<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 17, 1996
REGISTRATION STATEMENT NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FLORIDA PANTHERS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
FLORIDA 7941 65-0676005
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
H. WAYNE HUIZENGA
CHAIRMAN OF THE BOARD
FLORIDA PANTHERS HOLDINGS, INC.
100 NORTHEAST THIRD AVENUE, SECOND FLOOR 100 NORTHEAST THIRD AVENUE, SECOND FLOOR
FORT LAUDERDALE, FLORIDA 33301 FORT LAUDERDALE, FLORIDA 33301
(954) 768-1900 (954) 768-1900
(Address, including zip code, and telephone number, (Name, address, including zip code, and telephone
including number, including area code, of agent for service)
area code, of registrant's principal executive offices)
</TABLE>
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Copies to:
<TABLE>
<S> <C>
STEPHEN K. RODDENBERRY, ESQ. THOMAS J. MURPHY, ESQ.
AKERMAN, SENTERFITT & EIDSON, P.A. MCDERMOTT, WILL & EMERY
ONE S.E. THIRD AVENUE, 28TH FLOOR 227 WEST MONROE STREET
MIAMI, FLORIDA 33131-1704 CHICAGO, IL 60606-5096
(305) 374-5600 (312) 372-2000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of the
Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Class A Common Stock, par value $.01 per
share..................................... 7,705,000 $10.00 $77,050,000 $26,569
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</TABLE>
(1) Includes 405,000 shares of Class A Common Stock which may be purchased by
the Underwriters pursuant to an overallotment option.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 17, 1996
PROSPECTUS
, 1996
7,300,000 SHARES
[LOGO] FLORIDA PANTHERS HOLDINGS, INC.
CLASS A COMMON STOCK
All the shares of Class A Common Stock offered hereby are being sold by
Florida Panthers Holdings, Inc. Of the 7,300,000 shares offered hereby,
2,700,000 shares are being offered to the public in an Initial Public Offering
and 4,600,000 shares are being offered in a Concurrent Offering by the Company
directly to certain investors at a price per share equal to the Initial Public
Offering price per share less the underwriting discounts and commissions but
including the Placement Agent fee. See "Concurrent Offering." The consummation
of the Concurrent Offering is contingent upon the consummation of the Initial
Public Offering.
Prior to the Offerings, there has been no public market for the Class A
Common Stock. It is currently anticipated that the Initial Public Offering price
will be $10.00 per share. See "Underwriting" for a discussion of the factors to
be considered in determining the Initial Public Offering price. Application has
been made to have the Class A Common Stock listed on The Nasdaq National Market
under the symbol "PUCK."
The Company has two classes of Common Stock: Class A Common Stock, which is
offered hereby, and Class B Common Stock, all of which is currently owned by Mr.
H. Wayne Huizenga, the Company's principal shareholder and the Chairman of the
Board. Each share of Class A Common Stock is entitled to one vote, and each
share of Class B Common Stock is entitled to 10,000 votes, on all matters
submitted to the shareholders for approval. The shares of Common Stock are
subject to certain National Hockey League requirements and restrictions with
respect to the ownership. THE SHARES OF CLASS B COMMON STOCK WERE ISSUED TO MR.
HUIZENGA TO SATISFY CERTAIN CONTROL REQUIREMENTS OF THE NATIONAL HOCKEY LEAGUE.
See "The National Hockey League -- Restriction on Ownership -- Control
Requirement" and "Description of Capital Stock."
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CLASS A COMMON STOCK
OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE TO PROCEEDS TO
PUBLIC UNDERWRITING COMPANY(2)
DISCOUNTS AND
COMMISSIONS(1)
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<S> <C> <C> <C>
Per Share
Initial Public Offering................................ $ $ $
Concurrent Offering.................................... $ $ $
Total(3)................................................. $ $ $
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</TABLE>
(1) Donaldson, Lufkin & Jenrette Securities Corporation and Raymond James &
Associates, Inc. are also acting as the Company's Placement Agents in
connection with the Concurrent Offering, and the Company has agreed to pay
the Placement Agents a fee of $ per share. In addition, the Company has
agreed to indemnify the Underwriters and the Placement Agents against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $590,000.
(3) The Company has granted the several Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of 405,000
additional shares of Class A Common Stock on the same terms as set forth
above solely to cover over-allotments, if any. If such option is exercised
in full, the total Price to Public, Underwriting Discounts and Commissions
and Proceeds to Company will be $ , $ and $ , respectively.
See "Underwriting."
The shares of Class A Common Stock are being offered in the Initial Public
Offering by the several Underwriters named herein, subject to prior sale, when,
as, and if accepted by them, subject to certain prior conditions, including the
right of the Underwriters to reject orders in whole or in part. It is expected
that the delivery of shares of Class A Common Stock will be made in New York,
New York on or about , 1996.
DONALDSON, LUFKIN & JENRETTE RAYMOND JAMES & ASSOCIATES, INC.
SECURITIES CORPORATION
<PAGE> 3
[INSERT PHOTOS HERE]
------------------------
THE COMPANY INTENDS TO FURNISH ITS SHAREHOLDERS WITH ANNUAL REPORTS
CONTAINING AUDITED FINANCIAL STATEMENTS CERTIFIED BY ITS INDEPENDENT AUDITORS.
IN CONNECTION WITH THESE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET, OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless the context otherwise requires, all
information contained in this Prospectus assumes no exercise of the
over-allotment option and the consummation of the Reorganization. See
"Reorganization." This Prospectus contains certain forward-looking statements
which may involve certain risks and uncertainties. The actual results may differ
materially from the results anticipated in these forward-looking statements as a
result of certain factors set forth under "Risk Factors" and elsewhere in this
Prospectus.
Florida Panthers Holdings, Inc. (the "Company") is a newly-formed Florida
corporation. The operations of the business described in this Prospectus are
presently conducted by Florida Panthers Hockey Club, Ltd. (the "Partnership"),
Arena Development Company, Ltd. ("Arena Development") and Arena Operating
Company, Ltd. ("Arena Operator"), all of which will be contributed to the
Company in connection with the Reorganization. Through its ownership of Decoma
Investment, Inc. I ("Decoma I") and Decoma Investment, Inc. II ("Decoma II"),
the Company will also own, upon completion of the Reorganization, approximately
78% of the partnership interests (the "Decoma Interests") in Decoma Miami
Associates, Ltd., a Florida limited partnership ("Decoma") which operates the
Miami Arena. Unless the context otherwise requires, prior to the completion of
the Reorganization, references to the "Company" throughout this Prospectus,
including the financial information contained herein, refer to the operations of
the Partnership, Arena Development and Arena Operator. After the completion of
the Reorganization, references to the "Company" refer to the operations of
Florida Panthers Holdings, Inc. and its subsidiaries. References herein to the
"Offerings" include the 2,700,000 shares of the Company's Class A Common Stock,
par value $.01 per share (the "Class A Common Stock"), being offered in an
Initial Public Offering (the "Initial Public Offering") as well as the 4,600,000
shares of Class A Common Stock being offered by the Company directly to certain
investors concurrent with the Initial Public Offering (the "Concurrent
Offering"). See "Concurrent Offering."
THE COMPANY
The Company owns and operates the Florida Panthers, a professional hockey
team (the "Panthers") of the National Hockey League (the "NHL"), an
unincorporated not-for-profit association, Arena Development, a Florida limited
partnership formed for the purpose of developing a new multi-purpose,
state-of-the-art sports and entertainment center (the "Broward County Civic
Arena" or the "Facility") in Broward County, Florida and Arena Operator, a
Florida limited partnership formed for the purpose of managing and operating the
Broward County Civic Arena. In addition, the Company owns approximately 78% of
the partnership interests in Decoma, a Florida limited partnership which
operates the Miami Arena in which the Panthers currently play.
HOCKEY OPERATIONS
The Panthers commenced play in the NHL on October 4, 1993 and, in their
third season, reached the Stanley Cup Finals. Currently, the Company derives
substantially all of its revenue from its hockey operations. This revenue is
primarily derived from (i) the sale of tickets to the Panthers' home games, (ii)
contracts with broadcast organizations and (iii) advertising and promotions. A
large portion of the Company's annual revenue is determinable at the
commencement of each hockey season based on season ticket sales and contracts
with broadcast organizations and sponsors.
The Company believes that the NHL is poised for significant continued
growth as evidenced by record ticket sales estimated to total approximately
$520.0 million during the 1995-96 season (an estimated 23% increase in revenue
from the 1993-94 season) and an estimated increase in net revenue from retail
sales of NHL licensed merchandise from approximately $18.0 million during the
1993-94 season to approximately $21.0 million during the 1995-96 season. In
addition, prior to the commencement of the 1994-95 season, the NHL (i) entered
into a new, seven-year $275.0 million television contract (the "Fox Contract")
with Fox Broadcasting Co. ("Fox"), and (ii) extended its existing contract with
ESPN, Inc. ("ESPN") through the end of the 1998-99 season (pursuant to which
ESPN agreed to pay the NHL approximately $65.0 million) for
3
<PAGE> 5
the national broadcast of certain NHL games in the U.S. The NHL also renewed its
contract with Molson Breweries of Canada Limited ("Molson") prior to the
commencement of the 1994-95 season, pursuant to which Molson agreed to pay the
NHL approximately $171.0 million for the rights to broadcast certain NHL games
throughout Canada for four seasons. The NHL estimates that the aggregate number
of television households in the United States that tuned in to an NHL national
telecast increased from 53.9 million during the 1993-94 season to 87.5 million
during the 1995-96 season, an increase of 62%.
The Company intends to capitalize on the increasing popularity of hockey,
in general, and the success achieved by the Panthers during the 1995-96 season,
in particular, by continuing to advertise and market the Panthers as well as
continuing to enhance the service and entertainment provided at games.
ARENA DEVELOPMENT AND OPERATIONS
In June 1996, the Company entered into an agreement (the "Development
Agreement") with Broward County to develop the Broward County Civic Arena, which
will be owned by Broward County. Pursuant to the Development Agreement, Broward
County will purchase a 135 acre parcel of land (the "Development Site"), which
will be used primarily for the development of the Facility and also for possible
future ancillary development. Broward County has agreed to provide up to $184.7
million for the development of the Broward County Civic Arena, including the
purchase of the Development Site. Performance of the Company under the
Development Agreement is contingent upon, among other things, Broward County's
acquisition of the Development Site, issuance of bonds by Broward County to
finance the development of the Facility and the satisfactory resolution of
certain restrictions affecting title and development rights to the purchased
land. See "Risk Factors -- Arena Development and Operations -- Development of
the Broward County Civic Arena" and "Business -- Arena Development and
Operations -- Development of the Broward County Civic Arena."
In connection with the development of the Broward County Civic Arena, the
Company entered into a 30-year license agreement (the "License Agreement") and
co-terminus operating agreement (the "Operating Agreement") with Broward County,
pursuant to which the Company will utilize and operate the Broward County Civic
Arena beginning on October 1, 1998, provided that construction is completed on a
timely basis. Under the License Agreement, the Company is entitled to retain 95%
of the revenue derived from the sale of general seating tickets to the Panthers'
home games, and all of certain other hockey related advertising and
merchandising revenue. In addition, the Company is entitled to receive the first
$14.0 million of net operating income generated from the Broward County Civic
Arena and 80% (with Broward County receiving 20%) of the net operating income in
excess of $14.0 million. The Company believes that successful operation of the
Broward County Civic Arena will significantly enhance the Company's total
revenue. See "Business -- Arena Development and Operations."
The Company owns approximately 78% of the partnership interests in Decoma.
Decoma derives all of its revenue from its Miami Arena operations. This revenue
is primarily derived from (i) seat use charges imposed on tickets sold at the
Miami Arena, (ii) net operating income and (iii) fixed and variable operating
payments generated from the Miami Arena. See "Risk Factors -- Litigation."
The Company's principal executive offices are located at 100 Northeast
Third Avenue, Second Floor, Fort Lauderdale, Florida 33301 and its telephone
number is (954) 768-1900. The Company was incorporated in Florida on July 3,
1996.
4
<PAGE> 6
THE OFFERINGS
<TABLE>
<S> <C>
Class A Common Stock Offered by the Company
Initial Public Offering.................... 2,700,000 shares
Concurrent Offering........................ 4,600,000 shares
Total................................... 7,300,000 shares
Common Stock to be Outstanding after the
Offerings.................................. 12,320,678 shares of Class A Common Stock (1)
255,000 shares of Class B Common Stock (2)
Use of Proceeds by the Company............... To repay indebtedness and for working capital
and general corporate purposes. See "Use of
Proceeds."
Proposed Nasdaq National Market Symbol....... PUCK
</TABLE>
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(1) Does not include 2,600,000 shares of Common Stock reserved for issuance
under the Company's stock option plan, of which shares are
subject to options to be granted upon consummation of the Offerings at an
exercise price per share equal to the Initial Public Offering price. See
"Management -- Stock Option Plan."
(2) All the outstanding shares of Class B Common Stock are currently owned by
Mr. Huizenga.
5
<PAGE> 7
SUMMARY FINANCIAL DATA
The summary financial data set forth below is derived from and should be
read in conjunction with the financial statements, including the notes thereto,
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained elsewhere in this Prospectus. The pro forma financial data
included herein is presented for informational purposes only and may not reflect
the Company's future results of operations and financial position or what the
results of operations and financial position of the Company would have been had
such transactions actually occurred as of the dates indicated.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
------------------------------------------------------------
1996
--------------------------------------
SEVEN MONTHS PRO FORMA,
ENDED PRO FORMA AS ADJUSTED
JUNE 30, 1993 1994 1995 ACTUAL (1) (2)
------------- -------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenue:
Tickets................... $ -- $ 14,784 $ 9,559 $ 23,226 $ 23,226 $ 23,226
Television and radio...... -- 3,163 3,717 5,141 5,141 5,141
Advertising and
promotions............. -- 1,534 1,297 2,192 2,192 2,192
NHL Enterprise rights..... -- 761 846 885 885 885
Decoma arena operations... -- -- -- -- 1,082 1,082
Other, primarily arena
concessions............ -- 1,440 912 1,561 1,561 1,561
----- -------- -------- -------- -------- --------
Total revenue..... -- 21,682 16,331 33,005 34,087 34,087
----- -------- -------- -------- -------- --------
Cost of Revenue:
Team operations........... -- 17,691 15,652 32,639 32,258 32,258
Ticketing and arena
operations............. -- 2,498 1,743 3,700 3,700 3,700
Selling, general and
administrative......... 768 5,512 5,351 7,814 8,371 8,371
----- -------- -------- -------- -------- --------
Total cost of
revenue......... 768 25,701 22,746 44,153 44,329 44,329
----- -------- -------- -------- -------- --------
(768) (4,019) (6,415) (11,148) (10,242) (10,242)
----- -------- -------- -------- -------- --------
Amortization and
depreciation.............. 2 6,444 5,980 9,427 9,741 9,741
----- -------- -------- -------- -------- --------
Operating loss.... (770) (10,463) (12,395) (20,575) (19,983) (19,983)
Interest income (expense),
net....................... (167) (2,463) (3,703) (4,908) (4,908) 122
Minority Interest in
Decoma.................... -- -- -- -- (98) (98)
----- -------- -------- -------- -------- --------
Net loss.................... $(937) $(12,926) $(16,098) $(25,483) $ (24,989) $ (19,959)
===== ======== ======== ======== ======== ========
PRO FORMA:
Net loss per share.......... $ (5.79)(3) $ (4.74) $ (1.59)
======== ======== ========
Weighted average shares
outstanding............... 4,405(3) 5,276 12,576
======== ======== ========
</TABLE>
6
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<TABLE>
<CAPTION>
JUNE 30, 1996
----------------------------------
PRO FORMA,
PRO FORMA AS ADJUSTED
ACTUAL (4) (5)
-------- --------- -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total current assets........................................ $ 3,402 $ 3,756 $25,868
Total current liabilities................................... 65,562 27,614 7,426
Total assets................................................ 38,396 47,760 69,872
Long-term obligations....................................... 28,277 28,277 3,277
Partners' deficit/shareholders' equity...................... (55,443) (8,131) 59,169
</TABLE>
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(1) Adjusted to reflect the Reorganization as if it had occurred at the
beginning of the period presented.
(2) Adjusted to reflect the Reorganization and the Offerings (assuming an
Initial Public Offering price of $10.00 per share and a Concurrent Offering
price of $9.65 per share), and the application of the net proceeds thereof
as described under "Use of Proceeds" as if such events had occurred at the
beginning of the period presented.
(3) Adjusted to reflect the Reorganization, excluding the contribution of the
Decoma Interests, as if it had occurred at the beginning of the period
presented.
(4) Adjusted to reflect the Reorganization as if it had occurred on June 30,
1996.
(5) Adjusted to reflect the Reorganization and the Offerings (assuming an
Initial Public Offering price of $10.00 and a Concurrent Offering price of
$9.65 per share) as if such events had occurred on June 30, 1996.
7
<PAGE> 9
RISK FACTORS
Prospective investors should consider carefully the following risk factors,
together with the other information contained in this Prospectus, in evaluating
an investment in the shares of Class A Common Stock offered hereby. The
following factors and other information set forth in this Prospectus contain
certain forward-looking statements involving risks and uncertainties. The
Company's actual results may differ materially from the results anticipated in
these forward-looking statements as a result of certain factors set forth in
this section and elsewhere in this Prospectus.
GENERAL
History of Losses and Uncertainty of Future Results
The Company has not generated any earnings to date and has incurred net
losses of approximately $937,000, $12.9 million, $16.1 million and $25.5 million
for the seven months ended June 30, 1993 and the years ended June 30, 1994, 1995
and 1996, respectively. The Panthers currently play in the Miami Arena, which
has a seating capacity of 14,703, one of the smallest arenas in the NHL. Under
the terms of the Panthers' current lease, the Miami Heat of the National
Basketball Association, as the primary tenant, controls revenue generated from
the sale of suites and parking and a majority of the advertising, limiting the
Company's ability to generate certain revenue which is generally available to
other NHL franchises. In addition, the size of the Miami Arena limits the
Company's ability to generate revenue from the sale of additional tickets. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Hockey Operations -- Miami Arena." It is currently
anticipated that the Panthers will incur net losses which could exceed $20.0
million per annum while playing at the Miami Arena. In the event the Broward
County Civic Arena is not completed in time for the 1998-99 season, the Company
could incur additional operating losses. There can be no assurance that the
Company will ever achieve a profitable level of operations or that
profitability, if achieved, can be sustained on an ongoing basis. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Need for Additional Capital
The continuing operations of the Company's business may require substantial
capital infusions on a continuing basis. The Company intends to use the net
proceeds of the Offerings, cash flow from operations and additional borrowings
to finance its operations. Whether or when the Company can achieve cash flow
levels sufficient to support its operations cannot be accurately predicted.
Unless such cash flow levels are achieved, the Company will require additional
borrowings or the sale of debt or equity securities, or some combination
thereof, to provide funding for its operations. In the event the Company cannot
generate sufficient cash flow from its operations, or is unable to borrow or
otherwise obtain additional funds to finance its operations, the Company's
financial condition or results of operations could be adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
Control by H. Wayne Huizenga; Voting Rights
The Company created a dual class of common stock in connection with the
Reorganization, comprised of Class A Common Stock and Class B Common Stock
(collectively, the "Common Stock"). The Company issued shares of Class B Common
Stock to Mr. Huizenga to satisfy certain control requirements of the NHL. In
accordance with the NHL Constitution and the Bylaws, a change in controlling
shareholder must be approved by the NHL. As such, Mr. Huizenga is required to
maintain control of the Company unless the NHL approves the transfer of his
controlling interests. See "The National Hockey League -- Control Requirement."
Class A Common Stock and Class B Common Stock vote together on each matter
submitted to the shareholders for approval. Each share of Class A Common Stock
is entitled to one vote, and each share of Class B Common Stock is entitled to
10,000 votes. Consequently, Mr. Huizenga, as the sole holder (holding 255,000
shares) of the Class B Common Stock, will be able to control the management and
policies of the Company and the outcome of substantially all of the matters
submitted to the shareholders for approval,
8
<PAGE> 10
including the election of directors. See "Management," "Certain Transactions,"
"Principal Shareholders," and "Shares Eligible for Future Sale."
Neither the Company's charter nor its bylaws restrict the transfer of the
Class B Common Stock. Accordingly, subject to the requirements of federal and
state securities laws, the 180 day lock-up agreement with the Underwriters and
the approval of the NHL, shares of Class B Common Stock may be owned by persons
other than Mr. Huizenga. As a result, control of the Company may be transferred
by Mr. Huizenga to other persons without the approval of the holders of Class A
Common Stock and Mr. Huizenga may receive a control premium, which may be
significant, in connection with such sale.
Litigation
On June 17, 1996, the Miami Sports and Exhibition Authority ("MSEA" or the
"Plaintiff") filed a lawsuit against, among others, Mr. Huizenga, Richard C.
Rochon, a director of the Company, the Panthers, Decoma, Arena Development and
Arena Operator (collectively, the "Defendants") in the United States District
Court of the Southern District of Florida. The suit alleges that the Defendants
have conspired to restrain trade in the South Florida sports and entertainment
facility market by monopolizing or attempting to monopolize such market in
violation of federal antitrust laws. The Plaintiff seeks, among other things, to
(i) nullify certain provisions of the Miami Arena Contract, dated as of December
13, 1990 (the "Miami Arena Contract"), by and between Decoma and MSEA,
specifically provisions restricting MSEA from developing a new state-of-the-art
arena in Miami (the "New Arena"), and (ii) force the Defendants to divest their
control over the Miami Arena and the Broward County Civic Arena. In addition,
the Plaintiff seeks treble damages as well as reimbursement for reasonable
attorneys' fees and costs. The Defendants believe that the suit is without merit
and intend to vigorously defend against this suit. An unfavorable outcome of
this litigation may have a material adverse effect on the Company's financial
condition or results of operations.
Business Concentration
Upon completion of the Offerings, the business of the Company will be to
own and operate the Panthers, Arena Development, Arena Operator and Decoma
(which will only be owned in part). The Company expects that a significant
portion of the Company's revenue will continue to be generated by the Panthers
following the consummation of the Offerings. The Panthers have not been
profitable since their inception. The failure on the part of the Company to (i)
maintain a winning hockey franchise, (ii) continue to receive revenue from its
Miami Arena operations, (iii) successfully develop the Broward County Civic
Arena on schedule or (iv) operate the Facility efficiently, could have a
material adverse effect on the Company's financial condition or results of
operations.
Expansion of Business
Although the Company is not presently engaged in negotiations to acquire
other businesses, it may, as part of its growth strategy, consider making future
acquisitions of certain sports-related or non-sports-related businesses as well
as certain commercial properties, including properties which may be owned by Mr.
Huizenga or his affiliates. If the Company does make any such acquisitions,
various associated risks may be encountered, including potential dilution to the
shares of Class A Common Stock then outstanding due to additional shares of
Common Stock (which may include shares of Class B Common Stock) being issued in
connection with the acquisitions, possible goodwill amortization, diversion of
management's attention, possible environmental and other regulatory costs and
unanticipated problems or liabilities, some or all of which could have a
material adverse effect on the Company's financial condition or results of
operations. In addition, transactions, including acquisitions, which would
result in the issuance of a significant number of shares of Common Stock (which
may include shares of Class B Common Stock) may require consent of the NHL.
There is no assurance that the Company will be able to obtain such consent from
the NHL. See "-- Hockey Operations -- League Membership."
9
<PAGE> 11
Dependence on Key Personnel
For the foreseeable future, the Company will be materially dependent upon
the services of Mr. Huizenga, the Chairman of the Board, Mr. Richard H. Evans,
President and Chief Operating Officer, and Mr. William A. Torrey, President of
Florida Panthers Hockey Club, Inc. The loss of the services of any of these
individuals could have a material adverse effect on the Company. See
"Management -- Executive Officers and Directors." The Company does not carry key
man life insurance on any of its officers.
Seasonality
The NHL season begins during the fall and ends in late spring. As a result,
the Company realizes the vast majority of its revenue and incurs the vast
majority of its expenses during that period.
Dilution
The Offerings will result in an immediate and substantial dilution to
purchasers in the Initial Public Offering of $8.68 per share (assuming an
Initial Public Offering price of $10.00 per share and a Concurrent Offering
price of $9.65 per share) in net tangible book value from the Initial Public
Offering price. See "Dilution." In addition, the Company may undertake to raise
additional capital through sales of additional shares of Class A Common Stock.
Such sales could have a dilutive effect on the shares of Class A Common Stock
purchased in the Offerings.
Shares of Class A Common Stock Eligible for Future Sale
Upon completion of the Offerings, the Company will have 12,320,678 shares
of Class A Common Stock outstanding, of which 7,300,000 shares of Class A Common
Stock (7,705,000 shares if the Underwriters' over-allotment option is exercised
in full) will be freely tradeable without restriction under the Securities Act
of 1933, as amended (the "Securities Act") unless purchased by "affiliates" of
the Company, as that term is defined in Rule 144 under the Securities Act. The
remaining 5,020,678 shares of Class A Common Stock (the "Huizenga Class A
Shares") are eligible for sale in the public market, subject to the registration
requirements of the Securities Act, or a valid exemption thereunder. The Company
intends to (i) cause a registration statement (the "Huizenga Registration
Statement"), registering the Huizenga Class A Shares, to be filed and declared
effective at or immediately after the effective date of the Registration
Statement of which this Prospectus is a part, and (ii) maintain the continued
effectiveness of the Huizenga Registration Statement, including filings of
post-effective amendments, in connection with the sale of Huizenga Class A
Shares from time to time on a continuous basis. The directors and officers of
the Company have agreed not to sell any shares of Class A Common Stock held by
them for a period of 180 days from the date of this Prospectus without the
consent of the Underwriters, subject to certain exceptions including pursuant to
a foreclosure by a lender on a loan for which shares of Class A Common Stock
have been pledged as collateral. The Company intends to register under the
Securities Act the 2,600,000 shares of Common Stock reserved for issuance under
the Company's Stock Option Plan (the "Stock Option Plan"). In addition, the
Company may from time to time file registration statements covering shares of
Class A Common Stock which may be issued in connection with potential future
acquisitions and resales thereof by the recipients, although no such
acquisitions are currently contemplated. Shares so registered could be sold in
the public market. No predictions can be made as to the effect, if any, that
market sales of shares of Class A Common Stock or the availability of the shares
of Class A Common Stock for sale will have on the market price for shares of
Class A Common Stock prevailing from time to time. Sales of substantial amounts
of shares of Class A Common Stock in the public market following the Offerings
could adversely affect the market price of the Class A Common Stock and could
impair the Company's future ability to raise capital through an offering of
equity securities. See "Shares Eligible for Future Sale."
No Prior Public Market and Possible Volatility of Stock Price
Prior to the Offerings, there has been no public market for the Class A
Common Stock. Although the Company has applied for inclusion of the Class A
Common Stock on the Nasdaq National Market, there can
10
<PAGE> 12
be no assurance that an active trading market will develop or be sustained
following the Offerings. There can be no assurance that the price at which the
Class A Common Stock will trade in the public market subsequent to the Offerings
will not be lower than the Initial Public Offering price. The Initial Public
Offering price for the Class A Common Stock will be determined by negotiations
among the Company and the Underwriters based on factors described in this
Prospectus under "Underwriting." The trading price of the Company's Class A
Common Stock could be subject to significant fluctuations in response to
variations in quarterly results and other factors. In addition, in recent years
the stock market, in general, and the market for the shares of companies with a
small capitalization, in particular, has experienced extreme price fluctuations
which have often been unrelated to the operating performance of affected
companies.
Absence of Dividends
The Company does not intend to pay any cash dividends with respect to its
Common Stock in the foreseeable future. Furthermore, the Company's ability to
declare or pay dividends on its Common Stock is limited by the provisions of the
NHL Bylaws and is expected to be limited by the terms of its new credit
facility. See "Dividend Policy" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources".
HOCKEY OPERATIONS
Competition
The Panthers compete for sports entertainment dollars not only with other
major league sports, but also college athletics and other sports-related
entertainment. During parts of the hockey season, the Panthers experience
competition from professional basketball (the Miami Heat), professional football
(the Miami Dolphins) and professional baseball (the Florida Marlins). Mr.
Huizenga controls the Miami Dolphins and the Florida Marlins. In addition, the
colleges and universities in South Florida, as well as public and private
secondary schools, offer a full schedule of athletic events throughout the year.
The Panthers also compete for attendance and advertising revenue with a wide
range of other entertainment and recreational activities available in South
Florida.
Dependence on Competitive Success
The financial results of the Company are expected to depend in part on the
Panthers continuing to achieve success in the NHL. By achieving and maintaining
success, the Panthers expect to generate greater fan enthusiasm, resulting in
higher ticket sales throughout the regular season and capturing greater shares
of the local television and radio audience. Furthermore, any participation in
the playoffs will provide the Panthers with additional revenue from sales of
tickets for home playoff games and from broadcasts of playoff games under local
media contracts. Conversely, revenue could be adversely affected by a poor
performance by the Panthers. There can be no assurance that the Panthers will
perform well or qualify for the playoffs.
Players' Salaries
Players' salaries in the NHL have increased significantly over the last two
seasons. The aggregate Panthers players' salaries nearly doubled from
approximately $10.2 million during the 1993-94 season to approximately $20.1
million during the 1995-96 season. In comparison, average aggregate players'
salaries for NHL teams have increased 48% from approximately $14.3 million
during the 1993-94 season to approximately $21.2 million during the 1995-96
season. The NHL Collective Bargaining Agreement is designed, in part, to control
the rate of increase in players' salaries. However, there can be no assurance
that the rate of increase in players' salaries will be effectively controlled.
Significant increases in players' salaries could have a material adverse effect
on the Company's financial condition or results of operations.
Miami Arena
In May 1996, the Company entered into an amendment to the lease for the
Miami Arena (the "Lease Amendment"), extending the term of the lease (which was
scheduled to expire at the end of the 1995-96
11
<PAGE> 13
season) to July 31, 1998, with two one-year options for the 1998-99 season and
the 1999-2000 season. The Lease Amendment contained substantially the same
economic terms as the existing Miami Arena lease and was subject to the approval
of MSEA, which approval, according to the Miami Arena lease, could not be
unreasonably withheld. In June 1996, MSEA rejected the Lease Amendment and
demanded that the Panthers vacate the Miami Arena. Subsequently, the Company
sought and obtained a preliminary injunction enjoining MSEA from taking actions
to prevent the Panthers from utilizing the Miami Arena pursuant to the Lease
Amendment. MSEA has indicated that it plans to appeal the decision rendered by
the court. If MSEA is successful in its appeal, the Company will need to find
and enter into a lease for an alternative playing site until such time as the
Broward County Civic Arena is completed. There can be no assurance that the
Company will be able to find and enter into a lease for an alternative playing
site or that the use of such alternative playing site will not adversely affect
the Company's financial condition or results of operations.
The Company owns approximately 78% of the partnership interests in Decoma,
which derives all of its revenue from its Miami Arena operations. The City of
Miami recently announced that it intends to build the New Arena which will be
utilized by the Miami Heat. Upon its completion, the New Arena will compete with
the Miami Arena for the rights to host various events, including sports events
and concerts. There can be no assurance that Miami Arena can successfully
compete with the New Arena. In the event the Miami Arena is unable to attract
the various sports and non-sports events, the results of operations of Decoma
will be adversely affected.
Dependence on Talented Players
The success of the Panthers will depend, in part, upon their ability to
retain and attract talented players. The Panthers compete with other NHL and
non-NHL hockey teams for available players. There can be no assurance that the
Panthers will be able to retain players upon expiration of their contracts or
identify and obtain new players of adequate talent to replace players who retire
or are injured, traded or released. Even if the Panthers are able to retain or
obtain players who have had successful college or professional careers, there
can be no assurance of their quality of performance for the Panthers.
Insurance; Injuries
Player contracts generally provide that a player is entitled to receive his
salary even if, as a result of injuries sustained from hockey-related activities
during the course of his employment, he is unable to play. These salaries
represent significant financial commitments of the Panthers. Disability
insurance for NHL players (which provides for up to 80% of salary reimbursement
after 30 consecutive regular season games are missed) is costly to maintain, and
the Panthers carry it only for certain highly compensated players. In the event
an injured player is not insured or insurance does not cover the entire amount
of the injured player's salary, the Company may be obligated to pay all or a
portion, as the case may be, of the injured player's salary. In addition, the
Company would be required to pay the salary of a player who replaces the injured
player. To the extent that financial results of the Company are dependent on the
Panthers' competitive success (as discussed above), the likelihood of achieving
such success is substantially reduced by serious injuries to key players. There
can be no assurance that key players for the Panthers will not sustain serious
injuries during any given season.
Labor Relations in Professional Sports
During the 1994-95 season, the NHL experienced labor relations difficulties
in the form of a player lock-out in a dispute over its collective bargaining
agreement, which adversely affected the Company's results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The NHL and the NHL Players' Association entered into a new
seven-year collective bargaining agreement (the "NHL Collective Bargaining
Agreement") on August 11, 1995 that took retroactive effect as of September 16,
1993. There can be no assurance that the NHL will not experience labor relations
difficulties in the future which could have a material adverse effect on the
Company's financial condition or results of operations. See "The National Hockey
League -- Collective Bargaining Agreement."
12
<PAGE> 14
League Membership
Because the NHL is a joint venture, the Panthers and other members of the
NHL are generally jointly and severally liable for the debts and obligations of
the league. Any failure of other members of the NHL to pay their pro rata share
of any such debt or obligation could adversely affect the Panthers. The success
of the NHL and its members depends in part on the competitiveness of the teams
in the NHL and their ability to maintain fiscally sound franchises. Certain NHL
franchises have at times encountered financial difficulties, and there can be no
assurance that the NHL and its respective franchises will continue to be able to
operate on a fiscally stable and effective basis. In addition, the Panthers and
their personnel are bound by a number of rules, regulations and agreements,
including, but not limited to, the Constitution and Bylaws of the NHL, national
television contracts and the NHL Collective Bargaining Agreement. Any change to
the rules, regulations and agreements adopted by the NHL will be binding upon
the Panthers and their personnel, regardless of whether the Panthers agree or
disagree with such changes, and it is possible that any such change could
adversely affect the Panthers.
The Commissioner of the NHL (the "Commissioner") has the exclusive power to
interpret the Constitution, Bylaws, rules and regulations of the NHL, and his
interpretations are final and binding on the members of the NHL. In addition, a
member of the NHL is precluded from resorting to the courts to enforce or
maintain rights or claims against any other member. All disputes must be
submitted to the Commissioner for his determination, and such determination,
when rendered, is final and binding. See "The National Hockey
League -- Governance."
The NHL Constitution and Bylaws contain provisions which may in some
circumstances operate to prohibit a person from acquiring the Class A Common
Stock and affect the value of such Class A Common Stock. In general, any
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding a 5% or more interest in the Company, and each
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding any multiple of a 5% interest, will require the prior
approval of the NHL, which may be granted or withheld in the sole discretion of
the NHL. The prospective purchaser will be required to submit to the NHL an
application, in a form to be prescribed from time to time by the NHL, providing
certain information relating to that person's background. Upon receipt of such
application, the Commissioner shall have the right to conduct an investigation
with respect to the prospective purchaser, which may include an interview by the
Commissioner's office or one or more NHL owners and the submission of such
information about the prospective purchaser, whether or not confidential, as the
Commissioner shall deem relevant in his sole discretion. In addition, the NHL
may condition its approval upon the execution, delivery and performance by the
prospective purchaser of such documents as the Commissioner shall prescribe. The
expenses of the NHL's investigation must be paid by the prospective purchaser,
whether or not its application is approved. If and when a prospective purchaser
receives the NHL's consent to acquire a 5% or more interest in the Company, such
prospective purchaser will be required to acknowledge that the purchaser shall
be bound by the applicable provisions of the NHL Constitution and Bylaws.
In addition, no person who directly or indirectly owns any interest in a
privately-held NHL team, or a 5% or more interest in any other publicly-held NHL
team, may own, directly or indirectly, a 5% or more interest in the Company,
without the prior approval of the NHL. The NHL Constitution and Bylaws also
contain provisions which would prohibit an owner of a 5% or more interest in the
Company from engaging in certain activities, such as wagering on any game in
which an NHL team participates. NHL players and referees and employees of the
NHL and its member clubs (other than the Company) are not eligible to purchase
or hold Common Stock. The NHL could in the future adopt different or additional
restrictions which could adversely affect the shareholders.
Furthermore, the grant of a security interest in any of the assets of the
Panthers, or any direct or indirect ownership interest in the Company, of 5% or
more, shall require the prior approval of the NHL, which may be withheld in the
NHL's sole discretion and, in that connection, the NHL will require a consent
agreement satisfactory to the NHL. NHL rules limit the amount of debt that may
be secured by the assets of, or ownership interests in, an NHL club and require
that the parties to any secured loan that is approved execute
13
<PAGE> 15
an agreement limiting the rights of the lenders and the club (or shareholder)
under certain circumstances, including upon an event of default or foreclosure.
These limitations may adversely affect the rights of the club (or shareholder)
under certain circumstances.
Failure by a holder of a 5% or more interest to comply with these
restrictions may result in a forced sale of such holder's interest in the
Company or the repurchase of such interests by the Company. The Company's
Articles of Incorporation provide that the Company may redeem, at the lower of
fair market value or cost, shares held by any person or entity who becomes the
owner of 5% or more of the Company's shares without the approval of the NHL.
These restrictions will be contained in a legend on each certificate issued
evidencing shares of Class A Common Stock.
Neither the NHL, any of its affiliates or members nor any of their
respective officers, employees or representatives, other than the Company, has
reviewed in advance the information being provided in this Prospectus or
elsewhere to potential investors in connection with the Offerings, or assumes
any responsibility for the accuracy of any representations made by the Company
to any potential investors.
NHL Expansion
It is currently anticipated that the NHL may grant additional franchises
within the next five years. While such expansion affords the NHL the opportunity
to expand into new markets, it also increases the competition for talented
players among the NHL teams. In the event the NHL expands, the expansion teams
are permitted to select in an expansion draft certain unprotected players
playing for the various NHL teams. There can be no assurance that the Panthers
will be able to retain all of their key players in the event of an expansion
draft or that the rules regarding the expansion draft will not change to the
detriment of the Company. In addition, to the extent the NHL teams share equally
in the revenue generated from national television contracts and sale of NHL
merchandise, the Company may receive less revenue from the NHL as the result of
the league expansion.
Media Contracts
Prior to the commencement of the 1994-95 season, the NHL entered into the
Fox Contract and extended its existing contract with ESPN for the national
broadcast of certain games in the U.S. Under the Fox Contract, Fox may choose to
terminate the contract after five years. In addition, the NHL also renewed its
contract with Molson for the national broadcast of certain NHL games in Canada.
A percentage of the revenue generated from such contracts is divided equally
among the members of the NHL. For the year ended June 30, 1996, this revenue
constituted approximately 8% of the Company's total revenue. There can be no
assurance that Fox, after the initial five-year period, will choose to continue
its contract with the NHL or that the NHL, upon expiration of its contracts with
each of Fox, ESPN and Molson, will be able to enter into new agreements on terms
as favorable as those in the current contracts.
In August 1996, the Company entered into a letter of intent (the
"SportsChannel Letter of Intent") with SportsChannel Florida Associates, a
Florida limited partnership which is 50% owned by Mr. Huizenga ("SportsChannel
Florida"), for the proposed local broadcast (other than radio broadcast) of the
Panthers' pre-season, regular season and certain post-season games. See "Certain
Transactions." The obligations of the Company and SportsChannel Florida are
subject to the negotiation of a definitive agreement. There can be no assurance
that the Company and SportsChannel Florida will enter into a definitive
agreement.
In addition, in August 1996, the Company entered into a letter of intent
(the "Sunshine Letter of Intent") with Sunshine Wireless Company, Inc.
("Sunshine"), for the proposed local radio broadcast of all the Panthers games
during the 1996-97 hockey season. The obligations of the Company and Sunshine
are subject to negotiation of a definitive agreement. There can be no assurance
that the Company and Sunshine will enter into a definitive agreement.
14
<PAGE> 16
ARENA DEVELOPMENT AND OPERATIONS
Development of the Broward County Civic Arena
The Company recently entered into the Development Agreement, pursuant to
which the Company will develop the Broward County Civic Arena, subject to
Broward County's acquisition of the 135 acre parcel of land, issuance of bonds
by Broward County to finance the development of the Facility and the
satisfactory resolution of certain restrictions affecting title and development
rights to the purchased land. Construction projects, such as the development of
a new civic center, entail significant risks, including regulatory and licensing
requirements, shortages of materials or skilled labor, unforeseen engineering,
environmental or geological problems, work stoppages, weather interferences,
unanticipated cost increases and challenges from local residents. There can be
no assurance that the Company can successfully develop the Broward County Civic
Arena or that costs associated with the development of the Facility will not
exceed the $184.7 million to be provided by Broward County. Under the
Development Agreement, the Company will be responsible for all costs relating to
the development of the Broward County Civic Arena in excess of $184.7 million.
See "Business -- Arena Development and Operations -- Development of the Broward
County Civic Arena." Although the Company anticipates that the Broward County
Civic Arena will be completed in time for the 1998-99 season, there can be no
assurance that the Facility will be completed within the contemplated time
frame.
Operation of the Broward County Civic Arena.
In June 1996, the Company entered into the License Agreement and the
Operating Agreement pursuant to which the Company will utilize and operate the
Broward County Civic Arena. In connection therewith, Broward County will receive
revenue (the "County Preferred Revenue") from the operations of the Broward
County Civic Arena for an amount to be determined concurrent with the issuance
of the bonds. The Company has provided Broward County a guaranty pursuant to
which the Company will be obligated to pay Broward County any deficiency in the
County Preferred Revenue (the "County Preferred Revenue Obligation"). The
Company believes that the revenue generated from the operations of the Facility
will be sufficient to provide Broward County with the County Preferred Revenue.
In the event such revenue is not sufficient to provide Broward County with the
County Preferred Revenue, the Company will be required to meet its County
Preferred Revenue Obligation. There can be no assurance that the revenue
generated from Broward County Civic Arena will be sufficient to meet the
Company's obligations to Broward County.
15
<PAGE> 17
REORGANIZATION
Immediately prior to the consummation of the Offerings, the following
events (collectively, the "Reorganization") will occur simultaneously: (i) Mr.
Huizenga will contribute (A) a note (the "Partnership Note"), representing the
outstanding amount which the Company borrowed from Mr. Huizenga plus interest,
and (B) all the outstanding capital stock of each of Decoma I and Decoma II,
constituting approximately a 78% interest in Decoma, to the capital of the
Partnership; (ii) Mr. Huizenga, as the sole limited partner and the sole general
partner (through his ownership of Florida Panthers Hockey Club, Inc.) of the
Partnership, will contribute all of the partnership interests in the Partnership
to the Company; and (iii) Mr. Huizenga, as the sole limited partner and the sole
general partner (through his ownership of the Arena Development Company, Inc.
and Arena Operating Company, Inc., respectively) of each of Arena Development
and Arena Operator, will contribute all the limited partnership interests in
each of Arena Development and Arena Operator as well as all the outstanding
capital stock of each of Arena Development Company, Inc. and Arena Operator
Company, Inc. to the Company. In exchange for all of the foregoing capital
contributions, Mr. Huizenga will receive 5,275,678 shares of Common Stock (the
"Exchange Shares"), of which 5,020,678 shares will be Class A Common Stock and
255,000 shares will be Class B Common Stock. The number of Exchange Shares to be
issued was derived by dividing by $9.30 (the assumed Initial Public Offering
price less underwriting discounts and commissions) the sum of (A) the
Partnership Note (approximately $41.0 million), which results in the issuance of
4,404,710 shares of Common Stock and (B) the approximately 78% interest in
Decoma (approximately $8.1 million, representing costs incurred by Mr. Huizenga
in acquiring the Decoma Interests), which results in the issuance of 870,968
shares of Common Stock.
After the Offering, operations of the business will be conducted by the
Company, which is a newly organized Florida corporation, and by its wholly-owned
subsidiaries, Florida Panthers Hockey Club, Inc., a newly-formed subsidiary
formed for the purpose of operating the Florida Panthers, Arena Development,
Arena Operator, and Decoma. Unless the context otherwise requires, references to
the "Company" refer to the operations of the Company and its subsidiaries.
CONCURRENT OFFERING
Concurrent with the shares offered hereby in the Initial Public Offering,
the Company is offering to certain individuals (the "Concurrent Purchasers")
4,600,000 shares of Class A Common Stock at a price equal to the Initial Public
Offering price less underwriting discounts and commissions but including the
Placement Agent fee. The consummation of the Concurrent Offering is conditioned
upon the consummation of the Initial Public Offering. Donaldson, Lufkin &
Jenrette Securities Corporation and Raymond James & Associates, Inc. are acting
as the placement agents (the "Placement Agents") in connection with the
Concurrent Offering. The Placement Agents will receive a fee of per share
of Class A Common Stock sold in the Concurrent Offering and will be indemnified
by the Company against certain liabilities, including liabilities under the
Securities Act. Certain of the Concurrent Purchasers have agreed not to sell
shares of Class A Common Stock for a period of 180 days after the date of this
Prospectus, subject to certain exceptions, without the consent of the
Underwriters. See "Shares Eligible for Future Sale" and "Underwriting."
16
<PAGE> 18
USE OF PROCEEDS
The net proceeds to the Company from the sale of shares of Class A Common
Stock in the Offerings (assuming an Initial Public Offering price of $10.00 per
share and a Concurrent Offering price of $9.65 per share and after deducting
underwriting discounts and commissions, the Placement Agent fee and other
estimated offering expenses) are estimated to be approximately $67.3 million
(approximately $71.1 million if the Underwriters' over-allotment option is
exercised in full).
The Company expects the net proceeds of the Offerings to be applied to
their intended uses over approximately 24 months following the consummation of
the Offerings. The Company estimates that approximately $45.0 million of the net
proceeds will be used to repay its indebtedness outstanding under two term
loans, with the balance of the net proceeds, estimated to be approximately $22.3
million, to be used for general working capital, including funding of net
operating losses, which could exceed $15.0 million per annum before
depreciation, amortization and interest until the completion of the Broward
County Civic Arena. The Company is in the process of negotiating a new revolving
line of credit (the "New Credit Facility"). It is anticipated that the New
Credit Facility will provide for a line of credit up to $50.0 million and will
be secured by all the tangible and intangible assets of the Company. The Company
believes that the net proceeds of the Offerings, together with its existing cash
and cash equivalents, revenue from its operations and borrowings under the New
Credit Facility, will be sufficient to enable it to maintain its current and
planned operations for at least the next 24 months. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Certain
Transactions."
The outstanding indebtedness under the two term loans to be repaid with a
portion of the proceeds of the Offerings bears interest at LIBOR plus 0.75% per
annum. The maturity date of the borrowings under one term loan is May 31, 2001,
and the maturity date for the other term loan is March 1, 1997.
Until required for specific purposes, the net proceeds of the Offerings
will be invested in short-term, investment-grade, interest-bearing investments.
DIVIDEND POLICY
The Company does not intend to pay any cash dividends with respect to its
Common Stock in the foreseeable future. It is expected that the New Credit
Facility will limit the Company's ability to pay cash dividends. In addition,
the NHL Bylaws prohibit the Company from the paying of cash dividends, unless
paying such cash dividends will not impair the Company's ability to (i) meet its
projected expenses for the ensuing 12 month period without the use of borrowed
funds, other than short-term borrowing, and (ii) maintain adequate reserves to
fund the future payment of all deferred player compensation and other deferred
obligations for past services. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
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<PAGE> 19
DILUTION
The difference between the Initial Public Offering price per share of
Common Stock and the net tangible book value per share of the Company after the
Offerings constitutes the dilution to investors in the Initial Public Offering.
Net tangible book value per share is determined by dividing the net tangible
book value of the Company (tangible assets less total liabilities) by the number
of outstanding shares of Common Stock.
At June 30, 1996, the pro forma net tangible book value of the Company was
a deficit of $50.7 million, or $9.61 per share of Common Stock, after giving
effect to the Reorganization. After giving effect to the Offerings (assuming an
Initial Public Offering price of $10.00 per share and a Concurrent Offering
price of $9.65 per share and after deducting underwriting discounts and
commissions, the Placement Agent fee and estimated expenses), the pro forma, as
adjusted, net tangible book value of the Company at June 30, 1996 would have
been $16.6 million, or $1.32 per share, representing an immediate increase in
net tangible book value of $10.93 per share to the existing shareholders and an
immediate dilution of $8.68 per share to investors in the Initial Public
Offering.
The following table illustrates the foregoing information with respect to
dilution to investors in the Initial Public Offering on a per share basis:
<TABLE>
<S> <C> <C>
Initial Public Offering price........................................ $10.00
Pro forma net tangible book value (deficit) before the
Offerings(1).................................................... (9.61)
Increase attributable to purchases by investors in the Offerings... 10.93
------
Pro forma, as adjusted, net tangible book value after the
Offerings.......................................................... 1.32
------
Dilution in net tangible book value to investors in the Initial
Public Offering.................................................... $ 8.68
======
</TABLE>
- ---------------
(1) Represents the pro forma net tangible book value after giving effect to the
Reorganization.
The following table sets forth, after giving effect to the Reorganization,
with respect to Mr. Huizenga and investors in the Offerings, a comparison of the
number of shares of Common Stock received or acquired from the Company, the
percentage ownership of such shares, the total consideration paid, the average
price per share and the average proceeds per share to the Company.
<TABLE>
<CAPTION>
AVERAGE
PROCEEDS
SHARES PURCHASED TOTAL CONSIDERATION PER
---------------------- ---------------------- AVERAGE PRICE SHARE TO
AMOUNT PERCENT AMOUNT PERCENT PER SHARE(1) THE COMPANY
---------- ------- ------------ ------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Existing Shareholder -- Mr. Huizenga........ 5,275,678(2) 41.9%(3) $ 49,063,806 40.7% $ 9.30 $ 9.30
Investors in the Concurrent
Offering -- Huizenga Family............... 1,340,000(4) 10.7(3) 12,931,000 10.7 9.65 9.30
Investors in the Concurrent
Offering -- Other......................... 3,260,000(4) 25.9 31,459,000 26.2 9.65 9.30
Investors in the Initial Public Offering.... 2,700,000 21.5 27,000,000 22.4 10.00 9.30
---------- ----- ------------ ----- ------
Total............................... 12,575,678 100.0% $120,453,806 100.0% $ 9.58 $ 9.30
========== ===== ============ ===== ======
</TABLE>
- ---------------
(1) The average price per share in the Concurrent Offering is less than the
average price per share in the Initial Public Offering because only
Placement Agent fees and no underwriting discounts and commissions will be
paid on account of shares sold in the Concurrent Offering.
(2) Derived by dividing by $9.30 (the assumed Initial Public Offering price less
underwriting discounts and commissions) the sum of (a) the Partnership Note
(approximately $41.0 million), which results in the issuance of 4,404,710
shares of Common Stock, and (b) the approximately 78% interest in Decoma
(approximately $8.1 million representing costs incurred by Mr. Huizenga in
acquiring the Decoma Interests), which results in the issuance of 870,968
shares of Common Stock.
(3) Mr. Huizenga and his family will collectively own a total of 52.6% of the
outstanding shares of Common Stock after giving effect to the
Reorganization and the Offerings. Additionally, assuming the underwriters'
over-allotment option is exercised in full, Mr. Huizenga and his family
will own 51.0% of the outstanding shares of Common Stock.
(4) Represents an estimate of the number of shares to be purchased.
18
<PAGE> 20
CAPITALIZATION
The following table sets forth at June 30, 1996 (i) the actual
capitalization of the Partnership prior to the Reorganization, (ii) the pro
forma capitalization of the Company which gives effect to the Reorganization and
(iii) the pro forma as adjusted capitalization of the Company which, in addition
to the Reorganization, gives effect to the Offerings at an assumed Initial
Public Offering price of $10.00 per share and an assumed Concurrent Offering
price of $9.65 per share and the application of the net proceeds therefrom. This
table should be read in conjunction with the financial statements and notes
thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1996
----------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA ADJUSTED
-------- -------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current debt:
Note payable -- related party............................ $ 40,172 $ -- $ --
Outstanding debt -- related party........................ 20,000 20,000 --
-------- ------- -------
Total current debt......................................... $ 60,172 $ 20,000 $ --
======== ======= =======
Long-term debt............................................. $ 25,000 $ 25,000 $ --
Partners' deficit.......................................... (55,443) -- --
Shareholders' equity:
Class A Common Stock, $.01 par value, 100,000,000 shares
authorized; no shares outstanding, actual; 5,020,678
shares outstanding, pro forma; 12,320,678 shares
outstanding pro forma, as adjusted.................... -- 50 123
Class B Common Stock, $.01 par value, 10,000,000 shares
authorized; 255,000 shares outstanding, pro forma..... -- 3 3
Additional paid-in capital............................... -- (8,184) 59,043
-------- ------- -------
Total shareholders' equity....................... -- (8,131) 59,169
-------- ------- -------
Total capitalization............................. $(30,443) $ 16,869 $ 59,169
======== ======= =======
</TABLE>
19
<PAGE> 21
SELECTED FINANCIAL DATA
The following information has been derived from the audited financial
statements of the Company. The financial statements of the Company as of and for
the periods ended June 30, 1993, 1994, 1995 and 1996 have been audited by Arthur
Andersen LLP, independent certified public accountants. The financial data set
forth below should be read in conjunction with the financial statements and
notes thereto contained elsewhere in this Prospectus. See also "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
SEVEN MONTHS FISCAL YEARS ENDED JUNE 30,
ENDED JUNE ------------------------------
30, 1993 1994 1995 1996
------------ -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenue:
Tickets.......................................... $ -- $ 14,784 $ 9,559 $ 23,226
Television and radio............................. -- 3,163 3,717 5,141
Advertising and promotions....................... -- 1,534 1,297 2,192
NHL Enterprise rights............................ -- 761 846 885
Other, primarily arena concessions............... -- 1,440 912 1,561
----- -------- -------- --------
Total revenue............................ -- 21,682 16,331 33,005
----- -------- -------- --------
Cost of Revenue:
Team operations.................................. -- 17,691 15,652 32,639
Ticketing and arena operations................... -- 2,498 1,743 3,700
Selling, general and administrative.............. 768 5,512 5,351 7,814
----- -------- -------- --------
Total cost of revenue.................... 768 25,701 22,746 44,153
----- -------- -------- --------
(768) (4,019) (6,415) (11,148)
----- -------- -------- --------
Amortization and depreciation...................... 2 6,444 5,980 9,427
----- -------- -------- --------
Operating loss..................................... (770) (10,463) (12,395) (20,575)
Interest expense, net.............................. (167) (2,463) (3,703) (4,908)
----- -------- -------- --------
Net loss........................................... $ (937) $(12,926) $(16,098) $(25,483)
===== ======== ======== ========
PRO FORMA(1):
Net loss per share................................. $ (5.79)
========
Weighted average shares outstanding................ 4,405
========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
---------------------------------------
1993 1994 1995 1996
------- -------- -------- -------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total current assets.................................... $ 9,117 $ 2,996 $ 2,713 $ 3,402
Total current liabilities............................... 15,605 17,712 47,820 65,562
Total assets............................................ 59,669 49,019 43,503 38,396
Long-term obligations................................... 45,000 45,169 25,643 28,277
Partners' deficit....................................... (937) (13,862) (29,960) (55,443)
</TABLE>
- ---------------
(1) Adjusted to reflect the Reorganization, excluding the contribution of the
Decoma Interests, as if it had occurred at the beginning of the period
presented.
20
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company was formed in December 1992 to own and operate the Panthers. In
April 1993, the NHL awarded the Company a hockey franchise, and the Panthers
commenced play in the NHL in October 1993. The Company currently derives
substantially all of its revenue from (i) the sale of tickets to home games,
(ii) contracts with broadcast organizations and (iii) advertising and promotion.
A large portion of the Company's annual revenue and operating expenses is
determinable at the commencement of each hockey season based on season ticket
sales and the Company's multi-year contracts with its players, broadcast
organizations and sponsors.
The operations of the Company are seasonal. The Company receives a
substantial portion of its receipts from the advance sale of regular season
tickets during the months of July and August, prior to the commencement of the
NHL regular season. For financial reporting purposes, hockey related revenue and
operating expenses are recognized during the regular season, which extends from
early October through mid-April. In the event the Panthers participate in the
playoffs, additional revenue will be realized and additional expenses will be
incurred for each playoff series.
During the seven month period from inception on December 2, 1992 through
June 30, 1993, the Company did not realize revenue or incur expenses from hockey
operations. The Company incurred approximately $770,000 of various general and
administrative start-up costs during the seven month period.
The 1994-95 season was shortened (from the normal 84 game schedule to a 48
game schedule) as a result of a player lockout in a dispute over the then
existing collective bargaining agreement, and the results of operations for the
year ended June 30, 1995 reflect the reduced number of games played.
During the 1995-96 season, the Panthers participated in all four rounds of
the Stanley Cup playoffs (playing in 22 playoff games) and derived additional
revenue and incurred additional expenses as a result of their participation in
the playoffs.
The Company incurred losses for the years ended June 30, 1994, 1995 and
1996. Net losses, before interest, amortization and depreciation, for such years
were approximately $4.0 million, $6.4 million and $11.1 million, respectively.
Such net losses were primarily a result of the Company having entered into an
unfavorable lease with the Miami Arena which did not provide the Company with
certain sources of revenue, including revenue from the sale of suites and
parking and a majority of the advertising space, which are generally available
to other hockey franchises. In addition, the Miami Arena, with a seating
capacity of 14,703, is one of the smallest arenas in the NHL. These seating
limitations have precluded the Company from receiving additional revenue from
the sale of additional tickets.
RESULTS OF OPERATIONS
Year Ended June 30, 1996 Compared to Year Ended June 30, 1995
Revenue. Revenue from ticket sales increased 143%, or approximately $13.7
million. This increase was primarily attributable to the fact that the Panthers
(i) participated in all four rounds of the 1995-96 Stanley Cup playoffs which
generated ticket sales of approximately $6.6 million, of which the Company
retained approximately $4.6 million after the various league playoff
assessments, and (ii) played only 24 home games during the shortened 1994-95
regular season as compared to 41 home games during the 1995-96 regular season,
resulting in an increase in regular season ticket sales of approximately $7.1
million. Average ticket revenue, net of sales tax, per regular season home game
increased 8% to approximately $395,000. This increase was due to a 14% increase
in average ticket price, partially offset by an 8% decrease in average paid
attendance.
21
<PAGE> 23
Television and radio revenue increased 38%, or approximately $1.4 million.
This increase was primarily attributable to the fact that 51 games (including 10
Stanley Cup playoff games) were televised during the 1995-96 season as compared
to 34 games during the shortened 1994-95 season.
Advertising and promotions revenue increased 69%, or approximately
$900,000, and other revenue, which consists primarily of the Company's share of
arena concessions, increased 71%, or approximately $650,000, both as a result of
the increase in the number of home games played. In addition, the NHL Enterprise
rights increased 5%, or approximately $40,000.
Cost of Revenue. Team operating costs, which consist primarily of players'
salaries, increased 109%, or approximately $17.0 million. Players' salaries were
approximately $11.8 million higher primarily because players were paid only 58%
(pro-rated for the shortened season) of their contracted salaries during the
1994-95 season and there were increases in the total compensation paid to the
first and second round draft picks during the 1995-96 season. The increase in
the number of games played during the 1995-96 season (including the Stanley Cup
playoffs) resulted in an increase in team travel costs of approximately $1.1
million, player insurance costs of approximately $220,000 and player benefit
costs of approximately $140,000. Other increases included approximately $2.0
million in league playoff assessments, $480,000 in league regular season
assessments, $500,000 in hockey personnel payroll costs and $410,000 in minor
league costs.
Ticketing and arena operating costs increased 112%, or approximately $2.0
million, as a result of the increase in the number of home games played
(including the Stanley Cup playoffs), with arena rent, which increased 145%, or
approximately $1.1 million, accounting for most of the increase.
Selling, general and administrative expenses increased 46%, or
approximately $2.5 million. This increase was attributable to approximately $1.3
million in playoff costs, $400,000 in computer consultation and legal fees,
$200,000 in advertising and game day promotional expenses, $200,000 in
non-player salary cost increases, $200,000 of predevelopment costs relating to
the Broward County Civic Arena and an increase of $160,000 in the management fee
paid to Huizenga Holdings. See "Certain Transactions."
Amortization of Player Contracts and NHL Franchise Costs. The Company was
required to pay a $50.0 million franchise fee to the NHL when the expansion
franchise was granted, of which approximately $25.7 million was allocated to the
contracts of players selected in the 1993 expansion draft and is being amortized
over the estimated useful lives of such contracts, which have been determined to
be approximately six years. The remaining portion of the franchise fee is being
amortized over 40 years. For the year ended June 30, 1996, amortization of
player contracts increased $3.4 million, or 67%. Amortization of player
contracts was approximately $8.5 million, including $4.9 million related to the
write-off of unamortized player costs as a result of four contracts terminated
due to buy-outs or player releases and adjustments to remaining balances to
better reflect the current values. For the year ended June 30, 1995,
amortization of the player contracts was approximately $5.1 million, which
included approximately $960,000 related to the write-off of three players'
contracts.
Amortization on the remaining portion of the franchise cost totaled
approximately $640,000 for both years.
Depreciation. Depreciation on capital assets was comparable between the
two years because there were no major additions to or write-offs of capital
assets.
Net Interest Expense. For the years ended June 30, 1996 and 1995, interest
expense consisted of interest accrued on long-term debt and interest accrued on
accumulated borrowings from Mr. Huizenga at the prime rate. Net interest expense
increased 33%, or approximately $1.2 million, primarily as a result of the
increase in accumulated borrowings from Mr. Huizenga which were used to fund
operating losses. The Company has entered into a series of swap agreements which
synthetically fix the interest rates on the long-term debt arrangements at 4.85%
and 5.19%. The Company uses these agreements as a hedge against future increases
in interest rates. For the year ended June 30, 1996, interest rates were above
the fixed swap rate at all times resulting in the Company earning interest
income of approximately $350,000 to offset against interest expense. For the
year ended June 30, 1995, interest rates were both below and above the fixed
swap rates and resulted in approximately $270,000 of net interest income which
reduced net interest expense.
22
<PAGE> 24
Year Ended June 30, 1995 Compared to Year Ended June 30, 1994
Revenue. Revenue from ticket sales decreased 35%, or approximately $5.2
million. This decrease was primarily attributable to the fact that ticket
revenue for the year ended June 30, 1995 included only 24 regular season home
games while ticket revenue for the year ended June 30, 1994 included 41 home
games. Average net ticket revenue increased 10% to approximately $365,000 per
game, primarily as a result of increased ticket prices.
Television and radio revenue increased 18%, or approximately $550,000. This
increase was primarily attributable to national broadcasting revenue of $700,000
from the Fox and ESPN contracts during the 1994-95 season.
Advertising and promotions revenue decreased 15%, or approximately
$240,000, and other revenue, primarily from concessions, decreased 37%, or
approximately $530,000, both as a result of fewer home games. In addition, NHL
Enterprise rights increased by 11% or $85,000.
Cost of Revenue. Team operating costs decreased 12%, or approximately $2.0
million. This decrease was primarily the result of the decrease in players'
salaries of 15%, or approximately $1.5 million, which was due to $5.8 million
reduction in actual salaries paid as a result of the shortened season, partially
offset by annual player contract increases of $4.3 million.
Ticketing and arena operating costs decreased 30%, or approximately
$760,000, as a result of playing fewer home games.
Selling, general and administrative costs decreased 3%, or approximately
$160,000. This net decrease was partially attributable to approximately $750,000
in inaugural season start-up costs including logo development, uniform
unveiling, extraordinary opening day ceremony costs, advertising and legal fees
for the year ended June 30, 1994, offset in part by costs associated with arena
development, which increased approximately $700,000 in the year ended June 30,
1995. The shortened 1994-95 season accounted for the remaining decrease in these
costs.
Amortization of Player Contracts and NHL Franchise Costs. For the years
ended June 30, 1995 and 1994, the amortization of player contracts totaled
approximately $5.1 million and $5.6 million, respectively, of which
approximately $960,000 and $1.5 million, respectively, related to the write-off
of unamortized player contract costs due to the release of players or
termination of players' contracts. Additionally, amortization on the remaining
portion of the franchise cost totaled approximately $640,000 for both years.
Depreciation. Depreciation on capital assets was comparable between the
two years because there were no major additions to or write-offs of capital
assets.
Net Interest Expense. Net interest expense increased 50%, or approximately
$1.2 million. Interest expense relating to the accumulated borrowings from Mr.
Huizenga increased approximately $490,000 as the Company's operating losses
accumulated. Net interest expense relating to the Company's long-term debt
increased 35%, or approximately $720,000, as a result of rising interest rates.
LIQUIDITY AND CAPITAL RESOURCES
Since its formation, the Company has financed net operating losses
primarily with loans from Mr. Huizenga. Such loans, including interest thereon
accrued through September 30, 1996, currently total approximately $41.0 million.
As of June 30, 1996 the Company had two term loans outstanding, totaling
approximately $45.0 million. The funds from these loans were used to finance a
portion of the $50.0 million NHL expansion franchise fee paid in June 1993. The
loan agreements contain certain financial covenants regarding the financial
performance of the Company, certain reporting requirements, a limitation on the
amount of annual capital expenditures and limitations on the assumption of
additional debt. The loan agreements also provide for repayment of all debt in
the event of a material adverse change in the business or a change in control.
Substantially all of the Company's assets are pledged as collateral for amounts
borrowed under the loan
23
<PAGE> 25
agreements. As of June 30, 1996, the Company was in compliance with all of the
requirements of the term loans. The Company plans to repay its indebtedness
under the loan agreements with the proceeds of the Offerings and subsequently
enter into the New Credit Facility. Upon repayment of the two outstanding term
loans, the Company will have approximately $22.3 million available in cash from
the proceeds of the Offerings to be used as working capital. See "Use of
Proceeds".
The Company is in the process of negotiating a New Credit Facility. It is
anticipated that the New Credit Facility will provide for a line of credit up to
$50.0 million and will be secured by all tangible and intangible assets of the
Company. The New Credit Facility is expected to limit the Company's ability to
pay cash dividends. In addition, the NHL's Bylaws preclude any one of its
members from paying cash dividends, unless paying such cash dividends will not
impair the member's ability to (i) meet its projected expenses for the ensuing
12 month period without the use of borrowed funds, other than short-term
borrowings, and (ii) maintain adequate reserves to fund the future payment of
all deferred player compensation and other deferred obligations for past
services.
The grant of a security interest in any of the assets of the Panthers, or
any direct or indirect ownership interest in the Company, of 5% or more, shall
require the prior approval of the NHL, which may be withheld in the NHL's sole
discretion and, in that connection, the NHL will require a consent agreement
satisfactory to the NHL. NHL rules limit the amount of debt that may be secured
by the assets of, or ownership interests in, an NHL club and require that the
parties to any secured loan that is approved execute an agreement limiting the
rights of the lenders and the club (or shareholder) under certain circumstances,
including upon an event of default or foreclosure. These limitations may
adversely affect the rights of the club (or shareholder) under certain
circumstances.
The contemplated reduction of indebtedness with the net proceeds of the
Offerings is expected to improve the Company's liquidity by reducing both the
Company's interest expense and the principal amount of the indebtedness required
to be repaid in the future. The Company believes that cash flow from operations
along with borrowing availability under the New Credit Facility will be
sufficient to satisfy the Company's anticipated working capital requirements
over the next 24 months. The Company anticipates that cash flow will improve if
the Broward County Civic Arena is constructed and the Panthers play there.
ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" ("SFAS No. 121"). SFAS No. 121 requires
that long-lived assets and certain identifiable intangibles to be disposed of be
recorded at the lower of carrying amount or fair value less cost to sell. The
Company adopted the provisions of this statement, effective July 1995. Such
adoption did not have a material effect on the Company's financial statements.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"). Under SFAS No. 123, companies can either measure
the compensation cost of equity instruments issued under employee compensation
plans using a fair value based method, or can continue to recognize compensation
cost under the provisions of Accounting Principles Board Opinion No. 25
("Opinion No. 25"). However, if the provisions of Opinion No. 25 are utilized,
pro forma disclosures of net income and earnings per share must be presented in
the financial statements as if the fair value method had been applied. The
Company intends to recognize compensation costs under the provisions of Opinion
No. 25, and, upon adoption of SFAS No. 123, will disclose the effects of SFAS
No. 123 on net earnings and earnings per share for the years ended June 30, 1995
and 1996.
24
<PAGE> 26
THE NATIONAL HOCKEY LEAGUE
GENERAL
The Company believes that the NHL is poised for significant continued
growth as evidenced by record ticket sales estimated to total $520.0 million
during the 1995-96 season (an estimated 23% increase in revenue from the 1993-94
season) and an estimated increase in net revenue from retail sales of NHL
licensed merchandise from approximately $18.0 million during the 1993-94 season
to approximately $21.0 million during the 1995-96 season. In addition, prior to
the commencement of the 1994-95 season, the NHL (i) entered into a new, seven
year $275.0 million television contract with Fox and (ii) extended its existing
contract with ESPN through the end of the 1998-99 season (pursuant to which ESPN
agreed to pay the NHL approximately $65.0 million) for the broadcast of certain
NHL games in the U.S. The NHL also renewed its contract with Molson prior to
commencement of the 1994-95 season, pursuant to which Molson agreed to pay the
NHL approximately $171.0 million for the rights to broadcast certain NHL games
throughout Canada for four seasons. The NHL estimates that the aggregate number
of television households in the United States that tuned in to an NHL national
telecast increased from 53.9 million during the 1993-94 season to 87.5 million
during the 1995-96 season, an increase of 62%.
TEAMS
For the 1995-1996 season, the NHL included the following teams, which are
currently aligned into two conferences, with two divisions in each conference:
EASTERN CONFERENCE
<TABLE>
<S> <C>
ATLANTIC DIVISION NORTHEAST DIVISION
Florida Panthers Boston Bruins
New Jersey Devils Buffalo Sabres
New York Islanders Hartford Whalers
New York Rangers Montreal Canadiens
Philadelphia Flyers Ottawa Senators
Tampa Bay Lightning Pittsburgh Penguins
Washington Capitals
</TABLE>
WESTERN CONFERENCE
<TABLE>
<S> <C>
CENTRAL DIVISION PACIFIC DIVISION
Chicago Blackhawks Anaheim Mighty Ducks
Dallas Stars Calgary Flames
Detroit Red Wings Colorado Avalanche
St. Louis Blues Edmonton Oilers
Toronto Maple Leafs Los Angeles Kings
Winnipeg Jets San Jose Sharks
Vancouver Canucks
</TABLE>
REGULAR SEASON AND PLAYOFFS
During the NHL regular season, which extends from early October to
mid-April, each team plays a total of 82 games against teams from both
conferences. Half of the games are played at home, and half are played away. At
the end of the regular season, 16 of the 26 teams (consisting of the four
division winners and six other teams from each conference with the highest
number of points accumulated during the course of the regular season) qualify
for the NHL playoffs to determine the NHL's Stanley Cup Champion for that
season. The playoffs consist of three rounds in each conference, with the fourth
and final round matching the winners of the Eastern and Western Conferences in
the Stanley Cup Finals to determine the Stanley Cup Champion. Each round is a
best of seven games series. Any team qualifying for the playoffs can be assured
of at least two
25
<PAGE> 27
home games during each round of the playoffs and, depending upon its success in
the playoffs, its regular season record and the length of each series, may play
up to 16 home games during the playoffs.
GATE RECEIPTS AND NHL ASSESSMENTS AND DISTRIBUTIONS
NHL teams are entitled to keep all gate receipts from pre-season and
regular season home games and do not share in the gate receipts from away games.
Each NHL member is required to pay an annual assessment to the NHL to cover the
NHL's operating expenses. Each team's assessment is generally funded by its
share of the NHL's revenue derived from its national television contracts and
from the sale of NHL licensed merchandise. Each team participating in the
playoffs pays a league playoff assessment for each home game played during the
playoffs. These assessments are used to pay players' regular season and playoff
awards, officiating costs and other playoff related expenses. Additionally, if
the playoff series goes beyond four games, each team hosting an extra game
contributes to an extra game pool an amount up to approximately 60% of the
average net gate receipts per game for that series. After deducting the league's
playoff assessments, the balance of the extra game pool is distributed 60% to
the winning team and 40% to the losing team of each series.
NHL ENTERPRISES
NHL Enterprises, L.P. ("NHLE"), the official licensing entity of the NHL,
operates a league-wide licensing program on behalf of its members. This program
consists of national licensing activities in the U.S., Canada and Europe in
which product manufacturers sign agreements allowing them to use the names and
logos of all 26 clubs, the league and the league's special events (including the
All-Star games and the Stanley Cup playoffs) in exchange for royalty and
guarantee payments to the NHLE. For the years ended June 30, 1994, 1995 and
1996, the Company's share of revenue from NHLE was approximately $761,000,
$846,000 and $885,000, respectively, which, in turn, was credited against the
NHL assessment for each such period. In addition, each member is permitted to
license its club identified products locally for sale at its arena or at team
owned and operated stores within a 75 mile radius of the arena and through team
catalogs.
SUMMARY OF LEAGUE REVENUE AND EXPENSES
The following table summarizes, for the last three seasons, the Company's
share of the revenue derived from the NHL as well as NHL assessments incurred
during the regular season:
<TABLE>
<CAPTION>
SEASON
---------------------------
1993-94 1994-95 1995-96
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenue:
Net broadcasting revenue................................... $ 1,563 $ 2,251 $ 2,796
NHL Enterprise rights...................................... 761 846 885
------ ------ ------
Total revenue...................................... 2,324 3,097 3,681
Assessments:
Operating assessment....................................... 969 1,018 1,045
Amateur league costs....................................... 90 316 269
Other costs................................................ 39 48 467
------ ------ ------
Total assessments.................................. 1,098 1,382 1,781
------ ------ ------
Net revenue.................................................. $ 1,226 $ 1,715 $ 1,900
====== ====== ======
</TABLE>
GOVERNANCE
The NHL is generally responsible for regulating the conduct of its members.
The NHL establishes the regular season and playoff schedules of the teams. It
also negotiates, on behalf of its members, the league's national over-the-air
and cable television contracts and the collective bargaining agreement with the
NHL Players' Association. Because the NHL is a joint venture, each of its
members is, in general, jointly and
26
<PAGE> 28
severally liable for the league's liabilities and obligations and shares in its
profits. Under the terms of the Constitution and Bylaws of the NHL, league
approval is required under certain circumstances, including in connection with
the sale or relocation of a member.
The NHL is governed by a Board of Governors, which consists of one
representative from each member. Mr. Torrey serves as the Panthers'
representative on the Board of Governors. The Board of Governors selects the
Commissioner, who administers the daily affairs of the league, including
dealings with the NHL Players' Association, interpretation of playing rules and
arbitration of conflicts among members. The Commissioner also has the power to
impose sanctions, including fines and suspensions, for violations of league
rules. Mr. Gary B. Bettman has been the Commissioner of the NHL since 1993.
The Commissioner has the exclusive power to interpret the Constitution,
Bylaws, rules and regulations of the NHL, and his interpretations are final and
binding. Members of the NHL are precluded from resorting to the courts to
enforce or maintain rights or claims against other members. Instead, all
disputes must be submitted to the Commissioner for his determination, and, such
determination, when rendered, is final and binding.
RESTRICTION ON OWNERSHIP
The NHL Constitution and Bylaws contain provisions which may in some
circumstances operate to prohibit a person from acquiring the Class A Common
Stock and affect the value of such Class A Common Stock. In general, any
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding a 5% or more interest in the Company, and each
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding any multiple of a 5% interest, will require the prior
approval of the NHL, which may be granted or withheld in the sole discretion of
the NHL. The prospective purchaser will be required to submit to the NHL an
application, in a form to be prescribed from time to time by the NHL, providing
certain information relating to that person's background. Upon receipt of such
application, the Commissioner shall have the right to conduct an investigation
with respect to the prospective purchaser, which may include an interview by the
Commissioner's office or one or more NHL owners and the submission of such
information about the prospective purchaser, whether or not confidential, as the
Commissioner shall deem relevant in his sole discretion. In addition, the NHL
may condition its approval upon the execution, delivery and performance by the
prospective purchaser of such documents as the Commissioner shall prescribe. The
expenses of the NHL's investigation must be paid by the prospective purchaser,
whether or not its application is approved. If and when a prospective purchaser
receives the NHL's consent to acquire a 5% or more interest in the Company, such
prospective purchaser will be required to acknowledge that the purchaser shall
be bound by the applicable provisions of the NHL Constitution and Bylaws.
In addition, no person who directly or indirectly owns any interest in a
privately-held NHL team, or a 5% or more interest in any other publicly-held NHL
team, may own, directly or indirectly, a 5% or more interest in the Company,
without the prior approval of the NHL. The NHL Constitution and Bylaws also
contain provisions which would prohibit an owner of a 5% or more interest in the
Company from engaging in certain activities, such as wagering on any game in
which an NHL team participates. NHL players and referees and employees of the
NHL and its member clubs (other than the Company) are not eligible to purchase
or hold Common Stock. The NHL could in the future adopt different or additional
restrictions which could adversely affect the shareholders.
Furthermore, the grant of a security interest in any of the assets of the
Panthers, or any direct or indirect ownership interest in the Company, of 5% or
more, shall require the prior approval of the NHL, which may be withheld in the
NHL's sole discretion and, in that connection, the NHL will require a consent
agreement satisfactory to the NHL. NHL rules limit the amount of debt that may
be secured by the assets of, or ownership interests in, an NHL club and require
that the parties to any secured loan that is approved execute an agreement
limiting the rights of the lenders and the club (or shareholder) under certain
circumstances, including upon an event of default or foreclosure. These
limitations may adversely affect the rights of the club (or shareholder) under
certain circumstances.
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<PAGE> 29
Failure by a holder of a 5% or more interest to comply with these
restrictions may result in a forced sale of such holder's interest in the
Company or the repurchase of such interests by the Company. The Company's
Articles of Incorporation provide that the Company may redeem, at the lower of
fair market value or cost, shares held by any person or entity who becomes the
owner of 5% or more of the Company's shares without the approval of the NHL.
These restrictions will be contained in a legend on each certificate issued
evidencing shares of Class A Common Stock.
CONTROL REQUIREMENT
In accordance with its Constitution and Bylaws, a change in the controlling
shareholder must be approved by the NHL. As such, Mr. Huizenga is required to
maintain control of the Company unless the NHL approves the transfer of his
controlling interests. In connection therewith, the Company issued to Mr.
Huizenga shares of Class B Common Stock. See "Risk Factors -- Control by H.
Wayne Huizenga; Voting Rights."
COLLECTIVE BARGAINING AGREEMENT
The NHL and the NHL Players' Association entered into a seven-year NHL
Collective Bargaining Agreement on August 11, 1995 that took retroactive effect
as of September 16, 1993. The NHL Collective Bargaining Agreement expires on
September 15, 2000.
FREE AGENTS
Under the NHL Collective Bargaining Agreement, when a player completes the
term of his contract, he becomes a free agent. Based upon the player's age,
experience and prior year's salary, he will either be classified as an
unrestricted or restricted free agent. The two main groups of unrestricted free
agents are as follows:
Group III Free Agent: Any player who is 32 years of age or older
(commencing with the 1997-98 season any player who is 31 years of age or
older) as of June 30 of the year he becomes a free agent and has been on an
NHL player roster for at least 40 games per season (30 games per season if
the player is a goalie) for at least four seasons.
Group V Free Agent: Any player who has played a minimum of 10 seasons
as a professional hockey player and whose salary in the final year of his
contract was less than that year's NHL average salary. A player may opt to
become a Group V Free Agent only once during his NHL career.
An unrestricted free agent is free to negotiate and sign with any other
team in the NHL following the expiration of his contract, and the team signing
such unrestricted free agent to a contract is not obligated to compensate the
player's former team.
A restricted free agent may also negotiate and sign with another team in
the NHL following the expiration of his contract; however, that player's current
team may exercise its right of first refusal and match the offers made by other
NHL teams. In the event the player's current team chooses not to exercise its
right of first refusal, it is entitled to draft pick(s) as compensation from the
player's new team. The compensation is dependent on the annual salary offer
secured by the restricted free agent.
As of September 1, 1996, the Panthers had two NHL players eligible for
restricted free agency: Mark Fitzpatrick and Jason Wooley.
NHL ENTRY DRAFT
Following the completion of the Stanley Cup playoffs, the NHL conducts its
annual draft in which each NHL team is given an opportunity to select top
amateur players from the U.S., Canada and Europe. The annual draft consists of
nine rounds. The 10 teams that did not qualify for the playoffs participate in a
draft lottery to determine the order of selections for the first 10 selections.
The drafting positions of the remaining teams for the first round, and the
positions of all teams for subsequent rounds of the draft, are assigned in
inverse order of the consolidated standings of each team during the preceding
NHL season.
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BUSINESS
GENERAL
The Company owns and operates the Panthers, Arena Development and Arena
Operator. In addition, the Company owns approximately 78% of the partnership
interests in Decoma.
The Panthers commenced play in the NHL on October 4, 1993 and, in their
third season, reached the Stanley Cup Finals. Currently, the Company derives
substantially all of its revenue from its hockey operations. This revenue is
primarily derived from (i) the sale of tickets to the Panthers' home games, (ii)
contracts with broadcasting organizations and (iii) advertising and promotions.
A large portion of the Company's annual revenue from its hockey operations is
determinable at the commencement of each hockey season based on season ticket
sales and the Company's contracts with broadcast organizations and sponsors.
The Company intends to capitalize on the growing popularity of hockey, in
general, and the success achieved by the Panthers during the 1995-96 season, in
particular, by continuing to advertise and market the Panthers as well as
continuing to enhance the service and entertainment provided at games.
In June 1996, the Company entered into the Development Agreement to develop
the Broward County Civic Arena. Pursuant to the Development Agreement, Broward
County will purchase the Development Site which will be used primarily for the
development of the Facility and also for possible future ancillary development.
Broward County has agreed to provide up to $184.7 million for the development of
the Broward County Civic Arena, including the purchase of the Development Site.
Performance of the Company under the Development Agreement is contingent upon,
among other things, Broward County's acquisition of the Development Site,
issuance of bonds by Broward County to finance the development of the Facility
and the satisfactory resolution of certain restrictions affecting title and
development rights to the purchased land.
In connection with the development of the Broward County Civic Arena, the
Company entered into the License Agreement and the Operating Agreement with
Broward County, pursuant to which the Company will utilize and operate the
Broward County Civic Arena beginning on October 1, 1998, provided that
construction is completed on a timely basis. Under the License Agreement, the
Company is entitled to retain 95% of the revenue derived from the sale of
general seating tickets to Panthers' home games and all of certain other hockey
related advertising and merchandising revenue. In addition, the Company is
entitled to receive the first $14.0 million of net operating income generated
from the Broward County Civic Arena and 80% (with Broward County receiving 20%)
of the net operating income in excess of $14.0 million. The Company believes
that successful operation of the Broward County Civic Arena will significantly
enhance the Company's total revenue.
The Company owns approximately 78% of the partnership interests in Decoma.
Decoma derives all of its revenue from its Miami Arena operations. Such revenue
is derived from (i) seat use charges imposed on tickets sold at the Miami Arena,
and (ii) net operating income and (iii) fixed and variable operating payments
generated from the Miami Arena.
HOCKEY OPERATIONS
Sources of Revenue
The Company derives its hockey revenue principally from the sale of tickets
to home games, contracts with broadcast organizations and advertising and
promotions.
Ticket Sales. The Panthers play an equal number of home games and away
games during the 82 game NHL regular season. In addition, the Panthers play one
to two exhibition home games prior to the commencement of the regular season.
Under the NHL Constitution and Bylaws, the Company receives all revenue from the
sale of tickets to regular season home games and no revenue from the sale of
tickets to the Panthers' regular season away games. During the exhibition
season, the Company retains all the revenue from the Panthers' home games and
shares the revenue for certain exhibition games played at neutral sites. During
the last three seasons, the Company has sold an average of 8,300 season tickets.
Ticket prices for regular
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<PAGE> 31
season home games during the 1995-96 season at the Miami Arena ranged from $9 to
$95 per game with an average paid ticket price of $35. The average individual
ticket price is approximately 14% higher than the average ticket price paid by
season ticket holders.
The following table shows certain information relating to the regular
season revenue generated by the sale of tickets for the periods indicated below:
<TABLE>
<CAPTION>
AVERAGE GROSS
SEASON TICKET AVERAGE PAID AVERAGE GROSS TICKET REVENUE
SEASON HOLDER BASE ATTENDANCE PAID TICKET PRICE PER GAME
---------------------------------- ------------- ------------ ----------------- --------------
<S> <C> <C> <C> <C>
1995-96(1)........................ 7,900 12,200 $ 34.51 $421,000
1994-95(2)........................ 9,400 13,300 30.30 403,000
1993-94........................... 7,500 13,200 26.89 355,000
</TABLE>
- ---------------
(1) Management believes that the decrease in the number of season ticket holders
as well as average paid attendance was primarily a result of the fans'
negative reaction to the announcement at the beginning of the season that
the Panthers would either relocate or be sold. From October to November
1995, the Company sold an average of 75% of all the seats available, while
from December 1995 to April 1996, the Company sold an average of 90% of all
the seats available. Of the last 25 regular season games, 14 games were
sold out.
(2) The 1994-95 season was shortened from 84 games to 48 games as a result of
labor relations difficulties in the form of a player lock-out in a dispute
over the then existing NHL collective bargaining agreement.
National Television. In 1994, the NHL entered a new, seven-year $275.0
million contract with Fox pursuant to which the NHL granted Fox exclusive
commercial over-the-air television rights to broadcast certain NHL regular
season and playoff games within the U.S. Under the terms of the Fox Contract,
Fox may choose to terminate the contract after five seasons. In the event Fox
chooses to terminate the contract after five seasons, the NHL will be entitled
to receive an aggregate of $155.0 million over such period. In addition, in
1994, the NHL extended its existing contract with ESPN through the end of the
1998-99 season pursuant to which ESPN agreed to pay the NHL approximately $65.0
million for cable rights to broadcast certain NHL regular season and playoff
games within the U.S.
The NHL also renewed its contract with Molson prior to the commencement of
the 1994-95 season, pursuant to which the NHL granted Molson the rights to
broadcast certain NHL games throughout Canada for four seasons. In return,
Molson agreed to pay the NHL approximately $171.0 million.
The revenue from the foregoing broadcasting contracts allocated to the
Company are as follows:
<TABLE>
<CAPTION>
SEASON PANTHERS' SHARE
--------------------------------------------------------------- ---------------
(IN THOUSANDS)
<S> <C>
1994-95........................................................ $ 2,750
1995-96........................................................ 2,980
1996-97........................................................ 3,275
1997-98........................................................ 3,697
1998-99........................................................ 2,307(1)
-------
Total.......................................................... $15,009
=======
</TABLE>
- ---------------
(1) Does not include the broadcasting contract with Molson which expires after
the 1997-98 season.
Local Television, Cable and Radio. The Company had a three year contract
with the Sunshine Network for the local media rights; consisting of television,
cable and radio broadcast of the Panthers' games pursuant to which the Company
derived revenue of approximately $1.7 million, $1.5 million and $2.4 million for
the 1993-94, 1994-95 and 1995-96 seasons, respectively. The contract with
Sunshine Network expired at the end of the 1995-96 season.
In August 1996, the Company entered into the SportsChannel Letter of Intent
for the proposed local broadcast (other than radio broadcast) of the Panthers'
games. See "Certain Transactions." Under the terms
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<PAGE> 32
of the SportsChannel Letter of Intent, the Company shall grant to SportsChannel
Florida broadcast rights (other than radio broadcast rights) to a pre-determined
number of the Panthers' pre-season, regular season and certain post-season games
during the 1996-97 season. The SportsChannel Letter of Intent provides that the
Company shall have the option to grant SportsChannel exclusive or nonexclusive
broadcast rights. In return, the Company shall be entitled to 11% (for the grant
of exclusive broadcast rights) or 5.5% (for the grant of non-exclusive broadcast
rights) of SportsChannel Florida's gross receipt for the 1996-97 season,
provided such gross receipts shall in no event be less than $2.5 million or $1.2
million, respectively. The obligations of the Company and SportsChannel Florida
are subject to the negotiation of a definitive agreement. There can be no
assurance that the Company and SportsChannel Florida will enter into a
definitive agreement.
In addition, in August 1996, the Company entered into the Sunshine Letter
of Intent for the proposed local radio broadcast of all the Panthers games
during the 1996-97 hockey season. Under the terms of the Sunshine Letter of
Intent, the Company shall grant to Sunshine local radio broadcast rights for
broadcast of all of the Panthers' pre-season, regular season and post-season
games during the 1996-97 season. The obligations of the Company and Sunshine are
subject to negotiation of a definitive agreement. There can be no assurance that
the Company and Sunshine will enter into a definitive agreement.
Advertising and Promotions. The Company also generates revenue from the
sale of advertising at certain limited locations at the Miami Arena as well as
in the game programs. In addition, the Company derives promotional revenue from
various sponsored events.
Performance
The following table shows the performance of the Panthers during their
first three NHL seasons:
<TABLE>
<CAPTION>
SEASON SEASON RECORD FINISH IN DIVISION PLAYOFF RESULTS
--------------------- ------------------- ------------------ ----------------------------------
<S> <C> <C> <C>
1995-96.............. 41-31-10 (92 pts.) 3rd Stanley Cup Finals
1994-95(1)........... 20-22-6 (46 pts.) 5th Missed participation by one point
1993-94.............. 33-34-17 (83 pts.) 5th Missed participation by one point
</TABLE>
- ---------------
(1) The 1994-95 season was shortened from 84 games to 48 games as a result of
labor relations difficulties in the form of a player lock-out in a dispute
over the then existing NHL collective bargaining agreement.
Players
In general, the rules of the NHL permit each team to maintain an active
roster of 24 hockey players during each regular season and to have up to 50
players under NHL contracts. The following table sets forth certain information
concerning the active roster of the Panthers' players as of September 1, 1996.
<TABLE>
<CAPTION>
YEARS IN LAST SEASON
NAME POSITION THE NHL OF CONTRACT HEIGHT WEIGHT AGE
- ----------------------------------------- ----------- --------- ----------- ------ ------- ---
<S> <C> <C> <C> <C> <C> <C>
Stu Barnes............................... Center 5 1996-97 5(#)11" 174 lbs 25
Terry Carkner............................ Defense 10 1996-97 6(#)03" 210 lbs 30
Radek Dvorak............................. Left Wing Rookie 1997-98 6(#)02" 185 lbs 19
Tom Fitzgerald........................... Right Wing 8 1997-98 6(#)01" 191 lbs 27
Mark Fitzpatrick(1)...................... Goaltender 9 1995-96 6(#)02" 190 lbs 27
Johan Garpenlov.......................... Left Wing 8 1996-97 5(#)11" 185 lbs 28
Per Gustafsson........................... Defense Rookie 1996-97 6(#)02" 190 lbs 26
Mike Hough............................... Left Wing 10 1996-97 6(#)01" 197 lbs 33
Jody Hull................................ Right Wing 8 1997-98 6(#)02" 195 lbs 27
Ed Jovanovski............................ Defense Rookie 1998-99 6(#)02" 205 lbs 19
Paul Laus................................ Defense 3 1997-98 6(#)01" 216 lbs 25
Bill Lindsay............................. Left Wing 5 1997-98 5(#)11" 190 lbs 25
Dave Lowry............................... Left Wing 11 1997-98 6(#)01" 200 lbs 31
Scott Mellanby........................... Right Wing 11 1997-98 6(#)01" 199 lbs 29
Gord Murphy.............................. Defense 8 1997-98 6(#)02" 191 lbs 29
</TABLE>
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<PAGE> 33
<TABLE>
<CAPTION>
YEARS IN LAST SEASON
NAME POSITION THE NHL OF CONTRACT HEIGHT WEIGHT AGE
- ----------------------------------------- ----------- --------- ----------- ------ ------- ---
<S> <C> <C> <C> <C> <C> <C>
Rob Niedermayer.......................... Center 3 1996-97 6'02" 200 lbs 21
Ray Sheppard............................. Right Wing 9 1998-99 6'01" 195 lbs 30
Brian Skrudland.......................... Center 11 1996-97 6'00" 196 lbs 32
Geoff Smith.............................. Defense 7 1996-97 6'03" 194 lbs 27
Martin Straka............................ Right Wing 4 1997-98 5'10" 178 lbs 23
Robert Svehla............................ Defense 2 1996-97 6'01" 190 lbs 27
John Vanbiesbrouck....................... Goaltender 13 1997-98 5'08" 176 lbs 32
Rhett Warrener........................... Defense Rookie 1998-99 6'01" 209 lbs 20
Jason Wooley(1).......................... Defense 5 1995-96 6'00" 188 lbs 26
</TABLE>
- ---------------
(1) Restricted free agent after the 1995-96 season.
Coaches
The head coach of the Panthers is Mr. Doug MacLean. Mr. MacLean, who guided
the Panthers to a playoff berth as well as to the Stanley Cup Finals in his
first season as the head coach of the Panthers, was a finalist for the Jack
Adams Award, which is presented to the NHL's Coach of the Year. Mr. MacLean also
earned the right to coach the Eastern Conference in the 1995-96 All-Star game.
Mr. MacLean served as the Panthers' director of player development and head
scout during the 1994-95 season. Prior to joining the Panthers, he spent four
seasons with the Detroit Red Wings, working in a variety of capacities. Mr.
MacLean recently extended his contract with the Panthers through the end of the
1998-99 season.
Mr. Duanne Sutter has completed his first year as an assistant coach with
the Panthers. Prior to joining the Panthers, Mr. Sutter served as the head coach
of the Indianapolis Ice of the International Hockey League (the "IHL") for three
seasons. Mr. Sutter also played 10 seasons with the New York Islanders before
retiring in 1990. Mr. Sutter is under contract with the Panthers through the end
of the 1996-97 season.
Mr. Lindy Ruff has completed his third season as an assistant coach with
the Panthers and is under contract with the Panthers through the end of the
1998-99 season. Mr. Ruff's responsibilities consist primarily of special teams
and defense. Mr. Ruff was a former player captain of the Buffalo Sabres (the
"Sabres") and played 691 games in the NHL with the Sabres and the New York
Rangers from the 1980-81 season to the 1991-92 season.
General Manager
Mr. Bryan Murray completed his second season as general manager of the
Panthers and is under contract through the 1997-98 season. Prior to joining the
Panthers, Mr. Murray was the head coach of the Detroit Red Wings from the
1990-91 season to the 1992-93 season as well as the general manager from the
1990-91 season to the 1993-94 season. Mr. Murray was the coach of the Washington
Capitals from the 1981-82 season to the 1988-89 season and was awarded the Jack
Adams Award as the NHL's Coach of the Year during the 1983-84 season. Mr. Murray
has a career coaching record of 467-337-112 (.571), placing him sixth on the
all-time victory list.
Player Development
The Panthers are currently affiliated with two minor league teams, the
Greensboro Monarchs ("Monarchs") of the American Hockey League (the "AHL") and
the Cincinnati Cyclones ("Cyclones") of the IHL. Under the terms of the
Company's respective agreements with the Monarchs and Cyclones, the Panthers are
obligated to provide the Monarchs and Cyclones with a certain number of players
and have the right to utilize such players on their NHL roster during the course
of the season.
The IHL, being comprised of many older, ex-NHL players, provides the
Panthers with the ability to call upon experienced players for short term
replacement. In contrast, by being affiliated with the Monarchs and
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<PAGE> 34
the AHL, for which the average player age is approximately 23, the Panthers have
the opportunity to develop young, newly signed players for future participation
in the NHL.
Players assigned to the Panthers' minor league affiliates generally have
"two way" contracts which provide them with higher salaries in the event they
are called upon to play for the Panthers.
Salaries
The NHL Bylaws require each team to enter into a uniform player contract
with each of its players. Players who sustain injuries from team sponsored or
approved hockey related activities are generally entitled to substantially all
of their salaries and signing bonuses. As of September 1, 1996, the Company was
required to make, in the aggregate, the following future payments to its present
and past NHL players.
<TABLE>
<CAPTION>
BASE SIGNING DEFERRED COMPENSATION
SEASON COMPENSATION BONUSES(1) PAYMENTS(2)
- ------------------------------------------------ ------------ ----------- ---------------------
(IN THOUSANDS)
<S> <C> <C> <C>
1996-97......................................... $ 15,860(3) $ 1,850 $ 678
1997-98......................................... 13,190 1,100 628
1998-99 and thereafter.......................... 4,585 50 558
</TABLE>
- ---------------
(1) Signing bonuses are amortized over the expected life of the player's
contract but are shown in the table on a cash basis.
(2) Represents payments to be made to four players, two of whom had their
contracts bought out by the Panthers and two of whom had been released by
the Panthers.
(3) Includes approximately $1.3 million paid to players whose contracts were
bought out by the Panthers during the 1995-96 season.
In addition to the salaries paid to its NHL players, the Company is
obligated to pay its non-NHL players (who play for the Panthers' minor league
affiliates) salaries pursuant to the terms of the players' respective contracts.
The Company is required to make, in the aggregate, the following future payments
to the Panthers' non-NHL players who have entered into contracts with the
Panthers as of September 1, 1996:
<TABLE>
<CAPTION>
MINOR LEAGUE
SEASON SALARIES PANTHERS' SALARIES(1) CASH SIGNING BONUSES
------------------------------------- --------------- --------------------- --------------------
(IN THOUSANDS)
<S> <C> <C> <C>
1996-97.............................. $ 1,598 $ 8,540 $848
1997-98.............................. 835 5,955 510
1998-99 and thereafter............... 308 2,390 50
</TABLE>
- ---------------
(1) The majority of non-NHL players have "two way" contracts with two levels of
compensation, one for playing in the minor league and the other for playing
in the NHL. This column represents the aggregate annual salaries of the
current non-NHL players, assuming that all such non-NHL players become
members of the Panthers and play a full season in the NHL.
Miami Arena
The Panthers currently play in the Miami Arena, which has a seating
capacity of 14,703, one of the smallest arenas in the NHL. Under the terms of
the Panthers' current lease, the Miami Heat of the National Basketball
Association, as the primary tenant, controls revenue generated from the sale of
suites and parking and a majority of the advertising, limiting the Company's
ability to generate certain revenue which is generally available to other NHL
franchises. In addition, the size of the Miami Arena limits the Company's
ability to generate revenue from the sale of additional tickets.
In May 1996, the Company entered into the Lease Amendment, extending the
term of the lease (which was scheduled to expire at the end of the 1995-96
season) to July 31, 1998, with two one-year options for the 1998-99 season and
the 1999-2000 season. The Lease Amendment contained substantially the same
economic terms as the existing Miami Arena lease and was subject to the approval
of MSEA, which approval, according
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<PAGE> 35
to the Miami Arena lease, could not be unreasonably withheld. In June 1996, MSEA
rejected the Lease Amendment and demanded that the Panthers vacate the Miami
Arena. Subsequently, the Company sought and obtained a preliminary injunction
enjoining MSEA from taking actions to prevent the Panthers from utilizing the
Miami Arena pursuant to the Lease Amendment. MSEA has indicated that it plans to
appeal the decision rendered by the court. If MSEA is successful in its appeal,
the Company will need to find and enter into a lease for an alternative playing
site until such time as the Broward County Civic Arena is completed. There can
be no assurance that the Company will be able to find and enter into a lease for
an alternative playing site or that the use of such alternative playing site
will not adversely affect the Company's financial condition and results of
operations.
The Company owns approximately 78% of the partnership interests in Decoma,
which derives all of its revenue from the Miami Arena operations. The City of
Miami recently announced that it intends to build the New Arena which will be
utilized by the Miami Heat. Upon its completion, the New Arena will compete with
the Miami Arena for the rights to host various events, including sports events
and concerts. There can be no assurance that the Miami Arena can successfully
compete with the New Arena. In the event the Miami Arena is unable to attract
the various sports and non-sports events, the results of operations of Decoma
will be adversely affected.
Competition
The Panthers compete for sports entertainment dollars not only with other
major league sports, but also with college athletics and other sports-related
entertainment. During portions of its season, the Panthers experience
competition from professional basketball (the Miami Heat), professional football
(the Miami Dolphins) and professional baseball (the Florida Marlins). Mr.
Huizenga controls the Miami Dolphins and the Florida Marlins. In addition, the
colleges and universities in South Florida, as well as public and private
secondary schools, offer a full schedule of athletic events throughout the year.
The Panthers also compete for attendance and advertising revenue with a wide
range of other entertainment and recreational activities available in South
Florida. The Panthers compete with other NHL and non-NHL teams, professional and
otherwise, for available players.
ARENA DEVELOPMENT AND OPERATIONS
Development of the Broward County Civic Arena
In June 1996, the Company entered into the Development Agreement to develop
the Broward County Civic Arena, which will be owned by Broward County. Pursuant
to the Development Agreement, Broward County will purchase the Development Site,
which will be used primarily for the development of the Facility and also for
possible future ancillary development. Broward County has agreed to provide
$184.7 million for the development of the Facility, including the purchase of
the Development Site. The Broward County Civic Arena will be located on the
Development Site and Broward County will reimburse the Company for all costs
relating to environmental remediation of the purchased land. The Company will
bear all costs relating to the development of the Broward County Civic Arena in
excess of $184.7 million; however, it may require Broward County to advance an
additional $18.5 million, which the Company will repay as supplemental rent.
Performance of the Company under the Development Agreement is contingent
upon, among other things, Broward County's acquisition of the Development Site,
issuance of bonds by Broward County to finance the development of the Facility
and the satisfactory resolution of certain restrictions affecting title and
development rights to the purchased land.
In July 1996, Sawgrass Land Corporation, a Florida corporation ("Sawgrass")
which is owned by Mr. Huizenga, entered into a letter of intent (the "Lennar
Letter of Intent") with Lennar Homes, Inc. for the purchase of 153 contiguous
acres of land adjacent to the Broward County Civic Arena. In the future,
Sawgrass may attempt to develop, or permit other parties to develop, such land.
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<PAGE> 36
Operation of the Broward County Civic Arena
In June 1996, the Company entered into the License Agreement and the
Operating Agreement pursuant to which the Company will utilize and operate the
Broward County Civic Arena. In connection therewith, Broward County will receive
the County Preferred Revenue from the operations of the Broward County Civic
Arena for an amount to be determined concurrent with the issuance of the bonds.
The Company has provided Broward County a guaranty pursuant to which the Company
will be obligated to pay Broward County the County Preferred Revenue Obligation.
The Company believes that the revenue generated from the operations of the
Facility will be sufficient to provide Broward County with the County Preferred
Revenue. In the event such revenue is not sufficient to provide Broward County
with the County Preferred Revenue, the Company will be required to meet its
County Preferred Revenue Obligation. There can be no assurance that the revenue
generated from Broward County Civic Arena will be sufficient to meet the
Company's obligations to Broward County.
Under the License Agreement, the Company is entitled to retain 95% of all
revenue derived from the sale of general seating tickets to the Panthers' home
games and all of certain other hockey-related advertising and merchandising
revenue. In addition, the Company is entitled to receive the first $14.0 million
of the net operating income generated from the Broward County Civic Arena and
80% (with Broward County receiving 20%) of all net operating income in excess of
$14.0 million.
The License Agreement commencement date will occur upon thirty days notice
of the completion of construction of the Broward County Civic Arena, which is
currently scheduled for October 1, 1998; however, the commencement of the
License Agreement may be deferred by the Company until the following NHL hockey
season in the event the Broward County Civic Arena is completed between March 1
and July 1 of 1999. Once commenced, the License Agreement is for a term of 30
years, which term may be extended for five year periods, subject to certain
conditions, pursuant to options granted to the Company by Broward County.
The License Agreement entitles the Panthers to the exclusive use of the
Broward County Civic Arena during the playing of all of its home games, and
provides for nonexclusive use by the Panthers for practices and other team uses.
Additionally, the License Agreement provides the Company with exclusive use of
certain space within the Broward County Civic Arena to be used for a retail
store, offices, a box office, a locker room and a training and weight room. The
License Agreement contains a use covenant which requires the Panthers to play
all of their home games at the Broward County Civic Arena during the term of the
License Agreement.
Decoma
The Company owns approximately 78% of the partnership interests in Decoma.
Decoma derives all of its revenue from its Miami Arena operations. Such revenue
is derived from (i) seat use charges imposed on tickets sold at the Miami Arena,
and (ii) net operating income and (iii) fixed and variable operating payments
generated from the Miami Arena operations. The City of Miami recently announced
that it intends to build the New Arena which will be utilized by the Miami Heat.
Upon its completion, the New Arena will compete with the Miami Arena for the
right to host various events, including sports events and concerts. There can be
no assurance that Miami Arena can successfully compete with the New Arena. In
the event the Miami Arena is unable to attract the various sports and non-sports
events, the results of operations of Decoma will be adversely affected.
EMPLOYEES
In addition to its players, the Company currently employs 25 hockey
personnel and 40 non-hockey personnel. During the hockey season, the Company
also uses part-time employees, most of whom are employed as statisticians and
press attendants. None of the Company's employees other than its players are
covered by collective bargaining agreements. The Company considers its relations
with its employees to be good.
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<PAGE> 37
INSURANCE
The Company maintains various insurance coverages on behalf of its players
through the NHL. Such insurance, for which the players are the beneficiaries,
includes medical and dental, permanent total disability, group life, accidental
death and dismemberment ("AD&D"), and spousal group life and AD&D.
The Company also maintains various types of insurance on behalf of the
Panthers through the league's affiliated Bermuda insurance company,
Intra-Continental Ensurers Ltd. ("ICE"). Workers' compensation insurance is
maintained with a $100,000 per injury deductible. The NHL Catastrophe Insurance
Plan covers the entire roster in the amount of $1.0 million per player. In
addition, the ICE program requires that each team cover their top five salaried
players with at least two years remaining on their contract with Total Temporary
Disability Insurance. This insurance pays a benefit of up to 80% of the covered
player's compensation after 30 consecutive regular season games are missed. From
time to time, the Panthers may obtain additional insurance coverage for its
players as may be necessary or required.
In addition to hockey related insurance, the Company maintains various
types of business insurance, including general liability insurance of $1.0
million, and umbrella insurance of $10.0 million.
Under the Operating Agreement, the License Agreement and the Development
Agreement, the Company will have insurance requirements which include (i)
workers' compensation insurance, (ii) casualty insurance against loss or damage
to the Facility in such amount not less than full replacement cost of the
Facility and the equipment and machinery therein, and (iii) occupancy insurance
in an amount not less than estimated annual revenue to be derived from the
Facility.
LITIGATION
On June 17, 1996, MSEA filed a lawsuit against, among others, Mr. Huizenga,
Mr. Rochon, the Panthers, Decoma, Arena Development and Arena Operator in the
United States District Court of the Southern District of Florida. The suit
alleges that the Defendants have conspired to restrain trade in the South
Florida sports and entertainment facility market by monopolizing or attempting
to monopolize such market in violation of federal antitrust laws. The Plaintiff
seeks, among other things, to (i) nullify certain provisions of the Miami Arena
Contract, specifically provisions restricting MSEA from developing the New
Arena, and (ii) force the Defendants to divest their control over the Miami
Arena and the Broward County Civic Arena. In addition, the Plaintiff seeks
treble damages as well as reimbursement for reasonable attorneys' fees and
costs. The Defendants believe that the suit is without merit and intend to
vigorously defend against this suit. An unfavorable outcome of the suit may have
a material adverse effect on the Company's financial condition or results of
operations.
In May 1996, the Company entered into the Lease Amendment, extending the
term of the lease (which was scheduled to expire at the end of the 1995-96
season) to July 31, 1998, with two one-year options for the 1998-99 season and
the 1999-2000 season. The Lease Amendment contained substantially the same
economic terms as the existing Miami Arena lease and was subject to approval of
MSEA, which approval, according to the Miami Arena lease, could not be
unreasonably withheld. In June 1996, MSEA rejected the Lease Amendment and
demanded that the Panthers vacate the Miami Arena. Subsequently, the Company
sought and obtained a preliminary injunction enjoining MSEA from taking actions
to prevent the Panthers from utilizing the Miami Arena pursuant to the Lease
Amendment. MSEA has indicated that it plans to appeal the decision rendered by
the court. If MSEA is successful in its appeal, the Company will need to find
and enter into a lease for an alternative playing site until such time as the
Broward County Civic Arena is completed. There can be no assurance that the
Company will be able to find and enter into a lease for an alternative playing
site.
On September 4, 1996, Timothy Johanson, Walter Johanson and Veronica
Juliano (the "ADA Plaintiffs") filed a lawsuit against the Panthers, among
others, in the United States District Court of the Southern District Florida.
The suit alleges that the Panthers violated the Americans with Disabilities Act
in connection with the development of the Broward County Civic Arena by (i)
failing to make reasonable modifications in policies, practices or procedure;
(ii) by failing to take such steps as may be necessary to
36
<PAGE> 38
ensure that no individual with a disability is excluded, denied services,
segregated or otherwise treated differently; and (iii) by failing to remove
architectural barriers and communications barriers. The ADA Plaintiffs seek,
among other things, to (A) obtain a judgment mandating the Panthers to revise,
modify and remove certain barriers at the Broward County Civic Arena that may
prevent persons with disabilities from having access to the Facility and
procure, and take steps necessary to ensure that no person with a disability is
excluded, denied services, segregated or otherwise treated differently, to the
extent required by law, and (B) grant to the ADA Plaintiffs reasonable
attorneys' fees, costs and expenses. The Panthers believe that they have
complied with the requirements of the Americans with Disabilities Act and that
the suit is without merit. An unfavorable outcome of the suit may require the
Company to incur additional costs.
The Company is not presently involved in any other material legal
proceedings. However, the Company may from time to time become a party to legal
proceedings arising in the ordinary course of business.
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<PAGE> 39
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The directors and the executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
--------------------------------------- --- ---------------------------------------
<S> <C> <C>
H. Wayne Huizenga...................... 58 Chairman of the Board
Richard H. Evans....................... 51 President and Director
William A. Torrey...................... 61 President of Florida Panthers Hockey
Club, Inc. and Director
Alex Muxo.............................. 41 President of Arena Development and
Arena Operator
Steven M. Dauria....................... 35 Vice President and Chief Financial
Officer
Steven R. Berrard...................... 41 Director
Harris W. Hudson....................... 53 Director
George D. Johnson, Jr.................. 53 Director
Richard C. Rochon...................... 39 Director
</TABLE>
All directors are elected to serve until the next annual meeting of
shareholders and until their successors are elected and qualified. Officers
serve at the pleasure of the Board.
H. WAYNE HUIZENGA has been the Company's Chairman of the Board since July
1996. Mr. Huizenga has been Chairman of the Board and Chief Executive Officer of
Republic Industries, Inc. ("Republic"), a diversified company with operations in
the solid waste, electronic security services and out-of-home advertising
industries, since August 1995, and has been Chairman of the Board of Extended
Stay America, Inc. ("Extended Stay"), an extended stay lodging facilities
company, since January 1995. From September 1994 to October 1995, Mr. Huizenga
served as the Vice Chairman of Viacom, Inc., a diversified media and
entertainment company ("Viacom"), a position he assumed upon its merger with
Blockbuster Entertainment Corporation ("Blockbuster"). Prior thereto, Mr.
Huizenga became a director of Blockbuster in February 1987 and served as its
Chairman of the Board and Chief Executive Officer from April 1987 to September
1994. Since 1984, Mr. Huizenga has been an investor in several businesses and is
the sole shareholder and Chairman of the Board of Huizenga Holdings, Inc.
("Huizenga Holdings"), a holding and management company with various business
interests and an affiliate of the Company. He is the owner of the Miami Dolphins
and the Florida Marlins. In addition, Mr. Huizenga owns Pro Player Stadium and
has investments in numerous hotels and various other real estate ventures. Mr.
Huizenga is the brother-in-law of Mr. Hudson.
RICHARD H. EVANS has been the Company's President and a director and has
also been the President and Chief Executive Officer of Huizenga Sports and
Entertainment Group, Inc. since September 1996. Mr. Evans has served as a
director of Genesco, Inc. since 1996 and Bass Pro Shops since 1994. From April
1993 to October 1996, Mr. Evans served as the Chief Operating Officer of Gaylord
Entertainment Company ("Gaylord Entertainment"), a diversified entertainment and
communications company. Prior to joining Gaylord Entertainment, Mr. Evans served
as President and Chief Executive Officer of Dorna USA, a subsidiary of
Madrid-based Dorna Promocion del Deporte, a marketing company, from January 1992
to February 1993. Mr. Evans also served as the President and Chief Executive
Officer of Madison Square Garden Corporation from January 1987 to August 1991.
WILLIAM A. TORREY has been the President of Florida Panthers Hockey Club,
Inc. and a director of the Company since July 1996. Since April 1993, Mr. Torrey
has served as the President and Governor of the Panthers. Prior to joining the
Company, Mr. Torrey was associated with the New York Islanders Hockey Club (the
"Islanders") for twenty-one years in various capacities. From June 1989 to
August 1992, Mr. Torrey served as the Chairman of the Board of the Islanders.
From September 1978 to August 1992 Mr. Torrey served as the President of the
Islanders, and from February 1972 to August 1992 he served as the General
Manager of the Islanders.
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<PAGE> 40
ALEX MUXO has been the President of Arena Development and Arena Operator
since July 1996. From January 1995 to July 1996, Mr. Muxo served as the Vice
President of Huizenga Holdings. Prior to joining Huizenga Holdings, Mr. Muxo
served as the Vice President for Planning for Blockbuster from May 1994 to
January 1995. Prior thereto, Mr. Muxo was the City Manager of City of Homestead,
Florida.
STEVEN M. DAURIA has been the Company's Vice President and Chief Financial
Officer since July 1996. From July 1994 to July 1996, Mr. Dauria served as
Director of Finance and Administration and Chief Financial Officer of the
Panthers, and, from December 1993 to July 1994, Mr. Dauria served as the
Controller of the Panthers and the Florida Marlins. Prior to joining the
Panthers, Mr. Dauria served as Controller of the New York Yankees, a Major
League Baseball franchise, from November 1991 to December 1993, and was
previously associated with Time Warner, Inc. and Coopers & Lybrand, an
international public accounting firm.
STEVEN R. BERRARD has been a director of the Company since July 1996. Mr.
Berrard has been the Chief Executive Officer of AutoNation Incorporated since
March 1996. From September 1994 to March 1996, Mr. Berrard served as the
President and Chief Executive Officer of Blockbuster Entertainment Group, a
division of Viacom, as well as a director of Viacom. Prior thereto, Mr. Berrard
served as the President and Chief Operating Officer of Blockbuster from January
1993 to September 1994 and was its Vice Chairman of the Board from November 1989
to September 1994. Mr. Berrard was also the President and Chief Executive
Officer and a director of Spelling Entertainment Group Inc., a television and
film entertainment producer and distributor, from March 1993 through March 1996.
HARRIS W. HUDSON has been a director of the Company since July 1996. Mr.
Hudson has been the President and a director of Republic since August 1995.
Prior thereto, Mr. Hudson served as the Chairman of the Board, Chief Executive
Officer and President of Hudson Management Corporation. Mr. Hudson is the
brother-in-law of Mr. Huizenga.
GEORGE D. JOHNSON, JR. has been a director of the Company since July 1996.
Mr. Johnson has been the President, Chief Executive Officer and a director of
Extended Stay since January 1995, the managing general partner of American
Storage Limited Partnership, a chain of 23 self-storage facilities located in
the Southeast United States, and Chairman of the Board of Johnson Development
Associates, Inc., a real estate management, leasing and development company. Mr.
Johnson currently serves on the Board of Directors of Viacom, Republic and Duke
Power Company. Mr. Johnson previously served as President of the Consumer
Products Division of Blockbuster Entertainment. He was formerly the managing
general partner of WJB Video, the largest Blockbuster franchisee, which
developed over 200 video stores prior to its merger with Blockbuster in 1993.
Mr. Johnson served three terms in the South Carolina House of Representatives.
RICHARD C. ROCHON has been a director of the Company since July 1996. Mr.
Rochon is also the President of Huizenga Holdings, a position he has held since
1988. Prior to joining Huizenga Holdings, he was a certified public accountant
at Coopers & Lybrand, an international public accounting firm.
DIRECTORS' COMPENSATION
The Company's policy is not to pay compensation in the form of salaries or
fees to directors. However, the directors are entitled to receive options to
purchase shares of Class A Common Stock pursuant to the Stock Option Plan.
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<PAGE> 41
EXECUTIVE COMPENSATION
The following table shows remuneration paid or accrued by the Company
during the year ended June 30, 1996 to the Chief Executive Officer and to each
of the four most highly compensated executive officers of the Company, other
than the Chief Executive Officer (together, the "Named Executive Officers"), for
services in all capacities while they were employees of the Company, and the
capacities in which the services were rendered.
<TABLE>
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION
- -------------------------------------------------------- -------- ------- ------------
<S> <C> <C> <C>
H. Wayne Huizenga....................................... -- -- --
Chairman of the Board
Richard H. Evans........................................ -- -- --
President(1)
William A. Torrey....................................... $300,000 $ 3,000 $128,000(3)(4)
President of Florida Panthers Hockey Club, Inc.
Alex Muxo............................................... 156,000 -- 19,000(4)
President of Arena Development and Arena Operator
Steven Dauria........................................... 90,000 10,000 14,000(4)
Vice President and Chief Financial Officer
</TABLE>
- ---------------
(1) Mr. Evans joined the Company as its President in September 1996. As such,
Mr. Evans did not receive any compensation from the Company during the
fiscal year 1996.
(2) Represents bonus amounts earned in fiscal 1995 and paid in fiscal year 1996.
(3) Includes deferred compensation of $100,000 paid to Mr. Torrey during fiscal
1996.
(4) Includes benefits including insurance premiums and/or automobile stipends
paid by the Company.
STOCK OPTION PLAN
Under the Company's Stock Option Plan, 2,600,000 shares of Class A Common
Stock are reserved for issuance upon the exercise of stock options. The Stock
Option Plan is designed as a means to attract, retain and motivate directors and
key employees. A committee (the "Committee") consisting of two or more non-
employee directors appointed by the Board of Directors will administer and
interpret the Stock Option Plan.
Options are granted under the Stock Option Plan on such terms and at such
prices as determined by the Committee, except that the per share exercise price
of the options cannot be less than the fair market value of the Class A Common
Stock on the date of grant. Each option shall be for a term of not less than
five years or more than ten years, as shall be determined by the Committee.
However, in the event of a change of control (as such term is defined in the
Stock Option Plan), all outstanding options shall be immediately exercisable.
Options granted under the Stock Option Plan are not transferable other than by
will or by the laws of descent and distribution.
EMPLOYMENT AGREEMENTS
Mr. Torrey's employment agreement (the "Torrey Employment Agreement")
provides that Mr. Torrey is entitled to an annual base salary for the 1996-97,
1997-98 and 1998-99 hockey seasons of $400,000, $450,000, $500,000,
respectively, plus bonus. The bonus is based upon the performance of the
Panthers during the regular season and the playoffs. The Torrey Employment
Agreement terminates in June 1999 and contains certain confidentiality and
non-competition provisions.
40
<PAGE> 42
OFFICERS AND DIRECTORS OF FLORIDA PANTHERS HOCKEY CLUB, INC.
The officers and directors of Florida Panthers Hockey Club, Inc., a
subsidiary of the Company, are as follows:
<TABLE>
<CAPTION>
NAME POSITION
-------------------------------------- ---------------------------------------------
<S> <C>
H. Wayne Huizenga..................... Chairman
William A. Torrey..................... President and Director
Dean J. Jordan........................ Executive Vice President
Steven M. Dauria...................... Vice President and Chief Financial Officer
Bryan Murray.......................... Vice President and General Manager
Declan Bolger......................... Vice President Marketing
Stephen B. Dangerfield................ Vice President Operations
Richard C. Rochon..................... Director
Cris V. Branden....................... Director
Robert J. Henninger, Jr............... Director
Pamela Huizenga-Van Hart.............. Director
Ray Goldsby-Huizenga.................. Director
H. Wayne Huizenga, Jr................. Director
William M. Pierce..................... Director
</TABLE>
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<PAGE> 43
CERTAIN TRANSACTIONS
Immediately prior to the consummation of the Offerings, the following
events will occur simultaneously: (i) Mr. Huizenga will contribute (A) the
Partnership Note, representing the outstanding amount which the Company borrowed
from Mr. Huizenga plus interest, and (B) all the outstanding capital stock of
each of Decoma I and Decoma II, constituting approximately a 78% interest in
Decoma, to the capital of the Partnership; (ii) Mr. Huizenga, as the sole
limited partner and the sole general partner (through his ownership of Florida
Panthers Hockey Club, Inc.) of the Partnership, will contribute all of the
partnership interests in the Partnership to the Company; and (iii) Mr. Huizenga,
as the sole limited partner and the sole general partner (through his ownership
of the Arena Development Company, Inc. and Arena Operator Company, Inc.,
respectively) of each of Arena Development and Arena Operator, will contribute
all the limited partnership interests in each of Arena Development and Arena
Operator as well as all the outstanding capital stock of each of Arena
Development Company, Inc. and Arena Operator Company, Inc. to the Company. In
exchange for all of the foregoing capital contributions, Mr. Huizenga will
receive the Exchange Shares of which 5,020,678 will be Class A Common Stock and
255,000 will be Class B Common Stock. The number of Exchange Shares were derived
by dividing by $9.30 (the assumed Initial Public Offering price less
underwriting discounts and commissions) the sum of (A) the Partnership Note
(approximately $41.0 million), which results in the issuance of 4,404,710 shares
of Common Stock, and (B) the approximately 78% interest in Decoma (approximately
$8.1 million, representing costs incurred by Mr. Huizenga in acquiring the
Decoma Interests), which results in the issuance of 870,968 shares of Common
Stock.
The Panthers play all their home games at the Miami Arena, which is
operated by Decoma. The general partner of Decoma is Decoma Venture, a Texas
joint venture which is comprised of Decoma Investment, Inc. III ("Decoma III"),
Decoma I and Decoma II. Decoma I, Decoma II and Decoma III, whose sole
shareholder is Mr. Huizenga, own in the aggregate 79% of the partnership
interests in Decoma. For the twelve months ended December 31, 1994, and 1995 and
the six months ended June 30, 1996, Decoma Venture had revenue of approximately
$2.3 million, $1.6 million (as a result of a shortened hockey season) and
$762,000, respectively, from the operations of the Miami Arena.
In 1994, Mr. Huizenga purchased a 50% interest in Leisure Management
International ("LMI"), which manages the Miami Arena pursuant to a management
agreement (the "Management Agreement") with Decoma. Under the terms of the
Management Agreement, LMI received from Decoma a management fee of approximately
$136,000, $122,000 and $58,000 for the twelve months ended June 30, 1994, and
1995 and the six months ended June 30, 1996.
In August 1996, the Company entered into the SportsChannel Letter of Intent
with SportsChannel Florida for the proposed local broadcast (other than radio
broadcast) of the Panthers' games. Under the terms of the SportsChannel Letter
of Intent, the Company shall grant to SportsChannel Florida broadcast rights
(other than radio broadcast rights) to all of the Panthers' pre-season, regular
season and certain post-season away games during the 1996-97 season. The
SportsChannel Letter of Intent provides that the Company shall have the option
to grant SportsChannel Florida exclusive or nonexclusive broadcast rights. In
return, the Company shall be entitled to 11% (for the grant of exclusive
broadcast rights) or 5.5% (for the grant of non-exclusive broadcast rights) of
SportsChannel Florida's gross receipts for the 1996-97 season, provided such
gross receipts shall in no event be less than $2.5 million or $1.2 million,
respectively. The SportsChannel Letter of Intent may be extended for an
additional season upon notice by the Company. Mr. Huizenga currently owns 50% of
SportsChannel Florida, and he holds an option to purchase an additional 20%
ownership interest in SportsChannel Florida.
The Company pays Huizenga Holdings a management fee equal to 1% of the
Company's gross revenue, excluding NHL generated revenues, in exchange for
services including, but not limited to, assisting the Company in obtaining
financing, developing tax planning strategies and formulating risk management,
as well as advising the Company with respect to securities matters and future
acquisitions. Such 1% management fees totaled approximately $194,000, $132,000
and $293,000 for the years ended June 30, 1994, 1995 and 1996, respectively.
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<PAGE> 44
In the Concurrent Offering, the Company will offer to certain individuals
the opportunity to purchase 4,600,000 shares of Class A Common Stock at a price
equal to the Initial Public Offering price per share less underwriting discounts
and commissions but including the Placement Agent fee. The Company expects that
the Concurrent Purchasers will include the Company's directors and certain of
its officers.
The Company incurred charges of $94,613 during the year ended June 30, 1994
for the leases of certain private corporate aircraft owned by Huizenga Holdings.
In June 1993, the Company entered into a $25.0 million revolving credit
facility with NationsBank of Florida, N.A. ("NationsBank") for the purpose of
financing a portion of the $50.0 million NHL expansion franchise fee and
obtaining working capital for use by the Company. The credit facility was
subsequently converted to a $25.0 million term loan (the "Term Loan"). In
connection with the Term Loan, substantially all of the assets of the Panthers
have been pledged to NationsBank as collateral and Mr. Huizenga has provided a
guaranty of the Company's obligations relating to such Term Loan.
In addition, in June 1993, Panthers Investment Venture, an affiliate of the
Company controlled by Mr. Huizenga ("PIV"), entered into a loan agreement with
NationsBank pursuant to which it borrowed $20.0 million. PIV, in turn, loaned
the $20.0 million borrowed from NationsBank to the Company pursuant to a
separate loan agreement. In connection therewith, the Company issued to PIV a
promissory note on terms substantially similar to the promissory note (the
"NationsBank Promissory Note") issued by PIV to NationsBank. Mr. Huizenga has
provided certain debt service guarantees of the Company's obligations relating
to the NationsBank Promissory Note.
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<PAGE> 45
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Class A Common Stock (including shares subject to
options exercisable within 60 days) as of the date of this Prospectus, and as
adjusted to reflect the sale of the shares of Class A Common Stock offered by
this Prospectus, by (a) each of the Company's directors, (b) all executive
officers and directors of the Company as a group and (c) all persons who own
beneficially more than 5% of the Company's Class A Common Stock.
<TABLE>
<CAPTION>
CLASS A
COMMON STOCK CLASS A
BENEFICIALLY OWNED SHARES OF CLASS A COMMON STOCK
PRIOR TO THE COMMON STOCK TO BE BENEFICIALLY OWNED
OFFERINGS PURCHASED IN THE AFTER THE OFFERINGS
------------------- CONCURRENT -------------------
NAME SHARES PERCENT OFFERING SHARES PERCENT
- ---------------------------------------- --------- ------- ------------------ --------- -------
<S> <C> <C> <C> <C> <C>
H. Wayne Huizenga....................... 5,020,678(1) 100%
100 Northeast Third Avenue
Second Floor
Fort Lauderdale, FL 33301
Richard H. Evans........................ -- --
William A. Torrey....................... -- --
Alex Muxo............................... -- --
Steven M. Dauria........................ -- --
Steven R. Berrard....................... -- --
Harris W. Hudson........................ -- --
George D. Johnson, Jr................... -- --
Richard C. Rochon....................... -- --
All directors and executive officers as
a group (10 persons)..................
</TABLE>
- ---------------
(1) Mr. Huizenga received 5,020,678 shares of Class A Common Stock and 255,000
shares of Class B Common Stock, constituting 100% of the outstanding Class
B Common Stock, in return for his capital contribution.
* Less than one percent (1%)
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<PAGE> 46
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital consists of 100,000,000 shares of Class A
Common Stock, par value $.01 per share, and 10,000,000 shares of Class B Common
Stock, par value $.01 per share. No preferred stock is authorized.
COMMON STOCK
Upon completion of the Reorganization and the closing of the Offerings,
there will be 12,320,678 shares of Class A Common Stock (12,725,678 shares if
the Underwriters' over-allotment option is exercised in full) and 255,000 shares
of Class B Common Stock outstanding. The Class A Common Stock and Class B Common
Stock are identical in all respects, except that each share of Class A Common
Stock is entitled to one vote, and each share of Class B Common Stock is
entitled to 10,000 votes. In the event of a liquidation, dissolution or winding
up of the Company, the holders of Class A Common Stock and Class B Common Stock
are entitled to share equally and ratably in the assets of the Company, if any,
remaining after paying all debts and liabilities of the Company. The holders of
Class A and Class B Common Stock are entitled to receive dividends, on a
share-for-share basis if, as and when declared by the Board of Directors out of
funds legally available therefor, subject to any dividend restrictions in the
Company's credit facilities and the NHL Bylaws. See "Dividend Policy." Holders
of Class B Common Stock are entitled to convert each share of Class B Common
Stock into one share of Class A Common Stock at any time.
The NHL Constitution and Bylaws contain provisions which may in some
circumstances operate to prohibit a person from acquiring the Class A Common
Stock and affect the value of such Class A Common Stock. In general, any
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding a 5% or more interest in the Company, and each
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding any multiple of a 5% interest, will require the prior
approval of the NHL, which may be granted or withheld in the sole discretion of
the NHL. The prospective purchaser will be required to submit to the NHL an
application, in a form to be prescribed from time to time by the NHL, providing
certain information relating to that person's background. Upon receipt of such
application, the Commissioner shall have the right to conduct an investigation
with respect to the prospective purchaser, which may include an interview by the
Commissioner's office or one or more NHL owners and the submission of such
information about the prospective purchaser, whether or not confidential, as the
Commissioner shall deem relevant in his sole discretion. In addition, the NHL
may condition its approval upon the execution, delivery and performance by the
prospective purchaser of such documents as the Commissioner shall prescribe. The
NHL's investigation must be paid by the prospective purchaser, whether or not
its application is approved. If and when a prospective purchaser receives the
NHL's consent to acquire a 5% or more interest in the Company, such prospective
purchaser will be required to acknowledge that the purchaser shall be bound by
the applicable provisions of the NHL Constitution and Bylaws.
In addition, no person who directly or indirectly owns any interest in a
privately-held NHL team, or a 5% or more interest in any other publicly-held NHL
team, may own, directly or indirectly, a 5% or more interest in the Company,
without the prior approval of the NHL. The NHL Constitution and Bylaws also
contain provisions which would prohibit an owner of a 5% or more interest in the
Company from engaging in certain activities, such as wagering on any game in
which an NHL team participates. NHL players and referees and employees of the
NHL and its member clubs (other than the Company) are not eligible to purchase
or hold Common Stock. The NHL could in the future adopt different or additional
restrictions which could adversely affect the shareholders.
Furthermore, the grant of a security interest in any of the assets of the
Panthers, or any direct or indirect ownership interest in the Company, of 5% or
more, shall require the prior approval of the NHL, which may be withheld in the
NHL's sole discretion and, in that connection, the NHL will require a consent
agreement satisfactory to the NHL. NHL rules limit the amount of debt that may
be secured by the assets of, or ownership interests in, an NHL club and require
that the parties to any secured loan that is approved execute an agreement
limiting the rights of the lenders and the club (or shareholder) under certain
circumstances,
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<PAGE> 47
including upon an event of default or foreclosure. These limitations may
adversely affect the rights of the club (or shareholder) under certain
circumstances.
Failure by a holder of a 5% or more interest to comply with these
restrictions may result in a forced sale of such holder's interest in the
Company or the repurchase of such interests by the Company. The Company's
Articles of Incorporation provide that the Company may redeem, at the lower of
fair market value or cost, shares held by any person or entity who becomes the
owner of 5% or more of the Company's shares without the approval of the NHL.
These restrictions will be contained in a legend on each certificate issued
evidencing shares of Class A Common Stock.
All of the shares of Class A Common Stock and Class B Common Stock to be
issued in connection with the Reorganization will be fully paid and
nonassessable and all of the shares of Class A Common Stock offered hereby, when
issued, will be fully paid and nonassessable.
The transfer agent and registrar for the Class A Common Stock is
ChaseMellon Shareholder Services Group, Inc.
CERTAIN PROVISIONS OF FLORIDA LAW
The directors of the Company are subject to the "general standards for
directors" provisions set forth in the Florida Business Corporations Act (the
"FBCA"). These provisions provide that in discharging his or her duties and
determining what is in the best interests of the Company, a director may
consider such factors as the director deems relevant, including the long-term
prospects and interests of the Company and its shareholders and the social,
economic, legal or other effects of any proposed action on the employees,
suppliers or customers of the Company, the community in which the Company
operates and the economy in general. Interests of other constituencies in
addition to the Company's shareholders may be considered, and directors who take
into account these other factors may make decisions which are less beneficial to
some, or a majority, of the shareholders than if the law did not permit
consideration of such other factors.
The Company has elected to opt out of the "affiliated transactions" and
"control -- share acquisition" provisions of the FBCA.
LIMITED LIABILITY AND INDEMNIFICATION
Under the FBCA, a director is not personally liable for monetary damages to
the corporation or any other person for any statement, vote, decision, or
failure to act unless (i) the director breached or failed to perform his duties
as a director and (ii) the director's breach of, or failure to perform, those
duties constitutes: (A) a violation of the criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful, (B) a transaction from which the director
derived an improper personal benefit either directly or indirectly, (C) a
circumstance under which an unlawful distribution is made, (D) in a proceeding
by or in the right of the corporation to procure a judgment in its favor or by
or in the right of a shareholder, conscious disregard for the best interest of
the corporation or willful misconduct, or (E) in a proceeding by or in the right
of someone other than the corporation or shareholder, recklessness or an act or
omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights, safety or
property. A corporation may purchase and maintain insurance on behalf of any
director or officer against any liability asserted against him and incurred by
him in his capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the FBCA.
The Articles of Incorporation and Bylaws of the Company provide that the
Company shall, to the fullest extent permitted by applicable law, as amended
from time to time, indemnify all directors of the Company, as well as any
officers or employees of the Company to whom the Company has agreed to grant
indemnification.
46
<PAGE> 48
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offerings, the Company will have outstanding
12,320,678 shares of Class A Common Stock (12,725,678 shares if the
Underwriters' over-allotment option is exercised in full). The 7,300,000 shares
of Class A Common Stock offered hereby (7,705,000 shares if the Underwriters'
over-allotment option is exercised in full) will be freely tradeable without
restriction or further registration under
the Securities Act, except to the extent such shares are owned or purchased by
"affiliates" of the Company, as that term is defined in Rule 144 under the
Securities Act. The remaining 5,020,678 shares of Class A Common Stock, which
are comprised exclusively of the Huizenga Class A Shares, are "restricted
shares" within the meaning of Rule 144 under the Securities Act (i.e., such
shares were issued pursuant to an exemption from registration) and, therefore,
may not be sold in the absence of registration under the Securities Act, other
than in accordance with Rule 144, as described below, or pursuant to another
exemption from registration.
In general, Rule 144 as currently in effect, provides that a person who is
an affiliate of the Company or who beneficially owns shares which are issued and
sold in reliance upon exemptions from registration under the Securities Act must
own such shares for at least two years before they may be sold. Further, Rule
144 limits the amount of shares which can be sold, so that the number of shares
sold by a person (or persons whose sales are aggregated), within any three-month
period does not exceed the greater of 1% of the then outstanding shares of Class
A Common Stock (beginning on the 91st day immediately after the Offerings) or
the average weekly trading volume in the Class A Common Stock during the four
calendar weeks preceding the filing of a notice of intent to sell. Sales under
Rule 144 are also subject to certain manner-of-sale provisions, notice
requirements and the availability of current public information about the
Company. However, a person who is not deemed to have been an "affiliate" of the
Company at any time during the three months preceding a sale, and who has
beneficially owned shares for at least three years, would be entitled to sell
such shares under Rule 144 without regard to volume limitations, manner-of-sale
provisions, notice requirements or the availability of current public
information about the Company.
The Company intends to (i) cause the Huizenga Registration Statement,
registering the Huizenga Class A Shares, to be filed and declared effective at
or immediately after the effective date of this Registration Statement, and (ii)
maintain the continued effectiveness of the Huizenga Registration Statement,
including filings of post-effective amendments, in connection with the sale of
Huizenga Class A Shares from time to time on a continuous basis. Mr. Huizenga
has agreed not to sell any shares of Common Stock held by him for a period of
180 days from the date of this Prospectus without the consent of the
Underwriters, subject to certain exceptions, including pursuant to a foreclosure
by a lender on a loan for which shares of Class A Common Stock have been pledged
as collateral.
The Company also intends to file a registration statement under the
Securities Act to register an aggregate of 2,600,000 shares reserved for
issuance under the Stock Option Plan, thus permitting the resale of such shares
in the public market without restriction under the Securities Act, subject to
vesting requirements and the lock-up agreements described above.
Prior to the Offerings, there has been no established trading market for
the Class A Common Stock, and no prediction can be made as to the effect that
sales of Class A Common Stock under Rule 144, pursuant to a registration
statement or otherwise, or the availability of shares of Class A Common Stock
for sale, will have on the market price prevailing from time to time. Sales of
substantial amounts of Class A Common Stock in the public market, or the
perception that such sales could occur, could depress the prevailing market
price. Such sales may also make it more difficult for the Company to sell equity
securities or equity-related securities in the future at a time and price that
it deems appropriate.
47
<PAGE> 49
UNDERWRITING
Subject to the terms and subject to the conditions of the Underwriting
Agreement dated the date hereof, the Underwriters named below (the
"Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities Corporation
and Raymond James & Associates, Inc. are acting as representatives (the
"Representatives"), have severally agreed to purchase from the Company an
aggregate of 2,700,000 shares of Class A Common Stock. The number of shares of
Class A Common Stock that each Underwriter has agreed to purchase is set forth
opposite its name below.
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
------------------------------------------------------------------ ----------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation...............
Raymond James & Associates, Inc...................................
---------
Total................................................... 2,700,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Class A Common
Stock offered hereby in connection with the Initial Public Offering are subject
to approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all the shares of
Class A Common Stock offered in the Initial Public Offering if any such shares
are purchased.
The Underwriters propose to offer 2,700,000 shares of Class A Common Stock
directly to the public at the Initial Public Offering price set forth on the
cover page of this Prospectus and part of the shares to certain dealers at a
price that represents a concession not in excess of $ per share under the
Initial Public Offering price. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $
per share to certain other dealers. The Representatives of the Underwriters have
advised the Company that the Underwriters do not intend to confirm sales to any
accounts over which they exercise discretionary authority.
The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to 405,000 shares of Class
A Common Stock at the price to public set forth on the cover page of this
Prospectus minus the underwriting discounts and commissions. The Underwriters
may exercise such option solely for the purpose of covering over-allotments, if
any, in connection with the Initial Public Offering. To the extent such option
is exercised, each Underwriter will be obligated, subject to certain conditions,
to purchase approximately the same percentage of such additional shares as the
number of shares set forth opposite each Underwriter's name in the preceding
table bears to the total number of shares listed in such table.
Subject to certain exceptions, the Company and its directors and officers
have agreed that, for a period of 180 days from the date of this Prospectus,
they will not, without the prior written consent of the underwriters offer,
sell, contract to sell, or otherwise dispose of, any shares of Common Stock or
any securities convertible into, or exercisable or exchangeable for, Common
Stock.
The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act.
Prior to the Offerings, there has not been any public market for the Class
A Common Stock of the Company. Consequently, the Initial Public Offering price
for the shares of Class A Common Stock of the Company included in the Initial
Public Offering has been determined by negotiations between the Company and the
Representatives principally based on the cost of Mr. Huizenga's investment in
the Company. Other factors considered in determining such price were the history
of and prospects for the Company's business and the industry in which it
competes, an assessment of the Company's management and the present state of the
Company's development, the past and present revenue and earnings of the Company,
the prospects for the growth of the Company's revenue and earnings.
The closing of the Concurrent Offering is conditioned upon the closing of
the Initial Public Offering. The price of the shares offered to the Concurrent
Purchasers in the Concurrent Offering is equal to the Initial
48
<PAGE> 50
Public Offering price less underwriting discounts and commissions plus the
Placement Agents fee. The Placement Agents in connection with the Concurrent
Offering will be paid a fee of $0.35 per share (assuming a Concurrent Offering
price of $9.65 per share) for each share sold in the Concurrent Offering in
consideration for the provision of certain advisory services and for acting as
the Company's Placement Agents. The Placement Agents will be indemnified by the
Company against certain liabilities, including liabilities under the Securities
Act.
At the request of the Company, certain shares of Common Stock offered in
the Initial Public Offering have been reserved for sale to existing Panthers'
season ticketholders and employees of the Company and its affiliates. The price
of such shares to such persons will be the Initial Public Offering price set
forth on the cover of this Prospectus. The number of shares available to the
general public will be reduced to the extent those persons purchase reserved
shares. Any shares not so purchased will be offered to the general public in the
Initial Public Offering at the offering price set forth on the cover of this
Prospectus.
LEGAL MATTERS
The validity of shares of the Class A Common Stock offered hereby will be
passed upon for the Company by Akerman, Senterfitt & Eidson, P.A., Miami,
Florida. Certain legal matters will be passed upon for the Underwriters by
McDermott, Will & Emery, Chicago, Illinois.
EXPERTS
The financial statements included in this Prospectus have been audited by
Arthur Andersen LLP, independent certified public accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Securities and Exchange Commission (the "Commission") under the
Securities Act with respect to the Class A Common Stock offered hereby. This
Prospectus omits certain of the information contained in the Registration
Statement, and reference is hereby made to the Registration Statement and
related exhibits and schedules for further information with respect to the
Company and the Class A Common Stock offered hereby. Any statements contained
herein concerning the provisions of any document are not necessarily complete,
and in each such instance reference is made to the copy of such document filed
as an exhibit to the Registration Statement. Each such statement is qualified in
its entirety by such reference. The Registration Statement and the exhibits and
schedules forming a part thereof can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, DC 20549, and should also be available for
inspection and copying at the following regional offices of the Commission: 7
World Trade Center, 14th Floor, New York, New York 10048; and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, DC 20549, at
prescribed rates. The Commission maintains a Web Site (http://www.sec.gov.) that
contains reports, proxy statements and other information filed by the Company.
49
<PAGE> 51
INDEX TO FINANCIAL STATEMENTS
THE REGISTRANT --
FLORIDA PANTHERS HOLDINGS, INC.
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
The balance sheet of Florida Panthers Holdings, Inc. as of July 3, 1996 consisting of
deferred offering costs and accrued expenses of $500,000 and common stock
subscriptions receivable of $500,000, has not been presented as it is not
considered meaningful.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
Introduction to Unaudited Pro Forma Financial Information............................ F-2
Unaudited Pro Forma Balance Sheet.................................................... F-3
Unaudited Pro Forma Statements of Operations......................................... F-4
Notes to Unaudited Pro Forma Financial Information................................... F-5
BUSINESSES TO BE ACQUIRED --
FLORIDA PANTHERS HOCKEY CLUB, LTD.
Report of Independent Certified Public Accountants................................... F-6
Balance Sheets as of June 30, 1995 and 1996.......................................... F-7
Statements of Operations
For the years ended June 30, 1994, 1995 and 1996................................... F-8
Statement of Partners' Deficit
For the years ended June 30, 1994, 1995 and 1996................................... F-9
Statements of Cash Flows
For the years ended June 30, 1994, 1995 and 1996................................... F-10
Notes to Financial Statements........................................................ F-11
THE DECOMA ENTITIES
Report of Independent Certified Public Accountants................................... F-18
Report of Independent Certified Public Accountants................................... F-19
Combined Balance Sheets as of December 31, 1994 and 1995 and June 30, 1996........... F-20
Combined Statements of Income
For the period from January 1, 1994 to August 5, 1994, the period from August 6,
1994 to December 31, 1994, the year ended December 31, 1995 and the six month
periods ended June 30, 1995 and 1996............................................... F-21
Combined Statement of Shareholder's Equity
For the period from January 1, 1994 to August 5, 1994, the period from August 6,
1994 to December 31, 1994, the year ended December 31, 1995 and the six month
period ended June 30, 1996......................................................... F-22
Combined Statements of Cash Flows
For the period from January 1, 1994 to August 5, 1994, the period from August 6,
1994 to December 31, 1994, the year ended December 31, 1995 and the six month
periods ended June 30, 1995 and 1996............................................... F-23
Notes to Combined Financial Statements............................................... F-24
</TABLE>
F-1
<PAGE> 52
FLORIDA PANTHERS HOLDINGS, INC.
INTRODUCTION TO
UNAUDITED PRO FORMA FINANCIAL INFORMATION
GENERAL
The following Unaudited Pro Forma Consolidated Balance Sheet as of June 30,
1996 and the Unaudited Pro Forma Statements of Operations for the year ended
June 30, 1996 reflect adjustments to Florida Panthers Hockey Club, Ltd. and the
Decoma Entities historical financial position and results of operations to give
effect to the transactions discussed below as if such transactions had been
consummated at June 30, 1996, or at the beginning of the period presented.
Florida Panthers Holdings, Inc. (the "Corporation") was formed on July 3,
1996 to enter into an exchange agreement which will be consummated only upon the
closing of a proposed initial public offering (the "Offering") of the
Corporation's Class A Common Stock. Pursuant to the exchange agreement, the
Corporation will acquire all of the partnership interest of the Florida Panthers
Hockey Club, Ltd. (the "Partnership") in exchange for 4,149,710 shares of its
Class A Common Stock and 255,000 shares of its Class B Common Stock.
Additionally, the Corporation will acquire all of the outstanding stock of
Decoma Investment, Inc. I (formerly BIL Development, Inc.), and Decoma
Investment, Inc. II (formerly, Linbeck Miami Corporation), (collectively, "the
Decoma Entities") in exchange for 870,968 shares of its Class A Common Stock.
The Partnership and the Decoma Entities are 100% owned by H. Wayne Huizenga
("HWH"). After the exchange agreements are consummated and the Corporation
closes its initial public offering, HWH will control the Corporation. The
transactions will be accounted for on a historical cost basis in a manner
similar to a pooling of interests.
The pro forma financial statements have been prepared by the Corporation
based on the audited financial statements of the Partnership and the Decoma
Entities as required under the Securities Act, which financial statements are
included elsewhere in this Prospectus. These pro forma financial statements are
not intended to be indicative of the results that would have occurred on the
dates indicated or which may be realized in the future.
THE OFFERING
The pro forma financial statements reflect the Offering and the application
of the net proceeds therefrom, as if the Offering had occurred on June 30, 1996,
or at the beginning of the period presented, as applicable. See "Use of
Proceeds."
F-2
<PAGE> 53
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>
FLORIDA PRO FORMA
PANTHERS FOR THE
HOCKEY THE DECOMA CONTRIBUTION PRO FORMA
CLUB, LTD. ENTITIES OF THE AS ADJUSTED
ACTUAL ACTUAL ACQUISITION DECOMA OFFERING FOR THE
PRO FORMA(A) PRO FORMA(B) ADJUSTMENTS ENTITIES ADJUSTMENTS OFFERING
------------ ------------ ----------- ------------ ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalents....... $ 373 $ 92 $ 465 $ 67,300(c) $22,577
(45,188)(d)
Accounts receivable........ 2,857 331 $ (69)(e) 3,119 3,119
Prepaid expenses and
other................... 172 172 172
------- ---- ---- ------- ------- -------
Total current
assets........... 3,402 423 (69) 3,756 22,112 25,868
Property and equipment,
net........................ 972 972 972
Franchise cost, net.......... 22,489 22,489 22,489
Player contract acquisition
costs, net................. 6,507 6,507 6,507
Capitalized signing
bonuses.................... 4,674 4,674 4,674
Investment in Miami Arena
operating contract......... 8,886 8,886 8,886
Other Assets................. 352 124 476 476
------- ---- ---- ------- ------- -------
Total assets....... $ 38,396 $9,433 $ (69) $ 47,760 $ 22,112 $69,872
======= ==== ==== ======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Deferred revenue........... $ 988 $ 988 $ 988
Accounts payable and
accrued expenses........ 2,235 $ 147 $ (69)(e) 2,313 (188)(d) 2,125
Related party debt......... 20,000 20,000 (20,000)(d)
Current portion of signing
bonuses payable......... 2,167 2,167 2,167
Other...................... 2,146 2,146 2,146
------- ---- ---- ------- ------- -------
Total current
liabilities...... 25,390 2,293 (69) 27,614 (20,188) 7,426
Long-Term Debt............... 25,000 25,000 (25,000)(d)
Deferred Compensation........ 1,867 1,867 1,867
Signing Bonuses Payable...... 1,410 1,410 1,410
Shareholders' Equity......... (15,271) 7,140 (8,131) 67,300(c) 59,169
------- ---- ---- ------- ------- -------
Total liabilities
and shareholders'
equity........... $ 38,396 $9,433 $ (69) $ 47,760 $ 22,112 $69,872
======= ==== ==== ======= ======= =======
</TABLE>
F-3
<PAGE> 54
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
PRO FORMA
FLORIDA FOR THE
PANTHERS CONTRIBUTION PRO FORMA
HOCKEY THE DECOMA OF THE AS ADJUSTED
CLUB, LTD. ENTITIES ACQUISITION DECOMA OFFERING FOR THE
ACTUAL ACTUAL ADJUSTMENTS ENTITIES ADJUSTMENTS OFFERING
---------- ---------- ----------- ------------ ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Tickets..................... $ 23,226 $ $ 23,226 $ 23,226
Television and radio........ 5,141 5,141 5,141
Advertising and
promotions............... 2,192 2,192 2,192
NHL Enterprise Rights....... 885 885 885
Arena operations............ 1,463 $(381)(f) 1,082 1,082
Other....................... 1,561 1,561 1,561
-------- ------ ----- -------- --------
Total revenue....... 33,005 1,463 (381) 34,087 34,087
-------- ------ ----- -------- --------
Cost of Revenue:
Team operations............. 32,639 (381)(f) 32,258 32,258
Ticketing and arena
operations............... 3,700 3,700 3,700
Selling, general and
administrative........... 7,814 557 8,371 8,371
-------- ------ ----- -------- --------
Total cost of
revenue........... 44,153 557 (381) 44,329 44,329
-------- ------ ----- -------- --------
(11,148) 906 (10,242) (10,242)
Amortization of Player
Contracts................... (8,505) (8,505) (8,505)
Amortization of NHL Franchise
and Other................... (640) (640) (640)
Depreciation.................. (282) (314) (596) (596)
-------- ------ ----- -------- --------
Operating Income (loss)....... (20,575) 592 (19,983) (19,983)
Interest, net................. (4,908) (4,908) $ 5,030(g) 122
Minority Interests............ (358) 260(b) (98) (98)
-------- ------ ----- -------- ------ --------
Net Income (loss)............. $ (25,483) $ 234 $ 260 $(24,989) $ 5,030 $ (19,959)
======== ====== ===== ======== ====== ========
Pro Forma Net Loss Per
Share....................... $ (5.79) $ (4.74) $ (1.59)
======== ======== ========
Pro Forma Weighted Average
Shares Outstanding.......... 4,405 5,276 12,576
======== ======== ========
</TABLE>
F-4
<PAGE> 55
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
- ---------------
(a) Reflects the pro forma capitalization of the Corporation giving effect to
the Recapitalization (excluding the contribution of the Decoma Interests),
as if it occurred on June 30, 1996.
(b) Reflects the pro forma capitalization of the Decoma Entities giving effect
to their proposed increase in ownership of the Decoma Venture joint venture
to 99% and the related decrease in the minority interests' share of net
income.
(c) Reflects the receipt of the net proceeds to the Company from the sale of
7,300,000 shares of Class A Common Stock in the Offerings (at an assumed
Initial Public Offering price of $10.00 per share and assumed Concurrent
Offering price of $9.65 per share and after deducting underwriting
discounts and commissions, Placement Agent fee and other estimated offering
expenses).
(d) Reflects the use of the net proceeds of the Offerings to repay borrowings
and accrued interest under the long-term debt and the Related party debt.
(e) Represents the elimination of amounts receivable by the Decoma Entities
from the Panthers.
(f) Represents the elimination of seat use fees paid by the Panthers to the
Decoma Entities.
(g) Represents the elimination of interest expense related to the term loan and
the Related party debt which will be repaid as discussed in note (d) above.
F-5
<PAGE> 56
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Florida Panthers Hockey Club, Ltd.:
We have audited the accompanying balance sheets of Florida Panthers Hockey
Club, Ltd. as of June 30, 1995 and 1996 and the related statements of
operations, partners' deficit and cash flows for each of the three years in the
period ended June 30, 1996. These financial statements are the responsibility of
the Club's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Florida Panthers Hockey
Club, Ltd. as of June 30, 1995 and 1996, and the results of its operations and
its cash flows for each of the three years in the period ended June 30, 1996 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
August 9, 1996 (except with
respect to the matter
discussed in the first
paragraph of Note 7, as to
which the date is September
13, 1996).
F-6
<PAGE> 57
FLORIDA PANTHERS HOCKEY CLUB, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1996
JUNE 30, -------------------------
1995 HISTORICAL PRO FORMA
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalents.................................. $ 1,216,071 $ 373,415 $ 373,415
Accounts receivable................................... 1,249,468 2,857,004 2,857,004
Prepaid expenses and other............................ 247,342 172,144 172,144
----------- ----------- -----------
Total current assets.......................... 2,712,881 3,402,563 3,402,563
Property and Equipment, at cost:
Leasehold improvements................................ 721,299 792,521 792,521
Equipment............................................. 682,934 745,059 745,059
Furniture and fixtures................................ 179,697 186,759 186,759
Less -- Accumulated depreciation and amortization..... (470,233) (752,336) (752,336)
----------- ----------- -----------
Property and equipment, net................... 1,113,697 972,003 972,003
----------- ----------- -----------
Franchise Cost, net of accumulated amortization of
$1,215,600 and $1,823,400 in 1995 and 1996,
respectively.......................................... 23,096,400 22,488,600 22,488,600
Player Contract Acquisition Costs, net of accumulated
amortization of $10,676,045 and $19,180,845 in 1995
and 1996, respectively................................ 15,011,955 6,507,155 6,507,155
Capitalized Signing Bonuses, net of accumulated
amortization of $837,083 and $3,088,750 in 1995 and
1996, respectively.................................... 1,137,917 4,673,750 4,673,750
Other Assets............................................ 429,746 352,191 352,191
----------- ----------- -----------
Total assets $43,502,596 $38,396,262 $38,396,262
=========== =========== ===========
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Deferred revenue...................................... $ 3,916,795 $ 987,624 $ 987,624
Note payable-related party............................ 22,226,388 40,171,756 --
Accounts payable and accrued expenses................. 1,276,427 2,235,243 2,235,244
Related party debt (Note 5)........................... 20,000,000 20,000,000 20,000,000
Current portion of signing bonuses payable............ 400,000 2,167,500 2,167,500
----------- ----------- -----------
Total current liabilities..................... 47,819,610 65,562,123 25,390,368
----------- ----------- -----------
Long-Term Debt (Note 5)................................. 25,000,000 25,000,000 25,000,000
Deferred Compensation................................... 532,600 1,866,899 1,866,899
Signing Bonuses Payable................................. 110,000 1,410,000 1,410,000
Commitments and Contingencies (Notes 3 and 7)
Partners' Deficit, net.................................. (29,959,614) (55,442,760) --
Pro Forma Shareholder's Equity (Note 1):
Class A common stock, $.01 par value, 100,000,000
shares authorized and 4,149,710 shares issued and
outstanding........................................ -- -- 41,497
Class B common stock, $.01 par value, 10,000,000
shares authorized and 255,000 shares issued and
outstanding........................................ -- -- 2,550
Contributed capital................................... -- -- (15,315,052)
----------- ----------- -----------
Total pro forma shareholder's equity.......... -- -- (15,271,005)
----------- ----------- -----------
Total liabilities and partners' deficit $43,502,596 $38,396,262 $38,396,262
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-7
<PAGE> 58
FLORIDA PANTHERS HOCKEY CLUB, LTD.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Tickets........................................ $ 14,784,070 $ 9,558,997 $ 23,226,043
Television and radio........................... 3,163,015 3,717,510 5,140,409
Advertising and promotions..................... 1,533,900 1,296,898 2,192,383
NHL Enterprise rights.......................... 761,000 846,000 885,000
Other, primarily arena concessions............. 1,439,700 911,833 1,560,988
------------ ------------ ------------
Total revenue.......................... 21,681,685 16,331,238 33,004,823
------------ ------------ ------------
Cost of Revenue:
Team operations................................ 17,691,042 15,652,321 32,638,550
Ticketing and arena operations................. 2,498,129 1,742,492 3,700,172
Selling, general and administrative............ 5,512,183 5,350,998 7,814,115
------------ ------------ ------------
Total cost of revenue.................. 25,701,354 22,745,811 44,152,837
------------ ------------ ------------
(4,019,669) (6,414,573) (11,148,014)
------------ ------------ ------------
Amortization of Player Contracts................. (5,592,189) (5,083,856) (8,504,800)
Amortization of NHL Franchise and Other.......... (639,943) (639,943) (639,943)
Depreciation..................................... (211,768) (256,194) (282,103)
------------ ------------ ------------
Operating Loss................................... (10,463,569) (12,394,566) (20,574,860)
------------ ------------ ------------
Other Income (Expense):
Interest income................................ 64,743 37,571 121,863
Interest expense............................... (2,526,751) (3,740,534) (5,030,149)
------------ ------------ ------------
(2,462,008) (3,702,963) (4,908,286)
------------ ------------ ------------
Net Loss......................................... $(12,925,577) $(16,097,529) $(25,483,146)
============ ============ ============
Pro Forma Net Loss Per Share, unaudited (Note
3)............................................. $ (5.79)
============
Pro Forma Shares Outstanding, unaudited (Note
3)............................................. 4,404,710
============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-8
<PAGE> 59
FLORIDA PANTHERS HOCKEY CLUB, LTD.
STATEMENT OF PARTNERS' DEFICIT
<TABLE>
<CAPTION>
FLORIDA
PANTHERS
H. WAYNE HOCKEY CLUB,
HUIZENGA INC. TOTAL
------------ ------------ ------------
<S> <C> <C> <C>
Balance, July 1, 1993............................... $ (927,143) $ (9,365) $ (936,508)
Net loss.......................................... (12,796,321) (129,256) (12,925,577)
------------ --------- ------------
Balance, June 30, 1994.............................. (13,723,464) (138,621) (13,862,085)
Net loss.......................................... (15,936,554) (160,975) (16,097,529)
------------ --------- ------------
Balance, June 30, 1995.............................. (29,660,018) (299,596) (29,959,614)
Net loss.......................................... (25,228,315) (254,831) (25,483,146)
------------ --------- ------------
Balance, June 30, 1996.............................. $(54,888,333) $ (554,427) $(55,442,760)
============ ========= ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-9
<PAGE> 60
FLORIDA PANTHERS HOCKEY CLUB, LTD.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss........................................... $(12,925,577) $(16,097,529) $(25,483,146)
Adjustments to reconcile net loss to net cash used
in operating activities --
Depreciation and amortization................... 6,443,900 5,979,993 9,394,703
Deferred compensation........................... 169,186 363,414 1,334,298
Changes in operating assets and liabilities --
Accounts receivable............................. (1,321,790) 72,322 (1,607,536)
Prepaid expenses and other...................... (220,453) (52,715) 152,753
Capitalized signing bonuses..................... (640,000) (497,917) (3,535,833)
Other assets.................................... (607,857) (55,227) --
Deferred revenue................................ (4,544,681) (574,570) (2,929,171)
Accounts payable and accrued expenses........... 1,402,557 388,667 958,817
Signing bonuses payable......................... 640,000 (130,000) 3,067,500
------------ ------------ ------------
Net cash used in operating activities...... (11,604,715) (10,603,562) (18,647,615)
------------ ------------ ------------
Cash Flows from Investing Activities:
Capital expenditures............................... (1,275,520) (160,799) (140,409)
------------ ------------ ------------
Net cash used in investing activities........... (1,275,520) (160,799) (140,409)
------------ ------------ ------------
Cash Flows from Financing Activities:
Payments on note payable -- related party.......... (5,500,000) (7,200,000) (3,500,000)
Proceeds from note payable -- related party........ 10,749,197 17,733,120 21,445,368
------------ ------------ ------------
Net cash provided by financing activities....... 5,249,197 10,533,120 17,945,368
Net decrease in cash and equivalents............ (7,631,038) (231,241) (842,656)
Cash and Equivalents:
Balance, beginning of period....................... 9,078,350 1,447,312 1,216,071
------------ ------------ ------------
Balance, end of period............................. $ 1,447,312 $ 1,216,071 $ 373,415
============ ============ ============
Supplemental Cash Flow Information:
Cash paid during the year for Interest............. $ 2,510,119 $ 3,460,522 $ 3,750,456
============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-10
<PAGE> 61
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994, 1995 AND 1996
(1) ORGANIZATION AND BASIS OF PRESENTATION
(a) General
Florida Panthers Hockey Club, Ltd. ("Limited" or the "Club") is a Florida
limited partnership which owns and operates the Florida Panthers Hockey Club.
Florida Panthers Hockey Club, Inc. ("FPI"), a Florida corporation, is the
general partner of Limited. Both were formed by H. Wayne Huizenga ("HWH") on
December 2, 1992.
On December 22, 1992, the National Hockey League ("NHL") adopted the 1993
Modified NHL Plan of Sixth Expansion. On April 1, 1993, Limited entered into an
Expansion Membership Agreement with the NHL.
(b) Proposed Initial Public Offering and Proposed Reorganization
The Club has entered into a proposed plan of reorganization which will be
consummated only upon the closing of a proposed initial public offering of the
Class A common stock of Florida Panthers Holdings Inc., a newly formed Florida
Corporation (the "Corporation"). Immediately prior to the proposed public
offering, HWH will contribute the Club's Note Payable-Related Party (including
anticipated accrued interest at the time of conversion) to the partnership,
followed by an exchange of all of the partnership interests for 4,149,710 shares
of the Corporation's Class A common stock and 255,000 shares of the
Corporation's Class B common stock (the "Recapitalization"). Accordingly, the
operations of the Club will henceforth be performed by the Corporation. This
exchange will be accounted for on a historical cost basis in a manner similar to
a pooling of interests and has been reflected in the accompanying pro forma
balance sheet at June 30, 1996.
In addition, immediately prior to the proposed public offering, the
Corporation will acquire all of the outstanding stock of Decoma Investment, Inc.
I (formerly, BIL Development, Inc.) and Decoma Investment, Inc. II (formerly,
Linbeck Miami Corporation) (collectively, the "Decoma Entities") in exchange for
870,968 shares of its Class A common stock. As the Decoma entities are
wholly-owned by HWH, this transaction will be accounted for on a historical cost
basis in a manner similar to a pooling of interests.
(2) PARTNERSHIP ACTIVITIES
Partnership interests of Limited (collectively, the "Partners") from
inception through June 30, 1996 are summarized as follows:
<TABLE>
<S> <C>
General Partner -- FPI................................................. 1%
Limited Partner -- HWH................................................. 99
---
100%
===
</TABLE>
Cash requirements for operating and other activities of the Club are funded
by the Partners and net loss is allocated in accordance with the terms of the
Amended and Restated Partnership Agreement dated April 5, 1993.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Pro Forma Net Loss Per Share
Pro forma net loss per share is calculated assuming that the 4,404,710
shares of the Corporation's common stock to be outstanding upon consummation of
the Recapitalization described in Note 1 were outstanding at the beginning of
the period presented.
F-11
<PAGE> 62
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(b) Cash and Equivalents
Cash and equivalents consist primarily of cash in banks and highly-liquid
investments with original maturities of 90 days or less.
(c) Note Payable -- Related Party
Note payable-related party represents a short-term borrowing of cash
required for working capital from HWH. Such note bears interest at prime (8.25%
at June 30, 1996) and is required to be repaid on demand.
(d) Property and Equipment
Property and equipment is recorded at cost. Depreciation and amortization
have been computed using the straight-line method over the following estimated
useful lives:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Leasehold improvements................................................ 5-20
Furniture, fixtures and equipment..................................... 5-7
</TABLE>
(e) Franchise Costs
The Club was required to pay a $50,000,000 franchise fee to the NHL, of
which $25,688,000 was allocated to the contracts of players selected in the 1993
expansion draft. The allocation was based upon the fair value of the player
contracts acquired as determined by an independent appraisal firm. The portion
allocable to player contracts is being amortized on a straight-line basis over
the estimated useful lives of the contracts which has been determined to be
approximately 6 years. The remaining portion of the franchise fee is classified
as Franchise costs in the accompanying balance sheets and is being amortized on
a straight-line basis over a 40 year life. For the fiscal years ended June 30,
1994, 1995 and 1996, the Club amortized $5,592,189, $5,083,856 and $8,504,800,
respectively, in player contract acquisition costs. The amortization for the
fiscal years ended June 30, 1994, 1995 and 1996 includes $1,469,971, $961,638
and $4,899,630 respectively, related to the write-off of unamortized player
contract costs due to the outright release of certain players and the
write-downs of contracts of active players to reflect reductions in remaining
value.
The Club accounts for trades of player contracts as like-kind exchanges,
whereby the recorded basis of the contract of the acquired player(s) is equal to
the net book value of the contract of the traded player(s) plus or minus any
cash consideration.
The Club continually evaluates whether events and circumstances have
occurred that indicate that the remaining estimated useful life of intangible
assets, such as franchise cost and player contract acquisition costs, may
warrant revision or that the remaining balance of the intangible asset may not
be recoverable. If factors indicate that the franchise cost or player contract
acquisition costs may be impaired, the Club uses an estimate of the remaining
value of the franchise rights or the individual player's contract in measuring
whether the intangible asset is recoverable. Unrecoverable amounts are charged
to operations in the applicable period.
The Club is required to implement the Financial Accounting Standards
Board's ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" in its fiscal year ended June 30, 1997. As the Club currently
continually evaluates the realizability of its long-lived assets, adoption of
the statement is not anticipated to have a material effect on the Company's
financial statements at the date of adoption.
F-12
<PAGE> 63
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(f) Player Contract Costs
Player contract costs are expensed in the year paid. Signing bonuses are
amortized over the life of the player contract. Such signing bonuses expensed
totaled approximately $220,000, $617,000 and $2,251,700 in the years ended June
30, 1994, 1995 and 1996 respectively, and have been included in Team operations
in the accompanying statements of operations.
Employment contracts with certain players require future compensation under
certain circumstances. Generally, these contracts are executory in nature;
accordingly, related payments are charged to operations over the contract
playing seasons.
The Club has obtained disability insurance policies for several of its
players under multi-year contracts. Benefits would become payable after thirty
consecutive games were missed by the insured player. The policies provide
payment of a portion of the player's salary for the remaining term of the
contract or until the player can resume playing.
(g) Deferred Revenue
Deferred revenue as of June 30, 1994, 1995 and 1996 consists primarily of
payments for ticket purchases for the respective upcoming seasons. Ticket
revenue is recognized as the underlying games are played.
(h) Income Taxes
Limited, as a partnership, is not subject to income taxes. Accordingly, no
income tax provision or benefit has been recognized in the accompanying
financial statements. On a pro forma basis (see Note 1), the Corporation would
have no income tax provision due to the Club's losses.
The Corporation, as of the date of the Recapitalization, will adopt the
provisions of SFAS No. 109, "Accounting for Income Taxes". SFAS No. 109
requires, among other things, recognition of future tax benefits measured at
enacted rates attributable to the deductible temporary differences between the
financial statement and income tax bases of assets and liabilities and net
operating loss carryforwards to the extent that the realization of said benefits
is "more likely than not". The adoption of SFAS No. 109 is not expected to have
a material impact on the financial position or results of operations of the
Corporation.
(i) Concession Agreement
Certain unrelated third party companies have the rights, at home games, to
sell consumable and non-consumable concessions. These rights were granted by
Leisure Management Miami, Inc. ("LMMI"), the manager of the Miami Arena (the
"Arena"). The Club is entitled to effectively receive amounts ranging from 7% to
35% of the hockey net consumable and non-consumable concessions income. The Club
recorded $763,651, $363,401 and $832,303 for the years ended June 30, 1994, 1995
and 1996 respectively, in hockey net consumable and non-consumable concessions
income. Such amounts have been included as a component of Other revenue in the
accompanying statements of operations.
(j) Television and Radio Agreements
In August 1996, the Club entered into a letter of intent with SportsChannel
Florida ("SportsChannel") for the local broadcast of the Panthers' games. HWH
currently owns 50% of SportsChannel and he holds an option to purchase an
additional 20% ownership interest of SportsChannel. Under the terms of this
letter of intent, the Company shall grant to SportsChannel broadcast rights
(other than radio broadcast rights) to all of the Panthers' pre-season, regular
season and certain post-season away games during the 1996-97 season. The letter
of intent may be extended for an additional season upon notice by the Club. The
obligations of the Club
F-13
<PAGE> 64
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
and SportsChannel are subject to the negotiation of a definitive agreement.
There can be no assurance that the Club and SportsChannel will enter into a
definitive agreement.
In addition, the Club entered into a letter of intent with Sunshine
Wireless Company Inc. ("Sunshine") for the local radio broadcast of all of the
Panthers' games. Under the terms of this letter of intent, Sunshine will have
local radio broadcast rights to all of the Panthers' pre-season, regular season
and post-season games during the 1996-97 season.
(k) Advertising Agreements
The Club has entered into multi-year agreements with several sponsors for
advertising and promotional activities. Such agreements expire at various dates
through June 30, 1998. The Club recognizes this revenue on a pro-rata basis over
the term of the underlying agreements.
(l) Fair Value of Financial Instruments
As of June 30, 1995 and 1996, the carrying amount of cash and equivalents,
accounts receivable, note payable-related party, accounts payable and accrued
expenses and long-term debt are reflected in the financial statements at cost
which approximates fair value.
(m) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(n) Presentation
Certain amounts in the accompanying financial statements have been
reclassified to conform with the current year presentation.
(o) Stock-Based Compensation
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation". Under the provisions of SFAS No. 123, companies can either
measure the compensation cost of equity instruments issued under employee
compensation plans using a fair value based method, or can continue to recognize
compensation cost using the intrinsic value method under the provisions of
Accounting Principles Board Opinion ("APB") No. 25. However, if the provisions
of APB No. 25 are continued, pro forma disclosures of net income or loss and
earnings or loss per share must be presented in the financial statements as if
the fair value method had been applied. The Corporation intends to recognize
compensation costs under the provisions of APB No. 25, and upon adoption of SFAS
No. 123 as of July 1, 1996, will provide the expanded disclosure required by
SFAS No. 123. As of August 9, 1996, a stock option plan had not yet been
formalized.
(4) RELATED PARTY TRANSACTIONS
During the year ended June 30, 1994, certain private corporate aircraft
owned by Huizenga Holdings, Inc. ("HHI", a corporation whose sole shareholder is
HWH) and its subsidiaries were leased by the Club. To the extent that such
aircraft was used by Club employees, the actual operating and overhead costs
related to such aircraft was charged back to the Club based on its pro-rata
share of flight hours used during any given month. The Club incurred $94,613 of
such charges in the year ended June 30, 1994. No such related party charges were
incurred during the years ended June 30, 1995 and 1996.
F-14
<PAGE> 65
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During fiscal 1995, HWH purchased an ownership interest in LMMI through
which HWH obtained operational control of the Arena, subject to prior
contractual restrictions.
The Club pays a management fee to HHI equal to 1% of total revenue,
excluding all NHL national television revenue and NHL Enterprise rights. Such
fees totaled $193,576, $132,339 and $293,239 for the years ended June 30, 1994,
1995 and 1996, respectively, and are reflected as a component of Selling,
general and administrative expenses in the accompanying statements of
operations.
During 1994, 1995 and 1996, the Club incurred interest expense of
$1,364,624, $2,306,986 and $3,448,136, respectively, to related parties.
(5) RELATED PARTY AND LONG-TERM DEBT
In June 1993, Limited entered into a $25,000,000 revolving credit facility
with a bank for the purpose of financing a portion of the $50,000,000 NHL
franchise fee and to obtain working capital for use by Limited. The credit
facility was subsequently converted to a $25,000,000 term loan. The Club is
required to make quarterly interest payments through June 30, 1997 and quarterly
principal and interest payments commencing July 1, 1997 and expiring May 31,
2001. The interest rate is LIBOR plus .75 percent per annum (6.34% at June 30,
1996).
In connection with this term loan, the Club is required to maintain
compliance with certain financial and other covenants. Substantially all of the
assets of the Club have been pledged as collateral and HWH has provided a
guaranty of the obligations related to this term loan.
In June 1993, Limited entered into an agreement with an affiliate, Panthers
Investment Venture ("PIV"), whereby Limited borrowed $20,000,000 bearing
interest at LIBOR plus .75 percent per annum (6.34% at June 30, 1996). This note
was issued contemporaneously with and with terms similar to a promissory note
issued by PIV to a bank. PIV was a joint venture between HWH and Blockbuster
Entertainment Corporation ("BEC"). However, during fiscal 1996, the terms of the
joint venture agreement were modified such that BEC was no longer a party to the
venture. PIV's note payable to the bank is guaranteed by HWH. This note is
subordinated to the $25,000,000 term loan discussed above and the Club is
required to make monthly interest payments until the note becomes payable on
September 1, 1996.
The Club paid a commitment fee of $225,000 in connection with disbursements
under these long-term debt arrangements. This amount has been capitalized as
Other assets in the accompanying balance sheets and is being amortized over the
period of the debt.
The Club has entered into a series of interest rate swap agreements which
synthetically fix the interest rates on the long-term debt agreements at 5.19%
and 4.85% for the $25,000,000 term loan and the $20,000,000 PIV note payable,
respectively. The Club accounts for these agreements as a hedge against the risk
of future increases in interest rates. For the years ended June 30, 1994, 1995
and 1996 the Club recognized net interest (expense) income of ($143,075),
$265,930 and $353,474 respectively, as a result of entering into these interest
rate swap agreements.
As of June 30, 1996, the scheduled principal payments on the outstanding
debt are as follows:
<TABLE>
<S> <C>
1997............................................................................ $20,000,000
1998............................................................................ 2,500,000
1999............................................................................ 2,500,000
2000............................................................................ 2,500,000
Thereafter...................................................................... 17,500,000
-----------
Total................................................................. $45,000,000
===========
</TABLE>
F-15
<PAGE> 66
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6) EMPLOYEE BENEFIT PLANS
The Club's NHL Hockey players are covered under the NHL Club Pension Plan
and Trust (the "Plan") which is administered by the NHL and represents a
multi-employer defined contribution plan. The Club contributions to the Plan
totaled $183,564, $89,379 and $179,606 for the years ended June 30, 1994, 1995
and 1996, respectively. Such contributions are included in Team operations in
the accompanying statements of operations.
Certain of the Club's employees are participants in a 401(k) Savings and
Retirement Plan (the "401(k)"), a defined contribution plan for non-players. The
401(k) is available to employees over the age of 21 with at least one year of
service who work a minimum of 1,000 hours per year. Game day arena employees are
ineligible to participate in the 401(k). The Club may match a discretionary
percentage of the amount contributed by the participant up to a limit of 6% of
annual compensation. Employees may contribute up to 10% of their annual
compensation. Participants are automatically vested in compensation deferrals.
Vesting in Club matching contributions is at the rate of 20% after one year of
plan participation, 40% after two years, 60% after three years, 80% after four
years and 100% after five years. The Club did not make a discretionary
contribution in 1994, 1995 or 1996.
Through March 31, 1995, the Club's employees other than players and coaches
were covered under a self-insured group health plan sponsored by HHI. The Club
fully reimbursed the third-party administrator for its actual billed cost,
including the cost of all paid claims for all Club employees other than coaches
and players. Beginning April 1, 1995 the Club obtained commercial insurance
coverage to cover such employees' health care costs for which employees make
partial contributions. Players and coaches are covered under the NHL Medical and
Dental Plan administered by the NHL, for which the Club pays 100% of the
premiums.
(7) COMMITMENTS AND CONTINGENCIES
Since its inception, the Club has been a party to a license agreement with
LMMI for the use of the Arena, for its home games. In May 1996, the Company
entered into an amendment to the lease for the Miami Arena (the "Lease
Agreement"), extending the term of the lease (which was scheduled to expire at
the end of the 1995-96 season) to July 31, 1998, with two one-year options for
the 1998-99 season and the 1999-2000 season. The Lease Agreement contained
substantially the same economic terms as the Miami Arena lease and was subject
to approval of Miami Sports and Exhibition Authority ("MSEA"). In June 1996,
MSEA rejected the Lease Agreement and demanded that the Panthers vacate the
Miami Arena. Subsequently, the Company sought and obtained a preliminary
injunction enjoining MSEA from taking actions to prevent the Panthers from
utilizing the Miami Arena pursuant to the Lease Agreement. MSEA has indicated
that it plans to appeal the decision rendered by the court. In the event MSEA is
ultimately successful in its appeal, the Company will need to find and enter
into a lease for an alternative playing site (within or outside of Florida)
until such time as the Broward County Civic Arena is completed. There can be no
assurance that the Company will be able to find and enter into a lease for an
alternative playing site.
The terms of the license and the related agreements provide for the Club to
pay minimum rent of $9,000 per home game, a seat use charge of $.75 per ticket
sold and 7.5% of gross ticket sales proceeds over $200,000 per season plus
utilities, staffing and other operating expenses. For the years ended June 30,
1994, 1995 and 1996, rent expense for the lease of the Arena was $1,173,181,
$729,382 and $1,787,795, respectively.
The Club has entered into employment agreements with various player and
non-player employees which expire at various dates through June of 1999. As of
June 30, 1996, the terms of these employment agreements require future payments,
excluding bonuses, as follows:
F-16
<PAGE> 67
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
FISCAL
------------------------------------------------------------
<S> <C>
1997........................................................ $17,757,121
1998........................................................ 11,351,083
1999........................................................ 2,013,049
-----------
$31,121,253
===========
</TABLE>
In June 1996, the Club entered into a license agreement for the use of the
Broward County Civic Arena (the "Broward License Agreement"). In connection
therewith, Broward County will receive revenue (the "County Preferred Revenue")
from the operations of the Broward County Civic Arena for an amount to be
determined concurrent with the issuance of the bonds. The Corporation has
provided Broward County a guaranty pursuant to which the Corporation will be
obligated to pay Broward County the County Preferred Revenue Obligation. The
Corporation believes that the revenue generated from the operations of the
Broward County Civic Arena will be sufficient to provide Broward County with the
County Preferred Revenue. The Broward License Agreement commences upon the
completion of construction of the Broward County Civic Arena, which is currently
scheduled for October 1, 1998; however, the commencement of the Broward License
Agreement may be deferred by the Club until the following NHL hockey season in
the event the Broward County Civic Arena is completed between March 1 and July
1, 1999. Once commenced, the Broward License Agreement is for a term of 30
years, which may be extended for five year periods, subject to certain
conditions, pursuant to options granted to the Club by Broward County.
The Broward License Agreement entitles the Club to exclusive use of the
Broward County Civic Arena during the playing of all its home games, and
provides for nonexclusive use by the Club for practices and other team uses.
Additionally, the License Agreement provides the Club with exclusive use of
certain spaces within the Broward County Civic Arena to be used for a retail
store, offices, a box office, a locker room and a training and weight room. The
Broward License Agreement contains a use covenant which requires the Club to
play all of its home games at the Broward County Civic Arena during the term of
the Broward License Agreement.
Pursuant to the Broward License Agreement, the Club is entitled to receive
all revenues from the sale of (i) general seating ticket sales for its home
games to be played at the Broward County Civic Arena, (ii) non-consumable
concession items at the Broward County Civic Arena during its home games, (iii)
items in the Club's retail store to be located within the Broward County Civic
Arena, (iv) (in conjunction with and subject to the rights of the NHL) the
rights to all television and radio and other media broadcasting rights for
hockey related events at the Broward County Civic Arena, (v) advertising within
or on certain designated locations at the Broward County Civic Arena during
hockey related events and (vi) Panthers' related sponsorships or NHL league-wide
sponsorships. In addition, the Club is entitled to receive the first $14 million
of "net operating income" generated by the Broward County Civic Arena and 80%
with Broward County receiving 20% of all net operating income generated by the
Broward County Civic Arena in excess of $14 million. "Net operating income" is
defined to include revenues from building naming rights fees, food and beverage
concessions, parking, non-hockey related advertising and all other revenues
generated from non-hockey related events offset by certain arena operating and
financing costs.
The Club is obligated to pay rent in the amount of $7,500 per home game
played by the Panthers at the Broward County Civic Arena and to pay certain
utility and event staffing expenses, but the combined amounts payable by the
Club under the Broward License Agreement will not exceed 5% of the gross
receipts from the sale of general seating tickets to the Panthers' home games.
F-17
<PAGE> 68
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder of Decoma Investment, Inc. I (formerly,
BIL Development, Inc.) and Decoma Investment, Inc. II
(formerly, Linbeck Miami Corporation):
We have audited the accompanying combined statements of income,
shareholder's equity, and cash flows of Decoma Investment, Inc. I (formerly, BIL
Development, Inc.), and Decoma Investment, Inc. II (formerly, Linbeck Miami
Corporation) (collectively, the "Decoma Entities") for the period from January
1, 1994 to August 5, 1994. These financial statements are the responsibility of
the Companies' management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Decoma
Investment, Inc. I (formerly, BIL Development, Inc.) and Decoma Investment, Inc.
II (formerly, Linbeck Miami Corporation) for the period from January 1, 1994 to
August 5, 1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
July 3, 1996.
F-18
<PAGE> 69
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder of Decoma Investment, Inc. I (formerly,
BIL Development, Inc.) and Decoma Investment, Inc. II
(formerly, Linbeck Miami Corporation):
We have audited the accompanying combined balance sheet of Decoma
Investment, Inc. I (formerly, BIL Development, Inc.) and Decoma Investment, Inc.
II (formerly, Linbeck Miami Corporation) (collectively, the "Decoma Entities")
as of December 31, 1994 and 1995, and the related combined statements of income,
shareholder's equity and cash flows for the period from August 6, 1994 to
December 31, 1994 and the year ended December 31, 1995. These financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Decoma Investment,
Inc. I (formerly, BIL Development, Inc.) and Decoma Investment, Inc. II
(formerly, Linbeck Miami Corporation) at December 31, 1994 and 1995, and the
results of their operations and their cash flows for the period from August 6,
1994 to December 31, 1994 and the year ended December 31, 1995, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
July 3, 1996.
F-19
<PAGE> 70
THE DECOMA ENTITIES
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1996
DECEMBER 31, ------------------------
----------------------- PRO FORMA
1994 1995 HISTORICAL (NOTE 1(B))
---------- ---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and equivalents.......................... $ 189,798 $ 201,011 $ 92,437 $ 92,437
Accounts receivable........................... 826,154 789,179 262,181 262,181
Receivable from related party................. -- 68,650 68,742 68,742
---------- --------- --------- ----------
Total current assets.................. 1,015,952 1,058,840 423,360 423,360
Investment in Miami Arena Operating Contract,
net of accumulated amortization of $1,126,131,
$1,436,315, $1,591,407 (unaudited) and
$1,731,623 (unaudited) in 1994, 1995, 1996,
and 1996 pro forma, respectively.............. 7,624,948 7,314,761 7,159,669 8,885,907
Other assets.................................... 125,436 130,961 123,683 123,681
---------- ---------- ---------- ----------
Total assets.......................... $8,766,336 $8,504,562 $7,706,712 $ 9,432,948
========== ========== ========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable and accrued liabilities...... $ 115,912 $ 143,951 $ 146,787 $ 146,787
Minority interests.............................. 3,381,562 3,267,333 2,820,501 2,146,306
---------- ---------- ---------- ----------
Commitments and Contingencies (Notes 3 and 6)
Shareholder's equity............................ 5,268,862 5,093,278 4,739,424 7,139,855
---------- ---------- ---------- ----------
Total liabilities and shareholder's
equity.............................. $8,766,336 $8,504,562 $7,706,712 $ 9,432,948
========== ========== ========== ==========
</TABLE>
The accompanying notes to combined financial statements are an integral part of
these balance sheets.
F-20
<PAGE> 71
THE DECOMA ENTITIES
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
PREDECESSOR
(NOTE 1) THE COMPANIES
--------------- -----------------------------------------------------------
PERIOD FROM PERIOD FROM SIX MONTHS ENDED
JANUARY 1, 1994 AUGUST 6, 1994 JUNE 30,
TO TO YEAR ENDED -------------------
AUGUST 5, 1994 DECEMBER 31, 1994 DECEMBER 31, 1995 1995 1996
--------------- ----------------- ----------------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Arena Management Revenue...... $ 1,581,984 $ 675,756 $ 1,626,078 $924,488 $761,826
Operating Expenses
Management fees............. 84,204 51,632 121,539 70,835 57,881
General and
administrative........... 73,565 41,986 114,584 54,471 388,264
Depreciation and
amortization............. 95,592 130,826 313,995 155,092 155,092
---------- -------- ---------- -------- --------
Total operating
expenses.......... 253,361 224,444 550,118 280,398 601,237
---------- -------- ---------- -------- --------
Net income before
income taxes and
minority
interest.......... 1,328,623 451,312 1,075,960 644,090 160,589
Minority interests............ 774,233 235,482 683,590 424,384 98,949
---------- -------- ---------- -------- --------
Net income.................... 554,390 215,830 392,370 219,706 61,640
Pro forma income tax provision
(Note 5).................... 216,212 84,173 153,024 85,685 24,040
---------- -------- ---------- -------- --------
Pro forma net income after
income taxes................ $ 338,178 $ 131,657 $ 239,346 $134,021 $ 37,600
========== ======== ========== ======== ========
</TABLE>
The accompanying notes to combined financial statements are an integral part of
these statements.
F-21
<PAGE> 72
THE DECOMA ENTITIES
COMBINED STATEMENT OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL PAID-IN
------------------------- CAPITAL RETAINED EARNINGS
(1) (2) ------------------------- -------------------------
DECOMA DECOMA DECOMA DECOMA DECOMA DECOMA
INVESTMENT, INVESTMENT, INVESTMENT, INVESTMENT, INVESTMENT, INVESTMENT,
INC. I INC. II INC. I INC. II INC. I INC. II TOTAL
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Predecessor (Note 1)
Balance as of January 1,
1994.................... $ 1,000 $ 1,000 $ 1,104,288 $ 1,104,288 $ (198,754) $ (198,754) $ 1,813,068
Net income.............. -- -- -- -- 277,195 277,195 554,390
Distributions........... -- -- -- -- (248,952) (248,952) (497,904)
------ ------ ---------- ---------- ---------- ---------- ----------
Balance as of
August 5,
1994........... $ 1,000 $ 1,000 $ 1,104,288 $ 1,104,288 $ (170,511) $ (170,511) $ 1,869,554
====== ====== ========== ========== ========== ========== ==========
The Companies
Capital contribution.... $ 1,000 $ 1,000 $ 2,749,000 $ 2,749,000 $ -- $ -- $ 5,500,000
Net income.............. -- -- -- -- 107,915 107,915 215,830
Distributions........... -- -- -- -- (223,484) (223,484) (446,968)
------ ------ ---------- ---------- ---------- ---------- ----------
Balance as of
December 31,
1994........... 1,000 1,000 2,749,000 2,749,000 (115,569) (115,569) 5,268,862
Net income.............. -- -- -- -- 196,185 196,185 392,370
Distributions........... -- -- -- -- (283,977) (283,977) (567,954)
------ ------ ---------- ---------- ---------- ---------- ----------
Balance as of
December 31,
1995........... 1,000 1,000 2,749,000 2,749,000 (203,361) (203,361) 5,093,278
Net income
(unaudited)........... -- -- -- -- 30,820 30,820 61,640
Distributions
(unaudited)........... -- -- -- -- (207,747) (207,747) (415,494)
------ ------ ---------- ---------- ---------- ---------- ----------
Balance as of
June 30, 1996
(unaudited).... $ 1,000 $ 1,000 $ 2,749,000 $ 2,749,000 $ (380,288) $ (380,288) $ 4,739,424
====== ====== ========== ========== ========== ========== ==========
</TABLE>
- ---------------
(1) Par value $1.00, 100,000 shares authorized, 1,000 shares issued and
outstanding for all periods.
(2) Par value $0.10, 100,000 shares authorized, 10,000 shares issued and
outstanding for all periods.
The accompanying notes to combined financial statements are an integral part of
these statements.
F-22
<PAGE> 73
THE DECOMA ENTITIES
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANIES
----------- -----------------------------------------------------
PERIOD FROM PERIOD FROM
JANUARY 1, AUGUST 6, SIX MONTHS ENDED
1994 TO 1994 TO YEAR ENDED JUNE 30,
AUGUST 5, DECEMBER 31, DECEMBER 31, -----------------------
1994 1994 1995 1995 1996
----------- ------------ ------------ ----------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating
Activities
Net income...................... $ 554,390 $ 215,830 $ 392,370 $ 219,706 $ 61,640
Adjustments to reconcile net
income to net cash provided
by operating activities --
Depreciation and
amortization............... 95,592 130,826 313,995 155,092 155,092
Minority interest............ 774,233 235,482 683,590 424,384 98,949
Changes in operating assets and
liabilities --
Receivables.................. (428,455) 216,490 (31,675) 150,819 526,906
Other assets................. (15,730) (5,422) (9,333) 7,064 7,278
Accounts payable and accrued
liabilities................ 9,674 75,604 28,039 (16,739) 2,836
----------- --------- ----------- ----------- ---------
Net cash provided by
operating
activities............ 989,704 868,810 1,376,986 940,326 852,701
Cash Flows from Financing
Activities
Payment of dividends............ (497,904) (446,968) (567,954) (430,016) (415,494)
Distributions to minority
interests.................... (546,175) (236,702) (797,819) (679,349) (545,781)
----------- --------- ----------- ----------- ---------
Net cash used in
financing
activities............ (1,044,079) (683,670) (1,365,773) (1,109,365) (961,275)
----------- --------- ----------- ----------- ---------
Net increase (decrease) in
cash and equivalents....... (54,375) 185,140 11,213 (169,039) (108,574)
----------- --------- ----------- ----------- ---------
Cash and Equivalents
Balance, beginning of period...... 59,033 4,658 189,798 189,798 201,011
----------- --------- ----------- ----------- ---------
Balance, end of period............ $ 4,658 $ 189,798 $ 201,011 $ 20,759 $ 92,437
=========== ========= =========== =========== =========
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these statements.
F-23
<PAGE> 74
THE DECOMA ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995 AND
JUNE 30, 1995 AND 1996 (UNAUDITED)
(1) ORGANIZATION
(a) General
Decoma Investment, Inc. I (formerly, BIL Development, Inc.) ("Decoma I")
and Decoma Investment, Inc. II (formerly, Linbeck Miami Corporation) ("Decoma
II") are Texas corporations which collectively represent 66 2/3% of the
partnership interests of Decoma Venture. Decoma Venture and its majority-owned
subsidiaries, Decoma Limited ("Limited") and Decoma Miami Associates, Limited
("DMAL") are hereinafter collectively referred to as "Venture". Decoma I and
Decoma II (collectively, the "Companies" or the "Decoma Entities") are engaged
in the business of operating the Miami Arena (the "Arena"). The Arena is the
home venue for the National Hockey League's Florida Panthers and the National
Basketball Association's Miami Heat.
On August 6, 1994, (the "Acquisition Date") all of the outstanding capital
stock of Decoma I and Decoma II was acquired by H. Wayne Huizenga ("HWH") for
approximately $5.5 million. Prior to this period, Decoma I and Decoma II were
owned by unrelated third parties (the "Predecessor"). The acquisition was
accounted for under the purchase method of accounting. Accordingly, the purchase
price was allocated to the net assets acquired based on their estimated fair
values at the date of acquisition as follows:
<TABLE>
<S> <C>
Purchase price.......................................................... $ 5,500,000
===========
Minority interest and working capital................................... $(2,360,558)
Investment in Miami Arena Operating Contract............................ 7,754,558
Other................................................................... 106,000
-----------
Total......................................................... $ 5,500,000
===========
</TABLE>
The accompanying combined financial statements represent the combined
accounts of the Companies. All significant intercompany amounts and transactions
have been eliminated.
(b) Proposed Reorganization
The Florida Panthers Hockey Club, Ltd. (the "Panthers"), an entity owned by
HWH, has entered into a proposed plan of reorganization which will be
consummated only upon the closing of a proposed initial public offering ("IPO")
of the Class A common stock of Florida Panthers Holdings, Inc., a newly formed
Florida Corporation (the "Corporation"). In accordance with the terms of the
proposed IPO, HWH will contribute all of the common stock of the Companies to
the Panthers and, in return, will receive 870,968 shares of Class A common stock
of the Corporation. As of July 3, 1996 the plan of reorganization and IPO had
not been consummated.
Since the Acquisition Date, Decoma I, Decoma II, and Decoma Investment,
Inc. III (formerly, HSA Management, Inc.) ("Decoma III" an entity wholly-owned
by HWH) have each owned 33 1/3% of the partnership interests of Venture. In
connection with the proposed reorganization discussed above, immediately prior
to the completion of the IPO, Decoma III will transfer all of its ownership of
Venture, except for a 1% interest, to Decoma II. As this transfer will be among
entities under common control, it will be accounted for on a historical cost
basis, in a manner similar to a pooling of interests and has been reflected in
the accompanying pro forma balance sheet at June 30, 1996.
F-24
<PAGE> 75
THE DECOMA ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Cash and equivalents
Cash and equivalents consist primarily of cash in banks and highly-liquid
investments with original maturities of 90 days or less.
(b) Investment in Miami Arena Operating Contract
Amounts invested in the Miami Arena operating contract (the "MAC") have
been reflected as Investment in Miami Arena operating contract in the
accompanying combined balance sheets. Such amounts are being amortized using the
straight-line method over the remaining term of the MAC (see Note 3).
(c) Revenue Recognition
Arena management revenue is recognized as earned, in accordance with the
terms of the MAC (see Note 3).
(d) Fair Value of Financial Instruments
As of December 31, 1994 and 1995, the carrying amount of cash and
equivalents, accounts receivable, accounts payable and accrued expenses and
minority interest approximates fair value due to the short-term nature of these
instruments.
(e) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(f) Long-Lived Assets
The Companies are required to implement the Financial Accounting Standards
Board's ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" in their fiscal year ending December 31, 1996. As the Companies
currently evaluate the realizability of their long-lived assets, adoption of the
statement is not anticipated to have a material effect on the Companies'
combined financial statements at the date of adoption.
(g) Interim Financial Data
In the opinion of the management of the Companies, the accompanying
unaudited combined financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the financial
position of the Companies as of June 30, 1996, and the results of operations for
the six month periods ended June 30, 1995 and 1996. The results of operations
and cash flows for the six month period ended June 30, 1996 are not necessarily
indicative of the results of operations or cash flows which may be reported for
the remainder of 1996.
(3) THE MIAMI ARENA
The Arena is owned by the Miami Sports and Exhibition Authority ("MSEA"),
an agency of the City of Miami. Under the terms of the MAC between MSEA and
DMAL, DMAL was engaged to operate the Arena. The MAC is scheduled to expire on
July 8, 2020. Under the terms of a separate agreement between
F-25
<PAGE> 76
THE DECOMA ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
the Companies and Leisure Management Miami, Inc. ("LMMI"), LMMI was engaged to
manage the operations of the Arena, including rental of space, advertising,
promotion, marketing, events management, box office, public relations and all
custodial and support services. During 1994, subsequent to the execution of the
MAC, approximately 50% of LMMI was acquired by HWH.
A summary of certain terms of the MAC is presented below:
(a) Operating Income (Loss)
Under the terms of the MAC, the Arena's operating income (as defined by the
MAC) is used to fund certain expenses, and required payments before any
distributions are made to DMAL and MSEA.
(b) Seat Use Fee
In accordance with the terms of the MAC, a $.75 to $1.00 seat use fee is
collected by the Arena as part of the purchase price of all tickets sold. This
charge is remitted quarterly to DMAL and MSEA based on percentages detailed in
the MAC and is recognized by the Decoma Entities in the period during which the
amount of such fees has been estimated and is determined to be collectible.
(c) Operating Payment
Under the terms of the MAC, DMAL is to receive a management fee from the
Arena consisting of a fixed and variable operating payment. The fixed operating
payment is based on an annual amount of $275,000, as adjusted for inflation. The
variable operating payment is calculated as defined in the MAC, based upon the
revenues of the Arena. In accordance with the terms of the MAC, the variable
operating payment is made only after the Arena's operating income (as defined in
the MAC) has been used to fund certain operating expenses and required payments.
Any unpaid management fees are deferred up to a maximum of $1,000,000. DMAL is
not entitled to recover any unpaid management fees in excess of $1,000,000. The
Decoma Entities recognize variable operating payments as revenue in the period
during which the amount of such payments has been determined and the
collectibility is considered to be probable.
(4) MINORITY INTERESTS
As discussed in Note 1 above, 33 1/3% of the partnership interests of
Venture are owned by Decoma III. Additionally, Limited and DMAL are organized as
limited partnerships of which 25% and 13%, respectively, are owned by unrelated
third parties (the "Limited Partners"). For financial reporting purposes, the
assets, liabilities, results of operations and cash flows of Venture, Limited
and DMAL are included in the accompanying combined financial statements and
Decoma III's interest in Venture and the Limited Partners' interests in Limited
and DMAL have been reflected as Minority interests.
(5) INCOME TAXES
Decoma I and Decoma II are organized as S corporations under provisions of
the Internal Revenue Code. Accordingly, taxable income of the Companies is
reported in the tax returns of the individual shareholder of the Companies. The
pro forma income tax provision in the accompanying combined statement of
operations is presented for informational purposes as if the operations of the
Decoma Entities were C corporations during the years presented. Pro forma taxes
have been computed based on an overall estimated effective rate of 39%.
F-26
<PAGE> 77
THE DECOMA ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(6) RELATED PARTY TRANSACTIONS
Leisure Management Miami, Inc.
The Companies through DMAL, are parties to a contract with LMMI, an entity
controlled by HWH, whereby LMMI provides certain management services to the
Companies related to the operation of the Arena.
Florida Panthers Hockey Club, Ltd.
In accordance with the terms of the MAC, the Companies received seat use
fees of $224,560, $7,481 and $426,145 during the period from January 1, 1994 to
August 5, 1994, the period from August 6, 1994 to December 31, 1994 and the year
ended December 31, 1995, respectively, and $238,846 and $308,267 for the 6
months ended June 30, 1995 and 1996, respectively, from its affiliate, the
Panthers.
During 1995, the Companies purchased certain fixed assets on behalf of the
Panthers in the amount of $68,650. Such amount has been reflected as receivable
from related party in the accompanying combined balance sheet.
(7) SUBSEQUENT EVENTS
(a) New Arena
During 1996, the City of Miami announced that it intends to build a new
arena (the "New Arena") which will be utilized primarily by the Miami Heat. Upon
its completion, the New Arena will compete with the Arena for the rights to host
various events, including sports events and concerts. There can be no assurance
that the Arena can successfully compete with the New Arena. In the event the
Arena is unable to attract the various sports and non-sports events, the results
of operations of the Decoma Entities will be adversely affected.
(b) Broward County Civic Arena
In addition, Broward County, Florida and an affiliate of HWH announced that
it also intends to build a new, state-of-the-art arena (the "Broward County
Civic Arena") which will be utilized primarily by the Panthers. Upon its
completion, the Broward County Civic Arena will be approximately 40 miles from
the Arena. Management of the Companies does not believe the Broward County Civic
Arena will have a material adverse impact on the Arena's operations, primarily
due to the distance between the facilities.
(c) Litigation
On June 17, 1996, MSEA filed a lawsuit against among others, HWH and Decoma
Venture (the "Defendants"), in the United States District Court of the Southern
District of Florida. The suit alleges that the Defendants have conspired to
restrain trade in the South Florida sports and entertainment facility market by
monopolizing or attempting to monopolize such market in violation of federal
antitrust laws. The plaintiff seeks, among other things, to (i) nullify certain
provisions of the MAC, specifically provisions restricting MSEA from developing
the New Arena, and (ii) force the Defendants to divest their control over the
Arena and the Broward County Civic Arena. In addition, the plaintiff seeks
treble damages as well as reimbursement for reasonable attorneys' fees and
costs. The Defendants believe that the suit is without merit and intend to
vigorously defend against this suit. An unfavorable outcome of the suit may have
a material adverse effect on the Companies financial condition or results of
operations.
F-27
<PAGE> 78
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION, NOR DOES IT CONSTITUTE AN OFFER TO
SELL OR SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE CLASS A
COMMON STOCK OFFERED HEREBY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 8
Reorganization........................ 16
Concurrent Offering................... 16
Use of Proceeds....................... 17
Dividend Policy....................... 17
Dilution.............................. 18
Capitalization........................ 19
Selected Financial Data............... 20
Management's Discussion and Analysis
of Financial Condition And Results
of Operations....................... 21
The National Hockey League............ 25
Business.............................. 29
Management............................ 38
Certain Transactions.................. 42
Principal Shareholders................ 44
Description of Capital Stock.......... 45
Shares Eligible for Future Sale....... 47
Underwriting.......................... 48
Legal Matters......................... 49
Experts............................... 49
Additional Information................ 49
Index to Financial Statements......... F-1
</TABLE>
------------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
7,300,000 SHARES
[LOGO]
FLORIDA PANTHERS HOLDINGS, INC.
CLASS A COMMON STOCK
--------------------
PROSPECTUS
--------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
RAYMOND JAMES & ASSOCIATES, INC.
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 79
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance of the securities
being registered are as follows:
<TABLE>
<S> <C>
SEC Registration Fee...................................................... $ 26,569
NASD Filing Fee........................................................... 8,205
Nasdaq National Market Listing Fee........................................ 50,000
Printing Expenses......................................................... *
Accounting Fees and Expenses.............................................. *
Legal Fees and Expenses................................................... *
Blue Sky Fees and Expenses................................................ 15,000
Transfer Agent and Registrar Fees and Expenses............................ *
Miscellaneous............................................................. *
----------
-
Total........................................................... $590,000
===========
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Florida Business Corporation Act. Section 607.0850(1) of the Florida
Business Corporation Act (the "FBCA") provides that a Florida corporation, such
as the Company, shall have the power to indemnify any person who was or is a
party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise against liability incurred in connection with such proceeding,
including any appeal thereof, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 607.0850(2) of the FBCA provides that a Florida corporation shall
have the power to indemnify any person, who was or is a party to any proceeding
by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses and amounts paid in
settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof. Such indemnification shall be
authorized if such person acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be made under this subsection in respect of
any claim, issue, or matter as to which such person shall have been adjudged to
be liable unless, and only to the extent that, the court in which such
proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
Section 607.850 of the FBCA further provides that: (i) to the extent that a
director, officer, employee or agent of a corporation has been successful on the
merits or otherwise in defense of any proceeding referred to in subsection (1)
or subsection (2), or in defense of any proceeding referred to in subsection (1)
or subsection (2), or in defense of any claim, issue, or matter therein, he
shall be indemnified against expense actually and reasonably incurred by him in
connection therewith; (ii) indemnification provided pursuant to Section 607.0850
is not exclusive; and (iii) the corporation may purchase and maintain insurance
on behalf of
II-1
<PAGE> 80
a director or officer of the corporation against any liability asserted against
him or incurred by him in any such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 607.0850.
Notwithstanding the foregoing, Section 607.0850 of the FBCA provides that
indemnification or advancement of expenses shall not be made to or on behalf of
any director, officer, employee or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute: (i) a violation of the
criminal law, unless the director, officer, employee or agent had reasonable
cause to believe his conduct was lawful or had no reasonable cause to believe
his conduct was unlawful; (ii) a transaction from which the director, officer,
employee or agent derived an improper personal benefit; (iii) in the case of a
director, a circumstance under which the liability provisions regarding unlawful
distributions are applicable; or (iv) willful misconduct or a conscious
disregard for the best interests of the corporation in a proceeding by or in the
right of the corporation to procure a judgment in its favor or in a proceeding
by or in the right of a shareholder.
Section 607.0831 of the FBCA provides that a director of a Florida
corporation is not personally liable for monetary damages to the corporation or
any other person for any statement, vote, decision, or failure to act, regarding
corporate management or policy, by a director, unless: (i) the director breached
or failed to perform his duties as a director; and (ii) the director's breach
of, or failure to perform, those duties constitutes: (A) a violation of criminal
law, unless the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful; (B) a
transaction from which the director derived an improper personal benefit, either
directly or indirectly; (C) a circumstance under which the liability provisions
regarding unlawful distributions are applicable; (D) in a proceeding by or in
the right of the corporation to procure a judgment in its favor or by or in the
right of a shareholder, conscious disregard for the best interest of the
corporation, or willful misconduct; or (E) in a proceeding by or in the right of
someone other than the corporation or a shareholder, recklessness or an act or
omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights, safety, or
property.
Articles and Bylaws. The Company's Articles of Incorporation and the
Company's Bylaws provide that the Company shall, to the fullest extent permitted
by law, indemnify all directors of the Company, as well as any officers or
employees of the Company to whom the Company has agreed to grant
indemnification.
Underwriting Agreement. Reference is made to the Underwriting Agreement,
the proposed form of which is to be filed as Exhibit 1.1 hereto, which provides
for indemnification by the Underwriters of directors, officers and controlling
persons of the Registrant against certain liabilities, including liabilities
under the Securities Act, under certain circumstances.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Aside from the securities issued in connection with the Reorganization of
the Company and as described more fully in the Prospectus, there has been no
issuance of unregistered securities by the Company within the past three years.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------
<C> <C> <S>
1 -- Form of Underwriting Agreement*
1.2 -- Form of Placement Agency Agreement*
3.1 -- Amended and Restated Articles of Incorporation of the Company
3.2 -- Form of By-Laws of the Company
5.1 -- Form of Opinion of Akerman, Senterfitt & Eidson, P.A., Counsel to the Company
</TABLE>
II-2
<PAGE> 81
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------
<C> <C> <S>
10.1 -- Broward County Civic Arena License Agreement, dated as of June 4, 1996, by and
between Florida Panthers Hockey Club, Ltd., Arena Operating Company, Ltd., and
Broward County Florida
10.2 -- Broward County Civic Arena Operating Agreement, dated as of June 4, 1996, by and
between Arena Operating Company, Ltd. and Broward County, Florida
10.3 -- Amendment and Clarification to Operating Agreement and License Agreement, dated as
of June 4, 1996, by and between Florida Panthers Hockey Club, Ltd., Arena Operating
Company, Ltd. and Broward County, Florida
10.4 -- Broward County Civic Arena Development Agreement, dated as of June 4, 1996, by and
between Arena Development Company, Ltd. and Broward County, Florida
10.5 -- Employment Agreement by and between William A. Torrey and the Company*
10.6 -- Management Agreement by and between the Company and Huizenga Holdings, Inc.*
10.7 -- Miami Arena Contract, dated as of October 10, 1986, as amended, by and between
Miami Sports and Exhibition Authority and Decoma Miami Associates, Ltd.
10.8 -- First Amendment to Miami Arena Contract and Agreement, dated as of December 13,
1990, by and between Miami Sports and Exhibition Authority and Decoma Miami
Associates, Ltd.
10.9 -- Lease Agreement by and between Florida Panthers Hockey Club, Ltd. and Draper &
Kramer, Inc.*
10.10 -- Lease Agreement by and between Florida Panthers Hockey Club, Ltd. and E & E
Enterprises*
10.11 -- Arena Management Agreement, dated as of October 10, 1986, by and between Decoma
Venture and Facility Management and Marketing (predecessor to Leisure Management
International)
10.12 -- 1996 Stock Option Plan*
21.1 -- Subsidiaries of the Company
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Form of Consent of Akerman, Senterfitt & Eidson, P.A. (included in their opinion
filed as Exhibit 5.1)
24.1 -- Powers of Attorney (included on the signature page of this Registration Statement)
27.1 -- Financial Data Schedule (for SEC use only)
</TABLE>
- ---------------
* To be filed by an amendment.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the
representatives of underwriters at the closing specified in the underwriting
agreement, certificates in such denominations and registered in such names as
required by such representatives of underwriters to permit prompt delivery to
each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
II-3
<PAGE> 82
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of Prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of Prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 83
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fort Lauderdale, State of
Florida, on the 17th day of September, 1996.
Florida Panthers Holdings, Inc.
By: /s/ STEVEN M. DAURIA
------------------------------------
Steven M. Dauria
Vice President and Chief Financial
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below on this Registration Statement hereby constitutes and appoints Steven M.
Dauria with full power to act as his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (including his capacity as a director
and/or officer of Florida Panthers Holdings, Inc. (until revoked in writing) to
sign any and all amendments (including post-effective amendments and amendments
thereto) to this Registration Statement on Form S-1 of the Company and to sign a
Registration Statement pursuant to Section 462(b) of the Securities Act of 1933
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully for all intents and purposes, as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and Power of Attorney have been signed by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- -------------------
<C> <S> <C>
/s/ H. WAYNE HUIZENGA Chairman of the Board September 17, 1996
- --------------------------------------------- (Principal Executive
H. Wayne Huizenga Officer)
/s/ RICHARD H. EVANS President and Director September 17, 1996
- ---------------------------------------------
Richard H. Evans
/s/ WILLIAM A. TORREY President of Florida September 17, 1996
- --------------------------------------------- Panthers Hockey Club, Inc.
William A. Torrey and Director
/s/ STEVEN M. DAURIA Vice President and Chief September 17, 1996
- --------------------------------------------- Financial Officer
Steven M. Dauria (Principal Financial and
Accounting Officer)
/s/ STEVEN R. BERRARD Director September 17, 1996
- ---------------------------------------------
Steven R. Berrard
/s/ HARRIS W. HUDSON Director September 17, 1996
- ---------------------------------------------
Harris W. Hudson
</TABLE>
II-5
<PAGE> 84
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- -------------------
<C> <S> <C>
/s/ GEORGE D. JOHNSON, JR. Director September 17, 1996
- ---------------------------------------------
George D. Johnson, Jr.
/s/ RICHARD C. ROCHON Director September 17, 1996
- ---------------------------------------------
Richard C. Rochon
</TABLE>
II-6
<PAGE> 85
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ---------------------------------------------------------------------------------
<C> <C> <S>
1 -- Form of Underwriting Agreement*
1.2 -- Form of Placement Agency Agreement*
3.1 -- Amended and Restated Articles of Incorporation of the Company
3.2 -- Form of By-Laws of the Company
5.1 -- Form of Opinion of Akerman, Senterfitt & Eidson, P.A., Counsel to the Company
10.1 -- Broward County Civic Arena License Agreement, dated as of June 4, 1996, by and
between Florida Panthers Hockey Club, Ltd., Arena Operating Company, Ltd., and
Broward County Florida
10.2 -- Broward County Civic Arena Operating Agreement, dated as of June 4, 1996, by and
between Arena Operating Company, Ltd. and Broward County, Florida
10.3 -- Amendment and Clarification to Operating Agreement and License Agreement, dated
as of June 4, 1996, by and between Florida Panthers Hockey Club, Ltd., Arena
Operating Company, Ltd. and Broward County, Florida
10.4 -- Broward County Civic Arena Development Agreement, dated as of June 4, 1996, by
and between Arena Development Company, Ltd. and Broward County, Florida
10.5 -- Employment Agreement by and between William A. Torrey and the Company*
10.6 -- Management Agreement by and between the Company and Huizenga Holdings, Inc.*
10.7 -- Miami Arena Contract, dated as of October 10, 1986, as amended, by and between
Miami Sports and Exhibition Authority and Decoma Miami Associates, Ltd.
10.8 -- First Amendment to Miami Arena Contract and Agreement, dated as of December 13,
1990, by and between Miami Sports and Exhibition Authority and Decoma Miami
Associates, Ltd.
10.9 -- Lease Agreement by and between Florida Panthers Hockey Club, Ltd. and Draper &
Kramer, Inc.*
10.10 -- Lease Agreement by and between Florida Panthers Hockey Club, Ltd. and E & E
Enterprises*
10.11 -- Arena Management Agreement, dated as of October 10, 1986, by and between Decoma
Venture and Facility Management and Marketing (predecessor to Leisure Management
International)
10.12 -- 1996 Stock Option Plan*
21.1 -- Subsidiaries of the Company
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Form of Consent of Akerman, Senterfitt & Eidson, P.A. (included in their opinion
filed as Exhibit 5.1)
24.1 -- Powers of Attorney (included on the signature page of this Registration
Statement)
27.1 -- Financial Data Schedule (for SEC use only)
</TABLE>
- ---------------
* To be filed by an amendment.
II-7
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
FLORIDA PANTHERS HOLDINGS, INC.
(formerly named Florida Panthers, Inc.)
The undersigned incorporator hereby amends and restates, pursuant to
Section 607.1001 of the Florida Business Corporation Act, the Articles of
Incorporation of Florida Panthers, Inc., a Florida corporation which initially
filed its Articles of Incorporation on July 3, 1996 and was issued charter
number P96000056449. The undersigned incorporator further certifies that no
shares of this corporation have been issued, no directors or officers have been
appointed, and no shareholder action is required hereby.
The Articles of Incorporation of Florida Panthers, Inc. are hereby
amended and restated (as such, the "Amended and Restated Articles of
Incorporation") as follows:
ARTICLE I
NAME
----
The name of the Corporation shall hereafter be Florida Panthers
Holdings, Inc. (the "Corporation").
ARTICLE II
MAILING ADDRESS
---------------
The mailing address of the Corporation is 100 Northeast Third Avenue,
Tenth Floor, Ft. Lauderdale, Florida 33301.
ARTICLE III
CAPITAL STOCK
-------------
The number of shares of stock that the Corporation is authorized to
issue is One Hundred Ten Million (110,000,000) shares of common stock, par
value $.01 per share (the "Common Stock"). The authorized shares of Common
Stock shall be divided into two classes, comprised of One Hundred Million
(100,000,000) shares of Class A Common Stock (the "Class A Common Stock") and
Ten Million (10,000,000) shares of Class B Common Stock (the "Class B Common
Stock").
<PAGE> 2
The Class A Common Stock and Class B Common Stock shall be identical in
all respects EXCEPT that: (i) each share of Class A Common Stock shall be
entitled to One (1) vote on each matter submitted to a vote of the shareholders
of the Corporation, while each share of Class B Common Stock shall be entitled
to Ten Thousand (10,000) votes on each matter submitted to a vote of the
shareholders of the Corporation; (ii) shares of Class A Common Stock may be
issued to holders of Class B Common Stock in a stock dividend, stock split or
otherwise duly declared by the Board of Directors, while Class B Common Stock
may not be issued to holders of Class A Common Stock in any such stock
dividend, stock split or otherwise; and (iii) each share of Class B Common
Stock shall at all times be directly convertible into one share of Class A
Common Stock without further consideration, while shares of Class A Common
Stock shall not, in any case, be convertible into shares of Class B Common
Stock.
The Class A Common Stock and Class B Common Stock may be subsequently
divided into and issued in one or more series of stock with voting rights,
priorities and preferences for each series that the Board of Directors of the
Corporation determines and sets forth in duly authorized resolutions providing
for the creation and issuance of such series of stock.
ARTICLE IV
RESTRICTIONS
------------
So long as the Corporation owns, directly or indirectly, a member club
in the National Hockey League, no person may own 5% or more of the
Corporation's Common Stock without National Hockey League approval. In the
event a person acquires 5% or more of the Corporation's Common Stock without
National Hockey League approval, each share of the Common Stock owned by such
person shall be subject to redemption at the lower of its original cost or its
then fair market value.
ARTICLE V
REGISTERED OFFICE AND AGENT
---------------------------
The street address of the Corporation's registered office is One S.E.
Third Avenue, 27th Floor, Miami, Florida 33131. The name of the Corporation's
registered agent at that office is American Information Services, Inc.
ARTICLE VI
INDEMNIFICATION
---------------
The Corporation shall indemnify and may advance expenses to its
officers and directors to the fullest extent permitted by law in existence now
or hereafter.
2
<PAGE> 3
ARTICLE VII
AFFILIATED TRANSACTIONS
AND CONTROL SHARE ACQUISITIONS
------------------------------
The Corporation expressly elects not to be governed by Sections
607.0901 and 607.0902 of the Florida Business Corporations Act, relating to
affiliated transactions and control share acquisitions, respectively.
[the remainder of this page is left intentionally blank]
3
<PAGE> 4
IN WITNESS WHEREOF, the undersigned Incorporator has executed these
Amended and Restated Articles of Incorporation this 17th day of September,
1996.
/s/ Edward T. Kim
---------------------------
Edward T. Kim, Incorporator
4
<PAGE> 1
EXHIBIT 3.2
[FORM OF]
BY-LAWS
OF
FLORIDA PANTHERS HOLDINGS, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. MEETINGS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 4. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 5. Notice of Adjourned Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. Fixing Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 7. Voting Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 8. Shareholder Quorum and Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 9. Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 10. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 11. Voting Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 12. Shareholders' Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 13. Action by Shareholders Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II. DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1. Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2. Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Duties of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 5. Presumption of Assent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6. Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7. Election and Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 9. Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 10. Quorum and Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 11. Director Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12. Executive and Other Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 13. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 14. Time, Notice and Call of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 15. Action Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE III. OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 1. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2. Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3. Removal of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V. STOCK CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 1. Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2. Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3. Transfer of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4. Lost, Stolen, or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI. BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Section 1. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2. Shareholders' Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VII. DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VIII. CORPORATE SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IX. AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
<PAGE> 5
BY-LAWS
OF
FLORIDA PANTHERS HOLDINGS, INC.
ARTICLE I.
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETING.
The annual meeting of the shareholders of this corporation shall be
held at the time and place designated by the Board of Directors of the
corporation. The annual meeting of shareholders for any year shall be held no
later than thirteen months after the last preceding annual meeting of
shareholders. Business transacted at the annual meeting shall include the
election of directors of the corporation.
SECTION 2. SPECIAL MEETINGS.
Special meetings of the shareholders shall be held when directed by
the President or the Board of Directors, or when requested in writing by the
holders of not less than ten percent of all the shares entitled to vote at the
meeting.
SECTION 3. PLACE.
Meeting of shareholders may be held within or without the State of
Florida.
SECTION 4. NOTICE.
Written notice stating the place, day and hour of the meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than ten nor more than sixty days before
the meeting, either personally or by first-class mail, by or at the
<PAGE> 6
direction of the President, the Secretary, or the officer or persons calling
the meeting to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail addressed to the shareholder at his address as it appears on
the stock transfer books of the corporation, with postage thereon prepaid.
SECTION 5. NOTICE OF ADJOURNED MEETINGS.
When a meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
If, however, after the adjournment the Board of Directors fixes a new record
date for the adjourned meeting, a notice of the adjourned meeting shall be
given as provided in this section to each shareholder of record on the new
record date entitled to vote at such meeting.
SECTION 6. FIXING RECORD DATE.
For the purpose of determining shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment thereof, or entitled
to receive payment of any dividend, or in order to make a determination of
shareholders for any other purpose, the Board of Directors shall fix in advance
a date as the record date for any such determination of shareholders, such date
in any case to be not more than sixty days and, in case of a meeting of
shareholders, not less than ten days prior to the date on which the particular
action requiring such determination of shareholders is to be taken.
If no record date is fixed for the determination of shareholders
entitled to notice or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on
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which notice of the meeting is mailed or the date on which the resolution of
the Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, unless the Board of Directors fixes a
new record date for the adjourned meeting.
SECTION 7. VOTING RECORD.
If the corporation shall have more than five (5) shareholders the
officers or agent having charge of the stock transfer books for shares of the
corporation shall make, prior to each meeting of shareholders, a complete list
of the shareholders entitled to vote at such meeting or any adjournment
thereof, with the address of and the number and class and series, if any, of
shares held by each. The list shall be kept on file at the registered office
of the corporation, at the principal place of business of the corporation or at
the office of the transfer agent or registrar of the corporation and any
shareholder shall be entitled to inspect the list at any time during usual
business hours. The list shall also be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
at any time during the meeting.
If the requirements of this section have not been substantially
complied with, the meeting on demand of any shareholders in person or by proxy,
shall be adjourned until the requirements are complied with. If no such demand
is made, failure to comply with the requirements of this section shall not
affect the validity of any action taken at such meeting.
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SECTION 8. SHAREHOLDER QUORUM AND VOTING.
A majority of the shares entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of shareholders. When a
specified item of business is required to be voted on by a class or series of
stock, a majority of the shares of such class or series shall constitute a
quorum for the transaction of such item of business by that class or series.
If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders unless otherwise provided by law. After a
quorum has been established at a shareholders' meeting, the subsequent
withdrawal of shareholders, so as to reduce the number of shareholders entitled
to vote at the meeting below the number required for a quorum, shall not affect
the validity of any action taken at the meeting or any adjournment thereof.
SECTION 9. VOTING OF SHARES.
Each outstanding share shall be entitled to one vote on each matter
submitted to a vote at a meeting of shareholders, unless otherwise provided
for in the Articles of Incorporation of this corporation, or any amendments
thereto, or any certificate of designation filed on behalf of this corporation.
A shareholder may vote either in person or by proxy executed in
writing by the shareholder or his duly authorized attorney-in-fact.
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At each election for directors every shareholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number
of shares owned by him for as many persons as there are directors to be elected
at that time and for whose election he has a right to vote.
Shares standing in the name of another corporation, domestic or
foreign, may be voted by the officer, agent, or proxy designated by the By-Laws
of the corporate shareholder; or, in the absence of any applicable By-Law, by
such person as the Board of Directors of the corporate shareholder may
designate. Proof of such designation may be made by presentation of a
certified copy of the By-laws or other instrument of the corporate shareholder.
In the absence of any such designation, or in case of conflicting designation
by the corporate shareholder, the Chairman of the Board, President, and Vice
President, Secretary, and Treasurer of the corporate shareholder shall be
presumed to possess, in that order, authority to vote such shares.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority to do so be contained
in an appropriate order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee or his nominee shall be entitled to vote the shares so
transferred.
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On and after the date on which written notice of redemption of
redeemable shares has been mailed to the holders thereof and a sum sufficient
to redeem such shares has been deposited with a bank or trust company with
irrevocable instrument and authority to pay the redemption price to the holders
thereof upon surrender of certificates therefor, such shares shall not be
entitled to vote on any matter and shall not be deemed to be outstanding
shares.
SECTION 10. PROXIES.
Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent without a meeting or a shareholder's duly authorized
attorney-in-fact may authorize another person or persons to act for him by
proxy.
Every proxy must be signed by the shareholder or his attorney-in-fact. No
proxy shall be valid after the expiration of eleven months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the shareholder executing it, except as otherwise provided
by law.
The authority of the holder of a proxy to act shall not be revoked by the
incompetence or death of the shareholder who executed the proxy unless, before
the authority is exercised, written notice of an adjudication of such
incompetence or of such death is received by the corporate officer responsible
for maintaining the list of shareholders.
If a proxy for the same shares confers authority upon two or more
persons and does not otherwise provide, a majority of them present at the
meeting, or if only one is present then that one, may exercise all the powers
conferred by the proxy; but if the proxy holders present at the meeting are
equally divided as to the right and manner of voting in any particular case,
the voting of such shares shall be prorated.
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If a proxy expressly provides, any proxy holder may appoint in writing
a substitute to act in his place.
SECTION 11. VOTING TRUSTS.
Any number of shareholders of this corporation may create a voting
trust for the purpose of conferring upon a trustee or trustees the right to
vote or otherwise represent their shares, as provided by law. Where the
counterpart of a voting trust agreement and the copy of the record of the
holders of voting trust certificates has been deposited with the corporation as
provided by law, such documents shall be subject to the same right of
examination by a shareholder of the corporation, in person or by agent or
attorney, as are the books and records of the corporation, and such counterpart
and such copy of such record shall be subject to examination by any holder of
record of voting trust certificates either in person or by agent or attorney,
at any reasonable time for any proper purpose.
SECTION 12. SHAREHOLDERS' AGREEMENTS.
Two or more shareholders of this corporation may enter an agreement
providing for the exercise of voting rights in the manner provided in the
agreement or relating to any phase of the affairs of the corporation as
provided by law. Nothing therein shall impair the right of this corporation to
treat the shareholders of record as entitled to vote the shares standing in
their names.
A transfer of shares of this corporation whose shareholders have a
shareholder's agreement authorized by this section shall be bound by such
agreement if he takes shares subject to such agreement with notice thereof. A
transferee shall be deemed to have notice of any such agreement if the exercise
thereof is noted on the face or back of the certificate or certificates
representing such shares.
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SECTION 13. ACTION BY SHAREHOLDERS WITHOUT A MEETING.
Any action required by law, these By-Laws, or the Articles of
Incorporation of this corporation to be taken at any annual or special meeting
of shareholders of the corporation, or any action which may be taken at any
annual or special meeting of such shareholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. If any class of shares is entitled to vote thereon as
a class, such written consent shall be required of the holders of a majority of
the shares of each class of shares entitled to vote as a class thereon and of
the total shares entitled to vote thereon.
Within ten days after obtaining such authorization by written consent, notice
shall be given to those shareholders who have not consented in writing. The
notice shall fairly summarize the material features of the authorized action
and, if the action be a merger, consolidation or sale or exchange of assets for
which dissenters rights are provided by law, the notice shall contain a clear
statement of the right of shareholders dissenting therefrom to be paid the fair
value of their shares upon compliance with further provisions as provided by
law regarding the rights of dissenting shareholders.
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ARTICLE II.
DIRECTORS
SECTION 1. FUNCTION.
All corporate powers shall be exercised by or under the authority of,
and the business and affairs of the corporation shall be managed under the
direction of, the Board of Directors.
SECTION 2. QUALIFICATION.
Directors need not be residents of this state or shareholders of this
corporation.
SECTION 3. COMPENSATION.
The Board of Directors shall have authority to fix the compensation of
directors.
SECTION 4. DUTIES OF DIRECTORS.
A director shall perform his duties as a director, including his
duties as a member of any committee of the board upon which he may serve, in
good faith, in a manner he reasonably believes to be in the best interests of
the corporation, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances.
In performing his duties, a director shall be entitled to rely on
information, opinions, reports or statements, including financial statements
and other financial data, in each case prepared or presented by one or more
officers or employees of the corporation whom the director reasonably believes
to be reliable and competent in the matters presented, counsel, public
accountants, or other persons as to matters which the director reasonably
believes to be within such person's professional or expert competence, or a
committee of the Board upon which he does not serve, duly designated in
accordance with a provision of the Articles of Incorporation or the By-Laws, as
to matters within its designated authority, which committee the director
reasonably believes to merit confidence.
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A director shall not be considered to be acting in good faith if he
has knowledge concerning the matter in question that would cause such reliance
described above to be unwarranted.
A person who performs his duties in compliance with this section shall
have no liability by reason of being or having been a director of the
corporation and shall be indemnified by the corporation for any and all claims
and/or losses arising out of his service as a director of the Corporation.
SECTION 5. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of its Board
of Directors at which action on any corporate matter is taken shall be presumed
to have agreed, consented to and adopted such corporate action unless he votes
against such action or abstains from voting in respect thereto because of an
asserted conflict of interest.
SECTION 6. NUMBER.
The Board of Directors shall consist of one or more members, the exact
number to be determined from time to time by shareholders or the Board of
Directors. The number of directors may be increased or decreased from time to
time by amendment to these By-Laws, but no decrease shall have the effect of
shortening the terms of any incumbent director.
SECTION 7. ELECTION AND TERM.
Each person named in the Articles of Incorporation or by the
incorporator as a member of the initial Board of Directors shall hold office
until the first annual meeting of shareholders, and until his successor shall
have been elected and qualified or until his earlier resignation, removal from
office or death.
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At the first annual meeting of shareholders and at each annual meeting
thereafter the shareholders shall elect directors to hold office until the next
succeeding annual meeting. Each director shall hold office for the term for
which he is elected and until his successor shall have been elected and
qualified or until his earlier resignation, removal from office or death.
SECTION 8. VACANCIES.
Any vacancy occurring in the Board of Directors, including any vacancy
created by reason of an increase in the number of directors, may be filled by
the affirmative vote of a majority of the remaining directors though less than
a quorum of the Board of Directors. A director elected to fill a vacancy shall
hold office only until the next election of directors by the shareholders.
SECTION 9. REMOVAL OF DIRECTORS.
At a meeting of shareholders called expressly for that purpose, any
director or the entire Board of Directors may be removed, with or without
cause, by a vote of the holders of a majority of the shares then entitled to
vote at an election of directors.
SECTION 10. QUORUM AND VOTING.
A majority of the number of directors fixed by these By-Laws shall
constitute a quorum for the transaction of business. The act of the majority
of directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
SECTION 11. DIRECTOR CONFLICTS OF INTEREST.
No contract or other transaction between this corporation and one or
more of its directors or any other corporation, firm, association or entity in
which one or more of the directors are directors or officers or are financially
interested, shall be either void or voidable because of such relationship or
interest or because such director or directors are present at the meeting of
the Board of Directors
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or a committee thereof which authorizes, approves or ratifies such contract or
transaction or because his or their votes are counted for such purpose, if:
The fact of such relationship or interest is disclosed or known to the
Board of Directors or committee which authorizes, approves or ratifies the
contract or transaction by a vote or consent sufficient for the purpose without
counting the votes or consents of such interested directors; or
The fact of such relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
The contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the Board, a committee or the
shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
SECTION 12. EXECUTIVE AND OTHER COMMITTEES.
The Board of Directors, by resolution adopted by a majority of the
full Board of Directors, may designate from among its members an executive
committee and one or more other committees each of which, to the extent
provided in such resolution shall have and may exercise all the authority of
the Board of Directors, except that no committee shall have the authority to:
approve or recommend to shareholders actions or proposals required by
law to be approved by shareholders, designate candidates for the
office of director, for purposes of proxy solicitation or otherwise
fill vacancies on the Board of Directors or any committee thereof,
amend the By-Laws, authorize or approve the reacquisition
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of shares unless pursuant to a general formula or method specified by
the Board of Directors, or
authorize or approve the issuance or sale of, or any contract to issue
or sell, shares or designate the terms of a series of a class of
shares, except that the Board of Directors, having acted regarding
general authorization for the issuance or sale of shares, or any
contract therefor, and, in the case of a series, the designation
thereof, may, pursuant to a general formula or method specified by the
Board of Directors, by resolution or by adoption of a stock option or
other plan, authorize a committee to fix the terms upon which such
shares may be issued or sold, including without limitation, the price,
the rate or manner of payment of dividends, provisions of redemption,
sinking fund, conversion, voting or preferential rights, and
provisions for other features of a class of shares, or a series of a
class of shares, with full power in such committee to adopt any final
resolution setting forth all the terms thereof and to authorize the
statement of the terms of a series for filing with the Department of
State.
The Board of Directors, by resolution adopted in accordance with this section,
may designate one or more directors as alternate members of any such committee,
who may act in the place and stead of any absent member or members at any
meeting of such committee.
SECTION 13. PLACE OF MEETINGS.
Regular and special meeting by the Board of Directors may be held
within or without the State of Florida.
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SECTION 14. TIME, NOTICE AND CALL OF MEETINGS.
Regular meetings of the Board of Directors shall be held without
notice at such times as the Board of Directors may fix. Written notice of the
time and place of special meetings of the Board of Directors shall be given to
each director by either personal delivery, telegram or telecopy at least two
days before the meeting or by notice mailed to the director at least five days
before the meeting.
Notice of the meeting of the Board of Directors need not be given to
any director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all obligations to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, any objection
to the transaction of business because the meeting is not lawfully called or
convened.
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting. A majority of the directors
present, whether or not a quorum exists, may adjourn any meeting of the Board
of Directors to another time and place. Notice of any such adjourned meeting
shall be given to the directors who were not present at the time of the
adjournment and, unless the time and place of the adjourned meeting are
announced at the time of the adjournment, to the other directors.
Meetings of the Board of Directors may be called by the chairman of
the Board, by the president of the corporation, or by any two directors.
Members of the Board of Directors may participate in a meeting of such
Board by means of a conference telephone or similar communications equipment by
means of which all persons
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participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
SECTION 15. ACTION WITHOUT A MEETING.
Any action required to be taken at a meeting of the directors of a
corporation, or any action which may be taken at a meeting of the directors or
a committee thereof, may be taken without a meeting if a consent in writing,
setting forth the action so to be taken, signed by all of the directors, or all
of the members of the committee, as the case may be, is filed in the minutes of
the proceedings of the Board or of the committee. Such consent shall have the
same effect as a unanimous vote.
ARTICLE III.
OFFICERS
SECTION 1. OFFICERS.
The officers of this corporation shall consist of a president,
secretary and treasurer, and may also include one or more vice presidents, each
of whom shall be elected by the Board of Directors at a meeting of directors
following the annual meeting of shareholders of this corporation, and shall
serve until their successors are chosen and qualify. Such other officers and
assistant officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors from time to time. Any two or more offices
may be held by the same person. The failure to elect a president, vice
president, secretary, or treasurer shall not affect the existence of this
corporation.
SECTION 2. DUTIES.
The officers of this corporation shall have the following duties:
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The President of the corporation shall be the chief executive and
operating officer of the corporation and have general and active management of
the business affairs of the corporation subject to the direction of the Board
of Directors and shall preside at all meetings.
The Vice President, if one or more is elected or appointed, shall have
all of the duties normally performed by the President when the President is
unable or unavailable to act, by order of seniority. Otherwise, his duties
shall be subject to the direction of the President and the Board of Directors.
The Secretary shall have custody of, and maintain, all of the corporate
records, except the financial records; shall record the minutes of all meetings
of the stockholders and Board of Directors, send all notices of meetings out,
and perform such other duties as may be prescribed by the Board of Directors or
the President.
The Treasurer shall have custody of all corporate funds and financial
records, shall keep full and accurate accounts of receipts and disbursements
and render accounts thereof at the annual meetings of stockholders and whenever
else required by the Board of Directors or the President, and shall perform
such other duties as may be prescribed by the Board of Directors or the
President.
SECTION 3. REMOVAL OF OFFICERS.
Any officer or agent elected or appointed by the Board of Directors
may be removed by the Board whenever in its judgment the best interest of the
corporation will be served thereby. Any officer or agent elected by the
shareholders may be removed only by vote of the shareholders, unless the
shareholders shall have authorized the directors to remove such officer or
agent. Any vacancy, however occurring, in any office, may be filled by the
Board of Directors, unless the By-Laws shall have expressly reserved such power
to the shareholders.
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Removal of any officer shall be without prejudice to the contract
rights, if any, of the person so removed; however, election or appointment of
an officer or agent shall not of itself create contract rights.
ARTICLE IV.
INDEMNIFICATION
Any person, his heirs, or personal representative, made, or threatened
to be made, a party to any threatened, pending, or completed action or
proceeding, whether civil, criminal, administrative, or investigative, because
he, his testator, or intestate is or was a director, officer, employee, or
agent of this corporation or serves or served any other corporation or other
enterprise in any capacity at the request of this corporation, shall be
indemnified by this corporation, and this corporation may advance his related
expenses to the full extent permitted by law. In discharging his duty, any
director, officer, employee, or agent, when acting in good faith, may rely upon
information, opinions, reports, or statements, including financial statements
and other financial data, in each case prepared or presented by (1) one or more
officers or employees of the corporation whom the director, officer, employee,
or agent reasonably believes to be reliable and competent in the matters
presented, (2) counsel, public accountants, or other persons as to matters that
the director, officer, employee, or agent believes to be within that person's
professional or expert competence, or (3) in the case of a director, a
committee of the board of directors upon which he does not serve, duly
designated according to law, as to matters within its designated authority, if
the director reasonably believes that the committee is competent. The foregoing
right if indemnification or reimbursement shall not be exclusive of other
rights to which the person, his heirs, or personal representatives may be
entitled. The corporation may, upon the affirmative vote of a majority of its
board of directors, purchase
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insurance for the purpose of indemnifying these persons. The insurance may be
for the benefit of all directors, officers, or employees.
ARTICLE V.
STOCK CERTIFICATES
SECTION 1. ISSUANCE.
Every holder of shares in this corporation shall be entitled to have a
certificate, representing all shares to which he is entitled. No certificate
shall be issued for any share until such share is fully paid.
SECTION 2. FORM.
Certificates representing shares in this corporation shall be signed
by the President or Vice President and the Secretary or an Assistant Secretary,
if any, and may be sealed with the seal of this corporation or a facsimile
thereof. The signatures of the President or Vice President and the Secretary
may be facsimiles if the certificate is manually signed on behalf of a transfer
agent or a registrar, other than the corporation itself or an employee of the
corporation. In case any officer who signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer at the date of its issuance.
In the event the corporation is authorized to issue more than one
class or series, every certificate representing shares issued by this
corporation shall be set forth or fairly summarize upon the face or back of the
certificate, or shall state that the corporation will furnish to any
shareholder upon request and without charge a full statement of, the
designations, preferences, limitations and relative rights of the shares of
each class or series authorized to be issued, and the variations in the
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relative rights and preferences between the shares of each series so far as the
same have been fixed and determined, and the authority of the Board of
Directors to fix and determine the relative rights and preferences of
subsequent series.
Every certificate representing shares which are restricted as to the
sale, disposition or other transfer of such shares shall state that such shares
are restricted as to transfer and shall set forth or fairly summarize upon the
certificate, or shall state that the corporation will furnish to any
shareholder upon request and without charge a full statement of such
restrictions.
Each certificate representing shares shall state upon the face
thereof: the name of the corporation; that the corporation is organized under
the laws of this state; the name of the person or persons to whom issued; the
number and class of shares, and the designation of the series, if any, which
such certificate represents; and the par value of each share represented by
such certificate, or a statement that the shares are without par value.
SECTION 3. TRANSFER OF STOCK.
The corporation shall register a stock certificate presented to it for
transfer if the certificate is properly endorsed by the holder of record or by
his duly authorized attorney, and the signature of such person has been
guaranteed by a commercial bank or trust company or by a member of the New York
or American Stock Exchange.
SECTION 4. LOST, STOLEN, OR DESTROYED CERTIFICATES.
The corporation shall issue a new stock certificate in the place of
any certificate previously issued if the holder of record of the certificate
(a) makes proof in affidavit form that it has been lost, destroyed or
wrongfully taken; (b) requests the issue of a new certificate before the
corporation has notice that the certificate has been acquired by a purchaser
for value in good faith and without notice
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of any adverse claim; (c) gives bond in such form as the corporation may
direct, to indemnify the corporation, the transfer agent, and registrar against
any claim that may be made on account of the alleged loss, destruction, or
theft of a certificate; and (d) satisfies any other reasonable requirements
imposed by the corporation.
ARTICLE VI.
BOOKS AND RECORDS
SECTION 1. BOOKS AND RECORDS.
This corporation shall keep correct and complete books and records of
accounts and shall keep minutes of the proceedings of its shareholders, Board
of Directors and committees of directors. This corporation shall keep at its
registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its shareholders, giving the names and
addresses of all shareholders, and the number, class and series, if any, of the
shares held by each.
Any books, records and minutes may be in written form or in any other
form capable of being converted into written form within a reasonable time.
SECTION 2. SHAREHOLDERS' INSPECTION RIGHTS.
Any person who shall have been a holder of record of shares or of
voting trust certificates therefor at least six months immediately preceding
his demand or shall be the holder of record of, or the holder of record of
voting trust certificates for, at least five percent of the outstanding shares
of any class or series of the corporation, upon written demand stating the
purpose thereof, shall have the right to examine, in person or by agent or
attorney, at any reasonable time or times, for any proper purpose its relevant
books and records of accounts, minutes and records of shareholders and to make
extracts therefrom.
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SECTION 3. FINANCIAL INFORMATION.
Not later than four months after the close of each fiscal year, this
corporation shall prepare a balance sheet showing in reasonable detail the
financial condition of the corporation as of the close of its fiscal year, and
a profit and loss statement showing the results of the operations of the
corporation during its fiscal year.
Upon the written request of any shareholder or holder of voting trust
certificates for shares of the corporation, the corporation shall mail to such
shareholder or holder of voting trust certificates a copy of the most recent
annual balance sheet and profit and loss statement.
The balance sheets and profit and loss statements shall be filed in
the registered office of the corporation in this state, shall be kept for as
long as the law requires and shall be subject to inspection during business
hours by any shareholder or holder of voting trust certificates, in person or
by agent.
ARTICLE VII.
DIVIDENDS
The Board of Directors of this corporation may, from time to time,
declare and the corporation may pay dividends on its shares in cash, property
or its own shares, to the full extent permitted by law.
ARTICLE VIII.
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the same of the corporation,
the year of incorporation, and the word "seal"; it may be any of a facsimile,
engraved, printed or impression seal.
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ARTICLE IX.
AMENDMENT
These By-Laws may be repealed or amended, and new By-Laws may be
adopted, either by the Board of Directors or the shareholders, but the Board of
Directors may not amend or repeal any by-law adopted by shareholders if the
shareholders specifically provide such by-law shall not be subject to amendment
or repeal by the directors.
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Exhibit 5.1
[FORM OF]
AKERMAN, SENTERFITT & EIDSON, P.A.
ATTORNEYS AT LAW
SUNTRUST INTERNATIONAL CENTER
28TH FLOOR
ONE SOUTHEAST THIRD AVENUE
MIAMI, FLORIDA 33131-1704
(305) 374-5600
FACSIMILE (305) 374-5095
September __, 1996
Florida Panthers Holdings, Inc.
100 N.E. Third Avenue, Second Floor
Fort Lauderdale, Florida 33301
RE: REGISTRATION STATEMENT ON FORM S-1
Ladies and Gentlemen:
We have acted as special counsel to Florida Panthers Holdings, Inc., a
Florida corporation (the "Company"), with respect to the registration statement
on Form S-1 (the "Registration Statement"), filed with the Securities and
Exchange Commission for the purpose of registering for sale by the Company
under the Securities Act of 1933, as amended, of up to 7,300,000 shares of
common stock of the Company, $.01 par value (the "Common Stock").
Based on our review of the Amended and Restated Articles of
Incorporation of the Company, the Bylaws of the Company, the minutes of the
meetings of the Boards of Directors of the Company, the stock ledger of the
Company and such other documents and records as we have deemed necessary and
appropriate, we are of the opinion that the Common Stock, if and when issued
and paid for in accordance with the terms of the Underwriting Agreement by and
among the Company, and Donaldson, Lufkin & Jenrette Securities Corporation and
Raymond James & Associates, Inc., on their own behalf and as representatives of
certain underwriters, will be validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the prospectus which is a part of the Registration Statement.
Very truly yours,
AKERMAN, SENTERFITT & EIDSON, P.A.
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Exhibit 10.1
BROWARD COUNTY
CIVIC ARENA
LICENSE AGREEMENT
(INCLUDING CERTAIN EXPENSE REIMBURSEMENTS)
DATED AS OF JUNE 4, 1996
BY AND AMONG
BROWARD COUNTY, FLORIDA
THE COUNTY
AND
FLORIDA PANTHERS HOCKEY CLUB, LTD.,
THE TEAM
AND
ARENA OPERATING COMPANY, LTD.
THE OPERATOR
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TABLE OF CONTENTS
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
GRANT OF LICENSE, TERM, USE OF LICENSED PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1 Grant of Use and License by County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 County Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3 Team Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.4 Operator Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.5 Permitted Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.6 Scheduling of Hockey Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.7 Term of License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.8 Options to Extend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.9 Abatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.10 Condition of the Licensed Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.11 Traffic Mitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.12 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III
RENT, TEAM LOAN AND TEAM GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.1 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.3 Seat Use Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.4 Pass Through Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5 Incentive Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.6 Supplemental Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.7 Team Loan to County for Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.8 County Preferred Revenue Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.9 Reduction of County Preferred Revenue Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.10 Team Spaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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ARTICLE IV
TEAM REVENUES, TEAM EXPENSES AND
REVENUE SHARING ARRANGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.1 Team Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.2 The Team Retail Store . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3 Team Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.4 Net Operating Income; Revenue Sharing Arrangement . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
MANAGEMENT AND CONTROL,
MAINTENANCE AND EVENT STAFFING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1 Management and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2 Utilities and Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 Condition of Arena on Day of Hockey Events and Practice Sessions . . . . . . . . . . . . . . . . . . 25
5.4 Staffing for Hockey Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.5 Ice Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI
CONCESSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.1 Operation of Concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2 Consumable Concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.3 Non-Consumable Concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII
ADVERTISING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Marketing, Advertising, Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Sponsor Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.3 Naming Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Team Name, Logo and Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.5 Tourism Promotion Spots/Tag Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII
RADIO AND TELEVISION BROADCASTSAND OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.1 Radio and Television Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Broadcast Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.3 Public Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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ARTICLE IX
PARKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.1 Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE X
TICKETS, PREMIUM SEATING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.1 Hockey Tickets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.2 Premium Seating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Tourism Promotion Ticket Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE XI
RECORDS, AUDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.1 Team Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE XII
ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.1 Right to Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE XIII
TEAM EQUIPMENT; ADDITIONS AND ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.1 Team Equipment; Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XIV
INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.1 Team Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.1.1 Commercial General Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.1.2 Property Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.1.3 Workers' Compensation and Employer's Liability Insurance . . . . . . . . . . . . . . . . . 35
14.2 Operator's Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
14.3 Insurance Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XV
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
15.1 Indemnification of Operator and County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
15.2 Indemnification of Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE XVI
DAMAGE OR DESTRUCTIONCONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
16.1 Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
16.2 Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
16.3 County and Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
16.4 Fees Abatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
16.5 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XVII
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
17.1 Use Covenant; Non-Relocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
17.2 No Interference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
17.3 Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
17.4 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE XVIII
REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.1 Team's Representations Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.1.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.1.2 Authorization; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.1.3 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.1.4 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.1.5 No Violation of Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.2 Operator's Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . 41
18.2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.2.2 Authorization; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
18.2.3 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
18.2.4 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
18.2.5 No Violation of Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
18.3 County's Representations Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 42
18.3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
18.3.2 Authorization, Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
18.3.3 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
18.3.4 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
18.3.5 Non-Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
18.3.6 No Violation of Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
18.4 Mutual Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
18.4.1 Additional Documents and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
18.4.2 Good Faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
18.4.3 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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18.4.4 NBA Team Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
18.4.5 Refinancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
18.5 Mutual Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XIX
DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
19.1 Team Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
19.2 Team Bankruptcy or Attachment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
19.3 County or Operator Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
19.4 Remedies are Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
19.5 Termination Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XX
DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
20.1 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XXI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
21.1 Ad Valorem Tax Imposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
21.2 Exclusive Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
21.3 Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
21.4 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
21.5 Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
21.6 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
21.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
21.9 Recognition and Non-Disturbance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
21.10 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
21.11 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
21.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
21.13 Reasonableness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
21.14 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
21.15 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
21.16 Amendment of Operating Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
21.17 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
21.18 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
21.19 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
21.20 Team Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
21.21 No Liability of Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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LICENSE AGREEMENT
This License Agreement (Including Certain Expense Reimbursements)
("License Agreement"), is dated as of May __, 1996 and is entered into by and
among Broward County, Florida, a public body corporate and politic and a
political subdivision of the State of Florida (the "County"), the Florida
Panthers Hockey Club, Ltd., a Florida limited partnership (the "Team") and
Arena Operating Company, Ltd., a Florida limited partnership (the "Operator").
RECITALS:
A. The County is to be the owner of a multipurpose arena to be
constructed in the City of Sunrise, Broward County, Florida (the "Facility")
and, in connection therewith, the County is empowered to enter into this
License Agreement.
B. The Team is the owner and operator of a professional hockey
franchise, a member club of the National Hockey League ("NHL"), known as the
Florida Panthers. The Operator, the County and the Team desire that the Team
conduct all of its Home Games in the Facility when the Facility is constructed
and ready for occupancy, for the License Term pursuant to the License granted
hereunder. The Team has designated Operator as the designated operator of the
Facility pursuant to its right to so designate provided in the Letter of
Intent.
C. The County and the Operator have entered into an Operating
Agreement of even date herewith pursuant to which the Operator shall be the
exclusive operator and manager of the Facility for a term that coincides with
the License Term, and, in connection therewith, Operator is empowered to enter
into this License Agreement and other agreements for the use of the Facility.
Pursuant to the Operating Agreement, Operator has designated Arena Management
Firm to manage the Facility and perform certain duties delegated by Operator.
D. The health, safety and general welfare of the people of the
County are directly dependent upon the continual encouragement, development,
growth and expansion of business, commerce and tourism. The development of a
major multipurpose sports and entertainment complex and accessory uses is most
appropriate in the County which, because of its size, is capable of retaining
and supporting professional as well as amateur sports teams and attracting
major national sporting and musical, cultural, family and community events; and
that attraction of business and tourism to the County as a result of the
development of such a facility and its accessory uses will be an important
factor in the continued encouragement, promotion, attraction, stimulation,
development, growth and expansion of business, commerce and tourism within the
County. The development and promotion of a multipurpose sports and
entertainment complex on public property will provide significant benefits to
the general public.
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E. In view of the foregoing, the County has determined that the
licensing of the Facility to the Team is in the best interests of the County
and the welfare of its residents, and is in accord with valid public purposes.
THEREFORE, intending to be legally bound, for valuable consideration,
the receipt and sufficiency of which are acknowledged, the parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this License Agreement, capitalized
terms shall have the meanings set forth below unless otherwise defined herein;
certain other capitalized terms which are not defined herein shall have the
meanings provided in the Development Agreement or the Operating Agreement;
however, in the event of a conflict between a defined term used herein that is
defined in both the Operating Agreement and the Development Agreement then for
purposes of operations the Operating Agreement will control and for the
purposes of project development the Development Agreement will control.
1.2 Abatement Period means any period during which the License
Term or the time for performance or the satisfaction of a condition is extended
as provided by this License Agreement and as defined in the Related Agreements.
1.3 Additions means permanent alterations or improvements to the
Facility.
1.4 Admissions Tax shall mean any sales or use tax or taxes, if
any, in effect from time to time during the License Term which are imposed by
any Governmental Authority on revenue received from the sale or other
disposition of Hockey Tickets.
1.5 Advertising means all announcements, acknowledgments,
banners, signs, showbills, and other audio or visual commercial messages
displayed, announced or otherwise presented in the Facility including video
messages, but excluding Team Advertising and sponsorships (including Sponsor's
Signs).
1.6 Affiliate of a specified person means a person who (a) is
directly or indirectly controlled by, or under common control with, the
specified person; or (b) owns directly or indirectly thirty-five percent (35%)
or more of equity securities of the specified person; or (c) is a general
partner, officer, director, non-financial institution trustee or fiduciary of
the specified person or of any person described in (a) or (b); or (d) is a son,
daughter, spouse, parent, sibling or in-law of the specified person.
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1.7 Arena means the multipurpose, state-of-the-art sports and
entertainment arena facility in the City of Sunrise, Broward County, Florida,
as more fully described in the Development Agreement and as set forth in the
Program Requirements attached to the Development Agreement.
1.8 Arena Management Firm shall mean initially Leisure
Management International, an Affiliate of Operator, and shall also mean any
subsequent Person selected by Operator pursuant to the Operating Agreement to
manage the Arena.
1.9 Arena Parking means the parking spaces (up to a maximum of
7,500 spaces) included within the Project Site as described in the Operating
Agreement and the Development Agreement.
1.10 Base Rent means the sum of Seven Thousand Five Hundred
Dollars ($7,500.00) plus applicable sales taxes to be paid by Team for each
Home Game played at the Arena during the Hockey Season up to a maximum amount
of Three Hundred Seven Thousand Five Hundred Dollars ($307,500.00) per Hockey
Season during the License Term. During any Extension Term the Base Rent shall
be Six Thousand Dollars ($6,000.00) for each Home Game played at the Arena up
to a maximum amount of Two Hundred Fifty Two Thousand Dollars ($252,000.00).
1.11 Bonds means the total amount of Professional Sports Facility
Tax and Revenue Bonds, Series 1996 outstanding from time to time and at any
time, including interest and other payment requirements and any restructuring
or refundings thereof, and related costs, which the County incurs for the
purpose of financing the development and construction of the Facility, all of
which is estimated at the time of execution of this License Agreement to be in
the original principal amount not to exceed $185 million.
1.12 Business Days means any Monday, Tuesday, Wednesday, Thursday
or Friday excluding County holidays.
1.13 Capitalized Interest Period shall mean the period of time
for which the Bonds provide for capitalized interest on the Bond debt.
1.14 Coaches Office shall mean "coaches' office" as defined in
the Program Requirements.
1.15 Common Area means the hallways, corridors, stairways,
elevators, public restrooms, restaurants and other portions of the Project
depicted in the Site Plan attached to the Development Agreement.
1.16 Communication System means all audio and visual
communication systems designed for radio and television broadcasting, which
systems shall include, but not be limited to, the scoreboards, computer and
related technologies, satellite hook-ups, television and loudspeaker systems,
acoustical technology and systems, public address system, timers, clocks,
message center,
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video screens, signs and marquees within or at the Facility all of which shall
be programmed to meet the goals and objectives of Team and in accordance with
the specifications of the Team.
1.17 Completion Notice means the notice which the Operator shall
deliver (whether a Certificate of Occupancy or otherwise) to advise the Team of
the date when the Facility has been Substantially Completed as such term is
defined in and as provided in the Development Agreement, a certificate of
occupancy has been issued and the Facility is ready for the playing of Home
Games as provided in the Development Agreement (collectively, "Completion").
The Operator shall deliver the Completion Notice no later than five days after
the date of Completion and may issue the Completion Notice in advance of the
date of Completion, in which latter event, the date of Completion shall be
deemed to be the later of the date of actual Completion or the date of
Completion as set forth in the Completion Notice.
1.18 Complimentary Tickets means any and all Hockey Tickets in an
amount consistent with good business practice in the professional sports
industry, which are transferred without charge; however, the following types of
Complimentary Tickets shall not be considered in determining whether the amount
of Complimentary Tickets is consistent with good business practice: Hockey
Tickets which are for charitable purposes and credentialed media, Hockey
Tickets pursuant to a ticket exchange program by which unused Hockey Tickets
for prior Home Games are exchanged for Hockey Tickets to future Home Games, and
Hockey Tickets given to Team or NHL players and other personnel as determined
by the Team or NHL rules and regulations.
1.19 Concession Agreement means any Agreement between the
Operator and Concessionaire(s) for the operation of Concessions at the
Facility.
1.20 Concession Revenue shall mean for all Concessions operated
by a Person, revenues paid to or received by Operator or paid to or received by
another Person at the direction of or for the benefit of Operator (other than
the amounts paid to or retained by the Concessionaires under a Concession
Agreement with Operator), in connection with the operation of the Concessions
at the Facility, without any offsets whatsoever to or from such payments to or
receipts by Operator for expenses, overhead or otherwise except for applicable
sales, excise or use taxes on such payments or receipts, and less any bad debt,
refunds and enforcement costs. "Concession Revenue" shall mean, for any
Concessions operated by Operator alone or in conjunction with others, revenues
paid to or received by Operator or paid to or received by another Person at the
direction of or for the benefit of Operator (other than retained by
Concessionaires under a Concession Agreement with Operator) in connection with
the operation of the Concessions in the Facility by Operator, less the
reasonable, ordinary and necessary expenses of operating such Concessions by
Operator; provided, however, that to the extent that any Concessions may be
operated by Operator in conjunction with others, Operator shall ensure that no
item of expense is duplicated and deducted from such revenues more than once in
calculating Concession Revenue.
1.21 Concessionaire(s) shall mean any Person, including Operator
or Team, operating a Concession.
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1.22 Concessions shall mean the business of selling, furnishing
or renting of foods, beverages, apparel, game programs, sporting equipment,
goods, novelties or merchandise (but not including parking) in, at, from or in
connection with the operation of the Facility whether sold, furnished or rented
from shops, kiosks or by individual vendors circulating through the Facility
including, without limitation, any restaurant (whether open to the public or
restricted to members thereof), club, membership dining room or other facility
therein for sale of food or beverages, and including sales to fill orders for
any such items received by any Concessionaire operating a Concession at the
Facility by mail, facsimile or telephone or other medium of communication.
1.23 Consumable Concessions means items of food, drink, tobacco
and candy products or other items for consumption which are sold or dispensed
at the Facility.
1.24 County means Broward County, Florida, a public body
corporate and politic and a political subdivision of the State of Florida, and
any of its administrative departments, divisions and functions and its
successors and assigns.
1.25 County Preferred Revenue Allocation shall have the meaning
given such term in the Operating Agreement.
1.26 County Representative shall mean the person authorized to
issue and receive notices on behalf of County with respect to this License
Agreement and shall be the person so designated and shall have the duties and
responsibilities described in Section 2.2 of this License Agreement.
1.27 Dasherboards shall mean a wood or fiberglass wall or fence,
including glass systems, surrounding the ice rink at the Facility which shall
in all respects comply with the Hockey Rules.
1.28 Debt Service Payment Date shall mean any date after the
Capitalized Interest Period on which a principal and/or interest payment is due
on the Bonds.
1.29 Design Development Documents shall have the meaning set
forth in the Development Agreement.
1.30 Development Agreement means the Development Agreement
between the County and the Project Developer, of even date herewith.
1.31 Event(s) means all revenue or nonrevenue producing sports,
entertainment, cultural, civic and other activities and events which are
conducted at the Facility.
1.32 Event Staffing means staffing levels for Events at the
Facility, as reasonably determined by Operator, with consideration for the type
of Event, anticipated attendance and other safety and security considerations
and consistent with the Quality Arena Standard. Such staffing shall include,
without limitation, ticket takers, ushers, internal and external security,
police,
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maintenance and clean-up personnel, emergency medical technicians, concierge,
restroom attendants, stagehands, sound and lights technical personnel, and box
office personnel.
1.33 Exhibition Games shall mean NHL ice hockey games played by
Team each Hockey Season prior to the date promulgated by the NHL as the first
day of the regular championship season.
1.34 Extension Option shall have the meaning given such term in
Section 2.8 hereof.
1.35 Extension Term shall have the meaning given such term in
Section 2.8 hereof.
1.36 Facility means the Arena and the Project Site together with
all facilities, fixtures, furniture, machinery and equipment, attachments and
appurtenances now or hereafter attaching thereto. "Facility" is sometimes used
interchangeably with "Project".
1.37 Facility Advertising Agreement shall heave the meaning given
such term in Section 7.1 of this License Agreement.
1.38 Facility Operating Expenses shall have the meaning given
such term in the Operating Agreement.
1.39 Facility Operating Revenues shall have the meaning given
such term in the Operating Agreement.
1.40 Fiscal Year means October 1 to September 30.
1.41 Franchise means and includes membership in and all of the
rights, privileges and powers granted by the NHL to the Team, and its
successors and assigns, to operate a team and conduct Home Games as a member of
the NHL.
1.42 General Seating means all of the seats at the Facility that
are not Premium Seating including but not limited to rinkside/courtside seating
or any other type of preferred location seating which is not Premium Seating.
The Team will sell "General Seating" for its own account at the prices that
Team determines and may include such other benefits for Hockey Ticket
purchasers as Team may determine, including, without limitation, membership in
the "Panthers Club" or some other club memberships of Team sponsors, season
ticket holders or others. The provision of a club membership or other benefits
to a Ticket purchaser does not change seating designated as General Seating to
Premium Seating as long as the General Seating is not suite seats or coop suite
seats.
1.43 Governmental Authority shall mean any Federal, state,
municipal or local government or any department or division thereof having
jurisdiction over the Arena, Operator, Team or any matter or Person addressed
in this License Agreement.
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1.44 Guaranty means the guaranty of the Team for the benefit of
the County in the form attached hereto as Exhibit 3.8.
1.45 Hockey Event shall mean any NHL ice hockey game which is
played by the Team in the Arena, including regular Home Games, Exhibition
Games, Play-Off Games and All-Star Games and any other in-season, pre-season or
post-season game sanctioned by the NHL whether or not played by the Team.
1.46 Hockey Event Staffing means the number and quality of Event
Staffing necessary in the reasonable opinion of Team for the presentation and
staging of a Hockey Event in a manner consistent with the Quality Arena
Standard. Notwithstanding the foregoing, such staffing levels for Hockey
Events at the Facility shall be sufficient in number and quality in Operator's
reasonable judgment to present the Hockey Event in a safe, efficient and secure
manner.
1.47 Hockey Event Staffing Expenses shall mean the actual, direct
expenses (without profit by Operator) incurred by or on behalf of Operator for
Hockey Event Staffing during a Hockey Season and paid by the Team to the
Operator.
1.48 Hockey Rules shall mean all provisions, rules, regulations,
by-laws, articles, contracts and arrangements which at the time in question
govern the rights, duties, privileges and obligations of Team as a member of
the NHL, including without limitation, the provisions of the Constitution of
the NHL. Team shall provide a copy of such Hockey Rules to Operator and County
and any amendments thereto as and when they become effective.
1.49 Hockey Season shall mean the period beginning on the date
officially promulgated by the NHL as the first day of training camp and ending
on the date on which the last Hockey Event is to be played by Team for such
season, including any games played as part of the Stanley Cup Championship
Series for such season.
1.50 Hockey Ticket means the ticket or other indicia by which
admission to the Facility for the Home Games is permitted and controlled.
1.51 Hockey Utility Reimbursable Expenses means the amount of
annual utility expenses incurred in the conduct and operation of Hockey Events
at the Facility and paid by the Team to the Operator. Hockey Utility
Reimbursable Expenses shall be equal to the product of the actual utility
expenses incurred at the Facility during the applicable Fiscal Year multiplied
by a fraction the numerator of which is the number of Hockey Events at the
Facility during the applicable Fiscal Year and the denominator of which is the
total number of other Events conducted at the Facility during the applicable
Fiscal Year up to the maximum amount of the Pass Through Expenses Cap.
1.52 Home Games shall mean all ice hockey games which under
Hockey Rules are designated as "home games". All pre-season Home Games will be
played at the Arena.
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1.53 Incentive Rent means an amount to be paid by Team to
Operator annually on or before the first day of the second month following the
conclusion of each Fiscal Year during the License Term, equal to the difference
between (i) five percent of the Ticket Receipts for each Home Game played at
the Facility during a Hockey Season, and (ii) the sum of Base Rent and Pass
Through Expenses up to a maximum of the Pass Through Expenses Cap, paid in the
applicable Fiscal Year. The amount set forth in clause (i) above shall not
accrue or be payable with respect to any Abatement Period.
1.54 Interactive Area shall mean that amount of useable area in a
location mutually acceptable to the Team and the Operator as described in the
Program Requirements of the Development Agreement (which Program Requirements
shall be approved by Team). The Interactive Area shall be furnished with such
equipment as Team and Operator shall determine or shall be subject to a
separate Concession Agreement for its operation as an interactive game and
arcade area for invitees at Hockey Events. The Concessionaire of the
Interactive Area (whether Operator, Team or a third party) may charge patrons
and invitees a separate charge for admission to the Interactive Area and all
such admission revenue shall be Facility Operating Revenue.
1.55 Letter of Intent means that certain Letter of Intent for
the Broward County Civic Arena between the County and Team.
1.56 License Commencement Date means the date on which the
License Term shall begin. The License Commencement Date shall be that date
within 30 days after the Completion Notice, as the Team shall select by notice
to the County within that 30-day period. Notwithstanding the foregoing, if the
Completion Notice is issued between March 1 and July 1, by notice to the County
no later than ten days after the Completion Notice, the Team may elect to defer
the License Commencement Date until not later than the first day of the next
Hockey Season which commences in the Fall of the Fiscal Year in which the
Completion Notice is issued.
1.57 License Expiration Date means the date of the ending of the
License Term and shall be that date which is 30 years after the July 1
immediately prior to the License Commencement Date unless Team shall exercise
Extension Option(s) in which case the License Expiration Date shall be the date
following the expiration of the Extension Term(s). Subject to the rounding
requirement hereafter described, the License Expiration Date shall be extended
for a period equal to the aggregate of every Abatement Period having a duration
of at least 90 days. The duration of the extension of the License Expiration
Date shall be rounded to the nearest half year so that the License Expiration
Date shall occur either on July 1 or January 1. The License Expiration Date is
subject to earlier termination or extension as provided in this License
Agreement.
1.58 License Term means the period of the Team's right and
obligation to use the Facility pursuant to this License Agreement beginning
with the License Commencement Date and ending on the License Expiration Date.
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1.59 Licensed Premises means those portions and facilities of the
Facility that are reasonably beneficial (or customarily given in NHL team
occupied arenas), for the playing of Team's Home Games and Practice Sessions or
for any other Permitted Use hereunder and generally consisting of, but not
limited to, the Team Spaces, Team Offices, Coaches' Offices, Team Locker Rooms,
physical therapy/rehabilitation and medical rooms, a commercial laundry
facility, the Interactive Area, Restaurant Area, visiting team locker rooms,
official's locker rooms, spectator seats (excluding suites), a predetermined
number of secured parking spaces for Team personnel, press lounges, media work
rooms, press areas, meeting and conference rooms, a private club/V.I.P. space
for use by the Team during the season and for certain pre-season and
post-season activities to promote the Team, the Arena floor, staff lounge and
spouse's waiting rooms, sponsor's booth, announcer's booth, radio and
television broadcast studios, scoreboard and Communications Center control
rooms, lighting control areas and medical facilities and Common Areas of the
Arena.
1.60 Liens means encumbrances, security interests, pledges,
claims, mechanics' and other liens arising out of work performed, materials
furnished or obligations incurred by the Team in connection with the Facility.
1.61 Naming Rights shall have the meaning given such term in the
Operating Agreement.
1.62 Net Operating Income shall have the meaning given such term
in the Operating Agreement.
1.63 NHL means the National Hockey League and any successor or
substitute association or other entity of which the Team is a member or joint
owner and which engages in professional ice hockey competition in a manner
comparable to the NHL.
1.64 Non-Consumable Concessions means all Concessions items other
than Consumable Concessions.
1.65 Operating Agreement means the Broward County Civic Arena
Operating Agreement between the County and the Operator, of even date herewith.
1.66 Operator means Arena Operating Company, Ltd., a Florida
limited partnership.
1.67 Operator Representative is the person authorized to issue
and receive notices on behalf of Operator with respect to this License
Agreement and shall be the person so designated and shall have the duties and
responsibilities described in Section 2.4 of this License Agreement.
1.68 Other Hockey Event shall mean any amateur, national (not
involving Team) or international ice hockey game played in the Arena.
1.69 Pass Through Expenses mean the Hockey Utility Reimbursable
Expenses and the Hockey Event Staffing Expenses.
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1.70 Pass Through Expenses Cap means the limitation on the amount
of Pass Through Expenses that Team shall be required to pay under Section 3.4
hereof. The Pass Through Expenses Cap is equal to the difference between five
percent (5%) of Ticket Receipts received by Team during the applicable Fiscal
Year less Base Rent paid to Operator for such Fiscal Year. In determining the
priority of Team's payment of Pass Through Expenses, Team shall first be
obligated to pay all Hockey Utility Reimbursable Expenses and then all Hockey
Event Staffing Expenses up to the Pass Through Expenses Cap amount.
1.71 Person means any individual, trust, estate, partnership,
joint venture, company, corporation, association, or any other legal entity or
business enterprise.
1.72 Play-off Game shall mean any professional ice hockey game
which is scheduled to be played between NHL teams as part of the competition
for the championship of the NHL, or any division thereof, and which, under the
Hockey Rules, is classified as a "play-off" game scheduled or permitted to be
played in the Arena.
1.73 Play-off Period shall have the meaning set forth in Section
2.6.2.
1.74 Pledged Tax Receipts means all the revenue received by the
County from the levy of (a) the one percent professional sports franchise
facility tax levied pursuant to Section 125.0104(l), Florida Statutes; (b) the
one percent additional professional sports franchise facility tax levied
pursuant to Section 125.0104(o), Florida Statutes (together (a) and (b), the
"Professional Sports Facility Tax"); and (c) the sales tax rebate received by
the County annually with respect to the use and operation of the Facility
pursuant to Section 288.1162, Florida Statutes.
1.75 Practice Session shall mean a period of time, other than
during a Warm-Up Session and a Hockey Event, during which Team shall be
permitted to use the ice rink in the Arena to practice ice hockey.
1.76 Premium Rate means the rate of interest equal to two percent
in excess of the rate of interest announced from time to time by the
NationsBank of South Florida, N.A., or its successor bank (or such other bank
as may be agreed to from time to time by County and Team), as its "prime rate"
of interest.
1.77 Premium Seating means the executive suite and co-op suite
seats at the Facility designated by Team which have exclusive access for its
patrons on a separate and exclusive concourse and is or may be serviced by
separate catering, service and maintenance support. Premium Seating shall not
include any of the General Seating.
1.78 Premium Seating License means the form of that certain
Premium Seating License Agreement for execution by Premium Seating Licensees
and the Operator, and all such forms of agreement as are executed and in effect
from time to time.
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1.79 Premium Seating Licensees means the licensees which have
executed Premium Seating Licenses with the Operator for the use of the Premium
Seating.
1.80 Program Requirements shall have the meaning given such term
in the Development Agreement.
1.81 Project means the Broward County Civic Arena which shall be
a state-of-the-art, multi-purpose sports and entertainment facility, including
related parking and marshaling/loading areas, designed and constructed to
support the occupancy of a professional hockey franchise and other professional
sports teams and to host other sporting events, family shows, concerts and
related events. "Project" refers to the Facility during its construction
stage; the term "Project" and the term "Facility" may be used interchangeably.
1.82 Project Developer means Arena Development Company, Ltd., a
Florida limited partnership which is an Affiliate of the Team.
1.83 Project Site means the land under and surrounding the Arena
and the Arena Parking as described in the Development Agreement.
1.84 Promotional Hockey Exhibition shall mean any exhibition of
hockey skills or instructions for promotional purposes but shall not include
any Exhibition Games, Practice Session, Warm-Up Session or Hockey Event.
1.85 Public Entity Assignee means an entity which has, or is
intended to have, a class of capital stock registered under the Securities Act
of 1933, as amended, that owns or is intended to own the Team's NHL Franchise.
1.86 Quality Arena Standard shall mean the average standard of
quality or performance, including construction of the improvements, ordinary
wear and tear excepted, fan amenities and ambiance provided by the following
arenas: (1) Marine Midland Arena, Buffalo, New York; (2) The CoreStates Center,
Philadelphia, Pennsylvania; (3) Ice Palace, Tampa, Florida; (4) the Arrowhead
Pond Arena in Anaheim, California; (5) Gund Arena, Cleveland, Ohio. In all
events, the Quality Arena Standard shall equal or surpass the standards
maintained at any arena facility located within one hundred (100) miles of the
Facility. In the event that any one or more of the five (5) arenas hereinabove
referenced shall be closed or shall, as generally reputed within the arena
industry, cease to be maintained and operated in accordance with the standards
of service and quality generally accepted within the arena industry for first
class arenas, then (a) such arena or arenas shall be deleted from the list set
forth in the foregoing sentence, and (b) the County, Operator and Team shall
agree upon the substitution of another arena or arenas to replace the deleted
arena or arenas, with approximate adjustments to reflect newer building and
technology than that possessed by the Arena. In applying the Quality Arena
Standard to construction/design issues and customer service issues, due
consideration shall be given to South Florida's unique competitive market
conditions, climate and topography.
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1.87 Related Agreements means this License Agreement, the
Operating Agreement and the Development Agreement.
1.88 Rent means the aggregate of Base Rent plus Incentive Rent,
if any, paid by the Team for the use of the Facility during each Fiscal Year of
the License Term as provided in Article III of this License Agreement.
1.89 Restaurant Area(s) shall mean that amount of useable area
in the Arena or located adjacent to the Arena at the Facility as specifically
described and set forth in the Program Requirements, to be used for a dining
facility open to patrons of the Facility during Hockey Events and open to the
public at other times determined by Operator. The Restaurant Area shall be
operated by Team or Operator and the revenue of which shall be Facility
Operating Revenue.
1.90 Seat Use Charge means a Seat Use Charge that Operator may
initiate and Team shall charge and collect in connection with its sales of each
Hockey Ticket for Home Games (excluding Hockey Tickets for Premium Seating and
excluding Complimentary Tickets). The Operator may initiate, modify or change
the Seat Use Charge upon written notice to Team at least one hundred eighty
(180) days prior to the commencement of a Hockey Season. The Seat Use Charge
shall be in addition to, and not in lieu of, Rent, admission charges and any
taxes that may be payable on such Seat Use Charge. Operator may terminate the
Seat Use Charge upon thirty (30) days prior written notice to Team.
1.91 Sponsors means the radio, television and other sponsors of
the Team or the Home Games.
1.92 Sponsor Signs means banners, signs and other temporary or
non-temporary, moveable or non-movable displays, or audio or video messages, in
the Facility which identify the Team or the Sponsors and which may be installed
before and removed after each Home Game so as to be visible or transmitted
during the Home Games but may be covered or otherwise not visible during other
Events at the Facility. At a minimum the Sponsor Signs shall be the exclusive
Advertising in the areas exclusively reserved for them in Section 7.2.
1.93 Supplemental Rent shall have the meaning given such term in
Section 3.6 of this License Agreement.
1.94 Sunrise Letter of Agreement shall mean that certain Letter
of Agreement by and among Team, County and the City of Sunrise, Florida.
1.95 Team means the Florida Panthers Hockey Club, Ltd., a Florida
limited partnership, its successors and permitted assigns who own the NHL
Franchise rights for the Florida Panthers.
1.96 Team Box Office shall mean a separate room and ticket
windows in accordance with the Program Requirements approved by Team to be
provided by Operator in an area proximate to
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the main Arena box office which shall have direct access to the exterior of the
Arena and shall be designated exclusively for the sale of Hockey Tickets.
1.97 Team Concession Revenue means all Concession Revenue from
sales of Non-Consumable Concessions during Hockey Events and sales of
Non-Consumable Concessions from the Team Retail Store as more fully described
in Article VI.
1.98 Team Equipment means furniture, fixtures and other moveable
equipment placed by the Team in the Facility at its expense, subject to
Operator's reasonable approval as to structural and safety concerns.
1.99 Team Spaces shall mean the Team Locker Room, Team Office
Space, Team Retail Store, a Team work-out and weight training facility, storage
facilities, shower facilities and Team Box Office in accordance with the
Program Requirements.
1.100 Team Locker Room shall mean the home team dressing room
space for use by the Team as a home team locker room and training and health
facility as specifically described and set forth in Program Requirements of the
Development Agreement (which Program Requirements have been approved by Team).
1.101 Team Office Space shall mean that amount of useable area of
office space for the Team's front office (business personnel) operations and
such additional office space as Operator and Team shall agree for the Team's
back office (coaches, trainers, and Team operational personnel) as specifically
described and set forth in the Program Requirements of the Development
Agreement (which Program Requirements have been approved by Team). The Team
Office Space will be provided to Team in consideration of Team's payment of
Base Rent.
1.102 Team Representative is the person authorized to issue and
receive notices on behalf of Team with respect to this License Agreement and
shall be the person designated and shall have the duties listed in Section 2.3
of this License Agreement.
1.103 Team Retail Store shall mean the useable area in an amount
not to exceed 10,000 square feet in a location mutually acceptable to the Team
and the Operator as described in the Program Requirements of the Development
Agreement (which Program Requirements have been approved by Team), to be opened
and operated by Team for the sale of Non-Consumable Concessions.
1.104 Team Revenue means revenue belonging solely to the Team as
more fully described in Article IV of this License Agreement.
1.105 Ticket Receipts means the gross amount of money received by
the Team from the sale of Hockey Tickets for General Seating, after first
deducting therefrom Admission Taxes, Seat Use Charges, and NHL assessments but
no other charges or costs. "Ticket Receipts" do not include
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the gross amount of money received by the Operator from the issuance of Hockey
Tickets for Premium Seating, or any Complimentary Tickets. Any Hockey Ticket
sales commissions on a net basis derived by the Team from any form of
distribution system or Ticket Agency agreement (whereby another entity sells
the Hockey Tickets, such as Ticketmaster), shall be deemed Ticket Receipts.
All other Hockey Tickets issued for General Seating at a Home Game shall be
deemed to have been sold at their face ticket price or their face Ticket price
plus any premium charges associated with upgraded amenities sold as package
with such Tickets (less Admissions Taxes, Seat Use Charges and applicable NHL
assessments) and shall be included in Ticket Receipts, albeit Hockey Tickets
issued in the ordinary course of business and in the exercise of the Team's
reasonable business judgement at a discount shall be included in Ticket
Receipts only at the discounted price.
1.106 Warm-Up Session shall mean the time period immediately prior
to a Hockey Event, during which the Team and any team playing against the Team
in such Hockey Event are permitted to use the Facility to prepare for such
Hockey Event.
ARTICLE II
GRANT OF LICENSE, TERM,
USE OF LICENSED PREMISES
2.1 Grant of Use and License by County. The County hereby
irrevocably grants to the Team, the license and right to use and occupy the
Facility, including but not limited to the Licensed Premises during the License
Term for the Permitted Uses (as defined below) in accordance with and subject
to the terms and conditions hereinafter set forth (the "License"). The License
granted herein shall be the exclusive grant of use of the Facility by County
for the playing and exhibition of Hockey Events and Other Hockey Events at the
Facility.
The Team shall have the exclusive right to use the entire Licensed
Premises for the Permitted Uses during the entire day (10:00 a.m. to the later
of midnight or the conclusion of the Hockey Event) when a Hockey Event is
scheduled. Notwithstanding the above, if Operator wishes to schedule another
Event at the Facility on the date that a Hockey Event is scheduled, then upon
request by Operator, Team, at its reasonable discretion, may waive its
exclusive right to use the Licensed Premises on the entirety of such date
provided that Team shall have exclusive use commencing no less than two (2)
hours prior to the commencement of the Hockey Event. Additionally, the Team
shall have the exclusive right to use and occupy the Team Spaces at all times
during the License Term. On days other than when a Hockey Event is scheduled,
and subject to scheduling of other Events at the Arena, or when the Arena is
not otherwise available, the Team shall have the non-exclusive right to use
the Licensed Premises for Practice Sessions, Promotional Hockey Exhibitions,
tryouts, scrimmages, publicity and/or press gatherings and any other
hockey-related activities provided that Team has provided to Operator
forty-eight (48) hours written notice of such use or such shorter notice as may
be reasonable under the circumstances.
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Notwithstanding anything to the contrary contained herein, Operator
shall have possession and control of the Licensed Premises other than the Team
Spaces for which Team shall have exclusive possession, and Team acknowledges
that Operator and County shall have the right to enter the Team Spaces upon at
least one (1) day's notice to Team except in an emergency when Operator and
County may enter as necessary. Neither Operator nor County (i) shall interfere
in a material respect with the Permitted Uses; (ii) shall deny or otherwise
impede access to the Licensed Premises or the Team Spaces to the Team, its
employees, agents, subcontractors, invitees or guests in a manner that
interferes in a material respect with the Permitted Uses; (iii) shall allow
any person to enter the Arena during the Home Games or for any other Hockey
Events without a Hockey Ticket; nor (iv) shall allow any other hockey team to
use the Facility for any use or purpose without the Team's prior written
consent which consent may be withheld at Team's discretion.
2.2 County Representative. The County Administrator shall be
the County's authorized representative who shall act as liaison and contact
person between the County, Team, and Operator in administering and implementing
the terms of this Agreement. County shall have the right to designate a
substitute authorized representative by providing written notice thereof to
Team and Operator. The County Representative, or his authorized designee,
shall respond to requests for review, consents (as to matters requiring
consent) or waivers within five (5) business days after submittal, failing a
written notice of disapproval within such time, the request shall be deemed
approved or the consent granted. Notwithstanding the foregoing, the Board
shall be required to consent to any amendment to this Agreement or to any other
request for consent that is not related to administration of the terms of this
Agreement. All administrative and ministerial consents required of the County
shall be given by the County Representative on behalf of County. In any
situation requiring Board approval for consent, the County's failure to provide
a written notice of disapproval within thirty (30) days of submittal shall be
deemed approved, waived or consented to by County. The Team and Operator and
any other person dealing with County in connection with this Agreement or any
matter governed by this Agreement may rely and shall be fully protected in
relying upon the authority of the County Representative or any such designee to
act for and bind County in any such matter.
2.3 Team Representative. The Team's Vice President of
Operations shall be the Teams's authorized representative who shall act as
liaison and contact person between the County, Team, and Operator in all
matters concerning this Agreement. Team shall have the right to designate a
substitute authorized representative by providing written notice thereof to
County and Operator. The Team Representative, or his authorized designee,
shall respond to requests for review, consents or waivers within ten (10) days
after submittal, failing a written notice of disapproval within such time, the
request shall be deemed approved or the consent granted. The County and
Operator and any other person dealing with Team in connection with this
Agreement or any matter governed by this Agreement may rely and shall be fully
protected in relying upon the authority of the Team Representative or any such
designee to act for and bind Team in any such matter.
2.4 Operator Representative. The Chief Operations Officer of
Operator shall be the Operator's authorized representative who shall act as
liaison and contact person between the County,
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Team, and Operator in all matters concerning this Agreement. Operator shall
have the right to designate a substitute authorized representative by providing
written notice thereof to Team and County. The Operator Representative, or his
authorized designee, shall respond to requests for review, consents or waivers
within ten (10) days after submittal, failing a written notice of disapproval,
the request shall be deemed approved or the consent granted. The Team and
County and any other person dealing with Operator in connection with this
Agreement or any matter governed by this Agreement may rely and shall be fully
protected in relying upon the authority of the Operator Representative or any
such designee to act for and bind Operator in any such matter.
2.5 Permitted Uses. Unless otherwise specifically set forth
herein, the Team shall be permitted to use the Licensed Premises for one or
more of the following purposes and uses (the "Permitted Uses"). Team shall be
permitted to use the Licensed Premises for the presentation of Hockey Events
and any activities related to or consistent with the presentation of Hockey
Events, including pre-and post game events (intermission shows, concerts or
other entertainment), Warm-Up Sessions, Practice Sessions and Promotional
Hockey Exhibitions. Team shall use the Team Spaces for their intended
purposes. The Team shall also be permitted to use the Licensed Premises to
store Team Equipment and other Team property; to conduct the marketing,
advertising, business and operations of the Team; as administrative space for
the Team's employees, officers, coaches and office personnel; for treatment,
rehabilitation and other medical needs of Team personnel; for use by the print,
voice, television, video, and radio media for watching, broadcasting and
reporting on Hockey Events and covering other Team activities; for sales of
Hockey Tickets, Sponsor Signs, Non-Consumable Concessions and for other
activities related to Team operations and the production of Team Revenue; for
use by NHL designated officials; for Team players' lounges, interactive games,
and for any other Team use not inconsistent with the foregoing.
2.6 Scheduling of Hockey Events.
2.6.1 County and Operator acknowledge that the Team shall
have first priority with regard to the scheduling of Hockey Events. Each year
during the License Term (and in the year prior to the year of the License
Commencement Date) at least thirty (30) days prior to the date on which the NHL
requires notice of preferred scheduling dates, the Team shall inform Operator
of at least fifty-six (56) dates that it wishes to reserve for regular season
Home Games and five (5) dates that it wishes to reserve for Exhibition Games
for the upcoming Hockey Season and Operator shall reserve such dates and not
schedule any other Events at the Facility on such dates. Notwithstanding the
foregoing, if at the time the Team provides Operator notice of its preferred
dates for Hockey Events, there is a previously scheduled Event, including a
County Event, which conflicts with any such date then Operator shall inform
Team of such conflict within forty-eight (48) hours of Operator's receipt of
the preferred dates and Team shall elect an alternate date or dates and provide
such dates to Operator which shall be reserved by Operator. Team may increase
the number of preferred scheduling dates as necessary to comply with NHL
requirements. Operator shall reserve such dates for Team until the NHL
releases the official schedule for such Hockey Season, at which time, the
scheduled dates shall be reserved and the remaining dates shall be released.
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2.6.2 Each Hockey Season during the License Term (and in
the year prior to the year of the License Commencement Date), Operator shall,
upon consultation with Team, reserve for Team at least 2 days per week (spaced
not less than 1 day apart or more than 2 days apart) commencing the week
following the conclusion of the regular scheduled portion of the Hockey Season
and continuing through the conclusion of the NHL's scheduled post-season
playoff period ("Playoff Period"). Team shall notify Operator as soon as
possible following receipt of the dates of the Play-Off Period from the NHL.
Operator will not schedule an Event for any date reserved for Play-Off Games.
2.6.3 As soon as Team has been mathematically eliminated
from participating in the Play-off Games, Operator shall be free to release all
reserved dates and may schedule other Events on such dates.
2.6.4 If any Hockey Event shall be postponed, canceled or
rescheduled after Operator has reserved a date therefor or, if the Hockey
Season is extended or otherwise altered and no other Event has been previously
scheduled for such date(s), Operator shall reserve the date(s) for such Hockey
Event requested by Team. If a date requested by Team has been previously
scheduled for another Event, then Team may designate an alternate date for such
Hockey Events and Operator shall reserve such date(s) for the postponed,
canceled or rescheduled Hockey Event(s).
2.6.5 Subject to general availability and reserved not more
than thirty (30) days in advance, the Team shall also have the right to use the
Facility for marketing functions for its sponsors, public skating for fans, or
for a junior sports league or other marketing uses that Team may determine
provided the Team shall reimburse the direct expenses for such use.
2.7 Term of License. This License Agreement shall be effective
as a contract as of the date hereof, but the Team's right and obligation to use
the Facility, Team's duties and obligations hereunder, and therefore the
License Term, shall not begin until the License Commencement Date (although the
parties shall have vested rights as of the date hereof as outlined in this
Agreement) and, subject to termination and extension as herein provided, shall
end on the License Expiration Date. Within twenty (20) days after the License
Commencement Date, the parties shall confirm in writing the actual License
Commencement and License Expiration Dates, which confirmation shall be attached
hereto so as to become a part hereof. Within twenty (20) days after the
conclusion of any Abatement Period, the parties shall confirm in writing the
date of commencement and the date of conclusion of such Abatement Period and if
the duration of the Abatement Period was at least ninety (90) days, the License
Expiration Date shall be extended for the entire duration of the Abatement
Period. Each such confirmation shall be attached hereto so as to become a part
hereof. Within twenty (20) days after the Team's exercise of each of its
Extension Options, the parties shall confirm in writing the date of
commencement and the date of conclusion of such Extension Term and the extended
License Expiration Date.
2.8 Options to Extend. Provided that this Agreement has not
previously been terminated as provided herein and provided that the Team is
able to obtain and deliver to County an
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opinion of County's bond counsel for any tax-exempt Bonds (the "County's Bond
Counsel Opinion") stating that the Extension Term (or any Subsequent Extension
Term) will not adversely impact the tax-exempt status of such obligations, the
Team shall have the option and right (each an "Extension Option") to extend the
License Term, upon the terms and conditions set forth herein, for up to two (2)
additional terms (each an "Extension Term") of five (5) years each, commencing
on the initial License Expiration Date or the extended License Expiration Date,
subject to earlier termination as provided herein. The Team shall exercise
such Extension Option(s) by delivering written notice to Operator and County
not less than six (6) months nor more than eighteen (18) months prior to the
then current License Expiration Date. In addition to the foregoing, if Team
wishes to renew for additional five (5) year terms (each a "Subsequent
Extension Term"), then Team shall have the right to so extend provided Team
shall deliver County's Bond Counsel Opinion to County. The Team shall
exercise such Subsequent Extension Term by delivering written notice to
Operator and County not less than six (6) months nor more than eighteen (18)
months prior to the then current License Expiration Date.
2.9 Abatement. If the cause or the effect of an Abatement
Period prevents the playing of Hockey Events in the Facility, then during the
pendency of such Abatement Period, the Team shall not be required to play the
Home Games in the Facility and shall have no obligation to pay Rent or any
other sums payable by Team hereunder during the pendency of such Abatement
Period. Within thirty (30) days after the commencement of any Abatement
Period, the party claiming the right to abate any obligation hereunder due to
the cause of such Abatement Period shall notify the other party of such claim
and upon such notification may commence abating such obligation. If the party
receiving such notice disputes such claim, such dispute shall be submitted to
ADR pursuant to Article XX within ten (10) days after receipt of such notice.
Notwithstanding the foregoing, no Abatement Period shall relieve the Team from
its obligations under the Guaranty Agreement.
2.10 Condition of the Licensed Premises. The Team acknowledges
that the Arena shall be constructed in accordance with the Program Requirements
in the Development Agreement which, when determined, shall be attached to this
License Agreement. The Arena will be a state-of-the-art, multi-purpose sports
and entertainment facility, including related surface parking and
marshaling/loading areas, designed and constructed to support the occupancy of
a NHL hockey franchise and to host other sporting events, family shows,
concerts, and related events. The Arena will include approximately
750,000-850,000 square feet in at least three (3) public concourses, as well as
mechanical and service levels and may include appropriate amenities, such as
clubs, restaurants, sports bars, retail shops, and interactive game rooms among
other features. The Arena will be equipped with modern technological systems
for acoustics, utilities (including wiring all meeting spaces for television
broadcast and reception), seating configurations (including adjustable or
exchangeable systems designed to perfect the difference in sight lines for
hockey and other sports), event transition, food and beverage facilities, live
radio and television production and broadcast facilities and equipment,
loading/unloading, mechanical systems, lighting, video distribution, ice plant,
storage, furnishings, vertical transportation, environmental graphics and
signage, video display boards, scoreboards, exterior marquees, advertising
displays, sound
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distribution and other features designed to provide patron, employee and tenant
conveniences. The Arena will include the following approximate capacities for
General Seating and Premium Seating:
18,000 - 19,500 seats for hockey
19,000 - 21,500 seats for other sports
20,000 - 21,500 seats for concerts (assumes seating behind
the stage)
The Arena capacities listed above will include Premium Seating, the number of
which is currently unknown.
The Arena will include, without limitation, the following systems.
The lighting systems in the arena bowl shall be equipped with a dimming system
for simplicity and ease of covering and uncovering such lighting. The air
conditioning and heating systems and air flow patterns shall be designed to
have minimal effect on the ice surface. The Arena shall include the rink
floor, boards and ice surface of the best available construction; state-of-the
art bracketless glass systems (Crystaplex or some other substantially similar
system satisfactory to Team) surrounding the rink floor, plus replacement glass
and systems as reasonably requested; penalty box; directional signs and
markings; scorers' tables and chairs; press tables; player benches; dasher
boards meeting or surpassing all NHL specifications and including rotating
dashers if requested by Team; training rooms (not including equipment),
equipment room (not including equipment), storage room, laundry room (not
including equipment), whirlpools, players' lounge, spouse's lounge, a VIP room,
dressing rooms (equipped with a pool for player rehabilitation), locker room
facilities comparable in size and fit out in a manner customary with other
modern, state-of-the-art facilities housing NHL teams including a storage space
as part of its locker room area, diagnostic imaging room (not including
equipment); a cooling system; ice making equipment for the rink surface,
consisting of no less than 300 tons of ice plant capacity and all
state-of-the-art ice making and water purification systems; a Communication
System; radio and television booths adequately equipped and wired; press rooms;
two (2) state-of-the-art Zamboni-type ice cleaning and resurfacing machines;
and all other equipment and facilities as commonly provided by similar
facilities and required for the conduct of the Hockey Events in compliance with
NHL requirements and normally accepted NHL procedures in a manner consistent
with the Quality Arena Standard. The Team Locker Room shall include adequate
electrical connections and capacity for drying Team equipment.
2.11 Traffic Mitigation. The County hereby agrees to use its best
efforts, in conjunction with the State of Florida Department of Transportation
and the City of Sunrise, to mitigate any traffic related issues, so that
ingress and egress projections by the County's traffic engineers and other
transportation consultants are not in excess of the capacity of the roadways
and other transportation modes leading to and from the Project Site. For
purposes hereof, such "best efforts" means, without limitation, that the County
shall (i) contract for a professional traffic engineering study to assess
traffic impacts of the Facility and recommend roadway improvements for
mitigation and (ii) pursue implementation by the City of Sunrise, the County or
the State of Florida Department of Transportation of the recommended
improvements from appropriate funding sources other than general revenues of
the County.
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2.12 Termination. Notwithstanding any contrary provision hereof,
in the event negotiations with a general contractor hired by the Project
Developer result in a definitive determination (attested to in writing by the
Contractor) that the Project cannot be opened or be issued a certificate of
occupancy prior to commencement of the 1998-99 Panthers Hockey Season, then
the Team has the option to terminate this License Agreement; provided, however,
a written notice of such termination shall be delivered to the County not later
than June 1, 1996 (unless such date is extended by mutual agreement of the
Team, the Operator and the County) which shall be based solely on the
reasonable determination by the County and the Team that the Project cannot be
Substantially Completed prior to commencement of the 1998-99 Panthers Hockey
Season. This Agreement shall also terminate if the Development Agreement is
terminated pursuant to Sections 8.1 and 14.1 thereof (except as otherwise
expressly provided in such Section 14.1). In the event of a termination
pursuant to this provision, upon payment of any sums then owing hereunder by
either party to the other, whether because of a default hereunder or for
payment of their respective shares of pre-development costs, as provided in
Section 8.1 of the Development Agreement, the parties shall be released from
all future obligations hereunder but neither party shall be released from any
liability under the Development Agreement that has accrued pursuant to the
Development Agreement on or before the date of such termination.
A default by the Project Developer or the Operator pursuant to the
Operating Agreement which is not cured, or following a reasonable cure period
does not result in the replacement of the Project Developer or the Operator by
the County, shall not enable the Team to terminate this Agreement.
ARTICLE III
RENT, TEAM LOAN AND TEAM GUARANTEE
3.1 Rent. Subject to Abatement as provided in Section 2.9 hereof,
in consideration to be paid to Operator for the Team's license and right to
use the Facility as herein provided, the Team shall pay the Base Rent and the
Incentive Rent, if any, plus applicable sales taxes thereon. Team shall pay
the Rent, without deduction, offset, prior notice or demand regardless of
whether the County or Operator is in default hereunder or in the payment of
debt service on the Bonds or whether the Operator or County is in default
under the Operating Agreement. The Rent payable to the Operator shall be
deemed Facility Operating Revenue. All payments of Rent shall be in lawful
money of the United States of America in cash or other immediately available
funds.
3.2 Base Rent. The Team shall, on or before the first day of each
month during the Hockey Season prior to any Home Games being played, and
without notice, delay or the benefit of a grace period, remit the Base Rent,
which shall be an amount equal to the total number of Home Games scheduled for
said month times Seven Thousand Five Hundred Dollars ($7,500.00), plus all
applicable sales taxes. The Base Rent shall be paid to Operator irrespective
of the number of Hockey Tickets issued, sold or otherwise distributed.
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3.3 Seat Use Charge. Upon written notice to Team at least one
hundred eighty days prior to the commencement of a Hockey Season, Operator may
initiate, modify or change the Seat Use Charge. The Team shall collect and
deliver to Operator the Seat Use Charge monthly in arrears, on or before the
fifteenth (15th) day of each calendar month in respect of Home Games played at
the Facility during the preceding month.
3.4 Pass Through Expenses. The Team shall pay the Hockey Event
Staffing Expenses, up to the Pass Through Expenses Cap, on or before the
fifteenth (15th) day of each calendar month following receipt from Operator of
a statement outlining all such Hockey Event Staffing Expenses incurred in
respect of Home Games played at the Facility during the preceding month. The
Team shall also pay the Hockey Utility Reimbursable Expenses, up to the Pass
Through Expenses Cap, to Operator annually on or before the first day of the
second month following the end of each Fiscal Year during the License Term.
Team shall only be required to annually pay Operator an amount of Pass Through
Expenses equal to the Pass Through Expenses Cap. The Pass Through Expenses
payable to Operator by Team shall be the reimbursement of direct costs incurred
by Operator.
3.5 Incentive Rent. In recognition of Operator's opportunities to
procure and retain personnel with certain economies of scale, Operator shall be
entitled to receive, each year during the License Term, Incentive Rent, plus
applicable sales taxes, from Team on or before the first day of the second
month following the conclusion of the Fiscal Year. Incentive Rent shall be
calculated using the aggregate Ticket Receipts, Base Rent, and Pass Through
Expenses (up to the Pass Through Expenses Cap) incurred, paid or determined by
Team during the immediately preceding Fiscal Year.
3.6 Supplemental Rent In the event that Team determines that
certain capital or other infrastructure improvements at the Facility are
necessary for the prudent and efficient operation of the Facility, then Team
shall propose to Operator and County and the Board may, subject to the County's
credit standing and debt capacities, use diligent, good faith efforts to
facilitate the financing and construction of such improvements. The County
agrees, subject to necessary Board approvals from time to time, shall utilize
diligent, good faith efforts to secure such financing at the lowest cost of
capital, whether taxable or tax-exempt, and may at its option identify legally
available non-ad valorem revenue sources which could be contributed to assist
or enable the underwriting or credit enhancement of the financing. Upon
completion of such improvements, Team shall be obligated to pay supplemental
rent to the Operator and the Operator will include as an Incremental County
Preferred Revenue Allocation pursuant to the Operating Agreement, when
considered along with any other dedicated County sources, if any, (subject to
adjustment for certain federal income tax considerations relating to the Bonds)
in an amount equal to the annual debt service cost of financing such additions
or improvements amortized over the remainder of the License Term or such other
term as mutually agreed.
3.7 Team Loan to County for Debt Service. The Bonds, when issued,
will provide for Revenue payments to be made commencing with the first
scheduled Debt Service Payment Date and continuing semi-annually or quarterly
until the Bonds have been paid in full. The County
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wishes to assure itself that it has access to sufficient funds that, when
considered together with the Pledged Tax Receipts, will enable it to timely pay
amounts required under the Bonds. Accordingly, Team and County agree that,
provided the Pledged Tax Receipts are legally eligible to be used for the
purposes set forth in the Bonds then, upon ten (10) days prior written notice
or demand from the County, regardless of whether the County or Operator is in
default hereunder or is in default in the payment of debt service on the Bonds,
and regardless of whether the Operator or County is in default under the
Operating Agreement, the Team shall make, at County's request, a loan to the
County (the "Team Loan") as described below. County acknowledges and agrees
that Team shall have no obligation to make a Team Loan to County if a change,
revision or other amendment to the law or ordinance that authorize the
collection of the Pledged Tax Receipts or their use in connection with the
Project, is enacted. The Team Loan shall be an amount equal to the difference
between Pledged Tax Receipts received by County during the semi-annual period
beginning and ending six (6) months prior to the applicable Debt Service
Payment Date (the "Measuring Period") and $5 million. The Team Loan shall be
evidenced by a Promissory Note or other evidence of indebtedness satisfactory
to Team. The County shall only use the Team Loan to make debt service payments
required under the Bonds. Notwithstanding the above, Team shall have no
obligation to make a Team Loan to County if the cumulative Pledged Tax
Receipts, beginning with the first Measuring Period, exceed $5 million x the
number of previous Measuring Periods, plus the amounts of Team Loans repaid to
Team during such prior Measuring Periods. The County covenants and agrees that
the first use of all Pledged Tax Receipts received during the Measuring Period
in excess of $5 million, at such Debt Service Payment Date (the "Excess Pledged
Tax Receipts"), shall be used to repay the Team Loan(s), plus accrued interest
thereon at the Premium Rate. The County further covenants and agrees (i) that
it shall not take, use or apply any of these Excess Pledged Tax Receipts
received during the Measuring Term until the Team Loan(s), plus accrued
interest thereon, have been repaid in full and (ii) that County shall not
pledge the Excess Pledged Tax Receipts unless such pledge shall recognize that
the first use priority for the Excess Pledged Tax Receipts shall be to repay
the Team Loans plus accumulated interest. The Team Loans shall be repaid to
the Team from Excess Pledged Tax Receipts at any Debt Service Payment Date.
Team's obligation to make Team Loans shall terminate when the debt service on
the Bonds has been paid.
3.8 County Preferred Revenue Allocation. The Team shall execute
and deliver to the County a Guaranty Agreement at the time of execution of
this License, in substantially the form attached hereto as Exhibit 3.8. The
Guaranty Agreement shall evidence the covenants and agreements of the Team to
make Team Loans pursuant to Section 3.7 and shall guarantee the Operator's
obligation to pay the County Preferred Revenue Allocation to County pursuant to
the applicable provisions of the Operating Agreement. The Guaranty Agreement
and the Guaranty provided herein shall terminate upon the full payment
satisfaction of the debt service on the Bonds. The Guaranty Agreement shall
provide that if the Operator fails to make a County Preferred Revenue
Allocation to the County at least ten (10) days prior to the applicable Debt
Service Payment Date then the Team shall pay the County Preferred Revenue
Allocation to County within five (5) days prior to such Debt Service Payment
Date.
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3.9 Reduction of County Preferred Revenue Allocation. In the
event (i) Operator determines pursuant to the Operating Agreement to use the
cash proceeds received from the sale of personal seat licenses prior to the
Operations Start Date to prepay or redeem a portion of the Bonds to the extent
permitted under the Plan of Finance (attached as Exhibit C to the Development
Agreement), (ii) Project Developer develops the Project for an amount less than
the amount set forth in the Land Acquisition and Project Development Budget and
such amount is not used to make additional improvements to the Project or (iii)
Operator sells the rights to conduct Concessions at the Facility to a third
party and the Operator, Team and the County mutually determine to use the
proceeds of such sale to redeem or prepay a portion of the Bonds to the extent
permitted under the Plan of Finance, then, in any such events, the County
Preferred Revenue Allocation shall be reduced each year during the Term by an
amount equal to the amount that the collective amount of the foregoing
prepayments or redemptions serve to reduce the annual debt service payments on
the Bonds (the "County Preferred Revenue Allocation Reduction").
3.10 Team Spaces. In consideration of the Team's payment of Base
Rent and Incentive Rent, Team shall have the sole right to use and occupy the
Team Spaces for the License Term and any Extension Term.
ARTICLE IV
TEAM REVENUES, TEAM EXPENSES
AND REVENUE SHARING ARRANGEMENT
4.1 Team Revenues. The Team shall exclusively own and possess all
Ticket Receipts, Team Concession Revenues, revenues received in connection with
Sponsor Signs, sponsorship receipts including pay television, television and
radio broadcasting, promotional and or Team sponsorship fees received or
collected in connection with the conduct of Hockey Events, revenues from the
sale of Non-Consumable Concessions sold during Hockey Events and other items
sold at the Team Retail Store, and all of the distributions to Team of Net
Operating Income pursuant to the Revenue Sharing Arrangement.
4.2 The Team Retail Store. The Team Retail Store will be managed
and operated by the Team. All revenues from sales of Non-Consumable
Concessions in the Team Retail Store shall be sole and exclusive revenue of the
Team and shall not be deemed Facility Operating Revenue. The Team Retail Store
shall be open at such times as determined solely by Team and Operator, but the
Team Retail Store may be open at all times that a Hockey Event or any other
Event is conducted at the Facility. The Team Retail Store may be designated as
the exclusive vendor of certain Team or other sports related Non-Consumable
Concession items at the Facility which items shall be chosen by Team with
consultation of Operator.
4.3 Team Expenses. Other than maintenance, custodial and utility
expenses, which shall be a Facility Operating Expense, all expenses related to
operation of the Team Office Space and the
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Team Retail Store including personnel costs, and other costs of the Team's
office and retail store operation, shall be borne by the Team and shall not be
treated as a Facility Operating Expense. The expenses of operating the Team
Retail Store shall be borne solely by the Team from its own resources and the
Operator shall have no responsibility for payment for such expenses. All
personnel utilized for the Team Retail Store shall be personnel of the Team and
not the Operator. Team shall also be responsible for all other operating
expenses of the Team (that are not Facility Operating Expenses) including,
without limitation, salaries and employment benefits for Team players,
employees, contractors and agents, expenses for insurance that Team is required
to maintain pursuant to Article XIV and the Team's obligations under the
Guaranty Agreement.
4.4 Net Operating Income; Revenue Sharing Arrangement. The County
shall require the Operator in the Operating Agreement and Operator
affirmatively agrees to distribute the Net Operating Income for each Fiscal
Year due to the Team (or to Team's assigns pursuant to Section 12.1 hereof) and
to the County pursuant to the Revenue Sharing Arrangement no later than 90 days
following the end of such Fiscal Year. In making payments of Facility
Operating Revenue from the Operating Fund, Operator shall distribute such funds
in the order of priority and at such times as described in Section 5.3 of the
Operating Agreement. For purposes of this Agreement, the term Revenue Sharing
Arrangement means the agreement between County and Team to share the annual Net
Operating Income of the Facility throughout the License Term. The Revenue
Sharing Arrangement provides that the Operator shall distribute the first $14
million of annual Net Operating Income to Team and shall distribute all Net
Operating Income in excess of $14 million eighty percent (80%) to Team and
twenty (20%) to County. The Revenue Sharing Arrangement shall not be adjusted
for inflation. Any adjustment to the amounts of Net Operating Income
distributed to County or Team due to audit adjustments shall be distributed to
or collected from the County and Team by the Operator no later than 30 days
after final audited statements of the Team and the Operator are completed.
ARTICLE V
MANAGEMENT AND CONTROL,
MAINTENANCE AND EVENT STAFFING
5.1 Management and Control. The Operator shall be responsible
for the safety and security of the Facility at the Hockey Events including,
without limitation, the determination upon consultation of Team, of security
staffing levels and patterns, the inspection and approval of security measures
and the exclusion or ejection of persons or items in the interest of safety or
security. The Operator shall provide such security personnel for the Hockey
Events both within and outside the Facility as shall be necessary to maintain
and ensure public order and safety in and around the Facility, for the
successful and interruption-free operation of the Hockey Event and to protect
the parties and the users thereof. The Team shall comply with such reasonable
rules governing the security of the Facility as shall be established by the
Operator from time to time consistent with NHL requirements and the provisions
of this License Agreement. In the conduct of its management and
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operations of the Facility, Operator shall cooperate with Team to insure that
due consideration is given to Team's customer service goals and for receipt of
Team's input on all staffing and customer service matters. Operator shall
manage and operate the Facility at all times during Hockey Events in a manner
consistent with the Quality Arena Standard. Operator and County shall procure
for Team and for the Facility all of the police, traffic management, fire,
paramedic, ambulance, hazardous materials response team, and other services to
be provided by the City of Sunrise pursuant to the Sunrise Letter of Agreement.
5.2 Utilities and Maintenance. The County shall cause the
Operator to furnish all water, heat, air-conditioning, electricity, gas,
telephone, janitorial and other services and utilities necessary for the
operation of the Facility, for the conduct, in comfort, of the Hockey Events,
Practice Sessions and for other related Team uses of the Facility as provided
herein and in a manner consistent with Quality Arena Standard. The electricity
for the Facility shall be sufficient to light the Arena with the degree of
illumination required for color televising and broadcast of the Hockey Events
and shall at all times be sufficient, in the Team's reasonable view, to permit
the Team to fully enjoy all of the Team's other uses permitted under this
License Agreement. Notwithstanding the above, neither Operator nor County
shall be responsible for an interruption of utility services that is beyond
their control. Operator will provide cleaning services necessary to clean and
maintain the Licensed Premises in a manner consistent with the Quality Arena
Standard for all Hockey Events and other Permitted Uses. The County shall
cause the Operator to furnish, operate and maintain in good, clean order,
condition and repair the Facility and its fixtures, machinery, equipment,
improvements and other components including, without limitation, all plumbing,
heating, air-conditioning, electrical and gas connections and systems; the
Communication System; the Common Area; the Premium Seating and all regular
seating; the rink floor and the remainder of the Licensed Premises, the Team
Spaces, so that the Facility shall be in a condition ready for each Hockey
Event, Practice Session or other related Team use as provided herein in a
manner consistent with the Quality Arena Standard. Neither Team nor Operator
nor County shall diminish or eliminate any of the facilities or equipment
required for the Hockey Events without the Team's prior written consent other
than in replacing furniture, fixtures and equipment which is damaged or
obsolete. In performance of its maintenance duties, the Operator shall make
such replacements, repairs and renovations of the Facility and its equipment
(excluding Team Equipment) as is required so that the Facility (including
inside the Arena and the outside Arena landscaped areas) shall be in good,
clean order, condition and repair in compliance with the Quality Arena Standard
and with NHL and applicable governmental regulations, requirements and
standards reasonable wear and tear excepted. The Team shall provide the
Operator with any changes in the NHL requirements or procedures as adopted.
County shall implement the terms of the Sunrise Letter of Agreement and cause
the City of Sunrise to provide Team and the Facility with all of the water,
sewer and natural gas utilities referred to in such agreement.
5.3 Condition of Arena on Day of Hockey Events and Practice
Sessions. On the day of each Hockey Event, except as provided in Section 2.1
of this License Agreement, Operator shall provide the Licensed Premises in a
condition consistent with Quality Arena Standard for Team's use for the conduct
of Hockey Events. Specifically, but not by way of limitation, this obligation
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includes: the furnishing of the ice playing surface in Quality Arena Standard
condition and meeting all NHL requirements on the day of such Hockey Event for
purposes of allowing Team and the visiting teams to conduct Warm-Up Sessions;
the furnishing in good operating order, condition and repair on the day of each
Hockey Event in a condition consistent with Quality Arena Standard of all
required goals and backup goals, nets, lines and striping, dasherboards;
protective glass systems, photographers booth(s), time keeper booth(s), player
penalty boxes, on-ice officials box, goal judge boxes, goal lights, two (2)
Zambonis, adequate signs and markers, team benches, tables and chairs, line
marking, complete and effective lighting system, Communication Systems, phone
hookup from each bench on ice level to respective coaches and assistant
coaches, radio and television booths, and all other special equipment and
facilities then necessary or desirable for the performance of the Hockey Event.
Operator shall provide for each Practice Session those facilities and equipment
necessary or desirable therefor in accordance with Quality Arena Standards.
5.4 Staffing for Hockey Events. At its expense, the Team shall
employ the players, officials, timers, scorekeepers, scoreboard operators,
public address announcer and other persons directly engaged in the conduct of
the Hockey Events. The Operator shall furnish trained employees sufficient for
the operation and maintenance of the Facility for the Hockey Events including
an event coordinator, parking lot attendants, plumbers, electricians,
carpenters, maintenance crew and supervisors qualified to operate the Facility
and its equipment which expenses shall be Facility Operating Expenses. The
County shall provide in the Operating Agreement that all necessary functions
for the staffing and operation of the Facility, its facilities and equipment,
shall be properly performed by the Operator so that the Hockey Events may be
conducted with adequate protection of the interests of the parties and of the
public and in a manner consistent with the Quality Arena Standard. The
Operator shall also employ Event Staff (ticket sellers, ticket takers, ushers,
first aid attendants, security personnel, janitors, cleaning personnel and
other personnel) in such number and with such qualifications as the Team may
require for the conduct of Hockey Events consistent with NHL requirements and
procedures and in a manner consistent with the Quality Arena Standard. In
meeting the Quality Arena Standard, Operator shall consult with Team on all
issues relating to staffing levels and composition during Hockey Events and
during times of other Team uses of the Facility. Team shall be able to
establish reasonable grooming, dressing and cleanliness standards for Hockey
Event Staff and other Operator employees who will have contact with Hockey
Ticket holders, Team guests and patrons during Hockey Events. The Team shall
have the right to require Operator to implement certain customer service,
security and hospitality training of Hockey Event Staff that meets the Team's
goals and in order to meet customer service, security and hospitality
consistent with the Quality Arena Standard. All Event Staff that Operator is
required to provide for Hockey Events pursuant to this Section 5.4 shall be
known as Hockey Events Staffing. Team shall reimburse Operator for the Hockey
Event Staffing Expenses as provided in Section 3.4 hereof.
5.5 Ice Making. Operator agrees that, upon at least twenty-four
(24) hours advance notice and subject to scheduling of other Events at the
Facility, Team may require that Operator remove the existing ice surface at no
cost to Team if such surface shall not meet any NHL requirement or any Hockey
Rules. In addition, Team may require Operator to remove and replace the ice
surface,
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at no cost to Team, up to three (3) times per Hockey Season, such replacement
to occur at Operator's earliest opportunity.
ARTICLE VI
CONCESSIONS
6.1 Operation of Concessions. The Operator, itself or through its
Concessionaires, shall diligently operate all Concessions operations at the
Facility (except for the Team Retail Store which will be exclusively operated
by Team or its designee) in a manner consistent with the Quality Arena
Standard. In order to conduct the sale of Concessions, the Operator shall
self-operate the concessions or contract with third party Concessionaires,
provided that the Team shall have the right to approve the parties and terms of
any third party agreements to be entered into by Operator for the conduct of
the sale of Concessions. Furthermore, in order to maintain the operation of
Concessions in a manner consistent with the Quality Arena Standard, the
Operator shall insure that all employees engaged in the sales of Concessions to
Facility patrons shall participate in quarterly customer service training
programs (for which the Team shall be able to provide input as to the
organization and substance of same) staged by the Operator, a Concessionaire or
third party. Operator agrees that it shall not enter into a Concession
Agreement that obligates Operator to sell certain name brand Consumable and
Non-Consumable Concession items at the Hockey Events without the prior written
approval of Team.
6.2 Consumable Concessions. Subject to the designation of products
by the Team as hereafter provided, the Operator shall determine the kind and
quality of Consumable Concessions and shall directly employ the sales personnel
or contract with third parties for sale of same. The Team and Operator shall
designate the menu, name brands and prices of Consumable Concession products to
be sold at the Hockey Events including the rights for beverage pouring rights,
but all such products shall be (a) in compliance with all contracts existing at
the time of such product designation among the Operator, its Concessionaires
and the producers or manufacturers of concession products sold at the Facility;
and (b) consistent with NHL requirements. Unless otherwise addressed in the
Operating Agreement or in this License Agreement, Concession Revenue from the
sale of Consumable Concessions shall be Facility Operating Revenues.
6.3 Non-Consumable Concessions.
6.3.1 Designation of Non-Consumable Concessionaires. In
the conduct of Non-Consumable Concessions at the Facility, Operator shall
self-operate or contract with third party Concessionaire or the Team to operate
Non-Consumable Concessions at the Facility for all or some Events (including
Hockey Events) in order to provide customer service and quality merchandise
acceptable to the Team and consistent with the Quality Arena Standard. The
concession contract will set forth the duties and responsibilities of the
Concessionaire applicable to the operation of the Concession.
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6.3.2 Team Input. The Team, in consultation with the
Operator, shall determine the kind, quality, quantity and pricing of
Non-Consumable Concessions to be sold at Hockey Events. The number and size of
the fixed locations, in addition to the Team Retail Store, where such products
may be sold within the Facility shall be established by mutual agreement of the
Operator and the Team and shown on the Design Development Documents, consistent
with the Quality Arena Standard. Non-Consumable Concessions products shall be
(a) in compliance with all contracts existing at the time of such product
designation among the Operator, its Concessionaires and the producers or
manufacturers of Non-Consumable Concessions sold in the Facility; and (b)
consistent with NHL requirements.
6.3.3 Non-Consumable Concession Revenue. All Concession
Revenues from sales of Non-Consumable Concessions during Hockey Events shall be
Team Revenue. All revenues from sales of Non-Consumable Concessions in the
Team Retail Store, regardless of when made, shall be Team Revenue except that
revenue from sales of Non-Consumable Concession merchandise received at the
Team Retail Store on consignment from the user of the Facility or from Operator
shall be Facility Operating Revenue to the extent provided in the use agreement
for such Event or to the extent provided in the consignment agreement.
ARTICLE VII
ADVERTISING
7.1 Marketing, Advertising, Promotion. Operator shall have the
exclusive right to post, exhibit or display any Advertising at the Facility and
the revenue received by Operator in connection with the sale, lease or license
of Advertising shall be Facility Operating Revenue. The marketing, promotion,
pricing and sale of Advertising shall be determined and executed initially by
the Project Developer and the Team, and after the Operations Start Date (as
defined in the Operating Agreement) jointly by the Operator and the Team. In
recognition of Team as primary user of the Facility, Operator shall enter into
a to-be-negotiated joint marketing/advertising agreement (the "Facility
Advertising Agreement") with Team to provide Team with significant input and
participation in the marketing and promotion of Advertising and in connection
with the sale or license of Advertising at the Facility. Operator agrees that
it shall not enter into any agreement for the sale or license of Advertising
which provides for the grant of exclusive rights for a specific advertising
category in the Facility unless Team shall consent to such sale, grant or
license and unless such sale, grant or license complies with the provisions of
the Facility Advertising Agreement. In the Facility Advertising Agreement,
Team and Operator shall agree to a procedure to resolve any potential conflicts
which may arise in the sale of Advertising and Sponsor Signs at the Facility.
Operator acknowledges that Team has the exclusive right to sell Sponsor Signs
and that Operator may not sell or license any Advertising in locations
identified as exclusive areas for Sponsor Signs. Advertising shall not include
any advertising or promotional opportunities provided pursuant to NHL league
sponsorship agreements and no revenue received by the Team pursuant or
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attributable to NHL league sponsorships shall be deemed Facility Operating
Revenue but shall be Team revenue.
7.2 Sponsor Signs. Team shall have the exclusive right to sell,
grant or license the placement of Sponsor Signs in the following locations
(and, except as may be sold by Team, no Advertising shall be located) on the
ice hockey playing surface, penalty boxes, dasher boards, player benches, on
Team and trainer equipment and visiting team and trainer equipment, in the
press room and other media areas, on the rink glass systems, on the Zambonis,
on the Hockey Tickets, on Hockey Event Staff, on the video matrix or electronic
score boards (for display or distribution of video or audio messages during
Hockey Events) on scoreboard streamers, in Team publications and printed
material, on Team blimps that operate inside of the Facility, on the signage
provided to the Project by the City of Sunrise pursuant to the Sunrise Letter
of Agreement and on all other marketing venues and opportunities created by
Team inside of the Facility (such opportunities may be created by the Team's
utilization of new technologies) during Hockey Events. The Team shall control,
bear all expenses and retain all of the revenue from Sponsor Signs. Sponsor
Signs shall be of such number, size, material and finish consistent with the
Quality Arena Standard. At the reasonable request of Operator, Sponsor Signs
shall be covered during other Events at the Facility. To the extent provided
in the Facility Advertising Agreement, Advertising shall not violate the
exclusivity or other restrictions of the Sponsor Signs. Operator shall have no
right or obligation to sell Sponsor Signs; however, if Operator, in its sales
of Advertising, shall learn of any Person that wishes to purchase a Sponsor
Sign, then Operator shall promptly forward such sales opportunity to Team. In
the event that Team has not sold or licensed Sponsor Signs on the dasherboards
during Hockey Events, then Team agrees that it shall promptly notify County and
make available such unsold dasherboard space for tourism promotion and
advertising use at user's sole production cost for as long as such dasherboard
shall remain unsold or unlicensed. All revenue from such sales of Sponsor
Signs shall be exclusively Team Revenue.
7.3 Naming Rights. The Team acknowledges that the Operator may
sell, license or grant the right to name some or all of the Facility, including
naming Facility concourses, the rink or any part of the Facility, subject to
NHL regulations and, pursuant to the terms of the Operating Agreement.
Operator shall be free to sell, license or grant the Naming Rights on such
commercially viable terms and conditions and at such consideration as Operator
and Team shall determine at any time after the date hereof. The consideration
to be received in connection with the sale, license or grant of Naming Rights
may include barter or trade consideration, up to a maximum of twenty percent
(20%) of the aggregate value of Naming Rights consideration. In any Fiscal
Year, Team shall be entitled to receive fifty percent (50%) of the actual
barter consideration received by Operator in respect of the sale, license or
grant of Naming Rights. However, under no circumstance shall such use of
barter reduce the revenue recognition by the Operator to the Project, except to
the extent attributable to Team Revenues earned in connection with such barter
transaction. All of the other revenues (including the remaining barter
consideration) attributable to such Naming Rights that accrue either prior to
the License Commencement Date or following the License Commencement Date shall
be Facility Operating Revenue. Operator shall consult with Team prior to
concluding any such sale, license or grant of Naming Rights in an effort to
avoid conflicts with Team sponsors and
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with licensees of Sponsors Signs and in order to maximize revenues from such
sales or licenses of Naming Rights and in order to permit the Team to market
Sponsor Signs to the Naming Rights purchaser, licensee or grantee.
7.4 Team Name, Logo and Schedule. Operator shall prominently
display Team's name, logo and schedule in areas around the Facility. The size,
location and appearance of such displays shall be developed and mutually agreed
upon by Team and Operator. In no event shall display of any other tenant be
more prominent in size, appearance or frequency than that of Team.
7.5 Tourism Promotion Spots/Tag Line. Team agrees that during any
regular season broadcasts of Team hockey games controlled by Team (exclusive of
game broadcasts controlled by NHL and/or by the visiting team) Team shall make
available from its unsold inventory, if any, a 30 second spot during each game
for promotion of tourism in Broward County, Florida.
ARTICLE VIII
RADIO AND TELEVISION BROADCASTS
AND OTHER DISTRIBUTIONS
8.1 Radio and Television Distribution. The Team and/or the NHL
shall have the exclusive right to control and to receive the revenue from all
radio, television and other media broadcasts, reproductions and transmittals of
the pictures, descriptions and accounts of the Hockey Events, and all other
activities of the Team and the visiting teams incidental to Hockey Events and
Other Hockey Events in the Facility permitted by this License Agreement
regardless of the nature of the technology or the medium and whether
distributed locally, nationally or otherwise. This Section 8.1 shall include,
without limitation, cable television, over the air pay television, multipoint
and multichannel multipoint distribution system television, direct broadcast
satellite television, subscription television, direct broadcast satellite
television, subscription television, master antenna and satellite antenna
television and lower power television, closed circuit television, internet
distribution and any other technology now or hereafter developed. Team will
determine the rates charged for radio and television hook-ups by television or
radio trucks or other distribution facilities for all Hockey Events at the
Facility (which rates may change as frequently as Team may determine and shall
be comparable to the rates charged Team at other NHL Arenas). All such hook-up
fee revenues shall be Facility Operating Revenue.
8.2 Broadcast Revenues. All revenue attributable to radio and
television broadcasts or other distributions of hockey games of the kind
described in Section 8.1 shall be Team Revenue and/or NHL revenue.
8.3 Public Areas. Operator shall ensure that the Restaurant Area,
Interactive Area, Team Locker Room, private club, and other public meeting
areas as set forth in the Construction Documents attached to the Development
Agreement or as reasonably designated by Team in the
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Program Requirements, shall be wired or otherwise equipped with radio and
television distribution inputs and outputs for receipt and transmission of
radio and television distribution.
ARTICLE IX
PARKING
9.1 Parking. The Operator shall control, bear all expenses and
collect all revenue from the use of the Arena Parking as Facility Operating
Revenue and shall establish parking charges and collect parking revenue in such
manner as the Operator may determine. The County will provide in the Operating
Agreement that the Operator shall not rent or otherwise commit the Arena
Parking in advance to other uses during the Hockey Events. Operator shall
provide Team at no charge with exclusive use of on-site parking spaces in
reasonably close proximity to the Arena at all times during the License Term
for use by Team employees, players, coaches and staff ("Team Parking") in
accordance and consistent with the Quality Arena Standard. In addition,
Operator shall also provide Team with non-exclusive use of parking spaces for
use by patrons of the Team Retail Store. Such use shall be at no charge to the
patron except that patrons shall be charged customary parking fees during
Hockey Events. These parking spaces can be utilized by Team employees and
players without charge. Operator shall designate spaces of Arena Parking as
exclusive for the use of Premium Seat Licensees which spaces shall be located
among the closest parking spaces to the Arena. Operator shall implement or
cause to be implemented any reasonable Team service, grooming and dress
standards for parking attendants and valet operators.
ARTICLE X
TICKETS, PREMIUM SEATING
10.1 Hockey Tickets. The Team shall control the pricing, the
advertising of and on, and the distribution of the Hockey Tickets for the Home
Games and shall receive all revenue from the sale of Hockey Tickets for General
Seating for the Home Games, issued either directly by the Team or through
agencies or other designees authorized by the Team. Team shall be responsible
for issuing all Hockey Tickets for Home Games to Premium Seating Licensees
without charge other than the fees charged pursuant to any Premium Seating
License. Neither the County nor the Operator shall issue Hockey Tickets or
authorize anyone else to do so. No person shall be admitted to a Home Game
without a valid Hockey Ticket. During Hockey Events, the Arena scorers' table,
ice surface, press room and other designated media areas shall be under the
exclusive control of the Team which shall issue all credentials for Hockey
Events and other Hockey Tickets therefor.
10.2 Premium Seating. The Operator and Team shall mutually control
the marketing promotion, pricing, sale and licensing of Premium Seating at the
Facility. Team shall be responsible for issuing all Hockey Tickets for Home
Games to Premium Seating Licensees without charge other
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than the fees charged pursuant to any Premium Seating License. Notwithstanding
the above, the Hockey Tickets distributed to Premium Seating Licensees shall be
valued for purposes of applicable sales taxes at no more than the average
prices charged for Hockey Tickets for General Seating (except for Play Off
Games when Hockey Tickets will be valued at the average Hockey Ticket price for
such Play Off Games). All revenues from the sale and licensing of Premium
Seating shall be Facility Operating Revenue and all expenses incurred in
connection with the marketing, promotion, sale and licensing of Premium Seating
shall be a Facility Operating Expense. The Operator shall provide a separate
means of access for Premium Seating Licensees at Hockey Events which shall be
more convenient than the access provided for General Seating and shall provide
such maintenance, services and support to the Premium Seating areas as is at
least consistent with the Quality Arena Standard.
10.3 Tourism Promotion Ticket Purchase. Team shall make available
for purchase for tourism promotion in Broward County, Florida up to fifty (50)
General Seating Tickets for each Hockey Event at the Facility. If requests
have not been exercised to purchase such Tickets at least one (1) week prior
to the scheduled date of such Hockey Event then Team shall have no further
obligation to reserve such Tickets and Team shall be free to sell such Tickets.
ARTICLE XI
RECORDS, AUDITS
11.1 Team Records. The Team shall maintain full, true and complete
books and records of all transactions upon which all Rent and other sums
payable hereunder are computed. On the 15th day of each calendar month
following a month in which Home Games were played in the Facility, the Team
shall provide the Operator with a copy of the official Ticket Receipts
statements or other manifests provided to the NHL for the Home Games played
during the preceding month. Within 120 days after each Hockey Season during
the License Term, Operator's independent auditor shall have reasonable access
to necessary records in order to review, certify, and audit the Ticket Receipts
(and any other sums collected by the Team on behalf of the Operator) to insure
compliance with the terms of this License Agreement. If the audit report
discloses an overpayment or underpayment of Rent, then within 15 days following
the issuance of the audit report, the Team shall pay to the Operator, or the
Operator shall refund to the Team, the applicable underpayment or overpayment.
The County acknowledges that certain Team records or information examined or
obtained hereunder by the County via the Operator is considered "Trade Secret
Information" pursuant to F.S. 815.045 and that any such information is
proprietary, and expressly made confidential and exempt from the public records
law. The County acknowledges and agrees that disclosure of any such Trade
Secret Information to another person would negatively impact the business
interests of the Team in the marketplace. County further covenants and agrees
that at all times during the Term and any Extension Term, County shall (i) hold
the Trade Secret Information in confidence and refrain from disclosing the
Trade Secret Information or transmitting any Trade Secret Information to any
other Person; (ii) use the Trade Secret Information solely in connection with
this License Agreement and
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for no other purpose; and (iii) take all precautions necessary to ensure that
Trade Secret Information shall not be, or be permitted to be, shown, copied or
disclosed to third parties, without the prior consent of Team. The County
further covenants and agrees to notify Team if it receives a request for
disclosure so that Team may vigorously defend any claims or disputes arising
from efforts by others to cause such Trade Secret Information to be disclosed
as a public record. The County further agrees to amend this Agreement as
necessary to further protect Trade Secret Information.
11.2 Facility Records. The Operator shall maintain full, true and
complete books and records with respect to the operations of the Facility and
the calculation of Net Operation Income in accordance with generally accepted
accounting principles and shall keep such records for three (3) years after the
Fiscal Year to which they pertain. Operator shall timely provide Team with the
Financial Reports required pursuant to and at such times required by Section
7.3 of the Operating Agreement. Within 60 days after each Fiscal Year, the
Operator shall provide the Team a certified audit of Facility operations for
such Fiscal Year conducted in accordance with generally accepted accounting
standards by a nationally recognized accounting firm chosen by Operator. The
audit shall be conducted for the benefit of the parties and the cost of which
shall be a Facility Operating Expense. The Team or its attorneys or
accountants, shall be entitled to inspect the books and records of the
Facility, at the offices of the Operator at reasonable times upon forty eight
(48) hours notice. At its expense, the Team may annually conduct an audit of
the books and records of the Facility. After thirty (30) days written notice
by the Team, Operator shall provide or make available to the Team, all books
and records requested by Team, to conduct such audit. If either audit reveals
an overpayment or underpayment of the Net Operating Income distributed to Team,
then Operator shall either pay or collect from Team the underpayment or the
overpayment, as the case may be, within thirty (30) days. In the event of a
discrepancy between such audits the auditing firms shall reconcile such
discrepancy and inform the parties of their results.
ARTICLE XII
ASSIGNMENT
12.1 Right to Assignment. Except as provided in Section 17.1 the
Team shall have the right to assign this License Agreement in connection with
the sale of its Franchise (or in connection with the sale of the general
partner and/or majority of partnership interests of the Team) in compliance
with NHL requirements (the Team shall provide the County and Operator with a
copy of the transfer application at the time it is submitted to the NHL) and
shall have the right to assign this License Agreement to a Public Entity
Assignee in compliance with NHL requirements. Any transferee or purchaser of
the Team's Franchise or the Public Entity Assignee shall expressly assume all
of the obligations of the Team under this License Agreement. The Team shall
require the transferee or the Public Entity Assignee to execute an Assignment
and Assumption Agreement in such form and content as is reasonably acceptable
to the County and Operator. Any such transfer shall conform to the terms and
restrictions of the Operating Agreement and this License Agreement. Except for
the foregoing, the Team shall not assign or transfer its rights or interest in
this License
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Agreement without the prior written consent of County and Operator, which
consent may not be unreasonably withheld or delayed except that Team shall have
the right to assign some or all of its share of Net Operating Income to an
Affiliate. Upon any transfer pursuant to this Article XII, the transferor
shall be released from all of its obligations under this License Agreement,
including Team's obligation of the Guaranty Agreements, except for accrued and
unpaid obligations.
ARTICLE XIII
TEAM EQUIPMENT; ADDITIONS AND ALTERATIONS
13.1 Team Equipment; Additions. At its expense, the Team may place
such Team Equipment in the home team locker room of the Facility as is
necessary for the conduct of the Home Games and the other Permitted Uses to the
Team hereunder. The Team Equipment shall be the property of the Team and may
be removed at any time the Team is not in default hereunder.
The Team shall not make Additions to the Facility with a total cost in
excess of $100,000.00 without the County's prior written consent, such consent
not to be unreasonably withheld or delayed. In seeking County's consent, Team
shall provide County and Operator with notice, construction plans and
specifications of the Additions as well the schedule of construction in order
to avoid conflicts with other Events at the Facility. As a condition to such
consent, Operator and County shall have the opportunity to review such plans
(provided Operator and County do not unreasonably delay) and may impose such
reasonable requirements as it may deem necessary including, without limitation,
the posting of appropriate bonds prior to the commencement of any such
construction. Upon installation, the Additions shall become a part of the
Facility and the property of the County. The Team shall keep the Facility free
from, and shall indemnify the Operator and County with respect to, all Liens
incurred or permitted by the Team in installing the Team Equipment or
constructing Additions. If within 60 days following the filing or other
assertion of any such Lien, the Team does not cause such Lien to be released in
a manner satisfactory to the County (such as by posting a bond or other
acceptable security), the County shall have the right but not the obligation to
cause the Lien to be released by any means the County deems proper including,
without limitation, payment of the Lien. All reasonable sums paid and expenses
(together with interest thereon from the date incurred until paid at the
Premium Rate) incurred by the County in connection therewith including, without
limitation, attorneys' fees and costs, shall be payable by the Team upon demand
by the County. Team shall provide Operator and County with a copy of the "as
built" construction plans and specifications for such Additions.
Notwithstanding the foregoing, Team may make (i) Additions with total
cost less than $100,000.00, and (ii) interior, nonstructural alterations,
installations, decorations, additions and improvements to the Licensed Premises
including changes to plumbing, fixtures, and to electrical systems which are
minor in nature such as switches, cables, outlets and fixtures, or other
apparatus of like nature without the consent of Operator or County. All such
Additions or changes, including
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the preparation of plans, specifications and engineering reports prepared
therefor, shall be done at Team's sole cost and expense, shall be done in a
good and workmanlike manner, free of all material defects, shall not weaken or
impair the structural strength of the Arena or fundamentally affect the
character or suitability of the Arena for use as a hockey arena, shall be in
compliance with all applicable laws, orders, regulations and requirements of
all Governmental Authorities and boards of fire underwriters having
jurisdiction thereover and shall be done in a manner as to not unreasonably
interfere with the operation of the Arena. Team shall provide Operator with
timely notice of and a schedule of such Additions and shall provide Operator
and County with a copy a copy of the "as built" construction plans and
specifications for such Additions and/or such other changes and a copy of any
permits required for such construction.
ARTICLE XIV
INSURANCE
14.1 Team Insurance. At its expense, the Team shall procure and
maintain during the License Term in full force and effect, the following
insurance coverages and limits of such coverages:
14.1.1 Commercial General Liability Insurance. Commercial
general liability insurance with a broad form general liability endorsement
which shall provide coverage against claims for personal injury, bodily injury,
death and property damage arising from the Team's occupancy or use of the
Facility and the Licensed Premises, or use by any of the Team's respective
invitees, employees, agents, independent contractors or any other person acting
for the Team or under its control or direction. The policy shall have minimum
limits of liability of $1,000,000 combined single limit each occurrence for
injury to one person or damage to property (no aggregate), and $9,000,000
umbrella coverages (each occurrence). The general liability insurance shall
also insure Team's obligations under Section 15.1 hereof. Such insurance shall
be maintained in full force and effect during the License Term. The insurance
policy shall name the County, the Operator, and their respective employees,
agents, independent contractors or any other person acting for the County or
the Operator or under their respective control or direction, as additional
insureds.
14.1.2 Property Insurance. Insurance on an "all risk" basis
providing coverage against damage and destruction of the Team Equipment and
Additions in the amount of the replacement value of such Team Equipment and
Additions with customary deductibles and co-insurance.
14.1.3 Workers' Compensation and Employer's Liability
Insurance. Workers compensation for its employees in accordance with the laws
of the State of Florida and employers liability insurance, with limits of not
less than $1,000,000 each accident, $1,000,000 disease each employee and
$1,000,000 disease policy aggregate.
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14.2 Operator's Insurance. The Operator shall procure and maintain
during the License Term, the insurance required by the Operating Agreement (the
Operator's Insurance"). The Operator Insurance shall insure Operator's and
County's obligations under Section 15.2 hereof. No amendment of the Operator
Agreement shall relieve Operator of its obligations to provide the Operator's
Insurance as set forth in the Operating Agreement on the date hereof.
14.3 Insurance Provisions. All insurance required by this Article
XIV shall be by valid and enforceable policies issued by insurance companies
rated not lower than A XII in Best's Rating Guide (most current edition) and
authorized to do business in Florida. The policies of insurance required of
each party shall be endorsed: (a) to provide that the coverage shall not be
invalid due to any act or omission of the other party or the County or their
respective agents or employees; (b) to name the County and the other party as
additional insureds; (c) to be primary over any insurance maintained by the
other party or the County, so that such insurance shall respond on a primary
basis to claims or incidents arising from the insuring party's rights, and
duties under this License Agreement and the use or occupancy of the Facility
and the Licensed Premises; and (d) to provide that the waiver of recovery
(subrogation) set forth hereafter shall not invalidate or have any adverse
effect on the insuring agreements or liability of the insurer under the policy.
The insurance companies issuing such insurance shall agree to notify the other
parties in writing of any cancellation, alteration or nonrenewal of the policy
at least sixty (60) days prior thereto. Within ten (10) days prior to the
License Commencement Date and thereafter before a policy period expires, each
party shall deliver to the other party certificates evidencing the insurance
coverage required herein. If either party fails to obtain the insurance or to
deliver a certificate thereof to the other party as herein required, the other
party shall be entitled but without obligation to obtain the insurance coverage
at the defaulting party's expense. The Operator and the Team shall not be
liable one to the other or to any insurance company (by way of subrogation or
otherwise) insuring any party hereto for any loss or damage to property or
injury to persons, or any resulting loss of income, or losses under workers'
compensation laws and benefits, even though such loss or damage might have been
occasioned by the negligence of such party, or their respective agents or
employees, if any such loss or damage is covered (or could have been covered
under the insurance policies required to be maintained hereunder) by insurance
benefiting the party suffering such loss or damage; provided, however, that any
limitation on the Operator's or the Team's liability pursuant to the preceding
sentence shall only be to the extent of available insurance proceeds.
ARTICLE XV
INDEMNIFICATION
15.1 Indemnification of Operator and County. Team shall defend,
indemnify and hold harmless Operator, County and their respective elected
officials or partners (as the case may be), agents, officers and employees
(collectively, "Operator and County Indemnitees") from and against any and all
demands, losses, judgments, damages, suits, claims, actions, liabilities and
expenses (including, without limitation, all attorneys fees and expenses), in
law or in equity, of every kind and
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nature whatsoever, for bodily injury, death or damage to property, which any
Operator and County Indemnitees may suffer or sustain or which may be asserted
or instituted against any of the Operator and County Indemnitees resulting
from, arising out of or in connection with (except to the extent caused by
Operator or County's gross negligence or wilful misconduct with respect to any
injury to or death of any individual person or with respect to damage to or
destruction of property) (i) injury to or death of any individual person
(including players and other Team employees) or damage to or destruction of
property caused by Team's use or occupancy of the Team Spaces, (or any portion
thereof), including without limitation, the conduct or management of its
business in the Team Spaces, and the negligence or wilful misconduct of Team in
connection with the use by Team of the Licensed Premises for Hockey Events,
Warm-Up Session and Practice Sessions, (ii) Team's use of the Team Spaces
and/or the Licensed Premises in violation of this License Agreement; (iii) the
breach by Team of any warranty, representation or covenant made in this License
Agreement by Team; (iv) any violation of any copyright, patent, service mark,
trade name or trademark by Team; (v) the sale, disposition or other exercise of
the television or radio broadcasting or pay television distribution rights; and
(vi) the violation of the Hockey Rules by Team.
15.2 Indemnification of Team. Operator and County shall defend,
indemnify and hold harmless Team, its agents, directors, partners, the
shareholders of the Team's general partner, officers and employees
(collectively "Team Indemnitees") from and against any and all demands, losses,
judgments, damages, suits, claims, actions, liabilities and expenses,
(including without limitation, all attorneys fees and expenses) in law or in
equity, of every kind and nature whatsoever, for bodily injury, death or
damage to property, which any Team Indemnitees may suffer or sustain, or which
may be asserted or instituted against any of the Team Indemnitees, resulting
from, arising out of or in connection with (except to the extent caused by
Team's gross negligence or wilful misconduct with respect to any injury to or
death of any individual person, or with respect to damage to or destruction of
property) (i) injury to or death of any individual person or damage to or
destruction of property arising from County's and Operator's ownership,
construction, use, operation, maintenance or occupancy of the Facility (or any
portion thereof) including, without limitation, the conduct or management of
any business or activity in any portions of the Facility, except for Team's use
or occupancy of the Team Spaces, including the conduct of Team's business in
the Team Spaces by Team and/or Team's partners, officers, employees, agents and
independent contractors; (ii) County's and Operator's use or occupancy of the
Team Spaces, the Licensed Premises (or any portion thereof or of the Facility)
in violation of this License Agreement; (iii) the breach by County or Operator
of any its warranties, representations or covenants made in this License
Agreement; (iv) the use or operation of any of the equipment in the Facility;
(v) any violation of any copyright, patent, service mark, trade name or
trademark by County or Operator; (vi) any violation of the Hockey Rules by
County or Operator; (vii) and in respect of County only, all environmental
liabilities arising out of, in connection with, or relating to any
environmental condition of the Facility, even if discovered after the License
Term expires, unless such environmental condition was caused by Team
Indemnitees; (viii) the performance of any labor or services or the furnishing
of any materials or other property in respect to the Facility and/or any part
thereof except for such services or materials furnished or provided by Team and
(ix) any acts or omissions of any Operator and County Indemnitees.
Notwithstanding the above, the Team
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acknowledges that County's obligations to indemnify shall be limited to the
extent of County's insurance and subject to the limitations provided by law.
ARTICLE XVI
DAMAGE OR DESTRUCTION
CONDEMNATION
16.1 Operator. If during the License Term, the Facility, the
Licensed Premises or any other part of the Arena shall be damaged by fire or
other casualty, regardless of the cause, Operator shall repair and restore the
Facility to its previous condition with reasonable dispatch, subject to the
receipt of adequate insurance proceeds; and this License Agreement shall
continue in effect without reduction in the Rent or diminution of the other
obligations of the Team hereunder (except as provided in Section 16.4). All
such restoration shall be in accordance with the requirements of the Operating
Agreement (the applicable provisions of which as of this date are incorporated
herein and no amendment thereof shall be effective hereunder or binding upon
the Team without the Team's prior written consent). Operator shall use all
reasonable efforts to effect such repairs and/or reconstruction in a manner
that will not unreasonably interfere with Team's occupancy, but shall not be
required to make such repairs and/or reconstruction only during non-business
hours.
16.2 Team. In the event of any damage or destruction of the Team
Equipment or to the Additions caused by the negligence or willful acts of the
Team, its employees or agents, this License Agreement shall continue in effect
without any diminution of the obligations of the Team hereunder and the Team
may elect whether not to replace or restore such damage or destruction. The
Team waives the right to terminate this License Agreement or to discontinue the
payment of Rent as the result of any damage or destruction of the Team
Equipment, Additions or of the Facility
16.3 County and Operator. In the event of any damage or
destruction of the Team Equipment or the Additions caused by the negligence or
willful acts of the County or Operator, or its employees or agents, the County
and Operator promptly shall repair such damage or destruction or replace the
damaged or destroyed Team Equipment or Additions and this License Agreement
shall continue in effect without reduction in the Rent or diminution of the
other obligations of the Team hereunder.
16.4 Fees Abatement. If the damage, Taking or the restoration
process described in Sections 16.1 and 16.5 causes the Arena Parking to be
inadequate or the Arena, the Licensed Premises or the Facility to fail to meet
governmental or NHL requirements and as a result prevents or materially
interferes with the playing of the Home Games in the Facility, then until the
Facility has been restored as described in Section 16.1, the Team shall not be
required to play the Home Games in the Facility and the Team shall have no
obligation to pay Operator the Rent.
16.5 Condemnation. If all or part of the Facility is taken by
right of eminent domain, with or without litigation, or transferred in lieu of
or under threat of such action (collectively a "Taking"
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or is "Taken"), the County promptly shall restore the Facility as provided in
the Operating Agreement (the applicable provisions of which as of this date are
incorporated herein and no amendment thereof shall be effective hereunder or
binding upon the Team without the Team's prior written consent) and this
License Agreement shall continue in effect without reduction in the Rent
(except as provided in Section 16.4). All restoration shall be in accordance
with the requirements of the Operating Agreement. Notwithstanding the
foregoing, if pursuant to the Operating Agreement, the County fails to restore,
or if the County elects to restore but fails to commit or to complete
restoration within the times required by the Operating Agreement, then the Team
shall be deemed a third party beneficiary of the Operating Agreement and the
Team may enforce County's obligations to restore the Facility or, at Team's
election, this License Agreement may be terminated by the Team as provided in
the Operating Agreement. If this License is so terminated, the Team shall not
be entitled to the rebate of any Rent or the reimbursement of any other prior
payments made or expenses incurred hereunder or in connection herewith which
relate to the period prior to the Taking. Upon payment of all sums then owing
hereunder by either party to the other, the parties shall be released from all
future liability hereunder but neither party shall be released from any
liability that has accrued on or before the date of such termination.
Notwithstanding the foregoing or any provision of the Operating Agreement, the
County covenants, warrants, represents, and agrees that it shall not at any
time during the License Term initiate, engage in, undertake, attempt or pursue
either singly or in combinations with any other Governmental Authority a
condemnation proceeding by right of eminent domain of any portion of the
Facility, the Arena or the Licensed Premises.
ARTICLE XVII
COVENANTS
17.1 Use Covenant; Non-Relocation. As additional consideration for
the County's willingness to execute and deliver this License Agreement, the
Team specifically covenants and agrees that from the License Commencement Date
and continuing until the License Expiration Date, the Team shall play its Home
Games only at the Facility and shall not play any of its Home Games at any
other location. Team shall also be deemed to violate this Non-Relocation
Covenant if Team shall execute a binding and enforceable contract to play its
Home Games at another location.
All obligations of the Team to play its Home Games at the Facility
pursuant to this Section 17.1 shall be suspended during any Abatement Period,
the cause of which prevents the playing of Hockey Events in the Facility and/or
prevents the attendance by the public at such games.
17.2 No Interference. The County, the Operator and the Team shall
not interfere, and shall not permit interference in the operation of the
Facility which causes the Facility to be unavailable for uses permitted by the
Operating Agreement or this License Agreement. In the event of a dispute
regarding the unavailability of the Facility, such dispute shall be submitted
to ADR; provided, however, that neither the requirement to utilize nor the
pendency of ADR shall in any way preclude or limit each party's opportunity to
seek any interim equitable remedy appropriate to the circumstances.
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17.3 Negative Pledge. Except as specifically provided hereunder,
the Team hereby pledges to the County and the Operator not to play any of the
Team's Home Games at any location other than the Facility.
17.4 Specific Performance.
Notwithstanding any of the foregoing, Team acknowledges that the
Hockey Games played by the Team are unique and played with particular skill
such that there is no substitute therefor. Based on the foregoing, the Team
acknowledges that the damages suffered by the County for a breach of any of the
covenants in Sections 17.1 and 17.3 cannot be estimated with any degree of
certainty and that the monetary damages cannot fairly and adequately compensate
the County for a breach of said covenants; therefore, the Team agrees that the
County shall have the right, in addition to any other applicable rights or
remedies, to compel the Team to comply with the aforesaid covenants by
appropriate specific performance, injunctive or equitable proceedings. The
Team agrees to be subject to the jurisdiction of any competent Federal or State
court of equity located in Broward County, Florida.
Additionally, any provision of law or this License Agreement to the
contrary notwithstanding, the parties acknowledge and agree that if the County,
the Operator or the Team were to fail to observe or to perform any of the
material provisions in this License Agreement including, without limitation,
Section 17.2 above, the award of damages arising from such breach would not be
an adequate remedy, in that the subject matter of this License Agreement is
unique, and the breach of such obligations create irreparable harm incapable of
calculation by monetary damages. Therefore, the parties acknowledge and agree
that each party has the absolute right to specific performance, any other
injunctive relief, or any other Court order to enforce the covenants and
obligations undertaken under this License Agreement; and notwithstanding any
other provision in this License Agreement or any Related Agreement, no cure
period provided for in this License Agreement or any Related Agreement shall be
a condition to the right to obtain such specific performance, other injunctive
relief or any court order enforcing performance of the provisions of Section
17.2.
The Team, the County and the Operator hereby waive any and all
requirements that the other parties post any security or collateral which may
be otherwise required or stipulated as a condition for such party to obtain
specific performance injunctive or equitable relief.
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ARTICLE XVIII
REPRESENTATIONS, WARRANTIES AND COVENANTS
18.1 Team's Representations Warranties and Covenants.
18.1.1 Organization. The Team is a limited partnership duly
organized and validly existing under the laws of the State of Florida; and Team
has all requisite power and authority to enter into this License Agreement.
18.1.2 Authorization; No Violation. The execution, delivery
and performance by the Team of this License Agreement have been duly authorized
by all necessary action and will not violate its partnership agreement, the NHL
Constitution or bylaws or any written rule, regulation or policy of the NHL, or
result in the breach of or constitute a default under any loan or credit
agreement, or other material agreement to which the Team is a party or by which
the Team or its material assets may be bound or affected; this License
Agreement has been duly executed and delivered by the Team and this License
Agreement and the documents referred to herein constitute valid and binding
obligations of the Team.
18.1.3 Litigation. No suit is pending against or affects
the Team which could have a material adverse effect upon the Team's performance
under this License Agreement or the financial condition or business of the
Team. There are no outstanding judgements against the Team which would have a
material adverse affect upon its assets, properties or franchises.
18.1.4 No Conflicts. This License Agreement is not
prohibited by and does not conflict with any other agreements, instruments,
judgements or decrees to which the Team is a party or is otherwise subject.
18.1.5 No Violation of Laws. The Team has received no
notice as of the date of this License Agreement asserting any noncompliance in
any material respect by the Team with applicable statutes, rules and
regulations of the United States of America, the State of Florida, or of any
other state or municipality or agency having jurisdiction over and with respect
to the transactions contemplated in and by this Agreement; and the Team is not
in default with respect to any judgment, order, injunction or decree of any
court, administrative agency, or other governmental authority which is in any
respect material to the transactions contemplated hereby.
18.2 Operator's Representations, Warranties and Covenants.
18.2.1 Organization. The Operator is a limited partnership
duly organized and validly existing under the laws of the State of Florida;
Operator has all requisite power and authority to enter into this License
Agreement, and to grant the License to Team as provided herein.
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18.2.2 Authorization; No Violation. The execution, delivery
and performance by the Operator of this License Agreement have been duly
authorized by all necessary action and will not violate its partnership
agreement, or result in the breach of or constitute a default under any loan or
credit agreement, or other material agreement to which the Operator is a party
or by which the Operator or its material assets may be bound or affected; this
License Agreement has been duly executed and delivered by the Operator and this
License Agreement and the documents referred to herein constitute valid and
binding obligations of the Operator.
18.2.3 Litigation. No suit is pending against or affects
the Operator which could have a material adverse effect upon the Operator's
performance under this License Agreement or the financial condition or business
of the Operator. There are no outstanding judgments against the Operator which
would have a material adverse affect upon its assets or properties.
18.2.4 No Conflicts. This License Agreement is not
prohibited by and does not conflict with any other agreements, instruments,
judgments or decrees to which the Operator is a party or is otherwise subject.
18.2.5 No Violation of Laws. The Operator has received no
notice as of the date of this License Agreement asserting any noncompliance in
any material respect by the Operator with applicable statutes, rules and
regulations of the United States of America, the State of Florida, or of any
other state or municipality or agency having jurisdiction over and with respect
to the transactions contemplated in and by this License Agreement; and the
Operator is not in default with respect to any judgment, order, injunction or
decree of any court, administrative agency, or other governmental authority
which is in any respect material to the transactions contemplated hereby.
18.3 County's Representations Warranties and Covenants.
18.3.1 Organization. The County is a public body
corporation and politic and a political subdivision of the State of Florida and
it has all requisite power and authority to enter into this License Agreement.
18.3.2 Authorization, Enforceability. The execution,
delivery and performance by the County of this License Agreement are within the
power of the County and have been duly authorized by all necessary action and
will not violate its charter or result in the breach of any material agreement
to which the County is a party; this License Agreement has been duly executed
and delivered by the County and this License Agreement and the documents
referred to herein constitute valid and binding obligations of the County.
18.3.3 Litigation. No suit is pending against or affects
the County which could have a material adverse effect upon the County's
performance under this License Agreement.
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18.3.4 No Conflicts. This License Agreement is not
prohibited by and does not conflict with any other agreements, instruments,
judgments or decrees to which the County is a party or is otherwise subject.
18.3.5 Non-Competition. The County reasserts, reconfirms
and incorporates herein its covenants and agreements regarding non-competition
set forth in the Operating Agreement, and all subdivisions thereof, and agrees
that such covenants shall inure to the benefit of Team in the same manner and
to the same extent as if made directly to and for the Team as well as the
Operator.
18.3.6 No Violation of Laws. The County has received no
notice as of the date of this License Agreement asserting any noncompliance in
any material respect by the County with applicable statutes, rules and
regulations of the United States of America, the State of Florida or any agency
having jurisdiction over and with respect to the transactions contemplated in
and by this License Agreement; and the County is not in default with respect to
any judgment, order, injunction or decree of any court, administrative agency,
or other governmental authority which is in any respect material to the
transactions contemplated hereby.
18.4 Mutual Covenants.
18.4.1 Additional Documents and Approval. The County, the
Operator and the Team shall, whenever and as often as each shall be reasonably
requested to do so by the other parties, execute or cause to be executed any
further documents, including such reasonable documents or reasonable changes in
documents, take any further actions and grant any further approvals as may be
necessary or expedient in order to consummate the transactions provided for
herein, and to carry out the purpose and intent of this License Agreement and
each of the Related Agreements.
18.4.2 Good Faith. In exercising its rights and fulfilling
its obligations under this License Agreement and each of the Related
Agreements, the County, the Operator and the Team shall act in good faith.
Each party acknowledges that this License Agreement and all Related Agreements
contemplate cooperation between the Team, the Operator and the County. Each
party further acknowledges that the terms and conditions of this License
Agreement and the Related Agreements have been negotiated on the basis of
certain projections and assumptions, including the assumption that the County,
the Operator and the Team will, among other purposes, act to advance, and not
unreasonably interfere with, the public purposes to be served by the Facility,
including the use of the Facility as a sports facility and, subject to the
License, the terms and prior uses granted herein and the terms of the Operating
Agreement, as a convention center, concert hall, and arena, as contemplated
under the applicable provisions of Section 196.012(6) Florida Statutes.
18.4.3 Cooperation. The County, the Operator and the Team
agree to contest any challenge to the validity, authorization and
enforceability of this License Agreement ("Challenge"), whether asserted by a
taxpayer or any Person. The County, the Operator and the Team shall strive in
good faith to defend any such Challenge. If the Challenge occurs during the
construction and development period of the Development Agreement, one half of
the costs of contesting the
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Challenge shall be paid by the Team, upon written notice and demand for payment
from the County itemizing such costs; the remaining one half of the costs shall
be borne by the County. If the Challenge occurs after the License Commencement
Date, the costs of contesting the Challenge shall be treated as a Facility
Operating Expense and shall be payable from Facility Operating Revenue.
However, if the nature of any Challenge (whether prior to or following the
License Commencement Date) is to the effect that the County has acted
improperly or unlawfully in executing this Agreement, then the County shall pay
all of the costs incurred by the parties in contesting this Challenge. The
County, the Operator and the Team each shall take all ministerial actions and
proceedings necessary or appropriate to remedy any apparent invalidity, lack or
defect in authorization, or illegality, or to cure any other defect, which has
been asserted or threatened.
18.4.4 NBA Team Tenant. The parties agree that in the event
that a member club of the National Basketball Association ("NBA") determines at
some time after the date of this License Agreement that it wishes to become a
tenant or licensee of the Facility then the parties hereto agree that they
shall negotiate an amendment to certain terms of this License Agreement in a
manner that will permit such prospective tenant or licensee to use the Arena
and the Facility as its "home" facility. County shall participate in any such
negotiating of a license agreement with an NBA team and shall be the party
executing the license agreement. Notwithstanding the foregoing, the lease or
license for such NBA team need not be on the same economic terms as Team has
under this License Agreement. Team shall continue to enjoy all of its benefits
hereunder as "primary tenant" including but not limited to its Hockey Event
scheduling priority, its exclusive rights to possess the Team Areas and its
rights concerning Concessions, Marketing, Advertising and Parking.
18.4.5 Refinancing. Team, County and Operator further
covenant and agree that Team shall have the right to request the refinancing,
refunding or other action with respect to lowering the payments on account of
the Bonds if any such action will result in the reduction of amounts payable on
account of the Bonds with the result of lowering the County Preferred Revenue
Allocation by the amount of such reduction. Upon Team's request, County and
Operator agree that they shall promptly initiate and cooperate with Team in any
such transaction as long as such transaction is in conformance with existing
tax law and the County's then existing policy and further provided that such
refinancing shall not negatively affect County's financial benefits under the
Related Agreements.
18.5 Mutual Cooperation. The parties contemplate that some portion
of the Bonds will be issued on a tax exempt basis and that when issued the
Bonds may contain covenants relating to the tax exempt aspects which may be
contrary to the terms of this License Agreement. Accordingly, the parties
covenant and agree to cooperate in good faith to amend this License Agreement
as necessary to comply with the Bond covenants relating to such tax-exempt
aspects and requirements.
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ARTICLE XIX
DEFAULT AND REMEDIES
19.1 Team Default. If (a) the Team fails to pay when due the Rent
or Supplemental Rent and any other sums payable to the Operator hereunder and
such failure is not cured within ten (10) days after receipt of written notice
from the Operator; (b) the Team fails to make any Team Loan when required to do
so or defaults under its obligations pursuant to the Guaranty Agreement; (c)
the Team violates the provisions of Article XVII; or (d) the Team fails to
observe or perform any of the other material provisions hereof and such failure
is not cured within 30 days after receipt of written notice from the Operator
(or such longer period as is necessary for the Team to cure the failure within
a reasonable time in the exercise of due diligence), then in any of such
events, the Team shall be in default hereof. In respect of the matters recited
in subsections (b) and (c) in this Section, Team shall receive notice of, and
shall cure such failure or violation within ten (10) days. In the event of a
default by the Team, at its option, subject to the requirement to comply with
Article XX, where applicable, the Operator may: (i) recover all damages and
losses provided by law or equity (except for consequential damages); or (ii)
exercise any other right or remedy at law or in equity including the right of
specific performance; however, the County and Operator hereby waive any right
they may have to terminate this License Agreement upon a Team Default. In
addition, the Operator shall have the right, but not the obligation, to render
the performance required to cure a default by the Team and to charge the Team
with all reasonable costs, expenses and reasonable attorneys fees (including
attorneys fees at trial and appellate level) incurred in connection therewith
together with interest thereon from the date incurred until paid at the Premium
Rate. Subject to the requirement to comply with Article XX, no remedy
conferred herein upon the Operator shall be considered exclusive of any other
remedy but shall be cumulative and in addition to all other lawful remedies.
Article XX shall not be applicable to the payment and performance obligations
of the Team in subsections (a) through (c) above or to the rights of specific
performance under Article XVII. Notwithstanding the above, no party under this
License Agreement shall be liable to any other party for consequential damages.
19.2 Team Bankruptcy or Attachment. If any of the following shall
have occurred:
(a) The Team shall have commenced any case, proceeding or
other action (a) under the Federal Bankruptcy Code,
as amended from time to time, or under any other
existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have
an order for relief entered with respect to the Team,
seeking to adjudicate the Team a bankrupt or
insolvent, or seeking reorganization, arrangement,
adjustments, winding-up, liquidation, dissolution,
discharge, composition or other relief with respect
to the Team or the debts of the Team or (b) seeking
appointment of a receiver, custodian or other similar
official for the Team for all or any substantial part
of the assets of the Team, or the
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Team shall make a general assignment for the benefit
of the creditors of the Team; or
(b) There shall be commenced against the Team any case,
proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or
similar process against all or any substantial part
of the assets of the Team which results in the entry
of an order for any such relief which shall not have
been vacated, discharged or stayed or bonded pending
appeal within one hundred twenty (120) days from the
entry thereof;
then in such event, in addition to the other remedies for default authorized
herein or by law, then, the Operator shall be entitled to the appointment of a
receiver for the assets of the Team.
In the event Operator unreasonably elects not to exercise its rights
pursuant to this Article, the County, upon thirty (30) days written notice to
Operator following the Operator's failure to so exercise, may elect to exercise
such rights on behalf of Operator, provided that the Operator has not exercised
such rights prior to the expiration of such thirty (30) day period.
19.3 County or Operator Default. If (a) the County or Operator
shall fail to observe or perform any of their respective duties and obligations
under this License Agreement and such failure is not cured within 30 days after
notice by the Team to the County or the Operator, as the case may be, (or such
longer period as is necessary for the County or Operator to cure the failure
within a reasonable time in the exercise of due diligence), then in any such
event, following resort to the procedures set forth in Article XX, where
applicable, the Team may: (i) recover all damages and losses at law or in
equity; (ii) exercise any other right or remedy at law or in equity including
the right of specific performance; however, the Team hereby waives any right it
may have to terminate this License Agreement upon a County or Operator Default
(except as provided in Section 16.5); or (iii) effect a cure on the County's or
Operator's behalf and all reasonable costs and expenses so incurred by the Team
together with interest at the Premium Rate shall be due and payable by the
County or Operator, as the case may be, on demand by the Team. Subject to the
requirement to comply with Article XX, no remedy conferred herein upon the Team
shall be considered exclusive of any other remedy but shall be cumulative and
in addition all other lawful remedies.
19.4 Remedies are Cumulative. In the event of any breach by any
party of any of the covenants, agreements, terms or conditions contained in
this Agreement, in addition to any and all other rights provided herein and
except as otherwise waived herein, the parties shall be entitled to invoke any
right and remedy allowed at law or in equity or by statute or otherwise for
such breach as though other remedies were not provided for in this Agreement.
19.5 Termination Waiver. Notwithstanding and prevailing over any
contrary provision hereof, it is intended that this License Agreement shall not
be subject to termination (except as provided in Sections 2.12 and 16.5)
whether because of a default or otherwise. As to all other events
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and circumstances, each of the parties waives its right to terminate this
License Agreement albeit each party shall have the other rights and remedies
set forth in this License Agreement.
ARTICLE XX
DISPUTE RESOLUTION
20.1 Dispute Resolution. In the event of any default, breach or
other dispute between the parties in connection with this License Agreement
(collectively, the "Dispute"), other than a breach by the Team of its
respective covenants in Section 17.1 and Section 17.2 to which this dispute
resolution procedure is not applicable, the parties shall comply with the
following procedures (all of which shall collectively be referred to as "ADR"):
Within seven (7) Business Days after written request (the "Request") by either
party, the parties promptly shall hold an initial meeting to attempt in good
faith to negotiate a settlement of the Dispute. No Request concerning a
Dispute may be made at any time after two (2) years following the occurrence of
the event giving rise to the Dispute. If within ten (10) days after the
Request, the parties have not negotiated a settlement of the Dispute, the
parties jointly shall appoint a mutually acceptable neutral person who is not
affiliated with any of the parties or the County (the "Neutral"). If the
parties are unable to agree upon the appointment of the Neutral within fourteen
(14) days after the Request, either party may request the American Arbitration
Association or its successor ("AAA") to select the Neutral or may cause both
parties to submit to any procedures of AAA to select the Neutral, including
without limitation the selection of AAA as the Neutral. In order to resolve
the Dispute, the parties shall develop a non-binding alternative dispute
resolution procedure such as mediation or facilitation (the "Mediation") with
the assistance of the Neutral. The Neutral shall make the decision as to how,
when and where the Mediation will be conducted if the parties have been unable
to agree on such matters by the earlier of seven (7) Business Days after the
appointment of the Neutral or twenty-one (21) days after the Request. The
parties shall participate in good faith in the Mediation to its conclusion. If
the parties resolve their Dispute through their own negotiations or in the
Mediation, the resolution shall be reduced to the form of a written settlement
agreement which shall be binding upon both parties and shall preclude any
litigation with respect to such Dispute. If the parties have not resolved the
Dispute through the Mediation within sixty (60) days after the Request, then at
any time thereafter and prior to resolution of the Dispute by the Mediation,
upon written demand by either party, the Mediation shall cease and the Dispute
shall be submitted to arbitration (the "Arbitration") for resolution by an
arbitrator or a panel of arbitrators whose number shall be determined and who
shall be selected and shall conduct the Arbitration in accordance with the
rules of AAA. If the Arbitration results in a determination by the
arbitrator(s) that an Event of Default has occurred, the provisions of this
Article, shall govern the damages and other remedies as limited by the
provisions of this License Agreement which may be implemented or ordered by the
arbitrator(s). Neither the requirement to utilize nor the pendency of any ADR
procedures shall in any way invalidate any notices or extend any cure periods
applicable to an Event of Default. Except as expressly provided to the
contrary in this Article or in Article XVII or elsewhere herein, these ADR
procedures require that the parties use these ADR procedures exclusively rather
than litigation as a means of resolving
47
<PAGE> 54
their disputes hereunder or to determine the consequences of an Event of
Default and the implementation of the remedies therefor. Notwithstanding any
other provision of this Article to the contrary, in the event either party may
wish to seek interim relief, whether affirmative or prohibitive, in the form of
a temporary restraining order or preliminary injunction or other interim
equitable relief concerning a Dispute, including without limitation declaratory
relief, provisional remedies, special action relief, stay proceedings in
connection with special action relief and any similar relief of an interim
nature, either before beginning the ADR procedures or at any point in the ADR
procedures concerning such Dispute, such party may initiate the appropriate
litigation to obtain such relief ("Equitable Litigation"). Nothing herein
shall be construed to suspend or terminate the obligation of both parties
promptly to proceed with the ADR procedures to completion while such litigation
and any appeal therefrom is pending. Notwithstanding any contrary provisions
of the Florida Rules of Civil Procedure or Rule 65(a)(2) of the Federal Rules
of Civil Procedure as either rule currently exists or may be amended, the
parties agree there shall be no consolidation of any hearing for preliminary
injunction in the Equitable Litigation with a trial of an action for permanent
injunction on the same matter. Regardless of whether such interim relief is
granted or denied or such Equitable Litigation is pending or any appeal is
taken from the grant or denial of such relief, at all times the parties shall
diligently proceed to complete the ADR procedures, except as provided in
Article XVII. Any interim or appellate relief granted in such Equitable
Litigation shall remain in effect until, and only until, the ADR procedures
concerning the Dispute that is the subject of such Equitable Litigation result
in a settlement agreement or the issuance of an Arbitration award. Such
written settlement agreement or award shall be the final determination on the
merits of the Dispute (including but not limited to any equitable relief and
monetary damages but excluding any award of attorneys' fees in the Equitable
Litigation), shall supersede and nullify any decision in the Equitable
Litigation on such merits and shall preclude any subsequent litigation on such
merits, notwithstanding any determination to the contrary in connection with
any Equitable Litigation granting or denying interim relief or any appeal
therefrom. The parties agree that any Disputes which arise out of such a
written settlement agreement or award during the term of this License Agreement
shall be resolved exclusively by the procedures set forth in this Article,
provided that either party may institute legal proceedings in a court of
competent jurisdiction to enforce judgment upon an Arbitration award in
accordance with applicable law. The fees and costs of the Neutral and AAA in
the Mediation shall be borne equally by the parties to such mediation;
provided, however, that the prevailing party in Arbitration shall be entitled
to recover from the other party's own assets, and not from Facility Operating
Revenue, in addition to any other remedy, reimbursement for any costs of such
proceeding, reasonable attorneys' fees, reasonable costs of investigation and
any other expenses incurred in connection with the Arbitration or the
Mediation. Any such recovered costs and expenses in such Arbitration shall not
be included as Facility Operating Expenses or paid from Facility Operating
Revenue.
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<PAGE> 55
ARTICLE XXI
MISCELLANEOUS
21.1 Ad Valorem Tax Imposition. It is acknowledged by the parties
that the parties have based their projections and assumptions as to sharing of
Net Operating Income, described herein, on the basis that there will be no levy
of County, City, school district, water management district or any other form
of ad valorem taxes on the Facility or its operations, by reason of exemption
from ad valorem taxes set forth in Sections 196.199(2) and 196.012(6) Florida
Statutes. Accordingly, if County, City, school district, water management
district or any other form of ad valorem taxes are subsequently assessed
against the Facility or its operations, and after contest of such taxes through
such efforts as Team or Operator shall deem sufficient to determine that such
taxes are declared validly assessed against the Facility or its operations,
then this License Agreement and the Operating Agreement shall be amended in the
following manner:
(a) The County and City of Sunrise, Florida portion of
said ad valorem taxes (paid by the Operator in respect of the Facility) will
constitute an Operator credit against the County Preferred Revenue Allocation
(and a credit against any obligation of the Team under the Guaranty Agreement,
if applicable), and accordingly the County Preferred Revenue Allocation shall
be reduced in that and subsequent Fiscal Years by an amount equal to such
County and City ad valorem taxes based on the November discounted amount (as if
such taxes were paid in November, regardless of when paid), plus interest
thereon from the November date at the Premium Rate;
(b) The School District and the water management district
portion of said ad valorem taxes will constitute an Operator credit against the
County Preferred Revenue Allocation (and a credit against any obligation of the
Team under the Guaranty Agreement, if applicable) and accordingly the County
Preferred Revenue Allocation in that Fiscal Year and to the extent necessary to
provide credit to Team, in subsequent Fiscal Years, shall be reduced by an
amount equal to the School District and water management district portion of
the ad valorem taxes based on the November discounted amount, plus interest
thereon at the Premium Rate.
The parties agree to execute the required amendments to this License
Agreement, when and if required, to effectuate the contingent events set forth
in this Section.
21.2 Exclusive Taxes. If, in the future, the County imposes any
form of tax or special assessments, which is exclusively imposed or levied on
the Facility that will be assessed on Hockey Tickets, or tickets to other
Events, Concessions, parking, Rent or other revenue streams of the Facility or
its tenants or licensees including the Team or the Operator, then the County
Preferred Revenue Allocation in that Fiscal Year and to the extent necessary to
provide proper credit to Team, in subsequent Fiscal Years, shall be reduced by
an amount equal to the aggregate amount of exclusively imposed taxes plus
interest thereon at the Premium Rate from the date when paid. For purposes of
this License Agreement, an "exclusively imposed or levied tax" shall mean any
tax that
49
<PAGE> 56
generates more than twenty percent (20%) of its composite collections from the
Facility and/or the operations at the Facility.
The parties agree to execute the required amendments to this License
Agreement, when and if required, to effectuate the contingent events set forth
in this Section.
21.3 Relationship. Neither of the parties hereto, or their
respective employees, agents, contractors and guests, shall be considered
employees or agents of either of the other parties or to have been authorized
hereby to incur any expense on behalf of either of the other parties or to act
for or to bind either of the other parties or the Facility. Neither the Team,
the Operator nor the County shall be liable for any acts, omissions or
negligence on the part of the other party, its employees or agents, resulting
in either personal injury or property damages. Neither the Operator, the
County nor the Team shall be construed to be either partners or joint venturers
in the operation of the Facility or the conduct of the Team. The relationship
created hereby is solely that of licensor-licensee, not that of landlord-tenant
and the Team has no possessory or other interest or estate in the Facility
other than the right to use it as provided in this License Agreement.
21.4 Subordination. This License Agreement and Team's rights and
benefits hereunder shall not be subordinate to any encumbrance by County.
Team's use and possession of the Licensed Premises and its rights and benefits
hereunder shall not be diminished, damaged or subordinate to or on account of,
any encumbrance.
21.5 Assurance. The County and the Operator covenant that if, and
so long as, the Team keeps and performs the material provisions of this License
Agreement, the Team shall peacefully and quietly enjoy its rights under this
License Agreement with respect to the Facility, as such rights are defined, set
forth and limited by this License Agreement and the Operating Agreement,
without hindrance or interference by the County or by any other person lawfully
claiming the same by, through or under the County.
21.6 Force Majeure. Except as provided herein, failure in
performance by either party hereunder shall not be deemed an Event of Default,
and the nonoccurrence of any condition hereunder shall not give rise to any
right otherwise provided herein, when such failure or nonoccurrence is due to
war; insurrection; strikes; lock-outs; riots; floods; windstorms; fires;
casualties; acts of God (other than adverse, but non-severe, weather conditions
to the extent normally encountered in Sunrise, Florida area and/or impacts
thereof); acts of the public enemy; epidemics; quarantine restrictions; freight
embargos; lack of transportation; governmental restrictions; the enactment,
imposition or modification of any applicable law which occurs after the date of
this Agreement and which prohibits or materially interferes with the use of the
Facility; inability (when both parties are faultless) of any contractor,
subcontractor or supplier; acts or the failure to act, of any public or
governmental agency or entity or any other causes beyond the control and
without the fault of the party claiming an extension of time to perform. An
extension of time for any such cause shall be limited to the period of delay
due to such cause, which period shall be deemed to commence from the time of
the commencement of the cause; provided, however, that if notice by the party
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<PAGE> 57
claiming such extension is sent to the other party more than 60 days after the
commencement of the cause, the period shall be deemed to commence 60 days prior
to the giving of such notice. The period of delay due to any such cause shall
be an Abatement Period and subject to the provisions of Section 16.4. Times of
performance under this Agreement may also be extended as mutually agreed upon
in writing by the County, the Operator and the Team. However, failure to agree
to a proposed extension of time for performance shall not be deemed grounds for
delay or failure to timely cure a default hereunder.
21.7 Notices. All notices and other communications pursuant to
this License Agreement shall be in writing to the County, the Operator or to
the Team, as applicable, and shall be deemed properly given upon delivery
thereto, or refusal of delivery, if sent by personal delivery, overnight
courier service with guaranteed next day delivery, or by certified United
States mail, postage prepaid, return receipt requested, addressed as follows:
AS TO THE COUNTY:
COUNTY REPRESENTATIVE:
County Administrator
Broward County, Florida
115 S. Andrews Avenue, Room 409
Ft. Lauderdale, Florida 33301
with copy to:
Director, Department of Finance
and Administrative Services
Broward County
115 S. Andrews Avenue, Room 121
Fort Lauderdale, Florida 33301
with copy to:
County Attorney
Broward County
115 S. Andrews Avenue, Room 423
Fort Lauderdale, Florida 33301
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AS TO THE TEAM:
TEAM REPRESENTATIVE:
Florida Panthers Hockey Club, Ltd.
100 Northeast Third Avenue
Tenth Floor
Fort Lauderdale, Florida 33301
AS TO THE OPERATOR:
OPERATOR REPRESENTATIVE:
Arena Operating Company, Ltd.
c/o Huizenga Holdings, Inc.
Sixth Floor
200 S. Andrews Avenue
Fort Lauderdale, Florida 33301
With a copy to: Leisure Management International
11 Greenway Plaza, Suite 3000
Houston, Texas 77046
Attention: President
With a copy to: Akerman, Senterfitt & Eidson, P.A.
One S.E. 3rd Avenue, 28th Floor
Miami, Florida 33131-1704
Each party may by notice to the other specify a different address for
subsequent notice purposes. Notice shall be deemed effective on the date of
actual receipt or three days after the date of mailing, whichever is earlier.
21.8 Waiver. From time to time during the Term or any Extension
Term, the Operator Representative, in its discretion, shall have the right,
power and authority to waive any non-material, non-economic, performance, duty,
right or benefit due Operator or County under this License Agreement.
21.9 Recognition and Non-Disturbance. Upon any event of default by
Operator under the Operating Agreement, this License Agreement shall
nonetheless continue in full force and effect, upon, and subject to, all of the
terms, covenants and conditions of this License Agreement for the entire
License Term plus any Extension Terms. The County, for itself, its successors
and assigns, as well as for any subsequent owner of the Facility, does hereby
covenant and warrant with and for the benefit of Team, in the event of the
expiration or earlier termination of the Operating Agreement or the surrender
thereof, whether voluntary, involuntary, by the Operator, by operation of law
or otherwise, prior to the expiration of all of the Extension Options and
rights available to Team under
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<PAGE> 59
this License Agreement, so long as the License Agreement remains in effect in
accordance with its terms:
21.9.1 the License Agreement and all rights created
thereunder shall remain in full force and effect; the County shall recognize
and give full effect to the License Agreement and Team's rights thereunder; and
(b) upon such expiration or earlier termination of the Operating Agreement, the
County will assume the obligations of the Operator under the License Agreement
and shall be bound by the terms, conditions and agreements set forth therein,
with the same force and effect as if the County were the original operator
thereunder. (c) upon the request of Team, the County will designate an
operator selected by Team to succeed to the rights and obligations of the
Operator under a substitute agreement for the Operating Agreement and under the
License Agreement.
21.10 Attorneys' Fees. If either party hereto shall initiate,
intervene in or is brought into any action at law or equity, whether in ADR,
arbitration, court or otherwise, against or involving the other, which is in
any way connected with this License Agreement, its interpretation or
enforcement, then the party hereto which prevails in any such action shall
recover and receive from the other party reasonable attorneys' fees, court
costs and expenses as determined by the arbitrator, court or administrative
agency and not by the jury, whether in ADR, arbitration, courts or agencies of
original, appellate or bankruptcy jurisdiction, provided that nothing in this
Section shall be construed to permit any action or proceeding not permitted
under Article XX of this License Agreement.
21.11 Interest. Any amounts which may be owed to either party by
the other pursuant to this License Agreement whether as Rent, damages or
otherwise, shall bear interest from the due date until paid at the Premium
Rate. Payment of such Interest shall not excuse or cure any default.
21.12 Severability. If any provision of this License Agreement is
determined to be illegal or unenforceable by an arbitrator or by a court of
competent jurisdiction, this License Agreement shall remain valid as if such
provision had not been contained herein, provided that no such severance shall
serve to deprive any of the parties of the enjoyment of its substantial
benefits under this License Agreement.
21.13 Reasonableness. Whenever in this License Agreement the
consent or approval of the County, the Operator or the Team is required, unless
expressly stated to the contrary, the granting of such consent or approval
shall be governed by a standard of reasonableness. If either party contends
that the standard has not been met, the matter shall be resolved as provided in
Article XX. In the event that such resolution results in the determination
that the action was unreasonable, such determination shall not constitute a
default of this License Agreement, operate to terminate it or give rise to any
right to damages as a result thereof, but the sole remedy shall be limited to
specific performance and the recovery of reasonable attorneys' fees and costs
(including the fee of the arbitrators) in such resolution procedure.
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<PAGE> 60
21.14 Interpretation. This License Agreement constitutes the entire
understanding of the parties with respect to the subject matter of this License
Agreement. There are no oral or written statements, representations,
agreements, understandings or surrounding circumstances which modify, amend or
vary any of the provisions hereof, including, without limitation, that certain
Binding Letter of Intent dated April 2, 1996 between County and the Team. All
attachments hereto shall be deemed to have been incorporated herein so as to
become a part of this License Agreement.
21.15 Amendment. This License Agreement shall not be amended or
modified, and except as provided herein, rights hereunder shall not be waived
except with the prior approval of the County, and any attempt to amend, modify
or waive any of the terms or provisions of this License Agreement without prior
County approval shall be void. The County, the Team and the Operator shall
make such changes to this License Agreement as may be necessary to implement
the Plan of Finance attached to the Development Agreement as Exhibit "C".
21.16 Amendment of Operating Agreement. No amendment to,
modification of, or waiver of rights under the Operating Agreement shall be
effective without the prior written approval of Team, if the purpose, effect or
result of such amendment, modification or waiver will be to deprive Team of any
of its rights and benefits under this License Agreement as they exist on the
date hereof. Without limiting the foregoing, County and Operator may not amend
the definitions of Facility Operating Revenue, Facility Operating Expenses, and
Net Operating Income as defined in the Operating Agreement on the date hereof
without the prior written consent of Team.
21.17 Successors and Assigns. This License Agreement shall extend to
and be binding upon the representatives, successors and permitted assigns of
the respective parties hereto including, without limitation, any successor,
assign or replacement of the Operator as the operator of the Facility whether
pursuant to the Operating Agreement or otherwise. This License Agreement shall
continue in effect notwithstanding, and neither this License Agreement nor the
Team's rights hereunder shall be adversely affected by, a default under or
termination of the Operating Agreement or any other agreements between the
County and the Operator.
21.18 Time of the Essence. The parties hereto mutually understand
and declare that time is of the essence of this License Agreement.
21.19 Governing Law. This License Agreement shall be construed in
accordance with and pursuant to the laws of the State of Florida and all
disputes arising out of this License Agreement shall be resolved in Broward
County, Florida.
21.20 Team Option. At the Team's request and to the extent
permitted by law, the County shall diligently pursue the mechanism to grant an
option to Team whereby, County would enter an agreement pursuant to which
County would grant to Team an option to acquire a fee simple interest (or other
beneficial interest with equivalent rights and benefits as fee simple interest)
in all or substantially all of the Facility or the Project through sale, lease,
assignment or other transfer at the
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License Expiration Date at a purchase price that is equal to the fair market
value of the Facility or the Project upon such terms and conditions as are
mutually satisfactory to the County and Team.
21.21 No Liability of Personnel. Notwithstanding and prevailing
over any contrary provision or implication in this License Agreement, except
for their criminal acts with respect hereto (i.e., acts which would constitute
crimes were they prosecuted therefor and convicted thereof), no member, elected
official, official, employee, agent or consultant of the County, and no partner
(other than any general partner), shareholder of a partner, officer, employee
or agents of either of the Team or Operator (collectively "the Personnel"),
shall in any way be liable under or with respect to this License Agreement; no
deficiency or other monetary or personal judgment of any kind with respect to
liability arising hereunder or with respect hereto shall be sought or entered
against any of the Personnel; no judgment with respect to liability arising
hereunder or with respect hereto shall give rise to any right of execution or
levy against the assets of any of the Personnel.
[Signatures on following page]
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<PAGE> 62
IN WITNESS WHEREOF, the parties have hereunto set their hands to be
effective as of June 4, 1996.
TEAM:
FLORIDA PANTHERS HOCKEY CLUB,
LTD., a Florida limited partnership
By: THE FLORIDA PANTHERS HOCKEY
CLUB, INC., a Florida corporation Its
General Partner,
By: /s/ H. Wayne Huizenga
--------------------------------------
Name: H. Wayne Huizenga
------------------------------
Title: Chairman
-----------------------------
OPERATOR:
ARENA OPERATING COMPANY, LTD.,
a Florida limited partnership
By: Arena Operating Company, Inc.,
a Florida corporation , Its General
Partner
By: /s/ H. Wayne Huizenga
--------------------------------------
Name: H. Wayne Huizenga
------------------------------
Title: Chairman
-----------------------------
COUNTY:
BROWARD COUNTY, FLORIDA
By: /s/ John E. Rodstrom
--------------------------------------
Chair of the Board of County
Commissioners
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<PAGE> 63
ATTEST:
/s/ B. Jack Osterholt
- -------------------------------
County Administrator
APPROVED AS TO FORM:
/s/ Noel Pfeffer
- -------------------------------
County Attorney
57
<PAGE> 64
STATE OF FLORIDA )
) SS.
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me on this 10 day
of June, 1996, by H. Wayne Huizenga as Chairman of Florida Panthers Hockey Club,
Inc., a Florida corporation, on behalf of the corporation as the general
partner of the Florida Panthers Hockey Club, Ltd., a Florida limited
partnership, on behalf of the partnership.
/s/ Cynthia Trezona
--------------------------
Notary Public
My Commission Expires:
2-20-99
- ----------------------------
STATE OF FLORIDA )
) SS.
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me on this 10 day
of June, 1996, by H. Wayne Huizenga as Chairman of Arena Development Company,
Inc., a Florida corporation, on behalf of the corporation as the general partner
of Arena Development Company, Ltd., a Florida limited partnership, on behalf of
the partnership.
/s/ Cynthia Trezona
--------------------------
Notary Public
My Commission Expires:
2-20-99
- --------------------------
58
<PAGE> 1
Exhibit 10.2
BROWARD COUNTY
CIVIC ARENA
OPERATING AGREEMENT
DATED AS OF JUNE 4, 1996
BY AND BETWEEN
BROWARD COUNTY, FLORIDA
THE COUNTY
AND
ARENA OPERATING COMPANY, LTD.
THE OPERATOR
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
ENGAGEMENT OF OPERATOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1 Engagement of Operator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Authority of Operator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3 Duty and Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.4 County Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.5 Operator Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.6 Operator Pre-Operations Start Date Duties . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III
TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Commencement and Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Options to Extend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV
OPERATOR'S RIGHTS AND OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Use Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Promotions Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Marketing and Public Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.6 Naming Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.7 Concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.8 Booking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.9 Ticketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.10 Affiliate Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.11 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.12 Changes in Parking Area Configuration . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.13 Security and Traffic Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.14 Base Management Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.15 Incentive Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.16 Small Disadvantaged Business Enterprise Participation . . . . . . . . . . . . . . . . . . . 19
</TABLE>
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4.17 Personal Seat Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V
FINANCIAL OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.1 Facility Operating Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.2 Distribution of Funds from Operating Fund . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3 Distribution of Net Operating Income and Other Funds . . . . . . . . . . . . . . . . . . . 21
5.4 Availability of Funds in Operating Fund; Working Capital Loans . . . . . . . . . . . . . . 22
5.5 Distribution of Funds from Operating Fund and Renewal and Replacement Account during
Abatement Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.6 Renewal and Replacement Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7 Operating Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.8 Distribution of Funds from Accounts Upon End of Term . . . . . . . . . . . . . . . . . . . 23
5.9 Reduction of County Preferred Revenue Allocation . . . . . . . . . . . . . . . . . . . . . 24
5.10 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI
OWNERSHIP AND USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 County Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 County Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.3 County Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII
RECORDS AND AUDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.1 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Accounting Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.3 Financial Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Additional County Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.5 Underreporting of Facility Operating Revenue . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VIII
ADDITIONS AND CAPITAL REPAIRS; EMERGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.2 Incremental County Preferred Revenue Allocation . . . . . . . . . . . . . . . . . . . . . . 28
8.3 Operator Right to Finance Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.4 County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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ARTICLE IX
IMPOSITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.2 Permitted Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.3 Ad Valorem Tax Imposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.4 Exclusive Taxes and Special Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE X
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.1 Indemnification of County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Indemnification of Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.4 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XI
INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.1 Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.2 Business Interruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.3 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.4 Workers Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.5 Builder's Risk or Installation Floater . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.6 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.7 Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.8 Insurance for County Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.9 Waiver of Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.10 Failure to Maintain Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.11 Proceeds Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE XII
DAMAGE OR DESTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.1 Adequately Insured Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.2 Insurance Deficiency and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.3 End of Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.4 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.5 Abatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XIII
EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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13.1 Substantial Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.2 Partial Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.3 End of Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.4 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.5 Abatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.6 No Condemnation by County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XIV
ASSIGNMENT AND TRANSFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.1 Right to Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.2 Prohibition Against Assignment of Agreement or Transfer of the Facility by the County . . . 39
ARTICLE XV
REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
15.1 County Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . 39
15.2 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.3 Optional Remedy of Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
15.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
15.5 Operator Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . 42
15.6 Mutual Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XVI
DEFAULTS, REMEDIES AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.2 Institution of Litigation Permitted by Article XVIII . . . . . . . . . . . . . . . . . . . 46
16.3 Rights and Remedies are Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
16.4 Costs, Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
16.5 Acceptance of Legal Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
16.6 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XVII
DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XVIII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
18.1 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
18.2 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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18.3 Relationship of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
18.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.5 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.6 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.7 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.10 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.11 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.12 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.13 Nondiscrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.14 Reasonableness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XIX
LIABILITY LIMITATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
19.1 County and Operator Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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OPERATING AGREEMENT
This Operating Agreement ("Agreement"), is dated as of June 4, 1996
and entered into by and between Broward County, Florida, a public body
corporate and politic and a political subdivision of the State of Florida (the
"County"), and Arena Operating Company, Ltd., a Florida limited partnership
(the "Operator").
RECITALS:
A. On April 2, 1996, the County and the Florida Panthers Hockey
Club, Ltd. (the "Team") entered into a Letter of Intent (the "Letter of
Intent") setting forth the outline of terms and conditions under which the
County and the Team would move forward to expeditiously develop a new
multipurpose civic arena to be financed and owned by the County (the
"Facility").
B. On even date herewith the County and Arena Development
Company, Ltd. the ("Project Developer") entered into a Development Agreement
(the "Development Agreement") setting forth the terms under which the Project
Developer will develop and construct the Facility.
C. On even date herewith, the County, the Team and the Operator
have executed a License Agreement (the "License Agreement") under which the
Team will play its Home Games in the Facility and otherwise use the Facility in
accordance with the terms of the License Agreement.
D. The County has determined to grant to the Operator the
exclusive right to manage and operate the Facility after completion of
construction pursuant to the terms and conditions stated herein.
E. The Operator is a Florida limited partnership formed by and
is an affiliate of the Team, which the Team has selected as the Operator
pursuant to the Letter of Intent. The Operator will operate and manage the
Facility pursuant to the terms of this Agreement.
F. The Operator and County acknowledge that their respective
duties and obligations hereunder, are absolute and unconditional, except where
specifically provided to the contrary herein.
G. The health, safety and general welfare of the people of the
County are directly dependent upon the continual encouragement, development,
growth and expansion of business, commerce and tourism. The development of a
major multipurpose sports and entertainment complex and accessory uses is most
appropriate in the County which, because of its size, is capable of retaining
and supporting professional as well as amateur sports teams and attracting
major national sporting and musical, cultural, family and community events; and
that attraction of business and tourism to the County as a result of the
development of such a facility and its accessory uses will be an important
factor in the continued encouragement, promotion, attraction, stimulation,
development, growth and expansion of business, commerce and tourism within the
County. The
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development and promotion of a multipurpose sports and entertainment complex on
public property will provide significant benefits to the general public.
H. In view of the foregoing, the County has determined that the
operation of the Facility, the licensing of same under the License Agreement
and the performance of this Agreement, are in the best interests of the County
and the welfare of its residents, and in accord with valid public purposes.
NOW, THEREFORE, intending to be legally bound, for valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, capitalized terms shall have the meanings
set forth below unless otherwise defined herein. Certain other capitalized
terms which are not defined herein shall have the meanings provided in the
Development Agreement or the License Agreement; however, in the event of a
conflict between a defined term used herein that is defined in both the License
Agreement and the Development Agreement then for purposes of use of the
Facility, the License Agreement will control and for the purposes of Project
development, the Development Agreement will control.
1.1 Abatement Period(s) means any period for which the time
for performance or the deadline for satisfaction of a condition or the
expiration date under any of the Related Agreements is extended as a result of
events described in any of the Related Agreements. Any Abatement Period under
any of the Related Agreements shall be deemed to be an Abatement Period for
every other such Related Agreement.
1.2 Accounts means any accounts that are required to be
maintained by Operator under the terms of this Agreement including, without
limitation, the Operating Fund, the Renewal and Replacement Account, the
Operating Reserve Account and all other accounts for the deposit of the Facility
Operating Revenue of the Facility as provided in Article V.
1.3 Additions and Capital Repairs shall mean collectively,
any or all installations, alterations, improvements, and purchases of additional
or replacement furniture, machinery or equipment at the Facility, the
depreciable life of which, according to generally accepted accounting
principles, is in excess of one (1) year and expenditures for maintenance or
repairs which extend the useful life of the assets being maintained or repaired
for a period in excess of one (1) year. Additions and Capital Repairs shall be
paid for from the Renewal and Replacement Account.
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1.4 Advertising means all announcements, acknowledgments,
banners, signs, show bills, and other audio or visual commercial messages
displayed, announced or otherwise presented in the Facility including video
messages, but excluding Sponsor Signs.
1.5 Advertising Revenue has the meaning set forth in Section
4.5.
1.6 Affiliate of a specified person means a person who (a)
is directly or indirectly controlled by, or under common control with, the
specified person; (b) owns directly or indirectly thirty-five percent (35%) or
more of the equity interests of the specified person; (c) is a general partner,
officer, director, non-financial institution trustee or fiduciary of the
specified person or of any person described in (a) or (b); or (d) is a son,
daughter, spouse, parent, sibling or in-law of the specified person.
1.7 Agreement shall mean this Operating Agreement.
1.8 Annual Budget means the budget to be prepared by the
Operator as provided in Section 4.1.
1.9 Arena means an approximately 750,000 - 850,000 square
feet multipurpose facility with seating capacity of 18,000 - 19,500 seats for
NHL hockey games, 19,000 to 21,500 seats for basketball and 20,000 - 21,000
seats for concerts or other events, all as is constructed in accordance with the
Program Requirements set forth in the Development Agreement.
1.10 Arena Management Firm shall mean Leisure Management
International, an Affiliate of Operator, who is a firm selected by Operator
which specializes in the management of public assembly facilities similar to the
Facility or any subsequent Person selected by Operator.
1.11 Base Management Fee shall mean a fee paid to Operator or
the Arena Management Firm annually for its services under this Agreement in the
aggregate amount of $250,000, which amount shall increase each year by the
percentage increase in the Consumer Price Index over the preceding Fiscal Year.
1.12 Board means the Board of County Commissioners of Broward
County, Florida.
1.13 Bonds mean the total amount of Professional Sports
Facility Tax and Revenue Bonds, Series 1996 outstanding from time to time and at
any time, including interest and other payment requirements and any
restructuring or refundings thereof, and related costs, which the County incurs
for the purpose of financing the development and construction of the Facility,
all of which is estimated at the time of execution of this Agreement to be in an
original principal amount not to exceed $185 million.
1.14 Business Days means Monday, Tuesday, Wednesday,
Thursday or Friday, excluding County holidays.
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1.15 Certificate of Occupancy means a certificate issued as
described in the Development Agreement.
1.16 City means the City of Sunrise, Florida.
1.17 Communication System means all the audio and visual
communication systems within or at the Facility, including but not limited to
scoreboards, television and loudspeaker systems, public address systems, timers,
clocks, message centers, video screens, signs and marquees, within or at the
Facility.
1.18 Comparable Events has the meaning set forth in Section
15.1.7.
1.19 Competing Facility has the meaning set forth in Section
15.1.7.
1.20 Concessionaire(s) shall mean any Person, including
Operator, operating a Concession.
1.21 Concession(s) shall mean the business of selling,
furnishing or renting of foods, beverages, apparel, game programs, sporting
equipment, goods, novelties or merchandise (but not including parking) in, at,
from or in connection with the operation of the Facility whether sold, furnished
or rented from shops, kiosks or by individual vendors circulating through the
Facility including, without limitation, any restaurant (whether open to the
public or restricted to members thereof), club, membership dining room or other
facility therein for sale of food or beverages, and including sales to fill
orders for any such items received by any Concessionaire operating a Concession
at the Facility by mail, facsimile, telephone or other medium of communication.
1.22 Consumable Concessions means items of food, drink,
tobacco products or other items for consumption which are sold or dispensed at
the Facility.
1.23 Consumer Price Index shall mean the Consumer Price Index
for National Consumers published by the Bureau of Labor Statistics of the U.S.
Department of Labor.
1.24 County means the County of Broward, a public body
corporate and politic operating under a home rule charter and a political
subdivision of the State of Florida, and any of its administrative departments,
divisions and functions and its successors and assigns.
1.25 County Event Revenue shall have the meaning set forth in
Section 6.2 of this Agreement.
1.26 County Events means Non-Commercial Events conducted or
sponsored or co-sponsored by the County or its designee pursuant to its rights
and obligations established in this Agreement.
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1.27 County Preferred Revenue Allocation means an annual
amount equal to the difference between (a) the actual amount of the County's
annual debt service obligation on the Bonds fixed at the time the initial Bonds
are sold and (b) $10,000,000. However unless otherwise agreed to by the
Parties, if an acceptable combination of tax-exempt and taxable financing is not
achieved in accordance with the Plan of Finance attached as Exhibit C to the
Development Agreement, then the initial County Preferred Revenue Allocation
(determined in accordance with the foregoing) shall not exceed Five Million
Dollars ($5,000,000). The County Preferred Revenue Allocation shall be payable
only for as long as the Bonds or any refunding bonds issued to refinance the
Bonds are outstanding. In addition, the County Preferred Revenue Allocation
shall be increased by the amount of the Incremental County Preferred Revenue
Allocation (if any) pursuant to Section 8.2 hereof. The County Preferred
Revenue Allocation shall be adjusted on the interest conversion date (and fixed
on such date) in the event of the sale of any refunding Bonds unless mutually
agreed upon otherwise.
1.28 County Representative is the person authorized to issue
and receive notices on behalf of County with respect to this Agreement and shall
be the person so designated and shall have the rights, duties and
responsibilities described in Section 2.4 of this Agreement.
1.29 Design Development Documents shall have the meaning set
forth in the Development Agreement.
1.30 Development Agreement means the Development Agreement
between the County and the Project Developer, dated as of the date hereof, as
and if amended or restated.
1.31 Emergency means any condition or situation which
threatens (or if not promptly acted upon will threaten) the health, safety or
welfare of users of the Facility or the structure or systems of the Facility
itself or any portion thereof including the Arena and the Parking Areas.
1.32 Emergency Expenditure means any Facility Operating
Expense or expenditure for an Addition or Capital Repair undertaken by the
Operator and deemed necessary by it because of an Emergency.
1.33 Environmental Laws means any federal, state, County or
applicable municipal law, statute, code, ordinance, rule, regulation or judicial
or administrative decision, order or directive relating to environmental
matters, historic preservation matters, or industrial health or safety matters,
including, without limitation, any of the foregoing regulating or applying to
any toxic or hazardous substance or waste or any environmental pollutant, as
those terms are defined in any of the foregoing.
1.34 Event of Default has the meaning set forth in Section
16.1.
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1.35 Event Related Expenses means those costs and expenses
that will be incurred by Operator in connection with, and directly attributable
to, each event or performance in the Arena or at the Facility and pursuant to an
agreement relating to such event or performance (i) will be reimbursed by the
user or the promoter out of the ticket sales for such event or performance or
(ii) will otherwise be paid by the user or promoter in addition to any other
charges for the use of the Arena or the Facility for such event or performance,
including, but not limited to, expenses for personnel (including ticket takers,
ushers, internal and external security, police, maintenance and cleanup
personnel, emergency medical technicians, concierge, restroom assistants,
stagehands, box office personnel and other maintenance personnel, utilities and
insurance) necessary for the conduct of an Event.
1.36 Event(s) means all revenue or nonrevenue producing
sports, entertainment, cultural, civic and other activities and events which are
conducted at the Facility and scheduled by Operator.
1.37 Expiration Date means the date of expiration of the
Agreement, which is thirty (30) years after the Operations Start Date, as
extended by any Abatement Period (or portion thereof) having a duration of at
least ninety (90) days and further extended by any Extension Term.
1.38 Facility means the Project Site, the Arena, and the
Parking Areas with all improvements, additions, facilities, fixtures, furniture,
machinery and equipment, attachments and appurtenances now or hereafter
attaching thereto.
1.39 Facility Advertising Agreement shall mean that certain
agreement to be entered into between Operator and Team pursuant to Section 7.1
of the License Agreement.
1.40 Facility Operating Expenses shall mean and include all
expenses or obligations of whatever kind or nature made or incurred by the
Operator or its designee or the Arena Management Firm, within the scope of
Operator's authority or responsibility under this Agreement, including, but not
limited to, Operator's expenses; Impositions; Tourism Promotion Payments;
payments of fees, costs, interest and principal on or with respect to Working
Capital Loans; payments to the Operating Reserve Account; payments to the
Renewal and Replacement Account; all expenses incurred to obtain Facility
Operating Revenues; salaries, wages and benefits of personnel working at the
Facility including personnel employed by Operator; human resource support
services and training and development expenses; contract labor expenses;
maintenance and repairs; utilities; deposits for utilities; telephone expenses;
expenses incurred under use or license agreements with licensees or other users
at the Facility; telescreen, video and/or scoreboard operation expenses; dues,
memberships and subscriptions; security expenses; Management Fees; audit fees;
legal fees; other professional fees; fees payable to Concessionaires or other
subcontractors; refuse removal expenses; cleaning expenses; sales taxes;
building supplies; ticket commissions; insurance premiums; data processing
expenses; advertising; marketing; public relations expenses; expenses and losses
incurred in the production and promotion of Events at the Facility where
Operator acts as promoter or co-promoter; pest control; travel, lodging and
related out-of-pocket expenses and Facility related entertainment expenses;
office supplies; employment fees; freight and delivery expenses; expenses
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<PAGE> 13
for leasing of equipment; Master Card, VISA and other credit and debit
facilities and telecheck fees and expenses; travel, lodging and related
out-of-pocket expenses for officers and directors of Operator properly
allocable to the performance of Operator's obligations under this Agreement
including, but not limited to, promotion of the Facility, local, regional and
national conferences, arena management seminars, crowd management seminars, and
schools of public facility management such as Oglebay; all damages, losses or
expenses suffered or paid by Operator as the result of any and all claims,
demands, suits, causes of action, proceedings, judgments and liabilities,
including reasonable attorneys fees incurred in litigation or otherwise,
assessed, incurred or sustained by or against any of them.
1.41 Facility Operating Revenues shall mean all revenues as
determined on an accrual basis including, without limitation, revenues from the
sale and/or licensing of Premium Seating (including deposits), revenues derived
from the sale or licensing of personal seat licenses (including deposits),
revenues from the sale of name sponsorship (including Naming Rights),
Advertising Revenues, box office revenues, parking revenues, revenues from the
sale of Consumable and Non-Consumable Concessions, sponsorship revenues, rent
and other fees under the License Agreement, all other licensing and use fee
revenues, interest income (except interest earned on funds deposited in the
Renewal and Replacement Account), forfeited security deposits, ticket
convenience fees, equipment rental fees and Seat Use Charges, earned by the
Operator (1) for the use of, operation, or admission to, the Facility or any
portion thereof, (2) for the right to sell, or in respect of the sale of, any
product or advertisement in the Facility including all rents, royalties, and
concessions from tenants, Concessionaires, and Licensees, (3) from interest on
or proceeds of investment of any Accounts (except the Renewal and Replacement
Account) required to be maintained hereunder, (4) for rental or use of the
Facility equipment, or (5) as fees for services rendered at the Facility; but
excluding, in all events, (i) sums received or collected by the Operator for and
on behalf of and actually paid to a user of the Facility, (ii) any revenues
reserved to the Team pursuant to the License Agreement and (iii) any Revenue
Advances pursuant to Section 5.10.
1.42 Facility Rights shall meany any rights, the sale of
which would give rise to Facility Operating Revenue but for the treatment of
such as Revenue Advances pursuant to Section 5.10.
1.43 Fiscal Year means a twelve (12) month period commencing
October 1 and ending on September 30 of the immediately following year, or any
portion thereof.
1.44 Fixed and Permanent Advertising means all Advertising
other than Temporary Advertising.
1.45 General Manager means the chief operations officer of
the Operator or Arena Management Firm, his designee or successor, in every case
designated in writing by the Operator to the County.
1.46 General Seating means all of the other seats at the
Facility that are not Premium Seating including but not limited to
rinkside/court side seating or any other type of preferred location
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<PAGE> 14
seating which is not Premium Seating. The Team will sell "General Seating" for
its own account at the prices that Team determines and may include such other
benefits for Hockey Ticket purchasers as Team may determine, including, without
limitation, membership in the "Panthers Club" or some other club memberships of
Team sponsors, season ticket holders or others. The provision of a club
membership or other benefits to a Ticket purchaser does not change seating
designated as General Seating to Premium Seating.
1.47 Impositions means all governmental assessments,
franchise fees, excises, license and permit fees, levies, charges and taxes,
general and special, ordinary and extraordinary, of every kind and nature
whatsoever (irrespective of the nature thereof, including, without limitation,
all such charges based on the fact of a transaction, irrespective of how
measured) which at any time during the Term hereof may be assessed, levied,
confirmed, imposed upon, or grow or become due and payable out of or in respect
of, or become a lien on: (a) all or any part of the Facility; (b) any payments
received from any holders of a leasehold interest or license in or to the
Facility, from any guests or from any others using or occupying all or any part
of the Facility; or (c) this transaction or any document to which the Operator
or the Team is a party which creates or transfers rights with respect to all or
any part of the Facility.
1.48 Incremental County Preferred Revenue Allocation has the
meaning set forth in Section 8.2
1.49 License Agreement means that certain License Agreement
entered into between the Operator, County and the Team, dated the date hereof,
as same may be amended or restated.
1.50 License Commencement Date has the meaning set forth in
the License Agreement.
1.51 Licensee means any licensee other than the Team,
including licensees of concessions, Premium Seating, Advertising, arena
restaurant, and other users of privileges in or around the Arena for a fee.
1.52 Licenses means Premium Seating Licenses, licenses with
Concessionaires, licenses with other users of the Facility and all booking and
use agreements as described herein.
1.53 Liens means all encumbrances, liens, security interests,
pledges and claims in, to, against or in any way applicable to any portion of
the Facility or the Accounts.
1.54 Management Fees means the Base Management Fee and
incentive fees, if any, paid to Operator for its services under this Agreement,
as set forth under Sections 4.14 and 4.15 herein.
1.55 Management Services means the services which the
Operator or its designee is required to render in connection with the management
of the Facility pursuant to this Agreement.
1.56 NHL means the National Hockey League.
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<PAGE> 15
1.57 NBA means the National Basketball Association.
1.58 Net Operating Income means, as to each Fiscal Year
during the Term, the net of Facility Operating Revenue for such Fiscal Year less
Facility Operating Expenses for such Fiscal Year and less the County Preferred
Revenue Allocation distributed by Operator pursuant to Section 5.2 for such
Fiscal Year.
1.59 Non-Commercial Event has the meaning set forth in
Section 15.1.8.
1.60 Non-Consumable Concessions means all Concessions items
other than Consumable Concessions.
1.61 Operating Fund means the account which shall be
established for the deposit of all Facility Operating Revenue and from which all
Facility Operating Expenses required by this Agreement shall be paid and from
which Net Operating Income and other distributions shall be made. Operator may
establish the Operating Fund in a bank or other financial institution located in
Broward County. Operator may deposit, invest or otherwise employ the funds in
the Operating Fund provided that such funds will be available as necessary to
pay Facility Operating Expenses as and when they become due.
1.62 Operating Reserve Account means the Account maintained
by Operator as a contingency reserve for three (3) months of Facility Operating
Expenses.
1.63 Operating Reserve Contribution means the deposit by
Operator into the Operating Reserve Account of amounts sufficient to enable a
build-up and maintenance of three (3) months of budgeted Facility Operating
Expenses.
1.64 Operations Start Date means the earlier of (a) the date
of issuance of a final and unconditional Certificate of Occupancy for the entire
Facility, or (b) if requested by the Operator, the date of issuance of any
temporary Certificate of Occupancy permitting any Event to be conducted.
1.65 Operator means Arena Operating Company, Ltd., a Florida
limited partnership, its successors and assigns.
1.66 Operator Representative is the person authorized to
issue and receive notices on behalf of Operator with respect to this Agreement
and shall be the General Manager and shall have the rights, duties and
responsibilities set forth in Section 2.5.
1.67 Panthers means the Florida Panthers Hockey Club, Ltd., a
member club of the National Hockey League. "Panthers" is used interchangeably
with "Team".
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<PAGE> 16
1.68 Parking Areas means the areas of the Facility designated
for parking.
1.69 Person means any Affiliate, individual, trust, estate,
partnership, joint venture, company, corporation, association, or any other
legal entity or business or enterprise.
1.70 Premium Rate means a rate of interest equal to two
percent (2%) in excess of the Prime Rate.
1.71 Premium Seating means the executive suites, party suites
and co-op suite seats at the Facility designated by Team which have exclusive
access for its patrons on a separate and exclusive concourse and is or may be
serviced by separate catering, service and maintenance support. Premium Seating
shall not include any of the General Seating.
1.72 Premium Seating License means the form of that certain
Agreement for execution by Premium Seat Licensees as amended from time to time
and all such executed forms of the agreement as are executed and in effect from
time to time.
1.73 Prime Rate means the rate of interest announced from
time to time by NationsBank of South Florida, N.A., or by any other bank located
in the County and designated by the Operator and the County, as the "prime rate"
of interest.
1.74 Project Site means the entire tract of land on which the
Facility is located as set forth in the Development Agreement.
1.75 Public Entity Assignee means an entity which has, or is
intended to have, a class of capital stock registered under the Securities Act
of 1933, as amended, and that owns or is intended to own the Operator or
Operator's material assets.
1.76 Quality Arena Standard shall have the meaning given such
term in the License Agreement.
1.77 Records means all the books, records and accounts of the
Facility that the County is permitted to inspect and audit pursuant to this
Agreement.
1.78 Related Agreements means this Agreement, the Development
Agreement and the License Agreement.
1.79 Renewal and Replacement Account means the Account
established for funds deposited pursuant to Section 5.6.1 and 5.6.2 which may be
used as specified in Section 5.6.3.
1.80 Renewal and Replacement Account Payments means payments
into the Renewal and Replacement Account in the manner and amounts established
in Section 5.2.5.
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<PAGE> 17
1.81 Renewal and Replacement Contribution means the annual
contributions to be deposited by Operator into the Renewal and Replacement
Account in amounts as set forth below, such amounts to be prorated in any
partial Fiscal Year:
<TABLE>
<CAPTION>
Year
----
<S> <C>
2 $338,000
3 $349,000
4 $362,000
5 $752,000
6 Prior Year, plus the lesser of the percentage change in the Consumer Price Index in the
preceding Fiscal Year or three percent (3%) (such amount to be increased in the event of an
increase on the Consumer Price Index and held constant from the previous year in the event of a
decrease in the Consumer Price Index).
</TABLE>
1.82 Revenue Advances shall have the meaning set forth in
Section 5.10.
1.83 Request with respect to this Agreement has the meaning
set forth in Article XVII thereof.
1.84 Seat Use Charge means the amount that (i) the user of
each seat in the Arena shall be charged for use of such seat and (ii) Operator
shall collect from each such user. Such amount shall be determined by Operator
in its discretion. The Seat Use Charge shall be in addition to, and not in lieu
of admission charges and any taxes that may be payable on such Seat Use Charge.
The Seat Use Charge shall be Facility Operating Revenue and shall be deposited
by Operator in the Renewal and Replacement Account and specifically segregated
for use for capital improvements at the Facility or to improve the roadways and
for traffic access improvements.
1.85 Sponsor Signs has the meaning set forth in the License
Agreement.
1.86 Sunrise Letter of Agreement shall mean that certain
Letter of Agreement by and among Team, County and the City of Sunrise, Florida.
1.87 Temporary Advertising means Advertising in connection
with any Event which is to be removed or terminated at the conclusion of such
Event.
1.88 Title Exceptions has the meaning set forth in Section
15.1.5.
1.89 Tourism Promotion Payment means $500,000 per year
payable within thirty (30) days after the end of each Fiscal Year, commencing
with the first Fiscal Year of the License Term, except that the payment
following the end of the first Fiscal Year shall be prorated for a partial
Fiscal Year. The Tourism Promotion Payment shall be a fixed amount and shall
not be adjusted for any increases or decreases in the Consumer Price Index or
otherwise.
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<PAGE> 18
ARTICLE II
ENGAGEMENT OF OPERATOR
2.1 Engagement of Operator. The Operator or its designee
shall be the sole and exclusive manager and operator of the Facility during the
Term hereof with sole responsibility and full control and discretion in the
operation, direction, management and supervision of the Facility and its staff,
subject to and as more fully described in this Agreement. Operator shall have
the right to delegate all or a portion of its duties and responsibilities
hereunder to Arena Management Firm and/or to subcontractors or agents including
to Operator's Affiliates.
2.2 Authority of Operator. The Operator shall have the
exclusive right and authority to exercise, or delegate the exercise of, all
rights, powers and duties conferred or imposed on the Operator in this
Agreement. The powers of the Operator with respect to the Facility shall be
plenary, subject only to the limitations expressly set forth in this Agreement.
2.3 Duty and Liability. The Operator shall owe to County a
duty to perform its obligations under this Agreement and to conduct the
management and operation of the Facility at all times with integrity and good
faith in a manner which is in the best interests of the County, the Facility and
its tenants, users and licensees, including the Team, and consistent with the
terms of this Agreement.
2.4 County Representative. The County Administrator shall
be the County's authorized representative who shall act as liaison and contact
person between the County and Operator in administering and implementing the
terms of this Agreement. County shall have the right to designate a substitute
authorized representative by providing written notice thereof to Operator. The
County Representative, or his authorized designee, shall respond to requests for
review, consents or waivers within five (5) business days after submittal, and
failing a written notice of disapproval within such time period, the request
shall be deemed approved or the consent granted. Notwithstanding the foregoing,
the Board shall be required to consent to any amendment to this Agreement or to
any other request for consent that is not related to administration of the terms
of this Agreement. All administrative and ministerial consents shall be given
by the County Representative on behalf of the County. In any situation
requiring Board approval, the County's failure to provide a written notice of
disapproval within thirty (30) days of submittal of any request, consent or
waiver by Operator or its designee, shall be deemed an approval or consent of
such request by County. The Operator and any other Person dealing with County
in connection with this Agreement or any matter governed by this Agreement may
rely and shall be fully protected in relying upon the authority of the County
Representative or any such designee to act for and bind County in any such
matter.
2.5 Operator Representative. The General Manager shall be
the Operator's authorized representative who shall act as liaison and contact
person between the County and Operator in all matters concerning this Agreement.
Operator shall have the right to designate a substitute authorized
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<PAGE> 19
representative by providing written notice thereof to County. The Operator
Representative, or his authorized designee, shall respond to requests for
review, consents or waivers within ten (10) days after submittal, and failing a
written notice of disapproval within such time period, the request shall be
deemed approved or the consent granted. The County and any other Person
dealing with Operator in connection with this Agreement or any matter governed
by this Agreement may rely and shall be fully protected in relying upon the
authority of the Operator Representative or any such designee to act for and
bind Operator in any such matter.
2.6 Operator Pre-Operations Start Date Duties. At any time
after the date hereof, the Operator shall have such rights and shall discharge
such duties as are reasonable and necessary to ensure that the Facility is
equipped, staffed and managed to commence operations upon the Operations State
Date and to sell or license Advertising, Naming Rights, Premium Seating, parking
or any other source of Facility Operating Revenues and, in connection therewith,
may make distributions from the Operating Fund in satisfaction of Facility
Operating Expenses or other amounts permitted hereunder. Operator will submit a
pre-opening plan to County detailing its pre-opening actions at least 24 months
prior to the Operations Start Date and shall update such plan at six month
intervals until the Operations Start Date. Except as specifically set forth in
this Section, Operator shall have no rights, duties or obligations to operate,
manage or perform other actions with respect to the Facility prior to the
Operations Start Date.
ARTICLE III
TERM
3.1 Commencement and Term. The term (the "Term") of this
Agreement shall commence on the date hereof and shall expire (the "Expiration
Date") on the anniversary date 30 years after the Operations Start Date;
provided, however, the Expiration Date shall be extended for a period equal to
the aggregate of every Abatement Period or portion thereof commencing after the
License Commencement Date and having a duration of at least 90 days and for the
period of any Extension Terms. Notwithstanding anything to the contrary it is
intended that the Expiration Date of this Agreement shall be simultaneous with
that of the License Agreement and therefore, unless sooner terminated herein,
this Agreement shall automatically terminate upon the expiration of the License
Agreement.
3.2 Options to Extend. Operator shall have the option and
right (each an "Extension Option") to extend the Term of this Agreement upon the
same terms and conditions, for two (2) additional terms (each an "Extension
Term") of five (5) years each commencing on the Expiration Date or the
conclusion of the then-expiring Extension Term of this Agreement. The Operator
shall exercise the Extension Options by delivering written notice to County not
less than six (6) nor more than eighteen (18) months prior to the Expiration
Date or the expiration of the then-expiring Extension Term.
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<PAGE> 20
ARTICLE IV
OPERATOR'S RIGHTS AND OBLIGATIONS
4.1 Management. Operator shall be the exclusive manager and
operator of the Facility and, except as provided in Section 4.2, shall have the
exclusive right to contract for its license or use during the Term and any
Extension Term in a manner that will promote and further the purposes for which
the Facility and the Arena has been constructed. The Operator shall do all
things and take all actions necessary for the operation of the Facility in
accordance with this Agreement. In performing its duties and responsibilities
hereunder, Operator shall exercise such attention and care as is reasonably
consistent with the Quality Arena Standard. Without limiting the generality of
the foregoing, the Operator is authorized to and shall:
4.1.1 collect all Facility Operating Revenue and
County Event Revenue and in connection
therewith, use all reasonable efforts to
obtain all fees, rents and other amounts due
from Licensees, Concessionaires and other
users of the Facility; and shall cause notices
to be served upon such Licensees and other
users to quit and surrender space occupied or
used by them where desirable or necessary in
the opinion of the Operator; and shall ask
for, demand, collect and give receipts for all
amounts which at any time may be due from any
Licensees and other users of the Facility;
4.1.2 prepare and submit to the County (for its
review and comment but not approval) on or
before August 1 of each Fiscal Year an Annual
Budget projecting the estimated revenues and
expenses of the Facility during the next
Fiscal Year and a Renewal and Replacement
Account budget projecting the estimated
Additions and Capital Repairs expenditures
for the Facility during the next Fiscal Year,
and maintain and furnish all other financial
records and information required herein;
4.1.3 commence, defend and settle in good faith
such legal actions or proceedings concerning
the operation of the Facility (other than
defense of the County in legal actions or
proceedings in which the County is a
defendant, which defense shall be assumed by
the County Attorney) as are necessary or
required in the opinion of the Operator and
shall retain counsel in connection therewith;
4.1.4 employ, pay and supervise all personnel that
the Operator determines to be necessary for
the operation of the Facility, including such
personnel as shall be necessary to maintain
and ensure public order and safety in and
around the Facility (such personnel, during
the course of such employment, shall be
employees of the Operator and shall not be
employees of the County); determine all
matters with regard to such personnel,
including, without
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<PAGE> 21
limitation, compensation, bonuses, fringe
benefits, hiring and replacement and may at
its option establish reasonable employee
benefit plans and training and motivational
programs similar to those at other NHL arenas
that meet or exceed the Quality Arena
Standard; and shall prepare, on its own behalf
and file when due, all forms, reports and
returns required by law relating to the
employment of such personnel;
4.1.5 purchase and maintain all materials, tools,
machinery, equipment and supplies necessary
for the operation of the Facility;
4.1.6 maintain the Facility in accordance with the
Quality Arena Standard, subject to normal
wear and tear, and maintain and operate the
Facility in compliance with all NHL
requirements in effect from time to time and,
to the extent available, utilizing the
Renewal and Replacement Account;
4.1.7 coordinate and administer a preventative
maintenance program for the Facility, its
machinery and equipment;
4.1.8 arrange for all utility and other services
for the Facility and pay or cause to be paid
when due all charges for water, sewer, gas,
light, heat, telephone, electricity and other
utilities and services rendered to or used on
or about the Facility;
4.1.9 maintain or cause to be maintained all
necessary licenses, permits and
authorizations for the operation of the
Facility;
4.1.10 furnish to the County such reports and other
information concerning the Facility and
operation thereof as may be reasonably
requested from time to time by the County.
4.1.11 procure and negotiate contracts with
Concessionaire(s) for the operation of
Consumable and/or Non-Consumable Concessions
at the Facility (unless Operator shall
self-operate such Concessions); in this
regard Operator shall advise County of the
status of such negotiations and permit County
to review and comment upon any such contract
and Operator, in its discretion and after
consultation with the County, shall conclude
such contracts and upon execution of any
Concession agreement, Operator shall deliver
a copy to County.
4.1.12 control the issuance of and issue all
credentials for Events at the Facility.
4.1.13 pay to County, in the event of a default
under the Guaranty Agreement, the amounts
pledged thereunder.
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<PAGE> 22
4.2 Use Agreements. Operator shall have the exclusive
right to negotiate, execute and perform use agreements, licenses and other
agreements: (i) with Persons who desire to schedule events, performances,
telecasts, broadcasts or other transmissions in, from or to the Facility, or
any part thereof or who desire otherwise to license the use of or to occupy the
Facility or any part thereof; or (ii) that otherwise pertain to the use,
operation and occupancy of the Facility or any part thereof. Notwithstanding
the above, in the event an NBA team wishes to become a licensee or tenant of
the Facility then the County shall be a party to all such negotiations and
shall be the party granting such license or lease to the NBA team. However,
Operator and County acknowledge that the lease or license for such NBA team
need not be on the same economic terms as the Team has under the License
Agreement and that Team shall continue to enjoy all of its benefits thereunder
as "primary tenant", including but not limited to its Hockey Event scheduling
priority, its exclusive right to possess the Team Areas and its rights
concerning Concessions, marketing, Advertising under the Facility Advertising
Agreement and parking.
4.3 Promotions Contracts.
4.3.1 Operator shall have the exclusive control over
the negotiation, execution, and delivery of
contracts with promoters, users and other
Persons of the Facility. In so doing,
Operator shall negotiate for rental rates
consistent with industry standards and with
the goal of maximizing use of the Facility and
the generation of revenues therefrom, subject
to Operator's right to contract with County
for County Events and for certain civic and
cultural activities. County recognizes,
however, that collection of rental rates is in
part dependent upon the success of a
promotion, and that subsequent usage of the
rates is in part dependent upon flexibility in
collection of negotiated rental rates when a
prior promotion with the same promoter has
failed to meet expectations. Accordingly,
Operator shall have the right to forgo
collection of all or part of pre-negotiated
rental rates when, in Operator's good faith
judgment, (a) the promotion has operated at a
significant loss to the promoter, or (b) the
promoter has historically utilized the
Facility in a financially successful manner,
or (c) the promoter is likely to be a user of
the Facility for subsequent promotions, or (d)
in Operator's judgment such concessions are in
the best interests of the Facility. If the
promoter is controlled by, under common
control with or controls Operator, Operator
may grant such concessions only with the
approval of County.
4.3.2 Operator shall have the right to negotiate and
enter into agreement with users of the
Facility whereby Operator and such user
co-promote an Event at the Facility. Each of
these co-promotion contracts shall
specifically set forth the arrangement between
the Facility and the co-promoter in respect to
sharing of revenues and expenses attributable
to user's use of the Facility in connection
with the Event.
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<PAGE> 23
4.4 Marketing and Public Relations. In cooperation
with the Team, the Operator shall plan, prepare, implement, coordinate and
supervise all public relations and other promotional programs for the Facility
and shall negotiate, execute (in its own name and not in the name of the
County) and perform all contracts for Facility promotions. The Operator shall
attempt to coordinate event marketing and planning with the management of the
Broward County Convention Center and the Broward County Performing Arts Center
in order to minimize, to the extent possible, conflicting dates and events. In
no event shall Operator be required to cancel or reschedule an Event unless it
determines that such cancellation or rescheduling is in the best interests of
the Facility in furtherance of Facility Operating Revenue.
4.5 Advertising. Operator shall have the exclusive right to
post, exhibit or display any Advertising at the Facility. The Operator shall
have the responsibility for and shall be the exclusive agent for the sale and
marketing of all Fixed and Permanent Advertising in the Facility and all
Temporary Advertising for Events sponsored by Operator (other than Sponsor Signs
displayed or exhibited by the Team, which shall be reserved to the Team). The
Facility Advertising Agreement shall be entered into by the Operator with the
Team which agreement sets forth the mutual duties and obligations to sell or
license advertising at the Facility. In addition, Operator shall enter into
marketing and advertising agreements with third parties, setting forth the
consideration for, the manner and the method of such advertising and marketing
arrangements. Operator shall have the right to negotiate, execute and perform
any and all contracts, use agreements, licenses and other agreements: (i) for
the use of Advertising space within the Facility or any part thereof and all
advertising rights of whatever kind or nature related thereto (except for
Sponsor Signs and other rights granted to Team under the License Agreement); or
(ii) for the sale, promotion, marketing and use of all names, trademarks,
tradenames, logos and similar intangible property relating to the Facility or
any part thereof. All revenues derived from Advertising rights or licenses, the
sale, promotion and use of all names, trademarks, tradenames, logos and similar
intellectual property rights related to Advertising in the Facility or on the
Project Site (other than revenue from Sponsor Signs and other Advertising
reserved for Team) ("Advertising Revenue") shall be deemed Facility Operating
Revenue and shall be turned over to or collected by the Operator for deposit
into the Operating Fund.
4.6 Naming Rights. The Operator shall have the exclusive
right to sell, license or otherwise grant the naming rights to some or all of
the Facility including Facility concourses, the rink or any part of the
Facility, subject to NHL regulations, on such commercially viable terms and
conditions as Operator shall determine (the "Naming Rights"). The County
reserves the right to disapprove and thus prohibit any name for the Facility
(but not for the concourses or any part of the Facility) that the Board
reasonably deems in bad taste or offensive to the County's image, or in the
reasonable opinion of the Board is a source of embarrassment to the South
Florida community. Notwithstanding the foregoing, the name of any Fortune 1000
company (with the exception of any tobacco or alcoholic beverage company) shall
be deemed a County approved name for purposes of this Section 4.6 and, in
addition, any bank, airline, sporting goods or apparel or soft drink company,
shall be deemed a County approved name. If Operator wishes to sell or license
the Naming Rights
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<PAGE> 24
to a tobacco or alcoholic beverage company, then Operator may propose such
company to County for its approval. The consideration to be received in
connection with the sale, license or grant of Naming Rights may include barter
or trade consideration, up to a maximum of twenty percent (20%) of the
aggregate value of Naming Rights consideration. However, under no circumstance
shall such use of barter reduce the revenue recognition by the Operator to the
Project except to the extent attributable to Team Revenues earned in connection
with such barter transaction. Other than certain barter consideration reserved
for Team under the License Agreement, all other revenue and barter
consideration, whether by sale, lease, license or otherwise, derived from the
grant of Naming Rights to the Facility or any part thereof, that accrues either
prior to or following the Operations Start Date shall be Facility Operating
Revenue. All revenue in respect of Naming Rights received by Operator prior to
the Operations Start Date shall be deposited in the Operating Fund. All
expenses incurred in the marketing or sale of Naming Rights for the Facility, or
any part thereof, shall be Facility Operating Expenses.
4.7 Concessions. Subject to the terms of the License
Agreement, the Operator or its designee shall have sole control and
responsibility and shall have the sole right to operate and/or contract for the
operation of Concessions (both fixed and portable) and catering operations at
the Facility for the sale of Consumable and Non-Consumable Concessions.
4.8 Booking. The Operator shall have the duty and sole
right to (a) arrange for and otherwise book Events in the Facility (subject to
the priority for Hockey Events described in the License Agreement). Operator
shall develop and maintain a scheduling system for Events, including County
Events, at the Facility.
4.9 Ticketing. Subject to the rights of the Team to control
ticketing for Hockey Events under the License Agreement, Operator shall control
and coordinate all ticketing for Events at the Facility and the Arena.
4.10 Affiliate Contracts. The Operator shall have the right
to enter into contracts or transact business with Affiliates without consent of
the County to the extent such contract is on commercially reasonably terms and
negotiated on an arms length basis. The Operator shall be obligated to provide
a copy of any such contract to the County if such Affiliate contract provides
for the purchase of goods and services by Operator with a value greater than
Sixty Thousand Dollars ($60,000) in any Fiscal Year.
4.11 Administration. Operator shall have the right to plan,
coordinate and administer the operation of the Facility and the Arena, including
the coordination of the efforts and all parties involved in Facility operations,
establishing and maintaining procedures for payment of Facility Operating
Expenses, receipt of Facility Operating Revenues, preparation of budgets and
related materials, development and implementation of accounting policies for the
Facility, coordination of the work of any party performing services at the
Facility, monitoring actual and projected costs of operations, furnishing
services, personnel, materials, tools, machinery, equipment and other items
necessary to operate the Facility.
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4.12 Changes in Parking Area Configuration. Provided that
such changes do not violate conditions of permits or a Development of Regional
Impact Order affecting the Project Site or the Facility (or require the
approvals of certain other parties under any such permits or Development of
Regional Impact Order), Operator may change the design, number or configuration
of parking spaces, including spaces allotted to Premium Seating patrons, VIPs,
employees and players, with the consent and participation of the Team, in order
to enhance the efficient operation of vehicle parking at the Facility.
4.13 Security and Traffic Control. The parties recognize the
obligations of the City pursuant to the Sunrise Letter of Agreement. Both the
County and the Operator shall take all necessary action to realize the police,
security and on-Site and off-Site traffic control benefits that City has agreed
to provide pursuant to the Sunrise Letter of Agreement. Operator shall also
provide such traffic control and security as is reasonably necessary to direct
traffic to and from Events at the Facility. The City, County and the Operator
shall cooperate in good faith to develop a traffic management plan to facilitate
the ingress and egress of traffic to and from events at the Facility; provided,
however, that the parties are under no obligation under the preceding clause to
incur any costs in excess of costs otherwise required by this Agreement.
Pursuant to the Sunrise Letter of Agreement, the City has agreed to provide at
specified times, among other things, (i) police for traffic management, security
and escort services; (ii) a three-person paramedic unit, a hazardous materials
response unit, emergency transport from the Facility under certain circumstances
and CPR/First Aid training; and (iii) services for maintenance of public streets
within the Project Site, solid waste services, utilities and the right to use a
billboard.
4.14 Base Management Fee. Each year during the Term, the
Operator shall receive or pay to Arena Management Firm a Base Management Fee for
its services under this Agreement. The Base Management Fee shall be payable
from Facility Operating Revenue, in accordance with the terms of this Agreement.
4.15 Incentive Fee. To the extent that the Operator
designates a firm other than an Affiliate, then in addition to the Base
Management Fee, the Operator may be entitled to pay an incentive fee, which fee
shall be subject to negotiation, payable to such firm from Facility Operating
Revenue within 30 days after the completion and delivery of the annual Facility
audit.
4.16 Small Disadvantaged Business Enterprise Participation.
On or before the Operations Start Date, Operator shall submit to County a plan
in substantially the form attached hereto as Exhibit 4.16 setting forth its
goals with respect to Small Disadvantaged Business Enterprise Participation in
the operation of the Facility. Operator agrees to cooperate with County in
meeting participation goals in the operations of the Facility.
4.17 Personal Seat Licenses. Upon consent of the Team,
Operator shall have the right (either exclusively or in conjunction with Team)
to license some or all of the General Seating through the sale of Personal Seat
Licenses ("PSL's"). In the event the Operator or Team sells or
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licenses PSL's prior to the Operations Start Date, Operator shall have the
option to use the proceeds collected prior to the Operations Start Date from
the sale thereof to redeem or prepay a portion of the Bonds (as described in
Section 5.9 but only to the extent permitted in the Plan of Finance attached as
Exhibit C to the Development Agreement) or to treat such revenues as Facility
Operating Revenues or to treat such revenues in accordance with provisions of
Section 5.10. Revenues from the sale or license of PSL's collected after the
Operations Start Date shall be treated as Facility Operating Revenues.
All expenses incurred by Operator in connection with the exercise of
any of its duties, rights or obligations under this Article IV shall be
included in Facility Operating Expenses.
ARTICLE V
FINANCIAL OBLIGATIONS
5.1 Facility Operating Revenue. The Operator shall use its
good faith best efforts to promptly and diligently collect Facility Operating
Revenue and, upon collection, shall deposit all Facility Operating Revenue into
the Operating Fund.
5.2 Distribution of Funds from Operating Fund. The Operator
shall distribute funds from the Operating Fund (subject to availability as
further described in Section 5.4) in the following order of priority, and at the
following times:
5.2.1 Operator shall reserve certain Facility
Operating Revenue so that it can make payments
of the County Preferred Revenue Allocation on
or before the debt service payment dates of
the Bonds. Such payments shall be made to
County within seven (7) days prior to the date
of any debt service payment on the Bonds.
County shall deliver to the Operator, within
thirty (30) days after issuance of the Bonds,
a schedule detailing the dates of such debt
service payments. Such payments shall be in
equal installments in accordance with the
annual debt service payments on the Bonds.
Making provision for the County Preferred
Revenue Allocation shall be first use of
Facility Operating Revenue.
5.2.2 Second, to the payment of Facility Operating
Expenses (except for the Management Fees)
payable by Operator in the ordinary course of
business, as and when they become due.
5.2.3 Third, in payment to the Team, within ninety
(90) days after the end of each Fiscal Year,
of any previously advanced yet unreimbursed
amount of the County Preferred Revenue
Allocation actually paid or advanced by the
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Team in that Fiscal Year pursuant to Team's
obligations under the Guaranty Agreement.
5.2.4 Fourth, in the payment of the Management Fees
payable to the Operator within ninety (90)
days after the end of each Fiscal Year,
except that the payment following the end of
the first Fiscal Year shall be prorated for a
partial Fiscal Year.
5.2.5 Fifth, in payment of the Renewal and
Replacement Contribution to the Renewal and
Replacement Account, payable annually within
ninety (90) days following the end of the
Fiscal Year commencing with the first Fiscal
Year of the License Term, except that the
payment following the end of the first Fiscal
Year shall be prorated for a partial Fiscal
Year.
5.2.6 Sixth, in payment of the Operating Reserve
Contribution to the Operating Reserve Account
(if required), payable annually within ninety
(90) days following the end of each Fiscal
Year commencing with the first Fiscal Year of
the License Term.
5.2.7 To the extent there are any remaining funds
in the Operating Fund, then to the payment of
the Net Operating Income as set forth in
Section 5.3.
5.3 Distribution of Net Operating Income and Other Funds.
Commencing on the date hereof and continuing through the remainder of the Term,
the following payments, distributions and allowances shall be made and the
following provisions shall be complied with:
5.3.1 Within thirty (30) days after the end of each
operating quarter (starting with the second
quarter after the commencement of the Term),
and to the extent cash available in the
Operating Fund exceeds the projected cash
requirements reasonably anticipated by
Operator for the following quarter, Operator
shall cause any Net Operating Income and other
funds remaining in the Operating Fund received
during such operating quarter to be
distributed as follows:
(i) First, to the extent of the first
$14,000,000 of Net Operating Income earned during such Fiscal
Year (if any) or other funds remaining in the Operating Fund,
Operator shall pay Team 100% of such Net Operating Income or
other funds remaining in the Operating Fund;
(ii) Second, to the extent that Net Operating
Income or other funds remaining in the Operating Fund exceeds
$14,000,000 during such Fiscal Year (if any), Operator shall
pay Team eighty percent (80%) and County twenty percent
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(20%) of such Net Operating Income or other funds remaining
in the Operating Fund.
5.3.2 Within ninety (90) days after the end of each
Fiscal Year, Operator shall reconcile Net
Operating Income with the cumulative
distributions made pursuant to this Section
5.3 and if Net Operating Income for such
Fiscal Year is greater than the cumulative
distributions made to Team (and County, if
applicable) (without regard to Revenue
Advances made pursuant to Section 5.10)
Operator shall distribute the remainder of
such (i) amounts to Team (and County, if
applicable), in accordance with this Section
5.3; (ii) if Net Operating Income for such
Fiscal Year is less than the cumulative
distributions made to Team (and County, if
applicable), Team (and County, if applicable),
shall reimburse Operator for the respective
amounts received in excess of their shares of
Net Operating Income within thirty (30) days
upon notification from Operator.
5.4 Availability of Funds in Operating Fund; Working Capital
Loans. The Operator shall have no obligation to distribute or pay any funds
described in Section 5.2 in excess of the funds in the Operating Fund at the
time payment is required in Section 5.2 above; except that Operator shall make
reasonable effort to pay Facility Operating Expenses as they become due in the
ordinary course of business. In the event that the Operating Fund does not
contain sufficient funds to pay any such Facility Operating Expenses, Operator
(i) shall pay the Facility Operating Expenses from the Operating Reserve
Account, to the extent of the funds therein or if Facility Operating Expenses
remain due after depletion of the Operating Reserve Account, (ii) may, but
shall have no obligation to, pay such Facility Operating Expenses from proceeds
of loans to fund Facility Operating Expenses ("Working Capital Loans").
Operator may make such financing arrangements to ensure the availability of
Working Capital Loans as it deems necessary or reasonable to fund Facility
Operating Expenses; however any such Working Capital Loans shall be on
commercially reasonable terms, shall provide for level maturity not in excess
of three (3) years, and shall not require the pledge of Facility Operating
Revenue as security therefor (except that Operator may pledge Facility
Operating Revenues to the extent that such revenues are to be distributed for
the payment of Working Capital Loans (as part of Facility Operating Expenses)
pursuant to Section 5.2). Notwithstanding anything to the contrary, Operator
shall have no obligation to make any financing arrangements for or otherwise
provide for Working Capital Loans. All expenses incurred by Operator in
obtaining Working Capital Loans, including loan fees, costs and interest
expenses and all expenditures made to repay such loans, shall be deemed
Facility Operating Expenses.
5.5 Distribution of Funds from Operating Fund and Renewal and
Replacement Account during Abatement Periods. During an Abatement Period, (a)
the Operator shall only be required to make distributions from the Operating
Fund to the extent of available cash proceeds and in the order set forth in
Section 5.2, and (b) the Operator shall distribute funds from the Renewal and
Replacement Account, subject to availability, only to make Additions and Capital
Repairs and to repair and/or reconstruct the Facility in accordance with
Articles VIII, XII and XIII.
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5.6 Renewal and Replacement Account.
5.6.1 Establishment of Account; Payments. The
Operator shall establish a Renewal and
Replacement Account and shall make deposits to
such account in the amount of the Renewal and
Replacement Contribution in accordance with
Section 5.2.
5.6.2 Fund Investment. All payments by the
Operator pursuant to 5.6.1 shall be deposited
in a bank located in Broward County approved
by the County and the Operator. Funds in
such account shall bear interest in amounts
authorized by law and all interest earned
thereon shall accrue to the benefit of such
Account and shall not be included in Facility
Operating Revenue.
5.6.3 Use of Renewal and Replacement Account. The
Renewal and Replacement Account shall be used
for Additions and Capital Repairs in
accordance with Article VIII and for the
purposes described in Articles XII and XIII.
5.7 Operating Reserve Account. The Operator shall also establish
and make payments to the Operating Reserve Account and shall make deposits to
such account in the amount of the Operating Reserve Contribution in accordance
with Section 5.2. This Account shall be maintained by the Operator, in a bank
located in Broward County approved by the County and the Operator. Withdrawals
from the Operating Reserve Account shall be solely those authorized by the
Operator.
5.8 Distribution of Funds from Accounts Upon End of Term. Except
as otherwise specifically set forth herein, upon termination of this Agreement,
all funds remaining in the Accounts shall be distributed as follows:
(1) Renewal and Replacement Account Funds: Any funds
remaining in the Renewal and Replacement Account
shall be distributed first to reduce debt service
on the Bonds and to the extent remaining shall be
distributed as if such funds were Facility
Operating Revenues.
(2) Operating Reserve Account: Any funds remaining in
the Operating Reserve Account shall be distributed
as if such funds were Facility Operating Revenues.
(3) Operating Fund: Any funds remaining as Net
Operating Income in the Operating Fund shall be
distributed in accordance with Section 5.2 and
shall be paid without making any other payments
required thereunder except for the payment of
liabilities incurred for Facility Operating
Expenses and Working Capital Loans.
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5.9 Reduction of County Preferred Revenue Allocation. In
the event (i) Operator or Team determines, pursuant to Section 4.17, to use the
cash proceeds received from the sale of PSL's prior to the Operations Start Date
to prepay or redeem a portion of the Bonds; (ii) Project Developer develops the
Project for an amount less than the amount set forth in the Land Acquisition and
Project Development Budget and such amount is not used to make additional
improvements to the Project or (iii) Operator sells the rights to conduct
Concessions at the Facility to a third party and the Operator, Team and the
County mutually determine to use the proceeds of such sale to redeem or prepay a
portion of the Bonds (to the extent permitted in the Plan of Finance attached as
Exhibit C to the Development Agreement), then, in any of such events, the County
Preferred Revenue Allocation shall be reduced each year during the Term by an
amount equal to the amount that the collective amount of the foregoing
prepayments or redemptions serves to reduce the yearly debt service payments on
the Bonds (the "County Preferred Revenue Allocation Reduction"). Nothing
contained herein shall limit Operator's ability to elect to treat any of the
foregoing proceeds as provided in Section 5.10.
5.10 Advances. Notwithstanding any provision of this
Agreement, the Operator shall have the right at semi-annual intervals (at least
two (2) business days following any debt service payment date on the Bonds)
during each Fiscal Year, to make advances and distributions ("Revenue Advances")
of any proceeds (whether current, prepaid, or deferred revenues) from the sale,
exchange, pledge, use, or grant of licenses of any Facility Rights including but
not limited to Naming Rights, PSL's, Premium Seating, concessionaire grants, or
any cash proceeds (when considered along with projected Facility Operating
Revenues received or anticipated to be received in excess of current year
Facility Operating Expenses) to the Team and County (if applicable) as provided
herein. Revenue Advances, if any, made to the Team or County pursuant to this
Section 5.10 shall be distributed in by the Operator eighty percent (80%) to the
Team and twenty percent (20%) to the County.
ARTICLE VI
OWNERSHIP AND USE
6.1 County Ownership. The Facility and the Project Site
have been or are being acquired by the County with funds being made available by
the County, and, together with other portions of the Facility and support
facilities (including Parking Areas) are or shall be owned by the County. County
shall maintain the Project Site and the Facility free and clear of any
Impositions during the Term and any Extension Term.
6.2 County Use. The County reserves the exclusive,
non-assignable right to use the Facility for up to 15 County Events in each
Fiscal Year (which shall be prorated in any partial Fiscal Year), subject to
priority scheduling of all other Events. Any dates not used by County for
County Events within the Fiscal Year shall terminate and shall not accrue for
use during successive Fiscal Years. All revenue derived in connection with
County Events from parking, Consumable and Non-
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Consumable Concessions and permitted Temporary Advertising shall be included in
Facility Operating Revenue. Ticket and any other revenue including revenue from
Temporary Advertising (that is exclusively sold for the County Event) derived
from County Events ("County Event Revenue") shall not be included in Facility
Operating Revenue and may be collected by Operator and distributed to County
upon County's payment to Operator of Event Related Expenses incurred in
connection with a County Event. The Operator shall be reimbursed from County
funds (or Operator shall have the right to set-off against any revenues in its
possession generated in connection with a County Event) for the Event Related
Expenses incurred in connection with a County Event on the date of the Event or
as specified in any applicable use agreement between the Operator and the County
Event sponsor but in no event later than 10 days following the Event. It is
understood that in its sales of permitted Temporary Advertising for County
Events, the County shall give any exclusive advertiser at the Facility the right
of first refusal to purchase any such Temporary Advertising. The County shall
maintain such insurance for County Events as provided in Section 11.8.
6.3 County Access. The County, through appropriate
designees, which may change from time to time, reserves the right to enter the
Facility during regular business hours solely to conduct fire, safety and health
inspections or to exercise County's normal police powers provided (a) the County
shall not interfere with the operations of the Facility (b) the County shall not
disturb the license or concession rights of others except in compliance with the
terms of any such concession or license and (c) the County's inspection rights
shall not be deemed to limit in any way Operator's rights to contest the
County's findings with respect to such inspections or the exercise of such
police powers. Additionally the County may enter the Facility in the case of an
Emergency to the extent necessary to make Additions and Capital Repairs in
accordance with Section 8.4.
ARTICLE VII
RECORDS AND AUDITS
7.1 Records. For a period of 3 years after the end of the
Fiscal Year to which they pertain, the Operator shall keep and maintain complete
and accurate Records for the Facility and for the Operator separate and
identifiable from its other records. The County (including accountants and
attorneys designated by the County) shall be entitled to inspect the Records
during the Term of this Agreement and five years thereafter (at the Operator's
office, upon not less than 48 hours' notice, and at all reasonable times).
7.2 Accounting Procedures. It is the intention of the
parties to eliminate distortions in the stream of Net Operating Income, so that
the exercise of discretion in the timing of receipts and expenditures from year
to year is minimized. Accordingly, the accounting system of the Operator shall
always be maintained in accordance with generally accepted accounting
principles, on an accrual basis, consistently applied.
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7.3 Financial Reports.
7.3.1 Audited Reports. Operator shall cause to be
prepared financial reports with such
information and at such times as required by
this Section 7.3. Each financial report shall
be prepared in accordance with generally
accepted accounting principles. Operator's
independent certified public accountant
(selected from nationally recognized "big six"
public accounting firms) shall be determined
by Operator and be reasonably acceptable to
Team and County. Operator may terminate its
independent certified public accountant and
appoint a replacement independent certified
public accountant upon the concurrence of Team
and if reasonably acceptable to County.
7.3.2 Financial Reports. The Operator shall furnish
to County and Team the following financial
statements:
(a) As soon as practicable and in any
event by the twentieth (20th) day of
each calendar month during the
Fiscal Year, a statement setting
forth the prior month's Facility
Operating Revenue and Facility
Operating Expenses, expenditures for
Additions and Capital Repairs and
such other information as may be
reasonably requested by County or
Team.
(b) As soon as practicable and in any
event within forty-five (45) days
after the end of each of the first
three (3) quarters of each Fiscal
Year, a balance sheet of the Facility
as of the end of such quarter, and
statements of income and cash flows
of the Facility for the period
commencing at the end of the previous
Fiscal Year and ending with the end
of such quarter.
(c) As soon as practicable and in any
event within sixty (60) days after
the end of each Fiscal Year, a
balance sheet as of the end of such
Fiscal year, and a statement of
profit or loss and a statement of
changes of financial condition for
such Fiscal Year, prepared in
accordance with generally accepted
accounting principles and accompanied
by an auditor's report containing an
opinion of the independent certified
public accountant preparing the
report, which shall be a firm of
national reputation selected by
Operator.
7.4 Additional County Audits. At the option of the County,
in addition to the annual audit, the County may conduct an audit or examination
of the books, records, accounts and financial statements, or any part of such
Facility records of the Operator, at any time upon reasonable notice to the
Operator, any such examination or audit to be made solely at the cost of the
County. The
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County acknowledges that certain Operator records or information relating to the
use, management or operation of the Facility examined or obtained hereunder, by
the County, are considered "Trade Secret Information" pursuant to F.S. 815.045
and that any such information is proprietary, and expressly made confidential
and exempt from the public records law. The County acknowledges and agrees that
disclosure of any such Trade Secret Information to another person would
negatively impact the business interests of the Operator and Team in the
marketplace. County further covenants and agrees that at all times during the
Term and any Extension Term, County shall (i) hold the Trade Secret Information
in confidence and refrain from disclosing the Trade Secret Information or
transmitting any Trade Secret Information to any other Person; (ii) use the
Trade Secret Information solely in connection with this Agreement and for no
other purpose; and (iii) take all precautions necessary to ensure that Trade
Secret Information shall not be, or be permitted to be, shown, copied or
disclosed to third parties, without the prior consent of Operator and Team. The
County further covenants and agrees to notify the Operator if County receives a
request for disclosure of any Trade Secret Information so that Operator may
vigorously defend any claims or disputes arising from efforts by others to cause
such Trade Secret Information to be disclosed as a public record. The County
further agrees to amend this Agreement as necessary to further protect Trade
Secret Information.
7.5 Underreporting of Facility Operating Revenue. In the
course of the preparation of the annual audited financial statements for the
Facility, in the event that Operator or its independent certified public
accountant determines that an underreporting of Facility Operating Revenue
occurred during the previous Fiscal Year in an amount in excess of 7.5% of the
Revenue sums due Facility from Team during the previous Fiscal Year, then in
such event Operator shall diligently pursue reconciliation of such discrepancy.
In such event, the Operator shall, promptly upon becoming aware of such
discrepancy, notify the County of such discrepancy.
ARTICLE VIII
ADDITIONS AND CAPITAL REPAIRS; EMERGENCY
8.1 Operator. The Operator shall have the right to make
Additions and Capital Repairs to the Facility if (a) necessary to comply with
governmental requirements; (b) requisite for the safe operation of the Facility
or its maintenance or repair; (c) required by any agreement approved by the
County; or (d) in the Operator's opinion such Additions and Capital Repairs will
improve the Facility, maximize Facility Operating Revenues or reduce Facility
Operating Expenses. Except in the case of an Emergency Expenditure as described
below, the Operator may not make or permit Additions and Capital Repairs to the
Facility if construction of the Additions and Capital Repairs would unreasonably
interfere with (i) Home Games or the Team's Areas, without the prior approval of
the Team or (ii) County Events, without the prior approval of the County. Upon
installation, the Additions and Capital Repairs shall become a part of the
Facility and the property of the County, as applicable. Subject to the
foregoing, the Operator may use funds available in the Renewal and Replacement
Account to pay for Additions or Capital Repairs. However, Operator may not use
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funds from any other Account to pay for Additions and Capital Repairs without
prior written consent of County except in the case of an Emergency, when the
Operator may make Emergency Expenditures from funds available in any Account to
the extent Operator deems such Emergency Expenditures necessary in its
reasonable discretion. Notwithstanding the above, the County shall have the
right to review, comment upon and approve the construction plans and
specifications for any Additions and Capital Repairs with an aggregate cost in
excess of $100,000.00 and, upon completion, County shall be provided a copy of
the "as built" construction plans. Additionally, the Operator shall keep the
Facility free from, and shall indemnify the County with respect to all Liens
incurred or permitted by the Operator or incurred or permitted by any licensee
or lessee. If within sixty (60) days following the filing or other assertion
of any such Lien, the Operator does not cause such Lien to be released in a
manner satisfactory to the County (such as by posting a bond or other
acceptable security), the County shall have the right but not the obligation to
cause the Lien to be released by any means the County deems proper including,
without limitation, payment of the Lien. All reasonable sums paid and expenses
incurred by the County in connection therewith including, without limitation,
reasonable attorneys' fees and costs, shall be Facility Operating Expenses
payable by the Operator to the County upon demand plus interest at the Premium
Rate computed from the date any such sum was paid by the County.
8.2 Incremental County Preferred Revenue Allocation. In the
event that Project cost overruns occur as set forth in the Development
Agreement, or the Operator determines that certain capital or other
infrastructure improvements at the Facility are necessary for the prudent and
efficient operation of the Facility, then Operator shall propose and Board may,
subject to debt capacities, use diligent, good faith efforts to facilitate the
financing and construction of such improvements. The Board, subject to
necessary Board approvals from time to time, shall utilize diligent, good faith
efforts to secure such financing at the lowest cost of capital, whether taxable
or tax-exempt, and may identify legally available non-ad valorem revenue sources
which could be contributed to assist or enable the underwriting or credit
enhancement of the financing. Upon completion of such improvements, Team is
obligated pursuant to the License Agreement to pay supplemental rent to
Operator, when considered along with County sources, if any, (subject to
adjustment for certain federal income tax considerations relating to the Bonds),
in an amount equal to the cost of such additions or improvements including
interest on the financing of such additions or improvements, amortized over the
remainder of the License Term or such other term as mutually agreed by the
Operator, County and Team. Operator shall pay any such supplemental rent to
County as an Incremental County Preferred Revenue Allocation.
8.3 Operator Right to Finance Additions. Operator shall have
the right to issue private debt for its construction of Additions, Capital
Repairs or other improvements on the Project Site and/or improvements and
enhancements related to traffic and transportation ("Operator Improvement
Debt"). Operator may use any revenues attributable to Seat Use Charges as the
sole source for repayment of the Operator Improvement Debt.
8.4 County. County shall have no right to make Additions
and Capital Repairs or other repairs to the Facility unless an Emergency exists
and, in the County's reasonable discretion, the
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Operator has not taken action necessary to preserve the Facility. To the
extent time is available, County shall contact Operator prior to the County's
making any expenditure, Additions or Capital Repairs or other repairs to the
Facility pursuant to this Section to discuss Operator's actions taken or to be
taken with respect to the Emergency and to attempt to avoid duplication of
efforts. Any expenditure made by County pursuant to this Section shall be
reimbursed by Operator to County as an Emergency Expenditure. Depending on the
nature of the expenditure, such expenditures shall be a Facility Operating
Expense payable from the Operating Fund or an expenditure payable from the
Renewal and Replacement Account.
ARTICLE IX
IMPOSITIONS
9.1 General. Subject to the County's obligations under
Sections 9.3 and 9.4, and the availability of funds as described in 5.2, the
Operator shall pay or cause to be paid any and all Impositions that accrue
during the Term of this Agreement, as and when they become due and payable, and
before any fine, penalty, interest or cost may be added thereto or become due or
be imposed by operation of law for the nonpayment thereof. Any Imposition that
includes a period of time prior to the Expiration Date (whether or not such
Imposition shall be assessed, levied, confirmed, imposed upon or become a lien
upon the Facility, or shall become payable, during the Term hereof) shall be
prorated between the County and the Operator so that the County shall pay the
portion of Imposition applicable to the period after the Expiration Date, and
the portion of Imposition applicable during the Term of this Agreement shall be
paid by the County and the Team in accordance with their respective shares of
Net Operating Income in effect immediately prior to the Expiration Date.
9.2 Permitted Contests. The Operator may contest the legal
validity or amount of any Imposition for which the Operator is wholly or
partially responsible hereunder and may institute such proceedings as it
considers necessary therefor without undue delay and shall prosecute such
proceedings to a final determination with reasonable dispatch. If the Operator
contests any Imposition, the Operator shall notify the County and may withhold
or defer payment or make payment of the Imposition under protest so long as such
withholdings or deferrals do not subject the Facility to a non-curable
forfeiture or sale without right of redemption. The County shall cooperate
reasonably in any permitted contest and shall execute any documents or pleadings
reasonably required for such purpose. Any proceedings to contest the validity
or amount of an Imposition or to recover any Imposition paid by the Operator
shall be prosecuted by the Operator. All costs and expenses described in this
Section shall be Facility Operating Expenses.
9.3 Ad Valorem Tax Imposition. It is acknowledged by the
parties that the County and Team have based their projections and assumptions as
to sharing of Net Operating Income, described herein, on the basis that there
will be no levy of County, City, school district, water management district or
any other form of ad valorem taxes on the Facility or its operations, including
the License
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Agreement, by reason of exemption from ad valorem taxes set forth in Sections
196.199(2) and 196.102(6) Florida Statutes. Accordingly, if County, City,
school district, water management district, or any other form of ad valorem
taxes are subsequently assessed against the Facility or its operations,
including the License Agreement, and after contest of such taxes through such
efforts as Team or Operator shall deem sufficient to determine that such taxes
are declared validly assessed against the Facility or its operations, then this
Agreement and the License Agreement shall be amended in the following manner:
Said ad valorem taxes (paid by the Operator in respect of
the Facility, whether County, City, school district or water
management district portion) will constitute an Operator
credit against the County Preferred Revenue Allocation (and
a credit against any obligation of the Team under the
Guaranty Agreement, if applicable), and accordingly the
County Preferred Revenue Allocation shall be reduced in that
and subsequent Fiscal Years by an amount equal to such
County and City ad valorem taxes based on the November
discounted amount (as if such taxes were paid in November,
regardless of when paid), plus interest thereon from the
November date at the Premium Rate.
The parties agree to execute the required amendments to this
Agreement, when and if required, to effectuate the contingent events set forth
in this Section.
9.4 Exclusive Taxes and Special Assessments. If, in the
future, the County imposes any form of tax and/or special assessment, which is
exclusively imposed or levied on the Facility or the License Agreement and that
will be assessed on Hockey Tickets, or tickets to other Events, Concessions,
parking, Rent or other revenue streams of the Facility or its tenants or
licensees including the Team or the Operator, then the County Preferred Revenue
Allocation (and any obligation of the Team under the Guaranty Agreement, if
applicable) in that Fiscal Year and to the extent necessary to provide proper
credit to Operator in subsequent Fiscal Years, shall be reduced by an amount
equal to the aggregate amount of exclusively imposed taxes plus interest thereon
at the Premium Rate from the date when paid. For purposes of this Agreement, an
"exclusively imposed or levied tax" shall mean any tax and/or special assessment
that generates more than twenty percent (20%) of its composite collections from
the Facility or the operations at the Facility.
The parties agree to execute the required amendments to this Agreement,
when and if required, to effectuate the contingent events set forth in this
Section.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification of County. Operator shall defend,
indemnify and hold harmless County and its elected officials, agents, officers
and employees (collectively, "County Indemnitees")
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from and against any and all demands, losses, judgments, damages, suits, claims,
actions, liabilities and expenses (including, without limitation, all attorneys
fees and expenses), in law or in equity, of every kind and nature whatsoever,
for bodily injury, death or damage to property, which any County Indemnitees may
suffer or sustain or which may be asserted or instituted against any of the
County Indemnitees resulting from, arising out of or in connection with (except
to the extent caused by County's gross negligence or wilful misconduct with
respect to any injury to or death of any individual person or with respect to
damage to or destruction of property) (i) injury to or death of any individual
person or damage to or destruction of property caused by Operator's use or
occupancy of Facility (or any portion thereof), including without limitation,
the conduct or management of its business in any portion of the Facility and its
management and operation of the Facility, (ii) the breach by Operator of any
warranty, representation or covenant made in this Agreement, or (iii) any
violation of any copyright, patent, service mark, trade name or trademark by
Operator.
10.2 Indemnification of Operator. County shall defend,
indemnify and hold harmless Operator, its agents, directors, partners,
shareholders of the Operator's general partner, officers and employees
(collectively "Operator Indemnitees") from and against any and all demands,
losses, judgments, damages, suits, claims, actions, liabilities and expenses,
(including without limitation, all attorneys fees and expenses) in law or in
equity, of every kind and nature whatsoever, for bodily injury, death or damage
to property, which any Operator Indemnitees may suffer or sustain, or which may
be asserted or instituted against any of the Operator Indemnitees, resulting
from, arising out of or in connection with (except to the extent caused by
Operator's gross negligence or wilful misconduct with respect to any injury to
or death of any individual person, or with respect to damage to or destruction
of property) (i) injury to or death of any individual person or damage to or
destruction of property arising from County's ownership, construction, use,
operation, maintenance or occupancy of the Facility (or any portion thereof)
including, without limitation, the conduct of any County Events in the Facility,
or any part thereof or of any County business; (ii) County's use or occupancy of
the Facility (or any portion thereof) in violation of this Agreement; (iii) the
breach by County of any its warranties, representations or covenants made in
this Agreement; (iv) all environmental liabilities arising out of, in connection
with, or relating to any environmental condition of the Facility, even if
discovered prior to commencement of the Term, unless such environmental
condition was caused by Operator Indemnitees; (v) the performance of any labor
or services or the furnishing of any materials or other property in respect to
the Facility; (vi) any violation of any copyright, patent, service mark, trade
name or trademark by County; and (vii) any acts or omissions of any County
Indemnitees. Operator acknowledges that County's obligations to indemnify shall
be limited to the extent of County's insurance and as provided by Florida law.
10.3 Insurance. The County acknowledges that it shall look
first to the proceeds of any insurance policies maintained by Operator pursuant
to Article XI for recovery in respect of the obligations of the Operator under
this Article X and, if such proceeds are insufficient, then to Operator.
10.4 Claims. If any claim, action or proceeding is made or
brought against the County as to which the Operator is to indemnify the County
as required by this Article X, then upon demand
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by the County, the Operator shall resist or defend such claim, action or
proceeding in the County's name, if necessary, by the attorneys for the
Operator's insurance carrier (if such claim, action or proceeding is covered by
insurance). Notwithstanding the foregoing, after notice to the Operator, the
County may engage its own attorneys to defend it or to assist in its defense,
and the County shall pay the reasonable fees and disbursements of such
attorneys. Any and all costs and expenses incurred by the Operator to
discharge its obligations under this Article X shall be included as Facility
Operating Expenses; provided, however, that any expenses resulting from an
Event of Default by the Operator shall not be included as Facility Operating
Expenses and shall be paid by the Operator from its own funds; and provided,
further, that any expenses resulting from an Event of Default by the County
shall not be included as Facility Operating Expenses and shall be paid or
reimbursed by the County from its own funds.
ARTICLE XI
INSURANCE
During the term of this Agreement, the Operator (and County to the
extent provided in Section 11.8) shall cause to be maintained the following
insurance:
11.1 Casualty. Insurance against loss or damage to the
Facility resulting from fire, earthquake, windstorm, hail, lightning, vandalism,
malicious mischief, flood and such other perils ordinarily included in special
all-risk extended coverage insurance policies. Such insurance shall be
maintained in an amount not less than the then full replacement cost of the
Facility, the equipment and machinery therein and including any costs which may
be required to comply with applicable governmental requirements. Full
replacement cost shall be determined at reasonable intervals at the request of
the County by appraisal by the Operator's insurer or other appraiser mutually
acceptable to the Operator and the County.
11.2 Business Interruption. Use and occupancy or business
interruption or lost income insurance against the perils of fire, earthquake,
windstorm, hail, lightning, vandalism, malicious mischief, flood and such other
perils ordinarily included in "special all-risk extended coverage" insurance
policies, in an amount equal to not less than estimated Facility Operating
Revenues less non-continuing expenses (assuming for the purposes of such
estimate that no business interruption occurred), for the period of time
estimated to repair or rebuild the Facility after substantial damage to the
Facility.
11.3 Liability. Commercial general liability insurance with
a broad form general liability endorsement which shall provide coverage against
claims for personal injury, death and property damage resulting directly or
indirectly from any act or activities (in connection with the Facility) of the
County, the Operator, any of their respective invitees, officers, partners,
shareholders of partners, officers, employees, agents, independent contractors
or any other person acting for the County or the Operator or under their
respective control or direction (including liabilities for injuries or damages
alleged to have resulted from the Operator's sale and/or dispensing of alcoholic
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beverages). Such insurance shall be maintained in full force and effect during
the term of this Agreement in an amount of at least Twenty-Five Million Dollars
($25,000,000) (provided that the Operator shall be entitled to maintain a
lesser amount if such lesser amount is maintained in comparable facilities at
which NHL teams play and the County is notified of such lesser amount and fails
within twenty (20) Business Days after receipt of such notice to object and
submit to ADR the adequacy of such lesser amount) combined single limit, naming
the County, and its officers, the Operator, and their respective invitees,
licensees, employees, agents, independent contractors or any other person
acting for the County or the Operator or under their respective control or
direction, as additional insureds. This Section 11.3 shall not limit in any
way the extent to which the Operator may be held responsible for the payment of
damages to persons or property resulting from the Operator's activities, the
activities of its invitees, employees, licensees, agents or independent
contractors, or the activities of any other person or persons for whom the
Operator otherwise is legally responsible.
11.4 Workers Compensation. Worker's compensation insurance
complying with the statutory requirements of the State of Florida to insure all
persons or entities employed by the Operator in connection with the Facility.
Operator shall also purchase and maintain Employer's liability coverage for no
less than $1,000,000 each accident, $1,000,000 disease each employee and
$1,000,000 disease policy aggregate.
11.5 Builder's Risk or Installation Floater. During
construction of Additions and Capital Repairs, in addition to (but not in
duplication of) the other insurance coverages required under this Article,
standard "all risk" builder's risk or installation floater insurance written on
a completed value basis and including comprehensive liability insurance, in an
amount not less than the projected total cost of construction of the Additions
and Capital Repairs as reasonably estimated by the Operator not more than sixty
(60) days prior to commencement of construction and as thereafter revised from
time to time by the Operator during the course of such construction.
11.6 Other. Such other insurance coverages and in such
amounts as from time to time may be reasonably desired by Operator to insure
against such other insurable hazards as are customarily insured against in the
case of similar multipurpose sports and entertainment facilities.
11.7 Provisions.
11.7.1 All required insurance shall be primary
coverage and shall be for the benefit of the
Operator and the County.
11.7.2 All required insurance shall be reviewed
periodically by the Operator, and in any
event at least every three years, for the
purpose of determining whether to increase or
decrease the minimum limits and deductibles
of such insurance to amounts which may be
reasonable and customary for facilities of
like size and operation to the Facility.
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11.7.3 All required insurance shall be obtained from
a financially sound insurance company, rated
not less than B+ XII in Best's Rating Guide,
authorized to do business in the State of
Florida.
11.7.4 All required insurance shall provide that the
waiver of recovery (subrogation) provided in
Section 11.9 shall not invalidate or have any
adverse effect on the liability of the
insurer.
11.7.5 All required insurance shall provide that
such policies or certificates shall not be
cancelled or materially changed without the
consent of the County which shall be given
notice of an intent to cancel or materially
change said insurance at least thirty (30)
days' prior written notice to the County.
11.7.6 Prior to the Operations Start Date, the
Operator shall provide the County with a copy
of property policies covering the facility
together with certificates of insurance from
the companies issuing other policies required
by this Agreement, indicating that such
required insurance coverage provided by such
policies is in place. At least ten (10) days
prior to the expiration of any such property
policy, a copy of the renewal policy shall be
provided to the County and renewal
certificates of insurance will be provided on
such other insurance coverages.
11.8 Insurance for County Events. County acknowledges and
agrees that prior to scheduling a County Event, County shall obtain or Operator
shall purchase as a County Event Related Expense comprehensive general liability
insurance which shall provide coverages against claims for personal injury,
bodily injury, death and property damages arising from the conduct of the County
Event at the Facility or the negligence or misconduct of County, its employees,
agents, independent contractors, co-promoters or any other person acting on
behalf of County. The policy shall have minimum limits of liability of
$1,000,000 combined single limit each occurrence, $2,000,000 aggregate. The
insurance required under this Section 11.8 shall in all events comply with the
requirements of Article XI. Notwithstanding the foregoing, the County, upon
written notification to the Operator and upon compliance with such other
reasonable requirements of Operator (including the requirement for County to
provide security for its obligations) at least fifteen (15) days prior to any
County Event, may elect to self insure for such County Event. In such event,
County shall be obligated to pay any and all amounts and provide any other
services (including the duty to defend Operator and Team) to Operator which an
insurer would be required to pay or provide under the insurance coverages
otherwise required under this Section and County shall pay and/or provide such
services within the time periods required under standard insurance coverages.
Any failure by County to pay and/or perform as provided herein shall be deemed a
default by County and shall entitle Operator to exercise its rights with respect
to the security provided by County pursuant to this Section or to exercise any
other rights under this Agreement.
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11.9 Waiver of Recovery. Neither the Operator nor the County
shall be liable to the other party or to any insurance company (by way of
subrogation or otherwise) insuring the other party for any loss or damage to
property or injury to persons, or any resulting loss of income, or losses under
workers' compensation laws and benefits, even though such loss or damage might
have been occasioned by the negligence of such party, its agents or employees,
if and to the extent any such loss or damage is covered by insurance benefiting
the party suffering such loss or damage.
11.10 Failure to Maintain Insurance. If the Operator fails or
refuses to procure or maintain the insurance required by this Article, after
notice to the Operator, the County shall have the right, at its election, to
procure and maintain such insurance, in which event, any reasonable premium paid
by the County, plus interest at the Premium Rate computed from the date such
premium is paid by the County, shall be due and payable by the Operator as a
Facility Operating Expense to the County on the first day of the month following
the date on which such premium was paid. The County shall give prompt notice of
the payment of any premium stating the amount paid.
11.11 Proceeds Disposition. All insurance proceeds with
respect to loss or damage to the Facility shall be payable, under the provisions
of the policy of insurance, into the Renewal and Replacement Account. All
insurance proceeds from any other insurance policies maintained hereunder shall
be payable into the Operating Fund.
ARTICLE XII
DAMAGE OR DESTRUCTION
12.1 Adequately Insured Damage. Subject to the provisions of
Section 12.2 and Section 12.3, if the Facility is damaged or otherwise destroyed
and such damage or destruction was caused by a casualty covered under an
insurance policy maintained by the Operator as required hereunder, all insurance
proceeds paid under such insurance policies ("Insurance Proceeds") shall be
deposited into the Renewal and Replacement Account and, if such proceeds are
sufficient to restore the Facility in the reasonable estimation of Operator,
shall be used by the Operator to repair such damage or destruction as soon as
reasonably possible, and this Agreement shall continue in full force and effect.
Such restoration shall be in compliance with applicable governmental
requirements. All such restoration shall be performed under the joint
supervision of the County and the Operator.
12.2 Insurance Deficiency and Termination. Subject to the
provisions of Sections 12.3 and 12.4, if the Facility is damaged or otherwise
destroyed by a casualty not covered under an insurance policy or, if so covered,
the Insurance Proceeds are insufficient, in the reasonable estimation of
Operator, to pay the costs of restoration, and if there are funds in the Renewal
and Replacement Account in an amount sufficient, in the reasonable estimation of
Operator, to pay the costs of restoration that exceed the Insurance Proceeds
(the "Insurance Deficiency"), the Operator shall repair, or cause to be
repaired, the damage or destruction as provided in Section 12.1. If Renewal and
Replacement Account funds are insufficient to pay the Insurance Deficiency,
then,
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within thirty (30) days after the date such damage or destruction occurred (the
"Destruction Date") the Operator shall provide the County written notice of the
Operator's election either (a) to utilize the Insurance Proceeds and such funds
as are available in the Renewal and Replacement Account plus the Operator's own
funds (and not Facility Operating Revenue) to pay the costs of restoration, or
(b) to terminate this Agreement. In the event the Operator elects to utilize
Insurance Proceeds, funds as are available in the Renewal and Replacement
Account and its own funds to restore the Facility to the state in which it
existed prior to such damage or destruction, the Term of this Agreement shall
be suspended during such restoration, as provided in Section 12.5. In the
event the Operator is entitled to and does elect to terminate this Agreement,
the County shall have the right (within thirty (30) days after receipt of such
notice of the Operator's election to terminate) to issue notice to the Operator
of the County's intention to pay the Insurance Deficiency, in which event, the
County shall commit in writing to deposit the amount of the Insurance
Deficiency into the Renewal and Replacement Account and shall deposit such
amount into the Renewal and Replacement Account within ten (10) days of its
written commitment. Thereafter, the Operator's election to terminate shall be
deemed rescinded and void, and the Operator shall effect the restoration of the
Facility as provided in Section 12.1. If the County does not issue such notice
of its intention to pay such Insurance Deficiency within thirty (30) days after
receipt of the Operator's election to terminate, this Agreement shall be
terminated at the expiration of such thirty-day period, and the Insurance
Proceeds, if any, shall be deposited into the Renewal and Replacement Account
for distribution as provided in Section 12.4.
12.3 End of Term. If the Facility is destroyed during the
last two Fiscal Years of the term hereof, then notwithstanding any contrary
provision of this Article, by notice to the County within thirty (30) days after
the Destruction Date, the Operator may terminate this Agreement, whereupon the
Insurance Proceeds, if any, shall be deposited into the Renewal and Replacement
Account and shall be distributed pursuant to Section 12.4.
12.4 Distribution. In the event this Agreement is terminated
pursuant to Section 12.2 or 12.3, and notwithstanding any provisions of Article
V to the contrary, any funds in the Renewal and Replacement Account after the
deposit of any Insurance Proceeds therein pursuant to this Article shall be
distributed to the County and applied by the County to reduce debt service on
the Bonds. Any funds in other Accounts shall be distributed in accordance with
Article V, and funds in the Operating Reserve Account should be distributed as
of such funds were part of the Operating Fund.
12.5 Abatement. In the event of any damage or destruction
rendering a substantial portion of the Facility unusable, the period during
which a substantial portion of the Facility remains unusable shall be an
Abatement Period.
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ARTICLE XIII
EMINENT DOMAIN
13.1 Substantial Taking. If the Facility is taken by right
of eminent domain, with or without litigation, or transferred in lieu of or
under threat of such action (any such action to be referred to herein as a
"Taking"), and the Taking is a "Substantial Taking," the Operator shall have the
right, at its option, exercisable at any time within the ninety (90) days after
the official written notice of the Taking and its scope is issued by the
condemnor and received by the Operator and the County (the "Taking Date"), to
terminate this Agreement, in which event, the parties shall be released from all
future liability hereunder (such release to be effective upon the termination of
this Agreement pursuant to this Section, provided, however, that no party shall
be released from any liability hereunder that has accrued on or before such
termination.) The payment or other award from the condemnor attributable to the
value of any improvements on the Project Site ("Award") shall be deposited into
the Renewal and Replacement Account. As used in this Section, "Substantial
Taking" means a Taking of the Facility that in the reasonable estimation of
Operator, will deprive the Facility of the substantial economic benefits to be
derived from the operation thereof.
13.2 Partial Taking.
13.2.1 If the Facility is the subject of a Taking
which is not a Substantial Taking or if a
Substantial Taking occurs but this Agreement
is not terminated as provided in Section 13.1,
then as soon as reasonably possible, the
Operator shall restore the remainder of the
Facility using the proceeds available from the
Award, and this Agreement shall continue in
effect. Such restoration shall be in
accordance with plans approved by the County
and in compliance with then applicable
governmental requirements. All such
restoration shall be performed under the joint
supervision of the County and the Operator.
13.2.2 If (a) the Facility is to be restored as
provided in Section 13.2.1, (b) the Award is
insufficient to pay the costs of such
restoration in the reasonable estimation of
Operator, and (c) funds in the Renewal and
Replacement Account are sufficient to pay the
amount by which such costs of restoration
exceed the Award ("Condemnation Deficiency"),
the Operator shall restore the Facility using
available proceeds as provided in Section
13.2.1. If the Renewal and Replacement
Account is insufficient to pay the
Condemnation Deficiency, within ninety (90)
days after the Taking Date the Operator shall
provide the County written notice of the
Operator's election either (a) to utilize the
Award and such funds as are available in the
Renewal and Replacement Account plus the
Operator's own funds (and not Facility
Operating Revenue) to pay the costs of such
restoration, or (b) to terminate
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this Agreement. In the event the Operator is
entitled to and does elect to terminate this
Agreement, the County shall have the right
(within ten (10) days after receipt of such
notice of the Operator's election to
terminate) to issue notice to the Operator of
the County's intention to pay the Condemnation
Deficiency, in which event, the County shall
deposit the amount of the Condemnation
Deficiency within ten (10) days of such
notice, and thereafter the Operator's election
to terminate shall be deemed rescinded and
void, and the Operator shall effect the
restoration as provided in Section 13.2.1. If
the County does not give such notice of its
intention to pay such Condemnation Deficiency
within ten (10) days after receipt of the
Operator's election to terminate or does not
deposit the Condemnation Deficiency into the
Renewal and Replacement Account at the time
described above, this Agreement shall be
terminated at the expiration of such ten day
period, or after the time required for the
deposit of the Condemnation Deficiency, as
applicable, and the Award shall be deposited
into the Renewal and Replacement Account for
distribution pursuant to Section 13.4.
13.3 End of Term. If a Substantial Taking occurs during
the last two Fiscal Years of the term hereof, then notwithstanding any
provision of this Article to the contrary, by notice to the County within
thirty (30) days after the date of the Taking, the Operator may terminate this
Agreement whereupon the Award shall be deposited into the Renewal and
Replacement Account and shall be distributed pursuant to Section 13.4.
13.4 Distribution. In the event this Agreement is terminated
pursuant to Section 13.1, 13.2 or 13.3, and notwithstanding any provision of
Article V to the contrary, any funds in the Renewal and Replacement Account
after the deposit of the Award pursuant to this Article XIII shall be
distributed to the County and applied to reduce debt service on the Bonds. Any
funds in other Accounts shall be distributed in accordance with Article V and
funds in the Operating Reserve Account shall be distributed as if such funds
were part of the Operating Fund.
13.5 Abatement. In the event of a Taking rendering a
substantial portion of the Facility unusable, the period during which a
substantial portion of the Facility remains unusable shall be an Abatement
Period.
13.6 No Condemnation by County. Notwithstanding the
foregoing or any provision of this Agreement, the County covenants, warrants,
represents and agrees that it shall not at any time during the Term initiate,
engage in, undertake, attempt or pursue either singly or in combination with any
other governmental entity(ies) a condemnation proceeding by right of eminent
domain of any portion of the Facility.
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ARTICLE XIV
ASSIGNMENT AND TRANSFER
14.1 Right to Assignment. The Operator shall have the right
to assign this Agreement i) in connection with the sale of Team in compliance
with NHL requirements (the Team or Operator shall provide the County with a copy
of the transfer application at the time it is submitted to the NHL) to any
Person who thereafter shall control or be under common control with the Team (or
the Person which owns the Franchise), ii) to a Public Entity Assignee and iii)
to a Person with a fair market value net worth of at least Ten Million Dollars
($10,000,000) (including the net worth of such Person's affiliates) which has
experience in the ownership or management of at least one multipurpose arena of
at least 10,000 seats for at least five years, whether such experience is that
of the Person directly or of its principals, agents or employees. Any
transferee or purchaser of the Team's Franchise or the Public Entity Assignee
shall take subject to and must assume all of the obligations of the Operator
under this Agreement. The Operator or Team shall require the transferee or the
Public Entity Assignee to execute an Assignment and Assumption Agreement in such
form and content as is reasonably acceptable to the County and Operator. Any
such transfer shall conform to the terms and restrictions of the License
Agreement and this Agreement. Except for the foregoing, the Operator shall not
assign or transfer its rights or interests in this Agreement without the prior
written consent of County.
14.2 Prohibition Against Assignment of Agreement or Transfer
of the Facility by the County. The County shall not transfer or attempt to
transfer this Agreement or any rights herein, and any such transfer or attempted
transfer shall be void.
ARTICLE XV
REPRESENTATIONS, WARRANTIES AND COVENANTS
15.1 County Representations, Warranties and Covenants. The
County represents, warrants and covenants to the Operator the following:
15.1.1 Authority. The County has full power and
authority to enter into this Agreement, and
the execution, delivery, and consummation of
this Agreement by the County have been duly
authorized.
15.1.2 No Conflicts. The execution, delivery and
performance of this Agreement, does not
conflict with any other agreements,
instruments, judgments or decrees to which
the County is a party or is otherwise
subject.
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15.1.3 No Violation of Laws. Neither the execution,
delivery nor performance of this Agreement by
the County violates or will violate the
County Charter, the County Code or any
ordinance or resolution of the County. The
County has received no notice as of the date
of this Agreement asserting any noncompliance
in any material respect by the County with
applicable statutes, rules and regulations of
the United States of America, the State of
Florida, the County, or of any other state or
municipality or agency having jurisdiction
over and with respect to the transactions
contemplated in and by this Agreement; and
the County is not in default with respect to
any judgment, order, injunction or decree of
any court, administrative agency, or other
governmental authority which is in any
respect material to the transactions
contemplated hereby.
15.1.4 Litigation. No suit is pending before or by
any court or governmental body seeking to
restrain or prohibit, or seeking damages or
other relief in connection with, the
execution and delivery of this Agreement or
the consummation of the transactions
contemplated hereby or which might materially
and adversely affect the use and operation of
the Facility as contemplated herein.
15.1.5 Project Site Possession and Title. The
rights of the Operator pursuant to this
Agreement, and the Operator's peaceful use
and quiet enjoyment of the Facility as
provided in this Agreement, shall not be
diminished, impaired or disturbed in any way
by any lien, encumbrance, easement,
right-of-way, covenant, condition,
restriction, defect, invalidity or any other
matter adversely affecting the County's
rights of possession in, or title to, the
Project Site, or by any other insufficiency,
limitation, restriction or defect in the
rights of the County to possess and
reasonably use the Project Site or its
ownership or title thereto (collectively
"Title Exceptions"). The County shall pay
and be responsible for all liabilities,
losses, damages, costs, expenses and charges
including, without limitation, reasonable
attorneys' fees and costs, that may be
incurred or suffered by the Operator as a
result of any Title Exceptions, none of which
shall be treated as Facility Operating
Expenses.
15.1.6 Utility Rates. The County will use its best
efforts to negotiate long-term discounted
utility charges from public and private
utilities which will provide water, sewage,
gas, electric and waste handling and
recycling services to the Facility. The
County and Operator acknowledge that the City
is separately obligated to perform certain of
these services pursuant to the Sunrise Letter
of Agreement.
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15.1.7 Non-Competition. During the term of this
Agreement, except as provided herein, the
County agrees that it shall not directly or
indirectly, own, manage, operate, control,
finance, sponsor, develop, provide
County-owned land for or in any other way
participate in or cooperate with any indoor
or outdoor sports entertainment or multi-use
arena with an attendance capacity of 5,000 to
30,000 and located within Broward County
("Competing Facility") to which the general
public is invited with or without charge for
concerts, sports, entertainment and other
events of the kind typically booked at arenas
comparable to the Arena in the ordinary
course of operations thereof ("Comparable
Events"). This covenant shall not apply to
the following:
(a) the Broward Convention Center, or the
expansion thereof;
(b) the Broward Center for the Performing
Arts, or the expansion thereof;
(c) a facility for major or minor league
baseball;
(d) events in the County's regional parks and
all uses and practices of the County
presently in effect with respect to
public events in public places of the
County; and
(e) any other facility that does not book
Comparable Events.
15.1.8 No Arena Use by the County Which is
Competitive With Use by Operator. The County
shall use the Arena only for County Events
and celebrations (a) which do not feature
performers or performances which are normally
booked in arenas comparable to the Arena and
(b) for which ticket prices are less (when
compared nationally with reference to
industry guides) than those typically charged
for Comparable Events ("Non-Commercial
Events"). The County will not use the
Communication System in the Arena for
announcement of any event other than
Non-Commercial Events and public service
announcements.
15.2 Enforcement. The County agrees that the rights
conveyed by Section 15.1.7 are of a kind for which there is no adequate remedy
at law and for which money damages will not be adequate compensation.
Therefore, the County agrees that, if the County breaches the covenants of
Section 15.1.7, the Operator shall have the right, to obtain an injunction or
decree of specific performance from any court of competent jurisdiction to
restrain or compel the County to perform the covenants contained in Section
15.1.7. The covenants of the County in each subsection of Section 15.1.7 shall
each be construed as an agreement independent of any other provision in this
Agreement. The Team shall be entitled to rely upon and enforce this Section as
a third party beneficiary. Any and all reasonable costs paid or incurred by
the Operator or the Team to enforce
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the provisions of Section 15.1.7 shall be payable by Operator as Facility
Operating Expenses but shall be reimbursed to Operator by County from County's
own funds. Any and all amounts received by the Operator or the Team pursuant to
the enforcement of such provisions less any amounts paid or incurred by the
Operator or the Team to enforce such provisions and not reimbursed pursuant to
the preceding sentence shall be payable to Operator or Team as applicable and
shall not be deposited into the Operating Fund nor be Facility Operating
Revenue.
15.3 Optional Remedy of Operator. In the event that the
County should violate the covenants of Section 15.1.7, if the Operator seeks and
fails to obtain injunctive relief, then the Operator shall, at its option and
for as long as the County is operating a Competing Facility, be entitled to
receive payment from the County in an amount equal to the gross receipts of the
County from such Competing Facility, provided that the aggregate of all such
payments from the County to the Operator shall not exceed such gross receipts.
The parties agree that if the County were to breach Section 15.1.7, the
aggregate damages arising from such breach would be substantially incapable of
estimation due to the lost value attributable to the adverse consequences such a
breach would have on the Operator and that the amount set forth in this Section
constitutes the best, reasonable and objective estimate of the damages that
would be incurred in the event the County were to breach Section 15.1.7.
15.4 Severability. If and to the extent that a court of
competent jurisdiction determines that any provision of this Section or part
thereof is unenforceable, whether by virtue of excessive scope, geographical
limitation, term or otherwise, such provision or part thereof shall be
interpreted so as to delete that portion of the provision which exceeds the
maximum legal prohibition or otherwise to modify such provision in such a manner
so as to make this Agreement, as so modified, enforceable.
15.5 Operator Representations, Warranties and Covenants. The
Operator represents, warrants and covenants to the County the following:
15.5.1 Organization. The Operator is a limited
partnership, duly organized and validly
existing under the laws of the State of
Florida; and it has all requisite power and
authority to enter into this Agreement.
15.5.2 Authorization; No Violation. The execution,
delivery and performance by the Operator of
this Agreement have been duly authorized by
all necessary action and will not violate the
NHL Constitution or Bylaws or any written
rule, regulation or policy of the NHL, or
result in the breach of or constitute a
default under any loan or credit agreement,
or any other agreement or instrument to which
the Operator is a party or by which the
Operator or its assets may be bound or
affected. All consents and approvals of any
Person (including partners of the Operator)
required in connection with this Agreement
have been obtained.
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15.5.3 Litigation. No suit is pending against or
affects the Operator which could have a
material adverse affect upon the Operator's
performance under this Agreement or the
financial condition or business of the
Operator. There are no outstanding judgments
against the Operator.
15.5.4 No Payments. The Operator has not paid or
given, and will not pay or give, any third
person any money or other consideration for
obtaining this Agreement, other than normal
costs of conducting business and costs of
professional services such as the services of
architects, engineers and attorneys.
15.5.5 No Conflicts. No agreements between the
Operator and the Team are prohibited by nor
conflict with any other agreements,
instruments, judgments or decrees to which
the Operator is a party or is otherwise
subject.
15.5.6 No Violation of Laws. The Operator has
received no notice as of the date of this
Agreement asserting any noncompliance in any
material respect by the Operator with
applicable statutes, rules and regulations of
the United States of America, the State of
Florida, or of any other state or
municipality or agency having jurisdiction
over and with respect to the transactions
contemplated in and by this Agreement; and
the Operator is not in default with respect
to any judgment, order, injunction or decree
of any court, administrative agency, or other
Governmental Authority which is in any
respect material to the transactions
contemplated hereby.
15.5.7 Environmental and Historical Conditions. After
the Operations Start Date, (a) the Operator
shall maintain, keep current and comply in
full with any and all permits, consents and
approvals required by the Environmental Laws
and (b) the Operator shall comply with all
Environmental Laws and shall not conduct or
allow any use of or activity on or under the
Project Site that will violate or threaten to
violate any Environmental Law; provided,
however, that Operator shall have no
responsibility whatsoever to comply with
Environmental Laws with respect to any
condition existing prior to or at the time of
the Operations State Date and that the
Operator's obligations pursuant to this
Section shall not release the County from
obligations otherwise required by this
Agreement. The Operator shall promptly notify
the County if the Operator has actual
knowledge of any material noncompliance or
potential material noncompliance with any
Environmental Law or receives any written or
oral notification from any Governmental
Authority or any third party regarding any
material noncompliance or threatened or
potential material noncompliance with or any
request for information pursuant to any
Environmental Law.
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15.6 Mutual Covenants.
15.6.1 Additional Documents and Approval. The County
and the Operator, whenever and as often as
each shall be reasonably requested to do so by
the other party or by the Team, shall execute
or cause to be executed any further documents,
take any further actions and grant any further
approvals as may be necessary or expedient in
order to consummate the transactions provided
for in, and to carry out the purpose and
intent of each of the Related Agreements.
15.6.2 Good Faith. In exercising its rights and
fulfilling its obligations under each of the
Related Agreements, the County and the
Operator shall act in good faith. Each party
acknowledges that the Related Agreements
contemplate cooperation between the Operator
and the County. Each party further
acknowledges that the terms and conditions of
the Related Agreements together have been
negotiated on the basis of certain
projections and assumptions, including the
assumption that the County, the Operator and
the Team will act to advance, and not
unreasonably interfere with, the public
purposes to be served by the Facility.
15.6.3 No Termination. Neither the County nor the
Operator shall terminate this Agreement on
the ground of ultra vires act or for any
illegality or on the basis of any challenge
to the enforceability of this Agreement.
Subject to the foregoing, no such challenge
may be asserted by the County or the Operator
except by the institution of a declaratory
action in which the Operator, the County and
the Team, are named as parties.
15.6.4 Cooperation. The County and the Operator
mutually agree to contest any challenge to the
validity, authorization and enforceability of
this Agreement ("Challenge"), whether asserted
by a taxpayer or any Person. The County and
the Operator shall strive in good faith to
agree jointly upon counsel to defend any such
Challenge. If the Challenge occurs during the
construction and development period of the
Development Agreement, one-half of the costs
of contesting the Challenge shall be paid by
Operator, upon written notice and demand for
payment from the County itemizing such costs;
the remaining one-half of the costs shall be
borne by the County. If the Challenge occurs
after the Operations Start Date, the costs of
contesting the Challenge shall be treated as a
Facility Operating Expense and shall be
payable from Facility Operating Revenue.
However, if the nature of any Challenge
(whether prior to or following the Operations
Start Date) is to the effect that the County
has acted improperly or unlawfully in
executing this Agreement, then the County
shall pay all of the costs incurred by the
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parties in contesting this Challenge and any
legal fees, costs and other expenses in
connection with such Challenge shall be
treated as a Facility Operating Expense.
Furthermore, the County and the Operator shall
take all ministerial actions and proceedings
necessary or appropriate to remedy any
apparent invalidity, lack or defect in
authorization, or illegality, or to cure any
other defect, which has been asserted or
threatened.
15.6.5 Notice of Matters. Should the County or the
Operator receive knowledge about any matter
which may constitute a breach of any of its
warranties or covenants set forth herein which
arises after the date hereof, it shall
promptly notify the other party of the same in
writing. Specifically, without limitation,
the County and the Operator shall promptly
inform the other of any suits referred to in
Sections 16.4 and any Challenge referred to in
Section 16.4.
15.6.6 Compliance With Laws. During the Term of this
Agreement, the County and the Operator each
shall, in connection with its own use of (and,
in the case of the County, its ownership of)
and the exercise of its rights with respect to
the Facility, comply with all applicable laws,
ordinances, rules and regulations relating
thereto. However, the Operator shall have no
obligation to comply with any such laws to the
extent that a violation of such laws exists on
or prior to the Operations Start Date; and
such obligations shall be the responsibility
of County. The County shall obtain and
maintain all necessary permits and licenses
that are required of an owner of the Facility
or that are required of County Events at the
Facility. The Operator with the cooperation
of County shall obtain and maintain all
necessary permits and licenses that are
required in connection with the operation of
the Facility.
15.6.7 Survival of Covenants and Warranties. All
covenants, representations and warranties
contained in this Agreement shall survive the
execution and delivery of this Agreement. No
action taken pursuant to or related to this
Agreement, including, without limitation, any
investigation by or on behalf of a party
shall be deemed to constitute a waiver by the
party taking such action of compliance with
any representation, warranty, condition or
agreement herein.
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ARTICLE XVI
DEFAULTS, REMEDIES AND TERMINATION
16.1 Events of Default. Each of the following events shall
constitute an Event of Default:
16.1.1 If any representation or warranty made by the
County or by the Operator herein shall at any
time prove to have been incorrect in any
material respect as of the time made, and if
the party making such representation or
warranty fails to cause such representation or
warranty to become correct within thirty (30)
days after written notice that such
representation or warranty was incorrect;
provided, however, that if it is not
reasonably possible to cause such
representation or warranty to become correct
within such thirty-day period, such cure
period shall be for an unlimited period of
time if within thirty (30) days after such
written notice the curing party commences
diligently and thereafter continues to cause
such representation or warranty to become
correct.
16.1.2 If the Operator shall breach its obligations
under the provisions of Article V or the
County or Operator shall breach its
obligations under Article XI and such breach
is not cured within thirty (30) days after
written notice by the County to the Operator
or the Operator to the County, as applicable.
16.1.3 If the County or the Operator shall
materially breach any of the other covenants
or provisions in this Agreement other than as
referred to in Section 16.1.1 or 16.1.2 and
such failure is not cured within 30 days
after written notice; provided, however, that
if it is not reasonably possible to cure such
failure within such 30 day period, such cure
period shall be for an unlimited period of
time if within 30 days after such written
notice the curing party commences diligently
and thereafter continues to cure.
16.2 Institution of Litigation Permitted by Article
XVIII. To the extent permitted by Article XVIII, in addition to any other
rights or remedies, either party may institute litigation to recover damages
for any Event of Default or to obtain any other remedy (including specific
performance and any other kind of equitable remedy) consistent with the
purposes of this Agreement. Litigation pursuant to this Section shall only be
instituted in the Circuit Court of Broward County, Florida or in the Federal
District Court in the Southern District of Florida. The County and the
Operator consent to the jurisdiction of such courts. Subject to Article XVIII,
neither the existence of any claim or cause of action of a party, whether
predicated on this Agreement or otherwise, nor the pendency of ADR proceedings
involving another party, shall (a) constitute a defense to specific enforcement
of the obligations of such other party under this Agreement or (b) bar the
availability of injunctive relief or any other equitable remedy under this
Agreement.
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16.3 Rights and Remedies are Cumulative. Except with respect
to rights and remedies expressly declared to be exclusive in this Agreement, the
rights and remedies of the parties are cumulative and the exercise by either
party of one or more of such rights or remedies shall not preclude the exercise
by it, at the same or different times, of any other rights or remedies for the
same Event of Default or any other Event of Default by the other party.
16.4 Costs, Expenses and Fees. In the event of any
litigation, arbitration or other dispute resolution proceeding ("Challenge
Proceeding") that arises from, relates to or arises in connection with the
County's or the Operator's duties and obligations under this Agreement and is
instituted by a Person not a party to this Agreement, the Operator or the County
shall be entitled to advances from and to be reimbursed from Facility Operating
Revenue for all costs and expenses incurred by any of them in such Challenge
Proceeding, including reasonable attorneys fees and costs, and such costs and
expenses shall be treated as Facility Operating Expenses, and any award granted
to the Operator or the County in such Challenge Proceeding, including an award
of any such costs and expenses, shall be treated as Facility Operating Revenue.
In the event of any litigation, arbitration or other dispute resolution
proceeding in connection with this Agreement, involving a claim against a party
to this Agreement by the other party to this Agreement ("Proceeding"), (a) no
party shall be entitled to advances from or to be reimbursed from Facility
Operating Revenue for any costs or expenses incurred by it in such Proceeding,
including reasonable attorneys' fees or costs, (b) no such costs and expenses
shall be treated as Facility Operating Expenses, (c) the prevailing party in
such Proceeding shall be entitled to be reimbursed by the other party (and not
from Facility Operating Revenue) for all costs and expenses incurred in such
Proceeding, including reasonable attorneys' fees and costs as may be fixed by
the Circuit Court of Florida for Broward County, Florida the Federal District
Court for the Southern District of Florida, or the arbitrator, and (d) any award
granted to a party in such Proceeding shall be treated as the sole property of
such party.
16.5 Acceptance of Legal Process.
16.5.1 Service on County. In the event that any
legal or equitable action is commenced by the
Operator against the County, service of
process on the County shall be made by
personal service upon the Office of the Chair
of the Board, or in such other manner as may
be provided by law.
16.5.2 Service on the Operator. In the event any
legal or equitable action is commenced by the
County against the Operator, service of
process on the Operator shall be made by
personal service upon the statutory agent of
the limited partnership, in the State of
Florida (which Florida resident agent
Operator shall establish), or in such other
manner as may be provided by law.
16.6 Termination. Notwithstanding any other provision
herein to the contrary, this Agreement may not be terminated by the Operator or
the County except as specifically permitted in Sections 12.2, 12.3, 13.1, 13.2,
13.3, 16.6.1, 16.6.2 or 16.6.3.
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16.6.1 Termination of Operator by the County.
Provided that the County is not in default of
this Agreement and has caused no event to
occur or condition to exist which with the
passage of time or the giving of notice, or
both, would constitute a default under this
Agreement, the County at its option may
terminate the Operator upon fifteen (15) days
written notice to the Operator if the Operator
has caused an Event of Default to occur.
Immediately upon such termination the County
and the Team(s) shall select a replacement
operator who shall be subject to the terms and
conditions of this Agreement. If the County
and the Team(s) fail to agree on a replacement
operator, the Operator shall continue to carry
out its obligations under this Agreement (if
directed to do so by the County)until such
time as the County and the Team agree on a
replacement Operator.
16.6.2 Termination of Agreement by the Operator.
Provided that the Operator is not in default
of this Agreement and has caused no event to
occur or condition to exist which with the
passage of time or the giving of notice, or
both, would constitute a default under this
Agreement, the Operator at its option may
terminate its obligations under this
Agreement after fifteen (15) days prior
written notice to the County if the County
has caused an Event of Default to occur. If
the Operator terminates its obligations under
this Agreement for an Event of Default by the
County, the Operator shall continue to carry
out its obligations hereunder, if directed to
do so by the County, for a reasonable period
of time to permit the selection of a
replacement operator. The Operator shall be
entitled to a commercially reasonable fee for
its services after termination.
16.6.3 Automatic Termination of Agreement. This
Agreement automatically terminates upon any
lawful termination by the Team, the Operator
or the County of the License Agreement or
upon any termination of the Development
Agreement pursuant to Section 8.1 or Section
14.1 thereof (except as expressly provided in
such Section 14.1).
16.6.4 Rights After Termination of Agreement. In the
event of the termination of this Agreement,
the County and the Operator shall have no
further rights against or liabilities to each
other under this Agreement, except for
liabilities or rights which accrued prior to
termination. In the event of a termination by
reason of an Event of Default, each party
shall have available to it all of its rights
and remedies under this Agreement and in law
and equity.
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ARTICLE XVII
DISPUTE RESOLUTION
Except for Events of Default specified in Section 16.1.2, in the event
of any default, breach or other dispute between the parties in connection with
this Agreement (collectively, the "Dispute"), the parties shall comply with the
following procedures (all of which shall collectively be referred to as "ADR").
Within seven (7) Business Days after written request (the "Request") by either
party, the parties promptly shall hold an initial meeting to attempt in good
faith to negotiate a settlement of the Dispute. No Request concerning a
Dispute may be made at any time after two (2) years following the occurrence of
the event giving rise to the Dispute. If within ten (10) days after the
Request, the parties have not negotiated a settlement of the Dispute, the
parties jointly shall appoint a mutually acceptable neutral person who is not
affiliated with either of the parties (the "Neutral"). If the parties are
unable to agree upon the appointment of the Neutral within fourteen (14) days
after the Request, either party may request the American Arbitration
Association or its successor ("AAA") to serve as the Neutral or to select the
Neutral or may require both parties to submit to any procedures of AAA to
select the Neutral, including without limitation the selection of AAA as the
Neutral. In order to resolve the Dispute, the parties shall develop a
non-binding alternative dispute resolution procedure such as mediation or
facilitation (the "Mediation") with the assistance of the Neutral. The Neutral
shall make the decision as to how, when and where the Mediation will be
conducted if the parties have been unable to agree on such matters by the
earlier of seven (7) Business Days after the appointment of the Neutral or
twenty-one (21) days after the Request. The parties shall participate in good
faith in the Mediation to its conclusion. If the parties resolve their Dispute
through their own negotiations or in the Mediation, the resolution shall be
reduced to the form of a written settlement agreement which shall be binding
upon both parties and shall preclude any litigation with respect to such
Dispute. If the parties have not resolved the Dispute through the Mediation
within sixty (60) days after the Request, then at any time thereafter, and
prior to resolution of the Dispute by the Mediation, upon written demand by
either party, the Mediation shall cease, and the Dispute shall be submitted to
arbitration (the "Arbitration") for resolution by an arbitrator or a panel of
arbitrators whose number shall be determined and who shall be selected in
accordance with the rules of the AAA. Arbitration shall be conducted in
accordance with the rules of the AAA. If Arbitration results in a
determination by the arbitrator(s) that an Event of Default has occurred, the
provisions of Article XVII shall govern the damages and other remedies which
may be implemented or ordered by the arbitrator(s). Neither the requirement to
utilize nor the pendency of any ADR procedures shall in any way invalidate any
notices or extend any cure periods applicable to an Event of Default as
provided in Article XVII. Except as expressly provided elsewhere in this
Agreement, these ADR procedures require the County and the Operator to use
these ADR procedures exclusively rather than litigation as a means of resolving
their disputes under this Agreement or to determine the consequences of an
Event of Default and the implementation of the remedies therefor as provided in
Article XVII. Notwithstanding any other provision of this Article to the
contrary, in the event a party may wish to seek interim relief, whether
affirmative or prohibitive, in the form of a temporary restraining order or
preliminary injunction or other interim equitable relief concerning a Dispute
including without limitation, declaratory relief, specific performance,
provisional remedies, special
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action relief, stay proceedings in connection with special action relief or any
similar relief of an interim nature, either before beginning or at any point in
the ADR procedures concerning such Dispute, such party may initiate the
appropriate litigation to obtain such relief ("Equitable Litigation"). Nothing
herein shall be construed to suspend or terminate the obligation of both
parties promptly to proceed with the ADR procedures concerning the Dispute that
is the subject of such Equitable Litigation while such Equitable Litigation and
any appeal therefrom is pending. Regardless of whether such interim relief is
granted or denied or such Equitable Litigation is pending or any appeal is
taken from the grant or denial of such relief, at all times the parties shall
diligently proceed to complete the ADR procedures. Any interim or appellate
relief granted in such Equitable Litigation shall remain in effect until, and
only until, the ADR procedures concerning the Dispute that is the subject of
such Equitable Litigation result in a settlement agreement or the issuance of
an Arbitration award. Such written settlement agreement or award shall be the
binding, final determination on the merits of the Dispute (including but not
limited to any equitable relief and monetary damages but excluding any award of
attorneys' fees or costs rendered in the Equitable Litigation), shall supersede
and nullify any decision in the Equitable Litigation on the merits of the
dispute that is the subject of such Equitable Litigation, and shall preclude
any subsequent litigation on such merits, notwithstanding any determination to
the contrary in connection with any Equitable Litigation granting or denying
interim relief or any appeal therefrom. The parties agree that any disputes
which arise out of such a written settlement agreement or award during the term
of this Agreement shall be resolved exclusively by the procedures set forth in
this Article, provided that any party may institute legal proceedings in a
court of competent jurisdiction to enforce judgment upon an Arbitration award
in accordance with applicable law. The fees and costs of the Neutral and AAA
in the Mediation shall be borne equally by the parties; provided, however, that
the prevailing party in Arbitration shall be entitled to recover from the other
party's own assets and not from Facility Operating Revenue, in addition to any
other remedy, reimbursement for any costs of such proceeding, reasonable
attorneys' fees, reasonable costs of investigation and any other expenses
incurred in connection with such Arbitration or the Mediation of the Dispute
that is the subject of such Arbitration. Any recovered costs and expenses in
such Arbitration shall not be included as Facility Operating Expenses or paid
from Facility Operating Revenue.
ARTICLE XVIII
GENERAL PROVISIONS
18.1 Notice. All notices and other communications pursuant
to this Agreement shall be in writing and shall be deemed properly given upon
delivery, or refusal of delivery, if sent by personal delivery, overnight
courier service with guaranteed next day delivery or by certified United States
mail, postage prepaid, return receipt requested addressed as follows:
County Administrator
Broward County, Florida
115 S. Andrews Avenue, Room ___
Ft. Lauderdale, Florida 33301
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with copy to:
Director, Department of Finance
and Administrative Services
115 S. Andrews Avenue, Room 121
Fort Lauderdale, Florida 33301
with copy to:
The County Attorney
115 S. Andrews Avenue, Room 423
Fort Lauderdale, Florida 33301
To the Operator:
Arena Operating Company, Ltd.
c/o Huizenga Holdings, Inc.
200 South Andrews Ave., Sixth Floor
Ft. Lauderdale, FL 33301
with copy to:
Akerman, Senterfitt & Eidson, P.A.
SunTrust International Center
One S.E. Third Avenue, 28th Floor
Miami, Florida 33131-1704
with copy to:
Leisure Management International
Eleven Greenway Plaza
Suite 3000
Houston, Texas 77046
Attn: President
Each party may by notice to the other specify a different address for
subsequent notice purposes.
18.2 Time of Essence. Time is of the essence with respect to
the performance of each of the covenants and obligations contained in this
Agreement.
18.3 Relationship of Parties. No partnership, joint venture
landlord-tenant or other business relationship is established between the County
and the Operator under this Agreement or any other agreement referred to in this
Agreement other than the relationship of the County as the
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owner of the Facility and the Operator as an independent contractor of the
County. Except as expressly provided in the Agreement, the Operator, its
employees, agents, independent contractors and licensees shall not be
considered employees or agents of the County or to have been authorized to
incur any expense on behalf of the County or to act for or to bind the County.
The County, its elected officials, officers, employees, agents and independent
contractors shall not be considered employees or agents of the Operator or to
have been authorized to incur any expense on behalf of the Operator or to act
for or to bind the Operator. Neither the County nor the Operator shall be
liable for any acts, omissions or negligence on the part of the other party,
its employees, agents, independent contractors and licensees resulting in
either personal injury or property damages. The relationship created hereby is
solely that of owner-independent contractor.
18.4 Severability. If any provision of this Agreement shall
be adjudged invalid or unenforceable by a court of competent jurisdiction, the
remaining provisions of this Agreement shall not be affected thereby and shall
be valid and enforceable to the fullest extent permitted by law, provided that
no such severance shall serve to deprive any of the parties of the enjoyment of
its substantial benefits under this Agreement.
18.5 Force Majeure. Failure in performance by either party
hereunder shall not be deemed an Event of Default and the non-occurrence of any
condition hereunder shall not give rise to any right otherwise provided herein
when such failure or non-occurrence is due to war; insurrection; strikes;
lock-outs; riots; floods; windstorms; fires; acts of God; acts of the public
enemy; epidemics; quarantine restrictions; freight embargos; lack of
transportation; governmental restrictions; unusually severe weather; inability
(when both parties are faultless) of any contractor, subcontractor or supplier;
acts or the failure to act, of any public or governmental agency or entity
(except acts or failures to act by the County) or any other causes beyond the
control and without the fault of the party claiming an extension of time to
perform. An extension of time for any such cause shall be limited to the period
of delay due to such cause, which period shall be deemed to commence from the
time of the commencement of the cause, provided that, if notice by the party
claiming such extension is sent to the other party more than thirty (30) days
after the commencement of the cause, the period shall be deemed to commence
thirty (30) days prior to the giving of such notice. The period of the delay
due to any such cause, shall be an Abatement Period. Times of performance under
this Agreement may also be extended as mutually agreed upon in writing by the
County and the Operator. However, failure to agree to a proposed extension of
time for performance shall not be deemed grounds for delay or failure to timely
cure an Event of Default hereunder.
18.6 Interpretations. To the extent permitted by the context
in which used, (a) words in the singular number shall include the plural, words
in the masculine gender shall include the feminine and neuter, and vice versa,
and (b) reference to "persons" or "parties" in this Agreement shall be deemed to
refer to natural persons, corporations, general partnerships, limited
partnerships, trusts and other entities.
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18.7 Binding Effect. This Agreement, and the terms,
provisions, promises, covenants and conditions hereof, shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
18.8 Captions. Captions and paragraph headings used herein
are for convenience only and are not a part of this Agreement and shall not be
deemed to limit or alter any provisions hereof and shall not be deemed relevant
in construing this Agreement.
18.9 Entire Agreement. This Agreement is executed in seven
(7) duplicates each of which is deemed to be an original. This Agreement and
the referenced Exhibits, each of which is incorporated herein, together with the
other Agreements that constitute the Related Agreements to the extent
applicable, constitutes the entire understanding and agreement of the parties
with respect to the subject matter of this Agreement. This Agreement integrates
all of the terms and conditions mentioned herein or incidental hereto and
supersedes all negotiations or previous agreements between the parties with
respect to all or any part of the subject matter hereof.
18.10 Amendment. Except as otherwise provided herein, all
waivers of the provisions of this Agreement must be in writing and signed by the
County Representative or the Operator Representative. This Agreement may not be
changed, modified or rescinded except in writing by the County Representative
and the Operator Representative, and any attempt at oral modification of this
Agreement shall be void and of no effect. The Operator and County shall make
such changes to this Agreement as may be necessary to implement the Plan of
Finance attached to the Development Agreement as Exhibit "C".
18.11 Waiver. From time to time during the Term or any
Extension Term, the Operator Representative, in its discretion, shall have the
right, power and authority to waive any non-material, non-economic, performance,
duty, right or benefit due Operator or County under this Agreement.
18.12 Applicable Law. The laws of the State of Florida shall
govern the interpretation and enforcement of this Agreement.
18.13 Nondiscrimination. There shall be no discrimination
against or segregation of any person, or group of persons, on account of sex,
marital status, race, color, creed, religion, national origin or ancestry in the
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
Project Site or the Facility. Neither the Operator nor any person claiming
under or through it shall establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number,
use or occupancy of licensees, sublicensees or vendors using or operating at the
Project Site or Facility or any portion thereof.
18.14 Reasonableness. Whenever in this Agreement the consent
or approval of the County or the Operator is required, unless expressly stated
to the contrary, the granting of such consent or approval shall be governed by a
standard of reasonableness. If either party contends that the standard has not
been met, the matter shall be resolved as provided in Article XVIII. In the
event
53
<PAGE> 60
that such resolution results in the determination that the action was
unreasonable, such determination shall not constitute a default of this
Agreement, operate to terminate it or give rise to any right to damages as a
result thereof, but the sole remedy shall be limited to specific performance and
the recovery of reasonable attorneys' fees and costs (including the fee of the
arbitrators) in such resolution procedure.
ARTICLE XIX
LIABILITY LIMITATION
19.1 County and Operator Personnel. Notwithstanding and
prevailing over any contrary provision or implication in this Agreement, no
member, elected official, official, employee, agent, or consultant of the County
or limited partner, shareholder of partner, officer, employee or agent of the
Operator shall be liable to either of the parties hereto, or any successors in
interest thereof, in the event of any default or breach by the County or
Operator, for any amount which may become due to either party or any successors
in interest thereof, or on any other obligation under the terms of this
Agreement, except any such obligations which result from their criminal acts
with respect hereto (i.e., acts which would constitute crimes were they
prosecuted therefor and convicted thereof).
[Signatures on following page]
54
<PAGE> 61
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
by and through their lawfully authorized officers, this 4th day of June, 1996.
ATTEST: COUNTY:
/s/ B. Jack Osterholt
- ----------------------------- BROWARD COUNTY, FLORIDA
County Administrator
By: John E. Rodstrom
-----------------------------
Chair of the Board of County
Commissioners
OPERATOR:
ARENA OPERATING COMPANY, LTD.
By: Arena Operating Company
Inc., a Florida corporation, its
General Partner
By: /s/ H. Wayne Huizenga
-------------------------------
Name: H. Wayne Huizenga
-----------------------------
Title: Chairman
----------------------------
APPROVED AS TO FORM:
/s/ Noel Pfeffer
- ------------------------------
County Attorney
55
<PAGE> 62
EXHIBIT "4.16"
MBE/WBE PROGRAM
1. Operator will use good faith efforts to cause minority owned
(MBE) and women owned (WBE) business enterprises to be engaged in the operation
of the Facility at least up to the levels of the Operation Goals described
below.
2. Operator has established the following participation
percentages in its operational goals (the "Operational Goals"):
<TABLE>
<S> <C> <C>
(a) MBE
African American 10%
Hispanic 10%
Asian and/or Native American 3%
(b) WBE 7%
</TABLE>
3. The Operation Goals are percentages of the total amounts
expected to be paid to all companies for supplying supplies, services, food,
beverages, novelties and notions and other concessions (other than those
available from limited sources or suppliers) for items to be sold at and during
the operation of the Facility, but may not necessarily be achieved in each
category.
4. (a) Women's Business Enterprise or WBE. A business which
is:
(1) A sole proprietorship, owned and controlled
by a woman;
(2) A partnership or joint venture controlled by
women in which at least 51% of the beneficial ownership interest is held by
women;
56
<PAGE> 63
(3) A corporation or other entity controlled by
women in which at least 51% of the interest in such corporation or entity is
beneficially owned by women.
(b) Minority Business Enterprise or MBE. A business
which is:
(1) A sole proprietorship, owned and controlled
by a minority person;
(2) A partnership or joint venture controlled by
minority persons in which at least 51% of the beneficial ownership interest is
held by minority persons;
(3) A corporation or other entity controlled by
minority persons in which at least 51% of the interest in such corporation or
entity is beneficially owned by minority persons.
(c) Minority Person. A person who is an Asian American,
Black American, Hispanic American, or Native American.
5. Operator will cooperate with the County MBE/WBE agency
addressing MBE/WBE issues and other public spirited organizations addressing
such issues in its efforts to achieve the Operation Goals.
6. Operator shall not be required to engage MBE's or WBE's who
are not the lowest responsible bidders.
57
<PAGE> 1
Exhibit 10.3
AMENDMENT AND CLARIFICATION TO
OPERATING AGREEMENT
AND
LICENSE AGREEMENT
This Amendment and Clarification to the Operating Agreement and License
Agreement is made and entered into as of June 4, 1996 between Broward County,
Florida (the "County"), Arena Operating Company, Ltd., a Florida limited
partnership (the "Operator") (as to the Operating Agreement), and Florida
Panthers Hockey Club, Ltd., a Florida limited partnership (the "Team") (as to
the License Agreement).
A. On June 4, 1996, at its duly constituted meeting, the Board of
County Commissioners of Broward County, Florida (the "Board") approved the
Operating Agreement between the County and the Operator under which the
Operator will manage and operate the Facility (as defined in said document),
upon completion of construction, subject to the execution of this Amendment,
and the Board also approved the License Agreement between the County and the
Team, subject to the execution of this Amendment, and the Development Agreement
between the County and Arena Development Company, Ltd., all related to the
construction, use and operation of the Facility (the latter of which is not
being amended by this document).
B. The parties desire to set forth herein certain amendments and
clarifications to the License Agreement and the Operating Agreement, which are
deemed incorporated in the Operating Agreement and the License Agreement by
reference and made a part thereof.
NOW THEREFORE, the parties agree as follows:
1. The following paragraph is added at the conclusion of the
Operating Agreement as Section 19.2, as follows:
19.2 County or Facility not responsible for Operator or Manager
lawsuits.
The parties acknowledge that the Team and the Operator respectively are
solely responsible and have the exclusive right to select the Operator and the
Manager of the Facility. Therefore, whichever Operator and/or Manager is chosen
by the Team and/or the Operator to operate or manage the Facility, if a lawsuit
or claim is filed in Broward County or any other jurisdiction that claims or
asserts that the retention of that Operator or Manager is violative of an
existing contract with that or any other venue or with any other City, County
or other entity, public or private, the expenses involved in that claim or
lawsuit, including attorneys fees, shall not be borne by the County or the
Facility and shall not be deemed Facility Operating Expenses.
<PAGE> 2
2. Section 1.10 of the Operating Agreement is amended by deleting
the words "Leisure Management International." All other references in the
Operating Agreement to Leisure Management International is hereby deleted.
Section 1.8 of the License Agreement is amended by deleting the
words "initially Leisure Management International," and all other references to
Leisure Management International are hereby deleted.
IN WITNESS WHEREOF, the parties have hereunto executed this Amendment
and Clarification Agreement by and through their duly authorized officers this
4th day of June, 1996.
County:
[SEAL] BROWARD COUNTY, FLORIDA
By: /s/ John E. Rodstrom
---------------------------------
Chair of the Board
Operator:
ARENA OPERATING COMPANY, LTD.
By: ARENA OPERATING COMPANY,
INC. a Florida corporation, its
General Partner
By: /s/ H. Wayne Huizenga
--------------------------------
Name: H. Wayne Huizenga
Chairman
Team:
FLORIDA PANTHERS HOCKEY CLUB,
LTD.
By: Arena Development Company,
Inc. a Florida corporation,
its General Partner
By: /s/ H. Wayne Huizenga
--------------------------------
Name: H. Wayne Huizenga
Chairman
2
<PAGE> 1
Exhibit 10.4
BROWARD COUNTY
CIVIC ARENA
DEVELOPMENT AGREEMENT
DATED AS OF JUNE 4, 1996
BY AND BETWEEN
BROWARD COUNTY, FLORIDA
THE COUNTY
AND
ARENA DEVELOPMENT COMPANY, LTD.
THE PROJECT DEVELOPER
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II - THE COUNTY'S RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Acquisition of the Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Remediation of the Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Funding the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Traffic Mitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Pre-Development Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6 Acquisition of Construction Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.8 Additional Obligations of the County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III - THE PROJECT DEVELOPER'S RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1 Design and Construction Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Services to be Performed by the Project Developer . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV - DESIGN OF THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1 Design Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Development of Design Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 Design Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.4 The County's Consultant's Review and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.5 Use of Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V - CONSTRUCTION OF THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Duties of the Project Developer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Cost Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Supervision of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.5 Correction of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.6 Construction Change Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
5.7 Payment and Performance Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.8 Payment for Project Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI - DISBURSEMENTS FROM THE CONSTRUCTION FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2 Modifications to the Land Acquisition and Project Development Budget . . . . . . . . . . . . . . . 27
6.3 Draw Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.4 Developer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.5 Satisfaction of Interim and Full LOC Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII - COMPLETION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VIII - CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.1 Conditions Precedent for the Benefit of the Project Developer . . . . . . . . . . . . . . . . . . 28
ARTICLE IX - DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Project Developer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 County Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.3 Termination Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE X - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.1 Indemnification by Project Developer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.2 Indemnification by County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.3 Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.4 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE XI - REPRESENTATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.1 Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE XII - SCHEDULES AND REPORTS; INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.1 Design and Construction Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.2 Progress Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C>
12.3 Significant Event Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.4 Inspection Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.5 Final Construction Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.6 Returns Required by Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.7 Inspection Rights of the County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XIII - REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.1 Project Developer's Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . 37
13.2 County's Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XIV - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.1 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.2 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.3 Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.5 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.6 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.7 Relationship of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.9 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.10 Cross References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.11 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.12 Antidiscrimination Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.13 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.14 Third-Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.16 Date of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.17 Gender and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.18 Prior Agreements Superseded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.19 This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.20 Non-Exclusive Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.21 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.22 Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.23 Saturday, Sunday or Holiday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.24 Approvals by County and the Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.25 Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.26 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.27 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
A - Legal Description of the Land
B - Program Requirements
C - Plan of Finance
D - Land Acquisition and Project Development Budget
E - Substantial Completion Guaranty Agreement
F - SBDE Plan
G - Permits Which May Be Required
H - Insurance Requirements
I - Developer's Certificate
</TABLE>
(iv)
<PAGE> 6
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is dated as of June 4,
1996, and entered into by and between Broward County, Florida, a public body
corporate and politic and a political subdivision of the State of Florida (the
"County"), and Arena Development Company, Ltd., a Florida limited partnership
(the "Project Developer").
RECITALS:
A. On April 2, 1996, the County and Florida Panthers Hockey Club,
Ltd. (the "Team"), entered into a letter of intent (the "LOI") setting forth
the outline of terms and conditions under which the County and the Team would
move forward to expeditiously develop the Broward County Civic Center, which
will be a state-of-the-art, 21,500 seat, multi-purpose sports and entertainment
facility, including up to a maximum of 7,500 surface parking spaces (together
with all related machinery, equipment, fixtures, additions and appurtenances
(which may include a separate practice facility), the "Facility"), to be located
in the City of Sunrise (the "City").
B. The Facility will be developed by the Project Developer on
approximately 123.043 acres of land located in the City (the "Project Site";
together with the Facility, the "Project"). The Project Site and the
approximately 12 acres of land adjacent to the Project Site (the "Private
Development Site"; together with the Project Site, the "Land") shall be
assembled by the County and made available to the Project Developer.
C. The Facility shall be designed and constructed to support the
primary occupancy of the Team for NHL hockey and related uses and to host
professional basketball and other sporting, entertainment, family, music and
related community events.
D. The Project will be financed and owned by the County and
exclusively managed and operated by the Operator pursuant to an operating
agreement (the "Operating Agreement") of even date herewith between the County
and Arena Operating Company, Ltd. (the "Operator").
E. On the date hereof, the Team is entering into a License
Agreement (the "Team License") with the County and the Operator setting forth
the terms and conditions under which the Team will exclusively occupy and use
the Facility for pre-season, regular season and play-off NHL hockey and related
uses as set forth in the Team License.
F. The Project Developer will cause the Project to be designed
and constructed pursuant to the terms of this Agreement.
G. The County has determined that it is in the best interest of
the County to grant to the Project Developer the right to cause the Project to
be designed and constructed pursuant to the terms and conditions stated herein.
<PAGE> 7
H. The parties acknowledge that their respective obligations
hereunder to perform pursuant to this Agreement are absolute and unconditional,
except where specifically provided to the contrary herein.
I. The health, safety and general welfare of the people of the
County are directly dependent upon the continual encouragement, development,
growth and expansion of business, commerce and tourism. The development of a
major multipurpose sports and entertainment complex and accessory uses is most
appropriate in the County which, because of its size, is capable of retaining
and supporting professional as well as amateur sports teams and attracting
major national sporting and musical, cultural, family and community events.
Attraction of business and tourism to the County as a result of the development
of such a facility and its accessory uses will be an important factor in the
continued encouragement, promotion, attraction, stimulation, development,
growth and expansion of business, commerce and tourism within the County. The
development and promotion of a multipurpose sports and entertainment complex on
public property will provide significant benefits to the general public.
J. In view of the foregoing, the County has determined that the
construction of the Project, pursuant to the terms of this Agreement, the
delegation of rights to operate the Facility under the Operating Agreement and
the licensing of same under the Team License are in the best interests of the
County and the welfare of its residents, and in accord with valid public
purposes.
NOW, THEREFORE, in consideration of the premises, covenants,
agreements and obligations contained herein, the parties do hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings indicated unless a different meaning is specifically
provided or unless the context otherwise requires; certain other capitalized
terms which are not defined herein shall have the meanings provided in the Team
License or the Operating Agreement (as such terms are hereinafter defined):
"Action" means any demand, assertion, claim, action or proceeding,
judicial or otherwise.
"Applicable Law" means any law, statute, ordinance, rule, regulation,
order or determination of any Governmental Authority or any board of fire
underwriters (or other body exercising similar functions), or any recorded
restrictive covenant or deed restriction affecting the Project, the Project
Land or the Project Improvements, all as in effect as of the date of this
Agreement, including, without limitation, all applicable zoning ordinances and
building codes, flood disaster laws, health laws and environmental laws and
regulations.
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"Business Day" means any day other than a Saturday, a Sunday or a
public or bank holiday or the equivalent for banks generally under the laws of
the State of Florida. Use of the word "day", as opposed to Business Day, means
calendar day.
"City" shall have the meaning set forth in Recital A hereof.
"Construction Documents" shall have the meaning set forth in Section
4.2(d) hereof.
"Construction Fund" means the Construction Fund under the Trust
Agreement, as provided for in Section 2.3(d) hereof.
"Contract" means one or more construction contracts entered into by
the Project Developer relating to the construction of the Project Improvements.
"Contractors" mean the contractors selected and engaged by the Project
Developer to construct the Project Improvements.
"County" means Broward County, Florida, its agencies, departments and
authorities, and the respective successors to any of the foregoing.
"County Bonds" means the Professional Sports Facility Tax and Revenue
Bonds, Series 1996, to be issued by the County.
"County Default" shall have the meaning set forth in Section 9.2
hereof.
"County-Furnished Materials" shall have the meaning set forth in
Section 2.6(a) hereof.
"County Project Funding" means the funding of the Project by the
County, as provided for in Section 2.3(a) hereof.
"County's Consultant" shall have the meaning set forth in Section11.1
hereof.
"County's Representative" shall have the meaning set forth in Section
11.1 hereof.
"Design Architect" means the firm(s) selected or to be selected by the
Project Developer for the design of the Project.
"Design Development Documents" shall have the meaning set forth in
Section 4.2(c) hereof.
"Facility" shall have the meaning set forth in Recital A hereof.
"Force Majeure" means acts of God (other than adverse, but non-severe,
weather conditions to the extent normally encountered in the Sunrise, Florida
area and the impacts thereof), strikes, lock-outs, acts of the public enemy,
the enactment, imposition or modification of any Applicable Law
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which occurs after the date of this Agreement and which prohibits or materially
interferes with the development or construction of the Project Improvements;
confiscation or seizure by any government or public authority, wars or war-
like action (whether actual and pending or expected, and whether de jure or de
facto), arrests or other restraints of government (civil or military, but
excluding restraints on the development or construction of the Project
Improvements occurring as a result of any violations, by the party claiming the
right to delay performance, of Applicable Law or the terms and provisions of
this Agreement), blockades, insurrections, riots, civil disturbances,
governmental restrictions, epidemics, landslides, lightning, earthquakes,
fires, hurricanes, storms, floods, wash-outs, explosions, breakage or accident
to major equipment or machinery critical to the development of the Project
and/or construction of the Project Improvements, nuclear reaction or radiation,
radioactive contamination, acts, or the failure to act, of any Governmental
Authority or any other causes, whether of the kind herein enumerated or
otherwise, which are not reasonably within the control of the party claiming
the right to delay performance on account of such occurrence and which, in any
event, are not a result of the negligence of the party claiming the right to
delay performance on account of such occurrence; provided, however, that Force
Majeure shall not include acts, events or other matters arising out of
violations of any environmental laws with respect to or the presence or
discharge of any hazardous substances on the Land (exclusive of any violation
caused by or attributable to the County or for the remediation of which the
County is responsible).
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"General Contractor" means _______________ or such other general
contractor(s) or construction manager(s) as may be selected by the Project
Developer with respect to the construction of the Project Improvements.
"Governmental Authority(ies)" means any federal, state and/or local
agency, department, commission, board, bureau, administrative or regulatory
body or other instrumentality having jurisdiction over the Project or the
Project Improvements.
"Land" shall have the meaning set forth in Recital B hereof.
"Land Acquisition and Project Development Budget" means the sum of all
costs (including, but not limited to, costs for Land acquisition,
pre-development, architecture and engineering, site-related work, construction,
Project Developer's General Requirements, Project consulting fees, furniture,
fixtures and equipment, pre-opening expenses and contingency fund) actually
incurred and estimated to be incurred to acquire the Land and to complete the
design and construction of the Project, as determined by the Project Developer
and as in effect from time to time (see Section 3.2(a)). As of the date hereof,
the Land Acquisition and Project Development Budget is One Hundred Seventy-Five
Million Seven Hundred Thousand ($175,700,000) Dollars, as set forth in Exhibit D
hereto.
"LOI" shall have the meaning set forth in Recital A hereof.
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"NHL" means the National Hockey League and any successor or substitute
association or other entity of which the Team is a member or joint owner and
which engages in professional hockey competition in a manner comparable to the
NHL.
"Operating Agreement" shall have the meaning set forth in Recital D
hereof.
"Operator" shall have the meaning set forth in Recital D hereof.
"Permits" means all permits, consents, approvals, authorizations,
variances, waivers, liens, certificates and approvals from all Governmental
Authorities, quasi-Governmental Authorities, utility companies and insurance
rating agencies which are required for the planning, design, construction,
completion, use and occupancy of the Project and the Project Improvements.
"Permitted Exceptions" shall mean the permitted exceptions to the
County's fee simple interest in the Land, as approved by the Project Developer
pursuant to Section 8.1(a).
"Person" means an individual, partnership, corporation, joint stock
company, trust (including a business trust), unincorporated association, joint
venture or any other entity, the United States, or a federal, state or
political subdivision thereof or any agency or court of such state or
subdivision.
"Private Development Site" shall have the meaning set forth in Recital
B hereof.
"Program Requirements" means the program for the design, construction
and equipping of the Project as set forth Exhibit B attached hereto, as the
same may be amended or supplemented from time to time.
"Project Architects" means, collectively, the Design Architect and the
Site Architect, and "Project Architect" means either the Design Architect or
the Site Architect, as the context may require.
"Project Developer" shall have the meaning set forth in the initial
paragraph hereof.
"Project Developer Default" shall have the meaning set forth in Section
9.1 hereof.
"Project Developer Project Funding" means the funding of the Project
by the Project Developer, as provided for in Section 2.3(e) hereof.
"Project Developer's General Requirements" means all permit and
application fees, Project management and administrative costs, bonds and
insurance, inspection fees, financial and legal consulting fees, and other
"soft" costs associated with building the Project which, in the Project
Developer's opinion, are necessary or desirable in order to execute the Work,
as set forth in the Land Acquisition and Project Development Budget.
"Project Executive" shall have the meaning set forth in Section 11.1
hereof.
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"Project Improvements" shall have the meaning set forth in Section 3.1
hereof.
"Project Manager" shall have the meaning set forth in Section 11.1
hereof.
"Project Site" shall have the meaning set forth in Recital B hereof.
"Schedule" shall have the meaning set forth in Section 12.1 hereof.
"Scheduled Completion Date" means October 1, 1998, or such later date
as may be determined by the Team.
"Schematic Design Documents" shall have the meaning set forth in
Section 4.2(b) hereof.
"Site Architect" means the firm(s) selected or to be selected by the
Project Developer for the site planning of the Project Site.
"Substantial Completion" or "Substantially Completed" means the
completion of Project Improvements to the extent that (a) the Operator and the
Team, as applicable, are legally entitled (exclusive of any impediments not
related to the Project Developer's obligations under this Agreement), to
occupy, operate and use the Project and any necessary appurtenances in
accordance with the Operating Agreement and the Team License, and the Project
Developer, the Operator and the Team, as is appropriate, have been delivered,
and there shall be in effect, the Team License and all Permits necessary for
the use, operation and occupancy of the Project, and (b) the Project Architects
deliver their certificates to the Project Developer and the County stating that
the Work has been substantially completed subject only to "punch list" type
items which (i) in no way materially interfere with the use, operation and
occupancy of, or the anticipated revenues from, the Project, and (ii) may be
completed within thirty (30) calendar days of the date of such certificates or
such longer reasonable period of time which shall be permitted by Applicable
Law or Governmental Authorities so as to preserve the Operator and the Team's
right to use, operate and occupy the Project.
"Supplemental County Project Funding" shall have the meaning set forth
in Section 2.3(f) hereof.
"Sunrise Agreement" shall have the meaning set forth in Section 2.2
hereof.
"Team" means the Florida Panthers Hockey Club, Ltd., a Florida
limited partnership, its successors and assigns, who own the NHL Franchise
rights for the Florida Panthers.
"Team License" shall have the meaning set forth in Recital E hereof.
"Trust Agreement" means the Trust Agreement referred to in Section
2.3(b) hereof.
"Trustee" means the Trustee under the Trust Agreement.
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"Work" means the Project, the Project Improvements and the Program
Requirements pertaining to the Project Improvements as reflected in the
Construction Documents, as the same shall be amended from time to time as
provided herein, and to be reflected in the Project Developer's final as-built
drawings.
1.2 Accounting Terms. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP, as consistently applied.
ARTICLE II
THE COUNTY'S RESPONSIBILITIES
2.1 Acquisition of the Land.
(a) The County represents and warrants to and covenants with the
Project Developer that (i) the County is prepared to execute a binding
agreement (the "Land Acquisition Agreement"), subject to the Project
Developer's approval, providing for the County to acquire fee simple title to
the Land at a price not in excess of the price provided in the Sunrise
Agreement; (ii) the County has provided to the Project Developer a true and
complete copy of the final form of the Land Acquisition Agreement; (iii) upon
the execution thereof, the County will provide the Project Developer with a
true and complete copy of the Land Acquisition Agreement, as executed by all
parties thereto, which shall be in the final form thereof referred to in the
previous clause (ii); (iv) the County will comply with its obligations, and
enforce the obligations of the other parties, under the Land Acquisition
Agreement; (v) the Land Acquisition Agreement will not be amended without the
prior written consent of the Project Developer; and (vi) on or before October
1, 1996, the County will take title to and beneficial ownership of the Land and
such title shall be free and clear of all liens, claims, encumbrances,
restrictions and other matters of title other than the Permitted Exceptions.
Upon its taking title to and beneficial ownership of the Land, the County shall
make the Project Site (and for staging areas and the like, during the
construction period, the balance of the Land) fully available to the Developer
for the purposes contemplated by this Agreement. Exhibit A hereto is a legal
description of the Land. Legal descriptions of the Project Site and the
Private Development Site will be set forth in an amendment to this Agreement
which the parties shall execute at such time as the site planning of the
Project Site shall have been completed.
(b) Sufficient acreage will be set aside within the Project Site
for the purposes set forth in this Agreement, including up to a maximum of
7,500 parking spaces. The actual location of the Facility and related exterior
improvements (such as marshaling and loading areas) will be specified in the
Schematic Design Documents.
(c) The Project Developer shall have the exclusive right to
develop the Private Development Site for any use approved by any governmental
agency having jurisdiction. The County
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and the Project Developer's rights and obligations with respect to the use and
development of the Private Development Site by the Project Developer will be
set forth in an agreement to be negotiated in good faith by the County and the
Project Developer. The Private Development Site is not included in the
Facility. The County will assist and cooperate with the Project Developer in
obtaining maximum development rights for the Private Development Site. The
cost of permitting and developing the Private Development Site, if any, will
not be paid for by the County.
2.2 Remediation of the Land. The County shall cause the Land to
be free of all Hazardous Materials (as defined in that certain Letter of
Agreement dated April 13, 1996, among the Team, the County and the City (the
"Sunrise Agreement")) and shall diligently enforce all its rights against the
City with respect to Hazardous Materials and otherwise, as set forth in the
Sunrise Agreement. The County's obligations to cause the Land to be free of
all Hazardous Materials shall not be affected by any failure to enforce, or any
unsuccessful attempt to enforce, such rights against the City. Costs incurred
by the County to fulfill its obligations under this Section 2.2. shall be paid
from the Contingent County Project Funding and are not included in the Land
Acquisition and Project Development Budget. As used herein, "free of all
Hazardous Materials" means the removal, clean-up, treatment, isolation or
encapsulation of all such Hazardous Materials in accordance with all Applicable
Laws.
2.3 Funding the Project.
(a) The County will fund or cause to be funded the costs
of acquiring the Land and designing, developing and constructing the Project
and the Project Improvements in an amount not to exceed $175,700,000 (the
"Fixed County Project Funding"), as set forth in the Land Acquisition and
Project Development Budget and the applicable provisions of this Agreement. In
addition, the County will fund known and unknown and unforeseen geo-technical
and environmental contamination costs (the "Contingent County Project Funding";
together with the Fixed County Project Funding, the "County Project Funding")
and, if applicable, the Supplemental County Project Funding. The County's
obligations with respect to the Contingent County Project Funding shall not
include the funding of costs encountered as a result of unknown or concealed
site conditions which are of a usual nature and do not differ materially from
those ordinarily encountered and generally recognized as inherent in
construction activities of the character contemplated hereby.
(b) In order to provide the Fixed County Project Funding,
the County agrees to issue the County Bonds, in one or more series, the face
amount of which in the aggregate shall not exceed $185,000,000. The County
Bonds will be secured by the tourist development taxes referred to in Section
13.2.7, the state sales tax rebates referred to in Section 13.2.8, the County
Preferred Revenue Allocation (as defined in the Operating Agreement) and the
covenant of the County to budget and appropriate from other legally available
funds, as provided in a Trust Agreement (the "Trust Agreement") and in such
additional manner as is determined by the County in consultation with the
Project Developer and the Team. The County will issue the County Bonds no
later than September 15, 1996. The final maturity of the County Bonds will be
not later than six months following the initial License Expiration Date (as
defined in the Team License). The parties hereby
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agree to the Plan of Finance set forth in Exhibit C hereto. The provisions of
such Plan of Finance shall survive the termination of this Agreement.
(c) If the County does not otherwise pay or reimburse all
amounts incurred in respect of the Contingent County Project Funding, the
County covenants to budget and appropriate funds sufficient to fund all such
amounts.
(d) The County will deposit the Fixed County Project
Funding and all amounts required to fund the Contingent County Project Funding
in the Construction Fund established in the Trust Agreement (the "Construction
Fund"), and the Trustee will disburse all such funds from the Construction Fund
in accordance with the provisions of the Trust Agreement and Article VI hereof.
(e) Subject to the provisions of this Agreement, the
Project Developer will fund all costs of acquiring the Land and developing the
Project in excess of the County Project Funding ("Project Developer Project
Funding"). The Team will guaranty the obligations of the Project Developer in
respect of the Project Developer Project Funding pursuant to the Substantial
Completion Guaranty Agreement in the form of Exhibit E hereto.
(f) At the option of the Project Developer, in the event
the actual costs incurred to acquire the Land and permit, design, construct and
equip the Project and the Project Improvements shall exceed $175,700,000 (plus
the amount of the Contingent County Project Funding), the County shall issue
additional taxable bonds in such original face amount as will provide proceeds
equal to such excess costs up to a maximum face amount equal to 10% of the face
amount of the County Bonds. Such proceeds (the "Supplemental County Project
Funding") shall be deposited in the Construction Fund (or in a fund equivalent
thereto, if a separate trust agreement is used with respect to such additional
taxable bonds) to be used for the payment of such additional costs in
accordance with the provisions of this Agreement. The County's obligation to
issue such additional debt is conditioned upon the Team's obligation to pay
supplemental rent, in accordance with Section 3.6 of the Team License, equal to
the debt service on such additional debt over the License Term remaining at the
time of issuance of such additional debt.
2.4 Traffic Mitigation. The County hereby agrees to use its best
efforts, in conjunction with the State of Florida Department of Transportation
and the City, to mitigate any traffic related issues, so that ingress and
egress projections by the County's traffic engineers and other transportation
consultants are not in excess of the capacity of the roadways and other
transportation modes leading to and from the Project Site. For purposes
hereof, such "best efforts" means, without limitation, that the County shall
(i) contract for or cause to be contracted for a professional traffic
engineering study to assess traffic impacts of the Facility and recommend
roadway improvements for mitigation and (ii) pursue implementation by the City,
the County or the State of Florida Department of Transportation of the
recommended improvements from appropriate funding sources other than general
revenues of the County.
2.5 Pre-Development Costs. Prior to the issuance of the County
Bonds, the County and the Project Developer will incur obligations for
pre-development costs as set forth in the Land
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Acquisition and Project Development Budget. Amounts so advanced to pay such
obligations will be reimbursed from Project funds to the party advancing them.
2.6 Acquisition of Construction Materials.
(a) The County reserves the right to require Project
Developer to assign some or all of its agreements with material suppliers
directly to the County. Any materials purchased by the County pursuant to such
an assignment of a material supply agreement shall be referred to as
"County-Furnished Materials" and the responsibilities of both the County and
the Project Developer relating to such County-Furnished Materials shall be
governed by the terms and conditions of this Section 2.6, which shall take
precedence over other conditions and terms of this Agreement where
inconsistencies or conflicts exist.
(b) From time to time, the Project Developer shall
provide, or cause the General Contractor to provide, the County a list of all
intended suppliers, vendors, and materialmen for consideration as suppliers of
County-Purchased Materials, a description of the materials to be supplied,
estimated quantities and price quotes from the vendors.
(c) Upon request from the County, and in a timely manner,
the Project Developer shall prepare, or cause the General Contractor to
prepare, a purchasing requisition request form ("Purchasing Requisition Request
Form") which shall, in form and detail acceptable to County, specifically
identify the materials which County may, in its discretion, elect to purchase
directly and the vendors and suppliers thereof. The Purchasing Requisition
Request Form shall include: (i) the name, address, telephone number and
contact person for the material supplier; (ii) manufacturer or brand, model or
specification number of the item; (iii) quantity needed as estimated by the
General Contractor; (iv) the price quoted by the supplier for the materials
identified therein; (v) any sales taxes associated with such quote; (vi)
shipping and handling insurance cost; (vii) 100% performance bond cost; (viii)
delivery dates as established by the General Contractor; (ix) any reduction in
the General Contractor's cost for both the payment bond and the performance
bond; and (x) detail concerning bonds or letters of credit provided by the
supplier if included in his proposal.
The Purchasing Requisition Request Form shall include copies
of vendors' quotations, and specifically reference any terms and conditions
which have been negotiated with the vendors concerning letters of credit,
terms, discounts, or special payments.
(d) After receipt of a Purchasing Requisition Request
Form, the County shall prepare a purchase order (a "Purchase Order") for each
item of material which the County chooses to purchase directly. Pursuant to
the Purchase Order, the vendor will provide the required quantities of material
at the price established in the vendor's quote to the General Contractor, less
any sales tax associated with such price. Each Purchase Order shall contain
the County's consumer certificate of exemption number. Promptly upon receipt
of each Purchase Order, the Project Developer shall implement, or cause the
General Contractor to implement, a procedure for the purchase of the items in
accordance with the terms of the Purchase Order and in a manner to assure
timely delivery of such items. The County's Representative shall be the
approving authority for the County on Purchase
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Orders in conjunction with County-Furnished Materials. The Purchase Order
shall also provide for reimbursement of the cost to the supplier for providing
required shipping and handling insurance and for providing a performance bond
from the supplier to the County for the full value of the Purchase Order,
unless such insurance and bonding requirements were included in the quote
provided by the supplier to the Project Developer. The Purchase Order shall
also require the delivery of the County-Furnished Materials on the delivery
dates provided in the Purchasing Requisition Request Form.
(e) Except as otherwise provided in Section 2.6(d), the
Project Developer shall be fully responsible for all matters relating to the
procurement of materials furnished by the County in accordance with this
Section 2.6, including, but not limited to, assuring the correct quantities,
placing the order in a timely manner, assuring coordination of purchases,
providing and obtaining all warranties and guaranties required by the
Construction Documents and inspection and acceptance of the goods at the time
of delivery. The Project Developer shall coordinate, or cause the General
Contractor to coordinate, delivery schedules, sequence of delivery, loading
orientation, and other arrangements normally required by the General Contractor
for the particular materials furnished. The Project Developer shall cause the
General Contractor to provide all services required for the unloading, handling
and storage of materials through installation.
(f) The Project Developer shall cause the General
Contractor to visually inspect all shipments from the suppliers and approve the
vendor's invoice for material delivered, as County-Furnished Materials are
delivered to the jobsite. The General Contractor shall be required to assure
that each delivery of County-Furnished Materials is accompanied by
documentation adequate to identify the Purchase Order against which the
purchase is made. This documentation may consist of a delivery ticket and an
invoice from the supplier conforming to the Purchase Order together with such
additional information as the County may require. The Project Developer shall
require the General Contractor to then forward the invoice to the County for
payment.
(g) The General Contractor shall be required to determine
that County-Furnished Materials conform to the Construction Documents and
determine prior to incorporation into the Work if such materials are patently
defective, and whether such materials are identical to the materials ordered
and match the description on the bill of lading. If the General Contractor
discovers defects or non-conformities in County-Furnished Materials upon such
visual inspection, such nonconforming or defective materials shall not be used
in the Work, and instead, the Project Developer shall promptly notify the
County of the defective or nonconforming condition so that repair or
replacement of those materials can occur without any undue delay or
interruption to the Project. If the Project Developer fails to require the
General Contractor to perform such inspection, or the General Contractor
otherwise incorporates into the Work such defective or nonconforming
County-Furnished Materials, the condition of which it either knew or should
have known by performance of an inspection, the County shall not be responsible
for damages to the Project Developer resulting from the General Contractor's
incorporation of such materials into the Project.
(h) The General Contractor shall be required to maintain
records of all County-Furnished Materials it incorporates into the Work from
the stock of County-Furnished Materials in its possession. The General
Contractor shall account monthly to the County for any County-
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Furnished Materials delivered into the General Contractor's possession,
indicating portions of all such materials which have been incorporated into the
Work.
(i) The General Contractor shall be responsible for
obtaining and managing all warranties and guaranties for all materials and
products as required by the Construction Documents. All repair, maintenance or
damage-repair calls shall be forwarded to the General Contractor for
resolution with the appropriate supplier, vendor, or subcontractor.
(j) Notwithstanding the transfer of County-Furnished
Materials by the County to the General Contractor's possession, the County
shall retain legal and equitable title to any and all County-Furnished
Materials.
(k) The transfer of possession of County-Furnished
Materials from the County to the General Contractor shall constitute a bailment
for the mutual benefit of the County and the General Contractor. The County
shall be considered the bailor and the General Contractor the bailee of the
County-Furnished Materials. County-Furnished Materials shall be considered
returned to the County for purposes of their bailment at such time as they are
incorporated into the Project or consumed in the process of completing the
Project.
(l) The County shall purchase and maintain insurance
sufficient to protect against any loss of or damage to County-Furnished
Materials. Such insurance shall cover the replacement cost of any
County-Furnished Materials not yet incorporated into the Project during the
period between the time the County first takes title to any of such
County-Furnished Materials and the time when the last of such County-Furnished
Materials is incorporated into the Project or consumed in the process of
completing the Project.
(m) The County shall in no way be liable for any
interruption or delay in the Project, for any defects or other problems with
the Project, or for any extra costs resulting from any delay in the delivery
of, or defects in, County-Furnished Materials, except in the event of the
County's gross negligence or willful misconduct.
(n) On a monthly basis, the General Contractor shall be
required to review invoices submitted by all suppliers of County-Furnished
Materials delivered to the Project Site during that month and either concur or
object to the County's issuance of payment to the suppliers, based upon the
General Contractor's records of materials delivered to the Project Site and any
defects detected in such materials.
(o) In order to arrange for the prompt payment to the
supplier, the Project Developer shall cause the General Contractor to provide
to the County a requisition for payment within 15 days from receipt and
acceptance of the goods or materials. The requisition shall include a copy of
the applicable Purchase Order, invoices, delivery tickets, written acceptance
of the delivered items, and such other documentation as may be reasonably
required by the County. Upon receipt of the appropriate documentation, the
County shall cause the Trustee, as part of the periodic draw process to be set
forth in the Trust Agreement, to prepare a check drawn from the Construction
Fund
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to the supplier based upon the requisition data provided. This check will be
released, delivered and remitted directly to the supplier.
2.7 Permits. (a) The parties contemplate that the permits listed
in Exhibit G hereto may be required from Governmental Authorities and
quasi-Governmental Authorities in connection with the design, planning,
construction, completion, use and occupancy of the Project and the Project
Improvements.
(b) The County, as owner, shall act as applicant or
co-applicant, and shall diligently facilitate and expedite all actions
necessary in order to obtain the permits listed in Part One of Exhibit G so as
to permit the undelayed commencement of construction of the Project and
occupancy by the Team. In support of such applications, the Project Developer
shall timely engage appropriate consultants mutually approved by the County and
the Project Developer and timely shall furnish information required by the
County, and otherwise timely cooperate with, the County in connection with
obtaining such permits. The County shall submit its information requirements
to the Project Developer, or its consultants, sufficiently in advance so that
the Project Developer, or its consultants, may furnish the information required
for permitting on a timely basis. All applications and other documents to be
submitted by the County in connection with such permits shall be subject to the
Project Developer's approval, which shall not be unreasonably withheld and
shall be provided within three (3) Business Days after the County submits the
completed application and other documents, as applicable, to the Project
Developer. Failure by the Project Developer to disapprove, within such time
period, any item submitted for approval shall be deemed to be approval thereof.
The County shall furnish copies (or originals if required by Applicable Laws)
of all such permits to the Project Developer. The County shall keep the
Project Developer fully apprised of the status of processing such permits.
(c) The Project Developer shall diligently pursue,
facilitate and expedite all actions necessary in order to obtain the permits
listed in Part Two of Exhibit G and all other permits, provided that the County
shall furnish information required by the Project Developer, and otherwise
cooperate with, the Project Developer in order for the Project Developer to
obtain all such Permits in the most expeditious fashion. If requested, the
County shall be furnished copies of all such Permits and of all applications
and other documents to be submitted by or on behalf of the Project Developer in
connection with such Permits. The Project Developer shall keep the County
fully apprised of the status of processing such Permits.
2.8 Additional Obligations of the County. The County shall fully
cooperate with the Project Developer in the development of the Project.
Without limiting the County's obligations hereunder, and in addition to its
obligations set forth elsewhere in this Agreement, the County, acting through
the County's Representative or the County's Consultant, as provided in Article
XI hereof, shall:
(a) promptly respond to all requests for approval,
consent, review or comment submitted by or on behalf of the Project Developer;
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(b) promptly furnish to the Project Developer and the
Team, upon receipt by the County, copies of any and all legal notices received
by the County affecting the Project, including, without limitation, notices
from Governmental Authorities, notices from any party claiming any default in
any financing or payment obligation, and any other notice not of a routine
nature;
(c) promptly notify the Project Developer and the Team of
any suit, proceeding or action that is initiated or threatened in connection
with the Project or against the Project Developer or the County in connection
with the Project;
(d) procure and maintain, with responsible companies
reasonably acceptable to the Project Developer, the insurance coverage set
forth in Part Three of Exhibit H. Such insurance shall name the Project
Developer, the Operator and the Team as additional named insureds as their
interests may appear. Such insurance shall include waivers by the respective
insurance carriers of any and all rights of subrogation against the Project
Developer, the Operator, or the Team, and the County shall promptly provide
the Project Developer with certificates evidencing such insurance; and
(e) provide the Project Developer not less than seven
Business Days' prior written notice of the date of sale of the County Bonds.
ARTICLE III
THE PROJECT DEVELOPER'S RESPONSIBILITIES
3.1 Design and Construction Obligation.
(a) Provided that the County shall have performed its
covenants, and not breached its representations and warranties, set forth in
Article II and Section 13.2 hereof, the Project Developer hereby undertakes and
assumes sole and exclusive responsibility to cause and obtain the permitting,
design and construction of all improvements comprising the Project (the
"Project Improvements") in accordance with the Program Requirements and the
Construction Documents, to cause Substantial Completion of the same to occur on
or before the Scheduled Completion Date, as the same may be extended pursuant
to the provisions of this Agreement, and to equip the Facility in accordance
with the Program Requirements and as contemplated by the Team License.
Provided that the Trustee shall perform its obligations set forth in the Trust
Agreement, all costs, expenses and expenditures in connection with the design
and construction of the Project Improvements, including, without limitation,
the amounts owing to the Design Architect, and/or other architectural,
engineering or other design consultants, and to the General Contractor,
Contractors, or other contractors, subcontractors, suppliers, consultants or
otherwise for supervision, transportation, labor, materials or Permits or other
matters in connection with the Project and the Project Improvements, shall be
paid by the Project Developer from the Construction Fund pursuant to the Land
Acquisition and Project Development Budget.
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(b) The Project Developer shall manage and direct the
permitting, design and construction of the Work, and shall coordinate the work
of all Persons involved therein. The Project Developer shall meet with the
County's Consultant, the Project Architects, Contractors, General Contractor
and other Persons providing design or construction services on a regular and
frequent basis and as specifically provided herein in order to assure the
performance of the Work in accordance with the terms of this Agreement. To the
extent the Project Developer has, obtains, or retains rights under any Contract
pertaining to the Work, the Project Developer will exercise such rights in
accordance with all approval and consent provisions provided to the County and
the Team in this Agreement. Notwithstanding anything to the contrary set forth
herein, the parties agree that in performing its obligations pursuant to this
Agreement, the Project Developer shall not be acting as a contractor, within
the meaning of Chapter 489, Florida Statutes, and that the Project Developer
shall cause all services to be performed hereunder which, by reason of such
Chapter, must be performed by contractors, as so defined, to be performed by
properly licensed Persons.
3.2 Services to be Performed by the Project Developer. The
Project Developer shall cause the Project and the Project Improvements to be
designed and constructed in an orderly, expeditious and efficient manner in
accordance with the Applicable Laws, the Schedule and the Construction
Documents. Without limiting the Project Developer's obligations hereunder, the
Project Developer shall:
(a) on a monthly basis, prepare and submit to the County,
for informational purposes only, updates to the Land Acquisition and
Project Development Budget, which shall include updated estimates of
the cost of the Project and anticipated dates when funds will be
required to pay the County Project Funding and, if applicable, the
Project Developer Project Funding;
(b) prepare and submit to the County, for informational
purposes only, the Schedule, and thereafter update the Schedule on a
monthly basis;
(c) retain the services of the Project Architects and
consultants and coordinate the design of the Project as more
specifically set forth in Article IV hereof;
(d) direct, coordinate and supervise the preparation of
all submissions necessary in connection with the Permits to be
obtained by the Project Developer and negotiate with and act as
liaison to the Governmental Authorities in connection with obtaining
such Permits. The Project Developer shall obtain and provide to the
appropriate Governmental Authorities all drawings, documents,
information, consents and such other items necessary to secure the
Permits for which the Project Developer is responsible. All
applications and other documents submitted by or on behalf of the
Project Developer in connection with the Permits shall be available
for review by the County and the Team both prior to and after
submission to the Governmental Authorities. The Project Developer
shall keep the County and the Team fully apprised of the status of
processing the Permits;
(e) cause the construction services specified in Article
V hereof to be performed;
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(f) negotiate, procure and retain the services of the
General Contractor, who shall, among other things, execute the
construction of the Project Improvements, or, in the case of a
construction manager, manage, supervise and direct construction
activities related to the Work;
(g) investigate, hire, contract with, train, pay,
supervise and, when necessary, discharge the personnel reasonably
required to be employed or engaged by the Project Developer in order to
properly perform the Work. Such personnel shall in every instance be
deemed independent contractors, agents or employees, as the case may
be, of the Project Developer and not of the County, and all matters
pertaining to the employment, engagement, supervision, compensation,
promotion and discharge of such independent contractors, agents or
employees shall be the sole responsibility of the Project Developer.
All salaries, wages, commissions and other compensation or expense of
personnel employed by the Project Developer hereunder, including
so-called fringe benefits, medical and health insurance, pension plans,
social security, taxes, workers' compensation insurance and all other
expenses of the Project Developer are and shall be the responsibility
of and paid by the Project Developer from the Construction Fund
pursuant to the Land Acquisition and Project Development Budget. The
Project Developer shall use reasonable efforts to cause all personnel
used by the Project Developer, the Design Architect, the Project Site
Architect, General Contractor and any Contractor in the performance of
the design and/or construction of the Project Improvements to be
qualified by training and experience to perform their assigned tasks;
(h) procure and maintain, and require the General
Contractor, Project Architects, Contractors and other Persons
performing design and construction of the Work to procure and maintain,
with responsible companies reasonably acceptable to the County,
insurance coverage as set forth in Part One of Exhibit H. Such
insurance shall in any event name the Operator, the Team and the County
as additional named insureds, as their interests may appear. Such
insurance shall include waivers by the respective insurance carriers of
any and all rights of subrogation against the Project Developer, the
Operator, the Team, or the County, and the Project Developer shall
promptly provide the County with certificates evidencing such
insurance;
(i) at all times prior to the License Commencement Date
(as defined in the Team License), use its best efforts to investigate
and make a full timely written report to the insurance carriers as to
any accident at the Project, claim for damages relating to the design
and/or construction of the Project, and damage to or destruction of
the Project (and the estimated cost of repair thereof), and prepare
and file any and all reports required by any insurance carriers in
connection therewith;
(j) provided that the Trustee is obligated to make
disbursements for amounts due and payable as costs and expenses of the
Work under the Trust Agreement and that the disbursement procedures
set forth in the Trust Agreement are reasonably acceptable to the
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Project Developer, cause such disbursements to be made regularly and
punctually by the Trustee pursuant to the requisition procedure
established in the Trust Agreement;
(k) maintain at its regular business office separate,
true and proper books, records, accounts, journals and files regarding
its business transactions and the design and construction of the
Project Improvements, containing Contracts, agreements, all design
documents (including, without limitation, the Construction Documents),
shop drawings, change orders, applications for payment, Permits,
rental agreements and records, insurance policies, correspondence,
receipts, bills and vouchers, and all other documents and papers
pertaining to the Project and/or the design and construction thereof,
all of which shall be available for review by the County (and a copy
of any such items shall be provided to the Team, if requested);
(l) at all times prior to the License Commencement Date
(as defined in the Team License), take such action as may be necessary
to comply with any and all Applicable Laws, to the extent that such
Applicable Laws are susceptible of being complied with by the Project
Developer or Persons under its control;
(m) promptly furnish to the County and the Team, upon
receipt by the Project Developer, copies of any and all legal notices
received by the Project Developer affecting the Project, including,
without limitation, notices from Governmental Authorities and all
notices from any party claiming any default in any financing or
payment obligation, and any other notice not of a routine nature;
(n) promptly notify the County and the Team of any suit,
proceeding or action that is initiated or threatened in connection
with the Project or against the Project Developer or the County in
connection with the Project;
(o) provide from the Construction Fund pursuant to the
Land Acquisition and Project Development Budget field office space,
equipment, furniture and related items at the Project site during
construction sufficient for use by the County's Consultant;
(p) provide from the Construction Fund sufficient
resources for the Operator to execute a pre-opening plan as shall be
approved by the Project Developer, the Operator and the Team;
(q) provide the County and the Team with an original and
one (1) sepia print of as-built drawings substantially reflecting and
depicting the Project Improvements as constructed and indicating the
changes in and deviations from the Construction Documents. The
as-built drawings may be an assembled set prepared by the various
Contractors, provided such have been coordinated, reviewed, organized
and compiled into a single set of as-built drawings by the Design
Architect suitable for use by the County; and
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(r) cooperate with the County in causing specified goals
for construction hiring to be met, as provided in the SBDE Plan
attached hereto as Exhibit F; use good faith efforts to provide that
minority and female Contractors and subcontractors have the maximum
practicable opportunity to compete for contract work in accordance
with the SBDE Plan; and use good faith efforts to hire qualified
workers from within the County.
In lieu of performing such obligations itself, the Project Developer may cause
one or more of them to be performed by another Person.
ARTICLE IV
DESIGN OF THE PROJECT
4.1 Design Consultants. The Project Developer shall select the
Design Architect. The Project Developer shall consult with the County with
respect to such selection, but the Project Developer shall have the sole right
to select the Design Architect. The Project Developer shall negotiate and
execute the contract between the Project Developer and the Design Architect.
The Project Developer shall provide a copy of such contract and all amendments
thereto to the County's Consultant for its review and comment. The Project
Developer shall deliver to the County's Consultant, for informational purposes
only, a copy of all other contracts with consultants.
4.2 Development of Design Documents.
(a) Attached hereto as Exhibit B is a general description of the
contemplated Project Improvements (the "Program Requirements"). The Project
Developer acknowledges that such Program Requirements may not be withdrawn nor
may the scope and/or quality of work set forth therein be reduced without the
approval (i) of the Team and (ii) if such reduction would materially adversely
affect (y) the revenue-generating capacity of the Project Improvements or (z)
the Program Requirements, the County's Consultant. Within the times set forth
in the Schedule referred to in Section 3.2(b) and further described in Article
XIII hereof, the Project Developer shall cause the Project Architects to
prepare and deliver, to the County and to the Team, Schematic Design Documents,
Design Development Documents and Construction Documents as described herein.
(b) The Project Developer shall cause the Project Architects to
timely prepare and deliver to the County's Consultant, for its review and
approval in accordance with Sections 4.2(g) and 4.2(a), to the extent
applicable, and to the Team, for its review and approval, schematic design
documents for the Project Improvements, including, but not limited to, site
plans, floor plans, elevations, sections and outline specifications (the
"Schematic Design Documents") and amendments and supplements to the Program
Requirements. The Schematic Design Documents shall be based on the Program
Requirements.
(c) The Project Developer shall cause the Project Architects to
timely prepare and deliver to the County and the Team, but in no event later
than the date set forth in the Schedule unless
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otherwise agreed to in writing by the Team, for informational purposes only as
to the County and for the review and approval of the Team, development
documents for the Project Improvements, including, but not limited to, site
plans, floor plans, elevations, enlarged floor plans, miscellaneous details and
updated outline specifications (the "Design Development Documents"). The
Design Development Documents shall be based upon the approved Schematic Design
Documents and the Program Requirements.
(d) The Project Developer shall cause the Project Architects to
timely prepare and deliver to the County and the Team, but in no event later
than the date set forth in the Schedule unless otherwise agreed to in writing by
the Team, for informational purposes only as to the County and for the review
and approval of the Team, complete construction documents, including
Construction Documents, drawings and specifications setting forth in detail all
requirements for the construction of the Project (the "Construction Documents").
The Construction Documents shall be based upon the approved Design Development
Documents and, to the extent the Construction Documents include matters which
were not the subject of the approved Design Development Documents, the Program
Requirements.
(e) During the design process, the Project Developer shall
establish, and update as necessary, the Schedule setting forth the dates for
delivery of the various design documents and for the review and approvals
thereof, durations of design phases and dates for required submittals and bid
packages, and of all design meetings with the Project Architects, coordinated
with the requirements of the Schedule, and shall deliver a copy of the Schedule
and updates thereof to the County's Consultant and the Team sufficiently in
advance to afford the County's Consultant and the Team an opportunity to review
the Schedule and to attend and participate in such meetings. The County's
Consultant and the Team shall review the documents prepared by the Project
Architects to the date of each design meeting and confer with the Project
Developer and the Project Architects regarding progress. The Project Developer
shall prepare, or cause the Project Architects to prepare, minutes of each
design meeting reflecting the decisions made, Team approvals given and
objections raised at the meeting, and shall use its best efforts to accomplish
distribution thereof to the County's Consultant, the Team and others in
attendance within seven (7) days after each meeting. Such minutes shall be
reviewed, amended if necessary, and approved at the next design meeting
following the distribution thereof.
(f) No change from a previously approved design concept shall be
permitted unless the Team agrees to the change and, if the County's Consultant's
approval is required pursuant to Section 4.2(a) or Section 4.2(g), the County
agrees to the change.
(g) Notwithstanding anything to the contrary set forth herein, the
Project Developer shall retain control of the Project design process and all
aspects of the design and specifications of the Project other than conceptual
approval by the County's Consultant of the exterior design and finishes of the
Project Improvements. As to matters regarding the exterior design and finishes
of the Project Improvements, the County's Consultant's approval shall not be
unreasonably withheld or delayed.
4.3 Design Standards.
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It is the purpose of this Article IV to cause the Construction
Documents to comply with the requirements of the Program Requirements and to
produce a facility which meets the "Quality Arena Standard" set forth in the
Team License.
4.4 The County's Consultant's Review and Approval. (a) Any
matters which are to be submitted to the County's Consultant for the County's
Consultant's approval or consent shall be submitted to the County's Consultant
under cover of a review request which shall state when the Project Developer
wishes to have the County's Consultant's response. As to "routine matters"
(i.e., any matters described in clause (ii) of the second sentence of Section
4.2(a)), the County's Consultant will respond as soon as possible, but in no
event later than five (5) Business Days after receiving the request and
supporting information. As to matters other than routine matters, the County's
Consultant will respond as soon as possible, but in no event later than ten
(10) days. If information which the County's Consultant reasonably deems
necessary to fully accomplish its review of the matter in question is not
provided to the County's Consultant, the applicable review period shall not
commence until such information has been furnished to and received by the
County's Consultant. During the course of such review, the Project Developer
and the County's Consultant shall proceed in good faith and the Project
Developer shall make available to the County's Consultant such Persons involved
in either the preparation of the subject drawings and documents or the
construction of the Project Improvements described therein as the County's
Consultant shall reasonably request for the purpose of consultation and
explanation of the subject drawings and documents. On or before the expiration
of the review period, the County's Consultant shall prepare and submit to the
Project Developer in writing any comments, suggestions, modifications or
objections it may have to the subject drawings and documents. Except as
otherwise expressly provided in this Agreement, the approval of the County or
the County's Consultant as to any matter requiring the approval of the County
or the County's Consultant pursuant to this Agreement, shall not be
unreasonably withheld, and failure by County or the County's Consultant to
disapprove, within the time period specified herein, any item submitted for
approval shall be deemed to be approval thereof.
(b) All construction documents, plans, specifications,
drawings, models, samples and the like submitted to the County pursuant to this
Agreement are for informational purposes only, except (i) as otherwise
expressly provided herein and (ii) as submitted to the County for regulatory or
permitting purposes.
4.5 Use of Plans. The County shall not use the construction
documents, plans, specifications, drawings, models, samples and the like
produced or developed in connection with the design and construction of the
Project and the Project Improvements for any purpose other than as contemplated
by this Agreement.
ARTICLE V
CONSTRUCTION OF THE PROJECT
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5.1 Duties of the Project Developer. The Project Developer shall
cause the General Contractor diligently to pursue and prosecute to completion,
in accordance with the Schedule and the Construction Documents, the
construction of the Project Improvements and shall, subject to Force Majeure
and adjustments permitted by the terms of this Agreement, cause Substantial
Completion to occur on or before the Scheduled Completion Date. The Project
Developer shall select the General Contractor. The Project Developer shall
consult with the County with respect to such selection, but the Project
Developer shall have the sole right to select the General Contractor. The
Project Developer shall negotiate and execute the contract between the Project
Developer and the General Contractor, which contract may be a guaranteed
maximum price construction contract, which may include appropriate incentives
for early completion and/or budget savings and appropriate penalties for late
delivery and/or budget overruns, or such other form of contract as the Project
Developer deems appropriate (the "Construction Contract"). The Project
Developer shall provide a copy of such contract and all amendments thereto to
the County for informational purposes only. The Project Developer shall or
shall cause the General Contractor to prepare, negotiate and enter into bid
packages or agreements or otherwise retain the services of the Contractors and
such other contractor(s) and/or subcontractor(s) as are necessary or desirable
to perform the Work, as the Project Developer or the General Contractor shall
determine. Upon the execution of such Contracts and agreements, the Project
Developer shall provide copies thereof to the County's Consultant. Except as
otherwise provided herein, amounts owing under Contracts and other such
agreements, including costs, fees and expenses of Contractors and other
contractor(s) and/or subcontractor(s) retained by the Project Developer or the
General Contractor on behalf of the Project Developer in connection with the
construction of the Project, shall be the responsibility of the Project
Developer from the Construction Fund and not of the County. The Project
Developer shall require that the Contractors and others performing the Work
obtain the Permits, bonds and insurance required by this Agreement and the
Contracts to be obtained by them and shall provide the County's Consultants and
the Team with copies of such Permits and bonds and of the certificates
evidencing such insurance coverage.
5.2 Cost Savings. In the event that the final cost of acquiring
the Land and developing the Project as contemplated by this Agreement is less
than $175,700,000, such difference shall be applied in accordance with the Plan
of Finance.
5.3 Financial Information. The Project Developer shall deliver to
the County any and all financial information relating to the costs of the Work
which is reasonably requested by the County.
5.4 Supervision of Construction. The Project Developer shall
cause the General Contractor to supervise and coordinate the construction of
the Project Improvements so that the Project is constructed, equipped,
furnished and completed in a good and workmanlike manner and in accordance with
the terms of this Agreement. Except as otherwise provided in this Agreement,
the Project Developer shall be responsible for the payment from the
Construction Fund of all costs and expenses incurred in connection with the
construction of the Project Improvements. The Project Developer shall enforce
substantial compliance with the terms of the agreements with the Project
Architects, General Contractor, Contractors and other contractors,
subcontractors and/or design professionals and require their performance
substantially in accordance therewith. The Project
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Developer shall administer the contracts for the design and construction of the
Project Improvements and require that work be continuously and diligently
performed in order to achieve Substantial Completion on or before the Scheduled
Completion Date, as the same may be adjusted pursuant to the terms hereof.
Without limiting the foregoing, the Project Developer shall or shall cause the
General Contractor to:
(a) coordinate the Work as it progresses and the
inspections of the Project Improvements by consultants, review
inspection reports, schedule and conduct preconstruction and
construction meetings, implement courses of action when requirements
of Contracts or other agreements for the design or construction of the
Project Improvements are not being fulfilled, and review and revise
estimates of construction costs;
(b) negotiate or prepare bid packages for any portion of
the Work necessary for the award of Contracts and other agreements as
set forth herein, coordinate selections and procedures therefor and
maintain harmonious labor relations;
(c) review all applications for payment and supporting
documentation prepared by Contractors and others performing work or
furnishing materials for the Project Improvements and provide the
Project Developer and the Trustee with evidence of such payments;
(d) negotiate final payments and/or final settlements
with all parties involved in the construction of the Project
Improvements. The Project Developer shall commence, defend and settle
in good faith such legal actions and proceedings concerning the design
and construction of the Project Improvements (other than defense of
the County in legal actions or proceedings in which the County is a
defendant, which defense shall be assumed by the County Attorney) as
are necessary or required in the opinion of the Project Developer and
retain counsel in connection therewith. If any claims or liens are
filed with respect to the Project, take such action as is necessary to
cause the release and removal thereof;
(e) cause any defects in the construction of the Project
Improvements or in the installation or operation of any equipment or
fixtures therein to be corrected during construction and applicable
warranty periods;
(f) hold weekly job meetings with all job-site personnel,
including contractors and subcontractors and the Project Architects,
as appropriate and necessary, during the construction of the Project
to review the progress of development of the Project and completion of
the Project Improvements. The County's Consultant shall be given
notice of and permitted to attend such meetings and any other meeting
involving all or some of such parties. If requested by the Project
Developer, the County's Consultant shall confer with the Project
Developer regarding the need or appropriateness of the County's
Consultant's attendance at a particular meeting; however, the
foregoing shall not obligate the County's Consultant to attend nor
prevent the County's Consultant from attending any such meeting(s).
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The Project Developer shall cause copies of minutes of any and all
such meetings to be prepared and delivered to the participants and the
County's Consultant;
(g) advise the County and the Team of any delays or
anticipated delays in meeting the Schedule and of the actual dates on
which the various stages and construction indicated on the Schedule
are started and completed;
(h) if construction of the Project Improvements does not
progress in accordance with the dates required by the Schedule, as it
may be adjusted pursuant to the terms of this Agreement, or if it is
unlikely that such dates will be met based on the then progress of the
Work, the Project Developer may cause an acceleration of the Work by
all available means including utilization of overtime, additional work
crews and alternate material suppliers;
(i) cooperate with the Operator and the Team and require
the General Contractor and Project Architects to cooperate with the
Operator and the Team in the turnover of the Project to the Operator
and the Team for the use, occupancy and operation thereof, and
facilitate the orderly transition from construction to such use,
occupancy and operation (including, without limitation, delivery of
all maintenance manuals, warranties and the like); and
(j) supervise and coordinate the completion of "punch list"
items and warranty work following Substantial Completion.
5.5 Correction of Work. If during construction, the Project
Developer or the Project Architects reasonably determine that construction is
not proceeding in accordance with the Construction Documents as they may be
modified as permitted under this Agreement, the Project Developer shall cause
any such nonconforming work to be re-executed by the party responsible therefor
at no expense to the County and without adjustment to the Land Acquisition and
Project Development Budget or Schedule. If, however, the Project Developer
determines it to be inexpedient to require the correction of such work, an
equitable deduction under the applicable Contract or other remedy acceptable to
the Team may be pursued.
5.6 Construction Change Orders.
(a) The Project Developer may, at any time and from time
to time, by a written Change Order Request ("COR") cause changes in the Work
within the general scope of the construction required by this Agreement. Such
changes may include, but are not limited to, changes in the Construction
Documents.
(b) In the event a COR would materially and adversely
impact the Schedule, the Project Developer shall deliver to the Team the
Project Developer's written statement setting forth in detail the effect that
such change would have on the Schedule, together with a statement of the effect
of all COR's to date on the Schedule (the "Change Order Quotation").
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(c) Upon receipt of any Change Order Quotation, the Team
shall, within ten (10) Business Days, or as soon thereafter as reasonably
possible, review such proposal. Upon completion of such review, the Team, at
its sole discretion, shall have the option to (i) accept the Change Order
Quotation, in which event the parties shall be deemed to have agreed to the
Change Order Quotation, (ii) enter into negotiations with the Project Developer
concerning any aspect of the Change Order Quotation, or (iii) reject the Change
Order Quotation in writing, in which event the COR shall be deemed withdrawn
and the Project Developer shall construct the Project Improvements pursuant to
the Construction Documents without regard to such COR. Any failure of the
Team to respond to a Change Order Quotation within ten (10) Business Days of
delivery to the Team thereof shall be deemed disapproval of such Change Order
Quotation and withdrawal of such COR. Upon the Team's acceptance of a Change
Order Quotation, either as originally submitted or as modified with the
agreement of the Project Developer and the Team, the Project Developer shall
cause the work required by such COR to be performed and the Schedule shall be
adjusted as provided in the applicable Change Order Quotation.
(d) Except as otherwise may be provided in Exhibit C, the
County shall not have the right to approve or disapprove any COR except a COR
which would materially reduce any of the Program Requirements. Such approval
shall not be unreasonably withheld or delayed.
5.7 Payment and Performance Bonds. (a) Prior to the commencement
of the work under each subcontract between the General Contractor and the
General Contractor's subcontractors for the construction of any Project
Improvements, the Project Developer shall cause to be submitted to the County a
performance bond and a labor and materialman's payment bond for that
subcontract; provided, however, that no such bonds shall be required if the
subcontract is less than Two Hundred Fifty Thousand ($250,000) Dollars, and with
the inclusion of that subcontract, the aggregate amount of unbonded subcontracts
does not exceed ten percent (10%) of the aggregate of all contract sums of such
subcontracts for the construction of the Project Improvements. Such bonds shall
comply with the provisions of Part Two of Exhibit H hereto.
(b) Notwithstanding anything to the contrary in this
Agreement, if a performance bond and a labor and material payment bond are
issued for the Contract with the General Contractor which includes all the
Project Improvements and may also include construction management duties
between Project Developer and the General Contractor in an amount not less than
one hundred percent (100%) of the cost of the Project Improvements, and such
bonds comply with the provisions of Part Two of Exhibit H hereto, then the
Project Developer shall not be obligated to submit to the County any individual
performance bond or labor and materialmen's payment bond for any subcontractor
of the General Contractor.
(c) The costs of all such bonds are included in the Land
Acquisition and Project Development Budget and shall be included in the
applicable Contract(s) and agreement(s).
5.8 Payment For Project Improvements.
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(a) Except as otherwise provided in this Agreement, the
Project Developer shall timely cause to be paid from the Construction Fund all
due and owing applications for payment and other charges in connection with the
design and construction of the Project Improvements. The County's Consultant
shall have the right to review applications for payment and the documentation
submitted in connection therewith.
(b) The Project Developer shall require that concurrent
with each application for payment, Contractors execute and furnish waivers of
liens and lien rights current through the last day of the period covered by such
application and that subcontractors, suppliers or other Persons requesting
payment and not engaged directly by the Project Developer execute and furnish
such waivers current through the last day of the period covered by the
immediately preceding application for payment (or, with respect to waivers from
such Persons not in privity with the Project Developer, the Project Developer
may rely on a certificate of the General Contractor to the effect that all
amounts owing to all such Persons through such day were paid to them). It is
the purpose and intention of the parties that the Project Improvements be
designed and constructed free of liens and claims; the Project Developer agrees
to cause the same to occur and shall require the execution of and obtain any
other forms necessary to assure an effective waiver of mechanics' and
materialmen's liens and claims in compliance with the laws of the State of
Florida.
ARTICLE VI
DISBURSEMENTS FROM THE CONSTRUCTION FUND
6.1 Definitions. For purposes of this Article VI, the following
terms shall have the meanings indicated:
"Contingency Fund" means the amount initially set forth as the
Contingency Fund in the Land Acquisition and Project Development Budget, as
adjusted from time to time by the amount of any Project Cost Amendments.
"Developer's Certificate" means a certificate in the form of
Exhibit I hereto, with the information required by such form completed by the
Project Developer.
"Full LOC Amount" means an amount, determined as of any
Funding Determination Date, equal to 100% of the Shortfall as of such date.
"Full LOC Test" means that the Project Developer shall have
deposited cash in the Construction Fund in an amount equal to, or Trustee shall
be holding a Letter of Credit for, the Full LOC Amount.
"Funding Determination Date" means a date, reasonably
determined by the Project Developer on the basis of the Schedule and the
progress reports delivered to pursuant to Section 12.2 hereof, that is 30 days
prior to the date the Trustee shall require funds to be on deposit in the
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Construction Fund in order to pay for any Shortfall, but not, in any event,
prior to the date, so determined, that is 90 days prior to the date of
disbursement of the entire Fixed County Project Funding.
"Interim LOC Amount" means an amount, determined as of any
Shortfall Determination Date, equal to 33.33% of the Shortfall as of such date.
"Interim LOC Test" means that the Project Developer shall have
deposited cash in the Construction Fund in an amount equal to, or Trustee shall
be holding a Letter of Credit for, the Interim LOC Amount.
"Letter of Credit" means an unconditional, irrevocable letter
of credit expiring 90 days after the Scheduled Completion Date and issued by
NationsBank or such other bank as is reasonably satisfactory to the County.
"Project Cost Amendment" means any modification of the Land
Acquisition and Project Development Budget by the Project Developer.
"Shortfall" means the cumulative amount (if a positive sum),
from time to time, of Project Cost Amendments which are not covered by the
Contingency Fund.
"Shortfall Determination Date" means any date on which the
Project Developer delivers a Developer's Certificate which evidences a
Shortfall equal to or exceeding $10 million.
6.2 Modifications to the Land Acquisition and Project Development
Budget. The Project Developer shall have the right, from time to time, to (i)
reallocate funds from the Contingency Fund to any other category of the Land
Acquisition and Project Development Budget to be applied to an increase in any
other category of the Land Acquisition and Project Development Budget resulting
from any changes to the Project which the Project Developer shall determine to
be necessary or desirable and (ii) reallocate to the Contingency Fund any
reduction in any other category of the Land Acquisition and Project Development
Budget resulting from any Project Cost Amendment which the Project Developer
shall determine to be necessary or desirable.
6.3 Draw Requests. Disbursements from the Construction Fund shall
be made upon written draw requests submitted to the Trustee either: (i) as to
construction costs and site-related work, by the General Contractor and
concurred in by the Project Developer; or (ii) as to payment for the Project
Developer's General Requirements, architecture and engineering, project
consulting fees, furniture, fixtures and equipment and pre-opening expenses, by
the Project Developer; or (iii) as to pre-development costs, Land acquisition
costs, the cost of County-Furnished Materials and amounts payable by the County
through the Contingent County Project Funding, by the County. The Project
Developer shall provide a copy of all its draw requests with respect to the
County Project Funding to the County's Consultant, for its approval in
accordance with Section 11.1 hereof, and to the Trustee for payment. Advances
for the Work shall be made only if the conditions thereto set forth in this
Agreement have been satisfied, and shall be disbursed only for the cost of
construction work
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in place, disbursements for stored materials, if any, retainages, and any other
costs, expenses and fees paid or payable by the Project Developer or the County
for costs reflected in the Land Acquisition and Project Development Budget or
otherwise permitted under this Agreement.
6.4 Developer's Certificate. Each draw request submitted by the
Project Developer shall be accompanied by a Developer's Certificate.
6.5 Satisfaction of Interim and Full LOC Tests. In order to
secure its obligation to pay any Shortfall, the Project Developer shall (i)
within seven Business Days after any Shortfall Determination Date, cause the
Interim LOC Test to be satisfied and (ii) within seven Business Days after any
Funding Determination Date, cause the Full LOC Test to be satisfied.
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ARTICLE VII
COMPLETION
7.1 Completion.
(a) The Project Developer hereby acknowledges the
Scheduled Completion Date of October 1, 1998, that the Scheduled Completion
Date is essential to the Operator's licensing, marketing, financing and
operating plans, and agrees that it will use reasonable efforts to cause
Substantial Completion to occur on or before October 1, 1998, as such Scheduled
Completion Date may be extended as specifically provided in this Agreement.
(b) The Project Developer shall make all necessary
arrangements to permit, at the Team's election, the Team to have partial
occupancy prior to Substantial Completion of the Project as phases of the
Project Improvements are completed. Without limiting the foregoing, the Team
may in a timely manner identify to the Project Developer any particular
portions of the Project as to which the Team anticipates a need for partial
occupancy prior to Substantial Completion of the Project and the dates thereof,
which shall be reflected in the Schedule. The Project Developer specifically
agrees to use all reasonable efforts to make the areas within the Project
serving as the Team offices and the box office, as set forth in the
Construction Documents, available to the Team not less than thirty (30) days
prior to Substantial Completion and to provide the Team with written notice of
such availability. The Project Developer further agrees to use its best
efforts to permit the vendors, concessionaires and other parties engaged by the
Operator access to the Project prior to Substantial Completion. The Team's
taking partial occupancy shall not obligate the Team to accept the Project as
complete or to continue such partial occupancy nor shall such partial occupancy
constitute a waiver of any default under this Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions Precedent for the Benefit of the Project Developer.
Notwithstanding anything to the contrary set forth herein, the Project
Developer's performance of its obligations under this Agreement is expressly
conditioned upon the fulfillment or satisfaction of each of the following
conditions precedent on or prior to the date of the sale of the County Bonds
(or any other date specifically set forth below), any of which may be waived
only in writing by the Project Developer in its discretion:
(a) There shall be no unfulfilled conditions to
performance of the Land Acquisition Agreement by any party thereto, title to the
Land shall be free and clear of all liens, claims, encumbrances, restrictions
and other matters of title except those that shall have been approved in writing
by the Project Developer, the Land Acquisition Agreement shall not have been
amended
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without the prior written consent of the Project Developer and the County shall
have delivered to the Project Developer evidence satisfactory to the Project
Developer of all the foregoing;
(b) The Project Developer shall have approved a
topographical survey and soil boring tests of the Land;
(c) The Project Developer shall have entered into
agreements satisfactory to it with all Persons the Project Developer deems
necessary with regard to development rights appurtenant to the Land and all
restrictions imposed by Applicable Law which materially affect the development
and use of the Land and the Project as contemplated by this Agreement;
(d) The Project Developer shall have received and
approved an analysis of the Permits and the time required to obtain the same.
The Project Developer has engaged a firm acceptable to it to perform such
analysis;
(e) The County shall have taken all actions necessary
with respect to sales tax rebates, as set forth in Section 13.2.8;
(f) All permits required under Part One of Exhibit G
hereto shall have been obtained or the Project Developer shall be reasonably
satisfied that such Permits will be obtained within a time period which will
permit the Project Developer to achieve Substantial Completion by the original
Scheduled Completion Date and with the expenditure of amounts not exceeding the
amount of the original Land Acquisition and Project Development Budget;
(g) No act, event or condition shall have occurred and be
existing which would render the representations and warranties of the County
set forth in this Agreement not to be true and correct as of the date of the
sale of the County Bonds and the County shall have delivered to the Project
Developer a certificate to such effect; and
(h) The Land shall be free of all Hazardous Materials, as
required pursuant to Section 2.2, and the Project Developer shall have received
evidence satisfactory to it to such effect, or the Project Developer shall be
reasonably satisfied that the County will cause this condition to be satisfied
within a time period which will permit the Project Developer to achieve
Substantial Completion by the original Substantial Completion Date and with the
expenditure of amounts not exceeding the amount of the original Land
Acquisition and Project Development Budget.
The Project Developer's performance of its obligations under this Agreement is
further expressly conditioned upon (i) the County's sale and issuance of the
County Bonds and the deposit of the Fixed County Project Funding in the
Construction Fund to be used for the purposes of this Agreement on or prior to
September 15, 1996, and (ii) the County's taking title to the Land, in
accordance with the terms of the Land Acquisition Agreement and this Agreement
on or prior to October 1, 1996.
If any of the foregoing conditions is not satisfied as of the
specified date, the Project Developer shall have the right to terminate this
Agreement by giving the County written notice to
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such effect. In the event of such termination, the County shall apply all
Tourist Development Taxes theretofore collected by the County to the payment of
all obligations incurred by the County and the Project Developer for pre-
development expenses in accordance with the Land Acquisition and Project
Development Budget (or for the reimbursement of the County and the Project
Developer for amounts paid by them in respect of such expenses), and if such
Tourist Development Taxes are not sufficient to pay all such expenses, the
balance shall be paid by the County and the Project Developer in equal shares.
Upon such payment, the County, the Project Developer, the Operator and the Team
shall be released of all obligations under this Agreement, the Operating
Agreement and the Team License.
ARTICLE IX
DEFAULTS AND REMEDIES
9.1 Project Developer Default. If at any time the Project
Developer shall (i) cease to pursue diligently the construction of the Project
for more than sixty (60) consecutive days for any cause other than by reason of
Force Majeure or a County Default, and such cessation has the effect of
delaying the Schedule and Substantial Completion and is not excused by the
Team, (ii) fail, after funding by the Trustee of a draw request, to pay or
cause payment to the General Contractor, Project Architects, Contractors or
others engaged by the Project Developer in the design and construction of the
Project Improvements amounts due and owing and not legitimately in dispute in
connection therewith for a period of more than thirty (30) days, (iii) fail to
comply with its obligations pursuant to Section 6.5, (iv) commit any other
material breach of this Agreement which remains uncured for a period of thirty
(30) days after receipt of written notice from the County specifying in
reasonable detail the nature of the breach and the action required to cure;
provided, however, that if such matter cannot be cured within such thirty (30)
day period, the Project Developer shall not be in default if the Project
Developer shall commence the cure within such thirty (30) days and thereafter
diligently pursue the cure thereof, or (v) make a general assignment for the
benefit of creditors or if bankruptcy, reorganization, receivership,
insolvency, liquidation or other similar proceedings are instituted by or
against the Project Developer which result in the entry of an order for any
such relief and, if such proceedings are instituted against the Project
Developer, such order is not vacated, discharged, stayed or bonded pending
appeal within 120 days after entry thereof (collectively, the "the Project
Developer Default"), and shall fail to cure (which with respect to (i) above
shall mean the failure to resume the diligent pursuit of construction of the
Project Improvements) any of the foregoing within seventy-two (72) hours after
written notice thereof by the County, then the County, may upon thirty (30)
days' written notice to the Project Developer, either require specific
performance of the Project Developer's obligations hereunder, or recover such
actual damages (and not consequential damages) as to which the County may be
entitled, whether under the terms of this Agreement or otherwise, or exercise
any other right or remedy at law or in equity; provided, however, the County
waives any right it may have to terminate this Agreement upon a Project
Developer Default. Any failure of the County to exercise any right or remedy
as provided in this Agreement shall not be deemed a waiver by the County of any
claim for damages it may have by reason of the Project Developer Default or the
interruption of construction of the Project for which the Project Developer is
responsible under the terms of this Agreement.
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9.2 County Default. If the County shall (i) fail to issue the
Bonds in accordance with its obligations under this Agreement, (ii) fail to
enter into the Team License or the Operating Agreement, (iii) fail to cause the
Trustee to fund a properly completed draw request, (iv) commit any material
breach of any other covenant or any representation or warranty of the County
set forth in this Agreement which remains uncured for a period of thirty (30)
days after receipt of written notice from the Project Developer specifying in
reasonable detail the nature of the breach and the action required to cure;
provided, however, that if such matter cannot be cured within such thirty (30)
day period, the County shall not be in default if the County shall commence the
cure within such thirty (30) days and thereafter diligently pursue the cure
thereof, or (v) make a general assignment for the benefit of creditors or if
bankruptcy, reorganization, receivership, insolvency, liquidation or other
similar proceedings are instituted by or against the County which result in an
entry of an order for any such relief, and, if such proceedings are instituted
against the County, such order is not vacated, discharged, stayed or bonded
pending appeal within 120 days after the entry thereof (collectively, the
"County Default"), the Project Developer may upon thirty (30) days' written
notice to the County, either require specific performance of the County's
obligations hereunder, recover such damages as to which the Project Developer
may be entitled, whether under the terms of this Agreement or otherwise or
exercise any other right or remedy at law or in equity; provided, however, the
Project Developer waives any right it may have to terminate this Agreement upon
a County Default (except as provided in Section 8.1).
9.3 Termination Waiver. Notwithstanding and prevailing over any
contrary provision hereof, it is intended that this Agreement shall not be
subject to termination (except as provided in Sections 8.1 and 14.1) whether
because of a default or otherwise. As to all other events and circumstances,
each of the parties waive its right to terminate this Agreement albeit each
party shall have the other rights and remedies set forth in this Agreement.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by Project Developer. Notwithstanding
anything contained herein, the Project Developer shall indemnify, defend and
hold harmless the County (and each employee and agent thereof) from and against
any claim, loss, damage, liability, cost or expense, including reasonable
attorneys' fees, directly arising out of (a) any default by the Project
Developer under this Agreement or (b) any personal or bodily injury, including
death, to any person and destruction of property resulting from the performance
(or failure of performance) by Project Developer of the Work in accordance with
the provisions of this Agreement. The foregoing indemnification shall not
extend to those claims, losses, damages, liabilities, costs or expenses
asserted against or suffered by the County which are due to the acts or
omissions of the County, of its employees or agents or of architects, engineers
or contractors, if any, retained by the County, or to any action taken by the
County in violation of the provisions of this Agreement.
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10.2 Indemnification by County. Notwithstanding anything contained
herein, the County shall indemnify, defend and hold harmless the Project
Developer, the Operator and the Team (and each shareholder, director, officer,
employee, partner and agent thereof) from and against any claim, loss, damage,
liability, cost or expense, including reasonable attorneys' fees, directly
arising out of (a) any default by the County under this Agreement or (b) any
act, happening, occurrence or thing done, omitted or permitted by any Person
indemnified pursuant to this Section 10.2 in accordance with any direction,
authorization, consent, approval or agreement of the County. The foregoing
indemnification shall not extend to those claims, losses, damages, liabilities,
costs or expenses asserted against or suffered by the Project Developer which
are due to the acts or omissions of the Project Developer, of its employees or
agents or of architects, engineers or contractors retained by the Project
Developer, or to any action taken by the Project Developer in violation of the
provisions of this Agreement. Notwithstanding the foregoing, the Project
Developer acknowledges that the County's obligations to indemnify hereunder
shall be limited to the extent of the County's insurance and is subject to the
limitations of Florida law.
10.3 Indemnification Procedures. (a) If any Person indemnified
pursuant to Section 10.1 or 10.2 (an "Indemnitee") shall discover or have
actual notice of facts giving rise or which may give rise to a claim for
indemnification under this Article, or shall receive notice of any Action, with
respect to any matter for which indemnification may be claimed, the Indemnitee
shall, within twenty (20) days following service of process (or within such
shorter time as may be necessary to give the Person obligated to indemnify the
Indemnitee (the "Indemnitor") a reasonable opportunity to respond to such
service of process) or within twenty (20) days after any other such notice,
notify the Indemnitor in writing thereof together with a statement of such
information respecting such matter as the Indemnitee then has; it being
understood and agreed that any failure or delay of the Indemnitee to so notify
the Indemnitor shall not relieve the Indemnitor from liability hereunder except
and solely to the extent that such failure or delay shall have adversely
affected the Indemnitor's ability to defend against, settle, or satisfy any
such Action. Following such notice, the Indemnitor shall have the right, at
its sole cost and expense, to contest or defend such Action through attorneys,
accountants, and others of its own choosing (the choice of such attorneys,
accountants, and others being subject to the approval of the Indemnitee, such
approval not to be unreasonably withheld) and in the event it elects to do so,
it shall promptly notify the Indemnitee of such intent to contest or defend
such Action. If within twenty (20) days following such notice from the
Indemnitee (or within such shorter time as may be necessary to give the
Indemnitor a reasonable opportunity to respond to service of process or other
judicial or administrative action), the Indemnitee has not received notice from
the Indemnitor that such Action will be contested or defended by the
Indemnitor, the Indemnitee shall have the right to (i) authorize attorneys
satisfactory to it to represent it in connection therewith or (ii) subject to
the approval of the Indemnitor, which approval shall not be
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unreasonably withheld or delayed, at any time settle, compromise, or pay such
Action, in either of which events the Indemnitee shall be entitled to
indemnification therefor subject to this Section 10.3.
(b) In the event and so long as the Indemnitor is actively
contesting or defending against an Action as hereinabove provided, the
Indemnitee shall cooperate with the Indemnitor and its counsel in such contest
or defense, shall join in making any appropriate counterclaim or cross-claim in
connection with the Action, and shall provide such access to the books and
records of the Indemnitee as shall be necessary in connection with such defense
or contest, all at the sole cost and expense of the Indemnitor. Notwithstanding
that the Indemnitor is actively conducting such defense or contest, any Action
may be settled, compromised or paid by the Indemnitee without the consent of the
Indemnitor; provided, however, that if such action is taken without the
Indemnitor's consent, its indemnification obligations in respect of such claim
shall thereby be nullified. Any such Action may be settled, compromised, or
paid by the Indemnitor without the Indemnitee's consent, so long as such
settlement or compromise does not cause the Indemnitee to incur any present or
future material cost, expense, obligation or liability of any kind or nature.
(c) In the event any Action involves matters partly
within or partly outside the scope of the indemnification by an Indemnitor
hereunder, then the attorneys' fees, costs, and expenses of contesting or
defending such Action shall be equitably allocated between the Indemnitee and
the Indemnitor.
(d) If a conflict of interest exists between the
Indemnitee and the Indemnitor with respect to any Action, the Indemnitee shall
have the right to participate in the defense of such Action with separate
counsel chosen by the Indemnitee, subject to the reasonable approval of the
Indemnitor, and paid by the Indemnitor.
10.4 Limitation. Indemnification under this Article X does not
include indemnification against loss or liability due to Force Majeure.
ARTICLE XI
REPRESENTATIVES
11.1 Representatives. Upon execution of this Agreement, the Project
Developer shall designate in writing to the County the name of the individual
who is to be "the Project Executive" with full authority to execute any and all
instruments requiring the Project Developer's signature and to act on behalf of
the Project Developer with respect to all matters arising out of this Agreement.
The Project Developer may also designate a Person who shall act as the "Project
Manager". The Project Manager shall represent the interests of the Project
Developer, be responsible for overseeing all aspects of design, construction and
development of the Project, and work closely with the County's Consultant and
the Team, on behalf of the Project Developer, reporting to the Project
Executive.
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The County Administrator shall be the "County's Representative," who
shall act as liaison and contact person between the Project Developer and the
County in administering and implementing the terms of this Agreement. Except as
otherwise provided in this Agreement, the Project Developer shall submit a
request for consent or review of matters which require consent or review by the
County, to the County's Representative, who, shall either consent or obtain the
County's consent (as to matters requiring consent) or review the matter (as to
matters requiring review). The County's consent shall be required with respect
to any amendment to this Agreement. The County's Representative, or his
authorized designee, shall respond to requests for consent, waiver or review
within five (5) Business Days after submittal, and the County shall respond to
requests regarding matters requiring the County's consent within 30 days after
submittal. In either case, if a written notice of disapproval is not received
by the Project Developer within the specified time period, the matter shall be
deemed approved. The Project Developer and any Person dealing with the County
in connection with this Agreement or any matter governed by this Agreement may
rely and shall be fully protected in relying upon the authority of the County's
Representative or any such designee to act for and bind the County in any such
matter.
Upon execution of this Agreement, the County shall designate in
writing to the Project Developer the name of the Person who is to be the
"County's Consultant" to act on behalf of the County in accordance with the
provisions of this Agreement. In addition to matters specifically provided for
herein, the County's Consultant is authorized to: (i) monitor the performance
and progress of all aspects of the Project and report its findings to the
County; (ii) recommend approval by the County of disbursements and requests for
payment of the County Project Funding; and (iii) inspect and approve (to the
extent such approval is required) all documents delivered pursuant to this
Agreement to ensure compliance with the provisions hereof. The County's
Consultant shall act expeditiously with respect to any request for its approval
of submissions pursuant to clauses (ii) and (iii) of the previous sentence, and
such approvals shall not be unreasonably withheld.
From time to time following the execution hereof, the Project
Developer may change or replace the Project Executive or Project Manager, and
the County may change or replace the County's Representative or County's
Consultant, upon five (5) Business Days' written notice to the other party,
delivered to such party in the manner and at the address indicated in Section
14.8 hereof.
ARTICLE XII
SCHEDULES AND REPORTS
12.1 Design and Construction Schedules. The Project Developer
shall, not later than sixty (60) days from the execution hereof, prepare and
deliver to the County, for informational purposes only, a schedule for the
permitting, design and construction of the Project Improvements (such schedule,
as revised from time to time (with the County being furnished informational
copies of such revisions), being referred to as the "Schedule"). The Schedule
shall include time for adverse weather conditions to the extent normally
encountered in the Sunrise, Florida area and the impacts thereof, establish a
date for Substantial Completion not later than the Scheduled Completion Date,
delineate
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all phases of the Project Improvements and set forth a date for completion of
each phase in sufficient detail to allow the County or its representative(s) to
monitor progress of the Project. The Schedule shall be related to the design
and construction of all aspects of the Project Improvements. The Schedule
shall indicate the dates for the starting and completion of the various stages
of design and construction and shall be revised as required by the conditions
of the Project. The parties acknowledge and agree that notwithstanding any
theoretical delay or theoretical extensions of time for completion as may be
shown on any schedules or printouts, the Schedule shall be governed by this
Agreement and shall be extended only in accordance with the procedures set
forth in this Agreement. The phases of the Project to be addressed in the
Schedule shall include, without limitation, (a) the design phases, (b)
acquisition and approval of Permits and (c) all construction phases. Dates set
forth in this Agreement shall be included in the Schedule and such dates may
not be extended, except as provided in this Agreement.
12.2 Progress Reports. The Project Developer shall prepare and
deliver or cause to be prepared and delivered to the County's Consultant a
progress report for each month. Such report shall describe the status of the
construction of the Project Improvements and include, but not be limited to,
actual versus estimated percentage completion for each component of the Project
Improvements, any change in costs incurred in connection with the construction
of the Project Improvements, performance against schedule, any change in the
critical path and revisions to the Schedule as of the end of each reporting
period.
12.3 Significant Event Reports. Should any Force Majeure or other
situation, occurrence or event having a material impact on the Work be
anticipated, or any unanticipated Force Majeure or other situation, occurrence
or event having a material impact on the Work occur, the Project Developer will
immediately prepare a written "Significant Event Report" detailing all available
information and the steps being taken to correct the problem and forward the
same to the County's Consultant within five Business Days after the Project
Developer's discovery of such Force Majeure, situation, occurrence or event. The
County may at any time request a Significant Event Report on any event that in
the County's Consultant's reasonable opinion falls under this category.
12.4 Inspection Reports. The Project Developer shall cause its
designee to implement and require all necessary inspection, testing, peer review
and safety programs for the design and construction of the Project, and shall
prepare and submit its procedures, schedules and requirements with respect to
such programs in writing to the County's Consultant. The County's Consultant
shall have the right to participate in the implementation of such programs. The
Project Developer shall cause copies of all inspection reports to be sent to the
County. Progress Reports required under Section 12.2 hereof shall advise the
County's Consultant of the status of such programs.
12.5 Final Construction Report. (a) Within 35 months after
issuance of the County Bonds, the Project Developer shall deliver or cause to
be delivered to the County's Consultant a report which shall set forth (i) the
total costs incurred by the Project Developer in connection with the design and
construction of the Project Improvements through the date of such report, (ii)
all material items required to complete the Project Improvements and the
estimated cost thereof, and (iii) the status of
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any litigation affecting the Project Developer or the County and related to the
design and construction of the Project Improvements.
(b) Within 180 days after Substantial Completion, the
Project Developer shall deliver or cause to be delivered to the County's
Consultant a final construction report, which report shall set forth the total
costs incurred by the Project Developer in connection with the construction of
the Project through Substantial Completion of the Project Improvements and the
Project Developer's estimate of the remaining costs of design and construction
of the Project to final completion.
12.6 Returns Required by Law. The Project Developer shall execute
and file punctually when due all forms, reports and returns relating to the
Project required by Applicable Law, including, without limitation, reports
relating to the employment of personnel.
12.7 Inspection Rights of the County. The Project Developer agrees
that the County, through the County's Consultant, shall have the right at all
times during normal business hours of the Project Developer, the Contractors or
General Contractor, as the case may be, and at such other times as the County's
Consultant may reasonably request, to review the Construction Documents and to
inspect the progress of the construction of the Project Improvements. The
County agrees to require the County's Consultant to comply with all applicable
safety requirements and procedures. In addition, the Project Developer shall
keep the books and records to be maintained by the Project Developer pursuant
to this Agreement at its regular business office, which the County or its
authorized agent or representative may examine and/or audit (at the County's
expense) at all reasonable times upon reasonable notice (not less than one
Business Day) to the Project Developer. The Project Developer further agrees
to preserve and enforce the foregoing in favor of the County as to the General
Contractor and all Contractors or other Persons retained by or on behalf of the
Project Developer. The provisions of this Section 12.7 shall in no way limit
or otherwise relieve the Project Developer from the Project Developer's
obligation to complete the Project Improvements in conformance with this
Agreement unless the County's inspections or tours unreasonably interfere with
the Project Developer's construction of the Project Improvements and then only
to the extent that such acts continue after the Project Developer's notice to
the County of such interference. The County, through appropriate designees,
which may change from time to time, further reserves the right to enter the
Project during regular business hours to conduct fire, safety and health
inspections or to exercise County's normal police powers, provided (a) the
County shall use its best efforts not to interfere with the operations of the
Project Developer and (b) the County's inspection rights shall not be deemed to
limit in any way the Project Developer's rights to contest the County's
findings with respect to such inspections or the exercise of such police
powers.
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ARTICLE XIII
REPRESENTATIONS, WARRANTIES AND COVENANTS
13.1 Project Developer's Representations, Warranties and Covenants.
The Project Developer hereby represents and warrants to, and covenants with,
the County that:
13.1.1 Organization. The Project Developer is a limited
partnership duly formed, validly existing and in good standing under the laws
of the State of Florida. The Project Developer has all requisite power and
authority to enter into this Agreement.
13.1.2 Authorization; No Violation. The execution, delivery
and performance by the Project Developer of this Agreement have been duly
authorized by all necessary action and will not violate the charter documents
of the Project Developer or result in the breach of or constitute a default
under any loan or credit agreement, or other material agreement to which the
Project Developer is a party or by which the Project Developer or its material
assets may be bound or affected; this Agreement has been duly executed and
delivered by the Project Developer and this Agreement and the documents
referred to herein constitute valid and binding obligations of the Project
Developer.
13.1.3 Litigation. No suit is pending against or affects
the Project Developer which could have a material adverse effect upon the
Project Developer's performance under this Agreement or the financial condition
or business of the Project Developer. There are no outstanding judgements
against the Project Developer which would have a material adverse affect upon
its assets, properties or franchises.
13.1.4 No Conflicts. This Agreement is not prohibited by
and does not conflict with any other agreements, instruments, judgements or
decrees to which the Project Developer is a party or is otherwise subject.
13.1.5 No Violation of Laws. The Project Developer has
received no notice as of the date of this Agreement asserting any noncompliance
in any material respect by the Project Developer with applicable statutes,
rules and regulations of the United States of America, the State of Florida, or
of any other state or municipality or agency having jurisdiction over and with
respect to the transactions contemplated in and by this Agreement; and the
Project Developer is not in default with respect to any judgment, order,
injunction or decree of any court, administrative agency, or other governmental
authority which is in any respect material to the transactions contemplated
hereby.
13.2 County's Representations, Warranties and Covenants. The
County hereby represents and warrants to, and covenants with, the Project
Developer that:
13.2.1 Organization. The County is a public body
corporation and politic and a political subdivision of the State of Florida.
The County has all requisite power and authority to enter into this Agreement.
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13.2.2 Authorization; No Violation. The execution, delivery
and performance by the County of this Agreement are within the power of the
County and have been duly authorized by all necessary action and are authorized
by and will not violate the County's charter, the County's code of ordinances,
the County's administrative code and any other Applicable Laws, or result in
the breach of any material agreement to which the County is a party; this
Agreement has been duly executed and delivered by the County and this Agreement
and the documents referred to herein constitute valid and binding obligations
of the County. Subject to the provisions of Section 9.1 hereof, the Project
Developer is irrevocably vested with all rights required by the Project
Developer in order to perform its obligations hereunder, including, without
limitation, the right directly to negotiate, procure and enter into binding
purchase, supply and service Contracts for the design, construction and
equipping of the Project and the Project Improvements, without further
involvement by the County except as expressly provided in this Agreement.
13.2.3 Litigation. No suit is pending against or affects
the County which could have a material adverse effect upon the County's
performance under this Agreement.
13.2.4 No Conflicts. This Agreement is not prohibited by
and does not conflict with any other agreements, instruments, judgments or
decrees to which the County is a party or is otherwise subject.
13.2.5 Non-Competition. The County reasserts, reconfirms
and incorporates herein its covenants and agreements regarding non-competition
set forth in the Operating Agreement, and all subdivisions thereof, and agrees
that such covenants shall inure to the benefit of Project Developer in the same
manner and to the same extent as if made directly to and for the Project
Developer as well as the Operator.
13.2.6 No Violation of Laws. The County has received no
notice as of the date of this Agreement asserting any noncompliance in any
material respect by the County with applicable statutes, rules and regulations
of the United States of America, the State of Florida or any agency having
jurisdiction over and with respect to the transactions contemplated in and by
this Agreement; and the County is not in default with respect to any judgment,
order, injunction or decree of any court, administrative agency, or other
governmental authority which is in any respect material to the transactions
contemplated hereby.
13.2.7 Tourist Development Tax. The Broward County Board of
Commissioners has duly adopted Ordinance No. 96-9 and Ordinance No. 96-10, each
amending Section 31 1/2-16, "Tourist Development Tax", of the Broward County
Code by levying an additional one percent (1%) local option tourist development
tax to assist in the payment of the County Bonds. Upon the execution of this
Agreement, all conditions precedent to the effective date for the levy and
imposition of the taxes authorized by such ordinances shall have been
satisfied.
13.2.8 State Sales Taxes. The County has taken or will take
all actions necessary for the County to receive annual rebates of $2 million of
Florida sales tax pursuant to the provisions of
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Sections 288.1162 and 212.20, Florida Statutes, and the County is entitled to
receive such annual rebates.
ARTICLE XIV
MISCELLANEOUS
14.1 Force Majeure. Except as otherwise herein expressly provided,
if either party shall be delayed or hindered in, or prevented from, the
performance of any covenant or obligation hereunder, as a result of any Force
Majeure, and, provided that the party delayed, hindered or prevented from
performing notifies the other party both of the commencement and of the
expiration of such delay, hindrance or prevention, (each notice being required
within ten (10) days of the respective event) and provided further that the
Project Developer has complied with its obligation to deliver a Significant
Event Report, then the performance of such covenant or obligation shall be
excused for the period of such delay, hindrance or prevention and the period
for the performance of such covenant or obligation shall be extended by the
number of days equivalent to the number of days of the impact of such delay,
hindrance or prevention. Failure to so provide the foregoing notice will
result in waivers of both excuse in performance and extension of time to
perform under this Section 14.1 with respect to any such delay, hindrance or
prevention. Notwithstanding the foregoing, if any such event of Force Majeure
causes any increase (the "Cost Increase") in the total costs of designing,
developing, equipping and constructing the Project for the Team's 1998-99
season, as contemplated by the Team License, over such total costs as
determined pursuant to this Agreement immediately prior to the Force Majeure
event (the "Pre-FM Project Cost"), and such Cost Increase exceeds $12 million,
exclusive of any insurance proceeds collected by or made available to the
Project Developer as a result of such Force Majeure event, the Project
Developer shall have the right, upon written notice to the County ("Termination
Notice"), to terminate this Agreement; provided, however, that in the event the
Project Developer so gives notice to terminate this Agreement, the County
shall, within 30 days after receipt of the Termination Notice, by notice to the
Project Developer, either (i) accept such termination (in which event, all
obligations of the Project Developer hereunder, the guarantor under the
Substantial Completion Guaranty Agreement, the Operator under the Operating
Agreement, the Team under the Team License and the County under all such
agreements shall also terminate); or (ii) accept such termination and execute
an assumption, satisfactory in form and substance to the Operator and the Team,
of all obligations of the Project Developer to pay the Cost Increase and any
delay costs, losses reasonably anticipated by the Team to be actually incurred
by it by reason of the delay in its ability to use the Facility caused by the
Force Majeure event, increased financing costs, and all other costs to the
Project Developer, the Operator and the Team associated with the Force Majeure
event (collectively, the "FM Increase"), and to design, develop and construct
the Project Improvements and complete the Project in accordance with the terms
which this Agreement would require were this Agreement still in effect and as
required by the Operating Agreement and the Team License (in which event, the
obligations of the Project Developer under this Agreement shall terminate, and
the Operating Agreement and the Team License shall remain in full force and
effect); or (iii) reject such termination by the Project Developer, deposit in
the Construction Fund funds (other than proceeds of the County Bonds) in an
amount equal to the FM Increase, to be
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available for the purposes contemplated by this Agreement, the Operating
Agreement and the Team License, together with a covenant to budget and
appropriate any amounts (the "Additional FM Increase") in addition to the FM
Increase amount which are subsequently determined by the Project Developer to
have been incurred due to such event of Force Majeure (in which event this
Agreement, the Substantial Completion Guaranty Agreement, the Operating
Agreement and the Team License shall remain in full force and effect). In the
event the County elects clause (ii) in the preceding sentence, (x) the
Substantial Completion Guaranty Agreement shall terminate except only as to the
amount, if any, by which the Pre-FM Project Cost exceeds the Land Acquisition
and Project Development Budget as in effect on the date hereof less the amount
of any change orders implemented by the County which reduce the Pre-FM Project
Cost, (y) the County shall not make any changes to the development, design and
construction contemplated by this Agreement, the Program Requirements and the
Construction Documents without the prior written consent of the Team and (z)
the County's obligations under the foregoing clause (y) shall survive such
termination of this Agreement. In addition, in the event the County elects
such clause (ii), at such time as the Team commences to use the Facility
pursuant to the Team License, the amount of the FM Increase attributable to
losses anticipated to be incurred by the Team shall be adjusted and an
appropriate payment made, if necessary, to reflect whether or not the Team
actually played in any playoff games during the delay period.
14.2 Amendment; Waiver. No alteration, amendment or modification
hereof shall be valid unless executed by an instrument in writing by the
parties hereto with the same formality as this Agreement. The failure of the
County or the Project Developer to insist in any one or more instances upon the
strict performance of any of the covenants, agreements, terms, provisions or
conditions of this Agreement or to exercise any election herein contained shall
not be construed as a waiver or relinquishment for the future of such covenant,
agreement, term, provision, condition, election or option, but the same shall
continue and remain in full force and effect. No waiver by the County or the
Project Developer of any covenant, agreement, term, provision or condition of
this Agreement shall be deemed to have been made unless expressed in writing
and signed by an appropriate official on behalf of the Project Developer or the
County.
14.3 Consent. Unless otherwise specifically provided herein, no
consent or approval by the County or the Project Developer permitted or
required under the terms of this Agreement shall be valid or be of any validity
whatsoever unless the same shall be in writing, signed by the party by or on
whose behalf such consent is given.
14.4 Severability. If any article, section, subsection, term or
provision of this Agreement or the application thereof to any party or
circumstance shall, to any extent, be invalid or unenforceable, the remainder
of the article, section, subsection, term or provision of this Agreement or the
application of same to parties or circumstances other than those to which it is
held invalid or unenforceable shall not be affected thereby and each remaining
article, section, subsection, term or provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by law, provided that no
such severance shall serve to deprive either party of the enjoyment of its
substantial benefits under this Agreement.
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14.5 Captions. The captions of articles and sections are for
convenient reference only and shall not be deemed to limit, construe, affect,
modify or alter the meaning of such articles or sections.
14.6 Binding Effect. Except as may otherwise be provided herein to
the contrary, this Agreement and each of the provisions hereof shall be binding
upon and inure to the benefit of the Project Developer and the County, and
their respective permitted successors and assigns.
14.7 Relationship of Parties. Nothing contained in this Agreement
shall be deemed or construed by the parties hereto or by any third party to
create the relationship of principal and agent, partnership, joint venture or
any association between the Project Developer and the County.
14.8 Notices. All notices, demands, consents, approvals,
statements, requests and invoices to be given under this Agreement shall be in
writing, signed by the party or officer, agent or attorney of the party giving
the notice, and shall be deemed effective upon receipt if hand delivered, or
sent by telecopy or overnight courier service; and if sent by the United States
mail, postage prepaid, certified mail, return receipt requested, upon delivery
or the date of refusal, addressed as follows:
To the County:
County Administrator
Broward County, Florida
115 S. Andrews Avenue, Room 409
Ft. Lauderdale, Florida 33301
with copy to:
Director, Department of Finance
and Administrative Services
115 S. Andrews Avenue, Room 121
Fort Lauderdale, Florida 33301
with copy to:
The County Attorney
115 S. Andrews Avenue, Room 423
Fort Lauderdale, Florida 33301
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To the Project Developer:
Arena Development Company, Ltd.
c/o Huizenga Holdings, Inc.
200 S. Andrews Avenue, 6th Floor
Fort Lauderdale, Florida 33301
Attention: President
Either party may from time to time by written notice given to the other
pursuant to the terms of this Section 14.8 change the address to which notices
shall be sent or designate one or more additional Persons to whom notices are
to be sent.
14.9 Applicable Law. This Agreement has been prepared in the
State of Florida and shall be governed in all respects by the laws of the State
of Florida.
14.10 Cross References. Any reference in this Agreement to a
Section, Subsection, Article or Exhibit is a reference to a Section,
Subsection, Article or Exhibit, as appropriate, of this Agreement, unless
otherwise expressly indicated.
14.11 Effective Date. This Agreement shall be a legally binding
agreement, in full force and effect, as of the date set forth in the first
paragraph of this Agreement.
14.12 Antidiscrimination Clause. The Project Developer shall
comply with all applicable state, local and federal laws, rules, regulations,
executive orders and agreements pertaining to discrimination in employment,
unlawful employment practices and affirmative action.
14.13 Further Assurances. The County and the Project Developer
shall execute, acknowledge and deliver, after the date hereof, without
additional consideration, such further assurances, instruments and documents,
and shall take such further actions, as the Project Developer or the County
shall reasonably request of the other in order to fulfill the intent of this
Agreement and the transactions contemplated thereby. The Project Developer and
the County shall make such changes to this Agreement, and the County shall make
such changes to the Operating Agreement and the Team License, as may be
necessary in order to implement the Plan of Finance attached hereto as Exhibit
C. This provision shall survive the termination of this Agreement.
14.14 Third-Party Beneficiary. The provisions of this Agreement
are for the exclusive benefit of the parties hereto and not for the benefit of
any third person, nor shall this Agreement be deemed to have conferred any
rights, express or implied, upon any third person unless otherwise expressly
provided for herein, provided that the parties expressly designate the Team as
a third-party beneficiary hereof and confer upon the Team all the rights
granted to the Team in this Agreement.
14.15 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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14.16 Date of this Agreement. As used in this Agreement, the
terms "date of this Agreement", "date hereof" and words of similar import shall
mean and refer to the date set forth on the first page of this Agreement.
14.17 Gender and Terms. Whenever the context shall so require,
all words herein in any gender shall be deemed to include the masculine,
feminine, or neuter gender, and all singular words shall include the plural,
and all plural words shall include the singular.
14.18 Prior Agreements Superseded. This Agreement supersedes any
prior understanding or written or oral agreements between the parties
respecting the within subject matter, including, without limitation, the LOI,
but not including the Sunrise Agreement, and together with the Team License,
the Operating Agreement and the Sunrise Agreement, contains the entire
understanding between the parties with respect thereto.
14.19 This Agreement. The words "herein," "hereof," "hereunder,"
"hereby," "this Agreement" and other similar references shall be construed to
mean and include this Agreement and all amendments hereof and supplements
hereto unless the context clearly indicates or requires otherwise.
14.20 Non-Exclusive Remedies. Except as otherwise provided
herein, no remedy herein conferred or reserved is intended to be exclusive of
any other available remedy or remedies, and each and every such remedy shall be
cumulative and shall be in addition to every such remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. It
is expressly agreed that the remedy at law for breach by a party of its
obligations hereunder may be inadequate in view of the complexities and
uncertainties in measuring the actual damages which would be sustained by
reason of either party's failure to comply fully with each of such obligations.
Accordingly, the obligations of each party hereunder are expressly made
enforceable by specific performance, except as otherwise specifically provided
herein.
14.21 Exhibits. All exhibits referred to herein shall be
considered a part of this Agreement as fully as if and with the same force and
effect as if such exhibit had been included herein in full.
14.22 Language. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
14.23 Saturday. Sunday or Holiday. If the final date of any
period provided for herein for the performance of an obligation or for the
taking of any action falls on a day other than a Business Day, then the time of
such period shall be deemed extended to the next Business Day.
14.24 Approvals by County and the Team. No approval given or
withheld by the County and the Team shall relieve the Project Developer, or the
Persons retained by or on behalf of the Project Developer for the design or
construction of the Work, from responsibility for the proper and timely
performance of the Project Developer's and such Persons' obligations. No
approval by the
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County and the Team shall impose, imply or be construed as an assumption by the
County or the Team of any duties or responsibilities of others with respect to
the design or construction of the Work or for the construction means and
methods employed by or on behalf of the Project Developer or any Person
retained by or on behalf of the Project Developer.
14.25 Lawsuits. To the extent the County Attorney determines it
is legally able to do so, the County agrees to cooperate with, assist (in a
form and manner to be agreed by the County and the Project Developer at the
time of the filing of a complaint) the Team and/or the Project Developer in
connection with or relating to third party efforts, by legal action (in a
lawsuit, on appeal or otherwise), which threatens to stop or delay the
imposition of the Tourist Development Tax, the purchase of the Land (including
development rights), the negotiation, execution, or implementation of this
Agreement or any other agreement between the County, the Team and the Project
Developer or to materially delay completion of the Project or to materially
increase the cost of completion of the Project.
14.26 Attorneys' Fees. In the event of any controversy, claim or
dispute between the parties arising from or relating to this Agreement
(including, but not limited to, the enforcement of any indemnity provisions),
the prevailing party shall be entitled to recover reasonable costs, expenses
and attorneys' fees. For all purposes of this Agreement and any other
documents relating to this Agreement, the terms "attorneys' fees" or "counsel
fees" shall be deemed to include paralegals and legal assistants' fees, and
wherever provision is made herein or therein for the payment of attorneys' or
counsel fees or expenses, such provision shall include, but not be limited to,
such fees and expenses (and any applicable sales taxes thereon) incurred in any
and all judicial, bankruptcy, reorganization, administrative or other
proceedings, including appellate proceedings, whether such fees or expenses
arise before proceedings are commenced or after entry of a final judgment.
14.27 Assignment. The Project Developer shall have the right to
assign this Agreement to any Person to whom the Operator is permitted to assign
the Operating Agreement or to whom the Team is permitted to assign the Team
License or any Affiliate of such Person. Any such transferee shall take
subject to and must assume all the obligations of the Project Developer under
this Agreement. The Project Developer shall require the transferee to execute
an assignment and assumption agreement in such form and content as is
reasonably acceptable to the County. Except for the foregoing, the Project
Developer shall not assign, transfer, pledge or encumber its rights or
interests in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have entered in this Development
Agreement as of the day and year first hereinabove written.
Project Developer:
-----------------
ARENA DEVELOPMENT COMPANY, LTD.
By: Arena Development Company, Inc.,
general partner
By: /s/ H. Wayne Huizenga
----------------------------
Chairman
County:
------
BROWARD COUNTY, FLORIDA
By: John E. Rodstrom
----------------------------------
ATTEST: Chair of the Board of County Commissioners
/s/ B. Jack Osterholt
- ------------------------
County Administrator
APPROVED AS TO FORM:
/s/ Noel Pfeffer
- ------------------------
County Attorney
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EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
[TO BE PROVIDED]
<PAGE> 52
EXHIBIT B
PROGRAM REQUIREMENTS
GENERAL
THESE PROGRAM REQUIREMENTS ARE DESIGNED TO REFLECT THE INTENT OF THE
PROJECT DEVELOPER AND THE COUNTY WITHIN THE CONFINES OF A RAPIDLY PROGRESSING
DESIGN FOR THE PROJECT. THESE PROGRAM REQUIREMENTS ARE NOT MEANT TO BE
LIMITING IN ANY WAY, EITHER BY INCLUSION OR EXCLUSION, BUT ARE MEANT TO SHOW
THE NATURE OF THE UNDERSTANDING BETWEEN THE PROJECT DEVELOPER AND THE COUNTY AS
IT RELATES TO THE VARIOUS COMPONENTS OF THE PROJECT IMPROVEMENTS.
Capitalized terms used in these Program Requirements which are defined
in the Team License shall have the same meaning as in the Team License. Terms
which are defined in these Program Requirements shall have the meaning set
forth herein.
The purpose of these Program Requirements is to generally describe the
Team's requirements that the Project will be a state-of-the-art, multi-purpose
sports and entertainment facility, containing seating of approximately 18,000-
19,500 for Home Games, 19,000-21,500 for basketball games and 21,500 for
concerts (including seating behind the stage), including related surface
parking and marshaling/loading areas, designed and constructed to support the
occupancy of NHL hockey and professional basketball franchises and to host
other sporting events, family shows, concerts, and related events. The Project
will include approximately 750,000-850,000 square feet in at least three (3)
public concourses, as well as mechanical and service levels and may include
appropriate amenities, such as clubs, restaurants and shops, among other
features. The Project will be equipped with modern technological systems for
acoustics, utilities, seating configurations including adjustable or
exchangeable systems designed to perfect the difference in sight lines for
basketball and hockey event transition, food and beverage facilities, live
television production, loading/unloading, mechanical systems, lighting, video
distribution, ice plant, storage, furnishings, vertical transportation,
environmental graphics and signage, video display boards, scoreboards, exterior
marquees, advertising displays, sound distribution and other features designed
to provide patron, employee and tenant convenience. The Project shall also
include sufficient space for 7,500 surface parking spaces.
The Project shall include without limitation any and all Furnishings,
Fixtures, Equipment, Millwork, Mechanical, Electrical, Plumbing, Sound Systems,
Lighting Systems, Concession Equipment (fixed and portable), Shoring,
Underpinning, Waterproofing, Damp-proofing, Structural Systems, Interior Wall
Finishes, Exterior Wall Finishes, Roofing, Flashing, Railings, Ornamental
Metals, Doors, Frames, Glass, Sash, Ticket Windows, Finish Hardware, Ceilings,
Acoustical Treatment, Floor Coverings, Exterior Stairs, Interior Stairs, Toilet
Partitions, Toilet Accessories, Signs and Identifying Devices, Lockers, Mats,
Rugs, Window Treatments, Basic Television and Radio Production Facilities and
Equipment, Seats, Restaurant Equipment and Furnishings, Lounge and Bar
Equipment and Furnishings, Loge Furniture and Equipment, Furnishings and Decor,
Office Improvements, Retail Store Improvements and Fixtures, Elevators,
Escalators, Plumbing Fixtures,
<PAGE> 53
Fire Protection Systems, Heating, Ventilating and Air Conditioning Systems, Ice
Systems, Rigging Systems, Closed Circuit Television Systems, Camera Platforms,
Seating Platforms, Snow Melting Equipment, Security Systems, Spotlights,
Exterior Building Lighting, Landscaping, Building Energy Management Systems,
Lighting Management Systems, Hockey Dasher Systems, Catering Equipment, Kitchen
and Food Preparation Equipment, Concession Equipment, Operable Walls, Time
Clocks, Blackout Curtains, Whirlpool Baths, Ticket Window Reader Boards, Dock
Equipment, Handicapped Hearing Aids, Handicapped Seating Platforms, Trash Chute
and Compactor Systems, Folding Chairs, Hockey Goals, Soccer Goals, Storage
Racks or Systems for the Soccer Carpet, Telephone Equipment, Turnstiles, Mobile
Radios, First Aid Room Equipment, Forklifts, Pallet Jacks, Portable Stages,
Organ/Synthesizers, Snow Removal Equipment, Ice Sub-floor Covers, Banners,
Flags, Waste Receptacles, Cash Room Equipment, Storage Systems, Laundry
Equipment, Metal Detectors, Pneumatic Tube Systems, Zambonis, Dark Room
Equipment, Seat Storage Carts, Computer Equipment, Portable Standards and
Ropes, Maintenance and Housekeeping Equipment, Time and Shot Clocks, Scorers'
Tables, Fixed and Movable Seats, Electrical Sub-Metering, Truck and Trailer
Mechanical and Electrical Connections, Window Washing Equipment, Retractable
and Movable Platforms and Seats, Scoreboards, Basketball Floors, Basketball
Goals, Video Production Equipment, Radio Production Equipment, Broadcast
Cabling, Strength and Conditioning Equipment, Locker Room Equipment (except the
Team's), Television Monitors at Concourses and Loges, Exterior Marquee Signs,
Interior and Exterior Graphics which may be required to construct, operate, use
and occupy a "first class", "state-of-the-art" arena. The Project shall have a
complete television production and control room and related equipment. All
design efforts are subject to final approval of the Team.
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EXHIBIT C
PLAN OF FINANCE
I. County Bonds as defined in the Development Agreement to be issued
pursuant to Section 2.3 (b) of the Development Agreement will be
either of the following as mutually determined by the County and
Project Developer with the goal of the lowest annual debt service
payment:
A. Long term fixed rate taxable bonds issued by the County no
later than September 15, 1996, subject to extension by mutual
agreement of the parties, with a final maturity as set forth
in Section 2.3 (b) of the Development Agreement.
B. A combination of long term fixed rate tax-exempt and taxable
bonds with a final maturity as set forth in Section 2.3 (b) of
the Development Agreement issued pursuant to the terms set
forth in Section II of this Plan of Finance. The long term
fixed rate tax-exempt bonds will be issued by the County no
later than September 15, 1996, subject to extension by mutual
agreement of the parties. The long term fixed rate taxable
bonds, at the option of the County and the Project Developer,
may be issued by the County at a later date as funds are
needed as determined by the County.
C. County will issue completion bonds (the "Completion Bonds") up
to 10% of original amount as provided in Article VIII of
Operating Agreement and 2.3 (f) of Development Agreement the
debt service of which will be paid by the Operator.
II. Fixed Rate Long Term Tax-Exempt and Taxable Bonds.
A. Definitions applicable to Fixed Rate Long Term Tax-Exempt and
Taxable Bonds.
1. "County Preferred Revenue Allocation" means an annual
amount, payable as required by Section 5.2.1 of the
Operating Agreement equal to the difference between
(a) the County's actual annual debt service
requirement on the Fixed Rate Long Term Tax-Exempt
and Taxable Bonds in whatever combination and
principal amounts in which these bonds are ultimately
issued and (b) $10 million. The debt service
requirement on the Fixed Rate Long Term Tax-Exempt
and Taxable Bonds, for purposes of computing the
County Preferred Revenue Allocation, shall be fixed
and determined at the time of issuance of the Fixed
Rate Long Term Tax-Exempt and Taxable Bonds or,
collectively, shall be fixed and determined at the
time of issuance of the Fixed Rate Long Term Taxable
Bonds, if these Bonds are not issued simultaneously
with the Fixed Rate Long Term Tax Exempt Bonds.
In the event of the issuance of and
subsequent mandatory call of the Fixed Rate Long Term
Tax-Exempt Bonds pursuant to Section II.C.4.b.(1) of
this Plan of Finance and the issuance of Fixed Rate
Long Term Taxable
<PAGE> 55
Refunding Bonds therefor pursuant to Section
II.C.6.a. of this Plan of Finance, "County Preferred
Revenue Allocation" shall mean an annual amount,
payable as required by Section 5.2.1 of the Operating
Agreement equal to the difference between (a) the sum
of the County's actual annual debt service
requirement on the Fixed Rate Long Term Taxable
Refunding Bonds plus the Fixed Rate Long Term Taxable
Bonds and (b) $10 million. The debt service
requirement on the Fixed Rate Long Term Taxable
Refunding Bonds and the Fixed Rate Long Term Taxable
Bonds, for purposes of computing the County Preferred
Revenue Allocation, shall be fixed and determined at
the time of issuance of the Fixed Rate Long Term
Taxable Refunding Bonds.
2. "County's Equity" means the sum of:
a. The amount of the Professional Sports
Franchise Facilities Tax receipts contributed
by the County to pay interest during
construction or Project costs.
b. The amount of the Sales Tax Rebate
contributed by the County to pay interest
during construction or Project costs.
c. The amount received by the County from the
City of Sunrise for the purchase of an
easement and contributed by the County to the
Project to pay land acquisition costs.
d. The fair market value of any land contributed
by the County, the acquisition of which was
not financed by outstanding debt of the
County.
e. Any other County contributions deemed County's
Equity by the County's Bond Counsel.
3. "County's Equity Repayment" means the aggregate of
Private Payments first received equal to the County's
Equity as estimated by the certificate of the
County's Financial Advisor prior to the completion of
construction and as determined by the certificate of
the County's Financial Advisor following the
completion of construction.
4. "Discrete Portion" means all or any combination of
the following which has been designated as Discrete
Portion for the purposes of allocation of the Bond
Proceeds:
a. Suites and co-op suite levels of Premium Seating
b. Locker Rooms, weight rooms and like training
facilities
c. Team Office Space
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d. Operator's Office Space
e. Team Retail Store
f. Interactive Area
g. Restaurant Area
h. Team Box Office
i. Coaches' Office
j. Parking allocable exclusively to other
Discrete Portions
k. Any other areas or spaces identified by the
County's Bond Counsel
5. "Private Payments" means:
a. Payments by the Team, the Project Developer
or the Operator for the Project Developer
Project Funding pursuant to Section 2.3(e)
and Article VI of the Development Agreement,
and payments by any other private party such
as the General Contractor pursuant to a
guaranteed maximum contract; and
b. Payments by the Team, the Project Developer
or the Operator for additions which
constitute enlargements or upgrades to the
Facility and which are owned by the County;
and
c. Payments of the County Preferred Revenue
Allocation and the Guaranty thereof by the
Team in excess of the lesser of:
(1) Debt Service on the portion of the
Fixed Rate Long Term Taxable Bonds
and Completion Bonds allocable on a
reasonable basis to the final costs
of the Discrete Portion plus
issuance costs and capitalized
interest attributable thereto, or
(2) Reasonable compensation for the use
of the Discrete Portion based on the
final costs thereof; and
d. Payments of the County's share of remaining
Facility Operating Revenue as provided in
Section 5.2 of the Operating Agreement
allocable on a reasonable basis to the Fixed
Rate Long Term Tax-Exempt Bonds;
less the portion of any payment borne by the County
that is properly allocable to the payment of ordinary
and necessary expenses (as defined under Section 162
of the Internal Revenue Code) directly attributable
to the operation and maintenance of the Facility and
is approved by the County's Bond Counsel.
6. "Private Payments Cap" means the amount equal to 10%
of the present value of the aggregate debt service
payments made or reasonably expected to be
3
<PAGE> 57
made on the Fixed Rate Long Term Tax-Exempt Bonds
(other than the portion of the debt service payments
that constitutes interest during construction paid
from the proceeds of the Fixed Rate Long Term
Tax-Exempt Bonds, if any), such present value to be
determined as of the date of issuance based on the
discount rate equal to yield on the Fixed Rate Long
Term Tax-Exempt Bonds.
B. Basic Terms of the Fixed Rate Long Term Taxable Bonds.
1. Amount of Issue.
a. The aggregate costs of the Discrete Portion,
as mutually agreed by the Project Developer
and the County, plus issuance costs and
capitalized interest reasonably attributable
thereto.
(1) At the time of issuance of the Fixed
Rate Long Term Taxable Bonds, the
aggregate cost of the Discrete
Portion will be based on the
certificate signed jointly by the
Architect and General Contractor as
to the aggregate estimated cost of
the Discrete Portion.
(2) Following the determination of all
final costs, the Architect and the
General Contractor shall be required
to deliver their joint certificate
as to the aggregate final costs of
the Discrete Portion.
2. Final Maturity
a. As set forth in Section 2.3 (b) of the
Development Agreement.
3. Source of payment of debt service
a. The County Preferred Revenue Allocation and
the Guaranty thereof by the Team.
(1) To the extent that payments of debt
service on the Fixed Rate Long Term
Taxable Bonds do not exceed the
lesser of the reasonable compensation
for the use of the Discrete Portion
or the debt service on the Fixed Rate
Long Term Taxable Bonds, these
payments will not be treated as
Private Payments.
(2) To the extent that payments of such
debt service exceed the lesser of
the reasonable compensation for the
use of the
4
<PAGE> 58
Discrete Portion or the debt service
on the Fixed Rate Long Term Taxable
Bonds, these payments will be
treated as Private Payments to the
extent allocable on a reasonable
basis to the Fixed Rate Long Term
Tax-Exempt Bonds.
(3) A certificate of the County's
Financial Advisor, or such other
person as is satisfactory to the
County's Bond Counsel, will be
required at the time of issuance of
the Fixed Rate Long Term Taxable
Bonds as to whether payments of such
debt service are reasonably expected
to exceed the reasonable
compensation for the use of the
Discrete Portion based on the
aggregate estimated costs therefor
set forth in the certificate from
the Architect and the General
Contractor.
(4) An additional certificate of the
County's Financial Advisor, or such
other person as is satisfactory to
the County's Bond Counsel, will be
required at the time the Architect
and the General Contractor deliver
their joint certificate as to the
aggregate final costs of the
Discrete Portion as to whether the
payment of such debt service exceeds
reasonable compensation for the use
of the Discrete Portion based on the
aggregate final costs therefor set
forth in the certificate from the
Architect and the General
Contractor.
b. Proceeds of the Professional Sports Franchise
Facilities Tax not used to pay debt service
on the Fixed Rate Long Term Tax-Exempt Bonds.
c. Proceeds of the Sales Tax Rebate not used to
pay debt service on the Fixed Rate Long Term
Tax-Exempt Bonds.
d. Fixed Rate Long Term Taxable Bonds shall be
secured pari passu with Fixed Rate Long Term
Tax-Exempt Bonds.
5
<PAGE> 59
4. Call provisions.
a. Customary call provisions with or without
premium.
C. Basic Terms of Fixed Rate Long Term Tax-Exempt Bonds.
1. Amount of Issue.
a. The remainder of the cost to be borne by the
County not financed by the Fixed Rate Long
Term Taxable Bonds, plus cost of issuance and
capitalized interest reasonably attributable
thereto.
2. Final Maturity
a. As set forth in Section 2.3 (b) of the
Development Agreement.
3. Source of payment of debt service.
a. Proceeds of the Professional Sports Franchise
Facilities Tax
b. Proceeds of Sales Tax Rebate
c. The County Preferred Revenue Allocation and
the Guaranty thereof by the Team not used to
pay debt service on the Fixed Rate Long Term
Taxable Bonds.
(1) This payment will be treated as a
Private Payment attributable to the
Private Payments Cap.
d. Fixed Rate Long Term Taxable Bonds shall be
secured pari passu with Fixed Rate Long Term
Tax-Exempt Bonds.
4. Call provision.
a. Customary call provisions whether with or
without premium.
b. Extraordinary Mandatory Call provision whether
with or without premium.
(1) When the Director of Finance of the
County delivers a certificate to the
Trustee stating that:
(a) the County's Equity Repayment
has been received and that
the net present value of the
Private Payments
6
<PAGE> 60
actually received after
receipt of the County's Equity
Repayment, together with the
net present value of the
Private Payments reasonably
expected to be received within
the immediately succeeding
twelve months, using the
originally projected receipts,
will exceed the Private
Payments Cap, and
(b) the Director has been unable
to obtain from its nationally
recognized bond counsel an
opinion that there has been a
change in federal law since
the date of issuance of the
Fixed Rate Long Term
Tax-Exempt Bonds which would
render a mandatory call
unnecessary in order to
preserve the tax-exempt status
of the Fixed Rate Long Term
Tax-Exempt Bonds,
then the County shall call the Fixed
Rate Long Term Tax-Exempt Bonds (and
pay call premium, if any) at the
next interest payment date occurring
at least 90 days after the date of
the delivery of the certificate by
the Director of Finance to the
Trustee (the "Mandatory Call Date").
5. After the County's Equity Repayment has been received,
under no circumstances shall the net present value of
the aggregate Private Payments exceed the Private
Payments Cap, unless the County has received an
opinion from its nationally recognized bond counsel
that, due to a change in federal law subsequent to the
date of issuance of the Fixed Rate Long Term
Tax-Exempt bonds, the receipt of aggregate Private
Payments in excess of the Private Payments Cap will
not adversely affect the tax exempt status of the
Fixed Rate Long Term Tax-Exempt Bonds.
6. Refunding of Fixed Rate Long Term Tax-Exempt Bonds
with Fixed Rate Long Term Taxable Bonds upon Mandatory
Call.
a. Upon the Mandatory Call, the County shall,
prior to the Mandatory Call Date, refund the
Fixed Rate Long Term Tax-Exempt Bonds with
fixed Rate Long Term Taxable Refunding Bonds.
7
<PAGE> 61
D. Basic Terms of Fixed Rate Long Term Taxable Refunding Bonds.
In the event the Fixed Rate Long Term Tax-Exempt Bonds are
called pursuant to Section II.C.4.b, the County will issue
Fixed Rate Long Term Taxable Refunding Bonds with the goal of
the lowest annual debt service payment.
1. Amount of Issue.
a. Amount necessary to refund the Fixed Rate
Long Term Tax-Exempt Bonds plus call premium
(if any), required reserves and issuance
costs.
2. Final Maturity
a. As set forth in Section 2.3 (b) of the
Development Agreement, for the remaining term
of the License Agreement (with level debt
service) or longer if extended by mutual
agreement of the Project Developer and the
County.
3. Source of payment of debt service.
a. Proceeds of the Professional Sports Franchise
Facilities Tax.
b. Proceeds of Sales Tax Rebate
c. The County Preferred Revenue Allocation and
the Guaranty thereof by the Team not used to
pay debt service of the Fixed Rate Long Term
Taxable Bonds.
d. The Fixed Rate Long Term Taxable Refunding
Bonds shall be secured pari passu with the
Fixed Rate Long Term Taxable Bonds.
4. Call provisions.
a. Customary call provisions with or without
premium.
E. Required amendments to Development Agreement, Operating
Agreement and/or License Agreement under this financing
alternative.
1. The definition of "County Preferred Revenue
Allocation" as set forth in the Operating Agreement
must be amended as set forth herein.
2. The term of the License Agreement and renewal options
(other than renewal options at fair rental value
determined at the date of renewal) will be limited to
80% of the useful life of the Facility.
8
<PAGE> 62
III. Cost Savings
A. The Trustee shall deposit into the Interest Account and the
Principal Account of the Bond Fund any amount remaining in the
Construction Fund after the Completion Date and payment of all
costs and expenses to be paid from the Construction Fund, as
provided in the Trust Agreement.
9
<PAGE> 63
EXHIBIT D [05/23/96]
LAND ACQUISITION AND PROJECT DEVELOPMENT BUDGET
<TABLE>
<CAPTION>
BUDGET CATEGORY DETAIL AMOUNT
--------------- ------ ------
<S> <C> <C> <C> <C>
I. LAND ACQUISITION
1. Land Acquisition: Land $ 12,557,500
II. PROJECT DEVELOPMENT
2. Pre-Development Costs: Development Approvals $ 150,000
Program Management 250,000
Architectural & Engineering 500,000
Civil Engineering & Surveys 180,000
Contractor 250,000
Legal 100,000
Geotechnical 70,000
Pre-Development Contingency 600,000 $ 2,100,000
3. Architecture and Engineering: A&E Services $ 10,240,000
Reimbursable Expenses 860,000 $ 11,100,000
4. Site Related Work: Off-Site Infrastructure $ 4,000,000
Developer Approvals 100,000
Traffic Consultant 55,000 $ 4,155,000
5. Construction: Site Work $ 5,000,000
Materials 47,000,000
Concession Equipment 7,500,000
Finishes & Specialties 12,750,000
Art in Public Places 600,000
HVAC 10,000,000
Plumbing 4,700,000
Fire Protection 1,700,000
Electrical 11,000,000
Scoreboard & Equipment 5,000,000
Seating 3,600,000
General Conditions 6,100,000
Payment/Performance Bond 600,000
Fee 2,200,000 $117,750,000
6. Project Developer's
General Requirements: Fees, Permits, Surveys & Tests $ 2,830,000
Financial & Legal Consulting 875,000
Insurance 1,750,000 $ 5,455,000
7. Project Consulting Fees: County's Consultant $ 800,000
Reimbursable Expenses 350,000
Project Management 800,000 $ 1,950,000
8. Furniture, Fixtures & Equipment: FF&E $ 5,000,000
9. Pre-Opening Expenses: Start-Up, Marketing
& Premium Seat Sales $ 5,000,000
10. Contingency Fund: Contingency $ 10,632,500
TOTAL LAND ACQUISITION AND PROJECT DEVELOPMENT BUDGET $175,700,000
</TABLE>
<PAGE> 64
ESTIMATED SOURCES AND USES OF FUNDS*
<TABLE>
<CAPTION>
Sources of Funds
<S> <C>
Sunrise Easement $ 4,000,000
Proceeds of County Bond Issue 177,790,000
Collection of Tourist Development Tax (2%) 16,000,000
Collection of Sales Tax 4,000,000
Investment Income 10,830,000
-------------
Total, Sources of Funds $ 212,620,000
Uses of Funds
Land Acquisition Cost** $ 12,557,500
Project Development Budget** 163,142,500
Contingency 510,000
Deposit to Debt Service Reserve Fund 7,458,000
Interest Paid on Bonds During Construction 20,296,000
Deposit to Capitalized Interest Account 4,630,000
Underwriting and Issuance Expenses 1,813,000
Municipal Bond Insurance Premiums 2,213,000
------------
Total, Uses of Funds $212,620,000
</TABLE>
__________________
* Table reflects issuance of Fixed Rate Long Term Taxable Bonds only and
shall be adjusted to conform with the Final Plan of Finance which
contemplates a mix of taxable and tax-exempt bonds.
** Aggregating the Land Acquisition and Project Development Budget
2
<PAGE> 65
EXHIBIT E
SUBSTANTIAL COMPLETION GUARANTY AGREEMENT
THIS SUBSTANTIAL COMPLETION GUARANTY AGREEMENT ("AGREEMENT"), dated as of
_________________, 1996, of FLORIDA PANTHERS HOCKEY CLUB, LTD., a Florida
limited partnership ("Guarantor"), joined by ARENA OPERATING COMPANY, LTD., a
Florida limited partnership ("Operator"), in favor of BROWARD COUNTY, FLORIDA
(the "County").
W I T N E S S E T H:
WHEREAS, Arena Development Company, Ltd. (the "Project Developer"), and the
County are parties to that certain Development and Construction Agreement of
even date herewith (the "Development Agreement"); and
WHEREAS, all terms used in this Agreement shall have the meanings given to
such terms in the Development Agreement or, if not defined in the Development
Agreement, in the Operating Agreement or Team License (as such terms are
defined in the Development Agreement); and
WHEREAS, as an inducement to County to sign the Development Agreement,
Guarantor agreed to guaranty the Substantial Completion of the Project
Improvements as provided in the Development Agreement.
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound hereby, Guarantor hereby guaranties and agrees as follows:
1. The Project Improvements will be Substantially Completed by
the Project Developer, but if the Project Developer abandons the Work or does
not Substantially Complete the Project Improvements in accordance with the
Development Agreement, Guarantor shall cause the Project Improvements to be
Substantially Completed in accordance with the provisions of the Development
Agreement. This is a guaranty of Substantial Completion and not a guaranty of
any costs, damages or other amounts to which the County may claim to be
entitled under the Development Agreement or otherwise, other than costs
required in order to achieve Substantial Completion of the Work in accordance
with the provisions of the Development Agreement. In no event shall Guarantor
be responsible for any FM Increase or any Additional FM Increase.
2. In the event the Guarantor is required to perform its
obligations in accordance with Paragraph 1 above, by its acceptance hereof, the
County agrees to cause the Trustee to disburse to Guarantor, in accordance with
the terms and conditions of the Development Agreement and the Trust Agreement,
the balance of the County Project Funding, any amounts deposited by the Project
Developer in the Construction Fund or made available through a Letter of Credit
and, if applicable, the Supplemental County Project Funding for the purpose of
enabling Guarantor to cause the Substantial Completion of the Project
Improvements. Further, in such event, all rights, privileges and defenses of
the Project Developer pursuant to the Development Agreement, or if the
Development
<PAGE> 66
Agreement is terminated, all such rights, privileges and defenses as would
exist were the Development Agreement still in effect, and/or the Trust
Agreement shall inure to the benefit of Guarantor.
3. Guarantor shall pay to the County, upon demand, all losses and
reasonable costs and expenses, including reasonable attorney's fees, that may
be incurred by the County in attempting to cause satisfaction of Guarantor's
liability under this Agreement. Should Guarantor fail to cause the Project
Improvements to be Substantially Completed as required herein and the County
elects to undertake to complete all unfinished Work (but the County shall have
no obligation to undertake such completion), Guarantor hereby agrees to
reimburse the County for all costs and expenses of any kind or nature incurred
by the County, other than any FM Increase or any Additional FM Increase, in
completing the Project Improvements in accordance with the Construction
Documents over and above the balance of the County Project Funding, any amounts
deposited by the Project Developer in the Construction Fund or made available
through a Letter of Credit and the Supplemental County Project Funding.
4. Performance by the County of all its obligations under the
Development Agreement, or, if the Development Agreement is terminated, all such
obligations as would exist were the Development Agreement still in effect,
shall be a condition precedent to Guarantor's performance of its obligations
under this Agreement.
5. In the event of a default by the Project Developer under the
Development Agreement, Guarantor waives any right to require the County to (i)
proceed against the Project Developer or pursue any rights or remedies with
respect to the Development Agreement, or (ii) pursue any other remedies
whatsoever available to the County.
6. This Agreement shall be a continuing one and shall be binding
upon Guarantor until ninety (90) days after Substantial Completion of the
Project Improvements. This Agreement shall terminate 90 days after such
Substantial Completion or upon termination of the Development Agreement
pursuant to Section 8.1 or Section 14.1 thereof, except to the extent otherwise
expressly provided in such Section 14.1.
7. In order to secure the obligations of Guarantor under this
Agreement, Guarantor and Operator hereby pledge and grant to the County (and by
its acceptance hereof, County, as a party to the Operating Agreement and Team
License, consents to such pledge and grant) a first lien security interest in
(i) $4,000,000 of contractual Facility revenues to be received annually from
the sale or license of Premium Seating, (ii) $2,000,000 of contractual Facility
revenues to be received annually from the sale or license of Advertising
(excluding revenue attributable to the sale or license of Sponsor Signs), (iii)
no less than $6,000,000 as a combination of the foregoing (i) and (ii), and
(iv) any Supplemental Rent payments made pursuant to the License Agreement.
This pledge will be deemed to include any advance collections of the revenues
referenced herein. This pledge and grant of a security interest shall
terminate upon the termination of this Agreement except for the first lien
security interest in the Supplemental Rent payments received pursuant to the
License Agreement, which shall continue. The County shall have no right to
pledge, encumber, mortgage or lien the collateral pledged hereby or the
County's security interest therein, and this pledge and grant of a security
interest shall terminate upon any such pledge, encumbrance, mortgage or grant
of lien by the
2
<PAGE> 67
County. Nothing contained herein shall preclude the County from attempting to
perfect its security interest by filing a UCC-1 Financing Statement with
respect to the collateral.
8. The obligation of Guarantor hereunder shall not be released,
discharged, mitigated, impaired or affected by (i) any extensions of time,
indulgences or modifications which the County may extend or make with the
Project Developer in respect of or the performance of any of the obligations of
the Project Developer under any one or more of the provisions of the
Development Agreement, (ii) any waiver by or failure of the County to enforce
any of the terms, covenants, conditions and provisions of the Development
Agreement, (iii) any assignment of the Development Agreement by the Project
Developer or by any trustee, receiver or liquidator, or (iv) any consent which
the County may give to any such assignment.
9. Guarantor expressly waives the necessity of, and where
applicable, the right to receive notice of, any of the following and Guarantor
expressly agrees that this guaranty shall not be discharged, diminished,
released, reduced, altered, impaired or otherwise affected by the waiver of any
of the following: (a) presentment, protest, dishonor, notice of dishonor,
notice of nonpayment, notice of acceptance and presentment for payment; (b)
alterations, modifications, renewals or extensions of the Development
Agreement; and (c) acceptance of this guaranty.
10. Without limiting the generality of the foregoing, the
liability of Guarantor under this Agreement shall not be waived, released,
discharged, impaired or affected by reason of the release or discharge of the
Project Developer in any receivership, bankruptcy, winding-up, insolvency or
other creditors' proceeding.
11. No action or proceeding brought or instituted under this
Agreement and no recovery in pursuance thereof shall be a bar or defense to any
further action or proceeding which may be brought under this Agreement by
reason of any further default or defaults hereunder or in the performance and
observance of the terms, covenants, conditions and provisions of the
Development Agreement.
12. This Agreement shall be governed by the laws of the State of
Florida.
13. Any notice or consent required or permitted by this Agreement
shall be in writing and shall be deemed delivered if delivered in person or if
sent by certified mail, postage prepaid, return receipt requested, as follows,
unless such address is changed by written notice hereunder:
(a) If to the County:
County Administrator
Broward County, Florida
115 S. Andrews Avenue, Room 409
Fort Lauderdale, Florida 33301
with copy to:
Director, Department of Finance
and Administrative Services
3
<PAGE> 68
115 S. Andrews Avenue, Room 121
Fort Lauderdale, Florida 33301
with copy to:
The County Attorney
115 S. Andrews Avenue, Room 423
Fort Lauderdale, Florida 33301
(b) If to Guarantor:
Florida Panthers Hockey Club, Ltd.
c/o Huizenga Holdings, Inc.
200 S. Andrews Avenue, 6th Floor
Fort Lauderdale, Florida 33301
Attention: President
14. Guarantor warrants and represents that this Agreement has been
duly authorized and executed by Guarantor and is a legal, valid and binding
instrument, enforceable against Guarantor in accordance with its terms.
15. This Agreement shall inure to the benefit of the County, its
successors and assigns and shall be binding upon Guarantor and its successors
and assigns.
IN WITNESS WHEREOF, Guarantor, intending to be legally bound hereby, has
duly executed this Agreement as of the date and year first above written.
FLORIDA PANTHERS HOCKEY CLUB, LTD.
by The Florida Panthers Hockey Club, Inc.,
General Partner
by
-----------------------------------
President
Operator hereby joins in the foregoing Guaranty to evidence its agreement
to the provisions of paragraph 7 thereof.
ARENA OPERATING COMPANY, LTD.
by Arena Operating Company, Inc., general
partner
by
------------------------------------
Title:
------------------------------
4
<PAGE> 69
EXHIBIT F
SBDE PLAN
1. Project Developer will use good faith efforts to cause
minority owned and women owned business enterprises to be engaged in the
construction of the Project Improvements at least up to the levels of the
Construction Goals described below.
2. Project Developer has established the following
participation percentages as its construction goals (the "Construction Goals"):
<TABLE>
<S> <C> <C>
(a) Minority Business Enterprise ("MBE")
African American 10%
Hispanic 10%
Asian and/or Native American 3%
(b) Women's Business Enterprise ("WBE") 7%
</TABLE>
3. The Construction Goals are percentages of the total dollar
amounts of all trade contracts and material costs in an amount to be determined
by the Project Developer for the construction and design of the Project
Improvements, but may not necessarily be achieved in each trade.
4. (a) Women's Business Enterprise or WBE. A business
which is:
(1) A sole proprietorship, owned and
controlled by a woman;
(2) A partnership or joint venture controlled
by women in which at least 51% of the beneficial ownership interest is held by
women;
(3) A corporation or other entity controlled
by women in which at least 51% of the interest in such corporation or entity is
beneficially owned by women.
(b) Minority Business Enterprise or MBE. A business
which is:
(1) A sole proprietorship, owned and
controlled by a minority person;
(2) A partnership or joint venture controlled
by minority persons in which at least 51% of the beneficial ownership interest
is held by minority persons;
(3) A corporation or other entity controlled
by minority persons in which at least 51% of the interest in such corporation or
entity is beneficially owned by minority persons.
<PAGE> 70
5. Project Developer will cooperate with the Broward
County Office of Equal Opportunity in its efforts to achieve the Construction
Goals.
6. Project Developer shall not be required to engage
MBE's or WBE's who are not the lowest responsible bidders.
2
<PAGE> 71
EXHIBIT G
PERMITS WHICH MAY BE REQUIRED
Part One
- --------
<TABLE>
<S> <C>
(a) Developer Agreement with Department of Community Affairs pursuant to
Section 380.032, Florida Statutes.
(b) Chapter 380 DRI Development Order for the Project
(c) DNRP Complex Air Source License
(d) Zoning Approval (conditional use) by City
(e) County Plat Approval, including City's issuance of letter of no
objection regarding changing note on the plat
(f) DNRP Surface Water Management License
(g) DNRP Environmental Resource Lake Excavation License
(j) SFWMD Surface Water Management Permit
(i) DNRP Wetlands License
(j) U.S. Army Corps of Engineers Approval
(k) DNRP Development Review Approval
(l) DNRP EAR License (Contamination)
Part Two
- --------
(a) Site Plan Approval by City
(b) Foundation Permit
(c) Permit for Arena Superstructure
(d) Certificate of Completion
(e) Certificate of Use and Occupancy
</TABLE>
<PAGE> 72
[NOT FINAL -- TO BE COMPLETED BY
MUTUAL AGREEMENT OF THE PARTIES]
EXHIBIT H
INSURANCE REQUIREMENTS
<TABLE>
<CAPTION>
Part One: Project Developer's Insurance Requirements:
- -------- ------------------------------------------
<S> <C>
1.1 Without limiting any of the other obligations or
liabilities of the Project Developer, the Project Developer
shall provide, pay for, and maintain in force until all of
Work has been completed and accepted by the County (or for
such duration as is otherwise specified hereinafter), the
insurance coverages set forth herein.
1.1.1 Worker's Compensation insurance to apply for all
employees in compliance with the "Workers'
Compensation Law" of the State of Florida and all
applicable federal laws. In addition, the
policy(ies) must include:
1.1.1.1 Employers' Liability with a limit of
_________________ Dollars
($___________) each accident.
1.1.2 Comprehensive General Liability with minimum limits
of ____________________ Dollars ($____________) per
occurrence, combined single limit for Bodily Injury
Liability and Property Damage Liability. Coverage
must be afforded on a form no more restrictive than
the latest edition of the Comprehensive General
Liability policy, without restrictive endorsements,
as filed by the Insurance Services Office, and must
include:
[ ] 1.1.2.1 Premises and/or Operations.
[ ] 1.1.2.2 Independent Contractors.
[ ] 1.1.2.3 Products and/or Completed Operation.
The Project Developer shall maintain in
force until at least three years after
completion of all Work, coverage for
Products and Completed Operations,
including Broad Form Property Damage.
[ ] 1.1.2.4 Explosion, Collapse and Underground
Coverages.
[ ] 1.1.2.5 Broad Form Property Damage.
</TABLE>
<PAGE> 73
[ ] 1.1.2.6 Broad Form Contractual Coverage
applicable to this specific Contract,
including any hold harmless and/or
indemnification agreement.
[ ] 1.1.2.7 Personal Injury Coverage with Employee
and Contractual Exclusions removed,
with minimum limits of coverage equal
to those required for Bodily Injury
Liability and Property Damage
Liability.
1.1.2.8 The County is to be expressly included
as an Additional Insured in the name of
Broward County Board of Commissioners
with respect to liability arising out
of operations performed for the County
by or on behalf of the Project
Developer or acts or omissions of the
County in connection with general
supervision of such operation.
1.1.3. Business Automobile Liability with minimum limits
of _____________ Dollars ($___________) per
occurrence, combined single limit for Bodily Injury
Liability and Property Damage Liability. Coverage
must be afforded on a form no more restrictive than
the latest edition of the Business Automobile
Liability policy, without restrictive endorsements,
as filed by the Insurance Services Office, and must
include:
1.1.3.1 Owned Vehicles.
1.1.3.2 Hired and Non-Hired Vehicles.
1.1.3.3 Employers' Non-Ownership.
[ ] 1.1.4 Builder's Risk Insurance for the construction of
and/or addition to aboveground buildings or
structures is required. The coverage shall be "All
Risk" coverage on a completed value (nonreporting)
form for full replacement value, covering Broward
County as a named insured, with a deductible of not
more than Five Thousand Dollars ($5,000.00) each
claim.
1.1.4.1 Waiver of Occupancy Clause or
Warranty--Policy must be specifically
endorsed to eliminate any "Occupancy
Clause" or similar warranty or
representation that the Facility shall
not be occupied without specific
endorsement of the policy. The Policy
must be endorsed to provide that the
Builder's Risk coverage will continue
to apply until Substantial Completion
of the Project Improvements.
2
<PAGE> 74
[ ] 1.1.4.2 Flood Insurance--If the Facility is
located within an identified special
flood hazard area, flood insurance must
be afforded for the lesser of the total
insurable value thereof or the maximum
amount of flood insurance coverage
available under the National Flood
Program.
1.2 If the initial insurance expires prior to the completion of
the Work, renewal copies of policies shall be furnished at
least thirty (30) days prior to the date of their
expiration.
1.3 Notice of Cancellation and/or Restriction--The policy(ies)
must be endorsed to provide Broward County with at least
thirty (30) days notice of cancellation and/or restriction.
1.4 The Project Developer shall furnish to the County's
Consultant Certificates of Insurance or endorsements
evidencing the insurance coverage specified above within
fifteen (15) calendar days after the date of the Project
Development Agreement. The required Certificates of
Insurance shall name the types of policies provided, refer
specifically to this Contract, and state that such
insurance is as required by this Contract.
Part Two: Requirements Regarding Payment and Performance Bonds:
1. Within fifteen (15) days of being notified of the award,
Contractor shall furnish a Performance Bond and a Payment
Bond containing all the provisions of the County's
Performance Bond and Payment Bond forms 00710 and 00720.
1.1 Each Bond shall be in the amount of one hundred
percent (100%) of the Contract Price guaranteeing
to County the completion and performance of the
work covered in such Contract as well as full
payment of all suppliers, materialmen, laborers, or
subcontractors employed pursuant to this project.
Each Bond shall be with a surety company which is
qualified pursuant to Section 2 below.
1.2 Each Bond shall continue in effect for one year
after final completion and acceptance of the work
with liability equal to one hundred percent (100%)
of the Contract sum, or an additional bond shall be
conditioned that Contractor will, upon notification
by County, correct any defective or faulty work or
materials which appear within one year after final
completion of the Contract.
1.3 Pursuant to the requirements of Section
255.05(1)(a), Florida Statutes, as may be amended
from time to time, Contractor shall ensure that the
bond(s) referenced above shall be recorded in the
3
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<TABLE>
<S> <C>
public records of Broward County and provide the
County with evidence of such recording.
1.4 Alternate Form of Security:
In lieu of a Performance Bond and a Payment Bond,
Contractor may furnish alternate forms of security
which may be in the form of cash, money order,
certified check, cashier's check or unconditional
letter of credit in the County's form 00735. Such
alternate forms of security shall be subject to the
approval of County and for same purpose and shall
be subject to the same conditions as those
applicable above and shall be held by County for
one year after completion and acceptance of the
Work.
2. Bid Bonds, Performance Bonds and Payment Bonds over Five
Hundred Thousand Dollars ($500,000.00):
2.1 Each bond must be executed by a surety company of
recognized standing, authorized to do business in
the State of Florida as surety, having a resident
agent in the State of Florida and having been in
business with a record of successful continuous
operation for at least five years.
2.2 The surety company shall hold a current certificate
of authority as acceptable surety on federal bonds
in accordance with United States Department of
Treasury Circular 570, Current Revisions. If the
amount of the Bond exceeds the underwriting
limitation set forth in the circular, in order to
qualify, the net retention of the surety company
shall not exceed the underwriting limitation in the
circular, and the excess risks must be protected by
coinsurance, reinsurance, or other methods in
accordance with Treasury Circular 297, revised
September 1, 1978 (31 DFR Section 223.10, Section
223.111). Further, the surety company shall
provide County with evidence satisfactory to County
that such excess risk has been protected in an
acceptable manner.
2.3 The surety company shall have at least the
following minimum ratings or A-rated companies
listed in same Financial Size Category in the
latest revision of Best's Insurance Report:
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Best's Best's
Policy- Financial
holder's Size
Amount of Bond Ratings Category
-------------- -------- ---------
<S> <C> <C>
$ 500,001 to 1,000,000 A Class I
1,000,001 to 2,000,000 A Class II
2,000,001 to 5,000,000 A Class III
5,000,001 to 10,000,000 A Class IV
10,000,001 to 25,000,000 A Class V
25,000,001 to 50,000,000 A Class VI
50,000,001 or more A Class VII
</TABLE>
2.4 For projects of $500,000.00 or less, County
may accept a Bid Bond, Performance Bond and
Payment Bond from a surety company which has
twice the minimum surplus and capital
required by the Florida Insurance Code at the
time the invitation to bid is issued, if the
surety company is otherwise in compliance
with the provisions of the Florida Insurance
Code, and if the surety company holds a
currently valid certificate of authority
issued by the United States Department of the
Treasury under Section 9304 to 9308 of Title
31 of the United States Code, as may be
amended from time to time. The Certificate
and Affidavit so certifying (Form 00622)
should be submitted with the Bid Bond and
also with the Performance Bond and Payment
Bond.
Part Three: The County's Insurance Requirements:
- ---------- ----------------------------------
[CONTRACTUAL LIABILITY COVERAGE]
[COUNTY-FURNISHED MATERIALS]
5
<PAGE> 77
EXHIBIT I
DEVELOPER'S CERTIFICATE
Arena Development Company, Ltd. (the "Project Developer"), pursuant to
Section ___ of that certain Development Agreement (the "Agreement") dated as of
______________, 1996, between Broward County, Florida (the "County") and the
Project Developer, hereby certifies to the County as follows (all terms used in
this Developer's Certificate shall have the meanings given to such terms in the
Agreement):
(a) Project Cost Amendments. Attached hereto as Schedule
A is a true and complete description of all Project Cost Amendments from the
date of the last Developer's Certificate submitted pursuant to the Agreement
through the date hereof.
(b) Land Acquisition and Project Development Budget.
Attached hereto as Schedule B is a true and correct copy of the Land
Acquisition and Project Development Budget as in effect on the date hereof.
The Contingency Fund (not reallocated to any other Project cost category) set
forth in such Land Acquisition and Project Development Budget is
$_______________.
(c ) Effect of Project Cost Amendments. Based on the
Project Cost Amendments referred to in Schedule A hereto, the Land Acquisition
and Project Development Budget attached hereto as Schedule B shows an ___
increase or a ___ decrease in aggregate amount of the last Land Acquisition and
Project Development Budget equal to $___________. Attached hereto as Schedule
C is a true and correct copy of the Schedule as in effect on the date hereof
(which takes account of the effect of the Project Cost Amendments referred to
in Schedule A hereto).
(d) Budget vs. Actual. Attached hereto as Schedule D is
a true and complete comparison of actual Project costs incurred through the
date hereof and the costs projected to be incurred to complete the Project with
the Land Acquisition and Project Development Budget.
(e) Estimated Remaining Project Cost Drawdown Schedule.
Attached hereto as Schedule E is a projection of remaining amounts required to
be drawn down and paid from the Construction Fund each month from the month
after the month hereof until the month in which Substantial Completion occurs.
(f) Shortfall. As the date hereof, the amount of the
Shortfall, if any, is $_______.
<PAGE> 78
(g) Letter of Credit. As of the date hereof, the amount,
if any, of cash or Letter of Credit required to satisfy the Interim LOC Test or
Full LOC Test pursuant to Section 6.5 of the Agreement is $__________.
Dated:____________, 19__. ARENA DEVELOPMENT COMPANY, LTD.
by Arena Development Company, Inc.,
general partner
by_____________________________
Title:_______________________
2
<PAGE> 1
EXHIBIT 10.7
MIAMI ARENA CONTRACT
between
MIAMI SPORTS AND EXHIBITION AUTHORITY
and
DECOMA MIAMI ASSOCIATES, LTD.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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MIAMI ARENA CONTRACT
ARTICLE I CONTRACT DOCUMENTS.......................... 1
ARTICLE II DEFINITIONS................................. 1
ARTICLE III WORK........................................ 10
ARTICLE IV PAYMENTS AND INCOME ALLOCATION.............. 10
ARTICLE V TERM........................................ 10
EXHIBIT A
MINORITY PARTICIPATION AGREEMENT
ARTICLE I DEFINITIONS............................ A-3
Section 1.1 Defined Terms......... A-3
Section 1.2 Terms in the
Master Agreement...... A-5
ARTICLE 11 MINORITY EQUITY PARTICIPATION.......... A-5
Section 2.1 Minority ownership.... A-5
Section 2.2 The Venture's
Actions............... A-6
ARTICLE III CONSTRUCTION CONTRACTS.................. A-6
Section 3.1 Goals................. A-6
Section 3.2 Developer's
Obligations........... A-7
Section 3.3 Arena Project Team.... A-10
ARTICLE IV CONSTRUCTION HIRING..................... A-11
Section 4.1 Goals ................ A-11
Section 4.2 Developer's
Obligations .......... A-11
ARTICLE V PROFESSIONAL SERVICE CONTRACTS.......... A-12
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ARTICLE VI MANAGEMENT AND MAINTENANCE
OPERATIONS.............................. A-13
Section 6.1 Goals................. A-13
Section 6.2 Developer's
Obligations........... A-14
ARTICLE VII MINORITY COMMITTEE...................... A-14
ARTICLE VIII MISCELLANEOUS PROVISIONS................ A-15
Section 8.1 Florida and Local
Laws Prevail.......... A-15
Section 8.2 Conflicts of
Interest; MSEA,
City Representatives
and Venturers Not
Individually Liable... A-15
Section 8.3 Notice................ A-16
Section 8.4 Titles of Articles
and Sections.......... A-18
Section 8.5 Successors and
Assigns............... A-18
Section 8.6 Counterparts.......... A-18
Section 8.7 Records............... A-19
Section 8.8 Estoppel
Certificates.......... A-19
ARTICLE IX DISPUTES................................ A-20
EXHIBIT B
GENERAL DESCRIPTION OF WORK................................... B-1
B.1 DEVELOPMENT WORK.......................... B-1
B.2 CONSTRUCTION WORK......................... B-4
B.3 OPERATING WORK............................ B-5
PROJECT CONSTRUCTION PROGRAM
(SCHEDULE 1 TO EXHIBIT B)...................... B(1)-l
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(ii)
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PROJECT BUDGET
(ATTACHMENT I to SCHEDULE 1)................ B(1)-2
SOURCES AND USE OF CAPITAL.................... B(1)-4
PROJECT SCHEDULE
(ATTACHMENT 2 TO SCHEDULE 1)................ B(l)-6
PRE-OPENING OPERATING PROGRAM
(ATTACHMENT 3 TO SCHEDULE 1)................ B(1)-8
REQUEST FOR PAYMENT..................................
INITIAL OPERATING EXPENSE BUDGET
(SCHEDULE 2 TO EXHIBIT B)........................ B(2)-l
EXHIBIT C
PAYMENTS/INCOME ALLOCATION................................... C-1
C.1 DEVELOPMENT AND CONSTRUCTION OF
THE ARENA................................. C-1
C.2 OPERATION OF THE ARENA.................... C-2
C.2.1 Seat Use Revenues............. C-2
C.2.2 Operating Income/Replacement
Fund/Maintenance Account...... C-2
C.2.3 Operating Payment............. C-10
EXHIBIT D
GENERAL TERMS AND CONDITIONS................................. D-1
D.1 DEFAULT AND TERMINATION..................... D-1
D.1.1 Events of Default................ D-1
D,1.2 Termination...................... D-5
D.1.3 Damages.......................... D-8
D.1.4 Termination Fee.................. D-8
D.1.5 Surrender........................ D-12
D.1.6 Alternative Remedies............. D-12
D.2 EQUAL EMPLOYMENT OPPORTUNITY................ D-15
D.2.1 Minority Employment and
Investment....................... D-15
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D.3 RELATIONSHIP OF PARTIES........................ D-15
D.3.1 Independent Contractor ............... D-15
D.3.2 Owner Representative.................. D-15
D.3.3 Operator Representative............... D-16
D.4 TITLE AND NAMES................................ D-16
D.4.1 In General............................ D-16
D.4.2 Names................................. D-16
D.5 STANDARDS OF PERFORMANCE........................ D-17
D.5.1 Development/Construction
Standards ............................ D-17
D.5.2 Operating Standards ................... D-17
D.5.3 General Performance Standards.......... D-18
D.6 PROJECT BUDGET, PROJECT CONSTRUCTION
PROGRAM; APPROVED OPERATING EXPENSE
BUDGET; OWNER'S REVIEW AND APPROVAL............. D-19
D.6.1 Changes to the Project Budget ......... D-19
D.6.2 Changes to the Project
Construction Program................... D-19
D.6.3 Initial Operating Expense
Budget and Approved Operating
Expense Budget......................... D-20
D.6.4 Standards for Owner's Review
and Approval........................... D-21
D.7 ASSIGNMENT AND SUBCONTRACTS FOR PORTIONS
OF THE WORK..................................... D-23
D.7.1 Performance of the Development
Work................................... D-23
D.7.2 Performance of the Construction
Work................................... D-23
D.7.3 Performance of Operating Work D-23
D.7.4 Contracts for Use of Arena D-24
D.7.5 Advertising Contracts ................. D-25
D.7.6 Concessions............................ D-26
D.7.7 Use and Advertising Contracts.......... D-27
D.7.8 Sales, Assignments, and
Pledges................................ D-28
D.7.9 Removal of General Manager............. D-28
</TABLE>
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D.8 OWNER OBLIGATIONS.............................. D-28
D.8.1 Exclusive and Non-Competition
Agreement............................. D-28
D.B.2 Site Acquisition and Ad Valorem
Taxes................................. D-29
D.8.3 Expedited Approvals and Sales
Tax Exemptions........................ D-30
D.8.4 Discriminatory Legal
Requirements.......................... D-30
D.8.5 Operating Losses...................... D-30
D.8.6 Extraordinary Replacement and
Repair................................ D-31
D.8.7 Maintenance Account................... D-31
D.8.8 Construction Trust Fund............... D-31
D.8.9 Investment of Funds................... D-32
D.8.10 Seat Use Charge....................... D-32
D.8.11 Convention Development Tax
Revenues.............................. D-32
D.8.12 Block 44/57 Agreement................. D-32
D.8.13 Bond Documents........................ D-34
D.9 INSPECTIONS, BOOKS, RECORDS, ACCOUNTS,
AND AUDITS..................................... D-35
D.9.1 Inspection.......................... D-35
D.9.2 Books, Records and Accounts......... D-35
D.9.3 Statements and Audits............... D-35
D.10 MISCELLANEOUS.................................. D-36
D.10.1 Standard of Care.................... D-36
D.10.2 Emergency Services and
Expenditures........................ D-37
D.10.3 Force Majeure....................... D-37
D.10.4 Future Development of
Phase II............................ D-38
D.10.5 Governing Law....................... D-39
D.10.6 Notices............................. D-39
D.10.7 Entire Agreement.................... D-40
D.10.8 Non-Waiver.......................... D-40
D.10.9 Captions............................ D-41
D.10.10 Use of Certain Words................ D-41
D.10.11 Severability........................ D-41
D.10.12 No Third Party Beneficiaries ....... D-41
D.10.13 Governmental Imposition............. D-41
D.10.14 Attorneys' Fee...................... D-42
</TABLE>
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EXHIBIT G
PERMITTED ENCUMBRANCES............................................ G-1
EXHIBIT H
EXTRAORDINARY REPAIR AND REPLACEMENT.............................. H-1
EXHIBIT I
CONSTRUCTION FUNDING AGREEMENT.................................... I-1
</TABLE>
(vii)
<PAGE> 8
MIAMI ARENA CONTRACT
THIS MIAMI ARENA CONTRACT, entered into on this 10TH day of October,
1, 1986, effective as of the day of 19 , by and between MIAMI
SPORTS AND EXHIBITION AUTHORITY and DECOMA MIAMI ASSOCIATES, LTD.;
WITNESSETH:
In consideration of the mutual covenants set forth herein, the parties
hereto agree as follows:
ARTICLE I CONTRACT DOCUMENTS
This Contract consists of this contract agreement containing eleven
(11) pages and Exhibits A through I which are attached hereto and which are
made a part hereof as though set forth in full herein.
The above referenced Exhibits are as follows:
Exhibit A Minority Participation
Exhibit B General Description of Work
Schedule 1 - Project Construction
Program
Schedule 2 - Initial Operating
Expense Budget
Exhibit C Compensation, Payments and
Allocation of Income
Exhibit D General Terms and Conditions
Exhibit E Insurance
Exhibit F General Description ot Project
Exhibit G Permitted Encumbrances
Exhibit H Extraordinary Repair and
Replacement
Exhibit I Construction Funding Agreement
ARTICLE II DEFINITIONS
All terms defined in any part of this Contract shall have the same
meaning throughout this Contract. The following terms shall have the
meanings set forth opposite such terms, or in the specified provisions of the
Contract:
-1-
<PAGE> 9
"Annual Replacement Fund Payment" - Commencing with the first Operating
Year and for each Operating Year thereafter provided the Variable Operating
Payment for such Operating Year has been paid, an amount of money equal to the
lesser of (ii) $50,000.00 or (ii) the amount by which the Operating Income for
such Operating Year exceeds all Operating Expenses for such Operating Year other
than the Annual Replacement Fund Payment for such Operating Year. However, for
purposes of determining the amount of the Annual Replacement Fund Payment to be
paid in the fifth, tenth, fifteenth, twentieth, twenty-fifth and thirtieth
Operating Year following the Operating Year in which the first Annual
Replacement Fund Payment is made, clause (i) of the preceding sentence shall be
$150,000.00.
"Approved Operating Expense Budget" - Exhibit D.6.3.1
"Arena" - Exhibit F
"Barebones Administrative and Promotional Amount" - For the first
Operating Year, the sum of $1,349,750.00. For each Operating Year thereafter
the Barebones Administrative and Promotional Amount shall be the Barebones,
Adminstrative and Promotional Amount for the immediately preceding Operating
Year escalated by 5%.
"Block 44 and 57 Annual Payment" - For each Operating Year the amount
of rent that owner is obligated to pay to the City of Miami pursuant to that
certain Land Lease Agreement ("Block 44/57 Agreement") among Owner, Operator
and the City of Miami dated August , 1986.
"Budgeted Project Cost" - The estimate set forth in the Project Budget
of all Project Costs to be incurred by Owner and Operator in causing the Arena
to be developed, constructed and made operational including any contingencies
set forth therein.
"Construction Contract" - A guaranteed maximum price construction
contract to be entered between Operator and Linbeck Construction Corporation
that shall be subject to approval as to form and content by Owner and Operator.
"Construction Funding Agreement" - That agreement among Owner,
Operator and Linbeck Construction Corporation setting forth the mechanism for
payments to Contractor, a form of which agreement is attached hereto as
Exhibit I.
-2-
<PAGE> 10
"Construction Performance Bond" - The bond that is to be attached to
the Construction Contract.
"Construction Work" - Exhibit B.2
"Contract" - This agreement containing eleven (11) pages and Exhibits
A through I hereto.
"Convention Development Tax Revenues" - The receipts of the
Convention Development Tax that Dade County is authorized to levy, and the
Owner entitled to receive, pursuant to Section 212.057, Florida Statutes, as
amended and as may hereafter from time to time be amended.
"Development Fee" - An amount equal to 3% of Project Costs.
"Development Work" - Exhibit B.1.
"Event-Related Expenses" - Those costs and expenses that will be
incurred by Operator in connection with, and directly attributable to, each
event or performance in the Arena and pursuant to an agreement relating to such
event or performance (i) will be reimbursed by the user or the promoter out of
the ticket sales for such event or performance or (ii) will otherwise be paid
by the user or promoter in addition to any other charges for the use of the
Arena for such event or performance. Event-Related Expenses shall not include
any Operating Expenses that Operator has labeled Event-Related Expenses for the
sole purpose of evading payment pursuant to Exhibit C.2.2.1(c) hereof.
"Extraordinary Replacement and Replacement Expenses" - (i) 90% of all
expenditures and purchases for the types of matters referenced on Exhibit I that
are incurred during a period earlier than the expectancy periods specified
therefor on such Exhibit; (ii) 100% of all expenditures and purchases for the
types of matters referenced on Exhibit I that are incurred within or after the
expectancy periods specified therefor on such Exhibit and (iii) 90% of all
expenditures for building alterations or replacements to the Premises, and for
purchases of additional or replacement furniture, machinery or equipment, the
depreciable life of which, according to generally accepted accounting
principles, is in excess of one (1) year, which expenditures or
-3-
<PAGE> 11
purchases are not of the type of matters referenced on Exhibit H but are
reasonably necessary to the prudent operation ot the Arena.
"Initial Operating Expense Budget" - Exhibit B - Schedule 2.
"Legal Requirements" - The laws, rules and regulations of the United
States of America, State of Florida and all other governmental bodies having
jurisdiction over the Arena that are in effect on the date of execution of this
Contract.
"Maintenance Account" - The account that (ii) has been established by
Owner in connection with the Miami Sports and Exhibition Authority
Floating/Fixed Rate Special Obligation Bonds Series 1985 ("Bonds") for the
purpose of paying potential operating losses of the Arena and other costs
associated with the maintenance of the Arena and (ii) shall be maintained by
Owner in accordance with the provisions of such Bonds and this Contract.
"Net Operating Income" - For each Operating Year, the amount, if any,
by which the Operating Income for such Operating Year exceeds the Operating
Expenses incurred or properly accrued by Operator during such Operating Year
in accordance with generally accepted accounting principles.
"Opening Date" - The date on which the Arena is operational, actually
opens for business to the general public and is first used for a public event.
Upon the request of either Owner or Operator such parties shall execute a
declaration designating such date as the Opening Date.
"Operating Expenses" - For each Operating Year, all expenses of
whatever kind or nature incurred, directly or indirectly, or properly accrued by
Operator in performing the Operating Work during such Operating Year including
but not limited to all salaries, wages and benefits of personnel working at the
Premises; contract labor; maintenance and repairs; utilities; telephone;
telscreen and/or scoreboard operations; dues, memberships and subscriptions;
security; audit fees; legal fees; other professional fees; refuse removal;
cleaning; sales taxes; building supplies; ticket commissions; insurance; data
processing; advertising; pest control; bad debt writeoffs; travel lodging and
related
-4-
<PAGE> 12
out-of-pocket expenses and entertainment; oftice supplies; employment fees;
freight and delivery; lease of equipment (other than concession equipment
covered by a lease that has not been approved by Owner); Mastercard, Visa and
other credit and debit facilities and telecheck fees and expenses; payments
into reserve accounts as reasonably established by Operator and approved by
owner for working capital requirements; travel lodging and related
out-of-pocket expenses of officers and directors of Operator Affiliates that
are requested by Owner; the Operating Payment; the Annual Replacement Fund
Payment; the Block 44 and 57 Annual Payment; and NBA staffing and box office
expenses and NBA inducements but excluding (a) Extraordinary Replacement and
Repair Expense, (b) depreciation of capital assets, (c) interest on or
amortization of the indebtedness of Owner or Operator, (d) salaries wages and
benefits of officers and directors of (ii) Houston Sports Association, Linbeck
Construction Corporation, Barker Interests Limited, BIL Development, Inc.,
Linbeck Miami Corp. and HSA Management, Inc. or their successors or assigns or
(ii) any Operator Affiliate, (e) Event-related Expenses (f) ad valorem taxes
that are payable by Owner pursuant to Exhibit D.8.2.3., (g) any legal expenses
incurred by Operator in enforcing the rights of Operator under the agreements
referenced in Exhibits D.7.1, D.7.2 and D.7.3 and (h) any other expense that
Owner and Operator hereafter specifically agree in writing is to be excluded
from Operating Expenses. If any ad valorem taxes are hereafter imposed on the
Premises and Operator does not exercise its right to terminate the Contract
because of the Owner Default described in Exhibit D.1.1.2(e) (ii), then
ad valorem taxes in excess of the amount of such taxes that Owner is
responsible for paying pursuant to Exhibit D.8.2.3 shall be considered
Operating Expenses.
"Operating Loss" - The amount by which the Operating Expenses for an
Operating Year exceed the Operating Income for such Operating Year.
"Operating Income" - For each Operating Year, all amounts received by
Operator during such Operating Year from any use of, concession at or in, or
advertising in or connected with the Premises or interest, if any, actually
received on such amounts. However, Operating Income shall not include the Seat
Use Revenues, Convention Development Tax Revenues, nor include proceeds of
condemnation or, insurance (other than business interruption) nor proceeds
from ticket sales on behalf of, or as agent for, the user of
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<PAGE> 13
the Arena that are not paid to Operator for rental of the Arena or in connection
therewith, nor any Event-Related Expenses collected by Operator from any such
user. Moreover, Operating Income shall not include (and Owner shall have no
right, title or interest in): the Operating Payment; any payments received by
Operator or any Operator Affiliate for or in connection with the sale, transfer,
exchange, assignment or other hypothecation of an ownership or profits interests
in Operator or any operator Affiliate; any payments, rights or interests
received by an Operator Affiliate arising out of or connected with the use of,
concessions in or at, or advertising in or connected with, the Premises pursuant
to any agreement between Operator and an Operator Affiliate entered into
pursuant to or consistent with the provisions of Exhibit D.7; or proceeds of any
loan to Operator or an Operator Affiliate. Moreover, Operating Income is
further defined in Exhibit D.7.6(iv).
"Operating Payment" - For each Operating Year, the aggregate of the
Fixed Operating Payment and Variable Operating Payment for such Operating Year,
as such terms are defined in Exhibit C.2.3.
"Operating Quarter" - Each of the four three-calendar month periods
in each Operating Year commencing on October 1 of such Operating Year; The
Operating Quarters of each Operating Year shall be October, November and
December; January, February and March; April, May and June; July, August and
September.
"Operating Year" - The first Operating Year shall be the period of
time commencing on the Opening Date and ending on the first September 30th
following such date. Each Operating Year thereafter shall be the twelve (12)
month period commencing on each successive October 1.
"Operator" - Decoma Miami Associates, Ltd., a Florida limited
partnership.
"Operator Atliliate" - (i) HSA Management Inc., BIL Development Inc.
or Linbeck Miami Corporation or Decoma, Ltd. or (ii) any entity that is
controlled by or controls (a) Operator or any successor or assigns of
Operator's interests under this Contract, (b) the general partner of Decoma,
Ltd., (c) HSA Management Inc., BIL Development Inc. or Linbeck Miami
Corporation or Houston Sports Association, Barker Interests Limited or
Linbeck Construction Corporation. For purposes hereof 'control'
-6-
<PAGE> 14
shall require the direct or indirect ownership by the controlling entity
(whether one or more of the above specified entities) of at least twenty-five
percent (25%) of the voting securities of (or equivalent equity or beneficial
ownership interest in) the controlled entity.
"Operator Default" - Exhibit D.1.1.1
"Operator's Operating Income Allocations" - For each Operating Year,
the, sum of (i) 57.5% of the first $1,750,000.00 of Net Operating Income for
such Operating Year, (ii) 45% of the next $1,750,000.00 of Net Operating income
for such Operating Year and (iii) 40% of that portion of Net Operating Income
for such Operating Year in excess of $3,500,000.00.
"0perator's Seat Use Allocation" - For each Operating Year, the sum
of (i) 75% of the first $1,350,000.00 of Seat Use Revenues for such Operating
Year, and (ii) 50% of the portion of Seat Use Revenues for such Operating Year
in excess of $1,350,000.00.
"Owner" - Miami Sports and Exhibition Authority, an independent and
autonomous agency and instrumentality of the City of Miami, Florida (the
"City").
"Owner Default" - Exhibit D.1.1.2
"Owner's Operating Income Allocation" - For each Operating Year, the
sum of (i) 42.5% of the first $1,750,000.00 of Net Operating Income for such
Operating Year, (ii) 55% of the next $1,750,000.00 of Net Operating Income for
such Operating Year and (iii) 60% of that portion of Net Operating Income for
such Operating Year in excess of $3,500,000.00.
"Owner's Seat Use Allocation" - For each Operating Year, an amount of
money equal to the sum of (i) 25% of the first $1,350,000.00 of Seat Use
Revenues for such Operating Year and (ii) 50% of the portion of Seat Use
Revenues for such Operating Year in excess of $1,350,000.00.
"Owner's Share of Construction Savings" - The amount, if any, by which
the final guaranteed maximum price provided for in the Construction Contract
exceeds the sum of contractor's costs, contractor's fee and contractor's share
of savings.
-7-
<PAGE> 15
"Performance Failure" - Exhibit D.1.1.1(d)
"Pre-opening Operating Expenses" - Those Public Capital Costs that
are identified in the Project Budget as being the Pre-opening Operating
Expenses.
"Premises" - The Arena and all real property rights granted to Owner
pursuant to the Block 44/57 Agreement and all rights appurtenant thereto.
"Prime" - The rate of interest per annum established from time to
time by CitiBank, N.A. and designated as its prime rate.
"Private Capital" - $7,121,000.00.
"Private Capital Balance" - Private Capital minus the amount of all
Private Capital Costs.
"Private Capital Costs" - (a) Any of the costs paid by or on behalf
of Operator after March 28, 1985 in performing the Development Work and the
Construction Work pursuant to the Project Construction Program or the Project
Budget or otherwise approved by Owner or provided for in this Contract that (i)
have not been reimbursed by Owner, (ii) have been designated by Operator to be
Private Capital Costs and (iii) in the aggregate (together with any of the
payments described in the immediately following subparagraph (b)] do not exceed
the amount of Private Capital, and (b) Project Costs, if any, paid directly by a
concessionaire provided the amount thereof does not exceed $2,000,000.00.
"Project" - All matters described in Exhibit F including but not
limited to the Work and work by Owner or on behalf of Owner by parties other
than Operator.
"Project Budget" - Exhibit B.1.11.1
"Project Construction Program" - Exhibit B.1.11.1
"Project Costs" - All costs incurred by or on behalf of Owner and
Operator after March 28, 1985 in performance of their respective obligations
under this Contract and by Owner and Decoma Venture under that certain
Pre-Development Agreement dated as of August 20, 1985 (as extended by First
Extension of Pre-Development Agreement dated as of February 21, 1986 and Second
Extension of Pre-Development Agreement dated as of July 30, 1986).
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"Project Land" - Exhibit F
"Public Capital Costs" - All Project Costs except the Private
Capital Costs.
"Regular Budgeted Year" - Each Operating Year except the first
Operating Year and the Special Budgeted Years.
"Replacement Fund" - The account to be established and maintained by
Operator into which all Annual Replacement Fund Payments are to be deposited
together with all interest, if any, earned thereon.
"Request for Payment" - Exhibit C.1.2
"Seat Use Charge" - The amount that (i) the user of each seat in the
Arena shall be charged for use of such seat and (ii) Operator shall collect
from each such user. Such amount shall be at least $0.75 per seat and any
increase above $0.75 must be acceptable to both Owner and Operator; for purposes
of Exhibit D.1.1.2(e), the Seat Use Charge shall continue to be $0.75 unless
Owner and Operator specifically agree that for purposes of Exhibit D.1.1.2(e)
Seat Use Charge shall be a different amount. Such charge shall be in addition
to, and not in lieu of, admission charges and any taxes that may be payable on
such Seat Use Charge; any such taxes and admission charges shall be an
Operating Expense.
"Seat Use Revenues" - For each Operating Year, the aggregate of all
Seat Use Charges received by Operator during such Operating Year together with
all interest, if any, earned thereon.
"Special Budgeted Years" - Any Operating Year that (i) is after the
third Operating Year of the Term and (ii) is immediately preceded by two
consecutive Operating Years in each of which there has been an Operating Loss.
"Term" - Article V.
"Work" - Development Work, Construction Work and Operating Work
together with all other obligations of Operator under the Contract.
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ARTICLE III WORK
Except as otherwise expressly set forth in this Contract and
provided payments and allocations are made to Operator as provided in Exhibit
C, Operator shall perform the Work in substantial conformity with this Contract.
ARTICLE IV PAYMENTS AND INCOME ALLOCATION
Operator and Owner shall make the payments and share Operating Income
in the manner set forth in Exhibit C.
ARTICLE V TERM
This Contract shall be for a term ("Term") beginning on the date
hereof and ending on the thirty-second (32nd) anniversary of the Opening Date
provided that if Operator is not then in default hereunder, and if Operator
gives Owner an extension notice at least six (6) months prior to the originally
scheduled expiration of the Term, the Term shall be extended for ten (10) years
without necessity of execution of an amendment or extension agreement.
Moreover, if Operator is not then in default hereunder, and if Operator gives
Owner an extension notice at least six (6) months prior to expiration of such
ten (10) year renewal term, the Term shall be extended for an additional ten
(10) years without necessity of execution of an amendment or extension
agreement. Each such extension shall be on the same terms and
conditions as this Contract.
IN WITNESS WHEREOF, Owner and Operator have executed this Contract on
the date first set forth hereinabove, effective as of the date next set forth
hereinabove.
MIAMI SPORTS AND EXHIBITION AUTHORITY
By: /s/ Lawrence O. Turner,Jr.
------------------------------
Lawrence O. Turner, Jr.
Chairman
"OWNER"
APPROVED AS TO FORM AND CORRECTNESS
/s/ Robert Sechen
------------------------------------
Robert Sechen
Blackwell, Walker, Pascell & Hoehl
Counsel for the Miami Sports and
Exhibition Authority
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DECOMA MIAMI ASSOCIATES, LTD.
By: Decoma, Ltd., its general partner
By: Decoma Venture, its sole general
partner of Decoma, Ltd.
By: BIL Development, Inc.,
Managing Venturer
By: /s/ C. Dean Patrinely
---------------------------
C. Dean Patrinely
President
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MINORITY PARTICIPATION AGREEMENT
This Minority Participation Agreement (this "Agreement") is made and
entered into effective as of the _____ day of __________, 1986, by and between
THE MIAMI SPORTS AND EXHIBITION AUTHORITY ("MSEA"), an independent and
autonomous agency and instrumentality of the City of Miami (the "City"), a
municipal corporation of the State of Florida, and DECOMA MIAMI ASSOCIATES,
LTD. (the "Developer"), a Florida limited partnership; MSEA and the Developer
being joined herein by the City, acting herein by and through its City Manager.
Recitals:
WHEREAS, by authority of the City of Miami Charter, the City on July
31, 1984, authorized the publication of a Request for Proposals (the "City
RFP") for the Unified Development Project to be known as Southeast
Overtown/Park West Redevelopment Project Phase I Development; and
WHEREAS, by authority of Section 212.057 of the Florida Statutes,
MSEA on January 1, 1984 (Stage one) and August 1, 1984 (Stage Two), authorized
the publication of a Request for Proposals (the "MSEA RFP") for a project to be
known as the Miami Sports and Exhibition Complex, which development would
include a separate sports arena and exhibition hall and parking garage and
design factors inherent to the same; and
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WHEREAS, The Decoma Venture, a Texas joint venture (the "Venture"), in
response to the City RFP and the MSEA RFP (together, the "RFPs") submitted
proposals to develop a sports arena and exhibition hall (the "Planned Project")
referred to in the Venture's response to the RFPs as the Biscayne Centrum Arena
and Exhibition Center, said Planned Project to be situated on the land owned in
fee by the City and located between Northwest 8th Street, Northwest 6th Street,
Northwest 1st Avenue and North Miami Avenue, in the City of Miami, County of
Dade, State of Florida, which is collectively referred to herein as Block 44 and
parts of Block 57; and
WHEREAS, the City selected the Venture's proposal for the
Planned Project in accordance with the City RFP, and MSEA selected the Venture's
proposal in accordance with the MSEA RFP; and MSEA, the City and the Developer
have executed a groundlease for Block 44 and parts of Block 57 (the "Lease")
for the purposes set forth in the RFPs and the proposals submitted by the
Venture; and
WHEREAS, MSEA and the Developer have made and entered into an
agreement (the "Master Agreement") providing for the development, construction
and operation of the Arena portion of the Planned Project (the "Arena Project");
and
WHEREAS, MSEA, the City and the Developer are particularly aware of the
efforts needed to provide opportunities for Minority participation in
development undertakings; and
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WHEREAS, it is the mutual desire of the parties to set forth their
agreement and understanding of the goals for Minority participation in the
Arena Project;
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements hereinafter set forth, the parties hereby covenant and agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. As used herein the following terms shall
have the following meanings:
(a) This "Agreement" means this Minority Participation Agreement,
as the same may be modified or amended from time to time provided that
any such amendment or modification is consented to by a majority vote
of the City Commission of Miami.
(b) "Arena Project" has the meaning ascribed to it in the Recitals
of this Agreement.
(c) "City" has the meaning ascribed to it in the opening paragraph
of this Agreement.
(d) "Construction Contracts" means those certain agreements
between the Developer and a construction manager or general contractor
for construction of the Arena Project and includes subcontracts with
respect to such work between the general contractor and subcontractors
or, in the event the Developer employs a construction manager rather
than a general contractor, the trade contracts between the Developer
and trade contractors with respect to such work.
(e) "Dade County Office of Minority Business Development" means
the Dade County funded Minority business development program or
program staff.
(f) "Decoma" means Decoma, Ltd., a Texas limited partnership which
is the sole general partner of the Developer. The sole general
partner of Decoma is the Venture.
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(g) The "Developer" has the meaning ascribed to it in the opening
paragraph of this Agreement.
(h) "Master Agreement" has the meaning ascribed to it in the
Recitals of this Agreement.
(i) "MSEA" has the meaning ascribed to it in the opening paragraph
of this Agreement.
(j) "Miami Minority Procurement Office" means the City of Miami
funded Minority procurement program or program staff.
(k) "Minority Participation Program" means the goals and agreements
undertaken pursuant to this Agreement for the purpose of providing
opportunities for Minority participation in the Arena Project.
(l) "Minority" means the following persons as defined in the
following definitions as approved by the U.S. Department of Housing
and Urban Development ("H.U.D.") or as may be changed by H.U.D. from
time to time:
(1) Black (all persons having origins in any of the Black
African racial groups not of Hispanic origin); and
(2) Hispanic (all persons of Mexican, Puerto Rican,
Cuban, Central or South American or other Spanish
culture or origin regardless of race); and
(3) Females (whether or not included in the definition of
Black or Hispanic set forth in (1) or (2) above).
(m) "Minority Business Enterprise" means a corporation, partnership
individual, sole proprietorship, joint stock company, joint venture or
other legal entity which is at least fifty-one percent (51%)
individually or collectively owned by a Minority, or of which at least
fifty-one percent (51%) of the authorized stock ownership is
individually or collectively owned by a Minority.
(n) "Minority Committee" has the meaning ascribed to it in Article
VII of this Agreement.
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(o) "Overtown Jobs Program" means the City funded job development
program or program staff.
(p) "Section" subsection", "paragraph", "subparagraph",
"clause", or "subclause", followed by a number or letter, mean,
respectively the section, subsection, paragraph, subparagraph, clause
or subclause of this Agreement so designated.
(q) The "Venture" has the meaning ascribed to it in the Recitals
of this Agreement.
Section 1.2 Terms in the Master Agreement. All capitalized terms used
in this Agreement for which no definition is herein provided shall have the
respective meanings ascribed to such terms in the Master Agreement.
ARTICLE II
MINORITY EQUITY PARTICIPATION
Section 2.1 Minority Ownership. Minorities (individuals and/or
groups) will be afforded an opportunity to become direct equity participants in
the Arena Project through ownership in the Florida limited partnership that is
the Developer, as follows:
(a) the Minority investors will own, in the aggregate, a fifteen
percent (15%) limited partner ownership interest in the Developer
partnership;
(b) each one percent (1%) of limited partner ownership interest
will require a capital contribution commitment of $71,210.00, with
$6,300.00 for each 1% being payable in cash upon admission of the
Minority investors to the Developer partnership, and with the balance
being deferred and payable in monthly installments over the
following 15 months (approximately $4,327 per month for each 1% of
ownership); however, at the option of each of the Minority investors,
the Venture will advance the deferred capital contribution on behalf
of such Minority investor, to be repaid (with interest) to the Venture
out of one-half (1/2) of the net cash flow distributable to that
Minority investor;
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(c) the Minority investors will receive, in the aggregate (pro
rata on the basis of their respective ownership percentages), fifteen
percent (15%) of the Operator's Operating Income Allocation payable by
MSEA to the Developer under the Master Agreement, fifteen percent
(15%) of the Operator's Seat Use Allocation payable by MSEA to the
Developer under the Master Agreement, and fifteen percent (15%) of the
tax benefits of the Developer partnership; and
(d) the Minority investors shall not have any capital contribution
obligations to the Developer partnership other than the contribution
obligations described in subsection 2.1(b) above.
Section 2.2 The Venture's Actions. To accomplish the Minority equity
participation described in Section 2.1 above, the Venture has:
(a) subject to compliance with applicable federal, state and local
laws, established and structured a Minority investment group in order
to afford an opportunity for equity participation to a broad
cross-section of Minorities;
(b) with the assistance of the Developer's community and minority
affairs advisors, identified and contacted potential individual
Minority investors concerning an equity investment in the Arena
Project; and
(c) provided representation for the Minority equity investor group
(with each Minority group having a representative to the extent
possible) on the Developer's executive advisory committee for the
Arena Project, each of such Minority equity investor group
representatives to have equal status with all other members of such
executive advisory committee.
ARTICLE III
CONSTRUCTION CONTRACTS
Section 3.1 Goals. The Developer agrees to exert diligent, good
faith efforts to cause its general contractor to exert
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diligent, good faith efforts to award Construction Contracts representing a
percentage of the total contract price for construction of the Arena Project to
Minority Business Enterprises, as follows:
(a) seventeen percent (17%) of the total contract
price to Black Minority Business Enterprises;
(b) seventeen percent (17%) of the total contract
price to Hispanic Minority Business
Enterprises; and
(c) seventeen percent (17%) of the total contract
price to Female Minority Business
Enterprises.
Construction Contracts awarded to Black Female Minority Business
Enterprises may be counted toward satisfying either (but not both) of the goals
set forth in paragraphs (a) and (c) above, and Construction Contracts awarded
to Hispanic Female Minority Business Enterprises may be counted toward
satisfying either (but not both) of the goals set forth in paragraphs (b) and
(c) above.
Section 3.2 Developer's Obligations. In furtherance of the goals set
forth in Section 3.1 above, the diligent, good faith efforts of the Developer
and its general contractor shall include, but shall not necessarily be limited
to, the following:
(a) Designating specific construction trades which are more
suitable for competitive bidding among contractors who are Minority
Business Enterprises (herein sometimes called "Minority contractors")
and actively soliciting minority contractor interest.
(b) Encouraging joint ventures between local Minority contractors
and non-Minority contractors. In the event a contract is awarded to a
joint venture which includes
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a Minority contractor such contract shall be deemed a contract with a
Minority contractor to the extent of the Minority contractor's
beneficial ownership interest in the joint venture. For example, if a
contract for ten percent (10%) of the total construction contract
price is awarded to a joint venture that is fifty-one percent (51%)
owned by a Minority contractor, then such contract shall be deemed to
be a contract with a Minority contractor for five point one percent
(5.1%) of the total contract price.
(c) Encouraging the Developer's general contractor to use diligent
efforts (including utilizing the Overtown Jobs Program, the Miami
Minority Procurement Office, the Dade County Office of Minority
Business Development, or other appropriate agency, as a screening and
referral source) to hire Minorities from the neighborhoods having the
highest rate of unemployment consistent with the need to avoid
disruption due to labor disputes. Residency in a particular city,
county, state or region will not be a prerequisite to eligibility for
Minority participation in the development and construction of the
Arena Project; however, it is the goal that local Minorities (City of
Miami, Dade County and the State of Florida) will be given first
preference. In each instance in which the Developer's general
contractor has determined it to be necessary or advisable (due to the
particular requirements of the Arena Project) to procure materials,
supplies, equipment or laborers from Minority Business Enterprises
situated or residing outside Dade County, the Developer or its general
contractor will notify the Minority Committee (as provided for in
Article VII) of such actions, with a copy of such notice to be sent to
the City Commission of Miami.
(d) To the extent feasible, providing for small subcontracting
packages and establishing bidding procedures which are fair and
non-discriminatory in order to encourage bids from qualified Minority
Business Enterprises.
(e) Waiving bonding requirements for a qualified Minority Business
Enterprise if: (1) that Minority Business Enterprise otherwise meets
the requirements of the Developer as set forth in the request for
bids; (2) the waiving of the bonding requirement is necessary in order
for the bid to be competitive with non-Minority bids; and (3) there is
no other Minority Business Enterprise bidding on the same contract
that does not require a waiver of the bonding requirements.
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(f) As permitted by the Arena Project budget and consistent with
procedures to be established by MSEA and the Developer within one
hundred twenty (120) days following execution of this Agreement
(provided such procedures have been approved by a majority of the City
Commission of Miami), the Developer may award subcontracts to
qualified Minority Business Enterprises even if those Minority
Business Enterprises are not the lowest bidders for the particular
proposals.
(g) Negotiating cash draws upon completion of specific segments of
a subcontract or interim payments to a qualified Minority Business
Enterprise to which a subcontract has been awarded if: (1) the draws
or interim payments are necessary, in the opinion of the Developer, to
assist the Minority Business Enterprise in meeting any cash flow
requirements for the subcontracts; and (2) such Minority Business
Enterprise can provide the Developer with evidence required under the
contract with the Developer that the Minority Business Enterprise has
paid all subcontractors, materialmen and laborers performing work or
supplying material for the Minority Business Enterprise into the Arena
Project except for those entitled to claim under such draw or interim
payment.
(h) Through a representative of the Developer's general contractor,
advising Minority Business Enterprises who are bidding on contracts on
how to obtain discounts for the purchase of supplies or materials for
use on the Arena Project, to the degree such information is
available, so that the Minority Business Enterprise may bid
competitively on a contract.
(i) Assisting those Minority Business Enterprises who are awarded
contracts or subcontracts and who, in the Developer's judgment need
assistance, in the development of the managerial skills necessary to
coordinate their contract with the other contracts in the Arena
Project, utilizing the services of available community based Minority
business assistance programs such as the Overtown Jobs Program, the
Miami Minority Procurement Office, the Dade County Office of Minority
Business Development, or other appropriate agency.
(j) Encouraging the Developer's general contractor and
subcontractors to purchase materials, supplies and equipment for work
to be performed on the Arena Project from local Minority Business
Enterprises.
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(k) Advertising for bids in the Black and Hispanic media to
include newspaper publications and radio announcements.
(l) Adopting procedures (such as utilizing the Overtown Jobs
Program, the Miami Minority Procurement Office, the Dade County
Office of Minority Business Development, or other appropriate agency,
as a screening source) designed to insure that entities representing
themselves to the Developer and Developer's general contractor as
Minority Business Enterprises satisfy the requirements established by
this Agreement to be designated a Minority Business Enterprise.
Section 3.3 Arena Project Team. The Minority Participation Program
described in this Agreement evidences the mutual goal and agreement of MSEA,
the City and the Developer that no Minority Business Enterprise that submits a
qualified bid or proposal, or which is otherwise qualified to contract, for
providing goods, services and equipment required in connection with the
construction, maintenance and operation of the Arena Project shall be excluded
from consideration on the basis of race or national origin. MSEA, the City and
the Developer recognize that implementation of the Developer's Minority
Participation Program is to be consistent with the Arena Project budget and the
Developer's contractual commitment to MSEA to develop, construct and operate a
highly-specialized, complex facility within budgetary limitations and in
accordance with exacting specifications. To meet this commitment, the
Developer intends a free market approach to assembling a team of contractors,
subcontractors, suppliers, consultants, managers and employees capable of
developing, constructing and operating the Arena Project in a professional and
financially efficient manner.
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ARTICLE IV
CONSTRUCTION HIRING
Section 4.1 Goals. The Developer agrees to exert diligent, good faith
efforts to cause its general contractor to exert diligent good faith efforts to
fill a percentage of the construction jobs under Construction Contracts
for work on the Arena Project with Minorities, as follows:
(a) seventeen percent (17%) of all construction
jobs with Black employees;
(b) seventeen percent (17%) of all construction
jobs with Hispanic employees; and
(c) seventeen percent (17%) of all construction
jobs with Female employees.
Construction jobs filled by Black Female employees may be counted
toward satisfying either (but not both) of the goals set forth in paragraphs
(a) and (c) above, and construction jobs filled by Hispanic Female employees
may be counted toward satisfying either (but not both) of the goals set forth
in paragraphs (b) and (c) above.
Section 4.2 Developer's Obligations. In furtherance of the goals set
forth in Section 4.1 above, the diligent, good faith efforts of the Developer
and its general contractor shall include, but shall not necessarily be limited
to, the following:
(a) To the extent feasible and consistent with the need to avoid
disruption due to labor disputes, utilizing the
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Overtown Jobs Program, the Miami Minority Procurement Office, the Dade
County office of Minority Business Development, or other appropriate
agency, as a screening and referral source for construction
employment. After the subcontractors are selected, the Developer
shall inform the Overtown Jobs Program, the Miami Minority Procurement
Office, the Dade County Office of Minority Business Development, or
other appropriate agency, of the number of laborers needed for each
construction trade at least ten (10) days in advance of the work
commencement date, pursuant to procedures developed by the Developer
and the Overtown Jobs Program, the Miami Minority Procurement Office,
the Dade County Office of Minority Business Development, or other
appropriate agency.
(b) In the event laborers are to be replaced during the course of
construction, the Developer shall notify the Overtown Jobs Program,
the Miami Minority Procurement Office, the Dade County Office of
Minority Business Development, or other appropriate agency, for
assistance in identifying replacements. Referrals shall be made to
Developer within three (3) working days. The construction hiring goal
is not cumulative; therefore regardless of the turnover rate, the
hiring goal shall remain constant throughout the construction of the
Arena Project.
ARTICLE V
PROFESSIONAL SERVICE CONTRACTS
The Developer agrees to exert diligent, good faith efforts to hire
consultants and professional service firms that are either Minority Business
Enterprises or which have entered into joint ventures or subcontracts with
Minority Business Enterprises in connection with the development of the Arena
Project.
In furtherance of the goals set forth in this Article V, the Developer
has engaged the services of the following Minority firms for the Project:
(a) Jesse J. McCrary, Jr., Esq., is a Black male member of the
Florida Bar and provides legal services to the Developer.
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(b) Bob Simms Associates, Inc., of Miami, is a Black owned firm
and provides community and Minority affairs consultation and advice to
the Developer.
(c) Kimmberley L. Parker, Esq. is a Black Female member of the
Florida Bar. and provides legal services and Arena Project
development consultation to the Developer.
(d) Lagomasino, Vital & Associates, of Coral Gables, is an Hispanic
owned engineering firm and provides consulting services to the
Developer.
(e) San Martin Associates, Inc. of Miami, is an Hispanic Female
owned engineering firm and provides consulting services to the
Developer.
(f) Cruz-Stark Associates of Coral Gables is a Black owned
architectural firm and provides consulting services to the Developer.
ARTICLE VI
MANAGEMENT AND MAINTENANCE OPERATIONS
Section 6.1 Goals. The Developer agrees to exert diligent, good faith
efforts to cause the manager of the Arena Project to exert diligent, good faith
efforts to fill a percentage of the employment positions in the management and
maintenance operations of the Arena Project with Minorities, as follows:
(a) seventeen percent (17%) of all employment positions
with Black employees;
(b) seventeen percent (17%) of all employment positions
with Hispanic employees; and
(c) seventeen percent (17%) of all employment positions
with Female employees.
Employment positions filled by Black Female employees may be counted
toward satisfying either (but not both) of the goals set forth in paragraphs
(a) and (c) above, and employment positions
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filled by Hispanic Female employees may be counted toward satisfying either
(but not both) of the goals set forth in paragraphs (b) and (c) above.
Section 6.2 Developer's Obligations. In furtherance of the goals set
forth in Section 6.1 above, the diligent, good faith efforts of the Developer
and its manager shall include, but shall not necessarily be limited to, the
following:
(a) Advertising in the local Minority media.
(b) Notifying employment agencies throughout Dade County of job
opportunities.
(c) Notifying the Overtown Jobs Program, the Miami Minority
Procurement Office, the Dade County Office of Minority Business
Development, or other appropriate agency, of job opportunities, and
utilizing the Overtown Jobs Program, the Miami Minority Procurement
Office, the Dade County Office of Minority Business Development, or
other appropriate agency, as a screening and referral source for
management and maintenance employment positions.
ARTICLE VII
MINORITY COMMITTEE
On or before one hundred twenty (120) days following the execution of
this Agreement, the Developer, in cooperation with MSEA and the City, will
establish and organize an ad hoc minority advisory and assistance committee
(the "Minority Committee") consisting of responsible representatives of
Minority and other community groups (such as an individual from the Overtown
Advisory Board) and government agencies. The Minority Committee shall have
eight (8) members, with the City Commission of Miami selecting five (5) members
of the Minority Committee [each City Commissioner
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selecting one (1) member] and the Developer selecting the remaining three (3)
members of the Minority Committee. From the date of this Agreement until the
Opening Date (as defined in the Master Agreement), the Developer will meet with
the Minority Committee on not less than on a quarterly basis. The purposes of
the Minority Committee will be to: (1) advise the Developer on additional means
and methods of accomplishing Developer's goals as set forth herein; (2) assist
the Developer in communicating information to the Minority community concerning
opportunities for Minority participation in the development, construction,
management and maintenance operations of the Arena Project; and (3) review on a
regular basis the Developer's report of its progress with its Minority
Participation Program.
The Minority Committee shall meet at the Developer's field office in
the City of Miami. Developer will maintain minutes of the Committee's meetings
at its field offices in Miami, and will make the same available for inspection
by MSEA, the City and the members of the Committee at such field office upon
reasonable notice and during regular business hours.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Florida and Local Laws Prevail. This Agreement shall be
governed by the laws of the State of Florida.
Section 8.2 Conflicts of Interest; MSEA, City Representatives and
Venturers Not Individually Liable. No member, official,
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representative, or employee of MSEA or the City (or the City Manager) shall
have any personal interest, direct or indirect, in this Agreement, nor shall
any such member, official, representative or employee participate in any
decision relating to this Agreement which affects his or her personal interest
in any corporation, partnership or association in which he or she is, directly
or indirectly, interested. No member, official, representative or employee of
MSEA or the City (or the City Manager) shall be personally liable to the
Developer or any successor in interest to the Developer, in the event of any
default or breach by MSEA or the City (or the City Manager), or for any amount
which may become due to the Developer or its successor in interest, or on any
obligations of MSEA or the City under the terms of this Agreement. No venturer
of the Venture, and no partner of Decoma, and no officer, director,
shareholder, partner or employee of any of such venturers, the Venture or
Decoma, shall be personally liable to MSEA or the City in the event of any
default or breach hereunder by the Developer, or for any amount which may
become due to MSEA or the City, or on any obligation of the Developer under
the terms of this Agreement.
Section 8.3 Notice. A notice or communication under this Agreement by
any party hereto to the other parties hereto shall be in writing and shall be
sufficiently given or delivered if dispatched by registered or certified
mail, postage prepaid, return receipt requested or given by hand or other
actual delivery to such party; and
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(a) Developer. In the case of a notice or communication to the
Developer, if addressed as follows:
C. Dean Patrinely, President
BIL Development, Inc.
1400 Sage Plaza at 5151 San Felipe
Houston, Texas 77056
With a copy
to: James B. Rylander, Esq.
Vinson & Elkins
3300 First City Tower
1001 Fannin
Houston, Texas 77002-6760
From and after the Opening Date of the Arena Project, copies of any
notice to the Developer also shall be forwarded to:
HSA Management, Inc.
8700 Kirby
Houston, Texas 77054
Attn: Mr. Neal Gunn
Arena Manager
Miami Arena
Miami, Florida 33131
Denis Clive Braham, Esq.
Dow, Cogburn A Friedman
2300 Nine Greenway Plaza
Houston, Texas 77046
(b) MSEA. In the case of a notice or communication to MSEA, if
addressed as follows:
Executive Director
The Miami Sports and Exhibition Authority
300 Biscayne Blvd. Way, Suite 1120
Miami, Florida 33131
(c) City Manager. In the case of a notice or communication to the
City or the City Manager, if addressed as follows:
City of Miami, City Manager
3500 Pan American Drive
Miami, Florida 33133
A-17-
<PAGE> 36
With a copy
to: City Attorney
City of Miami
Alfred I. DuPont Building
169 E. Flagler Street, Suite 1101
Miami, Florida 33131
or if such notice is addressed in such other way in respect to any of the
foregoing parties as that party may, from time to time, designate in writing,
dispatched as provided in this Section 8.3. In the case of any notice or
communication to any of the parties hereto by any other party hereto, a copy of
such notice or communication also shall be given or delivered in the manner
herein provided to:
The City Commission of Miami
3500 Pan American Drive
Miami, Florida 33133
Section 8.4 Titles of Articles and Sections. Any titles of the
several parts, Articles and Sections of this Agreement are inserted for
convenience of reference only and shall be disregarded in construing or
interpreting any of its provisions.
Section 8.5 Successors and Assigns. Except to the extent limited
elsewhere in the Lease and/or the Master Agreement, all of the covenants,
conditions and obligations contained in this Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of MSEA, the
City and the Developer.
Section 8.6 Counterparts. This Agreement is executed in six (6)
counterparts, each of which shall be deemed an original, and such counterparts
shall together constitute one and the same instrument.
A-18-
<PAGE> 37
Section 8.7 Records. The Developer shall maintain at its field office
in the City of Miami records to enable MSEA and the City to monitor the
Developer's performance under this Agreement and will permit MSEA and/or the
City to inspect such records at such office upon reasonable notice and during
regular business hours.
Section 8.8 Estoppel Certificates. MSEA, the City and the Developer
shall at any time and from time to time, within thirty (30) days after written
request by any other party hereto, execute, acknowledge and deliver to the
party which has requested the same or to any prospective leasehold mortgagee,
assignee or transferee designated by the Developer, a certificate stating: (1)
this Agreement is in full force and effect, and has not been modified or
amended in any way, or if there have been modifications, identifying such
modification agreement, and if this Agreement is not in full force and effect,
the certificate shall so state; (2) this Agreement as modified represents the
entire agreement between the parties, or, if it does not, the certificate
should so state; (3) the dates on which this Agreement took effect and if
applicable, terminated; and (4) all conditions under this Agreement by MSEA,
the City or the Developer, as the case may be, have been satisfied and, as of
the date of such certificate, there are no defaults by MSEA, the City or the
Developer, as the case may be or if such conditions have not been satisfied or
if a party is in default, the certificate should so state. The party to whom
A-19-
<PAGE> 38
any such certificate shall be issued may rely on the matters therein set forth
and thereafter the party issuing the same shall be estopped from denying the
veracity or accuracy of the same. Any certificate required to be made by the
City pursuant to this paragraph may be made on its behalf by the City Manager,
and any certificate required to be made by MSEA pursuant to this paragraph may
be made on its behalf by the Executive Director of MSEA.
ARTICLE IX
DISPUTES
If a dispute shall arise between MSEA, the City and the Developer
under this Agreement including, but not limited to, whether or not the
Developer has made diligent, good faith efforts to meet the goals set forth
herein, then in lieu of other remedies or causes of action, such dispute shall
be resolved by an arbitrator selected according to the procedures of the
American Arbitration Association (the "Arbitrator"). The arbitration shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. If the Arbitrator shall determine that the Developer
has failed to make diligent, good faith efforts to meet the goals set forth
herein, the Arbitrator shall award monetary damages, if any, to MSEA and the
City in such amounts as the Arbitrator determines to be appropriate,
considering the nature, extent and wilfulness of Developer's failure, but in no
event shall the total amount of any such awards exceed $500.00 per day for the
first forty-five (45) days of the
A-20-
<PAGE> 39
period of duration of such failure by the Developer, and $1,000.00 per day for
the remaining period of duration of such failure by the Developer. The
Developer shall have sixty (60) days after the Arbitrator's award and prior to
the effective date of the damage award in which to cure such failure, and
thereby avoid the payment of the damage award. The Arbitrator may award the
costs of the arbitration proceeding, including reasonable attorneys fees,
against the unsuccessful party to the arbitration. An Arbitrator's decision
shall be final and binding upon the parties and enforceable in a court of
competent jurisdiction. MSEA, the City and Developer agree that it would be
difficult and speculative to attempt to ascertain the exact nature and amount
of damages that might be suffered by MSEA and/or the City if the Developer
failed to make diligent, good faith efforts to meet the goals set forth herein,
and that the provisions of this Article IX for the award of monetary damages by
an Arbitrator in such event is reasonable and is intended as a liquidation of
all such damages to the amounts herein provided.
The decision of the Arbitrator in a proceeding brought under this
provision shall not prevent MSEA and/or the City from bringing further
proceedings under this provision arising from a continuing or different failure
by the Developer to use diligent, good faith efforts to achieve the goals set
forth herein; provided, however the Arbitrator shall not make more than one
award under this provision for the Developer's failure to use
A-21-
<PAGE> 40
diligent, good faith efforts arising from a particular set of facts.
Any amounts payable by the Developer under this Article IX shall be
paid by the Developer and shall not be or become operating Expenses or Project
Costs under the Master Agreement.
IN WITNESS WHEREOF, DECOMA MIAMI ASSOCIATES, LTD. has caused this
Agreement to be signed in its name by Decoma, its sole general partner, acting
by and through The Decoma Venture, the sole general partner of Decoma, and THE
MIAMI SPORTS AND EXHIBITION AUTHORITY has caused this Agreement to be signed in
its name by Lawrence O. Turner, Jr., its Chairman, and the CITY COMMISSION OF
MIAMI has caused this Agreement to be signed by Cesar B. Odio, the City
Manager, and duly attested to by Matty Hirai, the City Clerk, on the day and
year first hereinabove written.
DECOMA MIAMI ASSOCIATES, LTD.
By: Decoma, Ltd., its general partner
By: Decoma Venture, its sole general partner
By: BIL Development, Inc.,
Managing Venturer
By:
---------------------------
C. Dean Patrinely
President
[signatures continued on following page]
A-22-
<PAGE> 41
MIAMI SPORTS AND EXHIBITION AUTHORITY
By:
----------------------------------
Lawrence O. Turner, Jr.
Chairman
APPROVED AS TO FORM
AND CORRECTNESS:
-------------------------------------
Robert Sechen
Blackwell, Walker, Fascell & Hoehl
Counsel to Miami Sports and Exhibition Authority
THE CITY OF MIAMI, A MUNICIPAL
CORPORATION OF THE STATE OF FLORIDA
By:
---------------------------------
Cesar H. Odio
City Manager
ATTEST:
--------------------------
Matty Hirai, City Clerk
APPROVED AS TO FORM
AND CORRECTNESS:
---------------------------
Name:
----------------------
Title:
---------------------
A-23-
<PAGE> 42
EXHIBIT B
GENERAL DESCRIPTION OF WORK
B.1 DEVELOPMENT WORK. To the extent necessary to complete the development
of the Arena in accordance with the Project Construction Program the
Plans and Specifications and the Construction Contract, the
Development Work shall consist of the following:
B.1.1 Performance of feasibility studies, business projections,
marketing studies, and other preliminary investigations for
the Project and the incurring of certain start up costs in
connection with such investigations.
B.1.2 Consultation and analysis regarding financing of the Project
and coordination with financing sources.
B.1.3 Payment of the Private Capital Costs.
B.1.4 Coordination of the Project's compliance with all federal,
state, and local affirmative action and minority employment
and investment requirements.
B.1.5 Consultation and coordination with Owner or the Owner
Representative regarding acquisition of the Project Land and
the availability, selection and procurement of materials and
equipment used in constructing the Arena.
B.1.6 Negotiation and execution of all contracts for, or related to,
the Premises or any part thereof.
B.1.7 Retaining legal counsel for the Arena, negotiation of
contracts for the performance of the Work, analysis,
consultation and coordination of all insurance programs.
B.1.8 Coordination of all advertising, promotional activities, and
public relations for the
B-1
<PAGE> 43
Arena, and the negotiation and execution of all contracts
related thereto.
B.1.9 Analysis, consultation, and coordination of compliance with
Development of Regional Impact Regulations and all planning,
zoning, platting, and other federal, state, and local
governmental requirements regulating the development and
construction of the Arena.
B.1.10 Retaining architects and engineers to perform the design and
engineering services to describe the Project in detail
including preparation of the plans and specifications
necessary to construct and make operational the Arena.
B.1.11 Coordination of the efforts of all parties involved in the
construction and development of the Arena and establishing and
maintaining consistent procedures for cost estimating,
reporting, control and schedule preparation. Such services to
be performed by operator shall include the following:
B.1.11.1 Attached to this Exhibit B as Schedule 1 is a
broad-scale program. Such program attached to
this Exhibit B as Schedule 1, as the same may
be amended in accordance with Exhibit D.6.2, is
herein called the Project Construction Program.
The budget included in the Project Construction
Program, as the same may be amended in
accordance with D.6.1, is herein called the
Project Budget. Attached to this Exhibit B as
Schedule 2 is the initial operating expense
budget for the first year following the opening
Date; such budget as may be amended in
accordance with D.6.1 is herein called the
Initial Operating Expense Budget. Such budget
estimates those expenses that are
B-2
<PAGE> 44
to be incurred in the management and operation
of the Arena; however, such budget does not
cover nor does it estimate Event-Related
Expenses.
B.1.11.2 Plan, coordinate and administer the Project
Construction Program on behalf of Owner with
the general contractor under the Construction
Contract.
B.1.11.3 Coordinate and manage the work of all
affiliates of Operator and all contractors
performing work on the Arena, in accordance
with the Project Construction Program the Plans
and Specifications and the Construction
Contract.
B.1.11.4 Prepare (i) monthly progress reports by a date
to be agreed upon by Owner and Operator, ii)
construction schedules, estimates of monthly
cash requirements and progress payments to all
parties (in this Exhibit B such parties are
called "contractors") performing work in
connection with the Project including Operator.
B.1.11.5 Monitor actual and projected costs of
construction and development; advise Owner as
projected costs exceed the Project Budget or
estimates.
B.1.11.6 Cause necessary or desirable changes in the
Project Construction Program to conform the
Project to the Project Budget, all in
accordance with Exhibit D.6.
B.1.11.7 Coordinate with Owner and all financing sources
the payments to Operator and all contractors.
B-3
<PAGE> 45
B.1.11.8 Provide necessary marketing and promotional
office and field office services, supplies and
related equipment and transportation required
for efficient development of the Project.
B.1.11.9 Prepare change orders for all contracts
relating to the Project, analyze claims of
construction contractors and maintain necessary
field records reflecting approved construction
changes.
B.1.11.10 Conduct such inspections and tests as Operator
may determine of all aspects of the Project.
B.1.11.11 Furnish all services, personnel, materials,
tools, machinery, equipment and other items
necessary to accomplish the foregoing
requirements of this Paragraph B.1.11
B.1.11.12 Do whatever else may be appropriate or
necessary to develop the Project in accordance
with the provisions of this Contract.
B.2 CONSTRUCTION WORK. To the extent necessary to complete the
construction of the Arena in accordance with the Project Construction
Program the Plans and Specifications and the Construction Contract,
the Construction Work shall consist of the following:
B.2.1 Supply, construction and installation on the Project Land of
the Arena in accordance with this Contract and the Plans and
Specifications.
B.2.2 Furnishing of all materials, supplies, equipment, tools,
labor, supervision, utilities, transportation and other
materials and services as and when required to perform the
portion of the Construction Work described in Paragraph B.2.1
above.
B-4
<PAGE> 46
B.3 OPERATING WORK. To the extent necessary to manage and operate the
Arena in accordance with this Contract, the Operating Work shall
consist of the following:
B.3.1 Management and operation of the Arena and contracting for its
use during the Term in a manner that will promote and further
the purposes for which the Arena is to be constructed, as set
forth in Exhibit D.5.2.1.
B.3.2 Retaining legal counsel for the Arena and analysis,
consultation and coordination of all insurance programs.
B.3.3 Negotiation, execution and performance of contracts, use
agreements, licenses and other agreements (a) with persons or
entities who desire to schedule events, performances,
telecasts, broadcasts or other transmissions in, from or to
the Premises or who desire otherwise to use the Premises or
any part thereof or (b) that otherwise pertain to the use,
operation and occupancy of the Premises or any part thereof.
B.3.4 Coordination of all advertising, licensing, promotional
activities, marketing, and public relations for the Arena.
B.3.5 Negotiation, execution and performance of contracts, use
agreements, licenses and other agreements (a) for the use of
advertising space for the Premises or any part thereof and
all advertising rights of whatever kind or nature related
thereto or (b) for the sale, promotion, marketing and use of
all names, trademarks, tradenames, logos and similar
intangible property relating to the Premises or any part
thereof.
B.3.6 Operation of concessions at and for the Premises for the sale
of food, beverages, souvenirs, novelties and programs and
including, but not limited to, the operation of clubs and
restaurants.
B.3.7 Coordination of the efforts of all parties involved in the
operation of the Arena and
B-5
<PAGE> 47
establishing and maintaining consistent procedures for cost
estimating, reporting and control, performance schedule
preparation and maintenance and payment of invoices. Such
services to be performed by Operator shall include the
following:
B.3.7.1 On or before the first of each Operating Year
Operator shall prepare and submit to Owner a budget
for review and informational purposes only,
describing the estimated revenues and estimated
expenses expected to be received and incurred in
implementing a broad-scale program covering the
management and operation of the Arena for the coming
Operating Year, recognizing that the operation of the
Premises is unique to the exhibition, entertainment
and sports industry in general and that any program
or budgetary estimates are by their nature
susceptible to change, variation and amendment for
which Operator shall have no liability except as
specifically provided in Exhibit C.2.2.1(c).
B.3.7.2 At least ninety (90) days before the commencement of
each Regular Budgeted Year and each Special Budgeted
Year, Operator shall submit to Owner for Owner's
review and approval an Operating Expense budget
setting forth an estimate of the Operating Expenses
that Operator estimates will be incurred during such
Operating Year.
Recognizing that the operation of the Premises is
unique to the exhibition, entertainment and sports
industry in general and that any budgetary estimates
are by their nature susceptible to change,
B-6
<PAGE> 48
variation and amendment, Operator shall have no
liability for failure to meet or comply with the
Approved Operating Expense Budget except for that
liability specifically provided for in Exhibit
C.2.2.1(c) for certain Operating Expenses in excess
of those set forth in the Operating Expense Budget.
B.3.7.3 Plan, coordinate and administer operation of the
Premises.
B.3.7.4 Coordinate the work of all parties performing work in
connection with the operation of the Arena.
B.3.7.5 Monitor actual and projected costs of operation and
advise Owner as projected costs exceed the estimates
set forth in the budgets submitted pursuant to
Paragraph B.3.7.1 and B.3.7.2.
B.3.7.6 Make payment of the Operating Expenses in accordance
with the provisions of Exhibit C.2.2.1.
B.3.7.7 Furnish all services, personnel, materials, tools,
machinery, equipment and other items necessary to
accomplish the foregoing requirements of this
Paragraph B.3.7.
B.3.8 Preventative maintenance of the Premises and all machinery, equipment
and facilities pertaining thereto or made a part thereof in accordance
with Exhibit D.5.2.2.
B-7
<PAGE> 49
SCHEDULE I TO EXHIBIT B
PROJECT CONSTRUCTION PROGRAM
This Project Construction Program consists of (i) the Project Budget,
(ii) Project Schedule, (iii) Pre-opening Operating Program and (iv) form of
Request for Payment of Project costs, a copy of each of which is attached to
this Schedule 1.
B(l) - 1
<PAGE> 50
Attachment 1 to Schedule 1 to Exhibit B
MIAMI ARENA
PROJECT BUDGET
<TABLE>
<CAPTION>
$ (000)
-------
<S> <C> <C> <C>
1. Land Acquisition (City estimate) $ 2,463
2. GMAX Contract 32,517
Base Arena Cost @ 16.590 seats and $29,317
selected site costs, including:
- Graphics
- Demolition
- Utilities (uses County chilled water)
- Landscaping
- Arts in public places
Builders Risk Insurance Premium (Florida) 400
Chilled Water Piping Charge (Dade Co.) 500
Furnishings, Fixtures and Equipment 2,300
---------------------------------------------------
32,517
3. Non GMAX Contract Site Costs 275
- DRI, MUSP, (legal, traffic analyses, 275
engineering, printing, etc. for
various reports and meetings) Plat,
Zoning, etc.
- DRI Impact Contingency 0
---------------------------------------------------
$ 275
4. Architecture/Engineering 3,200
5. Insurance/Legal/MBE 1,373
Minority Programs $ 55
Decoma Venture Legal 550
(V&E, GTA, BC, others)
Title; A/E Errors/omissions Insurance 418
(Florida)
</TABLE>
B(1) - 2
<PAGE> 51
Attachment 1 to Schedule 1 to Exhibit B
(continued)
<TABLE>
<CAPTION>
<S> <C> <C>
$ (000)
-------
Decoma Non-Public Reimb. Capital Costs 350
(Pre March 28, 1985 costs for legal and
consulting fees, printing, models, design,
engineering studies, specialty consultants,
travel accommodations, clerical expenses,
telephone, delivery, computer analysis,
software, etc., lump sum)
--------------------------------------------------
$ 1,375
6. Financing Costs (net): 12/27/85 MSEA Bond $6,979
Reserve Fund $ 3,375
Const. Period i% (MSEA/Shearson estimate) 4,100
Fees 132
Discount 522
LOC Fees 1,059
Reserve Funds 1,400
Arbitrage earnings (MSEA/Shearson estimate)(3,609)
-------------------------------------------------
Net Financing Cost $ 6,979
7. Pre-Operating/Marketing Expenses 822
Pre-Opening Expenses 407
Marketing Expenses 95
MSEA oversight and legal expenses 320
B. Decoma General/Administrative 2,693
Decoma Direct and Indirect Costs $ 1,175
Decoma Development Fee 1,518
-------------------------------------------------
$ 2,693
9. Contractor's reserve for NBA delivery date overtime 300
-----------------------------------------------------------
TOTAL ARENA PROJECT COST, $50,622
(net of reserve fund interest earnings)
</TABLE>
B(1) - 3
<PAGE> 52
SOURCES AND USE OF CAPITAL
<TABLE>
<CAPTION>
$ (000)
SOURCES ------
<S> <C> <C> <C>
I. Private Capital
A. Miami Decoma Associates Ltd $7,121
1. Decoma Venture $ 5,026
2. Minority Ltd. Partnership 95
3. Concessionaire 2,000
-----------------------------------------------------------
Subtotal $7,121
II. Public Capital
A. MSEA Bond Proceeds/CDT Cash $43,498
B. Interest earned on bond funds $ 3,609
-----------------------------------------------------------
Subtotal $47,110
TOTAL SOURCES $54,231
Project Budget (net of $50,622
Interest earnings)
[ = $3,6091]
</TABLE>
B(l)-4
<PAGE> 53
<TABLE>
<CAPTION>
$ (000)
--------
<S> <C> <C>
USES
I. Private Capital $ 7,121
GMAX Construction Contract $6,771
Decoma Non-Public Reimb. Costs 350
------
$7,121
11. Public Capital
All Other Project Costs 47,110
- --------------------------------------------------------------------
TOTAL USES $54,231
=======
Project Budget (net of $50,622
interest earning)
[ = $3,609]
</TABLE>
B(I) - 5
<PAGE> 54
Attachment 2 to Schedule 1 to Exhibit B
PROJECT SCHEDULE
LIMBECH CONSTRUCTION
MIAMI ARENA
Miami, Florida
Construction Schedule
24-Sep-86
[GRAPH]
B(1) - 6
<PAGE> 55
[GRAPH]
Owner and Operator acknowledge that the time periods set forth herein are
estimates and that there is no guaranty that the designated events will occur
as estimated. Events of force majeure, change orders and delays in permitting,
land acquisition and other matters will require that Owner and Operator be
flexible in modifying this Schedule to accomplish such parties' mutual goal of
opening the Arena to the public as soon as practicable and reasonably possible.
B(1) - 7
<PAGE> 56
Attachment 3 to Schedule 1 Exhibit B
PRE-OPENING OPERATING PROGRAM
The following schedule indicates the anticipated staffing, marketing
and pre-opening matters that need to occur prior to Opening Date, the costs
of which will be Project Costs.
General Manager - hire a general Manager 12 months $ 70,000
out from the completion of the project. This person would
be needed this soon in order that he can get to know the
community, its leaders, media, etc., understand the building
and its design, begin booking the facility, etc.
Operations Manager - brought on 9 months before facility is $ 20,000
open in order that he can be familiar with all the mechanical,
electrical, equipment, etc.
Marketing and Public Relations Manager - brought on at same $ 20,000
time as Operations Manager. This would give the individual,
if not local, an opportunity to establish relationships with
the community, media, etc., and work towards the opening
dedication ceremonies of the facility.
Secretary - secretary for the General Manager at the $ 18,000
time of the General Manager's hiring.
Office space, telephone, travel expenses, Pre-Opening $ 65,000
Program, General Manager, moving/relocation costs.
Start-up staffing and training $ 75,000
Working Capital $138,600
Pre-Opening Marketing Costs $ 95,000
Allocation for MSEA Oversight, Legal Marketing and $320,000
Management Assistant (including legal, financial
management services and NBA Exhibition game cost)
- ----------------------------------------------------------------------------
TOTAL $821,600
B(1) - 8
<PAGE> 57
EXHIBIT "B"
REQUEST FOR PAYMENT
-------------------
TO: Miami Sports and Exhibition Authority
-------------------------------------
Miami, Florida
---------
Attention:
--------------------------
RE: Miami Arena Contract ("Arena Contract") dated
, 1986, by and between Miami Sports and
Exhibition Authority ("Owner") and Decoma Miami
Associates, Ltd. ("Operator")
Gentlemen:
Reference is hereby made to the captioned Arena Contract. All terms
used herein and not otherwise defined herein shall have the same meaning
ascribed to such terms in the Contract.
Request is hereby made by the undersigned for the following:
Payment to Operator of the amounts specified in Schedule 1
attached hereto. Operator hereby certifies that such costs have been
incurred by Operator in accordance with the Project Budget and that the
same are properly due and owing to Operator.
The portion of the Budgeted Project Cost that is attributable to
the period of time covered by this Request for Payment is $ .
---------------
DECOMA MIAMI ASSOCIATESI LTD.
By: Decoma Ltd., its general partner
By: Decoma Venture, its sole general
partner
By: BIL Development, Inc., Managing
Venturer
By:
-----------------------------
Name: C. Dean Patrinely
Title: President
Date:
---------------------------
<PAGE> 58
SCHEDULE 2 TO EXHIBIT B
INITIAL OPERATING EXPENSE BUDGET*
**
<TABLE>
<CAPTION>
$/Year
--------
<S> <C> <C>
Utilities $559,000
Repair/Maintenance 175,000
Advertising/Promotion 100,000
(1) Travel $ 30,000
(2) Sales Aids 40,000
(3) Ad Sched 30,000
Insurance 387,000
General Administrative
General Manager 65,000
Deputy Manager 40,000
Executive Secretary 20,000
Marketing Manager 35,000
Asst. Marketing Manager 30,000
Bookkeeper 25,000
(3) Account Clerks ($17,000) 51,000
Auxiliary Section/Rec/PBX 14,000
Receptionist/PBX 15,000
Operations Manager 37,500
Assistant Operations Manager 30,000
Engineer 27,500
Assistant Engineer 22,500
Engineer Helper 18,000
(8) Labor ($15,000) 120,000
Box Office Manager 30,000
Finance Manager 35,000
Assistant Box Office Manager 22,500
(2) Cashier ($15,000) 30,000
Secretary 15,000
Sub-Total 683,000
Benefits (25%) 170,750
$853,750
Real Estate Taxes (non City) 0
Block 44/57 Lease 300,000
Reserve For Repairs 50,000
Other Miscellaneous Costs 57,000
Fixed Operating Payment 275,000
Variable Operating Payment (per formula)
NBA Staffing and Box Office (per NBA agreement)
NBA Inducements (per NBA agreement)
</TABLE>
*This budget estimates those expenses that are to be incurred in the management
and operation of the Arena; however, it does not cover Event-Related Expenses.
Moreover, Operator and Owner acknowledge that the operation of the Premises is
unique to the exhibition, entertainment and sports industry in general and that
any program or budgetary estimates are by their nature susceptible to change,
variation and amendment.
** In addition to these expenses, in the first Operating Year, $300,000 shall
be paid out of the Maintenance Account to create a Working Capital Fund.
8/25/86
B(2) - 1
<PAGE> 59
EXHIBIT C
PAYMENTS/INCOME ALLOCATION
C.1 DEVELOPMENT AND CONSTRUCTION OF THE ARENA. Owner shall pay
all Public Capital Costs and Operator shall pay all Private Capital
Costs. The Public Capital Costs incurred by Operator shall be paid to
Operator by Owner in accordance with the procedure set forth in C.1.1,
1.2, 1.3 and 1.4 below.
C.1.1. Contemporaneously with execution of the Construction
Contract and delivery to Owner of the Construction Performance
Bond, Owner shall pay Operator forty percent (40%) of the
Development Fee; forty-five percent of the Development Fee
shall be paid in equal monthly installments over the next
fourteen (14) months and the remainder thereof shall be paid
on the Opening Date.
C.1.2. On or before the 5th calendar day of each calendar month
during performance of the Development Work and Construction
Work, operator shall submit to Owner a request for payment
("Request for Payment") for work performed during the
immediately preceding calendar month. Each Request for Payment
shall set forth the actual costs incurred to such date in
comparison to that part of the Budgeted Project Cost that is
attributable to the period of time covered by such Request for
Payment. Each Request for Payment shall contain such
certifications from Operator as reasonably requested by Owner.
Payments of Project Costs related to the Construction Contract
shall be made in accordance with the procedure set forth in the
Construction Funding Agreement attached hereto as Exhibit J.6
C.1.3. Within five (5) calendar days after receipt of each Request for
Payment, Owner shall pay to Operator, or if requested by
Operator, wire transfer to a bank account designated by
C-1
<PAGE> 60
exists an Operating Loss at anytime during an
Operating Year, Operator shall deliver written
notice thereof to Owner and if there are adequate
funds therefor in the Maintenance Account, Owner
shall, within three (3) days after receipt of such
notice, pay to Operator out of the Maintenance
Account an amount of money equal to such Operating
Loss. To the extent funds are not available in the
Maintenance Account to pay Operating Losses, then to
the extent there are adequate funds in the
Replacement Fund, Operator shall pay for Operating
Losses out of the Replacement Fund. To the extent
there exists an Operating Loss and there are no
funds remaining in the Maintenance Account and the
Replacement Fund, then (i) owner is and shall be
obligated to provide to Operator within fifteen (15)
days after demand therefor an amount of money equal
to 86% of such Operating Losses and (ii) Operator
shall pay for 14% of such Operating Losses.
(b) To the extent that there are adequate funds
available in the Replacement Fund, Operator shall
use such funds to pay any Extraordinary Replacement
and Repair Expenses for which insurance proceeds are
not available. To the extent thereafter that there
are not adequate funds available in the Replacement
Fund but there are adequate funds available
therefor in the Maintenance Account, Owner shall,
within three (3) days after receipt of a notice
from Operator requesting such funds, pay to Operator
out of the Maintenance Account an amount equal to
the
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amount needed to pay any Extraordinary Replacement
and Repair Expenses for which insurance proceeds are
not available. To the extent that there are not
adequate funds in the Replacement Fund or the
Maintenance Account to pay Extraordinary Replacement
and Repair Expenses, Owner is and shall be obligated
to provide such funds to Operator within fifteen (15)
days after demand therefor. Operator shall have no
obligation to provide any funds for Extraordinary
Replacement and Repair Expenses.
To the extent that insurance and warranty proceeds
may be available to pay any Extraordinary
Replacement and Repair Expenses, Operator shall
diligently pursue collection thereof. If any such
proceeds are collected by Operator after Owner has
already provided Operator with funds to pay for the
same expenses then such proceeds shall be paid to
Owner to the extent, if any, that it is necessary to
result in Owner paying only that part of
Extraordinary Replacement and Repair Expenses that
exceeds such insurance and warranty proceeds.
(c) Notwithstanding the provisions of Exhibit
C.2.2.1(a) to the contrary and unless such excess
costs arise out of an event of force majeure, Owner
shall have no obligation to pay, and Operator shall
not be entitled to draw funds out of the Maintenance
Account or the Replacement Fund to pay: (i) The
amount by which the Operating Expenses incurred by
Operator during the first operating Year
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(other than the cost of utilities, insurance, taxes,
extraordinary legal costs, NBA staffing and box
office and NBA inducements (if any), Block 44 and 57
Annual Payment, Annual Replacement Fund Payment and
Operating Payment) exceed the sum of the Operating
Expenses (other than the cost of utilities,
insurance, taxes, extraordinary legal costs, NBA
staffing and box office and NBA inducements (if
any), Block 44 and 57 Annual Payment, Annual
Replacement Fund Payment and Operating Payment) set
forth in the Initial Operating Expense Budget (as
escalated to meet the obligations of Operator to
third parties under contracts that have been
approved by Owner and to meet unforeseen
emergencies) plus fifteen percent (15%); (ii) the
amount by which the Operating Expenses incurred by
Operator during each Regular Budgeted Year and each
Special Budgeted Year (other than the cost of
utilities, insurance, taxes, extraordinary legal
costs, NBA staffing and box office and NBA
inducements (if any), Block 44 and 57 Annual
Payment, Annual Replacement Fund Payment and
operating Payment) exceed the sum of the operating
Expenses (other than the cost of utilities,
insurance, taxes, extraordinary legal costs, NBA
staffing and box office and NBA inducements (if
any), Block 44 and 57 Annual Payment, Annual
Replacement Fund Payment and Operating Payment) set
forth in the Approved Operating Expense Budget for
such Operating Year (as escalated to meet the
obligations of Operator to third parties under
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contracts that have been approved by Owner and to
meet unforeseen emergencies) plus fifteen percent
(15%). To the extent the Operating Income for such
Operating Year is not adequate to pay such costs,
Operator shall pay the excess costs described in the
preceding subparagraphs (i) and (ii) that do not
arise out of an event of force majeure and/or are
not in the reasonable judgment of Owner offset by
savings, if any, that may have been realized during
such Operating Year in costs for utilities,
insurance, taxes, extraordinary legal costs, NBA
staffing and box office and NBA inducements.
(d) Notwithstanding the provisions of Exhibit
C.2.2.1(a) to the contrary, if at anytime prior to
the end of an Operating Year the Operating Expenses
incurred to such date exceed the amount of working
capital, if any, then available plus the Operating
Income received to the same date during such
Operating Year, then the provisions of this Exhibit
C.2.2.1(d) shall be followed in order to fund such
cash deficit. First, within three (3) days after
receipt of a notice requesting such funds and to the
extent the amount of funds thus far paid out of the
Maintenance Account during such Operating Year to pay
cash deficits does not exceed $500,000, then Owner
shall pay to operator out of the Maintenance Account
an amount equal to such cash deficits. If during an
Operating Year Owner has paid more than $500,000 out
of the Maintenance Account to pay cash deficits for
such operating Year
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and it is necessary to have additional funds to pay
for additional cash deficits during such Operating
Year and provided the amount of Seat Use Revenues
used to pay cash deficits shall never exceed the
balance in the Maintenance Account, Operator shall
use the Seat Use Revenues that have not been paid
out to Owner and Operator pursuant to Exhibit
C.2.1 to fund such cash deficits. If such Seat Use
Revenues are insufficient to pay such cash deficits
or if the balance in the Maintenance Account does not
exceed the amount of Seat Use Revenues used during
such Operating Year to pay cash deficits, then any
remaining funds needed during such Operating Year to
pay cash deficits shall be paid in accordance with
the procedure set forth in Exhibit C.2.2.1(a) as if
cash deficits were Operating Losses. That is, all
funds remaining in the Maintenance Account and the
Replacement Fund shall be used to pay such cash
deficits and when there are no funds in the
Maintenance Account and the Replacement Fund, Owner
and Operator shall pay 86% and 14% respectively, of
such cash deficits.
C.2.2.2 Allocation of Net Operating Income.
(a) Within ninety (90) days after the end of each
Operating Year, Operator shall be responsible for
paying, and shall pay, such payment to be
provisional and subject to adjustment based upon a
final audit, out of the Net Operating Income for
such Operating Year (i) subject to the remaining
provisions of this Exhibit C.2.2.2, to
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attempt to cure any Owner Default. If Owner has
used any of its own funds to pay for those specific
Operating Expenses that pursuant to Exhibit C.2.2.1
(a) (ii) and (c) are to be paid by Operator or to
cure or attempt to cure any Operator Default after
Final Notice and has not been reimbursed such
amounts, then Operator shall be obligated to repay
such amounts to Owner on demand together with
interest thereon at the rate of Prime plus 2 1/2%
per annum, from the date of its expenditure until
paid to Owner. In addition to all rights and
remedies available at law or equity to collect such
amounts from Operator but subject to the limitations
set forth in this Contract, Owner shall be entitled
to receive out of Operator's Operating Income
Allocation and Operator's Seat Use Allocation the
amount of money so expended by Owner together with
interest thereon at the rate of Prime plus two and
one-half percent (2 1/2%) per annum from the date of
its expenditure until paid to Owner. Operator
acknowledges that Owner has no obligation to use any
of Owner's own funds to pay for those specific
Operating Expenses that pursuant to Exhibit
C.2.2.1(a)(ii) and (c) are to be paid by Operator
or to cure or attempt to cure any Operator Default.
(c) If during an Operating Year any Seat Use
Revenues are used to pay cash deficits in accordance
with Exhibit C.2.2.1(d), then at the end of such
Operating Year, Owner shall pay out of the
Maintenance Account to Owner and Operator the
portion of Owner's Seat Use Allocation and
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Operator's Seat Use Allocation, respectively, that
were used during such Operating Year to pay for cash
deficits. To the extent the funds in the
Maintenance Account are insufficient to pay such
Seat Use Revenues, then the balance of such Seat
Use Revenues shall be paid in accordance with the
provisions of Exhibit C.2.2.1(a) with such Seat Use
Revenues being paid in the same manner that
Operating Losses are paid and with Owner and
Operator receiving an amount equal, respectively,
to Owner's Seat Use Allocation and Operator's
Seat Use Allocation.
(d) If (i) during an Operating Year funds have been
drawn pursuant to Exhibit C.2.2.1(d) out of the
Maintenance Account to pay Operating Expenses and
(ii) at the end of such Operating Year there is Net
Operating Income for such Operating Year, then the
Net Operating Income for such Operating Year shall
first be used to repay to the Maintenance Account
the amount of money drawn therefrom during such
Operating Year pursuant to Exhibit C.2.2.1(d).
C.2.3 Operating Payment.
C.2.3.1 Fixed Operating Payment. If the first Operating
Year is less than six (6) months, the Fixed
Operating Payment for the first Operating Year shall
be $275,000.00 prorated on the basis of the number
of days during such period and the Fixed Operating
Payment for the second Operating Year shall be
$275,000.00. Thereafter, for each Operating Year,
the Fixed Operating Payment shall be the Base Amount
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for such Operating Year as increased by the
Add-On-Sum for such Operating Year. If the first
Operating Year is six (6) months or longer, the
Fixed Operating Payment for the first Operating Year
shall be $275,000.00 prorated on the basis of the
number of days during such period and the Fixed
Operating Payment for the second Operating Year and
each Operating Year thereafter shall be the Base
Amount for such Operating Year as increased by the
Add-On-Sum for such Operating Year. For each
Operating Year the Fixed Operating Payment is an
Operating Expense that shall be paid to Operator in
equal monthly installments on or before the 5th day
of each month.
(1) The Base Amount for each Operating Year shall be
the Fixed Operating Payment for the immediately
preceding Operating Year.
(2) The Add-On-Sum for each Operating Year shall be
the greater of (i) the sum determined by multiplying
the Base Amount for such Operating Year by five
percent (5% or (ii) the sum determined by
multiplying the Base Amount for such Operating Year
by a fraction, the numerator of which is the
positive amount, if any, by which the "CPI"
published next preceding October 1 of such Operating
Year exceeds the "CPI" published next preceding
October 1 of the immediately preceding Operating
Year and the denominator of which is the "CPI"
published next preceding October 1 of the
immediately preceding Operating Year.
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(3) "CPI" shall mean the United States Consumer
Price Index for All Urban Consumers (also known as
the CPI-U) - United States Average (1967=100), as
published bimonthly (or if the same shall no longer
be published bimonthly, on the most frequent basis
available) by the Bureau of Labor Statistics, U.S.
Department of Labor (but if such is subject to
adjustment later, the later adjusted index shall be
used), or if such publication should be
discontinued, the "CPI" shall then refer to such
comparable statistics on changes in the cost of
living for urban consumers as the same may be
computed and published (on the most frequent basis
available) by an agency of the United States or by a
responsible financial periodical of recognized
authority, as selected by Operator and Owner. For
reference purposes, the "CPI" was 328.4 as of
January , 1986.
C.2.3.2 Variable Operating Payment. For each Operating
Year, the Variable Operating Payment shall be twelve
percent (12%) of the amount, if any, by which the
Operating Income for such Operating Year exceeds
$1,500,000.00. The Variable Operating Payment shall
be an Operating Expense that is paid to operator at
the end of each Operating Year. However, in any
Operating Year in which the Operating Expenses
(excluding the Variable Operating Payment as
calculated in accordance with the first sentence of
this Exhibit C.2.3.2) exceed the Operating Income
and Seat Use Revenues, the Variable Operating
Payment for such Operating Year shall be zero.
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EXHIBIT D
GENERAL TERMS AND CONDITIONS
D.1 DEFAULT AND TERMINATION
D.1.1 Events of Default
D.1.1.1 The occurrence of any of the following shall be an
Operator Default:
(a) The failure to pay any amounts required to be
paid by Operator under this Contract within ten
(10) days after notice from Owner that such
amounts are delinquent.
(b) The failure of Operator to substantially perform
or observe any of the other material obligations,
covenants, agreements, or conditions to be
performed or observed by Operator under this
Contract within sixty (60) days (subject to the
provisions of Exhibit D.10.3 relating to force
majeure) after notice from Owner of such failure;
provided, that if such performance or observance
cannot reasonably be accomplished within such
sixty (60) day period, then the failure to
commence such performance or observance within
such sixty (60) day period and (subject to the
provisions of Exhibit D.10.3. relating to force
majeure) to diligently prosecute such
performance or observance to conclusion.
(c) The filing by Operator of a voluntary petition in
bankruptcy or (ii) the adjudication of Operator
as a bankrupt; the approval as properly filed by
a court of competent jurisdiction of any petition
or other pleading in any action seeking
reorganization, arrangement, adjustment, or
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composition of, or in respect of, Operator under
the Bankruptcy Code, or any other similar state
or federal law dealing with creditor's rights
generally; or the appointment of a receiver,
trustee or other similar official for Operator or
its property, unless within ninety (90) days
after such approval of filing or appointment
Operator causes such appointment to be stayed or
discharged.
(d) If at any time during the Term, Owner is not in
default under this Contract and the amount of
money that Owner has actually paid in the
aggregate subsequent to the Opening Date pursuant
to Exhibit C.2.2.1(a) (i) for Operating Losses
exceeds the amount of money that Owner has
received in the aggregate since the opening Date
pursuant to both Exhibit C.2.2.2(a) and Exhibit
C.2.1 for Owner's Operating Income Allocation and
Owner's Seat Use Allocation by $5,000,000.00
(such event is herein called a "Performance
Failure"). For purposes of this calculation
only, Operating Losses shall not include (2)(i)
any payments out of the Maintenance Account, (ii)
the lesser of any Operating Losses incurred
during the first five (5) Operating Years or
$1,000,000.00, (iii) any Operating Losses that
arise out of or attributable to events of force
majeure or a condition that is common to the
national or local operating arena industry.
D.1.1.2 The occurrence of any of the following shall be an
Owner Default:
(a) The failure to pay any amounts required to be
paid by Owner under this Contract, including
without
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limitation, (i) the Public Capital Costs,
including the Development Fee, (ii) Operating
Losses that Owner is obligated to pay pursuant to
the provisions of this Contract, (iii) required
contributions to the Maintenance Account and the
Construction Trust Fund, (iv) the Operating
Payment and (v) ad valorem taxes pursuant to
Exhibit D.8.2.3. within ten (10) days after
notice from Operator that such amounts are
delinquent.
(b) The failure by Owner to substantially perform or
observe any of the other material obligations,
covenants, agreements, or conditions to be
performed or observed by Owner under this
Contract within sixty (60) days (subject to the
provisions of Exhibit D.10.3 relating to force
majeure) after notice from Operator of such
failure; provided, that if such performance or
observance cannot reasonably be accomplished
within such sixty (60) day period, then the
failure to commence such performance or
observance within such sixty (60) day period and
(subject to the provisions of Exhibit D.10.3
relating to force majeure) to diligently
prosecute such performance or observance to
conclusion.
(c) The condemnation or any attempted condemnation of
Operator, any portion of the Premises that
adversely affects the operations or income of the
Premises, or any of Operator's rights under this
Contract.
(d) The commencement of construction or upgrade by
Owner of any other arena, amphitheatre, coliseum
or stadium [other than exhibition or
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convention facilities or what is now known as the
Miami Baseball Stadium (if it remains an open
air, unairconditioned facility used principally
for baseball) and the Orange Bowl] at which
events could be presented that would be
substantially similar to events that could be
presented at the Arena and for which there would
then be seating comparable to the seating of the
Arena, whether or not such construction or
upgrade is financed in whole or in part by
Convention Development Tax Revenues, without
Operator's prior written approval, which Operator
may withhold in Operator's sole discretion.
(e) (i) Any law or governmental rule or regulation,
or action of Owner, that restricts or limits the
imposition or collection of the Seat Use Charge
including, but not limited to, any such law or
governmental rule or regulation, that requires
the imposition of a charge per seat or ticket
(other than sales taxes) and that requires
payment of the proceeds therefrom to an entity
other than Owner and Operator and the failure of
Owner within sixty (60) days thereafter to
modify this Contract in a manner that results in
Operator being entitled to receive the same
amount of income as Operator was entitled to
receive prior to the restriction or limitation of
the Seat Use Charge or (ii) the imposition or
assessment of any ad valorem or similar such
taxes on the Arena or the Project Land or this
Contract that are in excess of the amount of such
taxes that Owner is obligated to pay pursuant to
Exhibit D.8.2.3 and the failure of Owner within
sixty (60) days thereafter to
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successfully contest the imposition of such taxes
or to modify this Contract in a manner that is
acceptable to Owner and Operator which acceptance
may be witheld in either's party's sole
discretion.
(f) A default by Owner under the terms of the Block
44/57 Agreement or a termination of the Block
44/57 Agreement.
D.1.2 Termination
D.1.2.1 Upon the occurrence of an Operator Default of the
type described in Subparagraph D.1.1.1(a) or an
Owner Default of the type described in
Subparagraph D.1.1.2(a), the non-defaulting party
shall have the right to give to the defaulting
party notice ("Final Notice") of its intention to
terminate this Contract after the expiration of
a period of ten (10) days from the date such
Final Notice is effective pursuant to Exhibit
D.10.6, and upon expiration of such ten (10) day
period and payment of the Termination Fee, this
Contract shall terminate. If, however, either
within such ten (10) day period or prior to
payment of the Termination Fee, the defaulting
party cures such default by paying all such
amounts as may be required to be paid by the
defaulting party hereunder, then this Contract
shall not terminate by reason of such Final
Notice.
D.1.2.2 Upon the occurrence of an Operator Default of the
type described in Subparagraph D.1.1.1(b) or (d)
or an Owner Default of the type described in
Subparagraph D.1.1.2(b), the non-defaulting party
shall have the right to give to the defaulting
party notice ("Final Notice") of its intention to
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terminate this Contract after the expiration of a
period of sixty (60) days (subject to the
provisions of Exhibit D.10.3 relating to force
majeure) from the date such Final Notice is
effective pursuant to Exhibit D.10.6, and upon
expiration of such sixty (60) day period and
payment of the Termination Fee, this Contract
shall terminate. If, however, either within such
sixty (60) day period or prior to payment of the
Termination Fee, the defaulting party cures such
default, or if such default cannot reasonably be
cured within such sixty (60) day period, and the
defaulting party begins to cure such default
during such sixty (60) day period and (subject to
the provisions of Exhibit D.10.3 relating to
force majeure) diligently prosecutes such cure to
a successful conclusion, then this Contract shall
not terminate by reason of such Final Notice.
D.1.2.3 Upon the occurrence of an Operator Default of the
type described in Subparagraph D.1.1.1(c) or an
Owner Default of the type described in
Subparagraphs D.1.1.2 (c) or (d) or (e) or (f),
the non-defaulting party [i.e. Operator in the
case of D.1.1.2(c) or (d) or (e) or (f) and Owner
in the case of D.1.1.1(c)] shall have the right
to terminate this Contract upon written notice to
the defaulting party and payment of the
Termination Fee. Moreover, in the event of an
Owner Default of the type described in
Subparagraph D.1.1.2(f), Operator shall have the
right to give to Owner a Loss of Rights Notice,
as such term is defined in Exhibit D.8.12. Upon
delivery of such Loss of Rights Notice, owner"
shall have those rights and obligations
designated in Exhibit D.8.12.
D.1.2.4 On the seventeenth (17th), and thirtieth (30th)
anniversaries of the first September 30 following
the Opening Date,
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as such dates may be extended in the manner
hereinafter provided in this Subparagraph
D.1.2.4; (each of which anniversaries is herein
called a "Cancellation Date"), Owner shall have
the right to terminate this Contract, with or
without cause, provided that Owner is not in
default under this Contract and that the
following conditions have been satisfied: (i) not
less than nine (9) months nor more than fifteen
(15) months prior to a Cancellation Date,
Operator has received a written notice that Owner
intends to cancel this Contract on the next
following Cancellation Date; (ii) on the
Cancellation Date, Operator receives a written
notice terminating this Contract and an amount
of money equal to the Termination Fee. If Owner
does not exercise its right to deliver notice of
intent to cancel this Contract within such six
(6) month period, or having exercised such right,
if owner fails to pay Operator the Termination
Fee on or before the Cancellation Date, then
owner's right to terminate this Contract with
respect to such Cancellation Date shall expire.
If at anytime during the term of this Contract
an event of force majeure (as such term is
defined in Exhibit D.10.3) occurs and as a
result, the Arena or a material portion thereof
can not reasonably be used for the purposes
permitted under this Contract or attendance is
substantially reduced then each Cancellation Date
shall be extended by the number of days since
the Opening Date on which the Arena or material
portion thereof can not be so used or attendance
is so reduced.
D.1.2.5 If Operator terminates this Contract pursuant to
Subparagraphs D.1.2.1, D.1.2.2 or D.1.2.3 or if
Owner terminates this Contract pursuant to
D.1.2.1, D.1.2.2., D.1.2.3 or D.1.2.4,
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then contemporaneously with such termination
Owner shall pay the Termination Fee to Operator.
D.1.3 Damages. Owner and Operator recognize that the
profits to be realized by Operator under this Contract
are difficult, if not impossible, to accurately
ascertain on the date hereof. Moreover, Owner
recognizes that the Private Capital was procured and
provided to the Project upon Operator's reliance that
Operator would operate and manage the Arena for the
full Term. Owner and Operator recognize that an early
termination of this Contract can reasonably be
anticipated to cause Operator to fail to recover a
portion of Operator's Private Capital and to forego a
portion of Operator's expected profit. Any damages
due as a result of this Exhibit D.1.3 shall be as
provided for in Exhibits D.1.4 and D.1.6.3.
D.1.4 Termination Fee.
D.1.4.1 Except as specifically provided in this
Exhibit D.1.4, the Termination Fee
shall be an amount of money equal to
the sum of (a) the greater of (x) Operator's
Decoma Amount or (y) the product of (i) seven
and one-half (7 1/2) times (ii) the average
amount of all money payable to Operator under
this Contract (excluding the Fixed Operating
Payment but including the Variable operating
Payment, Operator's Operating Income
Allocation and Operator's Seat Use
Allocation) during each of the five (5)
highest income years during the Term plus (b)
any money that Operator has advanced in
accordance with the provisions of this
Contract to pay for any Operating Expenses
[other than payment of Operating Expenses by
Operator pursuant to Exhibit C.2.2.1(a)(ii)
and C.2.2.1(c)] or Extraordinary Replacement
and Repair Expenses or to cure or attempt to
cure any Owner Default and that has not been
reimbursed to Operator out of Owner's
Operating Income Allocation or Owner's Seat
Use Allocation together with
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interest thereon at the rate of Prime plus 2 1/2%
per annum from the date of its expenditure until
paid to Operator less (c) any money that (i)
Owner has advanced in accordance with the
provisions of this Contract to pay for those
specific Operating Expenses that pursuant to
Exhibit C.2.2.1(a)(ii) and 2.2.1(c) are to be
paid by Operator or to cure any Operator Default
after Final Notice and (ii) has not been
reimbursed to Owner together with interest
as provided for in Exhibit C.2.2.2(b).
The "five highest income years" shall be those
five Operating Years in which the highest amount
of money was received by Operator or if there are
less than five Operating Years in which money was
received by Operator, then the number of
Operating Years in which money was received by
Operator. "Operator's Decoma Amount" shall be
$7,121,000.00.
D.1.4.2 If any of the following specific events occur the
amount of the Termination Fee shall equal the sum
of Operator's Decoma Amount and the amount
calculated pursuant to Exhibit D.1.4.1(b) and
(c): (i) if Owner terminates the Contract at
anytime before the eighteenth (18th) Operating
Year because of an Operator Default that is a
Performance Failure; or (ii) if Owner terminates
the Contract at anytime prior to the eleventh
(11th) Operating Year because of an Operator
Default that constitutes a "willful failure"; or
(iii) if Owner terminates the Contract at anytime
prior to the eleventh (11th) Operating Year
because of the Operator Default described in
Exhibit D.1.1.1(c)(i); or (iv) if Operator
terminates this Contract at anytime before the
eighteenth (18th) Operating Year because of an
Owner Default described in Exhibit D.1.1.2(e).
D.1.4.3 If any of the following specific events occur,
the amount of the Termination Fee shall equal the
sum of Operator's Decoma
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Amount [as reduced by Four Hundred Thousand
and No/100 Dollars ($400,000.00) for each
Operating Year that is prior to termination
and after the seventeenth (17th) Operating
Year] plus the amount calculated pursuant to
Exhibit D.1.4.1(b) less the amount
calculated pursuant to Exhibit D.1.4.1(c):
(i) if Owner terminates the Contract at
anytime after the seventeenth (17th)
Operating Year because of an Operator
Default that is a Performance Failure; or
(ii) if Operator terminates this Contract at
anytime after the seventeenth (17th)
Operating Year because of an Owner Default
described in Exhibit D.1.1.2(e).
D.1.4.4 If any of the following specific events
occur, the amount of the Termination Fee
shall equal the sum of Operator's Decoma
Amount [as reduced by Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00)
for each full Operating Year that is prior
to Termination but after the tenth (10th)
Operating Year and prior to the eighteenth
(18th) Operating Year and Four Hundred
Thousand and No/100 Dollars ($400,000.00)
for each full Operating Year that is prior
to termination but after the seventeenth
(17th) Operating Year] plus the amount
calculated pursuant to Exhibit D.1.4.1(b)
less the amount calculated pursuant to
Exhibit D.1.4.1(c): (i) if Owner terminates
the Contract at anytime after the eleventh
(11th) Operating Year because of an Operator
Default that constitutes a "willful failure"
or (ii) if Owner terminates the Contract at
anytime after the eleventh (11th) Operating
Year because of the Operator Default
described in Exhibit D.1.1.1(c)(i).
D.1.4.5 If any of the following specific events
occur, the Termination Fee shall equal only
the amount calculated pursuant to Exhibit
D.1.4.1(b) and (c): (i) if Owner terminates
the Contract at anytime
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after the eleventh (11th) Operating Year
because of both an Operator Default that is
a Performance Failure and an Operator
Default that satisfies the following
conditions: Operator is obligated pursuant
to the Contract to make the following
payments, has the ability out of Operating
Income received by it during the then
current Operating Year to make any such
payments and deliberately elects not to make
any such payments. Such payments are the
payment to Owner pursuant to Exhibit
C.2.2(a) of Owner's Operating Income
Allocation and pursuant to Exhibit C.2.1 of
Owner's Seat Use Allocation, payment of the
insurance premiums for the insurance
described in Exhibit E and payment of the
Annual Replacement Fund Payment.
D.1.4.6 If any of the following specific events
occur, the amount of the Termination Fee
shall be the amount specified in Exhibit
D.1.4.1 reduced by Four Hundred Thousand and
No/100 Dollars ($400,000.00) for each
Operating Year prior to termination and
after the seventeenth (17th) Operating Year:
if Owner terminates the Contract at anytime
because of an Operator Default described in
Exhibit D.1.1.1(a) or D.1.1.1(b) or
D.1.1.1(c)(ii).
D.1.4.7 If this Contract is terminated by Owner or
Operator, pursuant to Exhibit E.6.2, the
Termination Fee shall be the amount
specified in Exhibit E.6.2.
D.1.4.8 If this Contract is terminated by Operator
because of an Owner Default described in
Exhibit D.1.1.2(c) that is a condemnation of
all of the Premises, then the Termination
Fee shall be the sum of the portion of the
condemnation award made to Operator or to
which Operator is entitled pursuant to the
Block 44/57 Agreement for its contractual
interests in the Premises plus an amount
calculated pursuant to
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Exhibit D.1.4.1(b) less an amount calculated
pursuant to Exhibit D.1.4.1(c).
D.1.4.9 The term "willful failure" as used in this
Exhibit D.1.4 shall mean when Operator has
the ability out of Operating Income received
by it during the then current Operating Year
to perform its obligations under this
Contract but deliberately elects without
justification not to perform such obligations.
D.1.5 Surrender. Upon the termination of this Contract for
any reason and payment to Operator of any applicable
Termination fee, (i) Operator and all persons claiming
by, through, or under Operator hereunder shall
promptly surrender and vacate the Premises to Owner,
(on an "as is" basis) leaving all of the equipment,
supplies, manuals, and inventories; (ii) Operator
shall transfer or assign (and Owner shall expressly
assume) to Owner, or to Owner's designee, without
recourse or warranty of any kind on Operator, all of
the rights and obligations under all contracts or
agreements concerning the Premises or the use thereof
between the Operator and any other person, firm,
corporation or other entity, such assignment to be
effective as of the date of such termination; (iii)
any disbursement that, but for such termination would
have been made to Operator under the provisions of
Exhibit C hereof, shall be prorated as of the date of
such termination and paid pursuant to Exhibit C; and
(iv) all obligations incurred by Operator within the
scope of its authority to perform the Work will be
assumed by Owner, or Owner's designee, and Owner will
hold Operator harmless in connection therewith after
the date of such termination. The provisions of this
Exhibit D.1.5 shall survive termination of this
Contract.
D.1.6 Alternative Remedies.
D.1.6.1 If Operator uses any of its own funds to pay
for any Operating Expenses [other than
payment of Operating Expenses by Operator
pursuant to Exhibit
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C.2.2.1(a)(ii) and (c)] or Extraordinary
Replacement and Repair Expenses after demand
has been made on Operator to make such
payments or to cure or attempt to cure any
Owner Default, all sums so expended by
Operator shall be payable upon demand, and
if not so repaid, such sums shall bear
interest and shall be repaid as provided in
Exhibit C.2.2.2(b), and, to the extent now
or hereafter permissible under law, shall be
secured by a lien in favor of Operator on
Owner's Seat Use Allocation and Owner's
Operating Income Allocation and on Owner's
interest in the Premises. Owner's interest
in the Convention Development Tax Revenues
shall be used to discharge Owner's
obligations under this Contract to the extent
it is permissible under the Bonds or under
any bonds that may hereafter be issued to
finance the cost of constructing an
exhibition center. Owner acknowledges that
Operator has no obligation to use any of
Operator's own funds to pay for any Operating
Expenses [other than payment of Operating
Expenses by Operator pursuant to Exhibit
C.2.2.1(a)(ii) and (c)] or Extraordinary
Replacement and Repair Expenses or to cure or
attempt to cure any Owner Default.
If Owner uses any of its own funds to pay for
those specific Operating Expenses that
pursuant to Exhibit C.2.2.1(a)(ii) and (c)
are to be paid by Operator or to cure or
attempt to cure any Operator Default, all
sums so expended by Owner shall be payable
upon demand, and if not so repaid, such sums
shall bear interest and shall be repaid as
provided in Exhibit C.2.2.2(b), and, to the
extent now or hereafter permissible under
law, shall be secured by a lien in favor of
Owner on Operator's Seat Use Allocation and
Operator's Operating Income Allocation.
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D.1.6.2 In addition to all other remedies hereunder,
Operator and Owner shall have the right to
pursue all equitable remedies including
injunction and relief in the form of mandamus.
D.1.6.3 The remedies provided under Subparagraphs
D.1.2.1, D.1.2.2, D.1.2.3, D.1.6.1 and D.1.6.2 in
the event of an Owner Default or an Operator
Default shall be the sole and exclusive remedies
available to the parties hereunder. Except for
the Termination Fee and any amount to be
reimbursed under Subparagraph D.1.6.1, payable
hereunder, neither Owner or Operator shall ever
be liable to the other, or to any other person,
on account of any act or omission, taken or
omitted to be taken, for any amount of damages,
or any other monetary obligation whatsoever,
which is in excess of the actual amount of cash
proceeds actually recovered under the policies of
liability insurance provided to be maintained
pursuant to Exhibit E of this Contract. Under no
circumstances whatsoever shall Owner or Operator,
under any theory of action or recovery, ever be
liable for, or obligated to pay or to satisfy any
judgment for, any damages or other monetary
obligations whatsoever that is in excess of the
amount of such cash proceeds, plus, in the case
of Owner, the Termination Fee and any amount to
be reimbursed under Subparagraph D.1.6.1. None of
the officers, directors, constituent partners,
employees, elected officials, or agents of Owner
or Operator or any Operator Affiliate shall ever
be personally liable for, or obligated to pay, or
to satisfy any judgment for, any damages or any
other monetary obligation whatsoever under any
theory of action or recovery, on account of an
Owner Default or an Operator Default.
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D.2 EQUAL EMPLOYMENT OPPORTUNITY
D.2.1 Minority Employment and Investment. Operator shall perform
its obligations under Exhibit A hereto.
D.3 RELATIONSHIP OF PARTIES
D.3.1 Independent Contractor. Notwithstanding anything in this
Contract to the contrary, no partnership or other business
relationship is established between Owner and Operator
other than that of Owner and independent contractor.
D.3.2 Owner Representative
D.3.2.1 Owner, by written notice to Operator, shall
designate one (1) person to be the Owner
Representative, who shall be authorized to act on
behalf of Owner under this Contract. Owner shall
have the right, from time to time, to change the
person who is the Owner Representative by giving
Operator written notice thereof. The Owner
Representative's review or approval, or agreement
to the performance, of the Work or any portion
thereof, or the furnishing of materials or
equipment shall, subject to the terms of this
Contract, in no way relieve Operator of its
responsibility for the performance of the
Work or for the adequacy of such materials and
equipment.
D.3.2.2 Owner shall designate one (1) person, who may be
the Owner Representative, to be the person (the
"Emergency Representative") to expedite the
obtaining of all governmental permits, licenses,
certificates, and other approvals for the
efficient performance of the Work. Owner shall
have the right, from time to time, to change the
person who is the Emergency Representative by
giving
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Operator written notice thereof. Owner shall use its
best efforts to assure that the Emergency
Representative is on call for the benefit of Operator
twenty-four (24) hours a day and that the Emergency
Representative has the authority to expedite all such
approvals, permits, licenses, certificate, and the
like to the full extent permitted by applicable Legal
Requirements.
D.3.3 Operator Representative. Operator, hereby designates C. Dean
Patrinely to be the Operator Representative, who shall be
authorized to act on behalf of Operator under this Contract,
Operator shall have the right, from time to time, to change the
person who is the Operator Representative by giving Owner
written notice thereof. Any action, consent or approval by
Operator Representative under this Contract shall be binding on
Operator. The Operator Representative's review or approval, or
agreement to any matter under this Contract shall, subject to
the terms of this Contract, in no way relieve Owner of its
obligations under this Contract.
D.4 TITLE AND NAMES
D.4.1 In General. Owner shall hold a leasehold interest in all of the
Project Land pursuant to the Block 44/57 Agreement except for
the permitted encumbrances set forth in Exhibit G attached
hereto, throughout the Term. Owner shall hold fee simple title
to the entire Arena.
D.4.2 Names. Owner shall have the right to designate the name for the
Arena provided that such name is commercially reasonable and can
be marketed, and subject to the reasonable approval of Operator.
Operator shall have sole and exclusive right, power and
authority, without Owner approval, to designate all other names
relating to parts of the Arena or any part of the Premises, and,
as provided in Exhibit D.7.5, to negotiate, execute and perform
all contracts, use agreements, licenses and other agreements
with person or entities including Operator Affiliates relating
directly or indirectly to the sale, marketing promotion and use
in whatever nature of all names (including the name of the
Arena), trademarks, logos and similar intangible property
relating to
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the Premises or any part thereof. All payments received by
Operator or Owner from name designation and any such contracts
agreements and licenses shall be Operating Income.
D.5 STANDARDS OF PERFORKANCE
D.5.1 Development/Construction Standards. Operator shall perform the
Work in a good and workmanlike manner continuously and
diligently in accordance with generally accepted standards in
the United States for development, design, construction
management, engineering, and construction practice for
construction of arena complexes similar to the Arena, using
qualified, careful and efficient workers and subcontractors and
in substantial conformity with the provisions of this Contract
and the Plans and Specifications.
D.5.2 Operating Standards.
D.5.2.1 The Arena shall be generally used for performance
purposes, including without limitation, use as an
arena, recreation facility, performance hall, and all
other similar or related uses.
D.5.2.2 Operator shall maintain the Arena in good condition,
reasonable wear and tear excepted, and shall continue
maintenance procedures which will keep the Arena in
good condition and working order, reasonable wear and
tear excepted. Operator may, without Owner approval,
incur any Extraordinary Repair and Replacement Expenses
provided that such expenditures (i) occur within or
after the expectancy periods specified therefor on
Exhibit I or (ii) are necessary in the reasonable
judgment of Operator, for the promotion of the health,
safety or welfare of persons using the Arena or (iii)
are emergency in nature or (iv) are necessary to
comply with the provisions of agreements with third
parties relating to the Arena which agreements have
been approved by Owner. Before incurring other
Extraordinary Repair and Replacement Expenses,
Operator shall
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obtain the approval of Owner. Such approval shall not
be unreasonably withheld and shall be deemed given
unless specifically disapproved in writing within 30
days after a written request therefor from Operator.
D.5.2.3 No use of the Arena shall be permitted without a
reasonable charge for such use.
D.5.2.4 Operator shall use reasonable efforts to require that
all events, performances and other uses of the Arena
shall be in keeping with the purposes described in
D.5.2.1 for which the Arena is to be used.
D.5.2.5 Operator shall use reasonable efforts to require that
all persons using the Arena or attending events
therein comply with all Legal Requirements of all
governmental authorities having jurisdiction over the
operation of the Arena, or any part thereof, including
those of the City and any requirements or regulations
established by Operator.
D.5.2.6 Notwithstanding the provisions of this Exhibit D.5 or
other pertinent provisions of this Contract to the
contrary, Operator's standards of performance,
maintenance and repair each Operating Year shall be
in conformity with that standard to which a good
operator could operate given the monetary limits set
forth in the Approved Operating Expense Budget for
such Operating Year.
D.5.3 General Performance Standards
D.5.3.1 Operator shall perform the Operating Work in
accordance with the laws, rules and regulations of
all governmental bodies having jurisdiction over
such Operating Work, or any part thereof; provided,
however, that if any such law, rule or regulation
enacted after the Opening Date necessitates any
structural
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change in the Arena, as constructed, Owner shall be
responsible, at its sole cost and expense, for
complying with such law, rule or regulation.
D.5.3.2 All obligations of Operator arising under, from, or by
reason of this Contract shall be promptly and fully
paid and discharged at or prior to the times specified
for payment or performance; provided, however, that
nothing herein shall prohibit Operator from contesting
in good faith the validity of any claim made against
Operator. Upon the conclusion of any such dispute, by
final non-appealable judgment, or otherwise, Operator
shall promptly pay and discharge any obligation which
is determined to be due and owing.
D.6 PROJECT BUDGET, PROJECT CONSTRUCTION PROGRAM; APPROVED OPERATING EXPENSE
BUDGET; OWNER'S REVIEW AND APPROVAL
D.6.1 Changes to the Project Budget
D.6.1.1 The Project Budget included in the Project
Construction Program attached to Exhibit B as
Schedule 1 is hereby approved by Owner. Operator
shall have the right, with the approval of Owner,
which consent shall not be unreasonably withheld, to
revise any line item in the Project Budget, except the
line item for the Development Fee, to take advantage
of any cost savings in any other line item, including
any contingency, of the Project Budget, provided that
(a) the Budgeted Project Cost is not increased and (b)
the capacity, utility, quality and appearance of the
Arena is not materially adversely affected thereby.
D.6.2 Changes to the Project Construction Program
D.6.2.1 The Project Construction Program attached to Exhibit B
as Schedule 1 is
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hereby approved by Owner. Operator shall have the
right, with Owner's approval, which consent shall not
be unreasonably withheld, to make such changes to the
Project Construction Program, including without
limitation, the Construction Contract and the plans
and specifications for construction of the Arena, as
Operator reasonably determines are necessary to
attempt to execute the entire Project at a cost not
in excess of the Budgeted Project Cost, provided that
the capacity, utility, quality, and appearance of the
Arena, if developed and constructed in conformity with
such changes would not be materially adversely
affected.
D.6.2.2 Owner shall not have the right to make any changes to
the Project Construction Program unless approved by
Operator, which approval operator may withhold in its
reasonable discretion.
D.6.3 Initial operating Expense Budget and Approved
Operating Expense Budget
D.6.3.1 The Initial Operating Expense Budget attached hereto as
Schedule 2 to Exhibit B has been approved by owner.
At least ninety (90) days prior to commencement of
each Regular Budgeted Year and Special Budgeted Year,
Operator shall submit to owner for Owner's review and
approval an Operating Expense budget setting forth an
estimate of the Operating Expenses that Operator
estimates will be incurred during such Operating Year.
Such budget when approved by owner in accordance with
the provisions of Exhibit D.6.4.1 and as may be revised
in accordance with such Exhibit D.6.4.1 is herein
called the "Approved Operating Expense Budget".
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D.6.4 Standards for Owner's Review and Approval
D.6.4.1 Owner acknowledges that in order to meet the
deadlines established by the Project Construction
Program for the performance of the Development Work
and the Construction Work, and in order to accomplish
the efficient performance of the Operating Work
Operator may, to the extent, if any, Owner approval
is specifically required under this Contract, submit
matters to Owner in stages for approval. Upon
receipt of any matter submitted by Operator for
review and approval, whether a revision to the
Project Budget, a revision to an element of the
Project Construction Program, any contract with an
Operator Affiliate for which Owner approval is
required under Exhibit D.7 the Operating Expense
budget described in Exhibit D.6.3.1 above or
revisions to the Approved Operating Expense Budget or
otherwise, Owner shall review the same and shall
promptly (but in any event within ten (10) calendar
days after such receipt) give Operator notice of
Owner's approval or disapproval, setting forth in
detail all reasons for any disapproval. Owner's
right to disapprove any such matter submitted shall
be limited to the elements thereof (i) which do not
conform substantially to matters previously approved,
or in the case of contracts, which contain material
provisions less favorable to Owner and Operator than
were contained in drafts previously approved by
Owner, (ii) which are new elements not previously
presented and Operator is unable to demonstrate, in
the reasonable judgment of the Owner that such new
element is reasonably necessary for performance of
the Work, or (iii) which depict matters that are
violations of this Contract or applicable Legal
Requirements. If no response from Owner is delivered
to Operator within ten (10) calendar days after the
submission of a
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particular matter (other than the Operating Expense
budget described in Exhibit D.6.3.1 for which the
time period shall be thirty (30) calendar days), or
any re-submission thereof as hereinafter provided,
such matter shall be deemed approved. In the
instance of an Operating Expense budget for a Regular
Budgeted Year, if Owner, exercising reasonable
judgment, disapproves the proposed budget then the
Approved Operating Expense Budget for such Operating
Year shall be deemed to be the same as the Approved
Operating Expense Budget for the immediately
preceding Operating Year as increased by an inflation
factor of 5%. In the instance of an Operating
Expense Budget for a Special Budgeted Year, if Owner
exercising reasonable judgment disapproves the
proposed budget, then the Approved Operating Expense
Budget for such Operating Year shall be deemed to be
the same as the Approved Operating Expense Budget for
the immediately preceding Operating Year with the
following modification: (i) the amount specified in
such budget for salaries, employee benefits and
related expenses, advertising/promotion and other
miscellaneous costs shall be the Barebones
Administrative and Promotional Amount for such
Operating Year.
D.6.4.2 If Owner disapproves of a particular matter, Operator
shall have the right, within sixty (60) days after the
date Operator receives notice of such disapproval, to
resubmit such matter to Owner, altered to satisfy
Owner's basis for disapproval. Any re-submission
shall be subject to review and approval by Owner in
accordance with the procedures described in
Subparagraph D.6.4.1 for an original submission,
until the same shall be approved, or deemed approved,
by Owner.
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D.6.4.3 Owner and Operator shall attempt in good faith to
resolve any disputes concerning the approval of any
aspect of the Work expeditiously, so as not to delay
the performance of the Work in accordance with
this Contract.
D.6.4.4 Notwithstanding anything contained in this Paragraph
D.6.4 to the contrary, Operator shall submit the
proposed final plans and specifications for the
construction of the Arena and the performance of the
remainder of the Construction Work as an integrated
whole to Owner for Owner's review and approval.
Owner's review and approval of the proposed final
plans and specifications, and Operator's
re-submission of the same, shall be subject to the
standards of review set forth in D.6.4.1 for other
matters, elements of which have been previously
approved, except that Owner shall have thirty (30)
days after the original submission of the proposed
final plans and specifications as an integrated whole
in which to review and approve or disapprove such
proposed final plans and specifications. The final
plans and specifications that are approved by Owner
shall be the Plans and Specifications.
D.7 ASSIGNMENT AND SUBCONTRACTS FOR PORTIONS OF THE WORK
D.7.1 Performance of the Development Work. Operator shall have the
right to enter into an assignment or subcontract with Barker
Interests Limited, a Texas limited partnership ("BIL"), with
BIL's affiliate, BIL Development, Inc., HSA Management Inc.
("HSA"), or any Operator Affiliate for the performance of some
or all of the Development Work.
D.7.2 Performance of the Construction Work. Operator shall have
the right with Owner approval to enter into the Construction
Contract.
D.7.3 Performance of Operating Work. Operator shall have the right
to enter into an assignment or
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subcontract with HSA Management Inc. ("HSA") or any venture in
which HSA or an HSA affiliate is a venturer, for the
performance of some or all of the Operating Work.
D.7.4 Contracts for Use of Arena. Operator shall have full and
exclusive power and authority, without Owner approval, to
negotiate, execute, and perform (a) contracts, use agreements,
licenses and other agreements with persons or entities
(including Operator Affiliates) who desire to schedule events
or performances, telecasts, broadcasts or other transmissions
in, from or to the Premises or who desire otherwise to use the
Premises or any part thereof and (b) contracts, use
agreements, licenses and other agreements with persons or
entities (including Operator Affiliates) that otherwise
pertain to the use, operation and occupancy of the Premises or
any part thereof in the Arena or the Premises.
No Owner approval shall be required in connection with the
negotiation, execution and performance of any of the
contracts, agreements and licenses described in this Exhibit
D.7.4 except that Owner shall have the right to approve the
execution of any of those contracts, agreements and licenses
described in Exhibit D.7.4(a) and (b) that (i) are with an
Operator Affiliate and (ii) schedule events or performances in
the Arena for more than 20 days during any one Operating Year
("Required Approval Agreements"). Such Owner approval shall
(i) be given by the Chairman of Owner or his designee, (ii)
not be unreasonably withheld and (iii) be subject to the
standards for Owner review and approval set forth in Exhibit
D.6.4. Any contracts, agreements or licenses described in
Exhibit D.7.4(a) and (b) with Operator Affiliates other than
the Required Approval Agreements are herein called "Unapproved
Affiliate Use Agreements"; such Unapproved Affiliate Use
Agreements shall be subject to the following annual review
process. On or before ninety (90) days after the end of each
Operating Year, Operator shall furnish to Owner all data
reasonably needed by Owner to make its annual review and
analysis of Unapproved Affiliate Use Agreements. In such
annual review and analysis, Owner shall compare the group of
Unapproved Affiliate Use Agreements in such Operating Year
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with the group of those agreements, contracts, and licenses
described in Exhibit D.7.4 (a) and (b) that are not with
Operator Affiliates ("Unaffiliated Use Agreements") in such
Operating Year. In its analysis, Owner shall not compare
specific agreements from the group of Unaffiliated Use
Agreements with specific agreements from the group of
Unapproved Affiliate Use Agreements. Instead, Owner shall
compare the aggregate standards, requirements and potential
for contribution to Operating Income in each group of
agreements. If in the reasonable judgment of the Owner, such
standards, requirements and potential for Operating Income are
not comparable, and as a result, in the reasonable judgment of
the Owner (taking into consideration the rental rate for other
events which could reasonably have been scheduled instead of
those events scheduled pursuant to Unapproved Affiliate Use
Agreements), the amount of Operating Income was less than if
such standards, requirements and potential were comparable
then Owner and Operator shall exercise their good faith
efforts to determine what payment, if any, in their reasonable
judgment should be made by Operator to Operating Income and
shall also establish mutually acceptable procedures to insure
that all future Unaffiliated Use Agreements, as a group in
each Operating Year, and Unapproved Affiliate Use Agreements,
as a group in each Operating Year, are comparable.
D.7.5 Advertising Contracts. Operator shall have full and exclusive
power and authority, without Owner approval, to negotiate,
execute, and perform (a) contracts, use agreements, licenses
and other agreements with persons or entities for the use of
advertising space at or on the Premises or any part thereof
and all advertising rights of whatever kind and nature related
thereto and (b) contracts, use agreements, licenses and other
agreements with persons or entities for the sale, promotion,
marketing and use in whatever manner of all names, trademarks,
tradenames, logos and similar intangible property relating to
the Premises or any part thereof. Any contracts, licenses or
other agreements described in this Exhibit D.7.5 that are with
Operator Affiliates shall be treated (for purposes of Owner
approval)
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in the same manner as provided in Exhibit D.7.4 for Unapproved
Affiliate Use Agreements.
D.7.6 Concessions. Subject to the prior written approval of Owner,
Operator shall have the full and exclusive power and authority
to operate, to assign or subcontract such right to operate,
and to negotiate, execute, and perform assignments and
subcontracts with persons or entities including Operator
Affiliates (herein such assignment(s) and subcontract(s) are
collectively called "Concession Agreement(s)" and any such
persons or entities are herein called "Concessionaire(s)") for
the operation of, including, but not limited to, (a)
concessions for the sale of food, beverages, souvenirs,
novelties and programs and (b) skyboxes, clubs and
restaurants, at and within the Arena. In approving any such
Concessionaire Agreement and Concessionaire, Owner and
Operator shall take into account Concessionaire's financial
strength, economic commitment to the Project which may include
equity investment; commitment to minority involvement,
reputation, and business experience including experience in
providing concession services for similar projects and other
sports and entertainment facilities in Florida and elsewhere.
Owner shall approve Concession Agreements that comply with the
following requirements:
(i) No Concession Agreement shall be for a term in
excess of twenty (20) years.
(ii) The percentage of gross sales from the operation of
the concessions, clubs, skyboxes and restaurants
that shall be (a) deemed included within Operating
Income, if Operator operates such concessions,
clubs, and restaurants, or (b) payable to Operator
as Operating Income, under any Concession
Agreement, shall be within then acceptable industry
limits or practices, and which on the date of
execution of this Agreement shall be no less than
thirty-two and one half percent (32 1/2%) of
Concessionaire's gross receipts from sales of food
and beverages (with increases to such percentage as
may be justified by total gross sales), ten percent
(10%) of such gross receipts from sales of
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candy and tobacco, fifteen percent (15%) of such
gross receipts from food and beverages sales to
skyboxes, and thirty-seven and one half percent (37
1/2%) of the Concessionaire's net receipts from the
sale of souvenirs and novelties at the Arena, and
with such other terms as are consistent with then
acceptable industry limits or practices.
(iii) Such operation of such concessions, clubs, skyboxes
and restaurants shall otherwise be upon terms and
conditions for such businesses under similar
circumstances at the time any such Concession
Agreement is executed.
(iv) There shall be included within Operating Income the
amount, if any, by which payments in equipment or
money to Operator or an Operator Affiliate (other
than payments to Operator or an Operator Affiliate
in consideration of the sale, transfer, assignment
or pledge of an ownership interest in Operator or an
Operator Affiliate or loans to Operator or an
Operator Affiliate) in connection with any
Concession Agreement prior to the Opening Date are
in excess of $2,000,000.00. Operating Income shall
not include and Owner shall have no right, title or
interest in or liability for (a) the first
$2,000,000.00 of any such payments (provided that if
such $2,000,000 is in the form of equipment, the
value placed on such equipment must be acceptable to
Owner and such $2,000,000 of equipment must be free
of liens) or (b) any payments to Operator or an
Operator Affiliate by a concessionaire or affiliate
of a concessionaire in the form of a loan or an
equity contribution or payment in consideration of
the sale, transfer exchange, assignment or other
hypothecation of an ownership or profits interest in
Operator or an Operator Affiliate.
D.7.7. Use and Advertising Contracts.
In connection with any of the contracts, agreements and
licenses described in Exhibits D.7.4 and 7.5, Operator shall
have the full and exclusive power and authority, without Owner
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approval, to grant to any contracting party (other than an
Operator Affiliate and a party to a Concession Agreement) a
right to participate in the Net Operating Income of the
Project provided that 57.5% of such participation is paid out
of Operator's Operating Income Allocation and 42.5% of such
participation is paid out of Owner's Operating Income
Allocation.
D.7.8. Sales, Assignments, and Pledges. Operator shall have the right
to sell, assign, collaterally assign, pledge, hypothecate or
otherwise transfer and encumber ("Transfer") any or all of its
rights to receive any compensation or income hereunder.
Operator shall have the right to Transfer up to eighty-five
percent (85%) of the ownership interests, distributive shares
of income, allocable shares of tax losses, or other
partnership interests in Operator, so long as Decoma Venture
(or a limited partnership in which Decoma Venture is the sole
general partner) remains the sole general partner of Operator.
No Transfer or assignment or subcontracting of Operator's
obligations under this Contract shall relieve Operator from
any of its obligations hereunder, including without limitation
Operator's obligation to pay the Private Capital Costs.
D.7.9 Removal of General Manager. If at anytime after the first
five (5) Operating Years there are three (3) consecutive
Operating Years in which the amount of Operating Loss paid by
Owner exceeded an average of $750,000.00 per each such
Operating Year, (subject to force majeure and the impact of
any competing facility) then Operator shall, if requested to
so in writing by Owner, remove the on-site general manager of
the Arena.
D.8 OWNER OBLIGATIONS
D.8.1 Exclusive and Non-Competition Agreement.
D.8.1.1 Owner shall not enter into any agreement with any
other person or entity (i) to develop, construct,
manage, or operate the Arena, (ii) to negotiate,
execute or perform contracts with persons or entities
who desire to exhibit or perform in the Arena, (iii)
to negotiate, execute, or perform contracts for
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the use of advertising space within the Arena or on
the Project Land, or (iv) to operate concessions
within the Arena or on the Project Land; Operator
shall have the exclusive power, authority, and
responsibility to perform all of the acts described
in Clauses (i) through (iv) of this Subparagraph
D.8.1.1.
D.8.1.2 Owner shall not facilitate, encourage, participate
in, or finance the construction or operation of any
other arena, amphitheater, coliseum or stadium (other
than exhibition or convention facilities [or what is
now known as the Miami Baseball Stadium (if it
remains an open air, unairconditioned stadium used
principally for baseball) and the Orange Bowl]) at
which events could be presented that would be
substantially similar to events that could be
presented at the Arena and for which there would then
be seating comparable to the seating at the Arena,
whether or not such construction or upgrade is
financed in whole or in part by the Convention
Development Tax Revenues, without Operator's prior
written approval, which Operator may withhold in its
sole discretion.
D.8.2. Site Acquisition and Ad Valorem Taxes.
D.8.2.1 After consulting with Operator, and upon Operator's
advice, Owner shall acquire, or shall cause the City
or the County to acquire, all of the real property
and interests in real property necessary to assemble
the Project Land, with due diligence, by purchase or
by exercise of the power of eminent domain, if
necessary, in accordance with the Project
Construction Program, and shall use its best efforts
to do so at a cost not in excess of the amount
budgeted therefor in the Project Budget.
D.8.2.2 Owner or, at Owner's direction, the City with
assistance of Operator shall acquire, abandon,
relocate, and condemn
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all rights-of-way, easements, and other property
interests, so as to deliver all of the real property
and interests in real property necessary for the
efficient performance of the Work on the Project
Land.
D.8.2.3 Owner shall be responsible for paying, and shall pay
prior to delinquency the first $300,000.00 of ad
valorem taxes that are payable each Operating Year in
connection with the Premises and the Arena.
D.8.3 Expedited Approvals and Sales Tax Exemptions. Owner
recognizes the importance or expeditious review and approval
of all matters submitted to Owner for review and approval and
of expeditious approval of the Work by all governmental
authorities having jurisdiction thereover. Owner agrees to
exercise its rights of review and approval hereunder with due
diligence, reasonableness, and good faith. Time is of the
essence with respect to all rights of Owner to review and
approve matters under this Contract. In addition, Owner shall
use its best efforts to expedite the Project's review and
approval by the City, and all other governmental entities
having jurisdiction over the Project, including without
limitation, the granting of all permits, licenses,
certificates, zoning variances, and other governmental
approvals. Owner shall join with Operator in connection with
obtaining for the benefit of the Arena any applicable sales
tax exemptions.
D.8.4 Discriminatory Legal Requirements. Owner shall use its best
efforts to assure that the Arena and Operator shall not be
subject to any Legal Requirements enacted by the City after
the date hereof that are not, in their effect, generally
applicable to businesses in the City of Miami, Florida.
D.8.5 Operating Losses. Except as specifically provided in Exhibit
C.2.2.1(a)(ii), Owner shall be responsible for paying, and
shall pay, all Operating Losses.
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D.8.6 Extraordinary Replacement and Repair. Owner shall be
responsible for paying, and shall pay, all Extraordinary
Replacement and Repair Expenses to the extent funds are not
available therefor in the Replacement Fund and the Maintenance
Account.
D.8.7 Maintenance Account. Owner has established a Maintenance
Account with Sun Bank-Miami, N.A., which account has a balance
of $700,000.00 on the date hereof and into which account
Owner shall cause to be deposited funds as provided in the
documents issued in connection with the Bonds and this
Contract. The Maintenance Account may be used only to fund
Operating Losses, Extraordinary Replacement and Repair
Expenses for which funds are not available in the Replacement
Fund, to pay amounts due to the Operator under Paragraph
C.2.2.2(b) of this Contract, to pay Owner and Operator
pursuant to Exhibit C.2.2.2(c) and for such other uses as
Owner and Operator shall agree. From and after the date on
which there have been three (3) consecutive Operating Years in
which there is no Operating Loss and provided that the amount
of money that has theretofore been deposited in the
Maintenance Account equals at least $3,000,000.00 Owner's
obligation to make payments into the Maintenance Account shall
cease. Thereafter Owner shall have the right to withdraw
funds from the Maintenance Account for the exclusive purpose
of paying construction costs for a new exhibition center
provided that after withdrawal of any such funds the aggregate
of the balance of funds in the Maintenance Account is at least
$3,000,000.00.
D.8.8 Construction Trust Fund. Owner shall deposit all of the net
proceeds of the Bonds, after making all other disbursements
required under the terms of the agreements pursuant to which
the Bonds were issued, plus (i) all insurance proceeds in
respect of any casualty or loss to the Arena after completion
of the Construction Work, (ii) any condemnation proceeds, and
(iii) all grants, gifts, contributions and other collections
made in respect of the Arena during the Term, into the
Construction Trust Fund. Owner shall use the Construction
Trust Fund only for the purpose of paying Project Costs.
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D.8.9 Investment of Funds. Owner shall cause the Maintenance Account
and the Construction Trust Fund to be continuously invested
and reinvested by the Trustee, to the extent practicable (but
readily available in order to meet the obligations of Owner
under this Contract), in direct obligations of the United
States of America. All income realized from such investment
will be deposited into the Maintenance Account in the
proportion that the amount in the Maintenance Account bears to
the total amount in both such funds, and into the Construction
Trust Fund in the proportion that the amount in the
Construction Trust Fund bears to the total amount in both such
funds.
D.8.10 Seat Use Charge. There shall continuously be imposed a Seat
Use Charge in the amount of at least 75 cents per seat for the
use of each seat in the Arena. Increases in the Seat Use
Charge shall be as mutually agreed upon by Owner and Operator.
D.8.11 Convention Development Tax Revenues. Subject to the Bonds,
"the Miami Sports and Exhibition Authority Subordinate
Obligation Note Series 1985, and any bonds that may hereafter
be issued to finance construction of an exhibition center,
Owner hereby pledges to Operator all of its rights, titles and
interests in and to all Convention Development Tax Revenues
received or to be received in the future and shall cause such
to be used exclusively to pay Public Capital Costs and
thereafter to be used exclusively for the benefit of the
Premises, operating expenses of Owner and necessary expenses
relating to an exhibition center.
D.8.12 Block 44/57 Agreement. Owner shall perform all obligations
of lessee under the Block 44/57 Agreement and under any
leasehold mortgage that may be obtained by lessee in
accordance with the provisions of such Agreement. Upon any
default in performance of such obligations or a termination of
such Block 44/57 Agreement, Operator may deliver to Owner a
written notice "Loss of Rights Notice") stating that Owner
shall have only those rights and interests hereafter specified
in this Exhibit D.8.12. From and after delivery of a Loss of
Rights Notice, (i) Owner shall have no right to receive
Owner's Seat Use Allocation, Owner's Operating Income
Allocation or any other money arising out of, from or
connected with the
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Premises; (ii) Owner shall no longer have any right or
interest in the Maintenance Account or Replacement Fund for
the purposes and to the extent specified in this Contract;
(iii) the Convention Development Tax Revenues that pursuant to
this Contract have been dedicated to the Arena and Owner's
Allocation of Operating Income and Owner's Seat Use Allocation
for each Operating Year shall be paid directly to a fund
("Operator Fund") established by the City Of Miami ("City") or
its successor and used to fund Owner's obligations under this
Contract for such Operating Year; (iv) subject to the
requirements of the preceding subparagraph (iii), City shall
have the right to withdraw that portion of the funds in the
Operator Fund in excess of three million ($3,000,000.00)
dollars (provided that at the time of such withdrawal and at
the time of any future withdrawal there is a balance then in
the Operator Fund of at least three million ($3,000,000.00)
dollars) and use such withdrawn funds as City, in its sole
discretion, deems appropriate and Operator, at no time, shall
have any right to the portion of funds in the Operator Fund in
excess of three million ($3,000,000.00) dollars; (v) City (or
in the instance in which the Owner has not been dissolved, a
successor governmental entity appointed by the City for such
purpose) shall make disbursements out of the Operator Fund and
the Maintenance Account in the same manner and for the same
purposes that the Owner is obligated under this Contract; (vi)
subject to the preceding subparagraphs, all rights, interests,
obligations, covenants, restrictions and requirements of the
Owner under the Block 44/57 Agreement shall become the rights,
interests and (subject to the limitations on liability set
forth in Section 18.1 of the Block 44/57 Agreement and Exhibit
D.1.6.3 of this Contract) the obligations, covenants,
restrictions and requirements of Operator and all rights and
interests of the Owner under this Contract shall become the
rights and interests of the City or whoever is then lessor
under the Block 44/57 Agreement; and such rights and interest
shall be self operative with no further agreement between City
and Operator being necessary to effect the same. Upon an
Operator Default under this Contract or the Block 44/57
Agreement, City shall have the right to terminate this Contract
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and the Block 44/57 Agreement and pay to Operator an amount of
money equal to the lesser of the Termination Fee or the amount
of money in the Maintenance Account, Operator Fund and
available to Operator through Operator's claim on the
Convention Development Tax Revenues. Subject to the
provisions of this Exhibit D.8.12, proceeds remaining in the
Operator Fund after Operator has been terminated by the City
pursuant to Owner's right to terminate Operator under this
Contract shall be the City's to be used as the City deems
appropriate. The City, and its successors and assigns, shall
have no liability for failure of the Owner to fulfill any of
Owner's obligations under this Contract and Operator's sole
remedy shall be either: (a) to terminate this Contract and
collect the Termination Fee solely from any funds then
remaining in the Operator Fund and to the extent permissible
under the Bonds in the Maintenance Account and available
through Operator's claim on the Convention Development Tax
Revenues; or (b) to continue as Operator under this Contract
and the Block 44/57 Agreement with Operator having all rights
and obligations of Operator under this Contract and the Block
44/57 Agreement and Owner's obligations. under the Block 44/57
Agreement subject to the provisions of Section 4.2(i), (ii),
(iii), (iv), (v), (vi) of the Block 44/57 Agreement, and being
permitted to occupy the Arena and the Project Land so long as
there exists no condition that constitutes an Operator Default
under this Contract and the Block 44/57 Agreement and all
Annual Rentals, all Additional Rent and other payments due the
City under the Block 44/57 Agreement, if it was in effect, are
made on a timely basis.
D.8.13 Bond Documents. Notwithstanding anything in the Contract to
the contrary, so long as the Bonds and the Miami Sports and
Exhibition Authority Subordinate Obligation Note Series 1985
remain outstanding, the amounts received by Owner pursuant to
the Contract shall in no event exceed the maximum allowable in
the opinion of the owner's bond counsel under federal law to
maintain the tax exempt status of the Bonds and the Miami
Sports and Exhibition Authority Subordinate Obligation Note
Series 1985. Unless an opinion is obtained by Owner's bond
counsel allowing such funds to be paid to Owner or a designee
of Owner, any moneys in excess of such amount shall be paid to
the Operator and its successors.
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D.9 INSPECTIONS, BOOKS, RECORDS, ACCOUNTS AND AUDITS
D.9.1 Inspection. Owner shall have the right, upon reasonable notice
to Operator, to inspect the Project and all parts thereof,
from time to time, by inspectors designated in writing by the
Owner Representative. No such inspection shall relieve
Operator of any of its obligations hereunder. Neither failure
to inspect nor failure to discover or reject any of the Work
that fails to comply with any provisions of this Contract
shall be construed to imply owner's acceptance of such Work or
to relieve Operator of any of its obligations hereunder.
Owner agrees that its right of inspection shall be used
reasonably and in a timely manner so as not to delay the
orderly performance and completion of the Work.
D.9.2 Books, Records and Accounts. Operator shall keep, or cause to
be kept, proper books, records and accounts in Miami in which
complete and correct entries shall be made of all transactions
pertaining to the Work and the Arena in accordance with
generally accepted accounting principles. Such matters
pertaining to the Development Work and the construction Work
will be kept in Houston, Texas and those matters pertaining to
the Operating work shall be kept in Miami, Florida.
D.9.3 Statements and Audits.
D.9.3.1 Within one hundred fifty (150) days after completion
of construction of the Arena, Operator shall furnish
to owner a preliminary audit prepared by an
independent firm of certified public accountants of
national reputation, covering all of the Development
Work and the Construction Work and on the date on
which all final Public Capital Costs and Private
Capital Costs are known, a final audit shall be
prepared and furnished to Owner. Any shortages or
overpayments of any of the Public Capital Costs,
including without limitation the Development Fee or
any of the Private Capital Costs, disclosed by the
audit shall be promptly adjusted and paid.
Thereafter Owner and Operator shall have
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no further liability, one to the other in respect of
the payment of the Public Capital Costs or the
Private Capital Costs.
D.9.3.2 After the Opening Date, Operator shall furnish to
Owner unaudited quarterly statements of Operating
Income received and Operating Expenses incurred in
connection with the Arena not later than the last day
of the month next following the month in which such
Operating Income is received and such Operating
Expenses are incurred.
D.9.3.3 Operator shall furnish to owner, not later than
ninety (90) days after the end of each Operating
Year, an audit prepared by an independent firm of
certified public accountants of national reputation
acceptable to, and certified to, both owner and
operator, covering the operations and accounts of the
Arena for the preceding Operating Year (or with
respect to the first year of operation, the period
from the opening Date to commencement of the first
full Operating Year). Any shortages or overpayments
of Owner's Seat Use Allocation, Operator's Seat Use
Allocation, Owner's Operating Income Allocation and
operator's operating Income Allocation disclosed by
the audit shall be promptly adjusted and paid.
D.10 MISCELLANEOUS
D.10.1 Standard of Care. Operator shall use reasonable efforts to
take all precautions which are deemed reasonably necessary and
adequate against any conditions created during the progress of
Operator's activities hereunder which involve a risk of bodily
harm to persons or risk of damage or loss to any property.
Operator shall regularly inspect all work, materials, and
equipment in an attempt to discover any such hazardous
conditions. Owner shall have the right to inspect during
regular business hours the Premises and all maintenance
records. Operator is an independent
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<PAGE> 105
contractor hereunder, and any provision of this Contract that
may appear to give Owner or the Owner Representative the right
to direct Operator as to the details of performing the Work
shall be deemed to mean that Operator shall follow the desires
of Owner or the Owner Representative in the results of the
Work only, and not in the means whereby the Work is to be
accomplished. Operator shall have complete and authoritative
control as to the details of doing the Work. Neither the
agents, representatives, nor employees of Operator, nor those
of any of its subcontractors, shall be deemed to be the
agents, representatives or employees of owner.
D.10.2. Emergency Services and Expenditures. Without owner's prior
approval of the performance thereof or the amount to be
expended therefor, Operator shall have the right to perform
all emergency repairs or services immediately necessary for
the preservation and safety of the Arena, or to avoid the
suspension of any substantial and important service to the
Arena, or to avoid or prevent immediate danger to life or
property, and whether or not the cost thereof is set forth in
any budget (provided that for any situation that is not life
threatening, such amount is not reasonably anticipated by
Operator to exceed $50,000.00). However, Operator shall, if at
all possible, secure owner's prior approval of the performance
of any such repair or service and the expenditure of any such
amount, by telephone or in writing, as the circumstances
reasonably allow, and in any event, Operator shall give owner
verbal notice of the performance of such repairs or services
and the expenditure of such amounts as soon as practicable
under the circumstances. Thereafter, as soon as practicable,
Operator shall give owner written notice of the details and
expenses thereof.
D.10.3 Force Majeure. Except as otherwise expressly provided in this
contract, neither party shall be obligated to perform and
neither shall be deemed to be in default hereunder, if
performance of a non monetary obligation is prevented by the
occurrence of any of the following (herein called "force
majeure" or "event of force majeure") acts of God, strikes,
lockouts, other industrial disturbances, acts of the public
enemy, laws,
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rules and regulations of applicable governmental bodies, wars
or warlike action (whether actual, impending, or expected and
whether de jure or de facto), arrest or other restraint of
government (civil or military), blockades, insurrections,
riots, epidemics, landslides, lightening, earthquakes, fires,
hurricanes, storms, floods, washouts, civil disturbances,
explosions, breakage or accident to equipment or machinery,
confiscation or seizure by any government or public authority,
nuclear reaction or radiation, radioactive contamination, or
any other causes, whether for the kind herein enumerated or
otherwise, that are not reasonably within the control of the
party claiming the right to delay performance on account of
such occurrence.
D.10.4 Future Development of Phase II. Subject to the further
provisions of this Exhibit D.10.4, Operator agrees to assist
Owner to continue to proceed with the plan to develop and
construct a permanent exhibition facility pursuant to Owner's
Request for Proposals which selected Operator to develop both
Phase I (the Arena Project) and Phase II (the Exhibition
Center Project in Park West). Operator and Owner agree to use
their best efforts to develop Phase II (as such project is
further defined in a mutually acceptable manner) and enter
into all necessary agreements for the development of Phase II
when adequate funding is obtained or identified for use in the
Phase II, provided however that nothing herein shall be
construed to require the performance of the owner or the
Operator to enter into such agreements, nor shall Owner or
Operator be required to fund the Phase II Project if funds are
not reasonably available to it, nor shall Operator, by the
terms of this Agreement become entitled to or obtain any
vested rights in or claim designation as the developer of
Phase II. Operator specifically agrees that in the event City
or Owner elects to build an exhibition center without
Operator, Operator shall waive and denounce and be deemed to
have waived and denounced any and all rights it may have had
as a result of Owner's Request for Proposal process and upon
request will execute documents confirming such waiver.
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D.10.5 Governing Law. This Contract shall be governed by the laws of
the state of Florida, and venue shall be in the City of Miami,
Dade County, Florida.
D.10.6 Notices. Any notice provided, or permitted, to be given under
this Contract must be in writing and may be served (i) by
depositing the same in the United States mail addressed to the
party to be notified, postage pre-paid, registered or
certified mail, return receipt requested; (ii) by delivering
the same in person to such party; or (iii) by pre-paid
telegram, telex, private or commercial telecopy, or Federal
Express or similar delivery service. Notice given in
accordance with (i) above, shall be effective three (3) days
after being deposited in the U.S. mail. Notice given in
accordance with (ii) or (iii) above shall be effective upon
receipt at the address of the addressee. For purposes of
notice, the addresses of the parties shall be as follows:
If to Owner: Miami Sports and Exhibition
Authority
300 Biscayne Boulevard Way
1120 DuPont Plaza Center
Miami, Florida 33131
Telex No.:
Telecopy No.:
With a copy
to: Robert N. Sechen
Blackwell, Walker, Fascell & Hoehl
2400 AmeriFirst Building
One S.E. Third Avenue
Miami, Florida 33131
Telex No.:52-2798
Telecopy No.:305-372-1468
If to
Operator: C. Dean Patrinely
Decoma Venture
5151 San Felip-2, Suite 1400
Houston, Texas 77056
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<PAGE> 108
With a copy
to: Francis J. Coleman
James B. Rylander
Vinson & Elkins
3300 First City Tower
1001 Fannin
Houston# Texas 77002-6760
Telex No.: 762146 VESS HOU
Telecopy No.: 713-651-2346
From and after Opening Date a copy of all notices to Operator
must also be sent to:
HSA Management, Inc.
P. 0. Box 288
Houston, Texas 77001
With a copy
to: Denis C. Braham
Dow, Cogburn & Friedman
The Coastal Tower
Nine Greenway Plaza
Suite 2300
Houston, Texas 77046
Telecopy No.: 713-626-3030
and to:
General Manager
Miami Arena
Miami, Florida
D.10.7 Entire Agreement. This Contract constitutes the entire
agreement, and supersedes any and all prior agreements and
understandings, both written and oral, between the parties
with respect to the subject matter hereof.
D.10.8 Non-Waiver. No waiver or waivers by either party hereto of
any breach or default of any provision hereunder shall be
deemed a waiver of any other provision hereof or a waiver of
any subsequent or continuing breach or default unless such
waiver is specifically agreed to in writing. No payment made
under this Contract (i) shall be, or be
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<PAGE> 109
construed to be, final acceptance or approval of that part of
the Work to which such payment relates or any other part of
the Work, (ii) shall relieve the Operator of any of its
obligations hereunder with respect thereto, or (iii) shall
constitute a waiver of, or otherwise affect, the covenants and
warranties of the Operator.
D.10.9 Captions. The captions used in this Contract are for
convenience only and shall in no way define, limit, or
describe the scope or intent of this Contract or any part
thereof.
D.10.10 Use of Certain Words. The use of the words "hereof",
"herein", "hereunder" and words of similar import shall refer
to this entire Contract and not to a particular paragraph or
provision of this Contract, unless the context clearly
indicates otherwise.
D.10.11 Severability. If any term or provision of this Contract, or
the application thereof to any person or circumstance shall,
to any extent, be invalid or unenforceable, the remainder of
this Contract or the application of such term or provision to
the persons or circumstance other than those as to which it is
held invalid or unenforceable, shall not be affected thereby,
and each term and provision of this Contract shall be valid
and be enforced to the fullest extent permitted by law.
D.10.12 No Third Party Beneficiaries. The terms and Provisions of
this Contract shall inure to the benefit of and be enforceable
by the parties hereto and their permitted assignees, and no
third parties shall succeed to any right hereunder or be
benefitted hereby.
D.10.13 Governmental Imposition. If any political entity or authority
alleges during the Term of this Contract that the Operator has
acquired any interest under this Contract that is subject to
an ad valorem tax and imposes or attempts to impose such tax
on any such interests, Operator shall pay this same prior to
delinquency; however, Operator shall have the right to contest
any such imposition. Moreover, the amount of any such tax and
costs incurred in contesting imposition of such tax shall be
considered Operating Expenses.
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D.10.14 Attorneys' Fee. In the event either party defaults in the
performance of any of the terms, conditions or agreements
contained in this Contract and the other party places the
enforcement of this Contract, or any part thereof, or the
collection of any sums due, or to become due, hereunder or
delivery or recovery of the Premises, in the hands of an
attorney who files suit upon the same (either by direct action
or counterclaim) and should such non-defaulting party prevail
in such suit, the defaulting party shall pay the other party's
reasonable attorney's fee. Any such attorney's fees shall not
be considered Operating Expenses.
D.10.15 Conflicts of Interest; MSEA and City Representatives and
Officers and Directors of Operator Not Individually Liable.
No member, official, representative or employee of Owner shall
have any personal interest, direct or indirect, in this
Contract nor shall any such member, official, representative
or employee participate in any decision relating to this
Contract which affects his or her personal interest in any
corporation, partnership or association in which he or she is,
directly or indirectly, interested. No member, official,
representative or employee of Owner shall be personally liable
to the Operator or any successor in interest to the Operator,
in the event of any default or breach by Owner, or for any
amount which may become due to the Operator or its successor
in interest, or on any obligations under the terms of this
Contract. No member, representative, director, agent or
representative, partner, Shareholder, officer or employee of
Operator or any Operator Affiliate shall be personally liable
to the Owner or the City or any successor in interest to the
Owner or the City, in the event of any default or breach by
Operator or any Operator Affiliate or for any amount which may
become due to the Owner or City or their successors in
interest, or on any obligations under the terms of this
Contract.
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<PAGE> 111
EXHIBIT E
INSURANCE
E. 1. INSURANCE COVERAGE. To the extent available on commercially reasonable
terms, Operator shall obtain, and maintain, or cause to be obtained and
maintained, on behalf of Owner, Operator and the other parties specifically
referenced below, the following insurance coverages, the cost of which
(including but not limited to the cost of premiums, deductibles and claims
processing) shall be included in Operating Expenses unless otherwise provided.
If at anytime the insurance required by this Exhibit E is not available on
commercially reasonable terms, whether as to the amounts of such insurance or
the risk protected against thereby, it will not constitute an Operator Default
hereunder if Operator, together with the good faith assistance of City,
develops an alternative risk finance plan capable of providing substantially
equivalent protection on behalf of City, Owner, Operator and other parties
specifically referenced below to substantially the same extent as the insurance
coverage contained herein.
E.1.1. INSURANCE COVERAGE BY CONTRACTOR AND SUBCONTRACTORS
DURING CONSTRUCTION WORK. Operator shall, prior to
the commencement of any construction at the Project
Land, cause the Contractor specified in the
Construction Contract to provide, and thereafter keep
in full force and effect until completion of the
Construction Work (or as otherwise provided in the
Construction Contract), as a part of Contractor's costs
under such Construction Contract, the insurance
coverages hereinafter specified in this Exhibit E.1.1;
such coverages shall be in primary and/or excess form
with limits not less than those set out below with
insurers licensed to do business in the State of
Florida and under forms or policies acceptable to
Operator, Owner, and/or the City. Operator covenants
and agrees that no construction shall be commenced at
the Project Land until Operator- shall have delivered
or caused to be delivered to Owner the certificates
E-1
<PAGE> 112
of insurance for the coverages specified under this
Section E.1.1., which shall clearly indicate that the
parties required to obtain the insurance under this
Section E.1.1. have obtained insurance in the type,
amount and classification as required under this
Section E.1.1.
E.1.1.1. Comprehensive General Liability
insurance. Comprehensive general
liability insurance or a comparable
policy form, naming Contractor as the
name insured, and Owner and the City as
additional insureds insuring against
liability for bodily injury and death
and for property damage, in an amount
not less than $1,000,000.00 combined
single limit per occurrence, if
available, and in the aggregate. Such
insurance shall contain blanket
contractual coverage and shall also
provide the following protection:
- premises/operations coverage;
- broad form property damage
liability coverage;
- completed operations coverage
for a period of two (2) years
following the date of
substantial completion of the
Work;
- XCU coverage;
- independent contractors and
employees as additional
insureds; and
- personal injury protection.
E.1.1.2 Automobile Liability Insurance.
Automobile liability and property
damage insurance covering all owned
non-owned and hired vehicles used in
connection with or arising out of
performance of the Construction
Contract, naming Contractor as the
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<PAGE> 113
named insured, and Owner and the City
as additional insureds, insuring
against liability for bodily injury and
death and for property damage in an
amount not less than $1,000,000.00 per
occurrence, if available, and in the
aggregate.
E.1.1.3 Workers' Compensation Insurance.
Workers' compensation insurance
providing statutory Florida state
coverage for all persons or entities
employed by Contractor in connection
with the construction at the Premises,
with employer's liability insurance of
not less than $500,000.00 per
occurrence and in the aggregate.
E.1.1.4 Umbrella Liability Insurance.
Umbrella liability insurance naming
Contractor as the named insureds, and
Owner and the City as additional
insureds, in an amount not less than
$20,000,000.00 per occurrence, if
available,, and in the aggregate.
Such policy shall be following form
and written on an excess basis above
the coverages required under E.1.1.1.,
E.1.1.2 and E.1.1.3 above.
E.1.2. ADDITIONAL INSURANCE COVERAGE BY OPERATOR DURING
CONSTRUCTION WORK. In addition to the insurance
coverages required to be maintained by Contractor and
any subcontractors under Section E.1.1. hereof,
operator shall, prior to the commencement of any
construction at the Project Land, and continuing until
completion of the Construction work,* maintain in effect
the following insurance coverages:
E.1.2.1. Comprehensive General Liability
Insurance. Comprehensive General
liability insurance or a comparable
policy form, naming Operator as the
named insured, and Owner and the City
of Miami (the "City"), a municipal
corporation of the State of Florida as
additional insureds, insuring against
liability for bodily injury and death
and for property damage, in an amount
E-3
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not less than $1,000,000.00 combined
single limit per occurrence, if
available, and in the aggregate. Such
insurance shall contain blanket
contractual coverage and shall also
provide the following protection:
- premises/operations coverage;
- broad form property damage
liability coverage;
- completed operations coverage
for a period of two (2) years
following the date of final
acceptance of the
Premises;,
- XCU hazards;
- independent contractors and
employees as additional
insureds; and
- personal injury protection.
E.1.2.2. Automobile Liability Insurance.
Automobile liability and property
damage insurance covering all owned,
non-owned and hired vehicles used in
connection with or arising out of
performance of this Contract, naming
operator as the named insured, and
Owner and the City as additional
insureds, insuring against liability
for bodily injury and death and for
property damage in an amount not less
than $1,,0000,000.00 per occurrence, if
available, and in the aggregate.
E.1.2.3. Workers' Compensation Insurance.
Workers' compensation insurance
providing statutory Florida state
benefits for all persons or entities
employed by Operator in connection with
the development and construction at the
Premises, with employer's liability
insurance of not less than $500,000.00
per occurrence and in the aggregate.
E-4
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E.1.2.4. Builders Risk Insurance. Builders
Risk Insurance covering all risks,
subject to policy terms and conditions,
of direct physical loss or damage to
property, materials, equipment and
supplies which are to become an
integral part of the Project, whether
owned by Owner, Operator, Contractor or
subcontractors of every tier, and in
which one or more of same has an
insurable interest, while in transit,
while at the site of the Project
awaiting construction, during
construction, and until passage of
care, custody and control of the
entire. Project to Operator. Such
insurance shall be maintained to cover,
as nearly as practicable, the insurable
value of such property, materials,
equipment and supplies at risk, and
shall contain a waiver of subrogation
in favor of Contractor and
subcontractors of every tier for loss
or damage occurring during the
Construction Work and shall name Owner
and Operator as the named insureds, and
Contractor as an additional insured.
Any proceeds payable pursuant to the
insurance coverage required under this
Section E.1.2.4. shall, after first
being disbursed in the manner provided
in the Construction Contract, be paid
to Operator for payment of Project
Costs. The policy or policies
providing the insurance described in
this Exhibit E.1.2.4 and the
deductibles shall be approved by Owner
and City.
E.1.2.5. Boiler and Machinery Insurance.
Boiler and machinery insurance in an
amount not less than $1,500,000.00 per
occurrence and in the aggregate on a
combined basis covering direct property
loss and providing for all steam,
mechanical and electrical equipment,
subject to the policy terms and
conditions, naming Owner and Operator
as the named insureds, and Contractor
as an additional insured.
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<PAGE> 116
Operator covenants and agrees that no construction
shall be commenced until Operator shall have delivered
to Owner the certificates of insurance for the
coverages specified under this Section E.1.2., which
shall clearly indicate that the parties required to
obtain the insurance under this Section E.1.2. have
obtained insurance in the type, amount and
classification as required under this Section E.1.2.
The insurance required by this Section E.1.2., at the
option of Operator, may be effected by blanket and/or
umbrella policies issued to Operator, covering the
Premises and other properties owned, leased or operated
by Operator, provided that the policies otherwise
comply with the provisions of this Section E.1.2. From
and after completion of the Construction Work and
passage of care, custody and control of the entire
Project to Operator, Operator shall maintain the
insurance required by Section E.1.4. hereof.
E.1.3. INSURANCE COVERAGE BY DESIGN PROFESSIONALS DURING
CONSTRUCTION WORK. Operator shall, prior to the
commencement of any construction at the Project Land,
provide an architects and/or engineers professional
liability policy covering all design professionals
working on the Project, with limits of liability of
$5,000,000.00 in the aggregate. Such policy shall be
maintained in effect until substantial completion of
the Construction Work, shall include tail coverage for
five (5) years after substantial completion of the
Construction Work, and shall be deemed primary to the
insurance coverages to be provided by the design
professionals, as set forth below. In addition to such
professional liability insurance coverage, Operator
shall, prior to the commencement of any construction at
the Project Land, cause the following design
professionals to provide, at such parties' sole cost
and expense, the following insurance coverages:
E.1.3.1. Professional Liability Insurance.
Professional liability insurance
covering errors and omissions in design
or work product, with limits of
liability as follows:
Lloyd Jones Fillpot/Architect $1,000,000.00
in aggregate
E-6
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Crain Anderson, Inc./Architect $2,000,000.00
in aggregate
Cruz-Stark Associates/Architect $ 100,000.00
in aggregate
Morris Architects/ $2,000,000.00
Graphics Consultant in aggregate
Walter P. Moore Associates, $2,000,000.00
Inc./Structural & Civil in aggregate
Engineer
SM Engineering, Inc./MEP
Engineers
Lagomasino, Vital Associates/ $ 250,000.00
MEP Engineers in aggregate
Post, Buckley, Schuh & $5,000,000.00
Jernigan, Inc./Civil Engineer in aggregate
Law Engineering Testing Co./ $1,000,000.00
Geotechnical Investigation in aggregate
Phillips & Brown/Planning and $ 500,000.00
Urban Design in aggregate
E.1.3.2. General Liability Insurance.
Comprehensive general liability
insurance, naming each design
professional as the named insured, and
Operator, Owner and the City, as
additional insureds, such insurance to
insure against liability for bodily
injury and death and for property
damage, in the amounts set forth beside
each design professional specified
below. Such insurance shall contain
blanket contractual coverage and shall
also provide for premises/ operations
coverage, independent contractors
coverage, completed operations coverage
for a period of two (2) years following
the date of final acceptance of the
Premises, and personal injury
protection. The following design
professionals shall provide such
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insurance in combined single limits as
follows:
Lloyd Jones Fillpot $ 500,000.00
Crain Anderson, Inc. $ 300,000.00
Cruz-Stark Associates $ ___________
Morris Architects $ 500,000.00
Walter P. Moore Associates,
Inc. $2,000,000.00
SMD Engineering, Inc, $ 500,000.00
Lagomasino, Vital &
Associates $ ___________
Post, Buckley, Schuh &
Jernigan $5,000,000.00
Law Engineering Testing
Company $1,000,000.00
Phillips & Brown $ 500,000.00
E.1.3.3. Workers' Compensation Insurance. Workers'
compensation insurance providing statutory Florida
state benefits for all persons employed by each design
professional in connection with the development and
construction at the Premises, with employer's liability
insurance of not less than $500,000.00 per occurrence
and in the aggregate. Each such policy of insurance
shall contain an acknowledgment by the insurance
company that its rights of subrogation have been
waived in favor of Owner, Operator and the City.
E.1.4. INSURANCE COVERAGE BY OPERATOR FOLLOWING COMPLETION OF CONSTRUCTION.
Operator shall, upon substantial completion of the Project and
continuing throughout the remaining Term of this Contract, maintain
in effect the following insurance coverages with such deductibles as
are commercially reasonable at the time:
E-8
<PAGE> 119
E.1.4.1. Property Insurance. An "All Risk of Physical
Loss" form of policy (with Replacement Costs
Endorsement) insuring all real and personal
property constituting the Premises excluding the
foundation (including the expense of the removal
of debris of such property as a result of damage
by an insured peril), subject to the terms and
conditions of the insuring agreements, including
coverage for loss or damage by water and flood,
with such sublimits as are mutually agreed upon
by Owner and Operator. Coverage shall be written
on as broad an "All Risk of Physical Damage" form
as is commercially available. The Premises and
the contents thereof shall be insured to full
insurable value. The policy or policies of
insurance, if the same contains a co-insurance
requirement, shall contain an agreed amount
endorsement in an amount reasonably agreed upon
by Owner and Operator, provided that the amount
set forth in such endorsement shall be sufficient
to prevent Owner and Operator from becoming
co-insurers in the event of a loss. Such
insurance shall name Owner and Operator as the
named insureds, and the City as an additional
insured.
E.1.4.2. General Liability Insurance. Comprehensive
general liability insurance or a comparable
policy form, naming Operator as the named
insured, and Owner and the City as additional
insureds, insuring against liability for bodily
injury and death and for property damage, in an
amount not less than $20,000,000.00 combined
single limit per occurrence, if available, and in
the aggregate. The limits of such insurance can
be provided in primary and/or excess form. Such
insurance shall include coverage for the Premises
and all parking lots, if any, sidewalks and
private drives adjoining or appurtenant to the
Premises, containing
E-9
<PAGE> 120
automatic blanket contractual coverage and
providing for the following additional protection:
- products and completed operations
coverage;
- broad form property damage liability
coverage;
- personal injury protection;
- sprinkler leakage - water damage legal
liability;
- fire legal liability if not otherwise
covered under the comprehensive form of
public liability insurance; and
- employees as additional insureds coverage.
E.1.4.3. Automobile Liability Insurance. Automobile
liability and property damage insurance covering
all owned, non-owned and hired vehicles used in
connection with the operation of the Premises
arising out of this Contract, insuring against
liability for bodily injury and death and for
property damage in an amount not less than
$5,000,000.00 per occurrence, if available, and in
the aggregate. The limits of such insurance can
be provided in primary and/or excess form. Such
insurance shall name Operator as the named
insured, and Owner and City as an additional
insured.
E.1.4.4. Workers' Compensation Insurance. Workers'
compensation insurance providing statutory
Florida State benefits for all persons or
entities employed in connection with the Premises,
with employer's liability insurance of not less
than $500,000.00 per occurrence and in the
aggregate. Such coverage will contain a
voluntary workers'
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<PAGE> 121
compensation endorsement and a broad form
all-states endorsement.
E.1.4.5. Boiler and Machinery Insurance. At Operator's
option, Operator will provide boiler and
machinery insurance in an amount not less than
$1,500,000.00 per occurrence and in the
aggregate on a combined basis covering all
steam, mechanical and electrical equipment,
boiler explosion and loss of income, subject to
the policy terms and conditions, naming Owner
and Operator as the named insureds and the City
as an additional insured.
E.1.4.6. Business Interruption/Loss of Earnings
Insurance. Business interruption/loss of
earnings insurance in an amount equal to the
greater of $2,000,000.00 or an amount equal to
the previous Operating Year's Operating Income,
naming Operator as the named insured and Owner
and City as an additional insured. Any
proceeds payable pursuant to the insurance
coverage required under this Section E.1.4.6.
shall constitute Operating Income during the
Operating Year in which such proceeds are
received by Operator.
E.1.4.7. Employer's Fidelity insurance. [To Be Added.]
E.1.4.8. Other. Insurance against such other operating
risks against which is now or hereafter may be
customary to insure in the operation of similar
facilities and such additional amounts and
types of coverage as may be desirable in the
reasonably exercised judgment of Operator.
E-2. POLICIES. Every policy referred to in this Exhibit E shall (a) except
for non-payment of premium, provide that no material change,
cancellation or termination shall be effective until at least thirty
(30) days after receipt of written notice thereof has been received by
Owner and Operator (and the City, for the coverages required to be
E-11
<PAGE> 122
maintained pursuant to Section E.1.4 hereeof); (b) provide that such
insurance shall not be invalidated by any act or negligence of Owner,
Operator, Contractor, any subcontractors or any person or entity
having an interest in the Project, nor by any foreclosure or other
proceedings or notices thereof relating to the Premises, nor by any
change in title to or ownership of the Premises; and (c) include a
waiver of all rights of subrogation in favor of Owner and City, its
officers, directors, and/or employees and in favor of Operator, it
constituent partners and/or employees.
E.3 RESPONSIBLE COMPANIES. All insurance required by any provision of
this Exhibit E shall be in such form and shall be issued by such
responsible companies licensed and authorized to do business in the
State of Florida as are reasonably acceptable to Owner. Any insurance
company rated at least "A" as to management and at least "Class X" as
to financial strength in the latest addition of Best's Insurance
Guide, published by Alfred M. Best Co., Inc., 75 Fulton Street, New
York,, New York (or any successor publication of comparable standing)
shall be deemed a responsible company and acceptable to Owner.
E.4 COPIES. Operator shall furnish certified true copies of the insurance
policies required under Section E.1.4. to Owner and to the City, which
shall clearly indicate that the parties required to obtain insurance
hereunder have obtained insurance in the type, amount and
classification as herein required. Copies of all policies of
insurance and renewals thereof shall be furnished by Operator upon
request of Owner prior to the effective date thereof. Operator shall
use its best efforts to obtain and deliver to Owner certificates of
new or renewal policies replacing any policies expiring during the
term of this Contract at least thirty (30) days prior to the date of
expiration of any policy.
E.5 COOPERATION; ADDITIONAL INSUREDS; PROOF OF LOSS. Operator and Owner
shall cooperate, and Operator shall cause Contractor, any
subcontractors, and any other parties who have been named as insureds
or additional insureds to cooperate, in connection with the collection
of any insurance moneys that may become due in the event of loss.
Notwithstanding any such inclusion as an insured or an additional
insured, the parties hereto agree, subject to the provisions of the
Construction Contract, that any losses under all policies of insurance
shall be payable, and all insurance proceeds recovered thereunder
shall be applied and disbursed, in
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<PAGE> 123
accordance with the provisions of this Exhibit E. Operator and Owner
shall execute and deliver such proofs of loss and other instruments
that may be required for the purpose of obtaining the recovery of any
such insurance moneys.
E.6 PROCEEDS OF INSURANCE. If, during the term of this Contract, the
Premises (including any personal property furnished or installed in, on
or about the Premises) are lost, damaged or destroyed by fire or other
casualty (including any casualty for which insurance was not obtained
or obtainable) of any kind or nature, ordinary or extraordinary,
foreseen or unforeseen (all of which shall hereinafter be referred to
as a "Casualty"), Operator shall make proof of loss in accordance with
the terms of the property insurance policies required to be maintained
hereunder, and the proceeds of such policies shall be payable as
follows:
E.6.1. If (i) the amount of the proceeds actually received
under such property insurance policies are adequate to
repair, restore, replace or rebuild the Premises
(hereinafter referred to as "Reconstruction Work"), in
the reasonable judgment of Operator, and (ii) there
are at least five (5) years remaining in the Term of
this Contract, then all amounts payable under the
property insurance policies maintained hereunder shall
be paid directly to Operator and shall be used by
Operator, to the extent required, for the
Reconstruction Work so that the Premises shall be
restored to a condition comparable to their condition
prior to the Casualty. The cost of any Reconstruction
Work performed by Operator hereunder shall
specifically include a reasonable development fee to
be paid to Operator. Operator shall commence the
Reconstruction Work as soon as is reasonably practical
following the Casualty and thereafter shall diligently
prosecute the Reconstruction Work to completion.
Operator's obligations to expend money with respect to
the Reconstruction Work shall be limited to the amount
of the insurance proceeds actually received by
Operator hereunder.
E.6.2. If following any Casualty the amount of the proceeds
received under such policies will be inadequate in
the reasonable judgment of Operator to pay the costs
required to perform the
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<PAGE> 124
Reconstruction Work, then Owner and Operator shall
each have the right to terminate this Contract,
exercisable by giving written notice to the other
party within three (3) months following the Casualty.
Upon any such termination, the proceeds payable under
the property insurance policies maintained hereunder
shall be paid, first directly to Operator in payment
of the amount hereinafter specified, and any
remaining amounts shall be paid to Owner. The amount
payable to Operator pursuant to this Exhibit E.6.2.
shall be as follows:
E.6.2.1. If the Casualty occurs prior to the
twenty-eighth (28th) Operating Year,
an amount of money equal to the
Termination Fee specified in Exhibit
D.1.4.1.; however, the amount
payable pursuant to this Exhibit
E.6.2.1. shall not exceed fourteen
percent (14%) of the amount of
insurance proceeds actually received
as long as the amounts paid pursuant
to this Exhibit E.6.2.1. equal at
least $7,121,000.00;
E.6.2.2. If the Casualty occurs after the
twenty-seventh (27th) Operating Year
and prior to the thirty-third (33rd)
Operating Year, an amount equal to
the sum of the lesser of Operator's
Decoma Amount or the amount
specified in Exhibit D.1.4.1(a)(y)
plus the amount set forth in Exhibit
D.1.4.1(b) minus the amount set
forth in Exhibit 1.4.1(c); or
E.6.2.3. If the Casualty occurs after the
thirty-second (32nd) Operating Year,
an amount equal to the amount set
forth in Exhibit D.1.4.1(b) minus
the amount set forth in Exhibit
D.1.4.1.(c).
E.7 DEDUCTIBLES AND PREMIUMS. City shall not be responsible for payment
or the premiums, deductibles or retentions in connection with any of
the insurance provided for in this Exhibit E; all such premiums,
deductibles and retentions shall be Operating Expenses paid in
accordance with the provisions of the Miami Arena Contract if incurred
after
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<PAGE> 125
the Opening Date and Project costs if incurred before the Opening Date.
DCOMA:e
9.22.9:30
E-15
<PAGE> 126
EXHIBIT F
GENERAL DESCRIPTION OF PROJECT
An indoor arena ("Arena") containing approximately 300,000 square feet with a
seating capacity of approximately 16,000, on the Project Land of approximately
4.8 acres in Miami, Florida bounded by Northwest 6th and Northwest 8th Streets
and by Northwest 1st and North Miami Avenues that is constructed, equipped and
ready for operation in the manner reasonably necessary to satisfy the following
design criteria:
An arena/coliseum facility consisting of approximately 300,000 square feet of
gross building area, not including exterior stairways or landings. The
facility will contain both a lower and upper seating bowl. The interior of the
building will contain a sub-concourse level which will house offices for
administration, concessions, security and primary tenants. The sub-concourse
area will be utilized for shipping, receiving, loading and unloading of
materials and other related equipment for the presentation of events as
outlined below. The interior of the building also will include a concourse
level which will house adequate restroom and concessions facilities. The
concourse level will also serve as the entrance area to the Arena, as well as
to both the lower and upper seating bowls. Also included in the interior
building will be a third or uppermost level which will house skyboxes, sound
and lighting control, and catwalk access. The facility will be capable of
hosting the following events with the respective seating capacities:
<TABLE>
<S> <C> <C>
1. Concerts 16,000 Seats
2. Circus 14,500 Seats
3. Ice Shows 10,000 Seats
4. Basketball 15,500 Seats
5. Wrestling 16,000 Seats
6. Boxing 16,000 Seats
7. Rodeo 14,500 Seats
8. Tractor Pull 14,500 Seats
9. Mud Bog 14,500 Seats
10. Motorcycle ATV Flat Track Racing 14,000 Seats
11. Motorcycle ATV Course Racing 14,000 Seats
12. Hockey 14,500 Seats
</TABLE>
F-1
<PAGE> 127
<TABLE>
<S> <C>
13. Tennis 14,000 Seats
14. Gymnastics 15,000 Seats
15. Closed Circuit Television 12,500 Seats
16. Miscellaneous Meetings 16,000 Seats
17. Flat Show 17,000 Square
Foot Floor
18. Kick Boxing 15,000 Seats
19. Other Family spectacular Shows 8,000-11,000 Seats
20. Dog Shows 15,000 Seats
21. Horse/Stock Shows 14,500 Seats
22. Soccer 14,500 Seats
23. Volleyball 15,000 Seats
24. Skating Competitions 14,500 Seats
25. Thrill Shows 14,500 Seats
</TABLE>
The above seating capacities could vary according to the configuration
of the event and are to be used as models only.
As used in the Contract, the term "Project" shall mean and refer to the
performance of all of the following: Development Work, (ii) Construction Work,
(iii) Operating Work, (iv) acquisition of, and site work on, the Project Land,
and (v) all other matters reasonably incidental to development, construction
and operation of the Arena.
As used in the Contract, the term "Project Land" shall mean the
following:
Tracts "A" and "B" of the Miami Arena Subdivision, according to the
Plat thereof, as recorded in Plat Book 129, at Page 55, of the Public
Records of Dade County, Florida.
DCOMA:g-l
9.29.2
F-2
<PAGE> 128
EXHIBIT G
PERMITTED ENCUMBRANCES
AS TO ALL PARCELS
Matters set forth on Plat of NORTH, CITY OF MIAMI, recorded in Plat
Book "B", Page 41, of the Public Records of Dade County, Florida.
AS TO PARCEL 1 ONLY
Dade County, Resolution No. R-923-84 regarding special assessments for
the "Downtown Component of Metrorail (DCM) Project", recorded August
30, 1984, in Official Records Book 12253, Page 1389, of the Public
Records of Dade County, Florida.
G-1
<PAGE> 129
EXHIBIT "G"
TO
CONSTRUCTION FUNDING AGREEMENT
CERTAIN DEFINITIONS FOR CONVENIENCE OF BENEFICIARY
"Notice(s) to Draft" - the written document delivered to Beneficiary
in the following instances, as applicable:
(a) in each instance in which a Draft against the Letter
of Credit is to be made under the terms of Section 3(a)(i) hereof, an Approved
Request for Payment for Operator's Share of Construction Costs for a Payment
Period (herein sometimes called the "Section 3(a)(i) Notice to Draft"), with
the Contractor's Request for Payment signed by both of (i) an individual
purporting to be Contractor's Representative and (ii) an individual purporting
to be MSEA's Representative (and which may, but need not, be signed by an
individual purporting to be Operator's Representative), with the accompanying
Contractor's Certificate signed by an individual purporting to be the
Contractor's Representative, and (if such Contractor's Request for Payment is
not signed by Operator's Representative) with the accompanying MSEA's
Certificate signed by an individual purporting to be MSEA's Representative;
(b) in the instance (if applicable) in which a Draft is
to be made against and exhausting the Letter of Credit under the terms of
Section 3(a)(ii) hereof, a written notice (herein sometimes called the
"Section 3(a)(ii) Notice to Draft") to Beneficiary, certifying to Beneficiary
and Operator that such Notice to Draft is authorized under Section 3(a)(ii) of
this Agreement and authorizing and directing Beneficiary to Draft on the Letter
of Credit for the entire amount then available to be Drafted thereunder, and
signed by both of (i) an individual purporting to be Contractor's
Representative, and (ii) an individual purporting to be MSEA's Representative;
(c) in an instance (if applicable) in which a Draft is to
be made against and exhausting the Letter of Credit under the terms of Section
3(a)(iii) hereof, a written notice (herein sometimes called the "Section
3(a)(iii) Notice to Draft") to Beneficiary, delivered only within the two-week
period (the "Final Two Weeks") prior to the stated expiration date of the
Letter of Credit then held by Beneficiary, certifying that such Notice to
Draft is authorized under Section 3(a)(iii) of this Agreement and authorizing
and directing Beneficiary to Draft on the Letter of Credit for the entire
amount then available to be
- 1 -
<PAGE> 130
EXHIBIT H
EXTRAORDINARY REPAIR AND REPLACEMENT
CAPITAL REPLACEMENT REPAIR REPLACEMENT
1. Energy Management and Lighting Controls 10 years
Description: A complete system of automatic controls, consisting of both
pneumatic and electronic direct digital control technologies for control
of the air conditioning system and a complete computerized lighting
control system with all components similar to General Electric Company
Programmable Lighting System.
Manufacturers:
Energy Management System: Johnson, Honeywell, Barber-Coleman, Robert Shaw
and MCC Powers
Lighting Controls: Johnson, Honeywell, General Electric, others.
2. Air Handing Equipment 5 years 15 years
Description: Includes factory built air handling units, fan coil units,
and custom built arena air handling units and all associated parts. All
fans shall be tested in accordance with the standards of the Air Moving
and Conditioning Association.
Manufacturers: Trane, Carrier, York, others.
3. Arena Curtain and Overhead Support 3 years
Description: Curtain for dividing arena bowl into different seating
configurations.
Manufacturers: Oklahoma City Scenic
4. Barricade 2 years
Description: Crowd control barrier for the front of the stage for concerts
and other events.
Manufacturers: None, barricade will be built on site.
5. Basketball Court 10 years
Description: Cincinnati "All-Star" Portable basketball court, 3 layer
construction with 2" x 3" sleepers, a middle layer of 1/2" plywood, and a
maple playing service.
Manufacturers: Robbins Inc, others.
6. Boxing Ring 5 years 15 years
Description: Portable boxing ring complete with ring ropes, mats, canvas,
and support structure.
Manufacturers: Everlast
Note: Included as an alternate in current FF&E budget.
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<PAGE> 131
EXHIBIT H
EXTRAORDINARY REPAIR AND REPLACEMENT
CAPITAL REPLACEMENT REPAIR REPLACEMENT
7. Communication Equipment 10 years
Description: Two-way portable radios, base stations and chargers
Manufacturers: Motorola, General Electric and Uniden.
Note: Included in current FF&E budget as a lease/purchase item.
8. Compressors for Ice Rink 5 years
Description: Reciprocating compressors for ice rink.
Manufacturers: York and Carrier
Note: Included in current pricing as an alternate.
9. Concession Equipment 10 years
Description: Various equipment including walk in coolers and freezers,
bun warmers, hot dog roller grills, popcorn poppers, etc.
Manufacturers: Hobart, Univex, Frislstor, Weaver, Bunn, Deirita, etc.
10. Office Equipment 5 years
Description: Photocopier, word processing equipment, postage machine,
postage scale, phone system, phone answering machines, etc.
Note: Photocopier, word processing equipment, postage machine, postage
phone system, phone answering machines are included in FF&E budget as
lease/purchase items.
11. Intentionally Omitted
12. Electrical and Mechanical Equipment 5 years
Electrical equipment includes all electrical motors over or under 10
horsepower, all raceway, busway, 600 volt wiring, low voltage power limited
wiring, wiring devices, motor controllers, motor control centers,
distribution panelboards, lighting panelboards, main switchboards,
disconnect switches, distribution transformers, distribution switchboards,
disconnect switches, fuses, molded case circuit breakers, emergency engine
generator, automatic transfer switches, general lighting, lightning
protection system, fire alarm system, telephone raceway system, lighting
contactors and relays, photocontrols and all equipment specified by the
mechanical engineers in division 16 of the Miami Arena specifications and
required for the proper functioning engineers in division 16 of the Miami
Arena specifications and required for the proper functioning of all
electrical systems. Mechanical equipment includes all supports, anchors,
sleeves, valves, motors, vibration isolation, insulation, domestic water
piping systems, sanitary and storm piping system, drainage pumps, domestic
house pumps, domestic water heaters, plumbing fixtures and trim, fire
protection piping, automatic fire sprinkler system, fire and jockey pumps,
stand pipe and fire hose system, HVAC piping, HVAC pumps, water treatment
systems, air cooled condensing units, centrifugal water chillers, cooling
towers, air conditioning terminals, electric duct heaters, fans, ductwork,
duct accessories, air outlets and all equipment specified by the mechanical
engineers in division 15 of the Miami Arena specification and required for
the proper functioning of all mechanical systems.
Manufacturers: Specified by engineer.
H - 2
<PAGE> 132
EXHIBIT H
EXTRAORDINARY REPAIR AND REPLACEMENT
CAPITAL REPLACEMENT REPAIR REPLACEMENT
13. Conveying Systems 15 years
Description: Two electric passenger elevators for subcontractors,
concourse and skybox level service and one hydraulic service elevator
for subconcourse and concourse level service and a pneumatic tube
system as described in division 14 of the Miami Arena specifications.
Manufacturers: Otis, Schindler, Haughton, Westinghouse, Miami Elevator
and Montgomery Elevator.
14. Exterior Finishes
Description:
Preformed Wall Panels 20 years
Split Face Concrete block 20 years
Fluted concrete Block 20 years
Fluted concrete Block 20 years
Misc. painting, Handrail, soffits, etc. 20 years
Manufacturers: Preformed Wall Panels. Robertson, Inryco Inc. E.6.
Smith
All others as specified by architect.
15. Fixed Seating
Plastic seat and back: 5 years 15 years
Upholstered seat and back (Alternate) 3 years 10 years
Description: Hussey Mfg. Co., Inc. "Sentinel series model S-80680:,
riser mounted, fold down, plastic seat and back and blow molded
armrests or equal.
Manufacturers: Hussey Mfg. Co. Inc., American Desk, American Seating
Company, Interkal.
16. Intentionally omitted.
17. Finishes
Description: Work as described in Division 9 of the Miami Arena
Specifications
a. Carpet N/A 3 years
b. Furring and Lathing
c. Portland Cement Piaster
d. Gypsum Board
e. Ceramic Tile 5 years 15 years
f. Terrazzo Paving (if used) 5 years 15 years
g. Acoustical Ceilings 5 years
h. Resilliant Flooring 5 years 15 years
i. Vinyl Wall Covering N/A 5 years
18. Furnishings
Includes all office furniture, lockers, custom lockers, skybox
furniture, paintings, artwork, press room seating and tables, etc.
H-3
<PAGE> 133
EXHIBIT H
EXTRAORDINARY REPAIR AND REPLACEMENT
CAPITAL REPLACEMENT REPAIR REPLACEMENT
19. Ice Machines 2 years
Description: Automatic ice cube makers located in the concession
stands, kitchen, Press lounge, skybox holding kitchens and team club
in various sizes.
Manufacturers: Scottsman, Manitowoc, others.
20. Painting
Description: Work as described in Division 9 of the Miami Arena
specifications.
A. Exterior Finish Formulas:
1. Miscellaneous Iron and Steel members when needed past 3 years
Minimum shop applied primer required on all exposed exterior
steel.
a. Touch up factory or shop applied prime coats.
b. One coat 13800 zinc chromate primer.
c. Two coats 26xx semi-gloss enamel.
2. Miscellaneous galvanized metal
members when needed past 3 years
a. Wash surfaces with mineral spirits or Varsol and let dry.
b. One coat 13201 Mirroalc primer.
c. Two coats 26xx semi-gloss enamel.
3. Galvanized metal handrails when needed past 3 years
a. Wash surfaces with mineral spirits or Varsol and let dry.
b. One coat 13201 Mirroalc primer.
c. Two coats 70xx alkyd-urethane high gloss enamel.
4. Concrete and concrete unit masonry. when needed past 3 years
a. One coat Bloxfil latex filler
b. Two coats 36xx latex filler
5. Portland cement plaster soffits when needed past 3 years
a. Two coats 15xx acrylic latex paint
6. Traffic/lane striping. when needed past 3 years
a. Two coats Traffic Marking paint.
7. Preformed Wall Panels when needed past 3 years
B. Interior Finish Formulas:
1. Miscellaneous iron and steel
members. when needed past 3 years
a. Touchup shop applied prime coats.
b. Two coats 26xx semi-gloss enamel.
H-4
<PAGE> 134
EXHIBIT H
EXTRAORDINARY REPAIR AND REPLACEMENT
CAPITAL REPLACEMENT REPAIR REPLACEMENT
20. Painting (con't..)
2. Miscellaneous galvanized metal members. when needed past 3 years
a. One coat 13800 zinc chromate primer.
b. Two coats 26xx semi-gloss enamel.
3. Hollow metal doors and frames. when needed past 3 years
a. Touch up prime coat.
b. Two coats 26xx semi-gloss enamel.
4. Concrete in low traffic areas. when needed past 3 years
a. One coat Bloxfil latex filler.
b. Two coats 36xx latex paint.
5. Concrete unit masonry. when needed past 3 years
a. One coat Bloxfil latex filler.
b. Two coats 124xx/12402 epoxy gloss coating.
6. Wood, i.e., inside cabinets and shelves when needed past 3 years
a. One coat 8801 undercoater.
b. Two coats 26xx semi-gloss enamel.
7. Gypsum board ceilings and walls. when needed past 3 years
a. One coat 50801 vinyl primer.
b. Two coats 23xx eggshell primer.
8. Gypsum board ceilings in toilet rooms. when needed past 3 years
a. One coat 50801 vinyl primer.
b. Two coats 26xx semi-gloss enamel.
9. Gypsum board of ceilings and walls in
locker room. when needed past 3 years
a. One coat 50801 vinyl primer.
b. Two coats 124xx/12602 epoxy semi-gloss enamel.
10. Aluminum extrusions; exposed ceiling
grids. when needed past 3 years
a. Two coats 23xx eggshell enamel.
11. Pre-wallcovering preparation. when needed past 3 years
a. One coat Surface Conditioner
Manufacturers: Devoe & Reynolds Company, Glidden, PPG and Sherwin-Williams
and others as specified by architect.
H-5
<PAGE> 135
EXHIBIT H
EXTRAORDINARY REPAIR AND REPLACEMENT
CAPITAL REPLACEMENT REPAIR REPLACEMENT
21. Portable Seating 3 years 10 years
Description: Portable folding chairs with cushioned seats and back,
and furnished with chair carts.
Manufacturers: Clarin, Kruger and others
22. Roof 5 years 10 years
Description: Fully adhered EDP11 membrane system secured to roof
insulation board within grid nailer system and flashing system,
complying with FM class I-90 and UL Class A.
Manufacturers: Carlisle, Firestone Rubber Guard roofing system and
Goodyear Tire & Rubber.
23. Sound System 10 years
Description: Arena sound system including speakers, amplifiers, mixing
board and accessories and as specified by the engineer in Division 15 of
the Miami Arena Specifications.
Manufacturers: Altec Lansing, JBL, others.
24. Spotlights 15 years
Description: Strong 1500 watt Xenon Super Trooper.
Manufacturers: Strong Manufacturing
25. Stage Decking and Scaffolding
Description: Plywood and wood decking supported by lightweight
scaffold.
Manufacturers: Scaffold; Safeway
26. Structural Steel, Concrete and
Masonry Units when needed when needed
Description: Includes cast in place concrete, reinforcing rods,
architectural precast concrete, precast concrete seating, mortar, glass
masonry units, unit masonry systems, structural steel, steel joists,
steel roof deck, steel composite deck, metal stairs, ornamental
handrails and railings and all items specified in division 3, division 4
and division 5 of the Miami Arena Specifications.
27. Turnstiles and Ticket Drop Boxes 5 years 15 years
Description: Portable turnstile for automatic counting of
persons walking through. "Super Kompack Passimeter" Model HD as
manufactured by Perry Turnstiles.
Manufacturers: Perry Turnstiles
28. Ice Resurfacing Machine 5 years 15 years
Description: Zamboni model HDB ice resurfacer with volkswagon
industrial engine and hydraulic drive system.
Manufacturers: Frank J. Zamboni & Company.
Note: Included in FF&E budget as lease/purchase item.
H-6
<PAGE> 136
EXHIBIT H
EXTRAORDINARY REPAIR AND REPLACEMENT
<TABLE>
<CAPTION>
CAPITAL REPLACEMENT REPAIR REPLACEMENT
<S> <C> <C>
29. Trash Cans N/A 2 years
Description: "Glutton" 56 gallon container with hooded top.
Manufacturers: Rubbermaid and others
30. Televisions 5 years
Description: Portable televisions in various sizes.
Manufacturers: Sony, Zenith and others.
31. Wood and Plastic 10 years
Description: Rough and finish carpentry as specified by the architect in division 6 of the Miami Arena specifications.
32. Thermal and Moisture Protection
Description: All work and materials as described in division 7 of the Miami Arena Specifications.
a. Below Grade Membrane Waterproofing when needed past 3 years
b. Fluid-Applied Waterproofing when needed past 3 years
c. Water repellent Coatings when needed past 3 years
d. Vapor Barrier when needed past 3 years
e. Building Insulation when needed past 3 years
f. Cementitious Fireproofing when needed past 3 years
g. Preformed Wall Panels when needed past 3 years
h. Single Ply Roofing System 5 years 10 years
i. Flashing and Sheet Metal 10 years 10 years
j. Prefabricated Roof Specialities 10 years 10 years
k. Caulking and Sealants 5 years
33. Specialties
Description: All equipment as specified by the architect in Division 10 of the Miami Arena Specifications.
a. Metal Toilet Compartments 10 years
b. Louvers when needed past 3 years
c. Flagpoints when needed past 3 years
d. Storage Bins 5 years 10 years
e. Toilet Accessories 5 years 10 years
34. Loading Dock Equipment 5 years 10 years
35. Basketball Goals 10 years
Description: Portable hydraulic basketball goals and backboards.
36. Trash Compactor
Note: listed in FF&E budget as a lease/purchase item.
</TABLE>
H-7
<PAGE> 137
EXHIBIT H
EXTRAORDINARY REPAIR AND REPLACEMENT
<TABLE>
<CAPTION>
CAPITAL REPLACEMENT REPAIR REPLACEMENT
<S> <C> <C>
37. Backlighted Displays and Signage 10 years
Description: Backlighted displays, section and row identification, room identification, etc.
38. Desher Wall and Glass 5 years 10 years
Description: Hockey desher and glass in compliance with HHL regulations.
Manufacturers Insulfab, HolmsLan and others
39. Insulated Floor 10 years
Description: Insulated wood floor to cover the arena floor when the ice rink is in use.
Manufacturer: Built on site.
Note: Included in FF&E budget as an alternate.
40. Scoreboards 5 years 10 years
Description: Electronic scoreboards in compliance with NHL and NBA regulations.
Manufacturers: Fairtron, American Sign and indicator, Whitaway Signs, others
41. Vehicles 5 years
Description: Forklift, electric carts, truck or van.
Note: Included in FF&E budget as a Lease/Purchase item.
42. Landscaping and Signage when needed past 3 years
Description: Includes all plants and shrubs, plant boxes, trees, fences, signage, etc.
43. Doors and Windows when needed past 3 years 5 years
Description: Includes all hollow metal doors and frames, overhead ceiling doors, overhead ceiling grilles, impact traffic
doors, aluminum entrances and storefront, finish hardware, weather-stripping and thresholds, glass and glazing and all work
as described in division 8 of the Miami Arena specifications.
44. Vault Doors and Safes 10 years
45. Fire Extinguishment Equipment As required by law
46. Ice Rink Floor when needed past 3 years 10 years
Includes all ice rink piping floor, surface materials, etc.
</TABLE>
* Any Extraordinary Replacement and/or Extraordinary Repair item shall involve a
cost of either $1,000 or more per item or shall involve a cost of $5,000 or
more cumulative for such items incurred by the Operator per ??? in the
aggregate. As additional equipment is purchased or new events are held at the
Arena, Operator ??? revise this Exhibit H, subject, however, to Owner's
reasonable approval of the repair/replacement time period for each such item of
equipment. Manufacturers when listed are illustrative, not mandatory.
Notwithstanding anything to the contrary contained herein, any repair or
replacement, regardless of the repair and replacement time period, which costs
greater than $10,000, 100% of such cost shall be deemed to be an Extraordinary
Replacement and Repair Expense.
<PAGE> 138
EXHIBIT "I"
CONSTRUCTION FUNDING AGREEMENT
BY AND AMONG
MIAMI SPORTS AND EXHIBITION AUTHORITY,
DECOMA MIAMI ASSOCIATES, LTD.,
LINBECK CONSTRUCTION CORPORATION
AND
SUN BANK, N.A.
October 10, 1986
<PAGE> 139
CONSTRUCTION FUNDING AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
l. Sources of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) MSEA Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Operator Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2. Payment Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(a) MSEA's and Operator's Share of
Construction Costs; MSEA
Purchase Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Conditions and Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Project Cost Overruns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(d) Special Termination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(e) Budget and Cash Flow Analysis;
Completion Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3. Drafts Against the Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(a) Submission of Notices to Draft to
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) Substitute Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4. Funding of Construction Costs and
Contingent Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(a) Procedure for Requests for Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(b) Procedure for Payment of MSEA's Share
of Construction Costs and MSEA
Purchase Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(c) Procedure for Payment of Operator's
Share of Construction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(d) Notice to TCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5. Agreements Concerning Beneficiary, Drafts and
Disbursement of Proceeds of Drafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(a) Capacity and Authority of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(b) Presentation of Drafts to TCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(c) Disposition of Proceeds of Drafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(d) Fees and Reimbursements to Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(e) Limitation on Beneficiary's Obligations;
Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
(i)
<PAGE> 140
<TABLE>
<S> <C>
(f) Beneficiary's Right to Rely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(g) Investment of Undisbursed Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(h) Actions Upon Notice of a
Terminating Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(b) Valid Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(c) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(d) Incorporation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(e) Attorney's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(f) Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
EXHIBITS
A -- Letter of Credit
B -- Contractor's Certificate
C -- Form of Substitute Letter of Credit
D -- MSEA's Certificate
E -- List of Contingent Items
F -- MSEA Purchase Costs Procedures
G -- certain Definitions for Convenience of Beneficiary
</TABLE>
(ii)
<PAGE> 141
CONSTRUCTION FUNDING AGREEMENT
THIS CONSTRUCTION FUNDING AGREEMENT ("Agreement") is made and entered
into this 10th day of October, 1986,, by and among MIAMI SPORTS AND EXHIBITION
AUTHORITY ("MSEA"), DECOMA MIAMI ASSOCIATES, LTD. ("Operator"), LINBECK
CONSTRUCTION CORPORATION ("Contractor") and SUN BANK, N.A. ("Beneficiary").
RECITALS
A. MSEA and Operator have entered into that certain Miami Arena
Contract (the "Arena Contract") dated effective as of October 10, 1986, for the
development, construction and operation of the facilities more particularly
described therein.
B. In performance of certain of its obligations under the Arena
Contract and with the approval of MSEA, Operator is entering into that certain
Construction Contract of even date herewith (the "Construction Contract") with
Contractor for construction of a sports arena ("Arena").
C. Under the terms of the Arena Contract, MSEA has agreed to pay, inter
alia, MSEA's Share of Construction Costs (as hereinafter defined) and the
Contingent Costs (as herein defined), and Operator has agreed to pay Operator's
Share of Construction Costs (as hereinafter defined).
D. Contractor has advised MSEA and Operator that Contractor shall enter
into the Construction Contract provided that Contractor and the issuer of the
construction contract bond required to be delivered under the Construction
Contract (the "Surety") receive from MSEA and Operator the assurances provided
for in this Agreement that adequate funds are available and committed for
making payments to Contractor under the Construction Contract and for making
payment of the Contingent Costs, and Contractor is entering into the
Construction Contract in reliance upon such assurances of MSEA and Operator as
are hereinafter set forth.
E. MSEA and Operator desire to assure Contractor and the Surety that
adequate funds to pay the IGMAX Sum (as defined below) are available and
committed for making payments to Contractor under the Construction Contract as
provided herein, and MSEA desires to assure Operator and Contractor that
adequate funds are available and committed for payment of the Contingent Costs.
<PAGE> 142
F. MSEA, Operator and Contractor desire to establish, in the manner
provided for in this Agreement, the mechanism by which Contractor will be paid
the amounts to become due under the Construction Contract and the mechanism by
which any Contingent Costs are anticipated to be paid.
G. To assure payment of Operator's Share of Construction Costs to
become due under the Construction Contract and this Agreement, Operator has
arranged to have Texas Commerce Bank, National Association ("TCB") in Houston,
Texas, issue an unconditional, irrevocable letter of credit (together with all
replacements, substitutions or amendments, the "Letter of Credit") in the
original sum of Six Million Seven Hundred Seventy-One Thousand and No/100
Dollars ($6,771,000.00) to Beneficiary, as the named beneficiary therein; and
Beneficiary has agreed, on and subject to the terms of and for the fee provided
for in this Agreement, to act as agent for Operator, MSEA and Contractor, in
receiving Notices to Draft (as defined below) and presenting Drafts (as defined
below) on the Letter of Credit to TCB, and disbursing the proceeds of such
Drafts; and Operator, MSEA and Contractor (sometimes herein collectively called
"Principals") and Beneficiary desire to set forth herein their agreements in
regard to such matters.
DEFINITIONS
Each of the following terms shall have the meaning set forth opposite
such term:
"Account Party(ies)" - each (all) of the entities identified
collectively as the "Account Party" in the Letter of Credit.
"Additional MSEA Funds" - as of any date, funds of MSEA (which may
include, but are not limited to, MSEA Funds), not subject to any claims or
encumbrances, which are in addition to all funds of MSEA necessary to meet and
pay when due all other monetary obligations of MSEA under the terms of the
Arena Contract and this Agreement which then are known or reasonably can be
anticipated (including, without limitation, the obligation of MSEA to pay when
due MSEA's Maximum Share of Construction Costs, any Contingent Costs and all
Covered Project Cost Overrun Amounts).
"Aggregate Uncovered Project Cost Overrun Amount" - as of any date, the
aggregate of the Uncovered Project Cost Overrun Amounts for all Uncovered
Project Cost Overruns which then are known or reasonably can be anticipated.
"Approved Request for Payment" - a Request for Payment from Contractor
for Construction Costs (combined with or accompanied
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<PAGE> 143
by a Certificate for Payment therefor), which (a) if any portion of such
Request for Payment is for MSEA's Share of Construction Costs, shall be signed
by Operator's Representative, MSEA's Representative and Contractor's
Representative, and (b) if such Request for Payment is entirely for Operator's
Share of Construction Costs (i) shall be signed by Contractor's Representative
and by MSEA's Representative (and which may, but need not, be signed
by Operator's Representative) and (ii) shall be accompanied by a Contractor's
Certificate, signed by Contractor's Representative, and (iii) if not signed by
Operator's Representative, shall be accompanied by a MSEA's Certificate, signed
by MSEA's Representative. References in this Agreement to the amount(s) of
Construction Costs, MSEA's Share of Construction Costs, MSEA Purchase Costs and
Operator's Share of Construction Costs "as stated in an Approved Request for
Payment" (or words of similar import) shall refer to such amounts as stated,
set forth or otherwise identified in the Contractor's Request for Payment
included in such Approved Request for Payment.
"Architect" - the architect identified in the Construction Contract as
the "Architect" for the Arena.
"BIL" - BIL Development, Inc., a Texas corporation.
"Bond Documents" - those certain documents executed in connection with
the Miami Sports and Exhibition Authority/Fixed Note Special Obligation Bond
Series 1985 in the amount of thirty-eight million ($38,000,000.00) dollars.
"Certificate for Payment" - The "Certificate for Payment" (as such
quoted term is defined in the Construction Contract), to be issued (or
otherwise evidenced) by Architect relative to a Contractor's Request for
Payment under the applicable terms of the Construction Contract.
"City" - the City of Miami, Florida, a municipality.
"Completion Amount" - as of any date, the additional amount of dollars
necessary to be paid by MSEA for Project Costs and Contingent Costs in order to
complete and make operational the Arena as contemplated in the Arena Contract
and the Construction Contract (and (i) assuming, unless the contrary has been
established to the reasonable satisfaction of Operator, that the Contingent
Costs will have to be expended, and (ii) including the Project Costs Overrun
Amounts of any Project Costs Overruns that then are known or reasonably can be
anticipated).
"Construction Costs" - (a) the sum of the amounts of "Contractor's
Costs" plus "Contractor's Fee" (as such quoted terms are established and used
in the Construction Contract), as
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<PAGE> 144
such amounts are determined and may be adjusted from time to time under the
terms of the Construction Contract plus any amounts owing to Contractor
pursuant to Article VI(d)(2)(iii) of the Construction Contract; and (b) as to
each Payment Period, the amount of Construction Costs for that Payment Period
included in the Approved Request for Payment for that Payment Period.
Construction Costs include all MSEA Purchase Costs and any Contingent Costs
that are within the scope of "Contractor's Costs" under the terms of the
Construction Contract.
"Contingent Costs" - amounts, which are not included in Construction
Costs, required to be paid for or in satisfaction of the cost of Contingent
Items.
"Contingent Items" - the items of work or expense described on Exhibit
"E" attached hereto.
"Continuing Funding Conditions" - as of any date, each and all of the
following conditions:
(a) no Contractor Default (as defined in the Construction
Contract) then shall exist under the Construction Contract;
(b) No Default Event or Suspension Period then is in
existence and continuing;
(c) no default by Contractor then shall exist under this
Agreement; and
(d) any Request for Payment then issued by Contractor for
approval by Operator and MSEA (i) shall be substantially in the form and
contain substantially the information and supporting documents as are required
therefor under the applicable provisions of the Construction Contract and this
Agreement, and (ii) shall have been approved by Architect (as evidenced by
its Certificate for Payment therefor and delivery of same to Operator and MSEA)
and by MSEA's Representative (and if such Request for Payment shall have been
approved only in part, Architect's Certificate for Payment therefor and the
approval of MSEA's Representative shall be for the same portion of such Request
for Payment).
"Contractor's Certificate" - a written certificate by Contractor in
the form attached to this Agreement as Exhibit "B".
"Contractor's Representative" - the President or a Vice President of
Contractor.
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<PAGE> 145
"County" - Dade County, Florida, a Subdivision of the State of
Florida.
"Coverage Assurances" - (a) as to any particular Project Cost Overrun,
(i) a written certificate, signed by MSEA's Representative, addressed to
Operator, certifying, in form and substance reasonably satisfactory to
Operator, that MSEA has or will have sufficient Additional MSEA Funds to pay
when due the amount of the Project Cost Overrun Amount for such Project Cost
Overrun, and that as such Additional MSEA Funds become available they will be
deposited in an account or accounts that is or are dedicated to the payment of
Project Costs, and (ii) a Financial Professional's Report relating to such
certificate from MSEA; and (b) as to the Completion Amount, (i) a written
certificate, signed by MSEA's Representative, addressed to Operator,
certifying, in form and substance reasonably satisfactory to Operator in
accordance with the provisions of Subsection 2(e) below, that MSEA has or will
have sufficient Additional MSEA Funds to pay when due the Completion Amount
(setting forth the source of such funds and the budget analysis and cash flow
forecast supporting such certification) and that as such Additional MSEA Funds
become available they will be deposited in an account or account that will be
dedicated to the payment of Project Costs, and (ii) a Financial Professional's
Report relating to such certification from MSEA.
"Covered Project Cost Overrun Amount" - the Project Cost Overrun
Amount for a Covered Project Cost Overrun.
"Covered Project Cost Overruns" - Any Project Cost Overrun for which
Coverage Assurances have been given by MSEA to Operator in accordance with
Section 2(c) of this Agreement.
"Current Payment Period" - as it relates to Requests for Payment, the
Payment Period covered by the most recent Request for Payment submitted by
Contractor to Operator and MSEA's Representative, and as it relates to Approved
Requests for Payment, the Payment Period covered by the most recent Approved
Request for Payment received by Beneficiary.
"Decoma, Ltd." - a limited partnership formed under the laws of the
State of Texas, acting as general partner of Operator.
"Decoma Venture" - a joint venture formed under the laws of the State
of Texas, acting as general partner of Decoma, Ltd.
"Dollar Share" - as to each of the Account Parties other than Harry M.
Stevens, Inc., that dollar amount (if any) which is equal to the product of the
Stipulated Percentage for such Account Party multiplied by that portion (if
any) of the Section
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3(a)(iii) Proceeds held by Beneficiary in escrow pursuant to Section 5(c) which
is in excess of $4,000,000 at the time of the Dollar Share computation pursuant
to Subsection 3(b)(ii) below.
"Draft(s)" or "Drafted" - a sight draft on the Letter of Credit
presented by Beneficiary to TCB in accordance with the terms of this Agreement
and in the form attached to the Letter of Credit; or the act of so presenting
such Draft.
"FGMAX Sum" - the amount of the "Final Guaranteed Maximum Sum" (as
such quoted term is established and used in the Construction Contract), as the
amount thereof is determined pursuant to Article VI of the Construction
Contract, and as such amount may be adjusted pursuant to the Construction
Contract.
"Final Conversion Payment Period" - the first Payment Period for which
Operator's Share of Construction Costs, when added to the aggregate of
Operator's Share of Construction Costs for all prior Payment Periods, equals
Operator's Maximum Share of Construction Costs.
"Final Funding Conversion Date" - the first day on which there exists
an Approved Request for Payment for the Final Conversion Payment Period.
"Financial Professional" - Coopers & Lybrand, or any other major
accounting firm of national reputation designated by MSEA and reasonably
acceptable to Operator.
"Financial Professional's Report" - a report or statement by a
Financial Professional confirming, in form and substance reasonably
satisfactory to Operator, the conclusions, analyses, forecasts or reports, as
applicable, delivered by MSEA to Operator under the terms of this Agreement
(and required to be accompanied by a "Financial Professional's Report"), with
such confirmation by such Financial Professional to be presented in such form,
supported by such analyses and supporting information, and based on such
assumptions as shall be reasonably satisfactory to Operator.
"First Conversion Amount" - the aggregate amount of $20,000,000.
"First Funding Conversion Date" - the first date on which there exists
an Approved Request for Payment stating an amount of Construction Costs for the
Current Payment Period which, when added to the total of all Construction Costs
for all prior Payment Periods paid by MSEA, equals or exceeds the First
Conversion Amount.
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"IGMAX Sum" - the amount of the "Initial Guaranteed Maximum Sum" (as
such quoted term is established and used in the Construction Contract), as the
amount thereof is stipulated in Article VI of the Construction Contract.
"Land Lease Agreement" - the "Land Lease Agreement" dated as of
October 10, 1986, entered among the City of Miami, MSEA and Operator.
"Maximum Aggregate Uncovered Project Cost Overrun Amount" - that
amount, as of any date after the Shared Payment Commencement Date, by which
the then Uncovered Completion Amount is less than the Maximum Uncovered
Completion Amount.
"MSEA's Available Funds" - as to each Payment Period commencing with
the Payment Period immediately prior to the Second Funding Conversion Date and
extending through the Payment Period immediately preceding the Final Funding
Conversion Date, all funds of MSEA (which shall include, but are not limited
to, MSEA Funds) which (a) then are available to MSEA and allocated to Project
Costs and (b) are in addition to all funds of MSEA necessary to meet and pay
when due Project Costs other than Construction Costs.
"MSEA's Certificate" - a written certificate by MSEA in the form
attached to this Agreement as Exhibit "D".
"MSEA's Maximum Share of Construction Costs" - that aggregate amount
which is the difference between the FGMAX Sum and $6,771,000.
"MSEA's Representative" - that individual who MSEA from time to time
designates in writing to Beneficiary as being MSEA's representative (and who
shall be the same individual who is designated as MSEA's representative under
the terms of the Construction Contract); initially, MSEA's Representative is
Gene Marks.
"MSEA's Share of Construction Costs" -
(a) (i) as to the first and each succeeding Payment
Period, to but excluding the Payment Period immediately preceding the First
Funding Conversion Date, the entirety of all Construction Costs stated in the
Approved Request for Payment for such Payment Period;
(ii) as to the Payment Period immediately
preceding the First Funding Conversion Date, that portion (if any) of the
Construction Costs for such Payment Period which, when
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added to the aggregate of Construction Costs for all prior Payment Periods,
equals the First Conversion Amount;
(iii) as to the first Payment Period after the
First Funding Conversion Date and each Payment Period thereafter, to but
excluding the Payment Period immediately preceding the Second Funding
Conversion Date, no portion of the Construction Costs for such Payment Period;
(iv) as to the Payment Period immediately
preceding the Second Funding Conversion Date, the lesser of (A) that amount (if
any) by which the Construction Costs for such Payment Period, when added to the
aggregate of all Construction Costs for all prior Payment Periods, exceeds the
sum of the First Conversion Amount and the Second Conversion Amount, or (B)
MSEA's Available Funds for such Payment Period;
(v) as to the first Payment Period after the
Second Funding Conversion Date and each Payment Period thereafter, to but
excluding the Final Conversion Payment Period, the lesser of (A) the
Construction Costs for such Payment Period, or (B) MSEA's Available Funds for
such Payment Period;
(vi) as to the Final Conversion Payment Period,
the sum of (A) MSEA's Available Funds for such Payment Period and (B) the
amount by which the Construction Costs for such Payment Period exceed the sum
of (1) MSEA's Available Funds for such Payment Period and (2) Operator's Share
of Construction Costs for such Payment Period; and
(vii) as to the first Payment Period after the
Final Conversion Payment Period and each Payment Period thereafter, the
entirety of the Construction Costs for such Payment Period; and
(b) in the aggregate, Construction Costs not exceeding
MSEA's Maximum Share of Construction Costs. MSEA Purchase Costs allocated to
MSEA's Share of Construction Costs pursuant to Section 2(a) below shall be
included in MSEA's Share of Construction Costs and in MSEA's Maximum Share of
Construction Costs.
"Notice(s) to Draft" - the written document delivered to Beneficiary
in the following instances, as applicable:
(a) in each instance in which a Draft against the Letter
of Credit is to be made under the terms of Section 3(a)(i) below, an Approved
Request for Payment for Operator's Share of Construction Costs for a Payment
Period (herein sometimes called the "Section 3(a)(i) Notice to Draft"), with
the Contractor's
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Request for Payment signed by both of (i) an individual purporting to be
Contractor's Representative and (ii) an individual purporting to be MSEA's
Representative (and which may, but need not, be signed by an individual
purporting to be Operator's Representative), with the accompanying Contractor's
Certificate signed by an individual purporting to be the Contractor's
Representative, and (if such Contractor's Request for Payment is not signed by
Operator's Representative) with the accompanying MSEA's Certificate signed by
an individual purporting to be MSEA's Representative;
(b) in the instance (if applicable) in which a Draft is to
be made against and exhausting the Letter of Credit under the terms of Section
3(a)(ii) below, a written notice (herein sometimes called the "Section 3(a)(ii)
Notice to Draft") to Beneficiary, certifying to Beneficiary and Operator that
such Notice to Draft is authorized under Section 3(a)(ii) of this Agreement and
authorizing and directing Beneficiary to Draft on the Letter of Credit for the
entire amount then available to be Drafted thereunder, and signed by both of
(i) an individual purporting to be Contractor's Representative, and (ii) an
individual purporting to be MSEA's Representative;
(c) in an instance (if applicable) in which a Draft is to be
made against and exhausting the Letter of Credit under the terms of Section
3(a)(iii) below, a written notice (herein sometimes called the "Section
3(a)(iii) Notice to Draft") to Beneficiary, delivered only within the two-week
period (the "Final Two Weeks") prior to the stated expiration date of the
Letter of Credit then held by Beneficiary, certifying that such Notice to Draft
is authorized under Section 3(a)(iii) of this Agreement and authorizing and
directing Beneficiary to Draft on the Letter of Credit for the entire amount
then available to be Drafted thereunder, and signed by an individual purporting
to be either (i) Operator's Representative, (ii) Contractor's Representative,
or (iii) MSEA's Representative.
"Operator's Maximum Share of Construction Costs" - the aggregate
amount of $6,771,000.
"Operator's Representative" - the President or a Vice President of the
joint venturer in Decoma Venture which, as of any given date, is the Managing
Venturer of Decoma Venture; initially, Operator's Representative is C. Dean
Patrinely.
"Operator's Share of Construction Costs" -
(a) (i) as to the first and each succeeding Payment
Period, to but excluding the Payment Period immediately
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preceding the First Funding Conversion Dates, no portion of the Construction
Costs for such Payment Period;
(ii) as to the Payment Period immediately preceding the
First Funding Conversion Date, the lesser of (A) that amount (if any) by which
the Construction Costs for such Payment Period, when added to the aggregate of
all Construction Costs for all prior Payment Periods, exceeds the First
Conversion Amount or (B) the Second Conversion Amount;
(iii) as to the first Payment Period after the First
Funding Conversion Date and each Payment Period thereafter, to but excluding the
Payment Period immediately preceding the Second Funding Conversion Date,
subject to the provisions of Section (e) below, the entirety of all
Construction Costs for such Payment Period;
(iv) as to the Payment Period immediately preceding the
Second Funding Conversion Date, the sum of (A) the entirety of that portion (if
any) of the Construction Costs for such Payment Period which, when added to the
aggregate of all Construction Costs for all prior Payment Periods, equals the
sum of the First Conversion Amount and the Second Conversion Amount, plus (B)
subject to the provisions of Section (e) below the amount by which the balance
of the Construction Costs for such Payment Period, is in excess of MSEA's
Available Funds for such Payment Period;
(v) as to the first Payment Period after the Second
Funding Conversion Date and each Payment Period thereafter, to but excluding
the Final Conversion Payment Period, the amount by which the Construction Costs
for such Payment Period are in excess of MSEA's Available Funds for such
Payment Period, but in no event shall the aggregate of all of the Operator's
Share of Construction Costs in this Subsection (a)(v), when added to the
aggregate of all of Operator's Share of Construction Costs in Subsections (a)
(ii), (iii) and (iv) hereof exceed Operator's Maximum Share of Construction
Costs);
(vi) as to the Final Conversion Payment Period, that
portion of the Construction Costs for such Payment Period which is in excess of
MSEA's Available Funds for such Payment Period but which in any event is not
more than that amount which, when added to the aggregate of all of Operator's
Share of Construction Costs for all prior Payment Periods, equals Operator's
Maximum Share of Construction Costs;
(vii) as to the first Payment Period after the Final
Conversion Payment Period and each Payment Period thereafter, no portion of the
Construction Costs for such Payment Period; and
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(b) in the aggregate, Construction Costs not exceeding Operator's
Maximum Share of Construction Costs. MSEA Purchase Costs allocated to
Operator's Share of Construction Costs pursuant to Section 2(a) below shall be
included in Operator's Share of Construction Costs and in Operator's Maximum
Share of Construction Costs.
"Particular Suspension Event" - each single Suspension Event that may
occur; and as of any date after the Shared Payment Commencement Date, each
single Suspension Event that on such date is in existence; should a Suspension
Event occur more often than once, then each instance shall be a Particular
Suspension Event (giving rise to Operator's elections under Section 2(b)
below); and should a Particular Suspension Event undergo, during its existence,
a material, adverse change in its status or consequence (e.g., a judgment on
the merits is entered in a lawsuit, which lawsuit constitutes a Particular
Suspension Event), then such change itself shall be a Particular Suspension
Event (giving rise to Operator's elections under Section 2(b) below).
"Payment Assurance" - a guarantee, bond, letter of credit or other
similar assurance (in any case, satisfying the requirements stated below) which
MSEA, during a Suspension Period, may cause to be provided to Operator for
MSEA's account, absolutely assuring Operator that any portion of Operator's
Share of Construction Costs paid by Operator during such Suspension Period
shall be repaid to Operator (without interest) upon a termination by Operator
of its obligations under, and in accordance with, this Agreement, either as a
portion of the Termination Fee or, in the case of a Special Termination only,
as a portion of the Special Termination Amount; such assurance shall be for a
stated dollar amount, shall be either a cash equivalent (such as a bond or a
letter of credit) or the guarantee of a guarantor of unquestionable
creditworthiness, shall be the absolute, irrevocable and unconditional
obligation of the issuer thereof, shall be for a term extending to a date which
is not less than 60 days after the latest date to which Operator's obligation
to pay Operator's share of Construction Costs may extend, in the reasonable,
good faith, judgment of Operator (considering the then status of construction
of the Arena and the incurrence of Construction Costs), shall provide that the
proceeds thereof are available at such time and in such manner as to correspond
to the time and manner in which the Termination Fee or Special Termination
Amount, as applicable, are payable to Operator under the Arena Contract, and
this Agreement, respectively, and in all other respects, including the form and
content of the documents and agreements evidencing and securing such assurance,
shall be satisfactory to Operator (in its sole, good faith, discretion).
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MSEA and Operator agree that a satisfactory Payment Assurance may take the form
of a written agreement by City or County obligating such entity to pay a stated
dollar amount and otherwise on terms consistent with the intent and purpose of
the Payment Assurance under the terms of this Agreement and containing terms
and conditions consistent with the foregoing requirements (excluding
creditworthiness) for a Payment Assurance, and no terms or conditions which are
inconsistent with such requirements.
"Payment Period" - the calendar month next preceding (and covered by)
a particular Request for Payment delivered by Contractor to Operator and MSEA's
Representative.
"Permitted Substitute LOC Issuer" - Texas Commerce Bank National
Association, Houston, Texas, or Chase Manhattan Bank, New York, New York,
Chemical Bank, New York, New York or Sun Bank, N.A., Miami, Florida, or any
other banking institution designated to Beneficiary as a Permitted Substitute
LOC Issuer by a written notice from Operator's Representative, Contractor's
Representative and MSEA's Representative.
"Person" - any individual, partnership (general or limited),
corporation, unincorporated association, trust, governmental body or political
subdivision (or any agency, department, bureau or other instrumentability
thereof), or other legal entity.
"Project Budget" - the "Project Budget" (as such quoted term is
defined and used in the Arena Contract), as established and adjusted from time
to time in accordance with the applicable provisions of the Arena Contract.
"Project Cost Overrun" - as contemplated in Section 2(c), any instance
in which the actual amount of a particular Project Cost (including, without
limitation, Contingent Costs) exceeds, or it is known or can reasonably be
anticipated that it will exceed, the provision for such Project Cost in the
Project Budget, or is a Project Cost not provided for or contemplated in the
Project Budget.
"Project Cost Overrun Amount" - as contemplated in Section 2(c), that
dollar amount by which what is known or reasonably can be anticipated to be the
actual amount of a particular Project Cost exceeds the amount of the provision
therefor in the Project Budget.
"Project Cost(s)" - singly and collectively, the "Project Costs" as
such quoted term is defined and used in the Arena Contract.
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"Reimbursement Agreement" -- that certain Reimbursement Agreement
dated as of October 10, 1986, entered into by and among TCB and the Account
Parties.
"Request for Payment" or "(Contractor's Request for Payment)" - each
"Request for Payment" (as such quoted term is defined in the Construction
Contract) submitted by Contractor pursuant to the Construction Contract.
"Second Conversion Amount" - the aggregate amount of $2,771,000.
"Second Funding Conversion Date" - the first date on which there
exists an Approved Request for Payment stating an amount of Construction Costs
for the Current Payment Period which, when added to the total of Construction
Costs for all prior Payment Periods, will equal or exceed the sum of the First
Conversion Amount and the Second Conversion Amount.
"Shared Payment Commencement Date" - that date on which Operator's
Funds are first disbursed in compliance with the terms of this Agreement to pay
an amount of Operator's Share of Construction Costs which, when added to the
aggregate of Operator's Share of Construction Costs for all prior Payment
Periods, exceeds the Second Conversion Amount.
"Significant Event" - the existence, as of any date (in the case of
(e) below, as of any date from and after the Shared Payment Commencement Date),
of any one or more of the following:
(a) an "Owner Default" (as such quoted term is defined in
the Arena Contract) under the Arena Contract;
(b) a "City Default" or an "Authority Default" (as such
quoted terms are defined in the Land Lease Agreement) under the Land Lease
Agreement;
(c) a default by MSEA under the terms of this Agreement;
(d) a Significant Threat;
(e) The occurrence, on or after (but not before) the
Shared Payment Commencement Date of one or more Uncovered Project Cost
Overruns for which the Aggregate Uncovered Project Cost Overrun Amount is more
than the Maximum Aggregate Uncovered Project Costs Overrun Amount; or
(f) a Terminating Event.
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"Significant Threat" - any suit, action or other proceeding (excluding
any suit, action or proceeding arising from the performance by Operator or
Contractor of their development or construction activities as contemplated by
the Arena Contract and the Construction Contract, and excluding any suit,
action or proceeding arising from facts or circumstances unrelated to the Arena
or the Arena Contract), judicial or administrative, instituted or brought by
any Person, excluding Operator, Contractor, Surety or any Account Party and
any Person claiming by, through or under Operator, Contractor, Surety or any
Account Party, the expressed objective or intent of which is, or the result or
consequence of which likely would be, any of the following (a "Significant
Effect"):
(a) a determination or judgment that the performance by MSEA, or
the right of Operator to enforce the performance by MSEA, of MSEA's obligations
under the Arena Contract, the Land Lease Agreement or this Agreement is void,
voidable or unenforceable in any material respect; or
(b) a determination or judgment that the performance by City, or
the right of MSEA or Operator to enforce the performance by City, of its
obligations under the Land Lease Agreement is void, voidable or unenforceable
in any material respect;
(c) a determination or judgment that the enforceability of the
obligations or rights of MSEA or the Trustee under the Bond Documents is void,
voidable or unenforceable in any material respect, or a determination or
judgment that MSEA Funds, any Additional MSEA Funds or any other funds of MSEA
committed thereto are not available to pay MSEA's Maximum Share of Construction
Costs, any Contingent Costs or any other Project Costs as and in the amount
provided for in this Agreement or in the Arena Contract; or
(d) to affect the development, construction or operation of the
Arena, in a manner that will result in a material, adverse change from the
anticipated development, construction and operation thereof as evidenced by the
Arena Contract.
"Stipulated Percentage(s)" - as to each Account Party named below,
the percentage set forth opposite such Account Party's name:
<TABLE>
<S> <C>
Linbeck Miami Corporation 33.33%
BIL Development, Inc. 33.33%
Century Facilities, Inc. 5.56%
Houston Sports Association, Inc. 16.67%
Stadium and Arena Management, Inc. 5.56%
Venue Management, Inc. 5.55%
-------
100.00%
=======
</TABLE>
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Harry M. Stevens, Inc., which is one of the Account Parties, is intentionally
omitted from the preceding list. The percentages set forth in the preceding
list are solely for the applicable purposes of this Agreement.
"Substitute Letter of Credit" - a Letter of Credit in the form
attached to this Agreement as Exhibit "C" which shall (a) be issued for the
account of one or more of the Account Parties, in such stated amount as shall
be an amount permitted in Section 3(b) of this Agreement, (b) have an
expiration date not sooner than six months following the date on which it is
presented to Beneficiary pursuant to this Agreement, (c) be for the benefit of
Beneficiary, and (d) be issued by a Permitted Substitute LOC Issuer; and all
replacements or substitutions thereof and therefor.
"Suspension Event" - a Significant Event or Terminating Event that
occurs after (but not before) the Shared Payment Commencement Date (but a
Terminating Event that occurs because of a Significant Event remaining in
existence, uncured and unremedied for 30 successive days, shall be considered to
be the same Suspension Event as such Significant Event and shall not be a new
or additional Suspension Event).
"Terminating Event" - as of any date, any one or more of the
following:
(a) a Significant Event shall exist, uncured and
unremedied, for any period of thirty (30) successive days;
(b) the termination of the Arena Contract (to the point
that the Termination Fee is then due and payable, whether or not then
actually paid), the Land Lease Agreement, or this Agreement, in
whatever manner such termination may be brought about; or
(c) the entry by a court of competent jurisdiction of any
judgment, order, decree or stay, the result or consequence of which is
or will be the existence of one or more of the Significant Effects.
"Trustee" - Sun Bank, N.A., in its capacity as trustee under the
applicable Bond Documents, and its successors in such trust.
"Termination Fee" - The "Termination Fee" as such quoted term is
defined in the Arena Contract.
"Uncovered Completion Amount" as of any date, the portion of the
Completion Amount as of such date which exceeds the funds
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that then are and thereafter are forecast (in accordance with Section 2(e)
below) to be available to MSEA when needed to pay Project Costs, and for which
Coverage Assurances have not been delivered to Operator.
"Uncovered Project Cost Overrun Amount" - the Project Cost Overrun
Amount for an Uncovered Project Cost Overrun.
Uncovered Project Costs Overruns" - Any Project Cost Overrun for which
Coverage Assurances have not been given by MSEA to Operator in accordance with
Section 2(c) of this Agreement.
(b) Each of the following terms shall have the meaning specified
in the provision of the Agreement indicated opposite such term:
"Agreement" - Introductory clause Page 1
"Allocated Operator Funds" - Section l(a)(ii)
"Arena" - Recitals para. B
"Arena Contract" - Recitals para. A
"Beneficiary" - Introductory clause Page 1
"Claims" - Section 2(d)(i)(C)
"Construction Contract" - Recitals para. B
"Construction GMAX Account" - Section l(a)(i)
"Contractor" - Introductory clause Page 1
"Default Events" - Section 2(b)(v)
"Determination Period" - Section 2(c)
"Final Two Weeks" - Definition of "Notice to Draft"
"Funding Shortfall" - Section 2(e)(ii)
"Letter of Credit" - Recitals para. G
"Maximum Uncovered Completion Account" - Section 2(e)(iv)
"MSEA" - Introductory clause Page 1
"MSEA Funds" - Section l(a)(i)
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<PAGE> 157
"MSEA Purchase Costs" - Section 2(a)
"notice" - Section 6(a)
"Operator" - Introductory clause Page 1
"Operator Funds" - Section l(b)
"Principals" - Recitals para. G
"Project Fund Account" - Section l(a)(i)
"Project Retainage Account" - Section 1(a)(iv)(A)
"Section 3(a)(i) Notice to Draft" - Definition of
"Notice to Draft"
"Section 3(a)(ii) Notice to Draft" - Definition of
"Notice to Draft"
"Section 3(a)(iii) Notice to Draft" - Definition of
"Notice to Draft"
"Section 3(a)(i) Proceeds" - Section 3(a)(i)
"Section 3(a)(ii) Proceeds" - Section 3(a)(ii)
"Section 3(a)(iii) Proceeds" - Section 3(a)(iii)
"Significant Effect" - Definition of "Significant
Threat"
"Special Termination" - Section 2(d)(i)
"Special Termination Amount" - Section 2(d)(i)B)
"Special Termination Date" - Section 2(d)(i)
"Surety" - Recitals para. D
"Suspension Commencement Date" - Section 2(b)
"Suspension Notice" - Section 2(b)
"Suspension Period" - Section 2(b)(i)
"TCB" - Recitals Para. G
"Termination Notice" Section 2(b)
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W I T N E S S E T H:
In consideration of the mutual covenants set forth herein, the
parties hereto hereby represent, covenant and agree as follows:
1. Sources of Funds.
(a) MSEA Funds.
(i) MSEA hereby warrants and represents to
Contractor, Surety and Operator that funds in the total amount of $20,000,000
are deposited at Sun Bank, N.A. in an account which is a subsidiary account of
MSEA's account at Sun Bank, N.A. which is styled (and referred to herein as)
the "Project Fund Account," and which is styled (and referred to herein as) the
"Construction GMAX Account" (which term also shall include all successor or
subsidiary accounts), all of which funds are available and committed for the
payment of MSEA's Maximum Share of Construction Costs and for the payment of
Contingent Costs in accordance with the terms of this Agreement and (as
applicable) the Bond Documents (the funds of MSEA now and hereafter deposited
in the Construction GMAX Account are herein sometimes called "MSEA Funds").
MSEA agrees that except as otherwise expressly provided in this Agreement, all
MSEA Funds shall remain in the Construction GMAX Account until disbursed in
payment of MSEA's Share of Construction Costs and in payment of any Contingent
Costs, all in accordance with this Agreement.
(ii) MSEA hereby pledges to Operator all of
MSEA's rights, titles and interests in and to all Operator Funds disbursed by
Beneficiary to MSEA to be utilized by MSEA to pay MSEA Purchase Costs allocated
to Operator's Share of Construction Costs as provided for in Section 2(a) below
("Allocated Operator Funds"). Except as otherwise expressly provided in this
Agreement, MSEA shall cause MSEA Funds to be used exclusively to pay MSEA's
Share of Construction Costs and to pay Contingent Costs, and without exception
shall cause Allocated Operator Funds to be used exclusively to pay MSEA
Purchase Costs allocated to Operator's Share of Construction Costs as provided
for in Section 2(a) below, all in accordance with the terms of this Agreement.
All Allocated Operator Funds paid and disbursed by MSEA in accordance with the
terms of this Agreement for MSEA Purchase Costs shall pass free of the security
interest created in the preceding sentence.
(iii) MSEA shall have the right to direct the
Trustee to withdraw interest accrued on the balance from time to time in the
Construction GMAX Account and the Project Retainage Account, which Trustee may
withdraw at such intervals as MSEA
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shall direct and, when withdrawn, shall be deposited in a MSEA account and
shall be allocated to payment of Project Costs.
(iv) To ensure that MSEA shall be able to pay the
Termination Fee or Special Termination Amount, as applicable, in the event
Operator elects pursuant to this Agreement to terminate its obligations under
this Agreement at any time prior to the Shared Payment Commencement Payment
Date, MSEA agrees as follows:
(A) MSEA hereby warrants and
represents to Operator, Surety and Contractor that funds in the total amount of
$2,771,000 are deposited in Sun Bank, N.A. in an account which is a subsidiary
account of MSEA's Project Fund Account, and which is styled (and referred to
herein as) the "Project Retainage Account" (which term shall also include all
successor or subsidiary accounts), which funds shall not be used by MSEA to pay
Project Costs or for any other purpose until the earlier to occur of (i) the
Shared Payment Commencement Date or (ii) the date on which MSEA pays such funds
to Operator in payment on account of either the Termination Fee or Special
Termination Amount, as applicable; and
(B) Subject to the further
provisions of this Subsection 1(a)(iv)(B), MSEA hereby pledges to Operator, to
the extent permitted by law, all of MSEA's rights, titles and interests in and
to such $2,771,000 in the Project Retainage Account (or as a pledge and
superior interest if such $2,771,000, in order to satisfy requirements of law,
is ever commingled with other MSEA funds in either the Construction GMAX
Account or the Project Fund Account) to further secure the obligation of MSEA
to pay to Operator, upon Operator's termination of its obligations under this
Agreement prior to the Shared Payment Commencement Date, the Termination Fee or
the Special Termination Amount, as applicable, all pursuant to and in
accordance with the Uniform Commercial Code of Florida and other applicable
law. In an event of any default by MSEA to pay the Termination Fee or the
Special Termination Amount pursuant to the Arena Contract or this Agreement, as
applicable, Operator shall have and is hereby granted all of the rights and
remedies of a secured party as aforesaid. MSEA further agrees to execute and
deliver to Operator such further instruments as may reasonably be required by
operator to effectuate the foregoing provisions, and at the option of Operator
this Agreement may serve as the necessary security agreement.
From and after the Shared Payment Commencement Date, the security
interest created in, and the foregoing provisions of, this Subsection 1(a)(iv)
shall no longer be effective, however, this sentence shall not be construed to
negate either the right
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of Operator to terminate its obligations under this Agreement (in accordance
with an applicable right to do so) or the obligation of MSEA to pay to Operator
either the Termination Fee or the Special Termination Amount, as applicable,
upon such termination.
(iv) In any instance in which a security interest
created under this Section l(a) terminates in accordance with the terms of this
Section l(a), then promptly after MSEA's request therefor, Operator shall
deliver a written release and termination of such security interest.
(b) Operator Funds. Contemporaneously with Operator's
execution of this Agreement, Operator has delivered the Letter of Credit to
Beneficiary, a copy of which is attached as Exhibit "A" hereto. The proceeds
of Drafts on the Letter of Credit, or of drawings on Substitute Letters of
Credit as provided for below, presented in accordance with this Agreement, are
herein sometimes collectively called "Operator Funds". Operator warrants to
Contractor, MSEA and Beneficiary that the Letter of Credit is genuine, has been
duly issued by TCB to and for the benefit of Beneficiary, and is valid and
enforceable in accordance with its terms (subject to laws of general
application relating to or affecting the enforcement of creditors' rights).
Beneficiary, by its execution hereof, acknowledges its receipt of the Letter of
Credit, and Contractor and MSEA, by their execution hereof, respectively
acknowledge their approval of the Letter of Credit.
2. Payment Obligations.
(a) MSEA's and Operator's Shares of Construction
Costs; MSEA Purchase Costs. MSEA shall pay MSEA's Share of construction Costs
and any Contingent Costs, and Operator shall pay Operator's Share of
Construction Costs, respectively, all in accordance with the terms of this
Agreement.
MSEA shall pay directly all Construction Costs as provided in
the Construction Contract which constitute the purchase costs (herein called
"MSEA Purchase Costs") of materials, goods, equipment and all other personal
property required or used in connection with the construction of the Arena with
respect to which a sales tax could be imposed. The procedures to be followed
by Contractor (and subcontractors) for MSEA's Purchase Costs are attached
hereto as Exhibit "F".
All MSEA Purchase Costs for a Payment Period shall be allocated to
MSEA's Share of Construction Costs and/or Operator's Share of Construction
Costs for such Payment Period, whichever shall be obligated under the terms of
this Agreement to pay Construction Costs for such Payment Period (and if both
MSEA and Operator are so obligated, then such allocation shall be in pro-
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portion to such respective obligations). MSEA Purchase Costs which are
included in MSEA's Share of Construction Costs for such Payment Period shall be
promptly paid by MSEA from MSEA Funds (or other funds of MSEA) and all MSEA
Purchase Costs for a Payment Period which are included in Operator's Share of
Construction Costs for such Payment Period shall be paid by MSEA with Allocated
Operator Funds promptly after the disbursement thereof by Beneficiary to MSEA
for payment by MSEA.
(b) Conditions and Limitations. Operator shall have no
obligation to pay any amounts to Contractor under the Construction Contract
except Operator's Share of Construction Costs (and in no event more than
Operator's Maximum Share of Construction Costs).
Any and all payments to be made under the Construction Contract
except Operator's Share of Construction Costs shall be made by MSEA. The
failure of MSEA or Operator to perform their respective obligations under this
Agreement within the time periods herein allowed shall constitute a default
under this Agreement and under the Arena Contract.
If a Particular Suspension Event shall occur, then while such
Particular Suspension Event shall be continuing, operator may deliver a written
notice (a "Suspension Notice") to MSEA (and shall send a copy to Contractor at
the same time), advising MSEA of the election of Operator to suspend Operator's
obligation to pay Operator's Share of Construction Costs under this Agreement.
Effective as of the date of receipt by MSEA (as established under Section 6(a)
below) of a Suspension Notice (a "Suspension Commencement Date"), the following
provisions shall apply:
(i) Operator, for the period hereinafter
established (a "Suspension Period"), and subject to the further provisions of
this Section 2(b), shall have no obligation under this Agreement or the Arena
Contract to pay Operator's Share of Construction Costs that may become due and
payable to Contractor under the Construction Contract; provided, however, that
such cessation of such obligation of Operator under this Agreement and the
Arena Contract shall not affect or limit the obligation of Operator to
Contractor to pay, or the rights of Contractor to be paid, Operator's Share of
Construction Costs in accordance with and subject to the provisions of the
Construction Contract (including, without limitation, the provisions of the
Construction Contract providing for time periods and the right of termination
granted to Contractor); if the Approved Request for Payment for the Current
Payment Period (for or including Operator's Share of Construction Costs) has
been delivered to Beneficiary prior to a Suspension Commencement Date, then the
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onset of the related Suspension Period shall not halt the process of
Beneficiary presenting a Draft to TCB, or drafting on any Substitute Letter(s)
of Credit that then may be held by Beneficiary, nor the disbursing of Operator
Funds (whether proceeds of a Draft to TCB or Section 3(a)(iii) Proceeds) in
payment of Operator's Share of Construction Costs for such Current Payment
Period as stated in such Approved Request for Payment; however, during such
Suspension Period (subject to the further provisions of this Section 2(b)) no
further Notices to Draft shall be submitted to Beneficiary, other than the
Section 3(a)(iii) Notice to Draft, if applicable.
(ii) (A) Subject to the further provisions of
this Subsection 2(b)(ii), each Suspension Period shall commence on the
Suspension Commencement Date for such Suspension Period and shall end on the
earliest to occur of the following:
(1) the cure, remedy or removal
of the Particular Suspension Event identified in the Suspension Notice for such
Suspension Period (upon which cure, remedy or removal, such Particular
Suspension Event shall cease to exist);
(2) the date on which MSEA
receives a Termination Notice (as defined below) from Operator (as such date is
established under Section 6(a) below); or
(3) that date which is 250 days
after the later to occur of a. the Suspension Commencement Date for such
Suspension Period or b. the first date after the Suspension Commencement Date
for such Suspension Period on which Operator does not pay Operator's Share of
Construction Costs when it would have been due under the terms of this
Agreement if Operator's obligation to make such payment had not been suspended.
(B) Notwithstanding the generality of
Subsection 2(b)(ii)(A), the following provisions shall apply in the instances
therein provided:
(1) if a Particular Suspension
Event occurs because of a material, adverse change in the status or consequence
of another Particular Suspension Event already existing (contemplated above in
the definition of "Particular Suspension Event"), such new Particular
Suspension Event shall have a Suspension Period measured as follows:
a. if prior to the
occurrence of such material, adverse change, MSEA has delivered a Payment
Assurance to Operator, then the Suspension Period for
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such new Particular Suspension Event shall commence on the Suspension
Commencement Date therefor and shall extend for that period which is the longer
of the balance of the Suspension Period for such existing Particular Suspension
Event (which underwent such change) as established under Subsection 2(b)(ii)(A)
above, or 45 days;
b. otherwise, the Suspension Period
for such new Particular Suspension Event shall commence on the Suspension
Commencement Date therefor and extend for the period established under
Subsection 2(b)(ii)(A) above.
(2) If a Particular Suspension
Event takes the form of the existence of an Aggregate Uncovered Project Cost
Overrun Amount which constitutes a Significant Event or Terminating Event (as
the case may be), then the Suspension Period for such Particular Suspension
Event shall commence on the Suspension Commencement Date therefor and shall end
(if not sooner terminated under Subsection 2(b)(ii)(A) above) 60 days
thereafter.
(iii) During a Suspension Period, the rights of
Operator under this Agreement, the Arena Contract, the Land Lease Agreement and
(subject to the proviso set forth in Subsection 2(b)(i) above) the Construction
Contract, and the obligations of Operator under this Agreement and the Arena
Contract (other than the obligation to pay Operator's Share of Construction
Costs, as and to the extent such obligation shall be suspended during such
Suspension Period) and the Construction Contracts shall continue uninterrupted
and unabated.
(iv) Operator shall have the continuing right
during a Suspension Period to pay all or any portion of Operator's Share of
Construction Costs for any or all Payment Periods (whether or not successive)
during such Suspension Period, and the election to do so shall never operate or
be construed to reinstate during such Suspension Period Operator's obligation
to pay Operator's Share of Construction Costs.
(v) If a Suspension Period exists which did not
occur as the result of any of the following ("Default Events"):
(A) an "Owner Default" (as such quoted
term is defined in the Arena Contract) under the Arena Contract if such Owner
Default occurs as the result of the action or inaction of the "Owner" (as such
quoted term is defined in the Arena Contract);
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(B) a "City Default" or an
"Authority Default" (as such quoted terms are defined in the Land Lease
Agreement) under the Land Lease Agreement if such City Default or Authority
Default occurs as the result of the action or inaction of the "City" or the
"Authority" (as such quoted term is defined in the Land Lease Agreement); or
(C) a default by MSEA under the
terms of this Agreement; (as properly established by the description of the
relevant facts of the Particular Suspension Event contained in the Suspension
Notice for such Suspension Period), then at any time during such Suspension
Period (and on the condition that no other Suspension Period then exists which
has occurred as the result of a Default Event), MSEA may arrange to tender a
Payment Assurance to Operator; if such Payment Assurance satisfies the
requirements therefor set forth in the definition for "Payment Assurance" in
this Agreement, then Operator again shall become obligated (unless and until
another Particular Suspension Event thereafter shall occur) to pay as provided
below that additional amount of Operator's Share of Construction Costs which
equals, in the aggregate, the stated dollar amount of such Payment Assurance
(but in no event more than that aggregate additional amount of Operator's Share
of Construction Costs which, when added to the aggregate of all of Operator's
Share of Construction Costs previously paid by or for the account of Operator
(including any amounts paid during any Suspension Period), equals Operator's
Maximum Share of Construction Costs); if, at the time a Payment Assurance
conforming to the requirements of this Agreement is delivered to Operator,
there then are payments of Operator's Share of Construction Costs for prior
Payment Periods which have not been paid, then subject to the express
limitations in this Subsection 2(b)(v), Operator shall promptly cause
Operator's Share of Construction Costs for such prior Payment Periods to be
paid to Contractor, and if MSEA shall have paid any portion(s) of Operator's
Share of Construction Costs during such Suspension Period, then if MSEA so
elects, Operator shall promptly pay to MSEA (without interest) an amount equal
to Operator's Share of Construction Costs so paid by MSEA (and Operator, MSEA
and Contractor shall jointly issue to Beneficiary appropriate written
directions, or enter into with Beneficiary an appropriate amendment to this
Agreement, to cause Beneficiary to send the appropriate Draft(s) to TCB, or to
draft on any Substitute Letter(s) of Credit that then may be held by
Beneficiary, and to disburse such operator Funds (whether proceeds of a Draft
or Section 3(a)(iii) Proceeds) to pay, such payments of Operator's Share of
Construction Costs, to Contractor or MSEA, as applicable, in accordance with
this Subsection); and thereafter Operator shall pay Operator's Share of
Construction Costs for
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<PAGE> 165
each Payment Period (as applicable) in accordance with the terms of this
Agreement (but subject to the limitations stated in this Subsection 2(b)(v).
(vi) Delivery by MSEA of a Payment
Assurance during a Suspension Period shall not constitute a cure, remedy or
removal of the Particular Suspension Event which caused such Particular
Suspension Period, or terminate or stay the running of such Suspension Period,
or prevent or negate the occurrence of other Particular Suspension Events; and
if another Particular Suspension Event should occur following the delivery by
MSEA of a Payment Assurance, and such further Particular Suspension Event is a
Default Event, then upon Operator delivering a Suspension Notice to MSEA
regarding such further Particular Suspension Event, Operator, notwithstanding
the Payment Assurance, shall have no further obligation to pay Operator's Share
of Construction Costs during the Suspension Period for such further Particular
Suspension Event, and all of the provisions of this Section 2(b) shall apply to
such further (and all other) Suspension Period(s).
(vii) At such time as a Suspension Period
shall terminate other than by reason of an election by Operator to terminate
its obligations under this Agreement (and if there then exist no other
Suspension Periods which have not terminated), Operator again shall be
obligated to pay Operator"s Share of Construction Costs, and if there then are
payments of Operator's Share of Construction Costs for prior Payment Periods
which have not been paid, then Operator shall promptly cause Operator's Share
of Construction Costs for such prior Payment Periods to be paid to Contractor,
and if MSEA shall have paid any portion (s) of Operator's Share of Construction
Costs during such Suspension Period, then if MSEA so elects, Operator shall
promptly pay to MSEA (without interest) an amount equal to Operator's Share of
Construction Costs so paid by MSEA (and Operator, MSEA and Contractor shall
jointly issue to Beneficiary appropriate written directions, or enter with
Beneficiary an appropriate amendment to this Agreement, to cause Beneficiary to
send the appropriate Draft(s) to TCB, or to draw on any Substitute Letter(s) of
Credit that then may be held by Beneficiary, to disburse Operator Funds
(whether proceeds of a Draft or Section 3(a)(iii) Proceeds) to pay Operator's
Share of Construction Costs to Contractor or MSEA, as applicable, in accordance
with this Subsection (but in no event shall the aggregate additional amount of
Operator's Share of Construction Costs paid upon and after the termination of a
Suspension Period, provided for in this Subsection 2(b)(vii), exceed that
amount which, when added to the aggregate of all of Operator's Share of
Construction Costs previously paid by or for the account of Operator (including
any amounts paid during Suspension Periods, equals Operator's Maximum Share of
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Construction Costs) ; also, upon the termination of a Suspension Period, the
particular Suspension Event which was the cause of such Suspension Period (as
established by the description of such Particular Suspension Event in the
Suspension Notice for such Suspension Period), shall be deemed waived by
Operator and such Particular Suspension Event shall no longer be a Suspension
Event.
Notwithstanding the foregoing provisions of this Section 2(b) which
may be to the contrary, but subject to the following provisions of this Section
2(b) upon any date after the occurrence of a Terminating Event (and on the
condition that such Terminating Event has not been deemed waived under
Subsection 2(b)(vii) or the following provisions of this Subsection 2(b), and
has not been cured, remedied or removed) and without regard to whether a
Suspension Period then exists or whether a Payment Assurance has previously
been delivered to Operator, Operator may send a written notice (a "Termination
Notice") to MSEA and Contractor, and in such event Operator's obligations under
this Agreement (including Operator's obligations to pay Operator's Share of
Construction Costs) shall terminate, effective as of the date of delivery of
the Termination Notice (as established under Section 6(a) below), but Operator
shall be obligated to pay Contractor all amounts payable by Operator to
Contractor for Operator's Share of Construction Costs under the terms of the
Construction Contract for work performed to such date and as a result of a
termination of the Construction Contract. If such termination is a Special
Termination then the provisions of Section 2(d) below shall control; if such
termination is not a Special Terminating then such termination also shall be
deemed an election by Operator to pursue the remedies available to Operator
under the Arena Contract upon an Owner Default and if Operator elects the
remedy of terminating the Arena Contract, the amount of the Termination Fee
payable to Operator thereunder shall be $7,121,000 minus the amount of the
credit then applicable under the provisions of the final grammatical paragraph
of Section 5(h) of this Agreement (describing the manner of calculation of such
credit). Any Significant Event or Terminating Event other than a Default Event
which is in existence on the Shared Payment Commencement Date and previously
has been known to Operator shall, as of the Shared Payment Commencement Date,
be deemed to have been waived by Operator and thereafter such Significant
Event(s) shall no longer be a Significant Event and shall not by passage of
time become a Terminating Event, and such Terminating Event(s) shall no longer
be a Terminating Event (but such waiver shall not be construed to be a waiver
of any future repetition of such waived Significant Event or Terminating Event
or any future occurrence of a Significant Event or Terminating Event of a
similar nature.
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(c) Project Cost Overruns. If at any time either
Operator, MSEA or Contractor shall determine that a Project Cost Overrun
exists, then each agrees to promptly notify the others thereof, which notice
shall be in writing and shall include such information concerning the reason
for such Project Cost Overrun and the magnitude of the resultant Project Cost
Overrun Amount as then reasonably shall be available.
Within 25 days (a "Determination Period") following MSEA determining
or being advised by Operator or Contractor that a Project Cost Overrun exists
in sufficient amount, MSEA shall determine whether MSEA has Additional MSEA
Funds that then are or thereafter shall become available to MSEA in such amount
as shall permit MSEA to pay such Project Cost Overrun Amount when due. If MSEA
determines that no Additional MSEA Funds then do or thereafter shall exist in
sufficient amount, MSEA shall advise Operator of this determination within such
Determination Period. If MSEA determines that such Additional MSEA Funds then
do or thereafter shall exist, then MSEA shall arrange for the preparation and
delivery to Operator, within the Determination Period, of the Coverage
Assurances for the Project Cost Overrun Amount of such Project Cost Overrun.
If MSEA shall fail or refuse within a Determination Period either to
make a determination, with respect to a Project Cost Overrun, as to whether
Additional MSEA Funds then do or thereafter shall exist in sufficient amount,
or to deliver Coverage Assurances to Operator, then in either such Event, at
the end of such Determination Period, such Project Cost Overrun shall be deemed
and thereafter shall be an Uncovered Project Cost Overrun (and the Project Cost
Overrun Amount for such Project Cost Overrun shall be deemed and thereafter
shall be an Uncovered Project Cost Overrun Amount) for all purposes of this
Agreement. Upon receipt and approval by Operator of Coverage Assurances for
the Project Cost Overrun Amount of a particular Project Cost Overrun, such
Project Cost Overrun shall be deemed and thereafter shall be Covered Project
Cost Overrun (and such Project Cost Overrun Amount shall be deemed and
thereafter shall be a Covered Project Cost Overrun Amount).
If after delivery of Coverage Assurances approved by Operator
relative to a particular Project Cost Overrun, MSEA or the Financial
Professional shall determine (at the instance of either MSEA or Operator), and
state in writing, that for any reason the Coverage Assurances relative to such
Project Cost Overrun are no longer valid, and MSEA shall fail to provide
further Coverage Assurances for such Project Cost Overrun within 15 days after
notice of such statement of invalidity of the prior Coverage Assurances, then
such Project Cost Overrun shall be deemed and thereafter shall be an
Uncovered Project Cost Overrun
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(and the Project Cost Overrun Amount of such Project Cost Overrun shall be
deemed and thereafter shall be an Uncovered Project Cost Overrun Amount) for
the purpose of this Agreement. If a Project Cost Overrun is an Uncovered
Project Cost Overrun under the terms of this Agreement, and MSEA and the
Financial Professional thereafter deliver to Operator Coverage Assurances for
the Uncovered Project Cost Overrun Amount for such Uncovered Project Cost
Overrun in accordance with the terms of this Agreement, then upon approval
thereof by Operator such Uncovered Project Cost Overrun shall be deemed and
thereafter shall be a Covered Cost Overrun (and the Project Cost Overrun Amount
of such Project Cost Overrun shall be deemed and thereafter shall be a Covered
Project Cost Overrun Amount) for the purposes of this Agreement.
(d) Special Termination Provisions.
(i) MSEA and Operator agrees, notwithstanding any
other provision of this Agreement or the Arena Contract which may be to the
contrary, that if (Y) Operator shall elect, pursuant to Section 2(b) above, to
terminate its obligations under this Agreement and (Z) there then is no Default
Event in existence (a "Special Termination"), then in such event, on that
date (the "Special Termination Date") which is the tenth (10th) business day
after the effective date (as established pursuant to Section 6(a) below) of
Operator's notice of its election to terminate its obligations under this
Agreement as a Special Termination:
(A) MSEA shall join with Operator to
deliver to Beneficiary written authorization and direction to take the
actions set forth in Subsections 5(h)(ii) through (iv) of this Agreement;
(B) MSEA shall pay to Operator,
in immediately available funds, that amount (the "Special Termination Amount")
which is the sum of (without duplication):
(1) all Project Costs paid by or
for the account of Operator, and any payments by or for the account of
operator to pay Project Costs, the payment of which was the obligation of MSEA
under the Arena Contract or the Land Lease Agreement; and
(2) the portion and amount of the
Development Fee provided for under the Arena Contract which is attributable to
the current period in which the Special Termination Date occurs, prorated and
adjusted to the Special Termination Date, and any past due payments of
Development Fee attributable to prior periods;
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(C) MESA shall either pay to
Contractor, or provide to Contractor assurance (which assurance must be of a
character and evidenced in a manner which are reasonably satisfactory to
Contractor) of the payment to Contractor when due and payable of that portion
of the Contract Sum (as defined in the Construction Contract) attributable to
work performed as of the Special Termination Date (including the Contractor's
Costs, Contractor's Fee and retainage that as of such date have not been paid
to Contractor for such portion of the work), plus any amounts to be paid under
the Construction Contract for Construction Costs during any Suspension Period
or for any demobilization and upon payment of or the providing of such
assurance of the payment of such amount, Operator shall automatically be
released of and from any obligation to pay Operator's share of Construction
Costs, or any other sums, hereunder and under the Construction Contract, and
MSEA shall arrange to have Contractor deliver to Operator, and Contractor agrees
to issue and deliver to Operator, on and as a condition to the occurrence of
the Special Termination Date, a written stipulation and release, in recordable
form and otherwise in form reasonably satisfactory to Operator, stipulating
that all of Operator's obligations to Contractor have been and are discharged,
and that Operator is released from and shall have no further obligation
whatsoever to Contractor, or those claiming by, through or under Contractor,
under the terms of the Construction Contract or this Agreement or in any other
regard whatsoever;
(D) MSEA shall agree in writing,
in form reasonably satisfactory to Operator, to assume and agree to discharge,
and to indemnify, defend and hold Operator harmless from, any Claims (as
defined below) against Operator solely for Project Costs incurred under the
Arena Contract (for the purposes hereof, "Claims" shall mean any claim, suit,
action or proceeding, to collect or secure the collection of money or property
from Operator to pay Project Costs incurred under the Arena Contract, any
interest thereon, and any costs associated therewith, including, without
limitation, attorney's fees and costs of court).
(ii) Upon payment and performance by MSEA
of its obligations set forth in paragraphs (A) through (D) of Subsection
2(d)(1) (including, without limitation, the payment of the Special Termination
Amount and any interest accrued thereon as provided below), and the completion
by Beneficiary of all of the actions set forth in Subsections 5(h)(ii) through
(iv), then on and effective as of the Special Termination Date:
(A) the Arena Contract shall
terminate, and neither MSEA nor Operator shall have any further rights or
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obligations thereunder (and specifically but without limitation, Operator shall
have no right to be paid or to receive the Termination Fee provided for in the
Arena Contract), and upon MSEA's request Operator shall deliver a written
release, in form reasonably satisfactory to MSEA, confirming the termination of
the Arena Contract and Operator's rights thereunder; and
(B) the Arena Management Agreement
between Decoma Venture and Facility Management and Marketing, the Development
Management Services Agreement between Decoma Venture and Barker Interests
Limited and the Food, Beverage and Merchandise Services Agreement between
Operator and Harry M. Stevens, Inc., each shall terminate, and MSEA shall have
no obligation to any of the respective parties thereto.
(iii) The effective date of Operator's termination
of its obligations under this Agreement shall be the date established under
Section 2(b) above, notwithstanding that the Special Termination Date will be
on a date after such effective date. Further, if MSEA does not pay and perform
all of its obligations to be paid and performed by MSEA pursuant to this
Section 2(d), on the date scheduled under this Section 2(d) as the Special
Termination Date, then the Special Termination Date shall not occur, and shall
be delayed, until MSEA has paid and performed fully and finally all of such
obligations, and until the Special Termination Date shall occur (whether or not
delayed).
(iv) If for any reason MSEA does not pay the
Special Termination Amount to Operator on the scheduled Special Termination
Date as established in Subsection 2(d)(i) above, then the Special Termination
Amount shall continue to be immediately due and payable and interest shall
accrue on the Special Termination Amount (or so much thereof as shall remain
unpaid), at that per annum rate which is the lesser of (A) the rate of interest
per annum established from time to time by Citibank, N.A. and designated as its
prime rate, plus two percent (2%), or (B) the maximum per annum rate of
interest which is not prohibited under applicable law, from such scheduled
Special Termination Date until the date on which the Special Termination Amount
is fully and finally paid.
(v) Upon the termination of the Arena Contract
pursuant to this Section 2(d), Operator shall be entitled to retain all
payments of Development Fee, reimbursements and any other payments previously
paid to Operator under the Arena Contract or the Pre-Development Agreement (as
defined in the Arena Contract).
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(vi) This Section 2(d) shall apply only to
a Special Termination. Termination by Operator of its obligations under this
Agreement while a Default Event exists shall not be a Special Termination and
shall not be governed by this Section 2(d).
(e) Budget and Cash Flow Analysis; Completion Amount.
(i) Not later than 45 days prior to the
end of the Payment Period in which Construction Costs are reasonably
anticipated by Operator to total when added to the aggregate of the
Construction Costs for all prior Payment Periods, an amount equal to the sum of
the First Conversion Amount and the Second Conversion Amount, MSEA, shall
deliver to Operator and Contractor an analysis of the Project Budget and a cash
flow analysis showing, as of the most recent date which is practicable, the
Project Costs incurred and paid to date, the Project Costs necessary to be
incurred and paid thereafter in order to complete, equip and furnish, and
commence operation of the Arena as contemplated in the Arena Contract and the
Construction Contract, the presence (if any) and magnitude of Project Cost
Overruns and Contingent Costs which then are known or can reasonably be
anticipated, and the presence (if any), magnitude and probable dates of
occurrence of instances which are known or can reasonably be anticipated in
which MSEA will not have sufficient funds, taking into account all available
MSEA sources, to pay when due Project Costs (including Contingent Costs but
excluding Operator's Share of Construction Costs) (a "Funding Shortfall").
Such analyses shall contain such supporting information and otherwise shall be
in such form and substance as shall be reasonably satisfactory to Operator, and
shall be accompanied by a Financial Professional's Report thereon.
(ii) Not earlier than 20 days nor later
than 10 days prior to the end of the Payment Period in which Construction Costs
are reasonably anticipated by Operator to total, when added to the aggregate of
the Construction Costs for all prior Payment Periods, an amount equal to the
sum of the First Conversion Amount and the Second Conversion Amount, MSEA shall
deliver to Operator, a written certificate, signed by MSEA'S Representative,
addressed to Operator, certifying, in form and substance reasonably satisfactory
to Operator, as of the date of such certificate, (A) the Uncovered Project Cost
Overruns then known or reasonably anticipated to occur, (B) the Aggregate
Uncovered Project Cost Overrun Amount for such Uncovered Project Cost Overruns,
as established by change order or other means having the effect of fixing such
cost or, if such cost cannot be fixed, as established by the best estimates
then available after due diligence, (C) a forecast of the Project Costs
necessary to complete, equip and furnish, and commence operation of the Arena
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as contemplated by the Arena Contract and the Construction Contract, and the
take-down schedule for same, (D) a forecast of the magnitude and probable dates
of occurrence of any instances of a Funding Shortfall and (E) a calculation and
stipulation of the Uncovered Completion Amount; such certificate of MSEA shall
be accompanied by a Financial Professional's Report thereon.
(iii) If such certificate from MSEA and
accompanying Financial Professional's Report satisfy the requirements therefor
(including being reasonably satisfactory to Operator) contained in this
Agreement and stipulate an Uncovered Completion Amount of more that $750,000,
then the existence of such Uncovered Completion Amount shall give Operator the
right to terminate its obligations under this Agreement and shall be a
"Terminating Event" for all purposes of this Agreement. To exercise such
right, Operator must deliver notice of such exercise to MSEA not later than
thirty (30) days after the later to occur of the Second Funding Conversion Date
or the date on which MSEA delivers to Operator the Certificate and Financial
Professional's Report thereon in compliance with the terms of Subsection
2(e)(ii) above.
If Operator delivers such notice within such 30-day period, then
Operator's obligations under this Agreement shall terminate on the date MSEA
receives such notice (as established under Section 6(a) below), but Operator
shall be obligated to pay Contractor all amounts payable by Operator to
Contractor for Operator's Share of Construction Costs under the terms of the
Construction Contract for work performed to such date and as a result of a
termination of the Construction Contract.
(iv) If Operator does not deliver such notice of
termination within such 30 day period, then Operator shall be deemed to have
waived Operator's right to terminate its obligations under this Agreement by
reason of the Uncovered Completion Amount being more than $750,000, and the
amount of the Uncovered Completion Amount stipulated in such certificate from
MSEA shall be the "Maximum Uncovered Completion Amount" for the purposes of
this Agreement. If the Uncovered Completion Amount stipulated in such
certificate from MSEA shall be not more than $750,000, then Operator shall have
no right to terminate its obligations under this Agreement as a result of the
existence of such Uncovered Completion Amount, and $750,000 (rather than such
stipulated amount of Uncovered Completion Amount) shall be the "Maximum
Uncovered Completion Amount" for the purposes of this Agreement.
(v) If after the Shared Payment Commencement Date
the Uncovered Completion Amount shall increase to an amount which is greater
than the Maximum Uncovered Completion Amount,
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then the existence of such excess shall constitute a Terminating Event for all
purposes of this Agreement.
(vi) If Operator elects to terminate this
Agreement pursuant to a right to do so granted in this Subsection 2(e), then
such termination shall be a Special Termination, and the provisions of
Subsection 2(d) shall control; if a Default Event exists on the effective date
of such notice, then such termination shall not be a Special Termination, and
such termination also shall be deemed an election by Operator to pursue the
remedies available to Operator under the Arena Contract upon an Owner Default
(as defined in the Arena Contract) and if Operator elects the remedy of
terminating the Arena Contract, the amount of the Termination Fee payable to
Operator thereunder shall be $7,121,000 minus the amount of the credit then
applicable under the provisions of the final grammatical paragraph of
Subsection 5(h) of this Agreement.
(vii) Effective upon Operator's Maximum Share of
Construction Costs being paid to Contractor, MSEA covenants to seek financial
assistance to provide Coverage Assurances to cover Uncovered Project Cost
Overruns or the Uncovered Completion Amount from appropriate governmental
entities, with the assistance and cooperation of Operator with the limitation
that the sole assistance to be sought by MSEA shall not, in any event, allow
Operator's financial interests under the Arena Contract to be diluted or
diminished. However, this covenant shall terminate upon the event that
Operator has sent a Termination Notice to MSEA, and Operator further covenants
that no legal action shall be instituted or brought by Operator which attempts
to seek damages for failure to enforce this covenant of MSEA once Operator
elects to send a Termination Notice to MSEA.
(xi) The analyses and certificates by MSEA and the
Financial Professional's Report related thereto which are delivered to Operator
under this Section 2(e) shall be updated and verified at such intervals (but
not after the Final Funding Conversion Date or more frequently than monthly)
as Operator shall reasonably request.
3. Drafts Against the Letter of Credit.
(a) Submission of Notices to Draft to Beneficiary. A
Notice to Draft shall be submitted to Beneficiary only in the following
circumstances:
(i) to authorize and direct Beneficiary to Draft on
the Letter of Credit for payment of Operator's Share of Construction Costs as
established and authorized pursuant to this Agreement, with the proceeds of
such Draft(s)) (the "Section
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3(a)(i) Proceeds") to be applied in payment of Operator's Share of Construction
Costs pursuant to Section 5(c) of this Agreement; and
(ii) upon completion of all work under the
Construction Contract and payment to Contractor of the amounts to be paid to
Contractor pursuant to Article IX of the Construction Contract, to authorize
and direct Beneficiary to Draft on the Letter of Credit for the balance, if
any, of the Letter of Credit, with the proceeds of such Draft (the "Section
3(a)(ii) Proceeds") to be held and disbursed pursuant to Section 5(c) of this
Agreement; and
(iii) if by the Final Two Weeks (A) the entire
stated amount of the Letter of Credit has not been drawn down and (B) a
substitute or amended letter of credit has not been delivered to Beneficiary
identical to the Letter of Credit then held by Beneficiary except with an
expiration date at least six (6) months later than the expiration date of the
Letter of Credit then held by Beneficiary and a stated amount equal to the
current balance of the Letter of Credit then held by Beneficiary, then within
the Final Two Weeks to authorize and direct Beneficiary to Draft on the Letter
of Credit for the balance of the Letter of Credit, with the proceeds of such
Draft (the "Section 3(a)(iii) Proceeds") to be held and disbursed pursuant to
Section 5(c) of this Agreement.
Whether or not Beneficiary receives a Section 3(a)(iii) Notice to Draft during
the Final Two Weeks, nevertheless if a substitute or amended Letter of Credit
meeting the requirements of Section 3(a)(iii) has not been delivered to
Beneficiary as contemplated in Section 3(a)(iii), then Beneficiary is
authorized and directed to Draft on the Letter of Credit, during the Final Two
Weeks, for the balance of the Letter of Credit, with the Section 3(a)(iii)
Proceeds to be held and disbursed pursuant to Section 5(c) of this Agreement.
(b) Substitute Letters of Credit. If Beneficiary
shall hold Section 3(a)(iii) Proceeds in escrow pursuant to this Agreement,
then at any time while Beneficiary continues to hold any portion of the Section
3(a)(iii) Proceeds, and subject to the further provisions of this Section 3(b),
an Account Party shall be entitled to deliver a Substitute Letter of Credit to
Beneficiary. The right of an Account Party to deliver a Substitute Letter of
Credit to Beneficiary shall be governed by the following provisions:
(i) Harry M. Stevens, Inc. shall have the right
to deposit with Beneficiary a Substitute Letter of Credit the stated amount of
which does not exceed the lesser of (A) the
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amount of Section 3(a)(iii) Proceeds received by Beneficiary from the Draft on
the Letter of Credit presented in response to the Section 3(a)(iii) Notice to
Draft or pursuant to the final grammatical paragraph of Section 3(a), or (B)
$4,000,000; and
(ii) if on any date the amount of the Section
3(a)(iii) Proceeds then held in escrow by Beneficiary is greater than
$4,000,000 (but not otherwise), then each of the Account Parties other than
Harry M. Stevens, Inc. (but without negating or limiting the right of Harry M.
Stevens, Inc. to deposit a Substitute Letter of Credit with Beneficiary as
permitted above) shall have the right to deposit a Substitute Letter of Credit,
the stated amount of which is no greater than such Account Party's Dollar
Share.
Concurrently with the receipt by Beneficiary in accordance with the
terms of this Agreement of a Substitute Letter of Credit for the account of an
Account Party, Beneficiary shall be authorized and directed to deliver to such
Account Party, out of the Section 3(a)(iii) Proceeds then held in escrow by
Beneficiary, a cash sum (but in no Event greater than the amount of Section
3(a)(iii) Proceeds then held in escrow by Beneficiary) equal to the stated
amount of such Substitute Letter of Credit. Following the disbursement of
Section 3(a)(iii) Proceeds to an Account Party in exchange for a Substitute
Letter of Credit for the account of such Account Party, Beneficiary shall hold
the Substitute Letter of Credit in escrow under the same terms as are provided
herein with respect to Section 3(a)(iii) Proceeds held in escrow by Beneficiary
and the term "Section 3(a)(iii) Proceeds" as used in this Agreement shall
include the amount available from time to time to be drawn under the Substitute
Letter(s) of Credit held by Beneficiary and also shall include any proceeds
received by Beneficiary upon drawing on Substitute Letter(s) of Credit in
accordance with the further provisions of this Agreement, until disbursed by
Beneficiary in accordance with the terms of this Agreement.
If by the final two weeks prior to the stated expiration date of any
Substitute Letter of Credit held by Beneficiary, (1) the entire face amount of
such Substitute Letter of Credit has not been drawn, and (2) a replacement or
substitute for such Substitute Letter of Credit has not been delivered to
Beneficiary identical to the Substitute Letter of Credit then held by
Beneficiary except with an expiration date at least six months later than the
expiration date of the Substitute Letter of Credit then held by Beneficiary and
a stated amount equal to the undrawn balance of the Substitute Letter of Credit
then held by Beneficiary, then Beneficiary is authorized and directed, within
such final two week period, to draw on the Substitute Letter Credit then held
by Beneficiary for the entire balance then
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available thereunder, with the proceeds of such drawing to become a part. of the
Section 3(a)(iii) Proceeds to be held and disbursed in accordance with the
terms of this Agreement.
Operator warrants to Contract MSEA and Beneficiary that any
Substitute Letter of Credit delivered to Beneficiary by an Account Party in
accordance with this Agreement will be genuine, will be duly issued by the
Permitted Substitute LOC Issuer issuing same to and for the benefit of
Beneficiary, and will be valid and enforceable in accordance with its terms
(subject to laws of general application relating to or affecting the
enforcement of creditor's rights).
4. Funding of Construction Costs and Contingent Costs. Payments
to be made to Contractor under the Construction Contract and payments of
Contingent Costs shall be documented and funded in accordance with the
following procedures (as applicable).
(a) Procedure for Requests for PayMent.
(i) Contractor shall submit Requests for
Payment to Operator, MSEA's Representative and Architect in accordance with the
terms of the Construction Contract.
(ii) Operator and MSEA's Representative
shall have five (5) working days following receipt of a Request for Payment in
which to expressly approve or disapprove such Request for Payment.
(iii) For the purpose of the Construction
Contract and this Agreement [(but subject to the further provisions of this
Section 4(a)]:
(A) If any portion of a given
Request for Payment is for MSEA's Share of Construction Costs, then such
Request for Payment shall be disapproved if Architect shall not issue a
Certificate for Payment therefor or either Operator's Representative or MSEA's
Representative shall disapprove such Request for Payment, and such Request for
Payment shall be approved if the Architect shall issue a Certificate for
Payment therefor and both Operator's Representative and MSEA's Representative
shall approve such Request for Payment; and
(B) if a given Request for
Payment is entirely for Operator's Share of Construction Costs then such
Request for Payment shall be disapproved if Architect shall not issue a
Certificate for Payment therefor or if MSEA's Representative shall disapprove
such Request for Payment, and shall be approved if Architect issues a
Certificate for Payment therefor and MSEA's Representative approves such
Request for Payment;
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<PAGE> 177
(C) approval by Operator's
Representative of a Request for Payment for Operator's Share of Construction
Costs shall not be required if all Continuing Funding Conditions are satisfied
on the date MSEA's Representative approves such Request for Payment (although
Operator's Representative, if he so elects, may approve such Request for
Payment); however, if any Continuing Funding Condition is not satisfied on the
date MSEA's Representative approves any Request for Payment for Operator's
Share of Construction Costs, then for such Request for Payment to be deemed an
Approved Request for Payment under and for the purposes of this Agreement
(assuming the other requirements for an "Approved Request for Payment" set
forth in this Agreement are satisfied), such Request for Payment also must be
approved in writing by Operator's Representative.
(iv) If a Request for Payment is not
specifically approved or disapproved in accordance with the foregoing procedure
within such five (5) working day period, then for the purposes of the
Construction Contract, such Request for Payment shall be deemed approved by
Operator and MSEA's Representative.
(v) In any instance in which the
Contractor submits a Request for Payment, such Request for Payment under and
subject to certain provisions of the Construction Contract, may be approved in
part (rather than in the entirety) by Architect, Operator and MSEA. Thus, in
this Agreement provision for (or references to) the approval of Requests for
Payment (or the issuance of Certificates for Payment thereof shall not operate
or be construed to negate or limit the right of MSEA, Operator and Architect to
approve and certify, respectively, a portion of a Request for Payment in
accordance with the Construction Contract, and shall mean and refer to Requests
for Payment so approved and certified in whole or in part. Further, it is
acknowledged that approval (express or deemed) of a Request for Payment in
accordance with the Construction Contract and this Section 4(a) does not
satisfy all of the requirements contained in this Agreement for an "Approved
Request for Payment" and a Request for Payment approved under the Construction
Contract and this Section 4(a) shall become an "Approved Request for Payment"
only upon satisfaction of such other requirements set forth in this Agreement.
(b) Procedure for Payment of MSEA's Share of Construction
Costs and MSEA Purchase Costs. MSEA shall pay or cause to be paid 100% of
MSEA's Share of Construction Costs stated in the Approved Request for
Payment for each Payment Period and shall make such payments within ten (10)
business days after delivery to Operator's Representative and MSEA's
Representative of each Request for Payment for MSEA's Share of Construction
Costs.
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MSEA shall pay all Contingent Costs that are not Construction Costs as
Project Costs in accordance with the terms of the Arena Contract.
Payment of MSEA's Purchase Costs shall be made by delivery to
Contractor of checks drawn on the Construction GMAX Account payable to each of
the parties designated in the Approved Request for Payment in the amounts set
forth adjacent to each such party's name. All other amounts stated in an
Approved Request for Payment that are payable by MSEA shall be paid directly to
Contractor.
(c) Procedure for Payment of Operator"s Share of
Construction Costs. Contractor shall be entitled to submit Approved Requests
tor Payment to Beneficiary, to the extent of, and to effect payment of
Operator's Share of Construction Costs established (as to amount, timing and
other conditions) in accordance with this Agreement. Contractor, Operator and
MSEA agree that each Approved Request for Payment submitted to Beneficiary
shall state clearly the respective amounts for the Current Payment Period for
Construction Costs, MSEA's Share of Construction Costs (if under the terms of
this Agreement any Construction Costs for the Current Payment Period are
included in MSEA's Share of Construction Costs), Operator's Share of
Construction Costs (if under the terms of this Agreement any Construction Costs
for the Current Payment Period are included in Operator's Share of Construction
Costs), and MSEA Purchase Costs (in the respective portions thereof which under
the terms of this Agreement Are allocated to MSEA's Share of Construction Costs
for such Payment Period and/or Operator's Share of Construction Costs for such
Payment Period).
Payments of MSEA Purchase Costs which under the terms of this
Agreement are allocated to Operator's Share of Construction Costs shall be paid
in the following manner:
(i) Beneficiary shall transfer from the proceeds
of the related Draft, to the Construction GMAX Account, an amount equal to the
amount of MSEA Purchase Costs stated on the Approved Request for Payment for
such Payment Period (which funds thereupon shall be Allocated Operator Funds);
and
(ii) MSEA shall promptly disburse the Allocated
Operator Funds from the Construction GMAX Account to or at the direction of
Contractor in payment of such MSEA Purchase Costs in accordance with the terms
of this Agreement.
All Allocated Operator Funds disbursed by Beneficiary to MSEA pursuant
to the preceding sentence shall be specifically allocated to and deemed paid by
Operator as a part of Operator's Share of Construction Costs.
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(d) Notice to TCB. Operator (i) commencing with the first
Request for Payment covering a portion of Operator's Share of Construction
Costs, shall send TCB and each Account Party other than Operator, promptly
after the same is delivered to Operator, a true copy of each Contractor's
Request for Payment, and (ii) shall send to TCB and each Account Party other
than Operator, on the same day as the same is delivered to Beneficiary, a true
copy of the Section 3(a)(ii) Notice to Draft (if such Notice to Draft is ever
delivered to Beneficiary), in each such case by overnight delivery service for
delivery on the next business day, at the following address:
As to TCB: Texas Commerce Bank National Association
712 Main Street
Houston, Texas 77002
Attention: Manager Real Estate
As to such Account
Parties: At the respective addresses for the
Account Parties shown in the Reim-
bursement Agreement
Operator shall accompany such copy of the Contractor's Request for Payment or
the Section 3(a)(ii) Notice to Draft (as applicable) with a letter advising TCB
and such Account Parties that such Contractor's Request for Payment or the
Section 3(a)(ii) Notice to Draft (as applicable) constitutes the "Application"
contemplated by the Reimbursement Agreement. Transmittal by Operator to TCB or
the Account Parties of a copy of a Request for Payment and such letter shall
not establish Operator's Share of Construction Costs covered by such Request
for Payment (which shall be established only by an Approved Request for
Payment), but instead shall only be for the purpose of permitting Operator to
advise TCB and such Account Parties of the contents of such Request for
payment.
The provisions of this Section 4(d) shall have no effect whatsoever on
the rights or obligations of any of MSEA, Operator, Contractor or Beneficiary
under the terms of this Agreement, and no failure by Operator to comply with
the provisions of this Section 4(d) shall give MSEA, Contractor or Beneficiary
any rights of enforcement or relief or excuse any of them from performance of
their respective obligations hereunder.
5. Agreements Concerning Beneficiary, Drafts and Disbursement of
Proceeds or Drafts.
(a) Capacity and Authority of Beneficiary. Beneficiary
agrees to act in the capacity set forth in this Agreement, and to perform the
functions and take the actions set forth
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in this Agreement, all on and in accordance with the terms of this Agreement.
Operator, MSEA and Contractor each authorize and direct Beneficiary to act in
the capacity set forth in this Agreement and to perform and take each and every
of the functions and actions required of Beneficiary under the terms of this
Agreement.
(b) Presentation of Drafts to TCB. Each time Beneficiary
receives a Notice to Draft, and only at such times, Beneficiary is authorized
and directed to present a Draft to TCB, not later than the next business day
after receiving such Notice to Draft, in an amount equal to (as applicable) (i)
Operator's Share of Construction Costs stated in the Approved Request for
Payment for such Payment Period, in the case of a Section 3(a)(i) Notice to
Draft, or (ii) the entire undrawn portion of the Letter of Credit, if such
Notice to Draft is either the Section 3(a)ii) Notice to Draft or the Section
3(a)(iii) Notice to Draft.
(c) Disposition of Proceeds of Drafts. The funds
obtained by Beneficiary from TCB in payment of Drafts shall be held and
disbursed by Beneficiary as follows:
(i) in the case of a Section 3(a)(i) Notice to
Draft, the Section 3(a)(i) Proceeds shall be disbursed by Beneficiary as
contemplated in Section 4(c) hereof, to MSEA in the amount (if any) of MSEA
Purchase Costs stated in the Approved Request for Payment for such Payment
Period to be included within Operator's Share of Construction Costs and to
Contractor in the amount of Operator's Share of Construction Costs (other than
MSEA Purchase Costs) stated in the Approved Request for Payment for such
Payment Period, in each case not later than the next business day after receipt
of Section 3(a)(i) Proceeds by Beneficiary, or on such later date as Contractor
may designate by written notice to Beneficiary;
(ii) in the case of the Section 3(a)(ii) Notice to
Draft, the Section 3(a)(ii) Proceeds shall be held by Beneficiary, as escrow
agent for Operator and MSEA, and portions thereof disbursed by Beneficiary from
time to time only pursuant to the joint written direction of both Operator's
Representative and MSEA's Representative (or at the joint written direction of
both Operator's Representative and MSEA's Representative, Beneficiary shall
disburse such funds to another escrow agent designated by Operator and MSEA);
and
(iii) in the case of the Section 3(a)(iii) Notice
to Draft, the Section 3(a)(iii) Proceeds shall be held by Beneficiary, as
escrow agent for Operator and MSEA (or at the joint written direction of both
Operator's Representative and MSEA's Representative, Beneficiary shall disburse
such funds to another escrow agent designated by Operator and MSEA) and
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<PAGE> 181
(A) portions thereof disbursed from time to time
as contemplated by Section 4(c) hereof, to MSEA to be utilized to pay MSEA
Purchase Costs included in Operator's Share of Construction Costs (if any) and
to Contractor for payment of Operator's Share of Construction Costs (other than
MSEA Purchase Costs), in each case in the respective amounts thereof stated in
the Approved Request for Payment for a Payment Period received by Beneficiary
subsequent to the Section 3(a)(iii) Notice to Draft, not later than the fifth
day after receipt of such Approved Request for Payment, or on such later date
as Contractor may designate by written notice to Beneficiary, and
(B) upon completion of all work under the
Construction Contract and payment (without duplication) (1) to MSEA of all
amounts (if any) to be utilized by MSEA to pay MSEA Purchase Costs which are
included in Operator's Share of Construction Costs, and (2) to Contractor of the
amounts to be paid to Contractor pursuant to Article IX of the Construction
Contract, the balance of such funds then on deposit with Beneficiary shall be
held by Beneficiary, as escrow agent for Operator and MSEA, and portions
thereof disbursed by Beneficiary from time to time only pursuant to the written
direction of both Operator's Representative and MSEA's Representative.
As Beneficiary receives Approved Requests for Payment to be paid from
Section 3(a)(iii) Proceeds in accordance with this Agreement, then Beneficiary
shall disburse Section 3(a)(iii) Proceeds in payment thereof as provided in
this Agreement; provided, however, that:
(i) if an Account Party other than Harry M. Stevens, Inc.
previously has delivered a Substitute Letter of Credit to Beneficiary (and has
received in exchange therefor a disbursement of Section 3(a)(iii) Proceeds
equal to the stated amount of such Substitute Letter of Credit), then until
such substitute Letter of Credit has been exhausted, Beneficiary shall draw
only upon each Substitute Letter of Credit deposited with Beneficiary for the
account of an Account Party other than Harry M. Stevens, Inc., in an amount
equal to the lesser of the balance of such Substitute Letter of Credit or the
product of the Operator's Share of Construction Costs stated in such current
Approved Request for Payment multiplied by the Stipulated Percentage for such
Account Party (and the proceeds of the drawing on such Substitute Letter(s) of
Credit shall become a part of the Section 3(a)(iii) Proceeds); and
(ii) if Harry M. Stevens, Inc. shall have deposited a
Substitute Letter of Credit with Beneficiary (and has received in exchange
therefor a disbursement of Section 3(a)(iii)
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<PAGE> 182
Proceeds equal to the stated amount of such Substitute Letter of Credit), then
after all other Substitute Letter(s) of Credit have been drawn in full and all
Section 3(a)(iii) Proceeds have been disbursed from escrow in accordance with
the terms of this Agreement, Beneficiary shall draw on the Substitute Letter of
Credit deposited with Beneficiary for the account of Harry M. Stevens, Inc., in
an amount which is equal to that portion (which may be the entirety) of
Operator's Share of Construction Costs stated in the Approved Request for
Payment for the Current Payment Period which remains unpaid and which, when
added to the aggregate of Operator's Share of Construction Costs paid pursuant
to all prior Approved Requests for Payments, does not exceed Operator's Maximum
Share of Construction Costs (and the proceeds of such drawing on such
Substitute Letter of Credit shall constitute Section 3(a)(iii) Proceeds).
Beneficiary shall not obtain or seek to obtain payment of Operator's
Share of Construction Costs from Operator or any other Person and (provided
that Beneficiary is acting in accordance with this Agreement) shall not be
obligated to seek or receive any consent or approval from any Person as a
condition to its presentation of a Draft under the Letter of Credit or
disbursement of the proceeds thereof.
(d) Fees and Reimbursements to Beneficiary. For the
services to be performed by the Beneficiary under this Agreement, Beneficiary
shall be paid the following amounts by Operator as Project Costs:
(i) An annual fee in the amount of $1,200 per
annum, payable annually in advance, with the first such payment being due
concurrently with the execution of this Agreement by Beneficiary, and with a
like payment to be due on each anniversary date of this Agreement for so long
as this Agreement shall remain in effect;
(ii) A $50 fee each time Beneficiary presents a
Draft to TCB under the Letter of Credit; and
(iii) If Beneficiary is requested by Operator, in
connection with disbursements to be made by Beneficiary under the terms of this
Agreement, to prepare and issue checks drawn on the Project Capital Account or
in disbursement of Section 3(a)(i) Proceeds, Section 3(a)(ii) Proceeds or
Section 3(a)(iii) Proceeds, a charge of $15 for each check so prepared and
issued by Beneficiary (but not for checks drawn on an account maintained with
Beneficiary but prepared and issued by Persons other than Beneficiary, and
Operator and MSEA reserve the right to prepare such checks rather than to
request Beneficiary to do so).
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Further, concurrently with the execution of this Agreement, Operator agrees to
reimburse Beneficiary as a Project Cost, for any out-of-pocket Costs incurred
by officers of Beneficiary, and for the reasonable fees and disbursements of
Beneficiary's attorneys, in both cases incurred in connection with the
examination and participation in the finalization of this Agreement and any
related documents, provided that such amount to be reimbursed shall not exceed
an aggregate of $7,000.
(e) Limitation on Beneficiary's Obligations; Indemnity.
Each Principal agrees that Beneficiary's only obligations under this Agreement
are to:
(i) Draft on the Letter of Credit and draw on any
Substitute Letter of Credit, in accordance with the terms thereof and the terms
of this Agreement, in the amounts and at the times provided for in this
Agreement;
(ii) Upon receipt thereof to hold and disburse the
proceeds of each Draft under the Letter of Credit and each drawing under a
Substitute Letter of Credit as provided in this Agreement; and
(iii) If applicable, take the actions described in
Sections 5(g) and (h) below.
Each Principal agrees that except for the above obligations
Beneficiary shall have no obligation of any kind or character to Principals,
arising out of the provisions of this Agreement, other than to act in good
faith and to exercise ordinary care. MSEA and Operator, jointly and severally,
agree to indemnify Beneficiary upon demand for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, Costs,
expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against Beneficiary, in the capacity
provided for herein, to the extent relating to or arising out of this Agreement
or the transactions contemplated hereby or the enforcement of any of the terms
hereof, provided that Principals shall not be liable for any of the foregoing
to the extent they arise from the negligence or willful misconduct of
Beneficiary.
If the amount of Operator's Share of Construction Costs specified by
Contractor in any Approved Request for Payment for any one or more Payment
Period(s) exceeds the amount of the actual Operator's Share of Construction
Costs for that Payment Period, then Operator agrees to look solely to
Contractor or Persons other than Beneficiary for any refund to which it may be
entitled.
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<PAGE> 184
In no Event shall Beneficiary ever have any obligation either to see
to the application of disbursements made by Beneficiary of either MSEA Funds or
Operator Funds in accordance with the terms of this Agreement, or to have any
responsibility to provide or arrange for the providing of any funds which may
be necessary to complete the construction of the Arena if the sum of MSEA's
Share of Construction Costs plus Operator's Share of Construction Costs exceeds
the sum of MSEA Funds and Operator Funds.
(f) Beneficiary's Right to Rely. Beneficiary shall have the
absolute right:
(i) to rely upon the purported signatures of the
individuals purporting to be Operator's Representative, Contractor's
Representative, and MSEA's Representative as being true and genuine, and to
rely upon the individuals purporting to be Operator's Representative,
Contractor's Representative, and MSEA's Representative being the respective
individuals they purport to be and being authorized to act in the respective
capacities they purport to act in; and
(ii) to rely upon, and take as true and correct,
the representations of Operator, Contractor and MSEA (acting through the
individuals purporting to be their respective Representatives) that the amount
stated in each Notice to Draft is permitted to be Drafted under the terms of
this Agreement, that the amount stated in each Approved Request for Payment
requested to be disbursed from Section 3(a)(iii) Proceeds is permitted to be so
disbursed under the terms of this Agreement, and that the respective amounts of
Construction Costs, MSEA's Share of Construction Costs, Operator's Share of
Construction Costs, and MSEA Purchase Costs (and the respective portions
thereof included in MSEA's Share of Construction Costs and Operator's Share of
Construction Costs) are calculated in accordance with this Agreement and stated
correctly in such Approved Request for Payment.
Each of MSEA, Operator and Contractor agree that, as to Beneficiary
only, each Notice to Draft, when signed by those signatories indicated in the
definition of "Notice to Draft" set forth in Exhibit "G" attached hereto, and
including the Certificate(s) provided for in the definitions of "Notice to
Draft" and "Approved Request for Payment" signed by the respective signatories
indicated in the definitions for such terms set forth in Exhibit "G" attached
hereto, shall be deemed to be in accordance with the terms of this Agreement,
and Beneficiary, in good faith and exercising ordinary care, may assume that
such Notices to Draft and Certificate(s), when regular on their face, are what
they purport to be and shall have no duty to investigate whether such Notice(s)
to Draft in fact have been
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<PAGE> 185
submitted to Beneficiary in strict accordance with this Agreement.
(g) Investment of Undisbursed Funds. Beneficiary agrees that any
funds received by the Beneficiary in payment of a Draft on the Letter of Credit
or a drawing on a Substitute Letter of Credit, which are not disbursed in
accordance with this Agreement on the same business day as received by
Beneficiary, shall be invested in one or more money market accounts with the
Beneficiary (and Operator reserves the right to limit the balance in any such
account to a maximum amount designated by Operator), for the account of
Operator, for each day that such funds are held by Beneficiary prior to the
date on which Beneficiary disburses such funds in accordance with this
Agreement, and Operator shall be entitled to withdraw from time to time the
amounts earned on such funds in such money market account. The preceding
sentence shall not be construed to authorize Beneficiary to withhold
disbursement of the proceeds of a Draft or a drawing on a Substitute Letter of
Credit disbursable in accordance with this Agreement, but is included only in
recognition of the fact that from time to time such funds will not be disbursed
on the same business day such funds are received by Beneficiary, and to ensure
that in any such eventuality the funds do not remain uninvested prior to
disbursement in accordance with this Agreement.
(h) Actions Upon Notice of a Terminating Event or Special
Terminating Event. If at any time while Beneficiary still holds the Letter of
Credit or a Substitute Letter of Credit and not all amounts have been drawn
thereunder, or if the full amount thereof has been drawn under either Section
3(a)(ii) or Section 3(a)(iii), and at any time while portions of the proceeds
of such Draft or Substitute Letters of Credit are still being held by
Beneficiary pursuant to this Agreement, Beneficiary shall receive a written
notice signed by an individual purporting to be either Operator's
Representative or MSEA's Representative stating that a Terminating Event or a
Special Terminating Event has occurred and that Contractor has been paid or has
received assurance of the payment of all funds (if any) then due and owing to
Contractor pursuant to the Construction Contract as a part of Operator's Share
of Construction Costs to which Contractor is entitled to be paid for work
performed to such date and as a result of a suspension of the work under or the
termination of the Construction Contract, then (and only in such Event) the
following provisions shall apply:
(i) Beneficiary shall not present any further Drafts
against the Letter of Credit or make any further drawings on any Substitute
Letter of Credit (even if a Notice to Draft previously has been delivered to
Beneficiary or a Notice of Draft is thereafter delivered to Beneficiary);
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<PAGE> 186
(ii) if Beneficiary previously has presented a Draft
against the Letter of Credit, and such Draft has been funded by TCB, and
Beneficiary then is or thereafter becomes in possession of all or a portion of
the proceeds of such Draft (including, without limitation, amounts being held
pursuant to Section 5(c) hereof and whether or not being held in escrow),
Beneficiary immediately shall return the proceeds of such Draft to TCB, with
the notation that such funds are for credit to the Account Parties;
(iii) if Beneficiary previously has initiated a drawing
under a Substitute Letter of Credit, and the issuer of such Substitute Letter
of Credit has funded such drawing, and Beneficiary then is or thereafter
becomes in possession of all or a portion of the proceeds of such drawing under
such Substitute Letter of Credit (including, without limitation, amounts being
held pursuant to Section 5(c) hereof and whether or not being held in escrow),
Beneficiary immediately shall return such proceeds to the issuer of such
Substitute Letter of Credit, with the notation that such funds are for credit
to the Account Party with respect to such Substitute Letter of Credit; and
(iv) Beneficiary immediately shall forward to TCB the
original Letter of Credit (if not previously returned to TCB), with
instructions that it be cancelled, and immediately shall forward to the issuer
thereof the original of any Substitute Letter of Credit (if not previously
returned to such issuer) with instructions that it be cancelled.
Each of the Principals irrevocably agrees that in taking the preceding actions,
in the circumstances described in this subparagraph, Beneficiary shall be
absolutely protected from any loss or liability which may be suffered by any of
the Principals as a result of the actions of any of Operator, MSEA or
Beneficiary under the terms of this subparagraph, and Contractor acknowledges
and agrees that if it incurs or suffers any liability or loss as a result of
the actions of the Beneficiary under the terms of this subparagraph, that it
shall look solely to Persons other than Beneficiary for recovery of any such
loss or indemnity against any such liability.
Operator agrees that when the actions described in Subsections (ii)
through (iv) above have been completed, there shall be allowed as a credit
against the Termination Fee that then is or thereafter may become payable by
MSEA to Operator under the Arena Contract that amount by which Operator's
Maximum Share of Construction Costs exceeds the aggregate of all of Operator's
Share of Construction Costs paid by or for the account of Operator under the
terms of this Agreement, the Construction Contract or the Arena Contract.
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<PAGE> 187
6. General Provisions.
(a) Notice. Any notice, statement, communication, request reply
or advice (herein severally and collectively, for convenience, called "notice"),
in this Agreement provided or permitted to be given, made or accepted must be
in writing and may, unless otherwise in this Agreement expressly provided, be
given or be served by depositing the same in the United States Mail, post paid
and registered or certified and addressed to the party to be notified, with
return receipt requested, or by delivering the same to such party or to an
officer or agent of such party, or by post paid telegram, when appropriate,
addressed to the party to be notified. Notice deposited in the mail in the
manner hereinabove described shall be deemed to have been delivered and shall
be effective from and after the expiration of five (5) business days after it
is so deposited. Notice given in any other manner shall be deemed to have been
delivered and be effective only if and when received by the party to be
notified. For purposes of notice, the addresses of the parties, until changed
as hereinafter provided, shall be as follows:
Operator: Decoma Miami Associates, Ltd.
c/o BIL Development, Inc.
Ste. 1400, Sage Plaza
5151 San Felipe
Houston, Texas 77056
Attn: Mr. C. Dean Patrinely
With Copies to: James B. Rylander, Esq.
Vinson & Elkins
3300 First City Tower
1001 Fannin
Houston, Texas 77002-6760
Denis Clive Braham, Esq.
Dow, Cogburn & Friedman
2300 Nine Greenway Plaza
Houston, Texas 77046
HAS Management, Inc.
8700 Kirby
Houston, Texas 77054
Attn: Mr. Neal Gunn
Linbeck Miami Corporation
3810 West Alabama
Houston, Texas 77027
Attn: Mr. Leo Linbeck, Jr.
- 47 -
<PAGE> 188
MSEA: Miami Sports and Exhibition Authority
300 Biscayne Boulevard Way
1120 DuPont Plaza Center
Miami, Florida 33131
Attention: Executive Director
With copy to: Robert N. Sechen
Blackwell, Walker, Fascell & Hoehl
2400 AmeriFirst Building
One S.E. Third Avenue
Miami, Florida 33131
City Attorney
City of Miami
169 East Flagler Street #1101
Miami, Florida 33131
Attention: Christopher G. Korge
Sun Bank: Sun Bank, N.A.
255 South Orange Avenue # 601
Orlando, Florida 32801
Attention: Trust Department
With copies to: Kenneth Myers
Meyers, Kenin, Levinson & Richards
Brickell Executive Tower
1428 Brickell Avenue
Miami, Florida 33131
Contractor: Linbeck Construction Corporation
3810 West Alabama
Houston, Texas 77054
Attention: Leo Linbeck, Jr.
With copies to: James B. Rylander, Esq.
Vinson & Elkins
3300 First City Tower
1001 Fannin
Houston, Texas 77002-6760
However, each of the parties named herein as being entitled to receive notices
shall have the right from time to time to change its address, and each shall
have the right to specify as its address any other address within the
continental United States of America by at least five (5) business days written
notice to the other party.
(b) Valid Agreement. Each of Operator, Contractor, MSEA and
Beneficiary represents and warrants for itself that this Agreement has been
duly and validly executed, issued and
- 48 -
<PAGE> 189
delivered by such party and constitutes the valid and binding obligation(s) of
such party, enforceable in accordance with its terms.
(c) Severability. The provisions of this Agreement are severable,
and if any provision or part of this Agreement or the application thereof to
any person or circumstance shall ever be held by any court of competent
jurisdiction to be invalid or unconstitutional for any reason, the remainder of
this Agreement and the application of such provision or part of this Agreement
to other persons or circumstances shall not be affected thereby.
(d) Incorporation of Other Agreements. References in this
Agreement to the Reimbursement Agreement, the Arena Management Agreement, the
Development Management Services Agreement and the Food Beverage and Merchandise
Services Agreement are solely for the limited purposes expressly set forth in
the applicable provisions of this Agreement, and such references herein shall
not operate or be construed to incorporate the terms and provisions of any of
such agreements into this Agreement for any purpose. The Construction
Contract, the Arena Contract and the Land Lease Agreement are incorporated
herein only for the limited purposes expressly set forth in the applicable
provisions of this Agreement, and references herein to the Arena Contract, the
Construction Contract and the Land Lease Agreement shall not operate or be
construed to incorporate the terms and provisions of such agreements into this
Agreement for any purpose other than such limited purposes.
(e) Attorneys' Fees. In the event any party defaults in the
performance of any of the terms, conditions or agreements contained in this
Agreement and the other party places the enforcement of this Agreement, or any
part thereof, or the collection of any sums due, or to become due, hereunder, in
the hands of an attorney who files suit upon the same (either by direct action
or counterclaim) and should such non-defaulting party prevail in such other
suit, the defaulting party shall pay the other party's attorney's fee, however,
such attorney's fee shall not exceed a reasonable amount based on the results
achieved by such prevailing party. Any such attorney's fees shall not be
considered Project Costs or Operating Expenses (as defined in the Arena
Contract.
(f) Miscellaneous. This Agreement (i) shall be binding upon and
inure to the benefit of each party hereto (and, for the purposes expressly set
forth in the applicable provisions of this Agreement, the Account Parties) and
their respective successors and assigns (provided, however, that Contractor
shall not assign its rights hereunder without (A) the prior written consent of
MSEA and Operator and (B) prior written notice thereof to Beneficiary signed by
all of the Principals); (ii) may be modified or amended only by a writing
signed by each party
- 49 -
<PAGE> 190
hereto; (iii) shall be governed by and construed in accordance with the laws of
the State of Florida; (iv) may be executed in several counterparts by the
parties hereto on separate counterparts, and each counterpart, when so
executed and delivered, shall constitute an original agreement, and all such
separate counterparts shall constitute but one and the same agreement; and (v)
embodies the entire agreement and understanding between Principals and
Beneficiary with respect to the subject matter hereof. The headings herein
shall be accorded no significance in interpreting this Agreement. Exhibits A,
B, C, D, E and F attached hereto are hereby incorporated herein by this
reference and made a part hereof for all purposes. Exhibit "G" attached
hereto is hereby incorporated into Section 6(f) for the purposes of such
Section 6(f) and as a convenience to Beneficiary. The defined terms, the
definitions therefor and the other provisions set forth in the Section of this
Agreement entitled "Definitions" shall be a part of this Agreement and the
agreement of the parties hereto for all purposes.
IN WITNESS WHEREOF, MSEA, Operator, Contractor and Beneficiary have
executed this Agreement, effective as of the date first set forth hereinabove.
- 50 -
<PAGE> 191
MIAMI SPORTS AND EXHIBITION
AUTHORITY
By:
-----------------------------------
Lawrence O. Turner, Jr.
Chairman
"MSEA"
APPROVED AS TO FORM AND
CORRECTNESS:
By:
------------------------------------
Robert N. Sechen
Blackwell, Walker, Fascell &
Hoehl
Counsel to the Miami Sports
and Exhibition Authority
DECOMA MIAMI ASSOCIATES, LTD.
By: Decoma, Ltd., sole general
partner of Decoma Miami
Associates, Ltd.
By: Decoma Venture, sole
general partner of Decoma,
Ltd.
By: BIL Development, Inc.,
Managing Venturer
By:
------------------------------------
C. Dean Patrinely
President
"OPERATOR"
LINBECK CONSTRUCTION
CORPORATION
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
"CONTRACTOR"
SUN BANK, N.A.
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
"BENEFICIARY"
- 51 -
<PAGE> 192
EXHIBIT "A"
LETTER OF CREDIT
[To Be Added)
- 1 -
<PAGE> 193
EXHIBIT "B"
TO
CONSTRUCTION FUNDING AGREEMENT
CONTRACTOR'S CERTIFICATE
The undersigned hereby certifies to Sun Bank, N.A. ("Beneficiary") as
follows:
1. The name of the undersigned is_________________________________
______________________________; the undersigned is either the President or Vice
President of Linbeck Construction Corporation ("Contractor") and is duly
authorized to execute this certificate on behalf of Contractor.
2. As of the date hereof, the aggregate amount of the "First
Conversion Amount" (as defined in that certain Construction Funding Agreement
["Funding Agreement"] dated as of ________________________, 1986, by and among
Miami Sports and Exhibition Authority ["MSEA"], Decoma Miami Associates, Ltd.
["Operator"], Contractor and Beneficiary) has been paid in full by or for the
account of MSEA in accordance with the terms of the Funding Agreement and all
such funds have been applied by or at the direction of Contractor in payment
of Contractor's Requests for Payment (as defined in the Funding Agreement)
approved by Operator and MSEA's Representative (as defined in the Funding
Agreement).
3. The Contractor has at all times complied in all material
respects with the terms of the Funding Agreement and is not in default under
the Construction Contract (as defined in the Funding Agreement); under the
provisions of the Funding Agreement the Contractor is entitled to receive
payment in the amount stated as "Operator's Share of Construction Costs" in the
copy of the Contractor's Request for Payment to which this Certificate is
attached; and such Contractor's Request for Payment has been approved by MSEA's
Representative and as otherwise required
LINBECK CONSTRUCTION
CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
- 1 -
<PAGE> 194
SWORN TO AND SUBSCRIBED BEFORE ME, by ______________________________
_______________________, personally known to me, this ______ day of
____________, 198_.
-------------------------------
Notary Public in and for the
State of
--------------
- 2 -
<PAGE> 195
EXHIBIT "C"
TO
CONSTRUCTION FUNDING AGREEMENT
FORM OF SUBSTITUTE LETTER OF CREDIT
IRREVOCABLE, NON-TRANSFERABLE, STAND-BY
LETTER OF CREDIT
--------------------------------------------
Number: _________ Date: _________________, 198_
Sun Bank, N.A.
- -------------------------
- -------------------------
Gentlemen:
We hereby establish, at the request and for the account of:
-------------------------
-------------------------
-------------------------
(collectively the "Account Party"), in your favor, our Irrevocable,
Non-transferable, Stand-By Letter of Credit whereby we, subject to the terms
and conditions contained herein, irrevocably authorize you to draw on us at
anytime or times before the Expiration Date (as defined below), by your draft
(the "Draft") at sight or by tested telex, in the form of Annex I hereto,
aggregate amounts not exceeding _____________________ Dollars ($________) in
U.S. currency. This Letter of Credit expires at 2:00 P.M. Central Standard
Time at the counters of _______________, on ____________ 1988 (such date and
time being the "Expiration Date").
Funds under this Letter of Credit are available to you against your
Draft(s) referring to the number of this Letter of Credit. Partial draws
against this Letter of Credit are permitted.
If we receive the Draft(s) in conformity with the terms and conditions
of this Letter of Credit on or prior to the Expiration Date, we will honor the
same.
Upon the earlier of (a) your surrendering this Letter of Credit to us
for cancellation; or (b) the Expiration Date (except
- 1 -
<PAGE> 196
that if a Draft is received by us on or before the Expiration Date, this Letter
of Credit shall remain in effect until payment is made in accordance with the
terms of this Letter of Credit), this Letter of Credit shall automatically
terminate and you shall deliver this Letter of Credit to us for cancellation.
Presentation of such Draft(s) shall be made at our office located at
___________________________________. Draft(s) will be considered to have been
presented if we receive such Draft(s) via inter-bank tested telex bearing the
appropriate security clearance codes.
This Letter of Credit sets forth in full or undertaking, and such
undertaking shall not in anyway be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein except
only the Draft(s) referred to herein; and any such reference shall not be
deemed to incorporate herein by reference any document, instrument or agreement
except for the Draft(s).
This Letter of Credit is issued pursuant to and shall be supplemented
by the provisions (to the extent that such provisions are consistent with this
Letter of Credit) of the Uniform Customs and Practices for Documentary Credits
(1983 Revision), International Chamber of Commerce, Publication No. 400 (the
"UCP"), and by applicable provisions of the laws of the United States of
America and the State of __________, including the Uniform Commercial Code as
in effect in the State of ____________. To the extent applicable provisions of
the UCP are in conflict with applicable provisions of _________ law, applicable
provisions of the UCP shall prevail. Notwithstanding anything to the contrary
contained herein, the original of this Letter of Credit shall accompany any
Draft which exhausts it.
Very truly yours,
---------------------------------
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
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<PAGE> 197
ANNEX I
TO
SUBSTITUTE LETTER OF CREDIT
DRAFT
$_______________________ _______________ __________________, 198_
Pay to the order of ______________________________, __________________
________________________________________ ($______________). Drawn under
________________________________ Irrevocable, Non-Transferrable, Stand-By
Letter of Credit No. _________________________ dated _____________________,
198_.
SUN BANK, N.A.
By:
---------------------------------
Name:
--------------------------------
Title:
-------------------------------
Annex II Deleted
- 3 -
<PAGE> 198
EXHIBIT "D"
TO
CONSTRUCTION FUNDING AGREEMENT
MSEA's CERTIFICATE
The undersigned hereby certifies to Sunbank, N.A. ("Beneficiary"), and
Decoma Miami Associates, Ltd. ("Operator") as follows:
1. The name of the undersigned is ________________________. The
undersigned is MSEA's Representative (as defined in that certain Construction
Funding Agreement ["Funding Agreement"] dated as of ______________________,
1986, by and among the Miami Sports and Exhibition Authority ["MSEA"],
Operator, Linbeck Construction Corporation ["Contractor"] and Beneficiary) and
is duly authorized to execute this Certificate on behalf of MSEA.
2. As of the date of this Certificate, to the best of the
knowledge of the undersigned, each of the Continuing Funding Conditions (as
that term is defined in the Funding Agreement) is satisfied, and the
Contractor's Request for Payment (as such term is defined in the Funding
Agreement) to which this Certificate is attached has been approved by MSEA's
Representative and is entitled to be considered an Approval Request for Payment
(as that term is defined in the Funding Agreement).
MIAMI SPORTS AND EXHIBITION
AUTHORITY
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
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<PAGE> 199
SWORN TO AND SUBSCRIBED BEFORE ME on this __________ day of
____________, 198_.
-------------------------------
Notary Public in and for
County,
---------- ----------
My Commission Expires:
- ----------------------------- -----------------------------
(Name Printed)
- 2 -
<PAGE> 200
EXHIBIT "E"
TO
CONSTRUCTION FUNDING AGREEMENT
CONTINGENT ITEMS
--------------------------
The estimates included in the Initial Guaranteed Maximum Sum Price
provided in the Construction Contract include an aggregate budget provision of
One Million Six Hundred Thousand Dollars ($1,600,000.00) for the below
Contingent Items.
Contingent items
1. Imposition of sales taxes on materials for project construction.
2. Chilled water equipment and related costs.
3. Stairway pressurization.
4. Fully sprinklered building.
5. Sidewalks, curb and gutter.
- 1 -
<PAGE> 201
EXHIBIT "F"
TO
CONSTRUCTION FUNDING AGREEMENT
MSEA PURCHASE COSTS PROCEDURES
A. To process a purchase order, Contractor or respective
subcontractor shall generate a detailed itemization for materials to be
purchased, including delivery instructions as to times and quantities,
warranties, payment terms and other conditions which may apply. On behalf of
MSEA, the Contractor will generate cover purchase orders in the name of MSEA
specifying MSEA's sale tax exemption number, which purchase order shall include
the Contractor's or respective subcontractor's delivery instructions. All such
cover purchase orders shall contain a provision stating that MSEA bears all
risk of loss or damage following delivery and acceptance.
B. Vendor shall generate invoices for material received in the
name of MSEA, in care of the Contractor or respective subcontractor.
Contractor or subcontractor shall be copied on any such invoice at the time it
is sent to MSEA.
C. All payments to vendors for such materials shall be made by
MSEA by checks drawn on a MSEA bank account. Title shall vest in MSEA
immediately upon delivery of the materials to the job site or bonded warehouse
pursuant to the purchase orders.
D. Each subcontract entered into by Contractor that provides for
both labor and materials will, to the extent reasonably practical, contain
separate provisions stating what percentage quantity is for materials. With
respect to the materials portion of any such subcontract, the subcontractor
will, to the extent reasonably practical, purchase materials in accordance with
the above-outlined procedure, which procedure will be expressly incorporated
into the subcontract.
- 1 -
<PAGE> 202
EXHIBIT "G"
TO
CONSTRUCTION FUNDING AGREEMENT
CERTAIN DEFINITIONS FOR CONVENIENCE OF BENEFICIARY
"Notice(s) to Draft" - the written document delivered to Beneficiary
in the following instances, as applicable:
(a) in each instance in which a Draft against the Letter
of Credit is to be made under the terms of Section 3(a)(i) hereof, an Approved
Request for Payment for Operator's Share of Construction Costs for a Payment
Period (herein sometimes called the "Section 3(a)(i) Notice to Draft"), with
the Contractor's Request for Payment signed by both of (i) an individual
purporting to be Contractor's Representative and (ii) an individual purporting
to be MSEA's Representative (and which may, but need not, be signed by an
individual purporting to be Operator's Representative), with the accompanying
Contractor's Certificate signed by an individual purporting to be the
Contractor's Representative, and (if such Contractor's Request for Payment is
not signed by Operator's Representative) with the accompanying MSEA's
Certificate signed by an individual purporting to be MSEA's Representative;
(b) in the instance (if applicable) in which a Draft is to be made
against and exhausting the Letter of Credit under the terms of Section 3(a)(ii)
hereof, a written notice (herein sometimes called the "Section 3(a)(ii) Notice
to Draft") to Beneficiary, certifying to Beneficiary and Operator that such
Notice to Draft is authorized under Section 3(a)(ii) of this Agreement and
authorizing and directing Beneficiary to Draft on the Letter of Credit for the
entire amount then available to be Drafted thereunder, and signed by both of
(i) an individual purporting to be Contractor's Representative, and (ii) an
individual purporting to be MSEA's Representative;
(c) in an instance (if applicable) in which a Draft is to be made
against and exhausting the Letter of Credit under the terms of Section
3(a)(iii) hereof, a written notice (herein sometimes called the "Section
3(a)(iii) Notice to Draft") to Beneficiary, delivered only within the two-week
period (the "Final Two Weeks") prior to the stated expiration date of the
Letter of Credit then held by Beneficiary, certifying that such Notice to Draft
is authorized under Section 3(a)(iii) of this Agreement and authorizing and
directing Beneficiary to Draft on the Letter of Credit for the entire amount
then available to be
- 1 -
<PAGE> 203
Drafted thereunder, and signed by an individual purporting to be either (i)
Operator's Representative, (ii) Contractor's Representative, or (iii) MSEA's
Representative.
"Approved Request for Payment" - a Request for Payment from Contractor
for Construction Costs (combined with or accompanied by a Certificate for
Payment therefor) which (a) if any portion of such Request for Payment is for
MSEA's Share of Construction Costs, shall be signed by Operator's
Representative, MSEA's Representative and Contractor's Representative, and (b)
if such Request for Payment is entirely for Operator's Share of Construction
Costs (i) shall be signed by Contractor's Representative and by MSEA's
Representative (and which may, but need not, be signed by Operator's
Representative) and (ii) shall be accompanied by a Contractor's Certificate,
signed by Contractor's Representative, and (iii) if not signed by Operator's
Representative, shall be accompanied by a MSEA's Certificate, signed by MSEA's
Representative. References in this Agreement to the amount(s) of Construction
Costs, MSEA's Share of Construction Costs, MSEA Purchase Costs and Operator's
Share of Construction Costs "as stated in an Approved Request for Payment" (or
words of similar import) shall refer to such amounts as stated, set forth or
otherwise identified in the Contractor's Request for Payment included in such
Approved Request for Payment.
- 2 -
<PAGE> 1
EXHIBIT 10.8
FIRST AMENDMENT TO MIAMI ARENA CONTRACT
AND
AGREEMENT
This First Amendment to Miami Arena Contract and Agreement (this
"Agreement"), dated as of December 13, 1990, to be effective as of the
respective dates stated in this Agreement, by and between Miami Sports and
Exhibition Authority and Decoma Miami Associates, Ltd.;
WITNESSETH:
Recitations
1. On and effective as of October 10, 1986, Miami Sports and
Exhibition Authority and Decoma Miami Associates, Ltd. entered into that
certain Miami Arena Contract (the "Original Contract") relating to the
development, construction and operation of the Miami Arena in Miami, Florida.
2. Miami Sports and Exhibition Authority and Decoma Miami
Associates, Ltd. have agreed to amend the Original Contract in certain respects
and have reached certain other stipulations and agreements relating to the
Original Contract, and now desire to evidence such amendments, stipulations and
agreements hereby.
Agreements
In consideration of the mutual covenants set forth herein, the parties
hereto agree as follows:
A. Incorporation of Definitions from Original Contract; Definitions in
this Agreement. All terms defined in any part of the Original Contract shall
have the same respective meanings when used in this Agreement except as the
definitions of such terms may be amended in this Agreement or except as may be
provided expressly to the contrary in this Agreement. All terms defined in any
part of this Agreement shall have the same meaning throughout this Agreement.
B. Amendment of the Original Contract.
1. Amendments. Owner and Operator hereby amend the Original
Contract in the following particulars:
<PAGE> 2
(a) Article II of the Original Contract is amended by:
(i) adding thereto the following terms and definitions for
such terms:
"Additional Seat Use Charge" - An amount that (except as provided to
the contrary below in this definition), commencing April 11, 1990, (i) the user
of each seat in the Arena shall be charged for the use of such seat and (ii)
Operator shall collect from each such user, which amount shall vary, for each
event, depending on the price range in which the ticket price for such seat at
such event falls, as follows:
<TABLE>
<CAPTION>
Ticket Price Range
(exclusive of Seat Use
Charge but inclusive of
sales tax on the ticket
price and any other Amount of Additional
admission charge) Seat Use Charge Per Seat
- ----------------------- ------------------------
<S> <C>
$14.99 and below -0-
$15.00 and above $0.25
</TABLE>
any Additional Seat Use Charge larger or effective earlier than as stated above
must be acceptable to both Owner and Operator; Additional Seat Use Charge shall
be in addition to, and not in lieu of, Seat Use Charges (as defined in this
Contract) and admission charges. Notwithstanding the preceding provisions of
this definition, (i) unless the then existing License Agreement between
Operator (or its subcontractor) and the Miami Heat Limited Partnership (or its
permitted successor) provides or permits the imposition of Additional Seat Use
Charge, no Additional Seat Use Charge shall be applied on tickets for
exhibition, regular season and playoff games of the Miami Heat National
Basketball Association team, and (ii) Operator shall not be obligated to, but
may, apply the Additional Seat Use Charge on event tickets which are
distributed without charge.
"Additional Seat Use Revenues" - For each Operating Year, the
aggregate of all Additional Seat Use Charges received by Operator during such
Operating Year together with all interest, if any, earned thereon.
"Adjusted Operating Expenses" - For any Operating Year commencing with
the 1988-89 Operating Year, Operating Expenses for such Operating Year less (i)
the Annual Replacement Fund Payment for such Operating Year
- 2 -
<PAGE> 3
and (ii) the Calculated Variable Operating Payment for such Operating Year.
"Adjusted Operating Loss" - For any Operating Year commencing with the
1988-89 Operating Year, the amount by which the Adjusted Operating Expenses for
such Operating Year exceed the Operating Income for such Operating Year.
"Available Operating Income" - For any Operating Year commencing with
the 1988-89 Operating Year in which there is an Operating Loss but not an
Adjusted Operating Loss, the amount by which the Operating Income for such
Operating Year exceeds the Adjusted Operating Expenses for such Operating Year.
"Calculated Variable Operating Payment" - For each Operating Year, the
Variable Operating Payment for such Operating Year as calculated pursuant to
the first or the second sentence, as applicable, of Exhibit C.2.3.2. The terms
"Variable Operating Payment" and "Calculated Variable Operating Payment" shall
have the same meanings when used in this Contract.
"Cumulative Deferred Annual Replacement Fund Payment" - At any date,
the lesser of (a) the aggregate of the Deferred Annual Replacement Fund
Payments from all prior Operating Years (but not prior to the 1990-91 Operating
Year) minus the aggregate of (i) all Operating Income paid prior to such date
under the terms of Exhibit C.2.2.1(a)(i) expressly and only for the payment and
reduction of the Cumulative Deferred Annual Replacement Fund Payment, and (ii)
all Additional Seat Use Revenues paid prior to such date under the terms of
Exhibit C.2.1.2 expressly and only for the payment and reduction of the
Cumulative Deferred Annual Replacement Fund Payment, or (b) $200,000.
"Cumulative Deferred Variable Operating Payment" - At any date, the
lesser of (a) the aggregate of the Deferred Variable Operating Payments from
all prior Operating Years not actually paid to Operator pursuant to Exhibit
C.2.3.2 minus the aggregate of (i) all Operating Income paid to Operator prior
to such date, as part of Operator's Operating Income Allocation, which under
the terms of Exhibit C.2.2.1 is paid to Operator expressly and only for the
payment and reduction of the Cumulative Deferred Variable Operating Payment,
and (ii) all Additional Seat Use Revenues paid to Operator prior to such date,
as part of Operator's Seat Use Allocation, which under the terms of Exhibit
C.2.1.2 are paid to Operator expressly and only for the payment and reduction
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<PAGE> 4
of the Cumulative Deferred Variable Operating Payment, or (b) $1,000,000.
"Deferral Operating Year" - An Operating Year in respect of which
either (or both) Deferred Annual Replacement Fund Payment is credited to
Cumulative Deferred Annual Replacement Fund Payment pursuant to Exhibit
C.2.2.1(a)(iii) or Deferred Variable Operating Payment is credited to
Cumulative Deferred Variable Operating Payment pursuant to Exhibit C.2.3.2.
"Deferred Annual Replacement Fund Payments" - The Annual Replacement
Fund Payment(s), or portions thereof, for Operating Years 1990-91 and
subsequent Operating Years, from time to time not paid but deferred, without
interest, pursuant to the terms of Exhibit C.2.2.1(a)(iii).
"Deferred Variable Operating Payments" - The Calculated Variable
Operating Payment(s), or portions thereof, from time to time not paid but
deferred, without interest, pursuant to the terms of Exhibit C.2.3.2.
"Qualifying Amounts" -
(a) For the Initial Operating Year, the aggregate of all
money payable to Operator under this Contract during or attributable
or allocable to such Operating Year, excluding the Fixed Operating
Payment but including the Variable Operating Payment for such
Operating Year, Operator's Operating Income Allocation for such
Operating Year and Operator's Seat Use Allocation for such Operating
Year; and
(b) For each subsequent Operating Year commencing with
the 1988-89 Operating Year, the sum of (without duplication): (i) the
aggregate of all money payable to Operator under this Contract during
or attributable or allocable to such Operating Year (excluding amounts
paid to Operator during such Operating Year as reimbursement for funds
previously advanced by Operator), minus the Fixed Operating Payment
for such Operating Year, minus, the portion (if any) of the Calculated
Variable Operating Payment for such Operating Year actually paid to
Operator pursuant to Exhibit C.2.3.2 and minus the aggregate amounts
of Operating Income and (if any) Additional Seat Use Revenue payable
to Operator for such Operating Year, under the provisions of Exhibits
C.2.2.1 and
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<PAGE> 5
C.2.1.2, respectively, expressly and only for the payment and
reduction of Cumulative Deferred Variable Operating Payment, plus (ii)
the Calculated Variable Operating Payment for such Operating Year
(whether or not any portion thereof was paid to Operator for such
Operating Year pursuant to Exhibit C.2.3.2).
"Unrecovered Deferral Operating Year" - A Deferral Operating Year for
which either (or both) the Deferred Annual Replacement Fund Payment for such
Operating Year or the Deferred Variable Operating Payment for such Operating
Year has not been fully recovered by payment thereof pursuant to Exhibit
C.2.1.2(iv) and/or Exhibit C.2.2.1(a)(i)(B)(5).
(ii) deleting the definition for "Annual Replacement Fund
Payment" in its entirety and replacing it with the following:
"'Annual Replacement Fund Payment' - For the first Operating Year an
amount equal to that amount calculated pursuant to Article II of this Contract
prior to the amendment hereof by the First Amendment hereto; and for each
Operating Year thereafter the sum of $50,000.00."
(iii) deleting the definition for "Contract" in its
entirety and replacing it with the following:
"'Contract' - This agreement containing eleven (11) pages and Exhibits
A through I hereto, as amended by the First Amendment to Miami Arena Contract
and Agreement dated as of December 13, 1990 and as the same may be further
amended, modified or supplemented from time to time."
(iv) deleting the definition for "Net Operating Income" in
its entirety and replacing it with the following:
"'Net Operating Income - For each Operating Year, the amount, if any,
by which the Operating Income for such Operating Year exceeds the Operating
Expenses for such Operating Year, as determined in accordance with generally
accepted accounting principles."
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<PAGE> 6
(v) deleting the definition for "Operating Income" in its
entirety and replacing it with the following:
"'Operating Income' - For each Operating Year, all income during such
Operating Year from any use of, concession at or in, or advertising in or
connected with the Premises or interest, if any, on such amounts, as received
or properly accrued by Operator during such Operating Year in accordance with
generally accepted accounting principles. However, Operating Income shall not
include the Seat Use Revenues, Additional Seat Use Revenues (except that
Additional Seat Use Revenue shall be included in Operating Income for a given
Operating Year to the extent Additional Seat Use Revenues for such Operating
Year are used, under Exhibit C.2.1.2, to reduce an Adjusted Operating Loss for
such Operating Year under any of the provisions of Exhibit C.2.1.2(i), to pay
all or a portion of the Annual Replacement Fund Payment for such Operating
Year, to pay all or a portion of the Calculated Variable Operating Payment for
such Operating Year or to pay any amount of Deferred Annual Replacement Fund
Payment and/or Deferred Variable Operating Payment for any Deferral Operating
Year), Convention Development Tax Revenues, sales taxes or other admission
charges collected by Operator in satisfaction of Legal Requirements therefor,
nor include proceeds of condemnation or insurance (other than business
interruption) nor proceeds from ticket sales on behalf of, or as agent for, the
user of the Arena that are not paid to Operator for rental of the Arena or in
connection therewith, nor any Event-Related Expenses collected by Operator from
any such user. Moreover, Operating Income shall not include (and Owner shall
have no right, title or interest in): the Operating Payment; any payments
received by Operator or any Operator Affiliate for or in connection with the
sale, transfer, exchange, assignment or other hypothecation of an ownership or
profits interests in Operator or any Operator Affiliate; any payments, rights
or interests received by an Operator Affiliate arising out of or connected with
the use of, concessions in or at, or advertising in or connected with, the
Premises pursuant to any agreement between Operator and the Operator Affiliate
entered into pursuant to or consistent with the provisions of Exhibit D.7; or
proceeds of any loan to Operator or an Operator Affiliate.
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<PAGE> 7
Further, if Operating Income for a given Operating Year includes accounts
receivable that are uncollected on the last day of such Operating Year, then
any such accounts receivable that remain uncollected at the later of (i) the
close of business on the first business day in the month of December following
the end of such prior Operating Year or (ii) the date of the audit report for
such prior Operating Year prepared as provided for in Exhibit D.9.3.3, shall be
reversed against the Operating Income for such prior Operating Year and charged
against the specific revenue account(s) to which such item(s) was (were)
previously credited (and when such item(s) are collected, it (they) shall be
included in the Operating Income for the Operating Year in which it (they)
actually are collected). Operating Income is further defined in Exhibit
D.7.6(iv)."
(vi) deleting the definition for "Operator's Operating
Income Allocation" in its entirety and replacing it with the
following:
"'Operator's Operating Income Allocation' -
(a) For the Initial Operating Year, the sum of (i) 57.5%, of the
first $1,750,000.00 of Net Operating Income for such Operating Year, (ii) 45%
of the next $1,750,000.00 of Net Operating Income for such Operating Year and
(iii) 40% of the remaining Net Operating Income for such Operating Year; and
(b) For each subsequent Operating Year commencing with the 1988-89
Operating Year, the amount of Operating Income provided to be paid to Operator
for such Operating Year under the provisions of Exhibit C.2.2.1."
(vii) deleting the definition for "Operator's Seat Use
Allocation" in its entirety and replacing it with the following:
"'Operator's Seat Use Allocation' -
(a) For the Initial Operating Year, the amounts of Seat Use
Revenue provided to be paid to Operator for such Operating Year under the
provisions of Exhibit C.2.1.1; and
(b) For each subsequent Operating Year commencing with the 1988-89
Operating Year, the amounts of Seat Use Revenues and Additional Seat Use
Revenues, respectively,
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<PAGE> 8
provided to be paid to Operator for such Operating Year under the provisions of
Exhibit C.2.1.2."
(viii) deleting the definition for "Owner's Operating Income
Allocation" in its entirety and replacing it with the following:
"'Owner's Operating Income Allocation' -
(a) For the Initial Operating Year, the sum of (i) 42.5% of the
first $1,750,000.00 of Net Operating Income for such Operating Year, (ii) 55%
of the next $1,750,000.00 of Net Operating Income for such Operating Year and
(iii) 60% of the remaining Net Operating Income for such Operating Year; and
(b) For each subsequent Operating Year commencing with the 1988-89
Operating Year, the amount of Operating Income provided to be paid to Owner for
such Operating Year under the provisions of Exhibit C.2.2.1."
(ix) deleting the definition for "Owner's Seat Use
Allocation" in its entirety and replacing it with the following:
"'Owner's Seat Use Allocation' -
(a) For the Initial Operating Year, the amounts of Seat Use
Revenue provided to be paid to Operator for such Operating Year under the
provisions of Exhibit C.2.1.1; and
(b) For each subsequent Operating Year commencing with the 1988-89
Operating Year, the amounts of Seat Use Revenues and Additional Seat Use
Revenues, respectively, provided to be paid to Owner for such Operating Year
under the provisions of Exhibit C.2.1.2."
(x) deleting the definition for "Seat Use Charge" in its
entirety and replacing it with the following:
"'Seat Use Charge' - The amount that (except as provided to the contrary below
in this definition) (i) the user of each seat in the Arena shall be charged for
use of such seat and (ii) Operator shall collect from each such user. Such
amount shall be at least $0.75 per seat and any increase above $0.75 must be
acceptable to both Owner and Operator; for purposes of Exhibit D.1.1.2(e), the
Seat Use Charge shall continue to be $0.75 unless
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<PAGE> 9
Owner and Operator specifically agree that for purposes of Exhibit D-1-1.2(e)
Seat Use Charge shall be a different amount. Such charge shall be in addition
to, and not in lieu of, admission charges. Notwithstanding the preceding
provisions of this definition, Operator shall not be obligated to, but may,
apply the Seat Use Charge on event tickets distributed without charge."
(xi) deleting the definition for "Special Budgeted Years"
in its entirety and replacing it with the following:
"'Special Budgeted Years' - any Operating Year that (i) is after the third
Operating Year of the Term and (ii) is immediately preceded by two consecutive
Operating Years in each of which there has been an Adjusted Operating Loss."
(b) Exhibit C is amended by:
(i) deleting Exhibit C.2.1 in its entirety and replacing
it with the following Exhibit C.2.1.1 and Exhibit C.2.1.2:
"C.2.1.1 Seat Use Revenues. Within thirty (30) days after the end of
each Operating Quarter and subject to the provisions of Exhibit
C.2.2.2(b) and C.2.2.1(d), Operator shall cause the Seat Use Revenues
received during such Operating Quarter to be distributed as follows:
(i) First, out of the first $1,350,000.00 of Seat Use
Revenues received during such Operating Year, Owner shall be paid 25%
and Operator shall be paid 75%; and
(ii) Second, out of the remaining Seat Use Revenues, if
any, that have been received during such Operating Year, Owner shall
be paid 50% and Operator shall be paid 50%.
C.2.1.2 Additional Seat Use Revenues. Within ninety (90) days after
the end of each Operating Year commencing with the 1989-90 Operating
Year and subject to the provisions of Exhibit C.2.2.2(b), Operator,
after application of all Operating Income for such operating Year in
accordance with this Contract, shall cause the Additional Seat Use
Revenues, to the extent that there are Additional
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<PAGE> 10
Seat Use Revenues available, to be applied and paid in the following
order of priority:
(i) first, to the reduction of the Adjusted Operating
Loss (if any) for such Operating Year in the following order of
priority:
(A) first, to pay any unpaid Adjusted Operating
Expenses incurred or properly accrued by Operator during such
Operating Year;
(B) then, to owner and operator to repay to Owner
and Operator any sums which Owner and Operator, or either of
them, may have paid, in respect of Adjusted Operating
Expenses for such Operating Year, under Exhibits
C.2.2.1(a)(ii), C.2.2.1(c) or C.2.2.1(d), pro rata according
to the aggregate respective amounts so paid by Owner and
Operator for such Operating Year, until all such amounts so
paid by Owner and Operator have been repaid in full;
(C) then, to repay to the Replacement Fund the
amount of money drawn therefrom during such Operating Year
to pay Adjusted Operating Expenses pursuant to Exhibit
C.2.2.1(d);
(D) then, to Owner and Operator to repay to Owner
and Operator any Seat Use Revenues which may have been used,
pursuant to Exhibit C.2.2.1(d), to pay Adjusted operating
Expenses for such Operating Year, pro rata according to
Owner's and Operator's respective Seat Use Allocations of
such Seat Use Revenues for such Operating Year; and
(E) then, to repay to the Maintenance Fund the
amount of money drawn therefrom during such Operating Year
to pay Adjusted Operating Expenses pursuant to Exhibit
C.2.2.1(d);
(ii) then, to the payment of such portion (which may be
all) of the Annual Replacement Fund Payment for such Operating Year
as may be in excess of the Available Operating Income (if any) for
such Operating Year;
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<PAGE> 11
(iii) then, to the payment of such portion (which may be
all) of the Calculated Variable Operating Payment for such Operating
Year as may be in excess of the amount (if any) by which the
Available Operating Income (if any) for such Operating Year exceeds
the Annual Replacement Fund Payment for such Operating Year;
(iv) then, with respect to each then Unrecovered Deferral
Operating Year, commencing with the earliest then Unrecovered
Deferral Operating Year, and following with each succeeding
Unrecovered Deferral Operating Year to and including the most recent
Unrecovered Deferral Operating Year, an amount equal to the portion
of the sum of the Deferred Annual Replacement Fund Payment (if any)
for such Deferral Operating Year and the Deferred Variable Operating
Payment (if any) for such Deferral Operating Year which has not been
paid previously pursuant to this Exhibit C.2.1.1(iv) and/or Exhibit
C.2.2.1(a)(i)(B)(5) (including any payments made pursuant to Exhibit
C.2.2.1(a)(i)(B)(5) immediately prior to the payment to be made
pursuant to this Exhibit C.2.1.2(iv)), which amount shall be applied
first to such unpaid portion of the Deferred Annual Replacement Fund
Payment (if any) for such Deferral Operating Year and second to pay
to Operator such unpaid portion of the Deferred Variable Operating
Payment (if any) for such Deferral Operating Year; and
(v) then, if the Seat Use Revenues received during such
Operating Year were less than $1,350,000, the remaining
Additional Seat Use Revenues received during such Operating Year
shall be paid 25% to Owner and 75% to Operator until the sum of Seat
Use Revenues and Additional Seat Use Revenues paid to Owner and
Operator for such Operating Year equals $1,350,000; and
(vi) finally, the remaining Additional Seat Use Revenues
received during such Operating Year shall be paid 50% to Owner
and 50% to Operator."
(ii) deleting Exhibit C.2.2 in its entirety and replacing
it with the following:
"C.2.2 Operating Income/Replacement Fund/Maintenance Account,
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<PAGE> 12
C.2.2.1 Payment of Operating Expenses Extraordinary Expenses
(a) (i) To the extent that there is Operating Income
available to do so, Operator shall use and apply the Operating Income
as follows:
(A) For the Initial Operating Year, to the
payment of Operating Expenses as such expenses are incurred
(with any Net Operating Income to be paid pursuant to Exhibit
C.2.2.2); and
(B) For each subsequent Operating Year commencing
with the 1988-89 Operating Year, to the payment of the
following items in the following order of priority:
(1) first, to the payment of Adjusted
Operating Expenses for such Operating Year as such
expenses are incurred;
(2) then, if applicable pursuant to
Exhibit C.2.2.2(d), to repay to the Maintenance
Account the amount of money drawn therefrom during
such Operating Year pursuant to Exhibit C.2.2.1(d);
(3) then, to the payment of the Annual
Replacement Fund Payment for such Operating Year;
(4) then, to Operator only, in payment
of the Calculated Variable Operating Payment for such
Operating Year;
(5) then, with respect to each then
Unrecovered Deferral Operating Year, commencing with
the earliest then Unrecovered Deferral Operating
Year, and following with each succeeding Unrecovered
Deferral Operating Year to and including the most
recent Unrecovered Deferral Operating Year, an amount
equal to the portion of the sum of the Deferred
Annual Replacement Fund Payment (if any) for such
Deferral Operating Year and the Deferred Variable
Operating Payment (if any) for such Deferral
Operating Year
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<PAGE> 13
which has not been paid previously pursuant to this
Exhibit C.2.2.1(a)(i)(B)(5) and/or Exhibit
C.2.1.2(iv), which amount shall be applied first to
such unpaid portion of the Deferred Annual
Replacement Fund Payment (if any) for such Deferral
Operating Year and second to pay to Operator such
unpaid portion of the Deferred Variable Operating
Payment (if any) for such Deferral Operating Year;
and
(6) finally, the remaining Operating
Income for such Operating Year ("Remaining Operating
Income") shall be paid to Owner and to Operator as
follows:
(A.) 57.5% to Operator and 42.5% to
Owner of the first $1,750,000 of Remaining
Operating Income;
(B.) then, 45% to Operator and 55%
to Owner of the next $1,750,000 of Remaining
Operating Income; and
(C.) finally, any further Remaining
Operating Income shall be paid 40% to
Operator and 60% to Owner.
(ii) To the extent that there exists (A) an Operating Loss
at anytime during the Initial Operating Year or (B) an Adjusted
Operating Loss during any subsequent Operating Year commencing with
the 1988-89 Operating Year, Operator shall deliver written notice
thereof to Owner and if there are adequate funds therefor in the
Maintenance Account, Owner shall, within three (3) days after receipt
of such notice, pay to Operator out of the Maintenance Account an
amount of money equal to such Operating Loss or such Adjusted
Operating Loss, as applicable. To the extent funds are not available
in the Maintenance Account to pay such Operating Loss or such Adjusted
Operating Loss, as applicable, then to the extent there are adequate
funds in the Replacement Fund, Operator shall pay such Operating Loss
or such Adjusted Operating Loss, as applicable, out of the Replacement
Fund. To the extent there exists such
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<PAGE> 14
an Operating Loss or such an Adjusted Operating Loss, as applicable,
and there are no funds remaining in the Maintenance Account and the
Replacement Fund, then (Y) Owner is and shall be obligated to provide
to Operator within fifteen (15) days after demand therefor an amount
of money equal to 86% of such Operating Loss or such Adjusted
Operating Loss, as applicable, and (Z) on the fifteenth (15th) day
after such demand to Owner or on the day Owner actually pays its 86%
share, if later, Operator shall pay for 14% of such Operating Loss or
such Adjusted Operating Loss, as applicable.
(iii) For each Operating Year commencing with the 1990-91
Operating Year that, because of insufficient Operating Income and
Additional Seat Use Revenues for such Operating Year, the entire
Annual Replacement Fund Payment for such Operating Year is not paid
out of Operating Income and/or Additional Seat Use Revenues pursuant
to the applicable provisions of Exhibits C.2.2.1 and C.2.1.2,
respectively, then the amount of the Annual Replacement Fund Payment
for such Operating Year which is not paid out of such Operating Income
and Additional Seat Revenues (an "Unpaid ARFP Portion") (subject to
the $200,000 maximum balance limitation set forth in the definition of
"Cumulative Deferred Annual Replacement Fund Payment" in Article II)
shall be deferred, without interest, and shall become a Deferred
Annual Replacement Fund Payment for all purposes of this Contract. If
an Unpaid ARFP Portion for a given Operating Year is not deferred (and
thus does not become a Deferred Annual Replacement Fund Payment)
because of such $200,000 maximum balance limitation on the Cumulative
Annual Replacement Fund Payment, then such Unpaid ARFP Portion shall
be cancelled and thereafter shall not be either paid or deferred (even
if in a subsequent Operating Year the balance of the Cumulative
Deferred Annual Replacement Fund Payment is reduced to an amount which
is less than $200,000).
Any Annual Replacement Fund Payment, or portion thereof, which is
deferred pursuant to this Exhibit C.2.2.1(a)(iii) and becomes a
Deferred Annual Replacement Fund Payment shall not be cancelled, but
shall be paid and recovered only as provided for in the applicable
provisions of this Contract.
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<PAGE> 15
(b) To the extent that there are adequate funds available
in the Replacement Fund, Operator shall use such funds to pay any
Extraordinary Replacement and Repair Expenses for which insurance
proceeds are not available. To the extent thereafter that there are
not adequate funds available in the Replacement Fund but there are
adequate funds available therefor in the Maintenance Account, Owner
shall, within three (3) days after receipt of a notice from Operator
requesting such funds, pay to Operator out of the Maintenance Account
an amount equal to the amount needed to pay any Extraordinary
Replacement and Repair Expenses for which insurance proceeds are not
available. To the extent that there are not adequate funds in the
Replacement Fund or the Maintenance Account to pay Extraordinary
Replacement and Repair Expenses, Owner is and shall be obligated to
provide such funds to Operator within fifteen (15) days after demand
therefor. Operator shall have no obligation to provide any funds for
Extraordinary Replacement and Repair Expenses.
To the extent that insurance and warranty proceeds may be available to
pay any Extraordinary Replacement and Repair Expenses, Operator shall
diligently pursue collection thereof. If any such proceeds are
collected by Operator after Owner has already provided Operator with
funds to pay for the same expenses then such proceeds shall be paid to
Owner to the extent, if any, that it is necessary to result in Owner
paying only that part of Extraordinary Replacement and Repair Expenses
that exceeds such insurance and warranty proceeds.
(c) Notwithstanding the provisions of Exhibit
C.2.2.1(a)(ii) to the contrary and unless such excess costs arise out
of an event of force majeure, Owner shall have no obligation to pay,
and Operator shall not be entitled to draw funds out of the
Maintenance Account or the Replacement Fund to pay the amount by which
the Operating Expenses incurred by Operator during each Regular
Budgeted Year and each Special Budgeted Year (other than the cost of
utilities, insurance, taxes, extraordinary legal costs, Block 44 and
57 Annual Payment, Annual Replacement Fund Payment and Operating
Payment) exceed the sum of the Operating Expenses (other than the cost
of utilities, insurance, taxes, extraordinary legal costs, Block 44
and 57 Annual
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<PAGE> 16
Payment, Annual Replacement Fund Payment and Operating Payment) set
forth in the Approved Operating Expense Budget for such Operating Year
(as escalated to meet the obligations of Operator to third parties
under contracts that have been approved by Owner and to meet
unforeseen emergencies) plus fifteen percent (15%). To the extent the
Operating Income for such Operating Year is not adequate to pay such
costs, Operator shall pay the excess costs described in the preceding
sentence that do not arise out of an event of force majeure and/or are
not in the reasonable judgment of Owner offset by savings, if any,
that may have been realized during such Operating Year in costs for
utilities, insurance, taxes, extraordinary legal Costs, NBA staffing
and box office and NBA inducements.
(d) Notwithstanding the provisions of Exhibit
C.2.2.1(a)(ii) to the contrary, if at any time prior to the end of (i)
the Initial Operating Year or (ii) the end of any subsequent Operating
Year commencing with the 1988-89 Operating Year, the Operating
Expenses (in the case of the Initial Operating Year) or the Adjusted
Operating Expenses (in the case of any subsequent Operating Year)
incurred to such date exceed the amount of working capital, if any,
then available plus the Operating Income received to the same date
during such Operating Year, then the provisions of this Exhibit
C.2.2.1(d) shall be followed in order to fund such cash deficit.
First, within three (3) days after receipt of a notice requesting such
funds and to the extent the amount of funds thus far paid out of the
Maintenance Account during such Operating Year to pay cash deficits
does not exceed $500,000, then Owner shall pay to Operator out of the
Maintenance Account an amount equal to such cash deficits. If during
an Operating Year Owner has paid more than $500,600 out of the
Maintenance Account to pay cash deficits for such Operating Year and
it is necessary to have additional funds to pay for additional cash
deficits during such Operating Year and provided the amount of Seat
Use Revenues used to pay cash deficits shall never exceed the balance
in the Maintenance Account, Operator shall use the Seat Use Revenues
that have not been paid out to Owner and Operator pursuant to Exhibit
C.2.1 to fund such cash deficits. If such Seat Use Revenues are
insufficient to pay such cash deficits or if the balance in the
Maintenance Account does not
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<PAGE> 17
exceed the amount of Seat Use Revenues used during such Operating Year
to pay cash deficits, then any remaining funds needed during such
Operating Year to pay cash deficits shall be paid in accordance with
the procedure set forth in Exhibit C.2.2.1(a)(ii) as if cash deficits
were Operating Losses (in the case of the Initial Operating Year) or
Adjusted Operating Losses (in the case of any subsequent Operating
Year commencing with the 1988-89 Operating Year). That is, all funds
remaining in the Maintenance Account in excess of the amount of Seat
Use Revenues used during such Operating Year to pay cash deficits and
all funds in the Replacement Fund shall be used to pay such cash
deficits and when there are no funds in the Maintenance Account in
excess of the amount of Seat Use Revenues used during such Operating
Year to pay cash deficits, and there are no funds in the Replacement
Fund, Owner and Operator shall pay 86% and 14% respectively, of such
cash deficits. Operator shall maintain a record of the Seat Use
Revenues used to pay cash deficits pursuant to this Exhibit
C.2.2.1(d).
C.2.2.2 Payment of Allocations of Operating Income to
Operator and Owner.
(a) Within ninety (90) days after the end of each
Operating Year, Operator shall be responsible for paying, and shall
pay, such payment to be provisional and subject to adjustment based
upon a final audit, out of Operating Income for such Operating Year
(i) subject to the remaining provisions of this Exhibit C.2.2.2, to
Operator, Operator's Operating Income Allocation and (ii) subject to
the remaining provisions of this Exhibit C.2.2.2, to Owner, Owner's
Operating Income Allocation.
(b) If Operator has used any of its own funds to pay for
any Operating Expenses (in the case of the Initial Operating Year) or
any Adjusted Operating Expenses (in the case of any subsequent
Operating Year commencing with the 1988-89 Operating Year) [other than
payment of Operating Expenses or Adjusted Operating Expenses, as
applicable, by Operator pursuant to Exhibit C.2.2.1(c)] or
Extraordinary Replacement and Repair Expenses after written demand has
been made on Owner to make such payments or to cure or attempt to cure
any Owner Default after Final Notice and
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<PAGE> 18
has not been reimbursed such amounts, then Owner shall be obligated to
repay such amounts to Operator on demand together with interest
thereon at the rate of Prime plus 2 1/2% per annum from the date of
its expenditure until paid to Operator. In addition to all rights and
remedies available at law or equity to collect such amounts from
Owner, Operator shall be entitled to receive, out of Owner's Operating
Income Allocation and Owner's Seat Use Allocation, (shall retain for
its own account and not pay to Owner), the amount of such money so
expended by Operator together with interest thereon at the rate of
Prime plus two and one-half percent (2 1/2%) per annum from the date
of its expenditure until paid to Operator. Owner acknowledges that
Operator has no obligation to use any of Operator's own funds to pay
for any Operating Expenses [except as specifically provided in Exhibit
C.2.2.1(a)(ii)(Z) and (C) or Extraordinary Replacement and Repair
Expenses or to cure or attempt to cure any Owner Default. If Owner has
used any of its own funds to pay for those specific Operating Expenses
or Adjusted Operating Expenses, as applicable, that pursuant to
Exhibit C.2.2.1(a)(ii)(Z) and (c) are to be paid by Operator or to
cure or attempt to cure any Operator Default after Final Notice and
has not been reimbursed such amounts, then Operator shall be
obligated to repay such amounts to Owner on demand together with
interest thereon at the rate of Prime plus 2 1/2% per annum from the
date of its expenditure until paid to Owner. In addition to all
rights and remedies available at law or equity to collect such amounts
from Operator but subject to the limitations set forth in this
Contract, Owner shall be entitled to receive out of Operator's
Operating Income Allocation and Operator's Seat Use Allocation the
amount of money so expended by Owner together with interest thereon at
the rate of Prime plus two and one-half percent (2 1/2%) per annum
from the date of its expenditure until paid to Owner. Operator
acknowledges that Owner has no obligation to use any of Owner's own
funds to pay for those specific Operating Expenses that pursuant to
Exhibit C.2.2.1(a)(ii)(Z) and (c) are to be paid by Operator or to
cure or attempt to cure any Operator Default.
(c) If during an Operating Year any Seat Use Revenues are
used to pay cash deficits in accordance with Exhibit C.2.2.1(d), then
at the end
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<PAGE> 19
of such Operating Year, Owner shall pay out of the Maintenance Account
to Operator, for disbursement in accordance with this Exhibit
C.2.2.2(c), an amount equal to the Seat Use Revenues that were used
during such Operating Year to pay for cash deficits. To the extent
the funds in the Maintenance Account are insufficient to pay such Seat
Use Revenues, then the balance of such Seat Use Revenues shall be paid
in accordance with the provisions of Exhibit C.2.2.1(a) with such Seat
Use Revenues being paid in the same manner that Operating Losses or
Adjusted Operating Losses, as applicable under the provisions of
Exhibit C.2.2.1(a)(ii), are paid and with Owner and Operator receiving
an amount equal, respectively, to Owner's Seat Use Allocation of such
Seat Use Revenues and Operator's Seat Use Allocation of such Seat Use
Revenues.
(d) Notwithstanding any other provision of this Contract
which may be to the contrary, if (i) during an Operating Year funds
have been drawn pursuant to Exhibit C.2.2.1(d) out of the Maintenance
Account to pay Operating Expenses or Adjusted Operating Expenses, as
applicable, and (ii) at the end of such Operating Year there is, for
that Operating Year, Net Operating Income (in the case of the Initial
Operating Year) or Available Operating Income or Net Operating Income
(in the case of any subsequent Operating Year commencing with the
1988-89 Operating Year), then such Net Operating Income (in the case
of the Initial Operating Year) or Available Operating Income or Net
Operating Income (in the case of any subsequent Operating Year
commencing with the 1988-89 Operating Year), shall first be used to
repay to the Maintenance Account the amount of money drawn therefrom
during such Operating Year pursuant to Exhibit C.2.2.1(d)."
(iii) deleting Exhibit C.2.3.2 in its entirety and
replacing it with the following:
"C.2.3.2 Variable Operating Payment. For each Operating Year, the
Variable Operating Payment shall be twelve percent (12%) of the
amount, if any, by which the Operating Income for such Operating Year
exceeds $1,500,000.00. However, in any Operating Year in which the
Adjusted Operating Expenses exceed the Operating Income plus the total
of Seat Use Revenues and Additional Seat Use
- 19 -
<PAGE> 20
Revenues (if any), the Variable Operating Payment for such Operating
Year shall be zero. For the Initial Operating Year, the Variable
Operating Payment shall be an Operating Expense that is paid to
Operator at the end of the Initial Operating Year. For each
subsequent Operating Year commencing with the 1988-89 Operating Year,
the Variable Operating Payment shall be an Operating Expense that is
paid to Operator at the time and in the manner hereinafter provided.
For each Operating Year commencing with the 1988-89 Operating Year
that Operator, because of insufficient Operating Income and Additional
Seat Use Revenues for such Operating Year, is not entitled to be paid
the entire Calculated Variable Operating Payment for such Operating
Year out of Operating Income and/or Additional Seat Use Revenues
pursuant to the applicable provisions of Exhibits C.2.2.1 and C.2.1.2,
respectively, then the amount of the Calculated Variable Operating
Payment for such Operating Year which Operator is entitled to be paid
from such Operating Income and/or Additional Seat Use Revenues shall
be paid to Operator at the end of such Operating Year, and the amount
of the Calculated Variable Operating Payment for such Operating Year
which Operator is not so entitled to be paid out of such Operating
Income and/or Additional Seat Revenues (an "Unpaid CVOP Portion")
shall not be paid, and (subject to the $1,000,000 maximum balance
limitation set forth in the definition of "Cumulative Deferred
Variable Operating Payment" in Article II) shall be deferred, without
interest, and shall become a Deferred Variable Operating Payment for
all purposes of this Agreement. If an Unpaid CVOP Portion for a given
Operating Year is not deferred (and thus does not become a Deferred
Variable Operating Payment) because of such $1,000,000 maximum balance
limitation on the Cumulative Deferred Variable Operating Payment, then
such Unpaid CVOP Portion shall be cancelled and thereafter shall not
be either paid or deferred (even if in a subsequent Operating Year the
balance of the Cumulative Deferred Variable Operating Payment is
reduced to an amount which is less than $1,000,000).
For each Operating Year in which (i) there is no Operating Loss, or
(ii) if there is an Operating Loss for such Operating Year, Additional
Seat Use
- 20 -
<PAGE> 21
Revenue (if any) equals or exceeds such Operating Loss, the entire
Variable Operating Payment for such Operating Year shall be paid to
Operator at the end of such Operating Year and no portion thereof
shall be deferred.
Any Calculated Variable Operating Payment, or portion thereof, which
is deferred pursuant to this Exhibit C.2.3.2 and becomes a Deferred
Variable Operating Payment shall not be cancelled, but shall be paid
and recovered only as provided for in the applicable provisions of
this Contract."
(c) Exhibit D is amended by:
(i) deleting Exhibit D.1.1.1(d) in its entirety and
replacing it with the following:
"(d) If at any time during the Term, Owner is not in default under
this Contract and the amount of money that Owner has actually
paid in the aggregate subsequent to the Opening Date (i)
pursuant to Exhibit C.2.2.1(a)(i) of this Contract (prior to
its amendment by the First Amendment to Miami Arena Contract
and Agreement) for Operating Losses in the Initial Operating
Year and (ii) pursuant to Exhibit C.2.2.1(a)(ii) of this
Contract (as amended by the First Amendment to Miami Arena
Contract and Agreement) for Adjusted Operating Losses in the
Operating Years succeeding the Initial Operating Year, as
applicable, exceeds the amount of money that Owner has
received in the aggregate since the Opening Date pursuant to
all of Exhibit C.2.2.2(a), Exhibit C.2.1 (for the Initial
Operating Year) and Exhibits C.2.1.1 and C.2.1.2 (for
Operating Years subsequent to the Initial Operating Year) for
Owner's Operating Income Allocation and Owner's Seat Use
Allocation by $5,000,000.00 (such event is herein called a
"Performance Failure"). For purposes of this calculation
only: (i) neither Operating Losses nor Adjusted Operating
Losses shall include any payments out of the Maintenance
Account or any Operating Losses or Adjusted Operating Losses
that arise out of or are attributable to events of force
majeure or a condition that is common to the national or local
operating arena industry; and (ii) the sum of Operating Losses
for the Initial Operating Year and
- 21 -
<PAGE> 22
Adjusted Operating Losses for the four (4) Operating
Years succeeding the Initial Operating Year shall be
deemed not to exceed $1,000,000 (even if the actual
sum of such Operating Losses and such Adjusted
Operating Losses for such five (5) Operating Years is
greater than $1,000,000)."
(ii) deleting Exhibit D.1.4 in its entirety and
replacing it with the following:
"D.1.4 Termination Fee.
D.1.4.1 Except as specifically provided in this
Exhibit D.1.4, the Termination Fee shall be
an amount of money equal to the sum of (a)
the greater of (x) Operator's Decoma Amount
(as defined below) or (y) the product of (i)
seven and one-half (7 1/2) times (ii) the
average amount of all Qualifying Amounts of
each of the five (5) highest income years (as
defined below) during the Term plus (b) any
money that Operator has advanced in
accordance with the provisions of this
Contract to pay for any Operating Expenses
[other than payment of operating Expenses by
Operator pursuant to Exhibit C.2.2.1(a)(ii)
and C.2.2.1(c)] or Extraordinary Replacement
and Repair Expenses or to cure or attempt
to cure any Owner Default and that has not
been reimbursed to Operator out of Owner's
Operating Income Allocation or Owner's Seat
Use Allocation together with interest thereon
at the rate of Prime plus 2 1/2% per annum
from the date of its expenditure until paid to
Operator less (c) any money that (i) Owner
has advanced in accordance with the
provisions of this Contract to pay for those
specific Operating Expenses that pursuant to
Exhibit C.2.2.1(a) (ii) and 2.2.1(c) are
to be paid by Operator or to cure any
Operator Default after Final Notice and (ii)
has not been reimbursed to
- 22 -
<PAGE> 23
Owner together with interest as provided for
in Exhibit C.2.2.2(b).
The "five highest income years" shall be
those five Operating Years of the highest
Qualifying Amounts or if there are less than
five Operating Years in which there were
Qualifying Amounts, then the number of
Operating Years in which there were
Qualifying Amounts. "Operator's Decoma
Amount" shall be $7,121,000.00.
D.1.4.2 If any of the following specific events,
occur the amount of the Termination Fee shall
equal the sum of Operator's Decoma Amount
plus the amount calculated pursuant to
Exhibit D.1.4.1(b) less the amount calculated
pursuant to exhibit D.1.4.1(c): (i) if Owner
terminates the Contract at anytime before the
eighteenth (18th) Operating Year because of
an Operator Default that is a Performance
Failure; or (ii) if Owner terminates the
Contract at anytime prior to the eleventh
(11th) Operating Year because of an operator
Default that constitutes a "willful failure";
or (iii) if Owner terminates the Contract at
anytime prior to the eleventh (11th)
Operating Year because of the Operator
Default described in Exhibit D.1.1.1(c)(i);
or (iv) if Operator terminates this Contract
at anytime before the eighteenth (18th)
Operating Year because of an owner Default
described in Exhibit D.1.1.2(e).
D.1.4.3 If any of the following specific events
occur, the amount of the Termination Fee
shall equal the sum of Operator's Decoma
Amount [as reduced by Four Hundred Thousand
and No/100 Dollars ($400,000.00) for each
Operating Year that is prior to termination
and after the seventeenth (17th) Operating
Year] plus the amount calculated pursuant to
Exhibit D.1.4.1(b) less the amount calculated
- 23 -
<PAGE> 24
pursuant to Exhibit D.1.4.1(c): (i) if Owner
terminates the Contract at anytime after the
seventeenth (17th) Operating Year because of
an Operator Default that is a Performance
Failure; or (ii) if Operator terminates this
Contract at anytime after the seventeenth
(17th) Operating Year because of an Owner
Default described in Exhibit D.1.1.2(e).
D.1.4.4 If any of the following specific events
occur, the amount of the Termination Fee
shall equal the sum of Operator's Decoma
Amount (as reduced by Two Hundred Fifty
Thousand Dollars ($250,000.00) for each full
Operating Year that is prior to Termination
but after the tenth (10th) Operating Year and
prior to the eighteenth (18th) Operating Year
and Four Hundred Thousand and No/100 Dollars
($400,000.00) for each full Operating Year
that is prior to termination but after the
seventeenth (17th) Operating Year] plus the
amount calculated pursuant to Exhibit
D.1.4.1(b) less the amount calculated
pursuant to exhibit D.1.4.1(c): (i) if Owner
terminates the Contract at anytime after the
eleventh (11th) Operating Year because of
Operator Default that constitutes a 'willful
failure' or (ii) if Owner terminates the
Contract at anytime after the eleventh (11th)
Operating Year because of the operator
Default described in Exhibit D.1.1.1(c)(i).
D.1.4.5 If any of the following specific events
occur, the Termination Fee shall equal only
the amount calculated pursuant to exhibit
D.1.4.1(b) less the amount calculated
pursuant to Exhibit D.1.4.1(c): (i) if Owner
terminates the Contract at anytime after the
eleventh (11th) Operating Year because of
both an Operator Default that is a
Performance Failure and an Operator
- 24 -
<PAGE> 25
Default that satisfies the following
conditions: Operator is obligated pursuant to
the Contract to make the following payments,
has the ability out of Operating Income
received by it during the then current
Operating Year to make any such payments and
deliberately elects not to make any such
payments. Such payments are the payment to
Owner pursuant to Exhibit C.2.2(a) of Owner's
Operating Income Allocation and pursuant to
Exhibit C.2.1 of Owner's Seat Use Allocation,
payment of the insurance premiums for the
insurance described in Exhibit E and payment
of the Annual Replacement Fund Payment.
D.1.4.6 If any of the following specific events
occur, the amount of the Termination Fee
shall be the amount specified in Exhibit
D.1.4.1 reduced by Four Hundred Thousand and
No/100 Dollars ($400,000.00) for each
Operating Year prior to termination and after
the seventeenth (17th) Operating Year: if
Owner terminates the Contract at anytime
because of an Operator Default described in
Exhibit D.1.1.1(a) or D.1.1.(b) or
D.1.1.1(c)(ii).
D.1.4.7 If this Contract is terminated by Owner or
Operator, pursuant to Exhibit E.6.2, the
Termination Fee shall be the amount specified
in Exhibit E.6.2.
D.1.4.8 If this Contract is terminated by Operator
because of an Owner Default described in
Exhibit D.1.1.2(c) that is a condemnation of
all of the Premises, then the Termination Fee
shall be the sum of the portion of the
condemnation award made to Operator or to
which Operator is entitled pursuant to the
Block 44/57 Agreement for its contractual
interests in the Premises plus an amount
calculated pursuant to Exhibit
- 25 -
<PAGE> 26
D.1.4.1(b) less an amount calculated pursuant
to Exhibit D.1.4.1(c).
D.1.4.9 The term 'willful failure' as used in this
Exhibit D.1.4 shall mean when Operator has
the ability out of Operating Income received
by it during the then current Operating Year
to perform its obligations under this
Contract but deliberately elects without
justification not to perform such
obligations."
(iii) deleting Exhibit D.7.4 in its entirety and
replacing it with the following:
"D.7.4 Contracts for Use of Arena. Except only as
provided to the contrary in this Exhibit
D.7.4, Operator shall have full and exclusive
power and authority, without Owner approval,
to negotiate, execute, and perform (a)
contracts, use agreements, licenses and other
agreements with persons or entities who
desire to schedule events or performances,
telecasts, broadcasts or other transmissions
in, from or to the Premises or who desire
otherwise to use the Premises or any part
thereof and (b) contracts, use agreements,
licenses and other agreements with persons or
entities that otherwise pertain to the use,
operation and occupancy of the Premises or
any part thereof in the Arena or the Premises.
No Owner approval shall be required in
connection with the negotiation, execution
and performance of any of the contracts,
agreements and licenses described in this
Exhibit D.7.4 except that Owner shall have
the right to approve the execution of any of
those contracts, agreements and licenses
described in Exhibit D.7.4(a) and (b) that
(i) are with an Operator Affiliate or (ii)
schedule events or performances in the Arena
for more than 20 days during any one
Operating Year ("Required Approval
- 26 -
<PAGE> 27
Agreements"). Such Owner approval shall (i)
be given by the Chairman of Owner or his
designee, (ii) not be unreasonably withheld
and (iii) be subject to the standards for
owner review and approval set forth in
Exhibit D.6.4."
(iv) deleting Exhibit D.8.5 in its entirety and
replacing it with the following:
"D.B.5 Operating Losses. Except as specifically
provided in Exhibit C.2.2.1(a)(ii)(Z), and
without limiting the effect of Exhibits
C.2.1.2 and C.2.2.1(a)(i), Owner shall be
responsible for paying, and shall pay, all
Adjusted Operating Losses."
(v) Deleting Exhibit D.8.7 in its entirety and
replacing it with the following:
"D.8.7 Maintenance Account. Owner has established a
Maintenance account with Sun Bank-Miami,
N.A., which account has a balance of
$700,000.00 on October 16, 1986 and into
which account owner shall cause to be
deposited funds as provided in the documents
issued in connection with the Bonds and this
Contract. The Maintenance Account may be
used only to fund operating Losses (in the
Initial Operating Year) and Adjusted
Operating Losses (in all Operating Years
commencing with the 1988-89 Operating Year),
Extraordinary Replacement and Repair Expenses
for which funds are not available in the
Replacement Fund, to pay amounts due to the
operator under Paragraph C.2.2.2(b) of this
Contract, to pay owner and Operator pursuant
to Exhibit C.2.2.2(c) and for such other uses
as Owner and Operator shall agree. From and
after the date on which there have been three
(3) consecutive Operating Years in which
there is no Operating Loss and provided that
the amount of money
- 27 -
<PAGE> 28
that has theretofore been deposited in the
Maintenance Account equals at least
$2,250,000 Owner's obligation to make
payments into the Maintenance Account shall
cease. Thereafter Owner shall have the right
to withdraw funds from the Maintenance
Account for the exclusive purpose of paying
construction costs for a new exhibition
center provided that after withdrawal of any
such funds the aggregate of the balance of
funds in the Maintenance Account is at least
$2,250,000."
(vi) deleting Exhibit D.8.10 in its entirety and
replacing it with the following:
"D.8.10 Seat Use Charge and Additional Seat Use
Charge. There shall continuously be imposed
a Seat Use Charge and, as applicable in
accordance with the terms of this Contract,
there shall be imposed an Additional Seat Use
Charge, in each case for the use of each seat
in the Arena. The Seat Use Charge shall be
at least $0.75 per seat and the Additional
Seat Use Charge shall be the applicable
charge per seat set forth in this Contract.
Increases in the Seat Use Charge or the
Additional Seat Use Charge shall be as
mutually agreed upon by owner and Operator as
set forth in this Contract. As contemplated
in the definition for Seat Use Charge, Owner
and Operator agree, for the purposes of
Exhibit D.1.1.2(e) only, that the Seat Use
Charge referred to in Exhibit D.1.1.2(e)
shall be $1.00. Operator shall not be
required to maintain collected Seat Use
Charges and Additional Seat Use Charges in
segregated accounts and may commingle Seat
Use Charges and Additional Seat Use Charges
in the same account. However, Operator shall
maintain accurate records of the amounts of
Seat Use Charge and Additional Seat Use
Charge received in each Operating Year. To
determine the amount of
- 28 -
<PAGE> 29
interest earned on Seat Use Charges and
Additional Seat Use Charges, respectively,
for the purpose of quantifying Seat Use
Revenues and Additional Seat Use Revenues,
the aggregate interest earned during the
course of an Operating Year on Seat Use
Charges and Additional Seat Use Charges shall
be prorated and deemed earned on the Seat Use
Charges and the Additional Seat Use Charges,
respectively, received for such Operating
Year in the same proportion as the respective
total amounts of Seat Use Charges and
Additional Seat Use Charges received during
such Operating Year."
(vii) deleting from Exhibit D.10.6 the requirement
that copies of notices directed to owner be sent to
Robert N. Sechen.
(viii) adding to Exhibit D.10.6 the requirement that
copies of notices directed to Owner be sent to:
William Perry III
Executive Director
Miami Sports and Exhibition Authority
300 Biscayne Boulevard Way
Suite 1120
Miami, Florida 33131
Christopher G. Korge
Holland & Knight
1200 Brickell Avenue
Miami, Florida 33101
2. Ratification. Except as expressly amended hereby the Original
Contract is hereby ratified and confirmed.
C. Additional Stipulations and Agreements.
1. Approval of 1988-89 and 1989-90 operating Expense Budgets.
The 1988-89 Operating Expense Budget submitted by Operator has been approved by
Owner, has been initialed by the parties for identification and is attached to
this Agreement as Exhibit A. The 1989-90 Operating Expense Budget submitted by
Operator has been approved by Owner, has been initialled by the
- 29 -
<PAGE> 30
parties for identification and is attached to this Agreement as Exhibit B.
2. Concerning the Operating Loss in the Initial Operating Year.
Owner agrees that the $107,559.00 paid by Operator to Owner on December 1,
1988, toward the loss from operations of $299,665 for the Initial Operating
Year (ending September 30, 1988), is the only payment Operator is obligated
under the Contract to make to Owner in respect of the Operating Loss for the
Initial Operating Year and, specifically, but without limitation, Owner hereby
waives any right to require Operator to contribute any portion of the purported
increase in the Operating Loss for the Initial Operating Year resulting from
the audit adjustments noted by Arthur Andersen & Co. in its report dated March
1, 1989.
3. Concerning Certain Receivables from Owner Held by Operators
Owner agrees to pay to Operator, on or before December 31, 1990, in full, the
amounts shown on Exhibits C and D attached to this Agreement, which are
accounts receivable from Owner on the books of Operator. The amounts shown on
Exhibit C shall be paid from funds in the Maintenance Account and the amounts
shown on Exhibit D shall be paid from Owner's funds.
4. Concerning Deposits to and Disbursements from the Replacement
Fund for Operating Year 1989-90. Owner and Operator have agreed that
$124,000.00 of the Net Operating Income for Operating Year 1989-90 shall be
deposited to the Replacement Fund, and such deposit has been made; and have
agreed that disbursements from the Replacement Fund shall be made, at such
times as Operator designates, to pay for the respective items, and in the
respective amounts therefor, set forth on the schedule attached to this
Agreement as Exhibit E.
5. Concerning Possible Costs Resulting from Art in Public Places
Ordinance. Reference is made to the fact that compliance hereafter with the
Art in Public Places ordinances of the City of Miami may require the incurrence
of costs to acquire art objects to be placed in or around the Arena. Operator
shall have the right to approve all such art objects (and any replacements
thereof), and their placement in or around the Premises, prior to the
acquisition thereof by owner; such approval shall not be unreasonably withheld
or delayed. Owner agrees that Operator shall have no obligation, under the
Contract or otherwise, to pay, contribute to the payment of, or reimburse Owner
in full or part for any of such costs to acquire any such objects or to replace
any such object; such costs shall not be Operating Expenses or Extraordinary
Replacement and Repair Expense; and no disbursement shall be made from
operating Income, Seat Use Revenue, Additional Seat Use Revenue, the
Replacement Fund or the Maintenance Fund to pay or reimburse such costs.
- 30 -
<PAGE> 31
D. Miscellaneous.
1. Governing Law. This Agreement shall be governed by the laws
of the State of Florida, and venue shall be in the City of Miami, Dade County,
Florida.
2. Entire Agreement. This Agreement constitutes the entire
agreement, and supercedes any and all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof.
3. Captions. The captions used in this Agreement are for
convenience only and shall in no way define, limit, or describe the scope or
intent of this Agreement or any part thereof.
4. Severability. If any term or provision or this Agreement, or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to the persons or circumstance other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
5. No Third Party Beneficiaries. The terms and provisions of
this Agreement shall inure to the benefit of and be enforceable by the parties
thereto and their permitted assignees, and no third parties shall succeed to
any right hereunder or be benefitted hereby.
6. Attorneys' Fees. In the event either party defaults in the
performance of any of the terms, conditions or agreements contained in this
Agreement and the other party places the enforcement of this Agreement, or any
part thereof, or the collection of any sums due, or to become due, hereunder,
in the hands of an attorney who files suit upon the same (either by direct
action or counterclaim) and should such non-defaulting party prevail in such
suit, the defaulting party shall pay the other party's reasonable attorney's
fees. Any such attorney's fees shall not be Considered Operating Expenses.
7. Effective Dates. The provisions of Articles A, B (other than
Section B.1(viii)) and D (other than this Section D.7) and of Sections C.l.,
C.2 and C.6 of this Agreement shall be effective as of October 1, 1988 except
as Section C.1 relates to the 1989-90 Operating Expense Budget, as to which
such provision shall be effective as of October 1, 1989; the provisions of
Sections B-1(viii), C.3, C.4, C.5 and D.7 of this Agreement shall be effective
as of December 13, 1990.
- 31 -
<PAGE> 32
IN WITNESS WHEREOF, Owner and Operator have executed this Agreement as
of the date first set forth above to be effective as of the respective dates
set forth in this Agreement.
MIAMI SPORTS AND EXHIBITION
AUTHORITY
By: /s/ Victor DeYurre
------------------------------------
Name: Victor DeYurre
Title: Chairman
and
By: /s/ William Perry III
------------------------------------
Name: William Perry III
Title: Executive Director
Approved as to Form and Correctness
Holland and Knight
/s/ Christopher G. Korge
----------------------------------------
Christopher G. Korge
DECOMA MIAMI ASSOCIATES, LTD.
By: Decoma, Ltd., its sole general
partner
By: Decoma Venture, its sole
general partner
By: BIL Development, Inc.
Managing Venturer
By: /s/ C. Dean Patrinely
----------------------
C. Dean Patrinely
President
- 32 -
<PAGE> 33
FIRST AMENDMENT TO MIAMI ARENA CONTRACT AND AGREEMENT
MIAMI ARENA
BUDGETED REVENUE AND EXPENSES
FISCAL YEAR 1988-1989
<TABLE>
REVENUES
<S> <C>
RENTAL 896440.00
NBA FIXED 124550.00
CONCESSIONS-NON-NBA 681366.51
CONCESSIONS-NBA 361257.23
PRIVATE SUITES 202500.00
ADVERTISING 250087.00
BOX OFFICE 176295.00
OTHER 257486.67
TOTAL OPERATING REVENUES 2949982.41
EXPENSES:
FIXED OPERATING PAYMENT 275000.00
VARIABLE OPERATING PAYMENT 0.00
ADMINISTRATIVE 1467596.80
REPAIR & MAINTENANCE 265406.00
UTILITIES 500000.00
PROMOTION/ADVERTISING 110000.00
INSURANCE 240000.00
ANNUAL RESERVE 0.00
BLOCK 44 LEASE 300000.00
TELEPHONE 40000.00
NBA STAFFING 209000.00
TOTAL OPERATING EXPENSES 3407002.80
NET OPERATING INCOME (DEFICIT) -457020.39
</TABLE>
Page 1 of 11 - Exhibit "A"
<PAGE> 34
MIAMI ARENA
BUDGET
FY 1988-89
<TABLE>
<CAPTION>
TOTAL
BUDGET OCT NOV DEC JAN FEB MAR
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUE:
REXIAL 896440.00 89644.00 89644.00 89644.00 89644.00 89644.00 89644.00
NBA FIXED 124550.00 20750.33 20750.33 20750.33 20750.33 20750.33
CONCESSION 681366.51 68136.65 68136.65 68136.65 68136.65 68136.65 68136.65
CONCES. K&A 351257.23 60209.54 60209.54 60209.54 60209.54 60209.54
PRIVATE SUIT 207500.00 16667.00 16667.00 16667.00 16667.00 16667.00 16667.00
ADVERTISING 250087.00 20583.00 20583.00 20583.00 20583.00 20583.00 20583.00
BOX OFFICE 176295.00 14691.25 14691.25 14691.25 14691.25 14691.25 14691.25
OTHER 257486.67 21457.22 21457.22 21457.22 21457.22 21457.22 21457.22
TOTAL 2949982.41 231179.12 312147.00 312147.00 312147.00 312147.00 312147.00
EXPENSES:
FIXED OPER P 275000.00 22916.67 22916.67 22916.67 22916.67 22916.67 22916.67
VAR OPER PAT 0.00
ADMINISTRATI 1467596.00 120633.07 120633.07 120633.07 120633.07 120633.07 130633.07
REPAIR & MAI 265406.00 22117.17 22117.17 22117.17 22117.17 22117.17 22117.17
UTILITIES 500000.00 41666.67 41666.67 41666.67 41666.67 41666.67 41666.67
PFOND/ADV 110000.00 9166.67 9166.67 9166.67 9166.67 9166.67 9166.67
INSURANCE 240000.00 20000.00 20000.00 20000.00 20000.00 20000.00 20000.00
ANNUAL RESER 0.00 0.00 0.00 0.00 0.00 0.00 0.00
BLOCK 44 LEA 300000.00 25000.00 25000.00 25000.00 25000.00 25000.00 25000.00
TELEPHONE 40000.00 3333.33 3333.33 3333.33 3333.33 3333.33 3333.33
N&P STAFFING 209000.00 34833.33 34833.33 34833.33 34833.33 34833.33
TOTAL 3407002.00 264833.57 299666.90 299666.90 299666.90 299666.90 309666.90
NET INCOME -457020.39 -33654.44 12480.10 12480.10 12480.10 12480.10 2480.10
<CAPTION>
APR MAY JUN JUL AUG SEP
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
REXIAL 89644.00 89644.00 89644.00 29881.33 29881.33 29881.33
NBA FIXED 20750.33
CONCESSION 68136.65 68136.65 68136.65 22712.22 22712.22 22712.22
CONCES. K&A 60209.54
PRIVATE SUIT 16667.00 16667.00 16667.00 17500.00 17500.00 17500.00
ADVERTISING 20583.00 20583.00 20583.00 21613.00 21613.00 21614.00
BOX OFFICE 14691.25 14691.25 14691.25 14691.25 14691.25 14691.25
OTHER 21457.22 21457.22 21457.22 21457.22 21457.22 21457.22
TOTAL 312146.00 231178.12 231178.12 127855.02 127855.02 127856.02
EXPENSES:
FIXED OPER P 22916.67 22916.67 22916.67 22916.67 22916.67 22916.67
VAR OPER PAT
ADMINISTRATI 130633.07 120633.07 120633.07 120633.07 120633.07 120633.07
REPAIR & MAI 22117.17 22117.17 22117.17 22117.17 22117.17 22117.17
UTILITIES 41666.67 41666.67 41666.67 41666.67 41666.67 41666.67
PFOND/ADV 9166.67 9166.67 9166.67 9166.67 9166.67 9166.67
INSURANCE 20000.00 20000.00 20000.00 20000.00 20000.00 20000.00
ANNUAL RESER 0.00 0.00 0.00 0.00 0.00 0.00
BLOCK 44 LEA 25000.00 25000.00 25000.00 25000.00 25000.00 25000.00
TELEPHONE 3333.33 3333.33 3333.33 3333.33 3333.33 3333.33
N&P STAFFING 34833.33
TOTAL 309666.90 264833.57 264833.57 264833.57 264833.57 264833.57
NET INCOME 2479.10 -33655.44 -33655.44 -136978.54 -136978.54 -136977.54
</TABLE>
page 2 of 11 - Exhibit "A"
<PAGE> 35
MIAMI ARENA
FY 1988-89 BUDGET
SCHEDULE OF ADMINISTRATIVE EXPENSES
<TABLE>
<CAPTION>
TOTAL
BUDGET OCT NOV DEC JAN FEB MAR
<S> <C> <C> <C> <C> <C> <C> <C>
PAYROLL & FR 1068946.80 89078.90 89078.90 89078.90 89078.90 89078.90 89078.90
AUTO EXP 16000.00 1333.33 1333.33 1333.33 1333.33 1333.33 1333.33
DUES & SUBS 5000.00 416.67 416.67 416.67 416.67 416.67 416.67
INTEREST 20000.00 1666.67 1666.67 1666.67 1666.67 1666.67 1666.67
OFFICE SUP 24000.00 2000.00 2000.00 2000.00 2000.00 2000.00 2000.00
POSTAGE 12000.00 1000.00 1000.00 1000.00 1000.00 1000.00 1000.00
EQUIP RENTAL 10000.00 1500.00 1500.00 1500.00 1500.00 1500.00 1500.00
PT TIME PAYA 55650.00 4637.50 4637.50 4637.50 4637.50 4637.50 4637.50
SECURITY 160000.00 14000.00 14000.00 14000.00 14000.00 14000.00 14000.00
MISCELLANEOU 10000.00 833.33 833.33 833.33 833.33 833.33 833.33
AUDIT FEES 20000.00 10000.00
LEGAL FEES 50000.00 4166.67 4166.67 4166.67 4166.67 4166.67 4166.67
TOTAL 1467596.00 120633.07 120633.07 120633.07 120633.07 120633.07 130633.07
<CAPTION>
APR MAY JUN JUL AUG SEP
<S> <C> <C> <C> <C> <C> <C>
PAYROLL & FR 89078.90 89078.90 89078.90 89078.90 89078.90 89078.90
AUTO EXP 1333.33 1333.33 1333.33 1333.33 1333.33 1333.33
DUES & SUBS 416.67 416.67 416.67 416.67 416.67 416.67
INTEREST 1666.67 1666.67 1666.67 1666.67 1666.67 1666.67
OFFICE SUP 2000.00 2000.00 2000.00 2000.00 2000.00 2000.00
POSTAGE 1000.00 1000.00 1000.00 1000.00 1000.00 1000.00
EQUIP RENTAL 1500.00 1500.00 1500.00 1500.00 1500.00 1500.00
PT TIME PAYA 4637.50 4637.50 4637.50 4637.50 4637.50 4637.50
SECURITY 14000.00 14000.00 14000.00 14000.00 14000.00 14000.00
MISCELLANEOU 833.33 833.33 833.33 833.33 833.33 833.33
AUDIT FEES 10000.00
LEGAL FEES 4166.67 4166.67 4166.67 4166.67 4166.67 4166.67
TOTAL 130633.07 120633.07 120633.07 120633.07 120633.07 120633.07
</TABLE>
Page 3 of 11 - Exhibit "A"
<PAGE> 36
RENTAL PROJECTIONS
<TABLE>
<CAPTION>
# of AVG TOTAL AVG RENT
CATEGORY EVENTS ATT ATT PRICE GROSS
<S> <C> <C> <C> <C> <C> <C>
ROCK 23.00 10500.00 241500.00 16.00 3864000.00 463680.00
ETHNIC 5.00 10500.00 52500.00 15.00 787500.00 94500.00
OTHER 5.00 10500.00 52500.00 15.00 787500.00 94500.00
CIRCUS 18.00 7500.00 135000.00 9.00 1215000.00 97200.00
ICE (DISNEY) 9.00 7000.00 63000.00 9.00 567000.00 45360.00
CAPADES 7.00 3500.00 24500.00 9.00 220500.00 -50000.00
SESAME 7.00 4500.00 31500.00 9.00 283500.00 34020.00
GLOBE TROTTERS 1.00 11000.00 11000.00 9.00 99000.00 11880.00
TRACTOR PULL 0.00 10000.00 0.00 9.00 0.00 0.00
WRESTLING 5.00 6000.00 30000.00 9.00 270000.00 32400.00
BOXING 0.00 6500.00 0.00 15.00 0.00 0.00
GYMNASTICS 0.00 7500.00 0.00 11.00 0.00 0.00
COLLEGE B. BALL 18.00 3500.00 63000.00 7.00 441000.00 6000.00
H. SCHOOL B. BALL 3.00 10000.00 30000.00 4.00 120000.00 14400.00
MISC. 15.00 3500.00 52500.00 0.00 FLAT RENT 52500.00
- ------------------ ----------------------------------------------------------------------------------------------
TOTAL 116.00 112000.00 787000.00 8655000.00 896440.00
================== ==============================================================================================
</TABLE>
Page 4 of 11 - Exhibit "A"
<PAGE> 37
<TABLE>
<CAPTION>
NBA FIXED PAYMENT
- --------------------
<S> <C>
43 HOME GAMES @ 113,372 575000.00
LESS: SEAT USE CHARGE
(14,300 X 42 X .75) 450450.00
----------
NET RENT 124550.00
==========
NBA CONCESSIONS
- --------------------
42 GAMES X 11.700 X 4.17 PER CAP 2049138.00
LESS: SALES TAX 115988.94
NET REVENUE 1933149.06
PARTICIPATION % .325
----------
PARTICIPATING REVENUE 628273.44
ARENA'S SHARE .575
----------
NBA CONCESSION REVENUE 361257.23
==========
</TABLE>
Page 5 of 11 - Exhibit "A"
<PAGE> 38
CONCESSIONS NON NBA
<TABLE>
<CAPTION>
FOOD & BEVERAGE
<S> <C> <C>
33.00 CONCERTS 346500.00 PATRONS
@ 3.00 PER CAP 1039500.00
57.00 FAM SHOWS 317500.00 PATRONS
@ 1.50 PER CAP 476250.00
5.00 WRESTLING 30000.00 PATRONS
@ 3.75 PER CAP 112500.00
21.00 COLLEGE BALL 93000.00 PATRONS
@ 2.,00 PER CAP 186000.00
----------
GROSS TOTAL 1814250.00
LESS SALES TAX 102693.40
----------
NET 1711556.60
ARENA'S SHARE .325
----------
FOOD & BEVERAGE REVENUE 556255.90
----------
MERCHANDISE
DISNEY 0.00
CIRCUS 0.00
33.00 CONCERTS 346500.00 PATRONS
@ 3.00 PER CAP 1039500.00
8.00 FAM SHOWS 42500.00 PATRONS
@ 1.50 PER CAP 63750.00
5.00 WRESTLING 30000.00 PATRONS
@ 2.00 PER CAP 60000.00
18.00 COLLEGE BALL 63000.00 PATRONS
@ .50 PER CAP 31500.00
----------
GROSS TOTAL 1194750.00
LESS SALES TAX 67627.36
----------
NET 1127122.64
ARENA'S SHARE .111
----------
MERCHANDISE REVENUE 125110.61
----------
TOTAL NON NBA CONCESSIONS 681366.51
==========
</TABLE>
Page 6 of 11 - Exhibit "A"
<PAGE> 39
BOX OFFICE REVENUE
<TABLE>
<S> <C>
TOTAL ATTENDANCE 787000.00
% SOLD BY T.M. 70%
----------
T.M. TICKETS 550900.00
OUTLET SALES % 75%
----------
OUTLET TICKETS 413175.00
OUTLET REBATE 0.25
----------
OUTLET REBATE $ 103293.75
T.M. TOTAL TICKETS 550900.00
% OF PHONE SALES 25%
PHONE TICKETS 137725.00
PHONE REBATE .75%
----------
PHONE REBATE $ 103293.75
TOTAL DOLLAR SALES 8655000.00
% SOLD BY T.M. 70%
----------
T.M. DOLLARS 6058500.00
% OF PHONE ORDERS 0.25
----------
PHONE DOLLARS 1514625.00
VISA/MC CHARGES 0.02
----------
COST OF PHONE TICKETS 30292.50
RECAP
OUTLET REBATES 103293.75
PHONE REBATES 103293.75
COST OF PHONE ORDERS -30292.50
----------
NET BOX OFFICE REVENUE 176295.00
==========
</TABLE>
Page 7 of 11 - Exhibit "A"
<PAGE> 40
OTHER REVENUE
<TABLE>
<CAPTION>
PER MONTH
<S> <C> <C>
INTEREST INCOME 5600.00 67200.00
TICKET MASTER FEES:
10 MONTHS @ $6,250. 6250.00 62500.00
2 MONTHS @ $8.333. 8333.00 16666.00
FMI BONUS 2500.00 30000.00
NBA REIMBURSEMENT
PRO-RATA SHARE OF EXCESS
SELECTED EXPENSES 81120.67
---------
257486.67
=========
</TABLE>
NBA REIMBURSEMENT
PRO-RATA SHARE OF EXCESS
SELECTED EXPENSES
<TABLE>
Actual Budget Difference
<S> <C> <C> <C>
GENERAL & ADMIN 1467596.80 897000.00 570596.80
REPAIR & MAINT 265406.00 175000.00 90406.00
UTILITIES 500000.00 587000.00 -87000.00
INSURANCE 240000.00 406000.00 -166000.00
ANNUAL RESERVE 0.00 50000.00 -50000.00
TELEPHONE 40000.00 60000.00 -20000.00
---------- ---------- ---------
TOTAL 2513002.80 2175000.00 338002.80
REIMBURSEMENT 0.24
---------
NBA REIMBURSEMENT AMOUNT 81120.67
=========
</TABLE>
Page 8 of 11 - Exhibit "A"
<PAGE> 41
SEAT USER CHARGE REVENUE
<TABLE>
ATTENDANCE:
<S> <C>
CONCERTS 346500.00
FAMILY & OTHER SHOWS 317500.00
WRESTLING & BOXING 30000.00
COLLEGE B BALL 93000.00
NBA 504000.00
----------
TOTAL ATTENDANCE 1291000.00
SEAT USE CHARGE 0.75
----------
SEAT USE CHARGE REVENUE 968250.00
<CAPTION>
NBA NON-NBA TOTAL
<S> <C> <C> <C>
EVENTS 42.00 116.00 158.00
ATTENDANCE 504000.00 787000.00 1291000.00
SEAT USE CHARGE 0.75 0.75 0.75
----------------------------------------
S.U.C. REVENUE 378000.00 590250.00 968250.00
DECOMA (75% TO 1.35M) 726187.50
MSEA (25% TO 1.35M) 242062.50
---------
TOTAL S.U.C. REVENUE 968250.00
=========
</TABLE>
Page 9 of 11 - Exhibit "A"
<PAGE> 42
REVENUE DERIVED BY THE CITY OF MIAMI
<TABLE>
<S> <C>
RENT BLOCK 44 LEASE 300000.00
SEAT USE CHARGE 242062.50
----------
SUB-TOTAL 542062.50
ARENA DEFICIT FUNDING -457020.39
----------
NET REVENUE TO CITY 85042.11
==========
</TABLE>
Page 10 of 11 - Exhibit "A"
<PAGE> 43
MIAMI ARENA
REPAIR & MAINTENANCE BUDGET
1988-89
<TABLE>
<CAPTION>
MONTHLY YEARLY
<S> <C> <C> <C>
AIR FILTERS 300.00 3600.00
EIGHT BULBS 1000.00 12000.00
BELTS 400.00 4800.00
PLUMBING 750.00 9000.00
HARDWARE 750.00 9000.00
ELECTRIC SUPP 1000.00 12000.00
A/C SUPPLIES 1000.00 12000.00
SOUND SYS 500.00 6000.00
PAINT 200.00 2400.00
LUMBER 200.00 2400.00
LANDSCAPE & IRR 1750.00 21000.00
UNIFORMS 250.00 3000.00
CLEANING SUPP 250.00 3000.00
FUELS 0.00
L.P. 100.00 0.00
DIESEL 300.00 400.00 4800.00
SCOREBOARD 1266.67 15200.00
MISC. EXPENSES 1000.00 12000.00
SERVICE AGREEMENTS
PEST CONTROL 350.00
FORKLIFT 100.00
RADIOS 640.00
CLEANING 7200.00
ELEVATOR 1233.00
HVAC 1000.00
OFFICE EOP 577.50 11100.50 133206.00
-------- ---------
TOTAL 22117.17 265406.00
</TABLE>
Page 11 of 11 - Exhibit "A"
<PAGE> 44
FIRST AMENDMENT TO MIAMI ARENA CONTRACT AND AGREEMENT
MIAMI ARENA
BUDGETED REVENUE AND EXPENSES
FISCAL YEAR 1989-1990
<TABLE>
<CAPTION>
REVENUES:
<S> <C>
RENTAL 1057368.00
NBA FIXED 124550.00
CONCESSIONS-NON-NBA 814029.48
CONCESSIONS-NBA 361257.23
PRIVATE SUITES 212625.00
ADVERTISING 263672.52
BOX OFFICE 108099.25
OTHER 293476.00
TOTAL OPERATING REVENUES 3235077.48
EXPENSES:
FIXED OPERATING PAYMENT 288750.00
VARIABLE OPERATING PAYMENT 0.00
ADMINISTRATIVE 1540976.10
REPAIR & MAINTENANCE 278682.24
UTILITIES 525000.00
PROMOTION/ADVERTISING 115500.00
INSURANCE 252000.00
ANNUAL RESERVE 0.00
BLOCK 44 LEASE 315000.00
TELEPHONE 42000.00
NBA STAFFING 219000.00
TOTAL OPERATING EXPENSES 3576908.34
NET OPERATING INCOME (DEFICIT) -341830.86
</TABLE>
Page 1 of 11 - Exhibit "B"
<PAGE> 45
MIAMI ARENA
BUDGET
FY 1989-90
<TABLE>
<CAPTION>
TOTAL
BUDGET OCT NOV DEC JAN FEB MAR
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUE:
RENTAL 1057368.00 105736.80 105736.80 105736.80 105736.80 105736.80 105736.80
NBA FIXED 124550.00 20750.33 20750.33 20750.33 20750.33 20750.33
CONCESSION 814029.48 81402.95 81402.95 81402.95 81402.95 81402.95 81402.95
CONCES. NBA 361257.23 60209.54 60209.54 60209.54 60209.54 60209.54
PRIVATE SUIT 212625.00 16667.00 16667.00 16667.00 16667.00 16667.00 16667.00
ADVERTISING 263672.52 20583.00 20583.00 20583.00 20583.00 20583.00 20583.00
BOX OFFICE 108099.25 9008.27 9008.27 9008.27 9008.27 9008.27 9008.27
OTHER 233476.00 24456.33 24456.33 24456.33 24456.33 24456.33 24456.33
TOTAL 3235077.46 257854.35 338822.22 338822.22 338822.22 338822.22 338822.22
EXPENSES:
FIXED OPER P 288750.00 24062.50 24062.50 24062.50 24062.50 24062.50 24062.50
VAR OPER PAT 0.00
ADMINISTRATI 1540976.10 126664.68 126664.68 126664.68 126664.68 126664.68 136664.68
REPAIR & MAI 278682.24 23223.52 23223.52 23223.52 23223.52 23223.52 23223.52
UTILITIES 525000.00 43750.00 43750.00 43750.00 43750.00 43750.00 43750.00
PROMO/ADV 115500.00 9625.00 9625.00 9625.00 9625.00 9625.00 9625.00
INSURANCE 252000.00 21000.00 21000.00 21000.00 21000.00 21000.00 21000.00
ANNUAL RESER 0.00 0.00 0.00 0.00 0.00 0.00 0.00
BLOCK 44 LEA 315000.00 26250.00 26250.00 26250.00 26250.00 26250.00 26250.00
TELEPHONE 42000.00 3500.00 3500.00 3500.00 3500.00 3500.00 3500.00
NBA STAFFING 219000.00 36500.00 36500.00 36500.00 36500.00 36500.00
TOTAL 3576908.34 278075.70 314575.70 314575.70 314575.70 314575.70 324575.70
NET INCOME -341830.86 -20221.34 24246.53 24246.53 24246.53 24246.53 14246.53
<CAPTION>
APR MAY JUN JUL AUG SEP
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
RENTAL 105736.80 105736.80 105736.80 35245.60 35245.60 35245.60
NBA FIXED 20750.33
CONCESSION 81402.95 81402.95 81402.95 27134.32 27134.32 27134.32
CONCES. NBA 60209.54
PRIVATE SUIT 16666.00 16666.00 16666.00 17500.00 17500.00 17500.00
ADVERTISING 20583.00 20583.00 20583.00 21613.00 21613.00 21614.00
BOX OFFICE 9008.27 9008.27 9008.27 9008.27 9008.27 9008.27
OTHER 24456.33 24456.33 24456.33 24456.33 24456.33 24456.33
TOTAL 338821.22 257853.35 257853.35 134957.52 134957.52 134958.52
EXPENSES:
FIXED OPER P 24062.50 24062.50 24062.50 24062.50 24062.50 24062.50
VAR OPER PAT
ADMINISTRATI 136664.68 126664.68 126664.68 126664.68 126664.68 126664.68
REPAIR & MAI 23223.52 23223.52 23223.52 23223.52 23223.52 23223.52
UTILITIES 43750.00 43750.00 43750.00 43750.00 43750.00 43750.00
PROMO/ADV 9625.00 9625.00 9625.00 9625.00 9625.00 9625.00
INSURANCE 21000.00 21000.00 21000.00 21000.00 21000.00 21000.00
ANNUAL RESER 0.00 0.00 0.00 0.00 0.00 0.00
BLOCK 44 LEA 26250.00 26250.00 26250.00 26250.00 26250.00 26250.00
TELEPHONE 3500.00 3500.00 3500.00 3500.00 3500.00 3500.00
NBA STAFFING 36500.00
TOTAL 324575.70 278875.70 278875.70 278875.70 278875.70 278875.70
NET INCOME 14245.53 -20222.34 -20222.34 -143118.17 -143118.17 -143117.17
</TABLE>
Page 2 of 11 - Exhibit "B"
<PAGE> 46
MIAMI ARENA
FY 1989-90 BUDGET
SCHEDULE OF ADMINISTRATIVE EXPENSES
<TABLE>
<CAPTION>
TOTAL
BUDGET OCT NOV DEC JAN FEB MAR
<S> <C> <C> <C> <C> <C> <C> <C>
PAYROLL & FR 1122393.60 93532.80 93532.80 93532.80 93532.80 93532.80 93532.80
AUTO EXP 16800.00 1400.00 1400.00 1400.00 1400.00 1400.00 1400.00
DUES & SUBS 5250.00 437.50 437.50 437.50 437.50 437.50 437.50
INTEREST 21000.00 1750.00 1750.00 1750.00 1750.00 1750.00 1750.00
OFFICE SUP 25200.00 2100.00 2100.00 2100.00 2100.00 2100.00 2100.00
POSTAGE 12600.00 1050.00 1050.00 1050.00 1050.00 1050.00 1050.00
EQUIP RENTAL 18900.00 1575.00 1575.00 1575.00 1575.00 1575.00 1575.00
PT TIME PAYR 58432.50 4869.38 4869.38 4869.38 4869.38 4869.38 4869.38
SECURITY 176400.00 14700.00 14700.00 14700.00 14700.00 14700.00 14700.00
MISCELLANEOU 10500.00 875.00 875.00 875.00 875.00 875.00 875.00
AUDIT FEES 21000.00 10000.00
LEGAL FEES 52500.00 4375.00 4375.00 4375.00 4375.00 4375.00 4375.00
TOTAL 1540976.10 126664.68 126664.68 126664.68 126664.68 126664.68 136664.68
<CAPTION>
APR MAY JUN JUL AUG SEP
<S> <C> <C> <C> <C> <C> <C>
PAYROLL & FR 93532.80 93532.80 93532.80 93532.80 93532.80 93532.80
AUTO EXP 1400.00 1400.00 1400.00 1400.00 1400.00 1400.00
DUES & SUBS 437.50 437.50 437.50 437.50 437.50 437.50
INTEREST 1750.00 1750.00 1750.00 1750.00 1750.00 1750.00
OFFICE SUP 2100.00 2100.00 2100.00 2100.00 2100.00 2100.00
POSTAGE 1050.00 1050.00 1050.00 1050.00 1050.00 1050.00
EQUIP RENTAL 1575.00 1575.00 1575.00 1575.00 1575.00 1575.00
PT TIME PAYR 4869.38 4869.38 4869.38 4869.38 4869.38 4869.38
SECURITY 14700.00 14700.00 14700.00 14700.00 14700.00 14700.00
MISCELLANEOU 875.00 875.00 875.00 875.00 875.00 875.00
AUDIT FEES 10000.00
LEGAL FEES 4375.00 4375.00 4375.00 4375.00 4375.00 4375.00
TOTAL 136664.68 126664.68 126664.68 126664.68 126664.68 126664.68
</TABLE>
Page 3 of 11 - Exhibit "B"
<PAGE> 47
RENTAL PROJECTIONS
<TABLE>
<CAPTION>
# of AVG TOTAL AVG RENT
CATEGORY EVENTS ATT ATT PRICE GROSS
<S> <C> <C> <C> <C> <C> <C>
ROCK 23.00 10500.00 262500.00 16.00 4200000.00 504000.00
ETHNIC 5.00 10500.00 52500.00 15.00 787500.00 94500.00
OTHER 5.00 10500.00 52500.00 15.00 787500.00 94500.00
CIRCUS 18.00 9300.00 167400.00 9.00 1506600.00 120528.00
ICE (DISNEY) 9.00 7000.00 63000.00 9.00 567000.00 45360.00
CAPADES 7.00 3500.00 24500.00 9.00 220500.00 22050.00
SESAME 7.00 4500.00 31500.00 9.00 283500.00 34020.00
GLOBE TROTTERS 1.00 11000.00 11000.00 9.00 99000.00 11880.00
TRACTOR PULL 1.00 7500.00 7500.00 15.00 112500.00 11250.00
WRESTLING 6.00 6000.00 36000.00 9.00 324000.00 38880.00
BOXING 5.00 5000.00 25000.00 15.00 375000.00 25000.00
GYMNASTICS 0.00 7500.00 0.00 11.00 0.00 0.00
COLLEGE B. BALL 17.00 3500.00 59500.00 7.00 416500.00 6000.00
H. SCHOOL B. BALL 3.00 10000.00 30000.00 4.00 120000.00 14400.00
MISC. 15.00 3500.00 52500.00 0.00 FLAT RENT 35000.00
- ------------------ ----------------------------------------------------------------------------------------------
TOTAL 124.00 109800.00 875400.00 9799600.00 1057368.00
================== ==============================================================================================
</TABLE>
Page 4 of 11 - Exhibit "B"
<PAGE> 48
<TABLE>
<S> <C>
NBA FIXED PAYMENT
- -------------------
43 HOME GAMES @ $13,372 575000.00
LESS: SEAT USE CHARGE
(14,300 X 42 X .75) 450450.00
----------
NET RENT 124550.00
==========
NBA CONCESSIONS
- -------------------
42 GAMES X 11,700 X 4.17 PER CAP 2049138.00
LESS: SALES TAX 115988.94
NET REVENUE 1933149.06
PARTICIPATION % .325
----------
PARTICIPATING REVENUE 628273.44
ARENA'S SHARE .575
----------
NBA CONCESSION REVENUE 361257.23
===========
</TABLE>
Page 5 of 11 - Exhibit "B"
<PAGE> 49
CONCESSIONS NON NBA
<TABLE>
<S> <C> <C>
FOOD & BEVERAGE
35.00 CONCERTS 367500.00 PATRONS
@ 3.00 PER CAP 1102500.00
58.00 FAM SHOWS 357400.00 PATRONS
@ 1.50 PER CAP 536100.00
11.00 WRESTLING 61000.00 PATRONS
@ 3.75 PER CAP 228750.00
20.00 COLLEGE BALL 89500.00 PATRONS
@ 3.00 PER CAP 268500.00
----------
GROSS TOTAL 2135850.00
LESS SALES TAX 120897.17
----------
NET 2014952.83
ARENA'S SHARE .325
----------
FOOD & BEVERAGE REVENUE 654859.67
----------
MERCHANDISE
DISNEY 0.00
CIRCUS 0.00
35.00 CONCERTS 367500.00 PATRONS
@ 3.50 PER CAP 1286250.00
16.00 FAM SHOWS 74500.00 PATRONS
@ 1.50 PER CAP 111750.00
11.00 WRESTLING 61000.00 PATRONS
@ 2.00 PER CAP 122000.00
20.00 COLLEGE BALL 89500.00 PATRONS
@ .00 PER CAP 0.00
----------
GROSS TOTAL 1520000.00
LESS SALES TAX 86037.74
----------
NET 1433962.26
ARENA'S SHARE .111
----------
MERCHANDISE REVENUE 159169.81
----------
TOTAL NON NBA CONCESSIONS 814029.48
==========
</TABLE>
Page 6 of 11 - Exhibit "B"
<PAGE> 50
BOX OFFICE REVENUE
TOTAL TICKETS SUBJECT TO SERV CHG. 506500.00
% SOLD BY T.M. 70%
----------
T.M. TICKETS 354550.00
OUTLET SALES % 75%
----------
OUTLET TICKETS 265912.50
OUTLET REBATE 0.25
----------
OUTLET REBATE $ 66478.13
T.M. TOTAL TICKETS 354550.00
% OF PHONE SALES 25%
----------
PHONE TICKETS 88637.50
PHONE REBATE .75
----------
PHONE REBATE $ 66478.13
TOTAL DOLLAR SALES SUBJECT TO SERV CHG. 7102000.00
% SOLD BY T.M. 70%
----------
T.M. DOLLARS 4971400.00
% OF PHONE ORDERS 0.25
----------
PHONE DOLLARS 1242850.00
VISA/MC CHARGES 0.02
----------
COST OF PHONE TICKETS 24857.00
RECAP
OUTLET REBATES 66478.13
PHONE REBATES 66478.13
COST OF PHONE ORDERS (24857.00)
----------
NET BOX OFFICE REVNUE 108099.25
==========
Page 7 of 11 - Exhibit "B"
<PAGE> 51
OTHER REVENUE
<TABLE>
<CAPTION>
PER MONTH
<S> <C> <C>
INTEREST INCOME 4000.00 48000.00
TICKET MASTER FEES:
10 MONTHS @ $8,333. 8333.00 83330.00
2 MONTHS @ $10,416. 10416.00 20832.00
FMI BONUS 2500.00 30000.00
NBA REIMBURSEMENT:
PRO-RATA SHARE OF EXCESS
SELECTED EXPENSES 111314.00
---------
293476.00
=========
</TABLE>
NBA REIMBURSEMENT
PRO-RATA SHARE OF EXCESS
SELECTED EXPENSES
<TABLE>
<CAPTION>
ACTUAL BUDGET DIFFERENCE
<S> <C> <C> <C>
GENERAL & ADMIN 1540976.10 896700.00 644276.10
REPAIR & MAINT 278682.24 175000.00 103682.24
UTILITIES 525000.00 586950.00 (61950.00)
INSURANCE 252000.00 406350.00 (154350.00)
ANNUAL RESERVE 0.00 50000.00 (50000.00)
TELEPHONE 42000.00 59850.00 (17850.00)
------------------------------------------
TOTAL 2638658.34 2174850.00 463808.34
REIMBURSEMENT 0.24
----------
NBA REIMBURSEMENT AMOUNT 111314.00
==========
</TABLE>
Page 8 of 11 - Exhibit "B"
<PAGE> 52
SEAT USER CHARGE REVENUE
<TABLE>
<S> <C>
ATTENDANCE:
CONCETS 367500.00
FAMILY & OTHER SHOWS 357400.00
WRESTLING & BOXING 61000.00
COLLEGE & H.S. B. BALL 89500.00
NBA 504000.00
----------
TOTAL ATTENDANCE 1379400.00
SEAT USE CHARGE 0.75
----------
SEAT USE CHARGE REVENUE 1034550.00
</TABLE>
<TABLE>
<CAPTION>
NBA NON-NBA TOTAL
<S> <C> <C> <C>
EVENTS 42.00 124.00 166.00
ATTENDANCE 504000.00 875400.00 1379400.00
SEAT USE CHARGE 0.75 0.75 0.75
----------------------------------------
S.U.C. REVENUE 378000.00 656550.00 1034550.00
DECOMA (75% TO 1.35M) 775912.50
MSEA (25% TO 1.35M) 258637.50
----------
TOTAL S.U.C. REVENUE 1034550.00
==========
</TABLE>
Page 9 0f 11 - Exhibit "B"
<PAGE> 53
MIAMI ARENA
REPAIR & MAINTENANCE BUDGET
1989-90
<TABLE>
<CAPTION>
MONTHLY YEARLY
<S> <C> <C> <C>
AIR FILTERS 315.00 3780.00
LIGHT BULBS 1050.00 12600.00
BELTS 420.00 5040.00
PLUMBING 787.75 9453.00
HARDWARE 787.75 9453.00
ELECTRIC SUPP 1050.00 12600.00
A/C SUPPLIES 1050.00 12600.00
SOUND SYS 525.00 6300.00
PAINT 210.00 2520.00
LUMBER 210.00 2520.00
LANDSCAPE & IRR 1837.50 22050.00
UNIFORMS 262.50 3150.00
CLEANING SUPP 262.50 3150.00
FUEL: 0.00
L.P. 105.00 0.00
DIESEL 315.00 420.00 5040.00
SCOREBOARD 1330.00 15960.00
MISC. EXPENSES 1050.00 12600.00
SERVICE AGREEMENTS:
PEST CONTROL 367.50
FORKLIFT 105.00
RADIOS 672.00
CLEANING 7560.00
ELEVATOR 1294.65
HVAC 1050.00
OFFICE EQP 606.37 11655.52 139866.24
-------- ---------
TOTAL 23223.52 278682.24
======== =========
</TABLE>
Page 10 of 11 - Exhibit "B"
<PAGE> 54
REVENUE DERIVED BY THE CITY OF MIAMI
<TABLE>
<S> <C>
RENT BLOCK 44 LEASE 315000.00
SEAT USE CHARGE 258637.50
----------
SUB-TOTAL 573637.50
ARENA DEFICIT FUNDING (341830.86)
----------
NET REVENUE TO CITY 231806.64
==========
</TABLE>
Page 11 of 11 - Exhibit "B"
<PAGE> 55
EXHIBIT C
TO
FIRST AMENDMENT TO MIAMI ARENA
CONTRACT AND AGREEMENT
Amounts Due as of September 30, 1990 to be
Paid from the Maintenance Account
<TABLE>
<CAPTION>
Invoice No. Date Description Amount
- ----------- ---- ----------- ------
<S> <C> <C> <C>
274 10/31/89 Improvements to the Arena $ 1,829.10
completed in October
294 11/30/89 Improvements - November 7,020.80
315 11/30/89 Improvements - November 710.20
343 12/31/89 Improvements - December 18,090.43
427 2/28/90 Improvements - February 5,117.16
452 2/28/90 Improvements - February 2,692.80
484 2/28/90 Fixed Assets 869.20
496 3/31/90 Improvements - March 2,059.40
----------
Total Amount due to $38,389.09
the Miami Arena ==========
</TABLE>
<PAGE> 56
EXHIBIT D
TO
FIRST AMENDMENT TO MIAMI ARENA
CONTRACT AND AGREEMENT
Amounts Due as of September 30, 1990 to be
Paid from Owner Funds
<TABLE>
<CAPTION>
Date
Description Date Amount Paid Balance Due
- ----------- ---- ------ ---- -----------
<S> <C> <C> <C> <C>
Invoice No. 0202 5/89 $ 500.00 ----
Invoice No. 0223 7/89 5,925.69 ----
Cleaning 12/89 22,436.40 ----
Invoice No. 0255 12/89 9,240.00 ----
---------- -----------
38,102.09 (Note 1) 2/9/90
Traffic Police 11/30/90 13,942.50 --- 13,942.50
Heat Games,
Invoice 311
Public Skating 9/30/90 2,266.47 --- 2,266.47
Invoice No. 628 -----------
Total amount due to the Miami Arena $ 16,208.97
===========
</TABLE>
Notes
(1) These items were approved and previously funded by Owner on February
9, 1990.
<PAGE> 57
EXHIBIT E
to
FIRST AMENDMENT TO MIAMI ARENA
CONTRACT AND AGREEMENT
Items Approved for Payment Out of the Replacement Fund
<TABLE>
<CAPTION>
Description Amount
- ----------- ------
<S> <C>
Terrazzo in restrooms $ 43,000.00
Computer hardware and software 16,000.00
Office furniture 5,000.00
Box Office security 4,000.00
Staging equipment 6,000.00
-----------
$ 74,000.00
===========
</TABLE>
<PAGE> 1
EXHIBIT 10.11
ARENA MANAGEMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into by and
between DECOMA VENTURE, a Texas joint venture (hereinafter referred to as
"Decoma") and FACILITY MANAGEMENT AND MARKETING, a Texas joint venture
(hereinafter referred to as "FM&M"), on this 10th day of October, 1986.
WHEREAS, Decoma is the sole general partner of Decoma, Ltd., a Texas
limited partnership (hereinafter referred to as "Decoma, Ltd."); and
WHEREAS, Decoma, Ltd. is the sole general partner of Decoma Miami
Associations, Ltd., a Florida limited partnership (hereinafter referred to as
"Operator"); and
WHEREAS, on October 10, 1986 Operator and the Miami Sports and
Exhibition Authority (hereinafter referred to as the "MSEA" and/or "Owner")
entered into that certain Miami Arena Contract (hereinafter referred to as the
"Arena Contract"), reference to which is here made for all purposes, whereby
Operator undertook to perform certain functions relating to the development,
construction and operator of an arena (the "Arena") to be constructed and
operated in Miami, Florida, to be used generally for performance and exhibition
purposes, all as described therein; and
WHEREAS, Operator action through Decoma, Ltd., in turn acting through
Decoma desires to engage FM&M as an independent contractor to perform certain
of Decoma's obligations as set forth in the Arena Contract and FM&M desires to
accept such engagement in accordance with the terms and conditions more
particularly set forth herein.
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00) in hand paid, and other good and valuable consideration, the
receipt and sufficency of which is
<PAGE> 2
hereby acknowledged, and the mutual benefits to be derived here from, Decoma
and FM&M hereby agree as follows:
WITNESSETH:
1.01 Definitions. All capitalized terms used herein, othen than those
that are defined herein, shall have the same meanings ascribed to such terms as
set forth in the Arena Contract.
A. "BIL" shall mean BIL Development, Inc., a Texas corporation.
B. "Concessionaire Agreement" shall mean that certain agreement dated
October 10, 1996, by and between Operator, and Harry M. Stevens, Inc.
C. "HSA" shall mean HSA Management, Inc., a Texas corporation.
D. "Joint Venture Agreement" shall mean that certain Joint Venture
Agreement of Decoma, executed effective as of September 4, 1984, by and among
HSA Management, Inc., BIL Development, Inc., and Linbeck Miami Corp.
E. "LMC" shall mean Linbeck Miami Corp., a Texas corporation.
F. "Person" shall mean an individual, partnership, corporation, trust,
unincorporated association, or other entity or association.
G. "Venturer" or "Venturers" shall mean BIL, HSA, LMC, and any Person
admitted to the Venture as an additional or substitute Venturer in accordance
with the Joint Venture Agreement; but excluding any Person that ceases to be a
Venturer pursuant to the Joint Venture Agreement.
H. "Venture Representative" shall mean any one of the BIL
Representative, the HSA Representative or the LMC Representative under the
Joint Venture Agreement.
-2-
<PAGE> 3
1.02 Services.
A. Subject to the terms and provisions of this Agreement, and for the
Term (as herein defined) of this Agreement, Decoma hereby grants to FM&M the
sole and exclusive right, engages FM&M to perform as an independent contractor,
and hereby delegates to FM&M on a sole and exclusive basis the right to
supervise, administer, and manage the performance of all of the Operating Work
to be peformed by Operator as set forth in Paragraph B.3 of Exhibit "B" to the
Arena Contract in a reasonable and efficient manner, and in accordance with
this Agreement and the operating standards and provisions set forth in
Paragraphs D.5.2 and D.5.3 of Exhibit "D" to the Arena Contract. Subject to
the provisions of this Agreement, FM&M hereby accepts such engagement and
shall, during the term of this Agreement, supervise, administer and manage the
performance of the Operating Work as herein provided, all of which shall be
performed by FM&M at the time and in the manner deemed appropriate by FM&M in
its sole and absolute discretion (but subject to the terms, provisions and
performance standards of this Agreement), without the need for any prior
approval (except as set forth herein and in the Arena Contract) by Decoma (or
any of the Venturers thereof), Decoma, Ltd. (or any of the partners thereof),
Operator (or any of the partners thereof) and/or the MSEA.
Subject to the applicable restrictions and applicable limitations of
this Agreement and the Arena Contract, to the extent necessary to manage and
operate the Arena in accordance with the Arena Contract, the Operating Work
shall include the following:
(1) Management and operation of the Arena and
contracting for its use during the Term in a manner that will promote
and further the purposes for which the Arena is to be contracted, as
set forth in Paragraph D.5.2.1 of Exhibit "D" to the Arena Contract.
<PAGE> 4
(2) Retaining legal counsel for the Arena (as opposed to legal counsel
for the Venture) and analysis, consultation and coordination of all
insurance programs.
(3) Negotiation, execution and performance of contracts, use
agreements, licenses, and other agreements (a) with persons or entities who
desire to schedule events, performance, telecasts, broadcasts or other
transmissions in, from or to the Premises or who desire otherwise to use
the Premises or any part of thereof or (b) that otherwise pertain to the
use, operation and occupancy of the Premises or any part thereof. [Complete
copies of all "major use contracts" (as hereinafter defined) and related
documents shall be provided to Decoma promptly].
(4) Coordination of all advertising, licensing, promotional
activities, marketing, and public relations for the Arena.
(5) Negotiation, execution and performance of contracts, use
Agreements, licenses and other agreements (a) for the use of advertising
space for the Premises or any part thereof and all advertising rights of
whatever kind or nature related thereto or (b) for the sale, promition,
marketing and use of all names, trademarks, tradenames, logos and similar
intangible property relating to the Premises or any part thereof.
(6) Subject to the Concessionaire Agreement which has already been
executed, negotiation, execution and performance of contracts for the
operation of future concessions at and for the Premises for the sale of
food, beverages, souvenirs, novelties and programs and including, but not
limited to, the operation of clubs and restaurants. [Complete copies of
all concession
-4-
<PAGE> 5
agreements and related documents shall be provided to Decoma promptly].
(7) Coordination of the efforts of all parties involved in the
operation of the Arena and establishing and maintaining consistent
procedures for cost estimating, reporting and control, performance
schedule preparation and maintenance and payment of invoices. Such
services to be performed by FM&M shall include the following:
(a) On or before the first of each Operating Year FM&M
shall prepare and submit to Owner and to Decoma an operating
program budget for review and informational purposes only,
describing the estimated revenues (at least as to revenues from
the major use contracts herein referred to) and estimated
expenses expected to be received and incurred in implementing
a broadscale program covering the Arena for the coming
Operating Year.
(b) At least ninety (90) days before the commencement of
each Regular Budgeted Year and each Special Budgeted Year, FM&M
shall submit to Owner for Owner's review and approval an
Operating Expense Budget, as provided for in the Arena
Contract, setting forth an estimate of the Operating Expenses
that FM&M estimates will be incurred during such Operating
Year.
(c) At least one hundred (100) days before the
commencement of each Regular Budgeted Year and each Special
Budgeted Year, FM&M shall submit to Decoma and the Venture
Representatives for review and approval the Operating Expense
Budget FM&M intends to submit to Owner under Subparagraph (b)
above, setting forth an estimate of the Operating
-5-
<PAGE> 6
Expenses that FM&M estimates will be incurred during such
Operating Year. Decoma and the Venture Representatives shall
not unreasonably withhold their consent and/or approval of the
Operating Expense budget submitted by FM&M. In the event
Decoma or any Venture Representative objects to the proposed
Operating Expense Budget, Decoma or such Venture Representative
shall stipulate its objections in writing to FM&M. In the
event that neither Decoma nor any of such Venture
Representatives disapproves the proposed Operating Expense
Budget within ten (10) days after the submission by FM&M to
Decoma and the Venture Representatives of such Operating
Expense Budget, the Operating Expense Budget shall be deemed
approved by Decoma and all Venture Representatives.
Notwithstanding any other provision of this Agreement, FM&M may
nevertheless submit the proposed Operating Expense Budget to
Owner, and in the event the proposed Operating Expense Budget
is approved by Owner under the Arena Contract, the proposed
Operating Expense Budget shall be the Approved Operating
Expense Budget regardless of whether such budget was
disapproved by Decoma or any such Venture Representative. In
connection with the Approved Operating Expense Budget, FM&M
shall have the right, subject to other terms hereof and to the
terms of the Arena Contract, to exceed the Approved Operating
Expense Budget (i.e., spend more than the budgeted amount for
such items) to the extent necessary to operate the Arena in
accordance with the standards set forth herein and
-6-
<PAGE> 7
to fulfill the obligation and duties of FM&M hereunder;
provided, provided, however, in the event that FM&M has
incurred expenses which exceed 115% of those items set forth in
Paragraph C.2.2.1(c) of Exhibit "C" to the Arena Contract, then
FM&M shall identify such expenses in the monthly operating
report submitted to Decoma as set forth in Section 1.02.A(8) of
this Agreement. In the event that FM&M anticipates that the
Operating Expenses set forth in Paragraph C.2.2.1(c) of Exhibit
"C" to the Arena Contract may or will exceed 115% of the
budgeted amount for such expenses (after taking into account
any offset by savings, if any, that may have been realized
during such Operating Year in costs for utilities, insurance,
taxes, extraordinary legal costs, NBA staffing, and any other
category of savings allowed by the MSEA), then FM&M shall
promptly inform Decoma in writing of such fact (without waiting
for the next scheduled report) and in no event shall FM&M have
any right, power or authority [except in the event of the need
to provide "emergency services and expenditures" in connection
therewith (as hereinafter provided for)] to incur any expenses
in excess of 130% of the Approved Operating Expense Budget
unless and until Decoma shall decide (unless Owner has already
approved the expenditures to such excess amounts in accordance
with the Arena Contract such that the Operator shall not be
liable therefor) that additional expenses of that type should
be incurred in that Regular or Special Budgeted Year. Any
approval given by Decoma to FM&M to spend any such excess
amounts
-7-
<PAGE> 8
shall be deemed given if Owner, pursuant to a mid-year revision
to the Approved Operating Expense Budget approves such
expenditure and agrees that Operator shall not be liable
therefor, notwithstanding the provisions of Paragraph
C.2.2.1.(c) of Exhibit "C" to the Arena Contract to the
contrary. Any mid-year revisions to the Approved Operating
Expense Budget made by FM&M and submitted to Owner shall also
be submitted to Decoma for review and informational purposes
only, but such revisions shall not constitute authorization for
expenditures until approved by the Owner as provided above.
Recognizing that the operation of the Premises is unique to the
exhibition, entertainment and sports industry in general and
that any budgetary estimates are by their nature susceptible to
change, variation and amendment, FM&M shall have no liability
to Decoma for failure to meet or comply with the operating
program budget described in Subparagraph (a) above or with the
Approved Operating Expense Budget or any expense budget
approved or deemed approved by Decoma or Owner (except as
provided herein in connection with a default by FM&M hereunder
and then however, subject to the limitations for liability
applicable thereto, if any). For the purposes hereof, and to
be consistent with the terms of the Arena Contract, FM&M shall
have the right to perform all emergency repairs or services
immediately necessary for the preservation and safety of the
Arena, or to avoid the suspension or any substantial or
important service to the Arena, or to avoid or prevent
immediate danger to life or
-8-
<PAGE> 9
property, and whether or not the cost thereof is set forth in
the Approved Operating Expense Budget or other budget (provided
that for any situation that is not life threatening, such
amount is not reasonably anticipated by FM&M to exceed
$50,000). However, FM&M shall, if at all possible, secure the
prior approval of the performance of any such repair or service
and the expenditure of any such amount, by telephone or in
writing, as the circumstances reasonably allow, from the
Managing Venturer of Decoma, and in any event, FM&M shall give
such Managing Venturer a verbal notice of the performance of
such repairs or services and the expenditure of such amounts as
soon as practicable under the circumstances. Thereafter, as
soon as practicable, FM&M shall given Decoma written notice of
the details and expenses thereof.
(d) Plan, coordinate and administer operation of the
Premises.
(e) After the Construction Work and Development Work
have been completed, coordinate the work of all parties
performing work in connection with the operation of the Arena.
(f) Monitor actual and projected costs of operation and
monitor revenues of "major use contracts" (hereafter defined)
and advise Owner and Decoma as such projected costs exceed the
estimates set forth in the budgets submitted pursuant to the
Arena Contract and pursuant to this Agreement and as such
revenues materially differ, if at all, from any projections
made by FM&M.
-9-
<PAGE> 10
(g) Collect revenues due Operator from concessionaires,
licensees and other users and make payment of the Operating
Expenses in accordance with the provisions of Paragraph C.2.2.1
of Exhibit "C" to the Arena Contract.
(h) Furnish all services, materials, tools, machinery,
equipment and other items, and a sufficient number of capable,
qualified and competent administrative, management, supervisory
and clerical personnel necessary to accomplish the requirements
of FM&M under this Agreement, all, however, within the
budgetary limitations of this Agreement and the Arena Contract.
(8) Prepare monthly financial reports for Decoma and Owner
in the form necessary to meet the obligations of Operator under the
Arena Contract. FM&M will further keep and maintain at the offices of
FM&M in the Arena, separate records devoted exclusively to the Arena
reflecting the business operations of the Arena which records shall be
subject, at Decoma's sole cost, to inspection or audit by Decoma (or
any Venture Representative at such Venture Representative's sole cost)
at any reasonable time during regular business hours and after prior
written notice.
(9) Coordinate the Operating Work's compliance with all
federal, state, and local affirmative action and minority employment
and investment requirements and specifically exert diligent, good
faith efforts to comply with Section VI of the Minority Participation
Agreement, which is attached as Exhibit "A" to the Arena Contract.
(10) Plan, coordinate and administer the preventative
maintenance of the Premises and all machinery,
-10-
<PAGE> 11
equipment and facilities pertaining thereto or made a part
thereof in accordance with Paragraph D.5.2.2 of Exhibit "D" to
the Arena Contract.
(11) To the extent funds are made available by Decoma
to FM&M therefore, FM&M shall promptly remedy any violation of
any Legal Requirement which comes to its attention to the
extent such remedy is within the control of FM&M; interest,
penalties, fines, and other charges payable because of delays
in payment by FM&M, not authorized by or not occasioned by any
act or omission of Decoma shall be for FM&M's sole account.
(12) In case of any emergency or any situation where the
failure to promptly comply with any Legal Requirement which
would expose Decoma (or any of its Venturers), the Operator,
the Owner, the City of Miami, FM&M and/or Decoma, Ltd. to the
imminent danger of criminal liability, then in such event, FM&M
shall cause such violation of such Legal Requirement to be
complied with or cured without awaiting Decoma's consent and to
promptly notify Decoma of the same.
B. Decoma acknowledges that FM&M (and any
predecessor-in-interest of FM&M including, but not limited to, Houston
Sports Association, Inc., HSA Management, Inc. and/or Miami
Management, Inc.), prior to the date of this Agreement, has provided
or performed several of the services relating to the Operating Work,
which services were performed by FM&M (or such
predecessor-in-interest) for and on behalf of Decoma and all such
services so performed by FM&M (or such predecessor-in-interest) prior
to the date hereof, and which have been made known to Decoma, are
hereby ratified and approved by Decoma. All actions taken (or
heretofore taken) by FM&M (or such predecessor-in-interest) in
performing its duties and responsibilities under the Pre-Development
Agreement and in providing such services relating
-11-
<PAGE> 12
to the Operating Work, pursuant to the terms and provisions of this Agreement
shall be (or were) as Decoma's special agent and for the account of Decoma. To
the extent FM&M (or any of its predecessors-in-interest) have not been
reimbursed, Decoma agrees to be responsible for and to pay for all reasonable
costs, fees, expenses and disbursements incurred in the provision or performance
of the Operating Work hereunder in accordance with the Arena Contract, the
Approved Project Budget and all funds made available to the Operator thereunder.
C. Decoma acknowledges that the compensation payable to FM&M
hereunder is not intended to cover the costs or expenses of FM&M incurred in
performance of the Operating Work or any other services provided by FM&M
hereunder, all of which shall constitute Event Related Expenses, Extraordinary
Replacement and Repair Expenses, Operating Expenses, and/or Pre-Opening
Operating Expenses, to the extent the same are incurred in accordance with the
Operating Expense Budget and/or the Decoma Venture budget and this Agreement,
and shall be paid pursuant to and in accordance with the Arena Contract and not
by FM&M or, if paid by FM&M, shall be reimbursable to FM&M upon demand therefor
(subject to the provision of subsection 1.02.D below). Such costs and expenses
also include, but shall not be limited to, the following:
(1) Pursuant to the Venture budget, up to the sum of $15,000 per year
(increased as hereinafter set forth) during the term hereof from and after the
Opening Date for the reasonable cost and expenses of travel, lodging and meals
for Houston-based management personnel of FM&M while out of the City of
Houston in the performance of the services described in Section 1.02 hereof
(and any such expenses incurred by FM&M prior to the Opening Date shall be
reimbursed by Decoma to FM&M out of the Project Budget pursuant to the Arena
Contract); provided, however, with respect to said
-12-
<PAGE> 13
$15,000 sum, the Venture shall not unreasonably withhold its consent to a
request by FM&M that such budget amount be increased each year to take into
account increases in the costs and expenses of travel, lodging and meals, nor
shall the Venture unreasonably withhold its approval of reasonable costs and
expenses actually incurred for such travel, lodging and meals which are
reasonably anticipated to be incurred by FM&M (and provided FM&M has notified
the Managing Venturer in advance of such anticipated budget overruns, and the
amount thereof, and the Managing Venturer has approved such overruns [which
approval shall not be unreasonably withheld or delayed]) in connection with
performance of such services, even in excess of the budgeted amounts; and
(2) Pursuant to the Operating Expense Budget, the following:
(a) Business entertainment expenses relating to the Operating
Work; and
(b) All costs and expenses associated with the Operating Work;
and
(c) All staffing necessary to perform the Operating Work;
(d) All costs of operation of the Arena including, without
limitation, Pre-Opening Operating Expenses, Event Related Expenses,
Operating Expenses and Extraordinary Replacement and Repair Expenses;
(e) All salaries, wages, benefits, costs and expenses of FM&M's
Arena staff, and associated Miami office expenses (including, without
limitation, costs of telephones, postage, forms, papers, ledgers and
other supplies, equipment and expenses), costs of bookkeeping,
accounting and
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data processing, transportation and travel and lodging expenses of such
Miami-based FM&M personnel and employees incurred in the discharge of
FM&M's responsibilities hereunder; and
(f) All other costs or expenses, incurred in accordance with the
terms and provisions of this Agreement by or for the account of
Decoma reasonably related to the services provided hereunder in
connection with the operation and management by FM&M of the Arena.
FM&M's staff and personnel shall be the employees of FM&M, and all matters
pertaining to the employment, training, placement, supervision, compensation,
promotion and discharge of FM&M staff and personnel are and shall be sole
responsibility of FM&M and all contracts with the staff and personnel shall be
entered into the name of FM&M.
D. Notwithstanding any provision of this Agreement to the contrary,
FM&M shall not be obligated to make any advance to or for the account of Decoma
nor to pay any sums incurred for the performance of the Operating Work, nor
shall FM&M be obligated to incur any liability or obligation for the account of
Decoma without assurance that the necessary funds for the discharge thereof are
or shall be available, nor shall FM&M be responsible for the failure of the
Operating Work to meet the standard provided herein as a result of Decoma's
failure to provide funds as herein set forth. Further, notwithstanding any other
provision of this agreement, FM&M shall only be obligated to perform its duties,
responsibilities and obligation hereunder only to the extent that funds of
Decoma are made available to FM&M for such purpose. In the event any of the
costs, fees or expenses described in subsection 1.02.C. above are paid by FM&M
on behalf of Decoma, then FM&M shall be entitled to be reimbursed for such
payment on a monthly basis, upon presentation to Decoma of FM&M's statement of
such costs, fees and expenses so incurred
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and paid; provided, FM&M shall not be entitled to reimbursement for such costs,
fees and expenses (except as provided in the following sentence) until and when
(i) the Operator is reimbursed by the Owner under the Arena Contract and such
funds are received by the Venture or (ii) such items are provided for in the
Venture budget of Decoma. However, all costs, fees and expenses incurred by
FM&M in the performance of the emergency services described in Subsection
1.02A(12) of this Agreement shall be for Decoma's account, and to the extent
FM&M makes an advance for the account of Decoma or pays any of such costs, fees
and expenses on behalf of Decoma (and without regard to whether such costs, fees
and expenses are reimbursable under the Arena Contract), FM&M shall be entitled
to be reimbursed by Decoma upon demand for the actual amount so advanced or
paid by FM&M.
E. If Decoma fails to make any reimbursement payment described in
Paragraph C and in Paragraph D of this Section 1.02 within ten (10) days after
demand therefor, then the amount due shall be interest at Prime plus 2-1/2% per
annum from the date due until the date FM&M is so reimbursed.
F. Within the limitations of this Agreement and the Arena Contract,
FM&M agrees that, in the performance of all of its duties and responsibilities
hereunder, FM&M shall abide by this Agreement, the Arena Contract, and the
Decoma Venture budget and the Operating Expense Budget (subject to the terms
hereof), and shall continue to act in good faith, in a diligent, workmanlike,
skillful, and careful manner, and shall continue to exercise reasonable and
professional, prudent judgment in accordance with generally accepted standards
of management for complexes similar to the Project in the United States.
1.03 Additional Authority of FM&M. In connection with the discharge of
its obligations hereunder, FM&M shall have the sole and exclusive authority
(subject to the terms and provisions of this Agreement) to perform all of the
functions of Operator as more particularly set forth in Paragraphs D.7.4.
(Contracts for
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Use of the Arena), D.7.5 (Advertising Contracts), D.7.6 (Concessions) and D.7.7
(Use and Advertising Contracts) of Exhibit "D" to the Arena Contract without the
prior approval (except as herein provided) by Decoma (or any Venturer or Venture
Representative thereof), Decoma, Ltd. (or any partner thereof), Operator (or any
partner thereof) and/or the MSEA. However, notwithstanding any other provision
of this Agreement, FM&M shall obtain Decoma's prior written approval (which
approval shall not be unreasonably withheld or delayed and shall in all events
be deemed approved if no approval or disapproval is given by Decoma or by any
Venture Representative within ten (10) days of the date of a request therefor,
which request shall include a complete, legible and accurate copy of the
proposed "major use contract" and all related documents or if no such document
has been finalized then a draft of such contract or a term sheet summarizing in
reasonable and sufficient detail the business terms for such contract) for any
"major use contract", which for the purposes hereof shall mean any contract,
agreement or license (or material amendment to the terms of such contract,
agreement or license) with (i) each user (or affiliated group of users) which
provides for forty (40) scheduled events or more in the Arena during each
Operating Year under any such contract, agreement or license with a term of five
(5) years or more and (ii) any contract, agreement or license (or material
amendment to the terms of such contract, agreement or license) with a basketball
league, hockey league or soccer league user which provides for at least
thirty-five (35) scheduled events or more in the Arena during each Operating
Year with a term of five (5) years or more. Additionally, Decoma's prior
written approval (which approval shall not be unreasonably withheld or delayed)
shall also be required (and shall similarly be deemed approved if no approval
or disapproval is given by Decoma or by any Venture Representative within ten
(10) days of the date of a request
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therefor) for: (i) any and all contracts relating in any manner to the use or
operation of the Arena with any person or entity having any ownership, proceeds
or profits interest in FM&M; (ii) any contracts, agreements or licenses (or
material amendment to such contracts, agreements or licenses) which provide for
third-party financing for any of the operations of the Arena, other than for
unsecured trade accounts incurred in the ordinary course of the operation of the
Arena; and (iii) selection of a replacement for the concessionaire under the
Concessionaire Agreement and any material amendments to the terms of any such
agreement.
1.04 Additional Funds. In order to facilitate that performance by
FM&M of its obligations hereunder, Decoma agrees to make available, pursuant to
the budget and funding mechanisms described in and contemplated by the Arena
Contract and this Agreement, to FM&M monthly, upon the written request of FM&M,
such amounts are provided to be funded to Operator under the Approved Operating
Expense Budget and/or under the Decoma Venture budget and as FM&M may require
in connection with the operation of the Arena including, but not limited to, the
working reserve contemplated under the Arena Contract (as such reserve is made
available to Operator under the Arena Contract and such funds are received by
the Venture).
To the extent expressly permitted under the Arena Contract, in
connection with any sums owed or owing to the Operator thereunder, FM&M shall
have the right under this Agreement to deduct from such sums any monies owed to
FM&M under this Agreement which monies are held by FM&M for the benefit of or
intended for distribution to the Venturers or to Decoma, but expressly excluded
any monies held for the benefit of or intended for distribution to the limited
partner of Decoma, Ltd. or the limited partners of Operator.
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1.05 Acknowledgment. Decoma acknowledges for itself, Decoma, Ltd.
and Operator that FM&M has not made and does not make any representations as to
the income, expenses, profits and/or losses expected to be derived from or to be
derived from the operation or as to the operation of the Arena. Decoma
acknowledges for itself, Decoma, Ltd. and Operator and stipulates that it does
not in any way rely on any warranties or representations of FM&M (or any of its
predecessors-in-interest), its officers, joint venturers, employees, or agents
and that no warranties or representations concerning FM&M or the Arena, past or
future, or financial performance or potential financial performance have been
made to Decoma, Decoma, Ltd. and/or Operator. In connection with the foregoing,
neither FM&M nor any of its predecessors-in-interest and all of their officers,
joint venturers, employees or agents shall be liable or bound in any manner by
any verbal or written statements, representations, or information pertaining to:
(i) the profitability of operations at the Arena and (ii) any benefits which may
or may not accrue to Decoma or the Venturers (or Decoma, Ltd. or Operator)
resulting from such operations.
1.06 Term. The term of this Agreement shall be co-extensive with the
term of the Arena Contract as set forth in Article V of the Arena Contract
(unless this Agreement is sooner terminated as provided in Section 1.09 below),
as such Arena Contract may be from time to time extended, amended, or as such
Arena Contract may be sooner terminated in accordance with Paragraph D.1.2. of
Exhibit "D" to the Arena Contract.
1.07 Personnel.
A. All personnel employed at the Arena shall be employees of FM&M
and shall not be deemed employees of Decoma. The employees and agents of FM&M
shall attain no rights or benefits under the Civil Service or Pension Ordinances
of the City of Miami, Dade County or the State of Florida, nor shall
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FM&M or its employees be entitled to Florida worker's compensation benefits as
employees of the City of Miami, Dade County or the State of Florida. FM&M
shall make a reasonable effort to recruit minority and non-minority employees
who reside in Miami. FM&M shall be responsible, to the extent of funds made
available from Decoma, for the hiring and direct remuneration of all personnel
necessary for the operation of the Arena.
B. The obligations of FM&M shall not require the services of Neal
Gunn or Mike McGee personally or individually, but shall be deemed satisfied by
the performance of the other officers, employees, representatives and agents of
FM&M.
1.08 Compensation. In consideration of performance by FM&M of the
services hereunder, and provided the Operating Payment is paid to the Operator
in accordance with the Arena Contract and is received by the Venture, Decoma
shall pay to FM&M a fee (the "Management Fee") comprised of the following:
(A) Commencing with the Opening Date, for each month of the first four
(4) years of the Term hereof from and after the Opening Date, the sum of
$6,666.66 per month (prorated for any partial month); for each month of the
next twelve (12) years of the Term hereof, the sum of $8,333.33 per month
and for each month thereafter during the Term hereof, the sum of $16,666.66
for each such month. Such portion of the Management Fee ("Base Fee") shall
be paid to FM&M in monthly installments as above provided. One such
installment shall be payable on or before the 5th day of each calendar
month commencing with the first month of the Term in which the Opening Date
occurs, and a like installment shall be payable (adjusted and increased as
hereinabove set forth) on the same day of each month thereafter or the
entire Term hereof; and
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(B) In addition to the Base Fee and as part of the Management Fee
referred to in the preceding paragraph, Decoma also agrees to pay to FM&M the
"Incentive Bonus". For the purposes hereof, the term "Incentive Bonus" shall
mean a bonus calculated on an annual basis following the end of each calendar
year during the Term hereof (commencing with the calendar year in which the
Opening Date occurs), which bonus shall equal a percentage (as set forth below)
of such prior calendar year's Net Operating Income from the operations of the
Arena, to the extent that such Net Operating Income for each such year exceeds
(for the applicable year involved) those amounts set forth on Exhibit "A"
attached hereto, incorporated herein and made a part hereof for all purposes,
such percentage being as follows:
With respect to the first additional $100,000 of Net Operating
Income in excess of such amount for the applicable year involved
an amount equal to one percent 1%) of such additional amount or
portion thereof.
With respect to the next additional $100,000 of Net Operating
Income in excess of such amount for the applicable year involved
an amount equal to the two percent (2%) of such additional
amount or portion thereof and similarly an additional one percent
(1%) for each increment of $100,000 of additional Net Operating
Income or portion thereof thereafter until the applicable
percentage for the next $100,000 increment of Incentive Bonus
has reached a percentage equal to twenty-five percent (25%)
of such $100,000 increment (which shall be achieved at a level
of $2,400,000 of additional Net Operating Income) of additional
Net Operating Income and such twenty-five percent (25%) figure
shall apply to all additional Net Operating Income in excess of
$2,400,0000 for the applicable year involved for any year during
the Term hereof; provided, however, that the Incentive Bonus for
any Operating Year shall not exceed the "Incentive Bonus Limit"
for such year set forth on Exhibit "A" attached hereto.
By way of illustration of the foregoing, but without limitation
thereof, in taking the
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year 1995, as shown on Exhibit "A" attached hereof as an example
to show the method of calculation of the Incentive Bonus, if in
such year the actual Net Operating Income of the Arena is
$132,000 (thereby creating excess Net Operating Income of $100,000
above the amount set forth on Exhibit "A" for that year), then,
in such event, the Incentive Bonus payable to FM&M for such year
would be one percent (1%) of such excess amount or the sum of
$1,000; similarly, had such excess amount of Net Operating Income
been $400,000, then the Incentive Bonus payable to FM&M for such
year would be one percent (1%) of the first $100,000 of such
excess amount, two percent (2%) of the next $100,000, three percent
(3%) of the next $100,000 of such excess amount and four percent
(4%) of the next $100,000 of such excess amount or the aggregate
sum of $10,000; similarly, had Net Operating Income for 1995
been $2,942,000 (thereby creating excess Net Operating Income of
$2,910,000 above the amount set forth on Exhibit "A" for that year),
the incentive Bonus payable to FM&M for such year would be one
percent (1%) of the first $100,000 of such excess amount, two
percent (2%) of the next $100,000 of such excess amount, three
percent (3%) of the next $100,000 of such excess amount and an
increasing percentage of the excess Net Operating Income, as
calculated above, which would result in an Incentive Bonus payable to
FM&M of $427,500; similarly, had Net Operating Income for 1995 been
$3,942,000 (thereby creating excess Net Operating Income of $3,910,000
above the amount set forth on Exhibit "A" for that year), the Incentive
Bonus payable to FM&M for such year would be $457,308 due to the
application of the Incentive Bonus Limit.
Said Incentive Bonus shall be calculated by FM&M (with such calculation
to be furnished to Decoma) based upon the figures of Net Operating Income
(as defined in the Arena Contract) available to FM&M for the applicable year
involved (and irrespective of whether or not the Incentive Bonus was paid in
prior years), and shall be due and payable to FM&M by Decoma within thirty
(30) days following the end of the applicable year involved.
1.09 Defaults and Remedies.
A. Each of the following shall constitute a "FM&M Default"
hereunder:
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(1) The failure of the FM&M to pay any amounts required to be paid by
FM&M under this Agreement within ten (10) days after written notice from
Decoma that such amounts are delinquent;
(2) The failure of FM&M to substantially perform or observe any of the
other material obligations, covenants, agreements, or conditions to be
performed or observed by FM&M under this Agreement within sixty (60) days
(subject to the provisions of Section 1.11 of this Agreement relating to
force majeure) after written notice from Decoma of such failure; provided,
that if such performance or observance cannot reasonably be accomplished
within such sixty (60) day period, then the failure to commence such
performance or observance within such sixty (60) day period and (subject to
Section 1.11 of this Agreement relating to force majeure) to diligently
pursue such performance or observance to conclusion;
(3) The filing by FM&M of a voluntary petition in bankruptcy; the
adjudication of FM&M as a bankrupt; the approval as properly filed by a
court of competent jurisdiction of any petition or other pleading in any
action seeking reorganization, rearrangement, adjustment, or composition of,
or in respect of, FM&M under the the Bankruptcy Code, or any other similar
state or federal law dealing with creditor's rights, generally; or the
appointment of a receiver, trustee or other similar official for FM&M or its
property, unless within ninety (90) days after such approval, filing or
appointment, FM&M causes such appointment to be stayed or discharged;
provided, however, notwithstanding any of the foregoing to the extent there is
an obligation of the Operator under the Arena
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Contract which is also an obligation of FM&M hereunder and for which the
standard of care or performance under the Arena Contract is substantially the
same standard of care or performance for FM&M hereunder, FM&M shall never be
deemed to be in default of its obligations hereunder unless Operator is itself
declared in default of such obligations by Owner under the Arena Contract.
B. Each of the following constitute a "Decoma Default" hereunder:
(1) The failure of Decoma to pay any amounts required to be paid by
Decoma to FM&M under this Agreement within ten (10) days after written
notice from FM&M that such amounts are delinquent.
(2) The failure by Decoma to substantially perform or observe any
of the other material obligations, covenants, agreements, or conditions to
be performed or observed by Decoma under this Agreement within sixty (60)
days (subject to Section 1.11 of this Agreement relating to force majeure)
after notice from FM&M of such failure; provided, that if such performance
or observance cannot reasonably be accomplished within such sixty (60)
day period and (subject to Section 1.11 of this Agreement relating to force
majeure) to diligently pursue such performance or observance to conclusion.
(3) Any default by Operator under the Arena Contract unless such
Operator default is caused by a default of FM&M hereunder.
Subject to the terms and provisions hereof, upon the occurrence of a
FM&M Default of the type described in Section 1.09.A(1) or a Decoma Default of
the type described in Section 1.09.B(1), the non-defaulting party shall have the
right
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to give the defaulting party notice ("Final Notice") of its intention to
terminate this Agreement after the expiration of a period of ten (10) days from
the date such Final Notice is effective pursuant to Section 1.19, and upon
expiration of such ten (10) day period this Agreement shall terminate. If,
however, within such ten (10) day period the defaulting party cures such default
by paying all such amounts as may be required to be paid by the defaulting party
hereunder, then this Agreement shall not terminate by reason of such Final
Notice.
Subject to the terms and provisions hereof, upon the occurrence of an
FM&M Default of the type described in Section 1.09.A(2) or a Decoma Default of
the type described in Section 1.09.B(2), the non-defaulting party shall have the
right to give the defaulting party notice ("Final Notice") of its intention to
terminate this Agreement after the expiration of a period of sixty (60) days
(subject to the provisions of Section 1.11 relating to force majeure) from the
date such Final Notice is effective and upon expiration of such sixty (60) day
period, this Agreement shall terminate. If, however, within such sixty (60) day
period, the defaulting party cures such default, or if such default cannot
reasonably be cured within such sixty (60) day period, and the defaulting party
begins to cure such default during such sixty (60) day period and (subject to
the provisions of Section 1.11 relating to force majeure) diligently pursue
such cure to successful conclusion, then this Agreement shall not terminate by
reason of such Final Notice.
Subject to the terms and provisions hereof, upon the occurrence of a
FM&M Default of the type described in Section 1.09A(3) or a Decoma Default of
the type described in Sections 1.09B(3), the non-defaulting party [i.e., FM&M or
Decoma as the case may be] shall have the right to terminate this Agreement upon
written notice to the defaulting party and payment of all amounts owing under
this Agreement.
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Subject to the terms and provisions of this Agreement, and subject
further to the limitations on liability hereinbelow set forth, either party
shall have the right upon the occurrence of an FM&M Default or Decoma Default
(as the case may be), as aforesaid, and in addition to the right to terminate
this Agreement, to seek any and all remedies, whether legal, equitable or both,
to which such non-defaulting party may be entitled.
In the event FM&M is finally adjudicated by a court of competent
jurisdiction (said adjudication not being the subject of further appeal or
review) to have committed fraud or willful misconduct with respect to its
obligations under this Agreement, FM&M shall be liable for all proven damages
directly and proximately caused by such fraud or willful misconduct. Except
where FM&M is finally adjudicated by a court of competent jurisdiction (said
adjudication not being the subject of further appeal or review) to have
committed fraud or willful misconduct, as aforesaid, Decoma agrees that any
judgment in favor of Decoma for damages shall be limited to such proven damages
directly and proximately caused by FM&M's default under this Agreement, which
shall in no event exceed the aggregate amount of all Management Fees paid to
FM&M from the date hereof to the date of such judgment, nor shall FM&M ever be
required by any such judgment to expend in satisfaction thereof funds in excess
of such amount. Except as expressly provided in the immediately preceding
sentence, in no event whatsoever and under no circumstances (howsoever
occurring) shall FM&M be liable to Decoma (or any other party whomsoever) for
any of the following:
(1) Event-Related Expenses;
(2) Extraordinary Replacement and Repair Expenses;
(3) Operating Expenses;
(4) Operating Losses;
(5) Net Operating Losses;
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(6) Pre-Opening Operating Expenses;
(7) Any other expenses, costs or losses howsoever occurring
resulting from the operation of the Arena or pursuant to the Arena
Contract, whether actual, direct, indirect, special or consequential
in nature; or
(8) Any consequential or special damages.
Notwithstanding anything to the contrary in this Agreement, the constituent
partners, employees, and agents of FM&M (or any of its predecessors in
interest) shall not be personally liable for any damages or other obligations
whatsoever, under any theory of action or recovery, as a result of a default by
FM&M hereunder.
C. In the event of the occurrence of a Decoma Default or FM&M
Default, the non-defaulting party shall, in addition to its other rights and
remedies hereunder, have the right to recover from the defaulting party the
reasonable costs and expenses incurred by the non-defaulting party in enforcing
its rights and remedies, including reasonable attorney's fees. A termination
of this Agreement by either Decoma or FM&M by reason of a FM&M Default or
Decoma Default, shall not relieve either party of any of its obligations
theretofore accrued prior to and through the effective date of such termination.
D. Decoma agrees that FM&M has been appointed Decoma's special
agent to supervise, administer and manage the Operating Work for the Arena on
and subject to the provisions of, and for the Term of this Agreement. Thus,
notwithstanding any other provisions of this Agreement, and without waiver of
any of FM&M's rights and remedies hereunder, Decoma and FM&M agree that, if
Decoma breaches this Agreement by wrongfully terminating, or wrongfully
purporting to terminate, in whole or in part, FM&M's position as manager
hereunder (i) FM&M's rights to perform the services herein and the benefits
hereof to FM&M shall be deemed to be unique; (ii) FM&M's remedy at law may be
inadequate to compensate FM&M for partial or complete loss of position
of FM&M
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hereunder, and (iii) FM&M shall be entitled to seek or obtain or to plea for a
decree by a court of competent jurisdiction directing Decoma to restore FM&M to
FM&M's full position as described herein and to comply with all of the
provisions hereof. The remedies available to FM&M shall be non-exclusive,
cumulative of and additional to all other remedies available at law or in
equity.
E. Decoma and Operator recognize that the profits and fees to be
realized by FM&M under this Agreement are difficult, if not impossible, to
accurately ascertain on the date hereof. Moreover, Decoma recognizes that
FM&M's agreement to manage and operate the Arena was procured on FM&M's
reliance that it would be able to do so for the full Term so long as FM&M is not
in default hereunder beyond any applicable period of notice, grace or
opportunity to cure. Decoma and FM&M recognize that at an early termination of
this Agreement (resulting form an early termination of the Arena Contract) can
reasonably be anticipated to cause FM&M to fail to obtain the fully expected
benefits of this Agreement and to forego a portion of FM&M's expected
Management Fee.
F. Upon the termination of this Agreement as provided herein, FM&M
shall surrender the Premises to Decoma in accordance with the provisions of
Section D.1.5 of the Arena Contract (but without the payment of any termination
fee or payment other than payments owing to FM&M under the terms of this
Agreement) as if the Owner referred to therein was Decoma and the Operator
referred to therein was FM&M.
G. Upon termination of this Agreement for any reason and payment of
all sums owing to FM&M, FM&M shall deliver to Decoma the following:
(1) a final report, reflecting the data and information provided for in
Section 1.02A(8) of this Agreement, as of the date of termination, such
report
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to be deliverd within thirty (30) days after such termination;
(2) any monies of the Operator or Decoma, or otherwise relating
to the Arena, held by FM&M, to be delivered promptly upon such
termination; and
(3) all records, contracts, unpaid bills and other papers or
documents of Decoma held by FM&M and relating to the operation of the
Arena, or otherwise relating to the Arena, all such documents to be
delivered promptly upon such termination.
H. Subject to the terms hereof, all sums due and owing by
Decoma to FM&M under this Agreement shall be secured by a lien (subordinated as
hereinafter set forth) in favor of FM&M on all monies due and owing to Decoma
pusuant to the Arena Contract therein and thereunder and on all of Decoma's
rights and interests in any monies or distributions from Decoma, Ltd. and/or
Operator, but expressly excluding any monies held for the benefit of or
intended for distribution to the limited partner of Decoma, Ltd. or the limited
partners of Operator; provided, however, said lien hereby granted in favor of
FM&M shall be expressly subordinate to (i) the lien granted to Concessionaire
under the Concession Agreement with respect to the Termination Fee (referred to
therein) and (ii) with respect to the following: If at any time or from time
to time Decoma, in its reasonable discretion, determined that it is necessary
for Decoma, Ltd., in its capacity as general partner of Operator, to contribute
or loan (a "Decoma Miami Advancement") additional sums to Operator to be used
by Operator to avert a materially adverse financial situtation for Operator
(the amount of such contribution or loan being hereinafter referred to as the
"Advancement Amount"), Decoma may, in its discretion, elect to obtain the funds
for such Decoma Miami Advancement by either (a) financial arrangements
("Third-Party Project Loans") with third-party lenders ("Project
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Lenders"); (b) loans by the Venturers to Decoma ("Venturer Project Loans"); (c)
capital contributions by the Venturers to Decoma ("Venturer Project
Contributions"); or (d) a combination of Third-Party Project Loans and Venturer
Project Loans, or Third-Party Project Loans and Venturer Project Contributions.
For the purposes hereof, the terms and provisions of said Third-Party Project
Loans, Venturer Project Loans and Venturer Project Contributions shall be
subject to and governed by the provisions of Section 4.01 of the Articles of
Limited Partnership of Decoma, Ltd. Accordingly, any such lien in favor of
Concessionaire, Third-Party Project Loans, Venturer Project Loans and Venturer
Project Contributions, as aforesaid, shall be a priority lien over the lien
rights granted to FM&M hereunder. The subordination herein provided is
intended to be self-effecting, but FM&M agrees to promtply execute and
deliver, from time to time, such instruments as Decoma may reasonably request
to evidence the subordination herein provided.
I. In the event that FM&M determined that an Owner Default (as
defined in the Arena Contract) has occurred, then in connection with any such
asserted Owner Default, the following shall apply:
(1) FM&M, acting in its capacity as manager of the Arena
hereunder, shall notify Decoma of such asserted Owner Default, and
shall be entitled to send, in its own name (but not in the name of
Decoma) a notice of such determination to Owner, with a copy of such
notice to Owner to be forwarded to the Venture Representatives of
Decoma. Thereupon, the Venture Representatives shall, in the exercise
of good faith, in an expeditious and prompt manner, make a
determination as to whether or not any such Owner Default has actually
occurred. FM&M may include with such copy of such notice any proposed
action that
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FM&M would recommend that Decoma should take against the Owner under
the terms of the Arena Contract as a result of any such Owner Default.
The determination of whether any Owner Default actually has occurred
shall be made by Decoma. In the event that such determination is made
by the Venture Representatives, then, in such event, the Managing
Venturer of Decoma (or other Venturer so directed by the Venture
Representative) shall be obligated to send a notice of such Owner
Default to Owner in accordance with the terms and provisions of the
Arena Contract. In the event that Decoma and all Venture
Representatives fail to respond within thirty (30) days to FM&M's
request that an Owner Default be declared by Decoma under the Arena
Contract, then, in such event, FM&M shall be deemed empowered and
authorized in the name of Decoma and in Decoma's capacity as sole
general partner of Operator, to send such notice of an Owner Default
to Owner (with a copy to all Venture Representatives); and
(2) In the event that any such Owner Default has been sent under
the terms of subparagraph (1) preceding (either by Decoma or by FM&M
acting on behalf of Decoma as aforesaid), then, upon the expiration of
all applicable periods of notice and opportunity to cure provided for
in the Arena Contract on account of an Owner Default and in the event
that following the expiration of such period of notice and opportunity
to cure, such Owner Default still remained uncured, then, Decoma shall,
in the exercise of good faith, and in an expeditious and prompt manner
make a determination of the appropriate remedy (or remedies), if any,
to be
-30-
<PAGE> 31
enforced against Owner on account of any such Owner Default and notify
FM&M of such determination; provided, however, in the event that
neither Decoma nor any of the Venture Representatives notifies FM&M not
to proceed as FM&M recommended within thirty (30) days (following the
expiration of the applicable period of notice and opportunity to cure
afforded Owner for an Owner Default under the Arena Contract), then in
such event FM&M shall be deemed empowered and authorized in the name of
Decoma and in Decoma's capacity as sole general partner of Decoma,
Ltd., and in turn acting on behalf of Decoma, Ltd. as sole general
partner of Operator to enforce the remedy or remedies originally
recommended by FM&M to Decoma against Owner.
1.10 Indemnity. Except where FM&M is finally adjudicated by a court of
competent jurisdiction (said adjudication not being the subject of further
appeal or review), to have committed fraud or willful misconduct or a breach of
any material provision of this Agreement, Decoma covenants and agrees to
indemnify, defend, protect, save and hold harmless FM&M (and all partners,
shareholders, directors, officers, employees, agents and representatives of
FM&M) (FM&M and all such other parties named in the preceding parenthetical
being hereinafter referred to collectively as "Indemnitees" and where the
context requires, singularly, as "Indemnitee") from any and all liabilities,
losses, costs, damages, obligations, claims and expenses (including, without
any limitation, reasonable attorney's fees and court costs) that Indemnitees
(or any Indemnitee) may directly or indirectly sustain, suffer or incur out of
or in connection with or arising from any allegations or claims and any
actions, suits or proceedings relating to such allegations or claims
(collectively referred to herein as the "Claims") by any person, party, firm or
corporation or any
<PAGE> 32
government authority (including the United States, the State of Florida, Dade
County, the City of Miami, the MSEA, or any other political subdivision, agency
or instrumentality exercising jurisdiction over the Arena, Decoma or FM&M)
(collectively the "Claimant") relating in any way to the performance of the
Operating Work or any other services provided by FM&M hereunder. Decoma agrees
to and does hereby assume the defense on behalf of Indemnitees (and any
Indemnitee) of any action at law or in equity which may be brought by Claimants
(or any one of them) against Indemnitees (or any Indemnitee) by reason of such
Claims (whether or not such Claims are based on the passive or active
participation of Indemnitees (or any Indemnitee) and to pay on behalf of such
Indemnitees (or any Indemnitee), provided that such Indemnitees have compiled
with the provisions of this Section 1.10, upon demand, the amount of any
judgment which may be entered against Indemnitees (or any Indemnitee) in any
such action (except as above provided); provided, however, that without
relieving Decoma of any obligations under this Agreement, Indemnitees (or any
Indemnitee) at their election, may select counsel of their own choosing to
defend or participate in the defense of any or all of the Claims. In the event
any Claims are asserted or commenced against Indemnitees (or any Indemnitee),
FM&M shall give written notice thereof to Decoma. Decoma shall then have
thirty (30) days (or such earlier period of time as may be required to respond
to any such Claims) from the date of such written notice to satisfy or commence
the defense of any such Claims. FM&M agrees, to the extent reasonable and
necessary (without incurring any cost or expense in connection therewith for
all of which FM&M is hereby indemnified), to cooperate with Decoma in
connection with any such defense of any of the Claims (and the failure to
cooperate shall release Decoma from all obligations under this Section 1.10);
provided, however, in no event shall FM&M be required to become a defendant or
otherwise
<PAGE> 33
join in any of the Claims unless FM&M is itself named a party defendant in any
one of the Claims by the party who has brought such suit, action or proceeding.
Notwithstanding any other provision of this Agreement, in no event
shall Decoma make any claim against FM&M on account of any alleged errors in
judgment made in good faith and in the exercise of reasonable and professional
prudent judgment by FM&M in connection with the performance of the Operating
Work provided or to be provided by FM&M under this Agreement.
1.11 Force Majeure. Neither party to this Agreement shall be obligated
to perform and neither party shall be deemed to be in default hereunder, if
performance of a non-monetary obligation is prevented by the occurence of any
of the following, other than as a result of a financial inability to perform,
(herein called "force majeure" or "event of force majeure") acts of God,
strikes, lockouts, other industrial disturbances, acts of the public enemy,
Legal Requirements, wars or war-like action (whether actual, impending or
expected and whether de jure or de facto), arrest or other restraint of
government (civil or military), blockades, insurections, riots, epidemics,
landslides, lightning, earthquakes, fires, hurricanes, storms, floods,
washouts, civil disturbances, explosions, breakage or accident to equipment or
machinery, confiscation or seizure by any government or public authority,
nuclear reaction or radiation, radioactive contamination or any other causes,
whether for the kinds herein enumerated or otherwise, that are not reasonably
within the control of the party claiming the right to delay performance on
account of such occurrence.
1.12 Assignment
A. FM&M shall have the right to assign this Agreement to any
"affiliate" of FM&M. Otherwise, FM&M shall not, without Decoma's prior written
approval (which may be given or denied in Decoma's sole and absolute
discretion) assign any of its rights,
-33-
<PAGE> 34
other than its right to receive the fees payable to FM&M as herein provided
(which FM&M may freely transfer or encumber; however, the assignment of any of
the rights to receive the fees payable to FM&M herein shall be limited only to
an assignment of proceeds [and as a result thereof, such assignee of such
proceeds shall not have any rights of FM&M, except to the proceeds and shall
not perform any of the Operating Work or perform any other duties of FM&M under
this Agreement]), or its obligations under this Agreement, whether by operation
of law or otherwise. For purposes of this Agreement an "affiliate" of FM&M
shall mean any corporation, partnership, or other entity controlled by,
controlling, or under common control with FM&M. "Control" shall mean and refer
to the ownership of at least fifty-one percent (51%) of the outstanding voting
securities or beneficial ownership interest of the controlled entity. Any
consent by Decoma to any such assignment, shall not be deemed a waiver of the
restrictions herein contained against assignment in any subsequent case.
1.13 Representatives and Officers and Directors of FM&M Not
Individually Liable. Notwithstanding anything to the contrary in this
Agreement, not constitutent partners (or any of their officers, directors,
employees, shareholders, official representatives, or agents), employees,
agents, members, directors, officers, shareholders, officials or
representatives of FM&M or any of its predecessors-in-interest (or any of their
officers, directors, employees, shareholders, official representatives, or
agents) or any affiliate (or any of their officers, directors, employees,
shareholders, official representatives, or agents) of FM&M shall be personally
liable to Decoma (or to any of the Venturers), Decoma, Ltd. (or to any of its
partners), Operator (or to any of its partners), the MSEA, or the City or any
one claiming under any of such parties in the event of a FM&M Default or for
any amount which may become due to Decoma, Decoma,
-34-
<PAGE> 35
Ltd., Operator, the MSEA or any such other party, or on any obligations under
the terms of this Agreement.
1.14 Decoma Consent; Amendment of Arena Contract; Other Amendments.
Decoma agrees for itself and in its capacity as the general partner of Decoma,
Ltd. and for Decoma, Ltd. in its capacity as the general partner of Operator
that, during the term of this Agreement, it shall not materially amend or
modify the Arena Contract, the Block 44/57 Agreement, the Decoma Joint Venture
Agreement, the partnership agreement of Decoma, Ltd. or the partnership
agreement of Operator, or any other agreement related to the Project Land or
the use or operation of the Arena without the prior written consent of FM&M
(which FM&M agrees not to unreasonably withhold or delay), if as a result of
such amendment or modification to such agreement the obligations of FM&M
hereunder would be enlarged or the rights of FM&M hereunder would be reduced.
However, the prior written consent of FM&M shall not be required if HSA
Management, Inc., as one of the Venturers of Decoma, has, in connection
therewith, granted (or was deemed to have granted) its consent to the
modification or amendment to the agreement then in question.
1.15 No Partnership. Neither the agreement to pay FM&M the Incentive
Bonus or any other provision hereof shall ever constitute a partnership or
joint venture relationship between Decoma and FM&M, and, notwithstanding such
provisions, no partnership or joint venture between the parties is intended to
be or is hereby created. Subject only to the provisions of Section 3.5(b) of
the Joint Venture Agreement, Decoma, the Venturers and FM&M each reserve and
retain the right to engage in all businesses and activities of any kind
whatsoever (irrespective of whether the same may be in competition with the
business and activities of Decoma, Decoma, Ltd., Operator or FM&M), and to
acquire and own all assets however acquired and wherever situated, and to
receive compensation or profit therefrom, for
-35-
<PAGE> 36
each of their own accounts and without in any manner being obligated to
disclose such business and activities or assets or compensation or profit to
the other. By way of illustration of the foregoing, but not in limitation
thereof, it is recognized that FM&M is a joint venture organized for the
purpose of providing management services to assembly, convention and trade show
centers, sports, entertainment and other leisure and recreational type
facilities and the provision of design and management consulting services in
connection therewith. Accordingly, except as provided in Section 3.5(b) of the
Joint Venture Agreement, the pusuit by FM&M and the involvement of FM&M in any
of such activities shall in no way obligate FM&M to Decoma (or the Venturers),
Decoma, Ltd. (or its partners) or Operator (or its partners) or hold FM&M
accountable to Decoma, Decoma, Ltd. or Operator (or such Venturers or partners)
for any reason whatsover or otherwise restrict in any way the freedom of FM&M
to conduct any such business or activity.
1.16 Operator's Representative. The Managing Venturer under the Joint
Venture Agreement shall be designated Operator Representative under the Arena
Contract, however, such Managing Venturer shall not give any consents or
approvals required of it under the Arena Contract if it in any material way
relates to the Operating Work or any of the rights, duties and obligation of
FM&M hereunder without first obtaining the prior written consent of FM&M (which
consent shall not be unreasonably withheld or delayed).
1.17 Exclusive and Non-Competition Agreement. Other than with respect
to the Concessionaire Agreement and subject to the rights of the Venturers
under the Joint Venture Agreement, during the term of this Agreement, Decoma
shall not enter into any agreement with any other person or entity (i) to
develop, construct, manage or operate the Arena, (ii) to negotiate, execute or
perform contracts with persons or entities who desire
-36-
<PAGE> 37
to exhibit or perform in the Arena, (iii) to negotiate, execute or perform
contracts for the use of advertising space within the Arena, (iv) to operate
concessions within the Arena or on the Project Land, or (v) any other rights in
any way relating to the performance of the Operating Work, all as herein
granted to FM&M under this Agreement and FM&M shall have the exclusive power
and authority to perform all such acts.
1.18 Insurance.
A. FM&M shall use reasonable efforts to obtain or cause to be obtained
at Decoma's expense, and shall use reasonable efforts to keep in force during
the Term of this Agreement, all of the insurance required under Paragraph E.1.4
of Exhibit "E" to the Arena Contract. Such insurance shall comply with and be
consistent in all respects with the insurance required of Operator under
Exhibit "E" to the Arena Contract, and shall be endorsed specifically to
include within its scope of coverage all liabilities and indemnities for which
Decoma and FM&M are obligated and liable under the terms of this Agreement.
Such insurance shall be written by companies selected by FM&M and that meet the
requirements set forth in Paragraph E.3 of Exhibit "E" to the Arena Contract,
and shall name Decoma, Ltd., Decoma and each of the Venturers as insureds, and
FM&M as an additional insured. So long as FM&M complies with the requirements
of this Section 1.18, FM&M shall not be in default under this Agreement even
though the insurance obtained or sought to be obtained or maintained in force
hereunder does not satisfy all of the requirements under the Arena Contract.
B. FM&M shall use reasonable efforts to cause every policy referred to
or required under this Agreement to comply with Paragraph E.2 of Exhibit "E" to
the Arena Contract, and to provide that each policy include a waiver of all
rights of subrogation (in addition to the waiver of all rights of subrogation
set forth in Paragraph E.2(c) of Exhibit "E" to the
-37-
<PAGE> 38
Arena Contract) in favor of Decoma, Ltd., Decoma, each of the Venturers, FM&M
and their officers, directors, employees, and/or their constituent partners.
C. Cooperation. Decoma and FM&M each shall furnish to the other
whatever information is requested by the other for the purpose of establishing
insurance coverages.
1.19 Miscellaneous.
A. Any notice which shall or may be given under this Agreement shall
be in writing and shall be sent by United States registered or certified mail,
postage prepaid, return receipt requested, addressed to the parties as follows,
or delivered in person to such address:
If to FM&M: 8701 Kirby, The Astrodome
Houston, Texas 77054
Attention: Mr. Neal Gunn
With a copy to: Denis Clive Braham, Esq.
Dow, Cogburn, & Friedman
9 Greenway Plaza, Suite 2300
Houston, Texas 77046
If to Decoma: BIL Development, Inc.
1400 Sage Plaza
5151 San Felipe
Houston, Texas 77056
Attention: Mr. C. Dean Patrinely
With a copy to: James B. Rylander, Esq.
Vinson & Elkins
3300 First City Tower
1001 Fannin
Houston, Texas 77002-6760
With a copy to: Howard T. Ayers, Jr.
Woodard, Hall & Primm
4700 Texas Commerce Tower
Houston, Texas 77002
Any party shall have the right to change its address for the purpose of notice
by giving notice to the other party in accordance with the provisions hereof.
Each notice shall be effective three (3) days after being deposited in the U.S.
Mail or upon receipt if delivered in person.
B. The titles of the paragraphs of this Agreement shall have no effect
and shall neither limit nor amplify the provisions of the Agreement itself.
-38-
<PAGE> 39
C. This Agreement, including Exhibit "A" which is attached hereto and
incorporated herein for all purposes, constitutes the entire agreement between
the parties relating to the subject matter hereof. This Agreement shall not be
amended or changed except by written instrument signed by the party to be
charged therewith.
D. This Agreement has been entered into in the State of Texas, and shall
be governed by the laws of the State of Texas.
E. Acceptance by either Decoma or FM&M of any payment made by the other
party shall not constitute a waiver of the right of such recipient to contest
whether or not the full amount due shall have been paid nor a waiver of any
other rights hereunder. Failure by Decoma or FM&M to complain of any action,
nonaction or default of the other party shall not constitute a waiver of any
rights hereunder, nor shall the waiver of any right occasioned by a default in
any one or more instances constitute a waiver of any right occasioned by either
a subsequent default of the same obligation or occasioned by any other default.
F. The terms and provisions of this Agreement shall inure to the benefit
of and be enforceable by the parties hereto and their permitted assignees.
G. Any agreement to pay an amount and any assumption of liability herein
contained, express or implied, shall be only for the benefit of the undersigned
parties and their respective successors and assigns (as permitted by this
Agreement), and such agreements and assumptions shall not inure to the benefit
of the obligees of any indebtedness or any other party, whomsoever, it being the
intention of the undersigned that no one shall be deemed to be a third-party
beneficiary of this Agreement.
1.20 EXCULPATION OF LIABILITY. Notwithstanding anything to the contrary
in this Agreement, and notwithstanding the theory of recovery or cause of
action, neither the
-39-
<PAGE> 40
constituent venturers of Decoma, nor their respective partners, shareholders,
members, directors, officers, employees or agents, shall ever be personally
liable to FM&M, or anyone claiming by, through or under FM&M, in the event of
any Decoma Default hereunder, or for any amount which may become due to FM&M
hereunder, or for any obligation of Decoma under the terms and provisions of
this Agreement. However, notwithstanding the preceding sentence, FM&M shall
have the right to recover from Decoma any and all Decoma funds and/or Decoma
assets in the event of any Decoma Default.
SIGNATURE PAGE FOLLOWS ...
-40-
<PAGE> 41
EXECUTED in multiple counterparts, each of which shall have
the force and effect of an original, as of the date and year first
above written.
DECOMA VENTURE, a Texas joint
venture, by its Venturers
By: /s/ C. Dean Patrinely
------------------------------
C. DEAN PATRINELY, President,
BIL Development, Inc.
By: /s/ Neal Gunn
-----------------------------
NEAL GUNN, Vice-President,
HSA Management, Inc.
By: /s/ Glen D. Graff
------------------------------
GLENN D. GRAFF, Vice President
Linbeck Miami Corp.
FACILITY MANAGEMENT & MARKETING,
a Texas joint venture, by its
venturers
ASH ENTERPRISES, INC.
By: /s/ Neal Gunn
-----------------------------
NEAL GUNN
Vice President
FACILITIES OPERATING ENTERPRISES,
a Texas partnership by its
partnership representatives,
CENTURY FACILITIES, INC.
By: /s/ Walter Ross
----------------------------
WALTER ROSS, President
BARMAC, INC.
By: /s/ Mike McGee
-----------------------------
MIKE McGEE, President
SIGNATURE PAGE OF
ARENA MANAGEMENT AGREEMENT
BY AND BETWEEN
DECOMA VENTURE
AND
FACILITY MANAGEMENT AND MARKETING
DCB/TJM/djl
9/10/86
DCB83A
<PAGE> 42
EXHIBIT "A"
PROFORMA
<TABLE>
<CAPTION>
NET OPERATING INCENTIVE
YEAR INCOME BONUS LIMIT*
---- ------------- ------------
<S> <C> <C>
1988 $ 33,000 $ 325,000
1989 $ 42,000 $ 341,250
1990 $ 32,000 $ 358,313
1991 $ 1,000 $ 376,228
1992 $ (110,000) $ 395,040
1993 $ 28,000 $ 414,792
1994 $ 15,000 $ 435,531
1995 $ 32,000 $ 457,308
1996 $ 16,000 $ 480,173
1997 $ (65,000) $ 504,182
1998 $ 99,000 $ 529,391
1999 $ 117,000 $ 555,860
2000 $ 101,000 $ 583,653
2001 $ 121,000 $ 612,836
2002 $ 6,000 $ 643,478
2003 $ 128,000 $ 675,652
2004 $ 116,000 $ 709,434
2005 $ 121,000 $ 744,906
2006 $ 121,000 $ 782,151
2007 $ 26,000 $ 821,259
2008 $ 127,000 $ 862,322
2009 $ 133,000 $ 905,438
2010 $ 134,000 $ 950,710
2011 $ 141,000 $ 998,245
2012 $ 42,000 $ 1,048,157
2013 $ 150,000 $ 1,100,565
2014 $ 152,000 $ 1,155,594
2015 $ 160,000 $ 1,213,373
2016 $ 163,000 $ 1,274,042
2017 $ 72,000 $ 1,337,744
2018 $ 171,000 $ 1,404,631
2019 $ 181,000 $ 1,474,863
And for as said last as said
all years amount is last
thereafter increased by amount is
5% per year increased
by 5% per
year
</TABLE>
*Notwithstanding anything to the contrary contained in Section 1.08(B)
of the Agreement, to which this Exhibit "A" is attached, the Incentive Bonus
Limit with respect to any year shall be the lesser of:
(i) the dollar amount set forth above as the Incentive Bonus Limit for
such year on this Exhibit "A"; or
(ii) the dollar amount equal to (a) sixty-seven and one-half percent
(67-1/2%) of that portion of the Operator's Operating Income Allocation
("OOIA", as defined in the Arena Contract) for the applicable year involved
which is actually distributed to Decoma by Decoma, Ltd., and which is available
for distribution by Decoma to its Venturers as Distributable Funds (as defined
in the Joint Venture Agreement) (such portion of OOIA actually received by
Decoma and available for
Exhibit "A"
Page 1 of 2 Pages
<PAGE> 43
distribution to the Venturers being herein referred to as the "Venture
OIA"), less and reduced by (b) the dollar amount, if any, of Venture OIA
payable to the owners of, or distributable with respect to, the initial
33-1/3% Venture ownership interest of HSA in Decoma (whether or not all or
any portion of such interest is then owned by HSA), but not reduced by any
other portion of Distributable Funds payable or distributable with respect
to the initial HSA Venture interest.
For purposes of this Exhibit "A", Decoma and FM&M recognize and agree
that in order to compute and determine the Venture OIA under subsection (ii)
(a) above, certain computations must first be made at the Decoma Miami
(Operator) partnership level to take into account that portion of the OOIA
distributable to the limited partners of Operator, and then similarly a
computation must be made at the Decoma, Ltd. partnership level to take into
account that portion of OOIA distributable to the Limited Partner (as defined
in the partnership agreement of Decoma, Ltd.), and that each of such
computations will reduce the OOIA to be distributed to Decoma as Venture OIA.
With respect to any such distribution to the Limited Partner of Decoma, Ltd.,
such portion of the OOIA is a portion of the "Available Amount" (as such term
is defined in the partnership agreement of Decoma, Ltd.). Notwithstanding the
fact that the partnership agreement of Decoma, Ltd. does not distinguish or
prioritize payments to the Limited Partner of any portion of the Available
Amount [whether OOIA, Operator's Seat Use Allocation ("OSUA") or the Variable
Operating Payment ("VOP"), as such terms are defined in the Arena Contract],
for the purposes of computing the Venture OIA to in turn compute the Incentive
Bonus Limit hereunder, the Available Amount payable to the Limited Partner
shall be deemed to be first satisfied by allocating such sources of revenue in
the following priority, whether or not the Limited Partner actually received
the Available Amount in such order: first, OSUA; then, VOP; and then, the OOIA
component of the Available Amount.
To the extent Venture expenses of Decoma reduce the amount of
Distributable Funds of Decoma, all such expense shall be deemed to have been
paid first out of OSUA distributed by Decoma, Ltd. to Decoma, then out of VOP
distributed by Decoma, Ltd. to Decoma, and then out of Ventura OIA.
Nothing contained in this Exhibit "A" shall alter or affect the
provisions of Section 1.08 of this Agreement which condition the payment of the
Incentive Bonus (as well as the Management Fee) upon the payment by MSEA to
Operator of the Operating Payment and the receipt by Decoma of such funds.
DCB/djl
9/30/86
DCB83A
Exhibit "A"
Page 2 of 2 Pages
<PAGE> 1
EXHIBIT 21.1
<TABLE>
<CAPTION>
SUBSIDIARIES STATE OF INCORPORATION
------------ ----------------------
<S> <C>
Florida Panthers Hockey Club, Inc. Florida
Arena Development Company, Inc. Florida
Arena Operating Company, Inc. Florida
Decoma Investment, Inc. I Texas
Decoma Investment, Inc. II Texas
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use of
our reports (and to all references to our firm) included in or made a part of
this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
September 13, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FLORIDA PANTHERS FOR THE YEAR ENDED JUNE 30, 1996, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 373,415
<SECURITIES> 0
<RECEIVABLES> 2,857,004
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,402,563
<PP&E> 1,724,339
<DEPRECIATION> (752,336)
<TOTAL-ASSETS> 28,396,262
<CURRENT-LIABILITIES> 65,562,123
<BONDS> 25,000,000
0
0
<COMMON> 0
<OTHER-SE> (55,442,760)
<TOTAL-LIABILITY-AND-EQUITY> 38,396,262
<SALES> 0
<TOTAL-REVENUES> 33,004,823
<CGS> 0
<TOTAL-COSTS> 44,152,837
<OTHER-EXPENSES> 9,426,846
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,908,286
<INCOME-PRETAX> (25,483,146)
<INCOME-TAX> 0
<INCOME-CONTINUING> (25,483,146)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (25,483,146)
<EPS-PRIMARY> (5.79)
<EPS-DILUTED> (5.79)
</TABLE>
