<PAGE>
As filed with the Securities and Exchange Commission on January 22, 1998
REGISTRATION NO. 333-43287
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
SFX ENTERTAINMENT, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 7922 13-3977880
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation Industrial Classification Identification Number)
or Organization) Code Number)
650 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 838-3100
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
ROBERT F.X. SILLERMAN, EXECUTIVE CHAIRMAN
SFX ENTERTAINMENT, INC.
650 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 838-3100
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
---------------------------
Copy to:
AMAR BUDARAPU, ESQ.
BAKER & MCKENZIE
805 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 751-5700
---------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective and all
other conditions to the distribution under the Distribution Agreement described
in the Prospectus have been satisfied or waived, and from time to time
thereafter pursuant to the exercise of warrants of SFX Broadcasting, Inc.
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. [X]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) 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 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 this form is a post-effective amendment filed pursuant to Rule
462(d) 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. [ ]
---------------------------
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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
===============================================================================
<PAGE>
EXPLANATORY NOTE
This Amendment No. 1 to the Registration Statement on Form S-1 (File
No. 333-43287) of SFX Entertainment, Inc. (the "Registration Statement"), is
being filed solely to include additional exhibits as part of the Registration
Statement. This Amendment No. 1 does not contain a copy of the Prospectus
included in the initial filing of the Registration Statement on December 24,
1997.
<PAGE>
PART II
ITEM 13. OTHER EXPENSES OF ISSUANCE AND SPIN-OFF
The following table sets forth the various expenses in connection with
the distribution of the securities being registered. All amounts shown are
estimates except for the SEC registration fee.
SEC Registration Fee................................... $ 30,777.94
Nasdaq Fees............................................ --
Transfer Agent and Registrar Fees...................... *
Accounting Fees and Expenses........................... *
Legal Fees and Expenses................................ *
Printing, Engraving and Mailing Expenses............... *
Miscellaneous.......................................... *
-----------
Total............................................. $ *
===========
- ---------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the DGCL empowers a Delaware corporation to indemnify
any person who is, or is threatened to be made, a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that the person is or was an officer or
director of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with the action, suit or proceeding,
provided that he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interest of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. Where an officer or director is successful on the merits
or otherwise in the defense of any action referred to above, the corporation
must indemnify him against the expenses which he actually and reasonably
incurred in connection therewith.
The SFX Entertainment Certificate provides that no director of SFX
Entertainment will be personally liable to SFX Entertainment or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability:
o for any breach of the director's duty of loyalty to SFX Entertainment
or its stockholders;
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o under Section 174 of the DGCL; or
o for any transaction from which the director derived an improper
personal benefit.
II-1
<PAGE>
In addition to the circumstances in which a director of SFX Entertainment is
not personally liable as set forth above, no director will be liable to SFX
Entertainment or its stockholders to such further extent as permitted by any
law enacted after the date of the SFX Entertainment Certificate, including any
amendment to the DGCL.
The SFX Entertainment Certificate requires SFX Entertainment to
indemnify any person who was, is, or is threatened to be made a party to any
action, suit or proceeding, by reason of the fact that he (a) is or was a
director or officer of SFX Entertainment or (b) is or was serving at the
request of SFX Entertainment as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of another
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise. This indemnification is to be to the fullest
extent permitted by the DGCL. The right to indemnification will be a contract
right and, as such, will run to the benefit of any director or officer who is
elected and accepts the position of director or officer of SFX Entertainment or
elects to continue to serve as a director or officer of SFX Entertainment while
this provision of the SFX Entertainment Certificate is in effect. The right to
indemnification includes the right to be paid by SFX Entertainment for expenses
incurred in defending any such action, suit or proceeding in advance of its
final disposition to the maximum extent permitted under the DGCL. If a claim
for indemnification or advancement of expenses is not paid in full by SFX
Entertainment within 60 days after a written claim has been received by SFX
Entertainment, the claimant may, at any time thereafter, bring suit against SFX
Entertainment to recover the unpaid amount of the claim and, if successful in
whole or in part, expenses of prosecuting his claim. It will be a defense to
any such action that the requested indemnification or advancement of costs of
defense are not permitted under the DGCL, but the burden of proving this
defense will be on SFX Entertainment. The rights described above do not exclude
any other right that any person may have or acquire under any statute, by-law,
resolution of stockholders or directors, agreement or otherwise.
The by-laws of SFX Entertainment require SFX Entertainment to
indemnify its officers, directors, employees and agents to the full extent
permitted by the DGCL. The by-laws also require SFX Entertainment to pay
expenses incurred by a director in defending a civil or criminal action, suit
or proceeding by reason of the fact that he is/was a director (or was serving
at SFX Entertainment's request as a director or officer of another corporation)
in advance of the final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director to repay the advance
if it ultimately is determined that the director is not entitled to be
indemnified by SFX Entertainment as authorized by relevant sections of the
DGCL. The indemnification and advancement of expenses provided in the by-laws
are not to be deemed exclusive of any other rights provided by any agreement,
vote of stockholders or disinterested directors or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
[Describe issuances of stock of SFX Entertainment in the Pending
Acquisitions, as required by S-K item 701.]
All of the above issuances are made in reliance on the exemption from
registration with the SEC contained in Section 4(2) of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------
2.1+ Form of Distribution Agreement, dated ________ __, 1998, between
SFX Entertainment and SFX (incorporated by reference to Annex F to
Schedule 14A of SFX (File number 0-000-22486), filed with the SEC
on ________ ___, 1998).
2.2+ Form of Tax Sharing Agreement, dated ________ __, 1998, between SFX
Entertainment and SFX.
2.3+ Form of Employee Benefits Agreement, dated __________, 1998,
between SFX Entertainment and SFX.
II-2
<PAGE>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------
3.1* Certificate of Incorporation of SFX Entertainment.
3.2+ Bylaws of SFX Entertainment.
3.3+ Form of Amended and Restated Certificate of Incorporation of SFX
Entertainment (incorporated by reference to Annex E to Schedule 14A
of SFX, filed with the SEC on ________ ___, 1998).
5.1+ Opinion of Baker & McKenzie.
10.1* Stock Purchase Agreement, dated as of October 11, 1996, by and
among Delsener/Slater Enterprises, Ltd., Beach Concerts, Inc.,
Connecticut Concerts Incorporated, Broadway Concerts, Inc., Ardee
Productions, Ltd., In-House Tickets, Inc., Exit 116 Revisited,
Inc., Ron Delsener, Mitch Slater and SFX Broadcasting, Inc.
10.2* License Agreement, dated January 29, 1990, by and between the State
of New York and Beach Concerts, Inc.
10.3* Amendment to License Agreement of January 29, 1990, dated as of
April 11, 1997, by and between the State of New York and Beach
Concerts, Inc.
10.4* Lease Agreement, Easement Agreement and Declaration of Restrictive
Covenants dated as of May 1, 1996, by and between New Jersey
Highway Authority and GSAC Partners.
10.5* Partnership Agreement, dated as of November 18, 1996, by and
between Pavilion Partners and Exit 116 Revisited, Inc.
10.6* Asset Purchase and Sale Agreement, dated June 23, 1997, by and
among Sunshine Concerts, L.L.C., SFX Broadcasting, Inc., Sunshine
Promotions, Inc., P. David Lucas and Steven P. Sybesma.
10.7* Asset Purchase and Sale Agreement, dated as of June 23, 1997, by
and among Suntex Acquisition, L.P., SFX Broadcasting, Inc., Suntex,
Inc., P. David Lucas, Steven P. Sybesma, Greg Buttrey and John
Valant.
10.8* Asset Purchase and Sale Agreement, dated as of June 23, 1997, by
and among Deer Creek Amphitheater Concerts, L.P., SFX Broadcasting,
Inc., Deer Creek Partners, L.P., Sand Creek Partners, L.P., Sand
Creek, Inc., P. David Lucas and Steven P. Sybesma.
10.9* Asset Purchase and Sale Agreement, dated as of June 23, 1997, by
and among Murat Centre Concerts, L.P., SFX Broadcasting, Inc.,
Murat Centre L.P., P. David Lucas and Steven P. Sybesma.
10.10* Asset Purchase and Sale Agreement, dated June 23, 1997, by and
among Polaris Amphitheater Concerts, Inc., SFX Broadcasting, Inc.,
Polaris Amphitheater Limited Partnership and certain of the
partners of Polaris Amphitheater Limited Partnership.
10.11* Asset Purchase and Sale Agreement, dated as of June 23, 1997, by
and among Sunshine Design, L.P., SFX Broadcasting, Inc.,
Tourdesign, Inc., P. David Lucas and Steven P. Sybesma.
10.12 Indenture of Lease, dated as of September 1, 1995, by and between
Murat Temple Association, Inc. and Murat Centre, L.P.
II-3
<PAGE>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------
10.13* Agreement of Merger, dated as of February 12, 1997, by and among
SFX Broadcasting, Inc., NOC Acquisition Corp., Cadco Acquisition
Corp., QN-Acquisition Corp., Nederlander of Connecticut, Inc.,
Connecticut Amphitheater Development Corporation, QN Corp.,
Connecticut Performing Arts, Inc., Connecticut Performing Arts
Partners and the Stockholders of Nederlander of Connecticut, Inc.,
Connecticut Amphitheater Development Corporation and QN Corp.
10.14* Agreement of Merger, dated as of February 14, 1997, by and among
SFX Broadcasting, Inc., NOC Acquisition Corp., Cadco Acquisition
Corp., QN-Acquisition Corp., Nederlander of Connecticut, Inc.,
Connecticut Amphitheater Development Corporation, QN Corp.,
Connecticut Performing Arts, Inc., Connecticut Performing Arts
Partners and the Stockholders of Nederlander of Connecticut, Inc.,
Connecticut Amphitheater Development Corporation and QN Corp.
10.15* Second Amendment of Agreement of Merger, dated as of March 19,
1997, by and among SFX Broadcasting, Inc., NOC Acquisition Corp.,
Cadco Acquisition Corp., QN-Acquisition Corp., Nederlander of
Connecticut, Inc., Connecticut Amphitheater Development
Corporation, QN Corp., Connecticut Performing Arts, Inc.,
Connecticut Performing Arts Partners and the Stockholders of
Nederlander of Connecticut, Inc., Connecticut Amphitheater
Development Corporation and QN Corp.
10.16* Lease Agreement, dated as of September 14, 1994, by and between The
City of Hartford and Connecticut Performing Arts Partners.
10.17* Agreement and Plan of Merger and Asset Purchase Agreement, dated as
of December 10, 1997, by and among SFX Entertainment, Inc.,
Contemporary Investments Corporation, Contemporary Investments of
Kansas, Inc., Continental Entertainment Associates, Inc., Capital
Tickets, LP, Dialtix, Inc., Contemporary International Productions
Corporation, Steven F. Schankman Living Trust, dated 10/22/82,
Irving P. Zuckerman Living Trust, dated 11/24/81, Steven F.
Schankman and Irving P. Zuckerman.
10.18* Lease Agreement, dated December 13, 1992, by and between Wyandotte
County, Kansas and Wyandotte County Parks Board and Sandstone
Amphitheater Joint Venture.
10.19* Stock Purchase Agreement, dated as of December 11, 1997, among each
of the shareholders of BGP Presents, Inc. and BGP Acquisitions,
LLC.
10.20 Amphitheater Lease and Agreement, dated June 20, 1986, between the
City of Mountain View, the Mountain View Shoreline Regional Park
Community and Shoreline Amphitheater Partners.
10.21* Stock and Asset Purchase Agreement, dated December 2, 1997, between
and among SFX Network Group, L.L.C. and SFX Entertainment, Inc.,
and Elias N. Bird, individually and as Trustee under the Bird
Family Trust u/d/o 11/18/92, Gary F. Bird, individually and as
Trustee under the Gary F. Bird Corporation Trust u/d/o 2/4/94,
Stephen R. Smith, individually and as Trustee under the Smith
Family Trust u/d/o 7/17/89, June E. Brody, Steven A. Saslow and The
Network 40, Inc.
10.22* Purchase and Sale Agreement, dated as of December 15, 1997, by and
among Alex Cooley, S. Stephen Selig, III, Peter Conlon, Southern
Promotions, Inc., High Cotton, Inc., Cooley and Conlon Management,
Inc., Buckhead Promotions, Inc., Northern Exposure, Inc., Pure
Cotton, Inc., Interfest, Inc., Concert/Southern Chastain Promotions
Joint Venture, Roxy Ventures Joint Venture and SFX Concerts, Inc.
II-4
<PAGE>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------
10.23* Stock Purchase Agreement, dated as of December 12, 1997 by and
between Pace Entertainment Corporation and SFX Entertainment, Inc.
10.24+ Agreement and Plan of Merger, dated as of August 24, 1997, among
SFX Buyer, SFX Buyer Sub and SFX (incorporated by reference to
Annex A to Schedule 14A of SFX, filed with the SEC on ________ ___,
1997).
10.25+ Amendment to SCMC Warrant, dated __________ __, 1998.
10.26* Non-Negotiable Promissory Note, dated as of June 23, 1997, between
SFX (as maker) and Sunshine Promotions, Inc. (as payee).
10.27 Partnership Agreement, dated as of April 1, 1994, by and among
SM/PACE, Inc., YM Corp., The Westside Amphitheater Corporation,
Charlotte Amphitheater Corporation and Amphitheater Entertainment
Partnership.
10.28 Purchase Agreement, dated as of December 19, 1997, by and among
SM/PACE, Inc., PACE Entertainment Corporation, Charlotte
Amphitheater Corporation, The Westside Amphitheater Corporation and
Viacom Inc.
10.29 Letter Purchase Agreement, dated as of December 22, 1997, by and
among SM/PACE, Inc., YM Corp. and PACE Entertainment Corporation.
10.30 Extended Events Management Agreement, dated as of November 21,
1994, by and between The Woodlands Center for the Performing Arts
and Pavilion Partners.
10.31 Operator Lease Agreement, dated as of September 26, 1989, by and
between the City of Phoenix and The Westside Amphitheatre Corp.
10.32 Addendum to Operator Lease Agreement, dated as of September 26,
1989, by and between the City of Phoenix and Pavilion Partners.
10.33 Memorandum of Lease, dated as of April 1, 1994, by and between the
City of Phoenix and Pavilion Partners.
10.34 Lease Agreement, dated as of February 9, 1994, by and between New
Jersey Development Authority and Sony Music/Pace Partnership.
10.35 First Amendment to Lease Agreement, dated as of March 11, 1994, by
and between New Jersey Economic Development and Sony Music/Pace
Partnership.
10.36 Second Amendment to Lease Agreement, dated as of June 7, 1994, by
and between New Jersey Economic Development Authority and Pavilion
Partners.
10.37 Third Amendment to Lease Agreement, dated as of March 15, 1995, by
and between New Jersey Economic Development Authority and Pavilion
Partners.
10.38 Fourth Amendment to Lease Agreement, dated as of March 11, 1997, by
and between the New Jersey Economic Development Authority and
Pavilion Partners.
10.39 Three Way Agreement, dated as of April 28, 1995, by and between New
Jersey Economic Development Authority, South Jersey Performing Arts
Center, Inc. and Pavilion Partners.
II-5
<PAGE>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------
10.40 Lease Agreement, dated as of December 1, 1989, between Crossroads
Properties, Incorporated and Pace Entertainment Group, Inc.
10.41 Assignment of Ground Lease, dated as of April 6, 1990, by and
between Pace Entertainment Group, Inc. and YM/Pace Partnership.
10.42 Partnership Agreement, dated as of July 1, 1991, by and between
SM/PACE Partnership and CDC Amphitheaters/I, Inc.
10.43 First Amendment to Partnership Agreement, dated as of January 31,
1992, by and between SM/PACE Partnership and CDC Amphitheaters/I,
Inc.
10.44 Lease Agreement, dated as of December 1, 1990, by and between the
City of Raleigh, North Carolina and Sony Music/Pace Partnership.
10.45 Amendment to Lease Agreement, dated as of November 15, 1995, by and
between Walnut Creek Amphitheater Partnership and City of Raleigh,
North Carolina.
10.46 Mutual Recognition Agreement, dated as of December 1, 1990, by and
among Walnut Creek Amphitheater Financing Assistance Corporation,
First Union National Bank of North Carolina, City of Raleigh, North
Carolina and Sony Music/Pace Partnership.
10.47 Mutual Recognition Agreement, dated as of December 1, 1990, by and
among Walnut Creek Amphitheater Financing Assistance Corporation,
First Union National Bank of North Carolina, City of Raleigh, North
Carolina and Sony Music/Pace Partnership.
10.48 Partnership Agreement, dated as of February 28, 1986, by and
between Belz Investment Company, Inc., Martin S. Belz and Pace
Productions, Inc.
10.49 First Amendment to Partnership Agreement, dated as of June 15,
1986, by and among Belz Investment Company, Martin S. Belz,
Belz-Starwood, Inc. and Pace Productions, Inc.
10.50 Partnership Agreement, dated as of May 15, 1996, by and between
Pavilion Partners and CDC/SMT, Inc.
10.51 Lease Agreement, Easement Agreement and Declaration of Restrictive
Covenants, dated as of January 4, 1995, by and between South
Florida Fair and Pam Beach County Expositions, Inc. and Pavilion
Partners.
10.52 First Amendment to Lease Agreement, dated as of June 5, 1995, by
and between South Florida Fair and Pam Beach County Expositions,
Inc. and Pavilion Partners.
10.53 Partnership Agreement, dated as of April 4, 1997, by and between
Pavilion Partners and Irvine Meadows Amphitheater.
10.54 Amended and Restated Agreement, dated as of October 1, 1991, by and
between The Irvine Company and Irvine Meadows.
10.55 Concession Lease, dated as of October 19, 1992, by and between the
County of San Bernardino and Amphitheater Entertainment
Corporation.
II-6
<PAGE>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------
10.56 Partnership Formation Agreement, dated as of January 22, 1988, by
and among MCA Concerts II, Inc. and Pace Entertainment Group, Inc.
10.57 Lease and Use Agreement, dated as of December 9, 1987, by and
between City of Dallas and Pace Entertainment Group, Inc.
10.58 Agreement, dated as of October 10, 1988, by and between the City of
Atlanta and MCA Concerts, Inc.
10.59 Amended Indenture of Lease, February 2, 1984, by and between the
City of Atlanta and Filmworks U.S.A., Inc.
10.60 Amendment to Lease Agreement, dated as of October 10, 1988, between
the City of Atlanta, Georgia and Filmworks U.S.A., Inc.
10.61 Agreement Regarding Sublease, dated as of January 20, 1988, by and
between Filmworks U.S.A., Inc. and MCA Concerts, Inc.
10.62 First Amendment to Sublease, dated as of January 21, 1988, between
Filmworks U.S.A., Inc. and MCA Concerts, Inc.
10.63 Second Amendment to Sublease, dated as of April 19, 1988, between
Filmworks U.S.A., Inc. and MCA Concerts, Inc.
10.64 Third Amendment to Sublease, dated as of September 15, 1988,
between Filmworks U.S.A., Inc. and MCA Concerts, Inc.
10.65 Memorandum of Agreement, dated as of October 10, 1988, by and
between the City of Atlanta and MCA Concerts, Inc.
10.66 Assignment of Sublease, dated as of June 15, 1989, by Filmworks
U.S.A., Inc. and MCA Concerts, Inc.
10.67 Assignment of Sublease, dated as of June 23, 1989, by Filmworks
U.S.A., Inc. and MCA Concerts, Inc.
10.68 Assignment of Agreement, dated as of June 15, 1989, by the City of
Atlanta and MCA Concerts, Inc.
10.69 Assignment of Agreement, dated as of June 23, 1989, by the City of
Atlanta and MCA Concerts, Inc.
10.70 Lease, dated as of June, 1997, by and between 500 Texas Avenue
Limited Partnership and Bayou Place Performance Hall General
Partnership.
10.71 Master Licensed User Agreement, dated as of February 1, 1996, by
and between Ticketmaster Ticketing Co., Inc. and Pace Entertainment
Corporation.
10.72 Joint Venture Agreement, dated as of July, 1995 by and between
American Broadway, Inc. and Gentry & Associates, Inc.
10.73 Amended and Restated Employment Agreement, dated as of December 12,
1997, by and between SFX Entertainment, Inc. and Brian E. Becker.
II-7
<PAGE>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------
10.74 Second Amended and Restated Partnership Agreement, dated as of
April 1, 1994 by and between The Westside Amphitheatre Corporation,
San Bernardino Amphitheater Corporation and YM Corp.
10.75 Employment Agreement, dated as of January 2, 1997, between
Delsener/Slater Enterprises, Inc., SFX Broadcasting, Inc. and Ron
Delsener.
10.76 Employment Agreement, dated as of January 2, 1997, between
Delsener/Slater Enterprises, Inc., SFX Broadcasting, Inc. and Mitch
Slater.
10.77 Bank Commitment Letter, dated January 15, 1998, among the Bank of
New York, BNY Capital Markets, Inc., Lehman Commercial Paper, Inc.,
Goldman Sachs Credit Partners L.P. and SFX Entertainment, Inc.
10.78 Summary of Principal Terms and Conditions of Credit Facility, dated
January 15, 1998.
21.1+ Subsidiaries of SFX Entertainment.
23.1 Consent of Baker & McKenzie (included in Exhibit 5.1).
23.2* Consent of Ernst & Young LLP.
23.3* Consent of Arthur Andersen LLP.
23.4* Consent of Price Waterhouse LLP.
23.5* Consent of Brian Becker.
24.1* Power of Attorney.
27.1* Financial Data Schedule.
99.1+ Opinion of Lehman Brothers (incorporated by reference to Annex B to
Schedule 14A of SFX, filed with the SEC on ______ __, 1998).
- ------------
* Previously filed.
+ To be filed by amendment.
(b) Financial Schedules.
None
ITEM 17. UNDERTAKINGS
(1) The undersigned registrant hereby undertakes:
(a) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
II-8
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a
20 percent change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table
in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(2) 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 against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Amendment No. 1 to the registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of New York, State of New York, on January 21, 1998.
SFX Entertainment, Inc.
By: /s/ Howard J. Tytel
-------------------------------
Howard J. Tytel
Secretary
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the registration statement has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------- ------------------------------------------- -------------------
<S> <C> <C>
* Executive Chairman, Member of the Office January 21 , 1998
- ------------------------- of the Chairman and Director
Robert F.X. Sillerman (principal executive officer)
* President, Chief Executive Officer, January 21 , 1998
- ------------------------- Member of the Office of the
Michael G. Ferrel Chairman and Director
* Executive Vice President and January 21 , 1998
- ------------------------- Director
D. Geoffrey Armstrong
* Chief Financial Officer, Vice President January 21 , 1998
- ------------------------- and Director
Thomas P. Benson (principal financial and accounting officer)
/s/ Howard J. Tytel Executive Vice President, General Counsel, January 21 , 1998
- ------------------------- Secretary and Director
Howard J. Tytel
* Vice President, Assistant General Counsel January 21 , 1998
- ------------------------- and Director
Richard A. Liese
* Director January 21 , 1998
- -------------------------
James F. O'Grady, Jr.
* Director January 21 , 1998
- -------------------------
Paul Kramer
* Director January 21 , 1998
- -------------------------
Edward F. Dugan
</TABLE>
*By: /s/ Howard J. Tytel
-------------------------
Howard J. Tytel
Attorney-in-fact
II-10
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------
2.1+ Form of Distribution Agreement, dated ________ __, 1998, between
SFX Entertainment and SFX (incorporated by reference to Annex F to
Schedule 14A of SFX (File number 0-____-_____), filed with the SEC
on ________ ___, 1998).
2.2+ Form of Tax Sharing Agreement, dated ________ __, 1998, between SFX
Entertainment and SFX.
2.3+ Form of Employee Benefits Agreement, dated __________, 1998,
between SFX Entertainment and SFX.
3.1* Certificate of Incorporation of SFX Entertainment.
3.2+ Bylaws of SFX Entertainment.
3.3+ Form of Amended and Restated Certificate of Incorporation of SFX
Entertainment (incorporated by reference to Annex E to Schedule 14A
of SFX, filed with the SEC on ________ ___, 1998).
5.1+ Opinion of Baker & McKenzie.
10.1* Stock Purchase Agreement, dated as of October 11, 1996, by and
among Delsener/Slater Enterprises, Ltd., Beach Concerts, Inc.,
Connecticut Concerts Incorporated, Broadway Concerts, Inc., Ardee
Productions, Ltd., In-House Tickets, Inc., Exit 116 Revisited,
Inc., Ron Delsener, Mitch Slater and SFX Broadcasting, Inc.
10.2* License Agreement, dated January 29, 1990, by and between the State
of New York and Beach Concerts, Inc.
10.3* Amendment to License Agreement of January 29, 1990, dated as of
April 11, 1997, by and between the State of New York and Beach
Concerts, Inc.
10.4* Lease Agreement, Easement Agreement and Declaration of Restrictive
Covenants dated as of May 1, 1996, by and between New Jersey
Highway Authority and GSAC Partners.
10.5* Partnership Agreement, dated as of November 18, 1996, by and
between Pavilion Partners and Exit 116 Revisited, Inc.
10.6* Asset Purchase and Sale Agreement, dated June 23, 1997, by and
among Sunshine Concerts, L.L.C., SFX Broadcasting, Inc., Sunshine
Promotions, Inc., P. David Lucas and Steven P. Sybesma.
10.7* Asset Purchase and Sale Agreement, dated as of June 23, 1997, by
and among Suntex Acquisition, L.P., SFX Broadcasting, Inc., Suntex,
Inc., P. David Lucas, Steven P. Sybesma, Greg Buttrey and John
Valant.
10.8* Asset Purchase and Sale Agreement, dated as of June 23, 1997, by
and among Deer Creek Amphitheater Concerts, L.P., SFX Broadcasting,
Inc., Deer Creek Partners, L.P., Sand Creek Partners, L.P., Sand
Creek, Inc., P. David Lucas and Steven P. Sybesma.
10.9* Asset Purchase and Sale Agreement, dated as of June 23, 1997, by
and among Murat Centre Concerts, L.P., SFX Broadcasting, Inc.,
Murat Centre L.P., P. David Lucas and Steven P. Sybesma.
<PAGE>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------c
10.10* Asset Purchase and Sale Agreement, dated June 23, 1997, by and
among Polaris Amphitheater Concerts, Inc., SFX Broadcasting, Inc.,
Polaris Amphitheater Limited Partnership and certain of the
partners of Polaris Amphitheater Limited Partnership.
10.11* Asset Purchase and Sale Agreement, dated as of June 23, 1997, by
and among Sunshine Design, L.P., SFX Broadcasting, Inc.,
Tourdesign, Inc., P. David Lucas and Steven P. Sybesma.
10.12 Indenture of Lease, dated as of September 1, 1995, by and between
Murat Temple Association, Inc. and Murat Centre, L.P.
10.13* Agreement of Merger, dated as of February 12, 1997, by and among
SFX Broadcasting, Inc., NOC Acquisition Corp., Cadco Acquisition
Corp., QN-Acquisition Corp., Nederlander of Connecticut, Inc.,
Connecticut Amphitheater Development Corporation, QN Corp.,
Connecticut Performing Arts, Inc., Connecticut Performing Arts
Partners and the Stockholders of Nederlander of Connecticut, Inc.,
Connecticut Amphitheater Development Corporation and QN Corp.
10.14* Agreement of Merger, dated as of February 14, 1997, by and among
SFX Broadcasting, Inc., NOC Acquisition Corp., Cadco Acquisition
Corp., QN-Acquisition Corp., Nederlander of Connecticut, Inc.,
Connecticut Amphitheater Development Corporation, QN Corp.,
Connecticut Performing Arts, Inc., Connecticut Performing Arts
Partners and the Stockholders of Nederlander of Connecticut, Inc.,
Connecticut Amphitheater Development Corporation and QN Corp.
10.15* Second Amendment of Agreement of Merger, dated as of March 19,
1997, by and among SFX Broadcasting, Inc., NOC Acquisition Corp.,
Cadco Acquisition Corp., QN-Acquisition Corp., Nederlander of
Connecticut, Inc., Connecticut Amphitheater Development
Corporation, QN Corp., Connecticut Performing Arts, Inc.,
Connecticut Performing Arts Partners and the Stockholders of
Nederlander of Connecticut, Inc., Connecticut Amphitheater
Development Corporation and QN Corp.
10.16* Lease Agreement, dated as of September 14, 1994, by and between The
City of Hartford and Connecticut Performing Arts Partners.
10.17* Agreement and Plan of Merger and Asset Purchase Agreement, dated as
of December 10, 1997, by and among SFX Entertainment, Inc.,
Contemporary Investments Corporation, Contemporary Investments of
Kansas, Inc., Continental Entertainment Associates, Inc., Capital
Tickets, LP, Dialtix, Inc., Contemporary International Productions
Corporation, Steven F. Schankman Living Trust, dated 10/22/82,
Irving P. Zuckerman Living Trust, dated 11/24/81, Steven F.
Schankman and Irving P. Zuckerman.
10.18* Lease Agreement, dated December 13, 1992, by and between Wyandotte
County, Kansas and Wyandotte County Parks Board and Sandstone
Amphitheater Joint Venture.
10.19* Stock Purchase Agreement, dated as of December 11, 1997, among each
of the shareholders of BGP Presents, Inc. and BGP Acquisitions,
LLC.
10.20 Amphitheater Lease and Agreement, dated June 20, 1986, between the
City of Mountain View, the Mountain View Shoreline Regional Park
Community and Shoreline Amphitheater Partners.
<PAGE>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------
10.21* Stock and Asset Purchase Agreement, dated December 2, 1997, between
and among SFX Network Group, L.L.C. and SFX Entertainment, Inc.,
and Elias N. Bird, individually and as Trustee under the Bird
Family Trust u/d/o 11/18/92, Gary F. Bird, individually and as
Trustee under the Gary F. Bird Corporation Trust u/d/o 2/4/94,
Stephen R. Smith, individually and as Trustee under the Smith
Family Trust u/d/o 7/17/89, June E. Brody, Steven A. Saslow and The
Network 40, Inc.
10.22* Purchase and Sale Agreement, dated as of December 15, 1997, by and
among Alex Cooley, S. Stephen Selig, III, Peter Conlon, Southern
Promotions, Inc., High Cotton, Inc., Cooley and Conlon Management,
Inc., Buckhead Promotions, Inc., Northern Exposure, Inc., Pure
Cotton, Inc., Interfest, Inc., Concert/Southern Chastain Promotions
Joint Venture, Roxy Ventures Joint Venture and SFX Concerts, Inc.
10.23* Stock Purchase Agreement, dated as of December 12, 1997 by and
between Pace Entertainment Corporation and SFX Entertainment, Inc.
10.24+ Agreement and Plan of Merger, dated as of August 24, 1997, among
SFX Buyer, SFX Buyer Sub and SFX (incorporated by reference to
Annex A to Schedule 14A of SFX, filed with the SEC on ________ ___,
1997).
10.25+ Amendment to SCMC Warrant, dated __________ __, 1998.
10.26* Non-Negotiable Promissory Note, dated as of June 23, 1997, between
SFX (as maker) and Sunshine Promotions, Inc. (as payee).
10.27 Partnership Agreement, dated as of April 1, 1994, by and among
SM/PACE, Inc., YM Corp., The Westside Amphitheater Corporation,
Charlotte Amphitheater Corporation and Amphitheater Entertainment
Partnership.
10.28 Purchase Agreement, dated as of December 19, 1997, by and among
SM/PACE, Inc., PACE Entertainment Corporation, Charlotte
Amphitheater Corporation, The Westside Amphitheater Corporation and
Viacom Inc.
10.29 Letter Purchase Agreement, dated as of December 22, 1997, by and
among SM/PACE, Inc., YM Corp. and PACE Entertainment Corporation.
10.30 Extended Events Management Agreement, dated as of November 21,
1994, by and between The Woodlands Center for the Performing Arts
and Pavilion Partners.
10.31 Operator Lease Agreement, dated as of September 26, 1989, by and
between the City of Phoenix and The Westside Amphitheatre Corp.
10.32 Addendum to Operator Lease Agreement, dated as of September 26,
1989, by and between the City of Phoenix and Pavilion Partners.
10.33 Memorandum of Lease, dated as of April 1, 1994, by and between the
City of Phoenix and Pavilion Partners.
10.34 Lease Agreement, dated as of February 9, 1994, by and between New
Jersey Development Authority and Sony Music/Pace Partnership.
10.35 First Amendment to Lease Agreement, dated as of March 11, 1994, by
and between New Jersey Economic Development and Sony Music/Pace
Partnership.
<PAGE>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------
10.36 Second Amendment to Lease Agreement, dated as of June 7, 1994, by
and between New Jersey Economic Development Authority and Pavilion
Partners.
10.37 Third Amendment to Lease Agreement, dated as of March 15, 1995, by
and between New Jersey Economic Development Authority and Pavilion
Partners.
10.38 Fourth Amendment to Lease Agreement, dated as of March 11, 1997, by
and between the New Jersey Economic Development Authority and
Pavilion Partners.
10.39 Three Way Agreement, dated as of April 28, 1995, by and between New
Jersey Economic Development Authority, South Jersey Performing Arts
Center, Inc. and Pavilion Partners.
10.40 Lease Agreement, dated as of December 1, 1989, between Crossroads
Properties, Incorporated and Pace Entertainment Group, Inc.
10.41 Assignment of Ground Lease, dated as of April 6, 1990, by and
between Pace Entertainment Group, Inc. and YM/Pace Partnership.
10.42 Partnership Agreement, dated as of July 1, 1991, by and between
SM/PACE Partnership and CDC Amphitheaters/I, Inc.
10.43 First Amendment to Partnership Agreement, dated as of January 31,
1992, by and between SM/PACE Partnership and CDC Amphitheaters/I,
Inc.
10.44 Lease Agreement, dated as of December 1, 1990, by and between the
City of Raleigh, North Carolina and Sony Music/Pace Partnership.
10.45 Amendment to Lease Agreement, dated as of November 15, 1995, by and
between Walnut Creek Amphitheater Partnership and City of Raleigh,
North Carolina.
10.46 Mutual Recognition Agreement, dated as of December 1, 1990, by and
among Walnut Creek Amphitheater Financing Assistance Corporation,
First Union National Bank of North Carolina, City of Raleigh, North
Carolina and Sony Music/Pace Partnership.
10.47 Mutual Recognition Agreement, dated as of December 1, 1990, by and
among Walnut Creek Amphitheater Financing Assistance Corporation,
First Union National Bank of North Carolina, City of Raleigh, North
Carolina and Sony Music/Pace Partnership.
10.48 Partnership Agreement, dated as of February 28, 1986, by and
between Belz Investment Company, Inc., Martin S. Belz and Pace
Productions, Inc.
10.49 First Amendment to Partnership Agreement, dated as of June 15,
1986, by and among Belz Investment Company, Martin S. Belz,
Belz-Starwood, Inc. and Pace Productions, Inc.
10.50 Partnership Agreement, dated as of May 15, 1996, by and between
Pavilion Partners and CDC/SMT, Inc.
10.51 Lease Agreement, Easement Agreement and Declaration of Restrictive
Covenants, dated as of January 4, 1995, by and between South
Florida Fair and Pam Beach County Expositions, Inc. and Pavilion
Partners.
<PAGE>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------
10.52 First Amendment to Lease Agreement, dated as of June 5, 1995, by
and between South Florida Fair and Pam Beach County Expositions,
Inc. and Pavilion Partners.
10.53 Partnership Agreement, dated as of April 4, 1997, by and between
Pavilion Partners and Irvine Meadows Amphitheater.
10.54 Amended and Restated Agreement, dated as of October 1, 1991, by and
between The Irvine Company and Irvine Meadows.
10.55 Concession Lease, dated as of October 19, 1992, by and between the
County of San Bernardino and Amphitheater Entertainment
Corporation.
10.56 Partnership Formation Agreement, dated as of January 22, 1988, by
and among MCA Concerts II, Inc. and Pace Entertainment Group, Inc.
10.57 Lease and Use Agreement, dated as of December 9, 1987, by and
between City of Dallas and Pace Entertainment Group, Inc.
10.58 Agreement, dated as of October 10, 1988, by and between the City of
Atlanta and MCA Concerts, Inc.
10.59 Amended Indenture of Lease, February 2, 1984, by and between the
City of Atlanta and Filmworks U.S.A., Inc.
10.60 Amendment to Lease Agreement, dated as of October 10, 1988, between
the City of Atlanta, Georgia and Filmworks U.S.A., Inc.
10.61 Agreement Regarding Sublease, dated as of January 20, 1988, by and
between Filmworks U.S.A., Inc. and MCA Concerts, Inc.
10.62 First Amendment to Sublease, dated as of January 21, 1988, between
Filmworks U.S.A., Inc. and MCA Concerts, Inc.
10.63 Second Amendment to Sublease, dated as of April 19, 1988, between
Filmworks U.S.A., Inc. and MCA Concerts, Inc.
10.64 Third Amendment to Sublease, dated as of September 15, 1988,
between Filmworks U.S.A., Inc. and MCA Concerts, Inc.
10.65 Memorandum of Agreement, dated as of October 10, 1988, by and
between the City of Atlanta and MCA Concerts, Inc.
10.66 Assignment of Sublease, dated as of June 15, 1989, by Filmworks
U.S.A., Inc. and MCA Concerts, Inc.
10.67 Assignment of Sublease, dated as of June 23, 1989, by Filmworks
U.S.A., Inc. and MCA Concerts, Inc.
10.68 Assignment of Agreement, dated as of June 15, 1989, by the City of
Atlanta and MCA Concerts, Inc.
10.69 Assignment of Agreement, dated as of June 23, 1989, by the City of
Atlanta and MCA Concerts, Inc.
<PAGE>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------
10.70 Lease, dated as of June, 1997, by and between 500 Texas Avenue
Limited Partnership and Bayou Place Performance Hall General
Partnership.
10.71 Master Licensed User Agreement, dated as of February 1, 1996, by
and between Ticketmaster Ticketing Co., Inc. and Pace Entertainment
Corporation.
10.72 Joint Venture Agreement, dated as of July, 1995 by and between
American Broadway, Inc. and Gentry & Associates, Inc.
10.73 Amended and Restated Employment Agreement, dated as of December 12,
1997, by and between SFX Entertainment, Inc. and Brian E. Becker.
10.74 Second Amended and Restated Partnership Agreement, dated as of
April 1, 1994 by and between The Westside Amphitheatre Corporation,
San Bernardino Amphitheater Corporation and YM Corp.
10.75 Employment Agreement, dated as of January 2, 1997, between
Delsener/Slater Enterprises, Inc., SFX Broadcasting, Inc. and Ron
Delsener.
10.76 Employment Agreement, dated as of January 2, 1997, between
Delsener/Slater Enterprises, Inc., SFX Broadcasting, Inc. and Mitch
Slater.
10.77 Bank Commitment Letter, dated January 15, 1998, among the Bank of
New York, BNY Capital Markets, Inc., Lehman Commercial Paper, Inc.,
Goldman Sachs Credit Partners L.P. and SFX Entertainment, Inc.
10.78 Summary of Principal Terms and Conditions of Credit Facility, dated
January 15, 1998.
21.1+ Subsidiaries of SFX Entertainment.
23.1 Consent of Baker & McKenzie (included in Exhibit 5.1).
23.2* Consent of Ernst & Young LLP.
23.3* Consent of Arthur Andersen LLP.
23.4* Consent of Price Waterhouse LLP.
23.5* Consent of Brian Becker.
24.1* Power of Attorney.
27.1* Financial Data Schedule.
99.1+ Opinion of Lehman Brothers (incorporated by reference to Annex B to
Schedule 14A of SFX, filed with the SEC on ______ __, 1998).
- ---------
* Previously filed.
+ To be filed by amendment.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I LEASED PREMISES AND DEFINITIONS.................................. 1
Section 1.01. Leased Premises............................................ 1
Section 1.02. Definitions................................................ 1
ARTICLE II TERM............................................................ 8
Section 2.01. Initial Term............................................... 8
Section 2.02. Extension Terms............................................ 8
ARTICLE III USE OF LEASED PREMISES AND NAME OF 1909 THEATRE BUILDING....... 8
Section 3.01. Use of Leased Premises..................................... 8
Section 3.02. Name of 1909 Theatre Building.............................. 8
ARTICLE IV RENT............................................................ 8
Section 4.01. Contingent Rent............................................ 8
Section 4.02. Accounting for Contingent Rent............................. 9
Section 4.03. Additional Rent............................................ 9
Section 4.04. Rental Payments - General.................................. 9
Section 4.05. Late Payments.............................................. 9
ARTICLE V REMODEL WORK AND LESSEE'S WORK................................... 10
Section 5.01. Remodel Work............................................... 10
Section 5.02. Change Orders to Remodel Plans and Specifications.......... 10
Section 5.03. Performance of Remodel Work................................ 10
Section 5.04. Lessee's Work.............................................. 10
Section 5.05. Change Orders to Premises Plans and Specifications......... 10
Section 5.06. Performance of Lessee's Work............................... 10
ARTICLE VI IMPROVEMENTS.................................................... 11
Section 6.01. Improvements, Additions and Alterations.................... 11
Section 6.02. Plans and Specifications................................... 11
Section 6.03. Governmental Approvals..................................... 11
Section 6.04. Ownership of Improvements.................................. 12
ARTICLE VII ASSIGNMENT AND SUBLETTING...................................... 12
Section 7.01. Permitted Subleases and Encumbrances....................... 12
Section 7.02. Assignment and Sale........................................ 12
ARTICLE VIII LESSEE'S RIGHT OF FIRST REFUSAL............................... 12
Section 8.01. Lessee's Right of First Refusal............................ 12
Section 8.02. Specific Performance....................................... 13
ARTICLE IX TAXES AND UTILITY EXPENSES...................................... 14
Section 9.01. Lessee's Payment of Taxes and Utilities.................... 14
Section 9.02. Lessor's Payment of Taxes and Utilities.................... 14
Section 9.03. Proration of Lessee's Real Estate Taxes.................... 14
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<PAGE>
Section 9.04. Right to Contest........................................... 14
Section 9.05. Distribution of Overpayment of Taxes....................... 15
Section 9.06. Separate Assessments....................................... 15
Section 9.07. Excluded Taxes and Assessments............................. 15
ARTICLE X MAINTENANCE; REPAIRS............................................. 15
Section 10.01. Maintenance and Repair by Lessee.......................... 15
Section 10.02. Governmental Authorities.................................. 15
Section 10.03. Maintenance and Repair by Lessor.......................... 16
ARTICLE XI MECHANICS' LIENS; INDEMNIFICATION AND NON-LIABILITY OF LESSOR... 16
Section 11.01. Mechanics' Liens from Lessee Activities................... 16
Section 11.02. Indemnification by Lessee................................. 16
Section 11.03. Mechanics' Liens from Lessor Activities................... 16
Section 11.02. Indemnification by Lessor................................. 17
ARTICLE XII SIGNS.......................................................... 17
ARTICLE XIII INSURANCE..................................................... 17
Section 13.01. Liability Insurance....................................... 17
Section 13.02. Casualty Insurance........................................ 18
Section 13.03. Blanket and Umbrella Policies............................. 18
Section 13.04. Certificates of Insurance................................. 18
Section 13.05. Waiver of Subrogation..................................... 18
Section 13.06. Special Provisions........................................ 18
Section 13.07. Insurance During Alteration or Repair or Restoration...... 19
Section 13.08. Use of Proceeds........................................... 19
ARTICLE XIV DESTRUCTION.................................................... 19
Section 14.01. Obligation to Repair Minor Damage......................... 19
Section 14.02. Obligation to Repair Major Damage......................... 20
Section 14.03. Option to Terminate....................................... 20
Section 14.04. Disbursement of Insurance Proceeds in the Event of
Repair.................................................. 20
Section 14.05. Disbursement of Insurance Proceeds in the Event of
Termination............................................. 21
Section 14.06. Prompt Performance of Work................................ 21
ARTICLE XV CONDEMNATION.................................................... 21
Section 15.01. Condemnation Proceeds..................................... 21
Section 15.02. Total Condemnation........................................ 21
Section 15.03. Proceeds of Total Condemnation............................ 22
Section 15.04. Partial Condemnation...................................... 22
Section 15.05. Restoration............................................... 22
Section 15.06. No Rent Adjustment........................................ 22
Section 15.07. Rights to Appear.......................................... 22
Section 15.08. Valuation................................................. 23
ARTICLE XVI UTILITY EASEMENTS.............................................. 23
ARTICLE XVII MORTGAGES..................................................... 23
Section 17.01. Leasehold Mortgages....................................... 23
Section 17.02. Notices and Rights Upon Lessee's Default.................. 23
-ii-
<PAGE>
Section 17.03. Extension................................................. 24
Section 17.04. No Obligation to Cure..................................... 25
Section 17.05. Modification of Lease..................................... 25
ARTICLE XVIII LESSEE RIGHTS................................................ 25
Section 18.01. No Termination............................................ 25
Section 15.02. Performance by Lessee..................................... 25
Section 18.03. Modification of this Lease................................ 25
ARTICLE XIX SPECIFIC PERFORMANCE........................................... 26
ARTICLE XX QUIET ENJOYMENT................................................. 26
Section 20.01. Lessor's Covenants........................................ 26
Section 20.02. Lessee's Remedies......................................... 26
ARTICLE XXI DEFAULTS....................................................... 26
Section 21.01. Events of Default......................................... 26
Section 21.02. Extensions................................................ 27
Section 21.03. Remedies.................................................. 27
ARTICLE XXII BANKRUPTCY AND INSOLVENCY..................................... 27
Section 22.01. Certain Events of Default Specified....................... 27
Section 22.02. Preservation of Leasehold Estate.......................... 27
ARTICLE XXIII NON-WAIVER................................................... 28
ARTICLE XXIV THIRD PARTY BENEFICIARIES..................................... 28
ARTICLE XXV FORCE MAJEURE.................................................. 28
ARTICLE XXVI NOTICES....................................................... 28
ARTICLE XXVII CERTIFICATES................................................. 31
ARTICLE XXVIII REPRESENTATIONS AND WARRANTIES.............................. 31
ARTICLE XXIX COMMON FACILITIES, COMMON STRUCTURAL SUPPORTS AND COMMON
STRUCTURAL MEMBERS......................................................... 32
Section 29.01. Steam Facilities.......................................... 32
Section 29.02. Maintenance of Steam Facilities........................... 32
Section 29.03. Freight Elevator.......................................... 32
Section 29.04. Maintenance of Freight Elevator........................... 32
Section 29.05. Common Structural Supports................................ 32
Section 29.06. Maintenance of Common Structural Supports................. 32
Section 29.07. Common Structural Members................................. 32
Section 29.08. Maintenance of Common Structural Members.................. 33
ARTICLE XXX LESSOR'S RESERVED RIGHTS....................................... 33
Section 30.01. Storage Area.............................................. 33
Section 30.02. Tours..................................................... 33
Section 30.03. Murat Theatre............................................. 33
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<PAGE>
Section 30.04. Egyptian Room............................................. 34
Section 30.05. Indemnification........................................... 34
Section 30.06. Reimbursement............................................. 34
Section 30.07. Lessor's Right of Inspection.............................. 35
Section 30.08. Parking Areas............................................. 35
ARTICLE XXXI GENERAL....................................................... 35
Section 31.01. Governing Law............................................. 35
Section 31.02. Partial Invalidity........................................ 35
Section 31.03. Memorandum of Lease....................................... 35
Section 31.04. Remote Vesting............................................ 35
Section 31.05. Interpretation............................................ 35
Section 31.06. Entire Agreement.......................................... 36
Section 31.07. Parties................................................... 36
Section 31.08. Attorneys' Fees........................................... 36
Section 31.09. Authority................................................. 36
Section 31.10. Relationship.............................................. 36
ARTICLE XXXII APPROVED CONTRACTS........................................... 36
ARTICLE XXXIII LIQUOR LICENSE.............................................. 36
ARTICLE XXXIV LESSOR DEFAULT............................................... 37
ARTICLE XXXV EASEMENTS..................................................... 37
Section 35.01. Lessor's Easements........................................ 37
Section 35.02. Indemnification .......................................... 37
Section 35.03. Relocation ............................................... 37
-iv-
<PAGE>
INDENTURE OF LEASE
THIS INDENTURE OF LEASE (the "Lease") effective as of the 1st day of
September, 1995 (the "Execution Date"), by and between MURAT TEMPLE ASSOCIATION,
INC., an Indiana not-for-profit corporation ("Lessor"), and MURAT CENTRE, L.P.,
an Indiana limited partnership ("Lessee"), WITNESSES THAT:
In consideration of the rents reserved herein and the mutual covenants and
undertakings contained herein, Lessor and Lessee agree as follows:
ARTICLE I
LEASED PREMISES AND DEFINITIONS
Section 1.01. Leased Premises. Lessor hereby leases to Lessee and Lessee
hereby leases from Lessor, upon and subject to the terms, conditions, covenants
and provisions hereof: (a) the 1909 Theatre Real Estate and the 1922 Mosque Real
Estate (as such terms are defined below); (b) all appurtenances, rights,
privileges, interests, tenements, hereditaments and easements in any way now or
hereafter belonging, appertaining or relating to the 1909 Theatre Real Estate
and/or the 1922 Mosque Real Estate or derived therefrom, including, without
limitation, all right, title and interest of Lessor in and to any land lying in
the bed of any adjacent street, road or highway; (c) any and all rights, title
and interests that Lessor may now or hereafter have in and to the 1909 Theatre
Building, the 1922 Mosque Building and the Improvements (as such terms are
defined below); and (d) the parking lots, parking spaces, roadways and other
paved areas (collectively, the "Parking Areas") that may now or hereafter be
located on the Murat Property (as such term is defined below) upon and subject
to the terms, conditions, covenants and provisions set forth in Section 30.08
below (items (a), (b), (c) and (d) are sometimes collectively referred to herein
as the "Leased Premises"). The Leased Premises is leased to Lessee "AS IS, WHERE
IS" and without warranty or representation of any kind as to condition, fitness
for Lessee's purposes or otherwise.
Section 1.02. Definitions. The following terms when used in this Lease
with initial capital letters shall have the following meanings:
"Affiliate of the City" has the same meaning as City.
"Affiliate of Lessee" means (a) the members, partners and shareholders of
Lessee, and (b) any limited liability company, partnership, corporation or other
entity in which Lessee, a wholly-owned or partially-owned but controlled
subsidiary of Lessee, any of the members, partners or shareholders of Lessee,
members of the families of Lessee or any of the members, partners or
shareholders of Lessee, or a trustee for the benefit of such family members, or
some, any or all of them, directly or indirectly, own an interest, either singly
or in the aggregate, sufficient to effectively control such entity; provided
that the term "Affiliate of Lessee" shall not include any members, partners or
shareholders of Lessee that have no voting rights or ability, either singly or
in the aggregate, to effectively control Lessee.
"Approved Contracts" means the agreements, contracts, bookings and other
obligations identified on Exhibit A attached hereto and incorporated herein.
"Banquet Hall" means that portion of the basement of the 1922 Mosque
Building and the 1909 Theatre Building that consists of approximately Five
Thousand Four Hundred Sixty-Eight and Five Tenths (5,468.50) square feet and is
generally described and/or depicted on Exhibit F attached hereto and
incorporated herein.
"Basement Area" means that portion of the basement of the 1922 Mosque
Building that consists of approximately Six Hundred Seventeen and Two Tenths
(617.20) square feet and is generally described and/or depicted on Exhibit F
attached hereto and incorporated herein.
<PAGE>
"City" means the Consolidated City of Indianapolis, Indiana, and/or each
agency, commission and department of the Consolidated City of Indianapolis,
Indiana.
"Common Facilities" means (a) all equipment and components of the system
that provide steam heat to the Murat Complex (the "Steam Facilities) and (b) all
equipment and components of the freight elevator located in the 1967 Club
Building (the "Freight Elevator").
"Common Maintenance Shop" means that portion of the basement of the 1909
Theatre Building that consists of approximately Two Thousand Six Hundred
Thirty-Eight and Five Tenths (2,638.50) square feet and is generally described
and/or depicted on Exhibit F attached hereto and incorporated herein.
"Common Structural Members" means foundations, walls, columns, girders,
beams, plates, poured or precast concrete slabs, supports and other structural
members located, installed or constructed in, on, over, across, under or through
the Leased Premises and designed to serve or actually serving the 1967 Club
Building.
"Common Structural Supports" means foundations, walls, columns, girders,
beams, plates, poured or precast concrete slabs, supports and other structural
members located, installed or constructed in, on, over, across, under or through
the 1967 Club Building and designed to serve or actually serving the Leased
Premises.
"Condemnation Proceeds" means the total aggregate award, including any
award for Lessor's fee simple title to the Real Estate and/or interests in the
Leased Premises, in the event of a total taking or Constructive Total Taking of
the Leased Premises in a condemnation proceeding or in lieu thereof.
"Constructive Total Taking" means a taking in a condemnation proceeding or
in lieu thereof of such scope that (a) the remaining portion of the Leased
Premises is insufficient to permit the restoration of the Improvements so as to
constitute a complete, operable facility capable of producing a proportionately
fair and reasonable net annual income, after the payment of all debt service,
operating and other expenses thereof, and after performance of all covenants and
agreements herein provided to be performed by Lessee, or (b) the cost of
restoring the Improvements to a complete architectural unit as determined by
Lessee exceeds Two Million Five Hundred Thousand Dollars ($2,500,000).
"Conventional Expenses" means and includes the total of all Taxes, Utility
Expenses, Contingent Rent to the extent paid in respect of preceding calendar
years, and all other reasonable and necessary or customary expenses incurred by
Lessee in operating the Leased Premises as a first-class establishment for the
uses permitted by Article III hereof, all as determined in accordance with
generally accepted accounting principles, consistently applied, including,
without limitation, management fees not exceeding seven percent (7%) of all
other Conventional Expenses, janitorial expenses and the cost of providing
commercial maintenance service [any or all of which services may be provided by
an Affiliate of Lessee at market rates]; any payment of principal or accrued
interest required under the terms of any Mortgage; costs of capital improvements
that are not paid for with borrowed funds that are secured by a Mortgage;
insurance premiums for fire insurance, liability insurance, business
interruption insurance and insurance for any other risks insured against by
Lessee, by any Mortgagee or as reasonable or customary in the operation of
facilities such as the Improvements and the costs of deductibles paid in
relation thereto; amounts actually placed in cash reserves for repairs to the
Improvements; to the extent not paid from cash reserves, all expenses incurred
in the maintenance, repair and replacement of the Improvements' equipment,
machinery and fixtures; fees for accounting, legal and other professional
services; consulting fees; and advertising and other marketing expenses.
Conventional Expenses shall not include any amount for depreciation of the
Improvements or any machinery, equipment or fixtures located therein or any
other non-cash expense; costs of any capital improvement that are paid for with
borrowed funds that are secured by a Mortgage; legal fees, commitment fees,
origination fees, processing fees or any other costs or charges in connection
with financings or refinancings; franchise or federal, state or local income
taxes imposed upon Lessee; any penalties assessed for any late payment or any
payment required under the terms of any secured or unsecured debt incurred in
connection with the Leased Premises, including, without limitation, any
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mortgage or deed of trust now or hereafter constituting a lien against the
Leased Premises or any interest therein that does not result in a reduction of
principal or accrued interest. Conventional Expenses shall not include costs of
replacement, restoration, repair or reconstruction due to casualty or
condemnation to the extent paid out of the proceeds of insurance or Condemnation
Proceeds that are not included in Gross Receipts. In the event that any
Conventional Expenses shall be incurred for the acquisition of goods or services
from an Affiliate of Lessee, only so much of the costs of such goods or services
as represents the fair competitive value of such goods and services in Marion
County, Indiana (as measured by the cost at which comparable goods and services
meeting Lessee's standards of quality could be acquired from qualified and
experienced suppliers of the goods or services having no connection with Lessee)
shall be allowed in determining Conventional Expenses.
"Egyptian Room" means that portion of the second floor of the 1922 Mosque
Building that consists of approximately Seventeen Thousand Seven Hundred
Seventeen and Five Tenths (17,717.50) square feet and is generally described
and/or depicted on Exhibit I attached hereto and incorporated herein.
"Event of Default" has the meaning set forth in Section 21.01 hereof.
"Gross Receipts" shall mean for each calendar year during the Term all
rentals, revenues and receipts of every kind received in cash or its equivalent
by Lessee from all customers, sub-subtenants, licensees and other users of the
Improvements or any portion thereof, including, without limitation, ticket
sales, food and beverage sales, any cash reserves set aside and excluded from
Gross Receipts in previous years in connection with the operation and management
of the Leased Premises and determined by Lessee to be no longer necessary for
the purposes for which such amounts were set aside (or which revert to Lessee
upon the expiration or earlier termination of this Lease), the proceeds of any
insurance to the extent the same shall represent compensation for lost income or
payments to Lessee, and all reimbursements of expenses and operating costs
received by Lessee to the extent the same are included in Conventional Expenses,
all as determined in accordance with generally accepted accounting principles,
consistently applied. In the event of the use or subletting of any space in the
Improvements to an Affiliate of Lessee on any basis other than for the fair
competitive rental value of space of a comparable size and quality, the fair
competitive rental value thereof shall be deemed to have been received by
Lessee. In the event any goods or services provided in the Improvements are
provided to any Affiliate of Lessee on any basis other than payment of the fair
competitive value thereof, the difference between the price paid and the fair
competitive value thereof shall be deemed to have been received by Lessee.
"Hazardous Material" means any substance:
(a) The presence of which requires investigation, response,
remediation or other corrective action under the Resource Conservation and
Recovery Act of 1976 (RCRA), 42 U.S.C. ss.ss. 690 et seq.; the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 (CERCLA), 42 U.S.C. ss.ss. 9601-9657, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (SARA); the Hazardous Materials
Transportation Act, 49 U.S.C. ss.ss. 6901 et seq.; the Federal Water
Pollution Control Act, 33 U.S.C. ss.ss. 1251 et seq.; the Clean Air Act,
42 U.S.C. ss.ss. 741 et seq.; the Clean Water Act, 33 U.S.C. ss. 7401; the
Toxic Substances Control Act, 15 U.S.C. ss.ss. 2601-2629; the Safe
Drinking Water Act, 42 U.S.C. ss.ss. 300f-300j; the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. ss.ss. 11001 et seq.; and all
amendments thereto, and all similar federal, state and local environmental
statutes, ordinances, and the regulations, orders, decrees now or
hereafter promulgated thereunder, or
(b) Which is defined as a "hazardous waste," "hazardous substance,"
"solid waste," "infectious waste," "toxic substance," or is otherwise
regulated by the Resource Conservation and Recovery Act of 1976 (RCRA), 42
U.S.C. ss.ss. 690 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. ss.ss.
9601-9657, as amended by the Superfund Amendments and Reauthorization Act
of 1986 (SARA); the Hazardous
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Materials Transportation Act, 49 U.S.C. ss.ss. 6901 et seq.; the Federal
Water Pollution Control Act, 33 U.S.C. ss.ss. 1251 et seq.; the Clean Air
Act, 42 U.S.C. ss.ss. 741 et seq.; the Clean Water Act, 33 U.S.C.
ss. 7401; the Toxic Substances Control Act, 15 U.S.C. ss.ss. 2601-2629;
the Safe Drinking Water Act, 42 U.S.C. ss.ss. 300f-300j; the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. ss.ss. 11001 et seq.;
and all amendments thereto, and all similar federal, state and local
environmental statutes, ordinances, and the regulations, orders, decrees
now or hereafter promulgated thereunder.
"Improvements" means the 1909 Theatre Building, the 1922 Mosque Building
and all alterations, changes, replacements, improvements and additions thereto
and all other buildings, fixtures, structures and improvements of whatever kind
existing on the Real Estate, from time to time, including, without limitation,
Lessee's Work.
"Insurance Trustee" means any national bank having a principal office in
Indianapolis, Indiana, or the holder of any Mortgage that is designated by
Lessee and acceptable to Lessor in its reasonable discretion to act as trustee
of any proceeds of the policies of casualty and builder's risk insurance
maintained upon the Improvements pursuant to Article XIII of this Lease or any
Condemnation Proceeds pursuant to Article XV.
"Investor" means The Indianapolis Shrine Foundation for The Performing
Arts and Community Development, Inc. or any person or entity that hereafter
becomes (a) a member, partner or shareholder of Lessee and owns at least thirty
percent (30%) of the membership interests, partnership interests or outstanding
stock of Lessee, as the case may be, or (b) entitled to receive at least thirty
percent (30%) of the Net Cash Flow.
"Kniepe Room" means that portion of the third/attic floor of the 1922
Mosque Building that consists of approximately Two Thousand Seven Hundred Four
and Eight Tenths (2,704.80) square feet and is generally described and/or
depicted on Exhibit L attached hereto and incorporated herein.
"Lease Year" means (a) the period from the Execution Date to 11:59 P.M. on
the day before the first anniversary of the Possession Date, and (b) each
consecutive period of one (1) year during the Term thereafter commencing on each
anniversary of the Possession Date.
"Leased Premises" has the meaning set forth in Section 1.01 of this Lease.
"Lessee" means Murat Centre, L.P., an Indiana limited partnership and any
assignee of the Lessee's interests under this Lease that receives Lessor's prior
written consent in accordance with Article VII.
"Lessee's Improvement Proportionate Share" means the percentage obtained
by dividing the total square footage of the 1909 Theatre Building and the 1922
Mosque Building by the total square footage of the 1909 Theatre Building, the
1922 Mosque Building and the 1967 Club Building, as certified in writing by
Simmons & Associates, Inc.
"Lessee's Insurance Share" means the percentage obtained by dividing the
aggregate of the most recently determined replacement cost values of the 1909
Property and the 1922 Property by the aggregate of the most recently determined
replacement cost values of the 1909 Property, the 1922 Property and the 1967
Property.
"Lessee's Land Proportionate Share" means the percentage obtained by
dividing the total square footage of all land constituting a part of the Leased
Premises by the total square footage of all land constituting a part of the
Murat Complex, as certified in writing by an Indiana registered land surveyor
reasonably acceptable to Lessee and Lessor.
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"Lessee's Leasehold Estate" means Lessee's leasehold interest in the Real
Estate and the Improvements located thereon on the Execution Date, and ownership
of and leasehold interest in the Improvements that are made, constructed or
installed by Lessee after the Execution Date.
"Lessee's Real Estate Taxes" means and includes all ad valorem real
property taxes and prevailing installments of assessments levied upon or with
respect to the Leased Premises during the Term, and all taxes, levies and
charges which may be levied or imposed by any governmental authority,
specifically in replacement, or in lieu of, or specifically in addition to, such
ad valorem real estate taxes, in whole or in part, and all special and general
assessments, sewer service charges and other governmental impositions and
charges of every kind and nature whatsoever, extraordinary as well as ordinary,
that relate to the Leased Premises and are assessed, charged, or imposed during
the Term.
"Lessee's Taxes" means all Lessee's Real Estate Taxes and personal
property taxes imposed on Lessee's personal property located on the Leased
Premises.
"Lessee's Utility Expenses" means and includes all charges relating to the
providing of water, steam, heat, gas, electricity, light and power, and other
service or services furnished to the Leased Premises or occupants thereof during
the Term.
"Lessee's Work" means the alterations, changes, replacements, improvements
and additions to the Leased Premises described in the Premises Plans and
Specifications, including, without limitation, all exterior work to the Leased
Premises described in the Premises Plans and Specifications.
"Lessor" means Murat Temple Association, Inc., an Indiana not-for-profit
corporation and any assignee of the Lessor's interests under this Lease.
"Lessor's Improvement Proportionate Share" means the percentage obtained
by dividing the total square footage of the 1967 Club Building by the total
square footage of the 1909 Theatre Building, the 1922 Mosque Building and the
1967 Club Building, as certified in writing by Simmons & Associates, Inc.
"Lessor's Insurance Share" means the percentage obtained by dividing the
most recently determined replacement cost value of the 1967 Property by the
aggregate of the most recently determined replacement cost values of the 1909
Property, the 1922 Property and the 1967 Property.
"Lessor's Land Proportionate Share" means the percentage obtained by
dividing the total square footage of all land constituting a part of the Murat
Premises by the total square footage of all land constituting a part of the
Murat Complex, as certified in writing by an Indiana registered land surveyor
reasonably acceptable to Lessee and Lessor.
"Lessor's Fee Estate" means Lessor's fee simple title to and residual
leasehold interest in the Real Estate and the Improvements located thereon on
the Execution Date, and residual leasehold interest in the Improvements that are
made, constructed or installed by Lessee after the Execution Date.
"Lessor's Real Estate Taxes" means and includes all ad valorem real
property taxes and prevailing installments of assessments based upon or with
respect to the Murat Premises, including, without limitation, the 1967 Club Real
Estate and the 1967 Club Building, or levied upon or with respect to the Leased
Premises prior to the Execution Date, and all taxes, levies and charges which
may be levied or imposed by any governmental authority, specifically in
replacement, or in lieu of, or specifically in addition to, ad valorem real
estate taxes, in whole or in part, and all special and general assessments,
sewer service charges and other governmental impositions and charges of every
kind and nature whatsoever, extraordinary as well as ordinary, that relate to
the Murat Premises or that relate to the Leased Premises and are assessed,
charged or imposed prior to the Execution Date.
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"Lessor's Taxes" means all Lessor's Real Estate Taxes and personal
property taxes imposed on Lessor's personal property located on the Murat
Complex.
"Lessor's Utility Expenses" means and includes all charges relating to the
providing of water, steam, heat, gas, electricity, light and power, and other
service or services furnished to the Murat Premises or occupants thereof during
the Term.
"Mortgage" or "Mortgage Loan" means any loan, including, without
limitation, permanent and interim building or construction loans, and all
advances thereunder or pursuant thereto, relating to and secured by a mortgage
lien upon Lessee's interest in the Leased Premises, or any part thereof; and
also shall refer to and include any mortgage or other security instruments with
respect to Lessee's interest in the Leased Premises, including, without
limitation, mortgages, financing statements, security agreements and any other
documentation, including, without limitation, all documentation required
pursuant to the Uniform Commercial Code.
"Mortgagee" means the mortgagee under any Mortgage Loan.
"Murat Complex" means the Murat Property and all buildings, structures and
improvements now or hereafter located thereon, including, without limitation,
the Improvements.
"Murat Premises" means all portions of the Murat Complex that are not a
part of the Leased Premises, consisting of the 1967 Club Real Estate and the
1967 Club Building.
"Murat Property" means the real estate located in Indianapolis, Indiana,
that is more particularly described and/or depicted on Exhibit B attached hereto
and incorporated herein and includes the Real Estate.
"Net Cash Flow" for each calendar year means and shall be computed by
subtracting all Conventional Expenses for the calendar year in question from all
Gross Receipts for such calendar year.
"Office Area" means that portion of the first floor of the 1922 Mosque
Building that consists of approximately One Thousand Nine Hundred Eighty and
Five Tenths (1,980.50) square feet and is generally described and/or depicted on
Exhibit E attached hereto and incorporated herein.
"Parking Areas" has the meaning set forth in Section 1.01 of this Lease.
"Person" or "Persons" shall mean and include individuals, corporations,
foundations, partnerships, joint ventures, trusts, political subdivisions,
limited liability companies and any other form of legal entity, unless the
context clearly requires otherwise.
"Plans and Specifications" shall mean all survey drawings, site plan
drawings, landscaping plans, architectural design, layout, and elevation
drawings and plans, engineering drawings, calculations and data, and information
relating to the type, color and/or quality of materials and workmanship, in such
detail as shall be reasonable and customary for projects of similar scope and
cost in the construction industry in Marion County, Indiana.
"Possession Date" means September 5, 1995.
"Premises Plans and Specifications" means the drawings, plans, designs,
specifications, calculations and data for Lessee's Work described on Exhibit O
attached hereto and incorporated herein.
"Real Estate" means the 1909 Theatre Real Estate, the 1922 Mosque Real
Estate and the Parking Areas and all appurtenances, rights, privileges,
interests, tenements, hereditaments and easements in any way now or
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hereafter belonging, appertaining, relating thereto or derived therefrom,
including, without limitation, all right, title and interest of Lessor in and to
any land lying in the bed of any adjacent street, road or highway.
"Remodel Work" means the alterations, changes, improvements and additions
for the benefit of Lessor described in the Remodel Plans and Specifications.
"Remodel Plans and Specifications" means the drawings, plans, designs,
specifications, calculations and data for the Remodel Work described in Exhibit
P attached hereto and incorporated herein.
"Rent" means the Contingent Rent and any "additional rent" owed to Lessor
as provided for and further described in Section 4.03 hereof.
"Shrine Museum" means that portion of the basement of the 1922 Mosque
Building that consists of approximately One Thousand Two Hundred Twenty-Five and
Five Tenths (1,225.50) square feet and is generally described and/or depicted on
Exhibit F attached hereto and incorporated herein.
"Social Room" means that portion of the first floor of the 1922 Mosque
Building that consists of approximately Nine Thousand Five Hundred Fifteen and
Five Tenths (9,515.50) square feet and is generally described and/or depicted on
Exhibit H attached hereto and incorporated herein.
"Storage Area" means that portion of the third/attic floor of the 1922
Mosque Building that consists of approximately Sixteen Thousand Four Hundred
Fifty-Seven and Six Tenths (16,457.60) square feet and is generally described
and/or depicted on Exhibit L attached hereto and incorporated herein.
"Term" has the meaning set forth in Section 2.02 hereof.
"Train Room" means that portion of the third/attic floor of the 1909
Theatre Building that consists of approximately Four Thousand Four Hundred
Thirty Three and Two Tenths (4,433.20) square feet and is generally described
and/or depicted on Exhibit L attached hereto and incorporated herein.
"Unavoidable Delay" means and includes any delay caused by reason of fire,
casualty, strikes, lock-outs, labor troubles, inability to procure materials or
supplies, failure of power, governmental authority, riots, insurrection, war,
weather or the act, failure to act, or default of the other party, or other
reason beyond the subject party's reasonable control.
"1909 Theatre Building" means the building, basement, basement mezzanine
and related improvements located on the 1909 Theatre Real Estate.
"1909 Theatre Real Estate" means that portion of the Real Estate that is
described and/or depicted on Exhibit C attached hereto and incorporated herein.
"1922 Mosque Building" means the building, basement, basement mezzanine
and related improvements located on the 1922 Mosque Real Estate.
"1922 Mosque Real Estate" means that portion of the Real Estate that is
described and/or depicted on Exhibit D attached hereto and incorporated herein.
"1967 Club Building" means the building, basement and related improvements
located on the 1967 Club Real Estate.
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"1967 Club Real Estate" means that portion of the Murat Property that is
described and/or depicted on Exhibit G attached hereto and incorporated herein.
ARTICLE II
TERM
Section 2.01. Initial Term. The initial term of this Lease shall commence
on the Execution Date and shall expire at 11:59 P.M. on the day before the
fiftieth (50th) anniversary of the Possession Date (the "Initial Term");
provided that Lessor shall remove all of its personal property from the Leased
Premises and shall deliver possession of the Leased Premises to Lessee on the
dates specified in and in accordance with the Possession Schedule.
Section 2.02. Extension Terms. In addition to the Initial Term of this
Lease, Lessee shall have the option to extend the Initial Term of this Lease for
five (5) additional consecutive terms of ten (10) years each upon the same terms
and conditions as the Initial Term (respectively, the "First Extension Term,"
the "Second Extension Term," the "Third Extension Term," the "Fourth Extension
Term," and the "Fifth Extension Term"), except as expressly provided otherwise
in this Lease. Lessee shall be entitled to exercise each of its options to
extend the term of this Lease by providing Lessor with written notice of its
intention to exercise any of its options to extend the term of this Lease at
least one (1) year prior to the date such extension period is to commence.
Lessee shall be deemed to have exercised each of its options to extend the term
of this Lease, unless Lessee provides to Lessor written notice of its intention
not to exercise any of the extension options at least one (1) year prior to the
date that such extension period is to commence. The Initial Term, the First
Extension Term, if any, the Second Extension Term, if any, the Third Extension
Term, if any, the Fourth Extension Term, if any, and the Fifth Extension Term,
if any, shall be referred to collectively herein as the "Term."
ARTICLE III
USE OF LEASED PREMISES AND NAME OF 1909 THEATRE BUILDING
Section 3.01. Use of Leased Premises. The Leased Premises shall be used
for the purposes of performing arts, catering, receptions, meetings,
conferences, theatre shows, live performances, concerts, music events, the sale
of food, beverages, liquor and related items, restaurant uses and ancillary
commercial, retail and service uses which support or complement theatre shows,
live performances, concerts, music events and other similar performances and
events. Lessor acknowledges and agrees that it shall not have any approval or
control rights over Lessee's programming in or from the Leased Premises,
including, without limitation, the form, content or participants of or in any
theatre shows, live performances, concerts or music events held in or from the
Leased Premises; provided that, unless otherwise agreed to in writing by Lessor,
Lessee shall cause all print, video and television advertising and promotional
medium and materials relating to Lessee's programming in or from the Leased
Premises to contain a disclaimer in a form and content approved by Lessor, which
approval shall not be unreasonably withheld, to the effect that Lessor has not
approved, consented to or endorsed such programming.
Section 3.02. Name of 1909 Theatre Building. The Lessee shall retain the
phrase "Murat Theatre" in the name of the theatre in the 1909 Theatre Building.
ARTICLE IV
RENT
Section 4.01. Contingent Rent. Commencing as of the first day of January,
1997, and continuing for each succeeding calendar year or partial calendar year
of the Term thereafter, Lessee shall pay to Lessor an annual rental ("Contingent
Rent") equal to the lesser of: (a) Fifty Thousand Dollars ($50,000), or (b) the
Net Cash Flow for such
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calendar year or partial calendar year. Contingent Rent for each calendar year
and partial calendar year shall be due and payable at the time that the Annual
Statement for such calendar year or partial calendar year is submitted by Lessee
pursuant to Section 4.02 hereof.
Section 4.02. Accounting for Contingent Rent. Lessee shall keep and make
available to Lessor complete and accurate records of Gross Receipts and
Conventional Expenses, as the case may be, cash reserves (and withdrawals
therefrom) for each calendar year and partial calendar year (including, without
limitation, sales and income tax returns insofar as the same pertain to the
Improvements and information pertaining to other users of the Leased Premises
where applicable); provided, that Lessee shall not have any obligation
whatsoever to make such records available to Lessor for any calendar year or
partial calendar year for which Contingent Rent in the amount of Fifty Thousand
Dollars ($50,000) is paid to Lessor. Commencing in 1998 for calendar year 1997,
Lessee shall submit on or before the last day of May of each calendar year and
partial calendar year of the Term to Lessor a statement audited by an
independent certified public accountant and certified by a principal financial
officer showing the Gross Receipts and Conventional Expenses, as the case may
be, cash reserves (and withdrawals therefrom) for the immediately preceding
calendar year (or portion thereof in the case of a partial calendar year) and
showing the computation of Net Cash Flow for such immediately preceding calendar
year or portion thereof (the "Annual Statement"); provided, that Lessee shall
not have any obligation whatsoever to submit an Annual Statement to Lessor for
any calendar year or partial calendar year for which Contingent Rent in the
amount of Fifty Thousand Dollars ($50,000) is paid to Lessor. Each such required
Annual Statement shall be audited by an independent certified public accountant
and prepared in accordance with generally accepted accounting principles,
consistently applied, and in accordance with the requirements and definitions
contained in this Lease, and shall be certified by a principal financial officer
to be true, correct and complete. In the event that any required Annual
Statement is delivered to Lessor to establish that the Contingent Rent payable
to Lessor for the calendar year or partial calendar year covered by such Annual
Statement is less than Fifty Thousand Dollars ($50,000), then Lessor may, at any
time within three (3) years after receipt of any such Annual Statement and at
its sole cost and expense, cause an examination to be made of all such financial
books and records for the calendar year or partial calendar year to which such
Annual Statement applies. Lessor may cause such examination of all such
financial books and records to be made by such persons as Lessor may determine
in its sole discretion; provided that in the event Lessor takes the position
that Net Cash Flow has been understated by any Annual Statement, Lessee may
require that an audit be made by a nationally recognized accounting firm
selected by Lessee. If such audit (or the examination if an audit is not
required) shows that the Net Cash Flow shown on the Annual Statement understates
the actual Net Cash Flow (as determined by such audit or examination, as the
case may be) by more than ten percent (10%) of such actual Net Cash Flow, then
the fees and expenses for such audit or examination, as the case may be, shall
be paid by Lessee as additional rent. Otherwise, the fees and expenses for such
audit or examination shall be paid by Lessor. In the event that any Annual
Statement delivered to Lessor provides that the Contingent Rent payable to
Lessor for the calendar year or partial calendar year covered by such Annual
Statement is Fifty Thousand Dollars ($50,000) or more, Lessor shall have no
right to examine any of the financial books or records for the calendar year or
partial calendar year to which such Annual Statement applies.
Section 4.03. Additional Rent. In addition to the payment of Contingent
Rent, if any, Lessee shall pay to Lessor as "additional rent" all other sums of
money and charges required to be paid to Lessor under this Lease.
Section 4.04. Rental Payments - General. All payments of Rent shall be
made to Lessor, and shall be sent to Lessor at the address set forth in Article
XXVI hereof, or at such other place as Lessor shall from time to time designate
in writing. All Rent shall be paid without relief from valuation and
appraisement laws.
Section 4.05. Late Payments. Any amount required to be paid under this
Lease, and not paid within thirty (30) days after the due date therefor, shall
bear interest from and after the first day following the end of such thirty (30)
day period at a rate equal to two percent (2%) above the prime interest rate as
announced by the Mortgagee holding a first mortgage lien on Lessee's interest
under this Lease, or if no such Mortgagee exists, then as announced
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by NBD Bank, NA, or its successor (determined as of the first day of each month
and to apply to any and all such amounts remaining unpaid during any part of
such month).
ARTICLE V
REMODEL WORK AND LESSEE'S WORK
Section 5.01. Remodel Work. The Lessee shall complete the Remodel Work
within a period of time which, under all prevailing circumstances, shall be
reasonable, but, in any event, by no later than May 1, 1996.
Section 5.02. Change Orders to Remodel Plans and Specifications. The
Lessee shall cause change orders to the Remodel Plans and Specifications to be
prepared and submitted to Lessor for its review and approval, which approval
shall not be unreasonably withheld, conditioned or delayed, for any modification
to the Remodel Work. Lessor shall notify Lessee in writing of its approval or
disapproval of any such change order within five (5) days after submission
thereof to Lessor. If Lessor fails to notify Lessee of approval or disapproval
of any such change order within the foregoing time period, such change order
shall be deemed approved by Lessor. If Lessor shall disapprove the whole or any
part of any such change order, a written disapproval describing specifically the
items to which objection is registered and a statement of the reasons for such
disapproval shall be provided to Lessee. Lessor's approval hereunder shall not
be deemed to create any liability to Lessee or third parties. Lessee shall cause
any change order that is disapproved by Lessor to be revised and resubmitted to
Lessor. This procedure shall continue until such change order has been approved
by Lessor.
Section 5.03. Performance of Remodel Work. Lessee shall perform and
complete the Remodel Work: (a) in a good and workmanlike manner; (b) in
accordance with all applicable laws, ordinances, orders, rules or regulations of
any federal, state, municipal or other public authority having jurisdiction over
the same; and (c) in accordance with the Remodel Plans and Specifications and
all change orders thereto that have been approved by Lessor as provided in
Section 5.02.
Section 5.04. Lessee's Work. The Lessee shall complete the Lessee's Work
within a period of time which, under all prevailing circumstances, shall be
reasonable, but, in any event, all portions of Lessee's Work other than exterior
work to the Leased Premises shall be completed by no later than May 1, 1996.
Section 5.05. Change Orders to Premises Plans and Specifications. The
Lessee shall cause change orders to the Premises Plans and Specifications to be
prepared and submitted to Lessor for its review and approval, which approval
shall not be unreasonably withheld, conditioned or delayed, for any modification
to the Lessee's Work that affects the external appearance and structural
integrity of the Improvements or that materially changes Lessee's Work; provided
that, if the consent of The Indianapolis Shrine Foundation for The Performing
Arts and Community Development, Inc. is obtained for any such change, then, in
any such event the consent of Lessor shall not be required. Lessor shall notify
Lessee in writing of its approval or disapproval of any such change order within
five (5) days after submission thereof to Lessor. If Lessor fails to notify
Lessee of approval or disapproval of any such change order within the foregoing
time period, such change order shall be deemed approved by Lessor. If Lessor
shall disapprove the whole or any part of any such change order, a written
disapproval describing specifically the items to which objection is registered
and a statement of the reasons for such disapproval shall be provided to Lessee.
Lessor's approval hereunder shall not be deemed to create any liability to
Lessee or third parties. Lessee shall cause any change order that is disapproved
by Lessor to be revised and resubmitted to Lessor. This procedure shall continue
until such change order has been approved by Lessor. Lessee shall submit change
orders for any modification to Lessee's Work that does not affect the external
appearance and structural integrity of the Improvements, but Lessor shall have
no approval rights with respect thereto or thereof.
Section 5.06. Performance of Lessee's Work. Lessee shall perform and
complete the Lessee's Work: (a) in a good and workmanlike manner; (b) in
accordance with all applicable laws, ordinances, orders, rules or
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regulations of any federal, state, municipal or other public authority having
jurisdiction over the same; and (c) in accordance with the Premises Plans and
Specifications and all change orders thereto that have been approved by Lessor
as provided in Section 5.05.
ARTICLE VI
IMPROVEMENTS
Section 6.01. Improvements, Additions and Alterations. Except for Lessee's
Work, Lessee shall not make, construct or install any alterations, changes,
replacements, improvements or additions in, on, of or to the Improvements
without Lessor's prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed; provided that (a) if such alterations,
changes, replacements, improvements or additions do not change the external
appearance and structural integrity of the Improvements, or (b) if the consent
of The Indianapolis Shrine Foundation for the Perfroming Arts and Community
Development, Inc., is obtained for such alterations, changes, replacements,
improvements or additions, then, in any such event, the consent of Lessor shall
not be required. Any and all such alterations, changes, replacements,
improvements and additions shall be performed and completed: (a) in a good and
workmanlike manner; (b) in accordance with all applicable laws, ordinances,
orders, rules or regulations of any federal, state, municipal or other public
authority having jurisdiction over the same; and (c) in accordance with the
Plans and Specifications therefore that have been approved by Lessor as provided
in Section 6.02, if applicable.
Section 6.02. Plans and Specifications. Prior to the making, construction
or installation of any alterations, changes, replacements, improvements or
additions in, on, of or to the Improvements that affect the external appearance
and structural integrity of the Improvements other than Lessee's Work, Lessee
shall submit Plans and Specifications for such alterations, changes,
replacements, improvements or additions to Lessor for its review and approval.
Lessee shall submit any substantial modifications to the Plans and
Specifications previously submitted to the Lessor pursuant to the first sentence
of this Section 6.02 that affect the external appearance and structural
integrity of the Improvements to be submitted to Lessor for its review and
approval. The Lessor shall notify Lessee in writing of its approval or
disapproval of the Plans and Specifications and any substantial modifications to
the Plans and Specifications within five (5) days after submission thereof to
Lessor. If Lessor fails to notify Lessee of approval or disapproval of the Plans
and Specifications, or modifications thereto, within the foregoing time period,
such Plans and Specifications, or modifications thereto, shall be deemed
approved by Lessor. If Lessor shall disapprove the whole or any part of the
Plans and Specifications, or any modifications thereto, a written disapproval
describing specifically the items to which objection is registered and a
statement to the reasons for such disapproval shall be provided by Lessor to
Lessee. The Lessor's approval of the Plans and Specifications, or any
modifications thereto, shall not be unreasonably withheld, conditioned or
delayed and shall be limited to the matters set forth in the first sentence of
this Section 6.02. The Lessor's approvals hereunder shall not be deemed to
create any liability to Lessee or third parties. Lessee shall also submit Plans
and Specifications for any alterations, changes, replacements, improvements or
additions in, on, of or to the Improvements that do not affect the external
appearance and structural integrity of the Improvements to Lessor, but Lessor
shall have no approval rights with respect thereto or thereof.
Section 6.03. Governmental Approvals. Except as otherwise expressly set
forth in this Lease, Lessee shall procure in a timely manner any and all
approvals required to be obtained with respect to any alterations, changes,
replacements, improvements or additions in, on, of or to the Improvements from
any and all governmental authorities having jurisdiction in the matter. Lessee
shall have the right to make applications for zoning changes, vacations,
variances, permits, approvals, releases, annexations, tax abatements, consents
and other authorizations in connection with the construction, operation and use
of the Improvements. Lessor shall reasonably cooperate with Lessee in any
application made by Lessee for the purpose of obtaining any and all such zoning
changes, vacations, variances, permits, approvals, releases, annexations, tax
abatements, consents and other authorizations, including, without limitation,
the execution by Lessor, promptly upon Lessee's request, of any applications,
petitions or other documents reasonably required in connection therewith.
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Section 6.04. Ownership of Improvements. At all times during the Term,
ownership of (a) any and all Improvements made, constructed or installed by or
through Lessee shall remain in the Person making, constructing or installing
such Improvements (subject to the rights of Mortgagees) and, as applicable, the
Person making, constructing or installing such Improvements alone shall be
entitled to claim depreciation therefor, provided that any and all historical
tax credits issued or available with respect to the making, construction or
installation of any Improvements by Lessee shall be assigned to Lessee, and
Lessor agrees to cooperate with Lessee to cause all such tax credits to be so
assigned. Upon expiration of the Term, by passage of time or otherwise (subject
to the rights of Mortgagees under this Lease), the Improvements shall become the
property of Lessor, without payment by Lessor.
ARTICLE VII
ASSIGNMENT AND SUBLETTING
Section 7.01. Permitted Subleases and Encumbrances. Lessee shall have the
right to grant one or more Mortgages or otherwise encumber this Lease or its
interests in the Leased Premises (in whole or in part or parts but subject to
compliance with Article XVII hereof as to any such Mortgage) without Lessor's
consent. Lessee may sublease all or any part of its interests in this Lease, the
Improvements or the Leased Premises, and may permit its sublessees to sublease
all or any part of their subleasehold interests in this Lease, the Improvements
or the Leased Premises, without Lessor's consent. After the date hereof, Lessor
has not and will not mortgage or otherwise create any security interests, liens
or encumbrances upon or affecting Lessor's interests in, or title to, the Leased
Premises, the Real Estate, the Improvements or any part thereof. Nothing
contained herein shall be deemed to constitute a subordination of Lessor's fee
simple title to the Real Estate to any Mortgage, or require Lessor to execute
any Mortgage or take any action to effect any such subordination. In the event
Lessor shall mortgage or otherwise create any security interests, liens or other
encumbrances upon or affecting Lessor's interests in or title to the Leased
Premises, the Real Estate or the Improvements, or parts thereof, after the
Execution Date and continuing during the Term, Lessee shall have the right to
incur such costs and take whatever actions are necessary or appropriate to
release or extinguish such mortgages, security interests, liens or encumbrances
and recover the costs incurred in so doing from Lessor, which costs shall be
immediately due and payable upon demand therefore.
Section 7.02. Assignment and Sale. Subject to the provisions of Section
7.01, Lessee shall not assign, sell or transfer all of its interests in or title
to this Lease, the Leased Premises, the Real Estate and the Improvements without
the prior written consent of Lessor, which consent shall not be unreasonably
withheld, conditioned or delayed; provided that Lessor's prior written consent
shall not be required for any such assignment, sale or transfer to (a) any
Affiliate of the City, (b) any Mortgagee pursuant to a foreclosure of its
mortgage lien or as a result of receiving an assignment in lieu of foreclosure
of its mortgage lien or (c) any purchaser at a foreclosure sale.
ARTICLE VIII
LESSEE'S RIGHT OF FIRST REFUSAL
Section 8.01. Lessee's Right of First Refusal. If at anytime during the
Term Lessor desires to sell any or all of its rights, title and interests in and
to the Real Estate or Improvements or as Lessor under this Lease, Lessee shall
have the right of first refusal to acquire such rights, title and interests upon
the same economic terms and conditions of purchaser's performance as are set
forth in the offer that Lessor intends to accept or contained in the agreement
that Lessor intends to execute. If Lessor receives an offer to purchase any or
all of its rights, title or interests in and to the Real Estate or Improvements
or as Lessor under this Lease which Lessor intends to accept (an "Offer") or
intends to enter into an agreement pursuant to which Lessor will be obligated to
sell any or all of its rights, title and interests in and to the Real Estate or
Improvements or as Lessor under this Lease (a "Sales Agreement"), then: (a)
Lessor shall submit to Lessee a copy of the Offer or Sales Agreement, as the
case may be; (b) Lessee shall have the right to purchase Lessor's rights, title
and interests in and to the Real Estate or Improvements or as Lessor under this
Lease upon the same economic terms and conditions of purchaser's
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performance as are set forth in the Offer or Sales Agreement, as the case may
be, by giving Lessor written notice of its election to exercise its right of
first refusal within thirty (30) days after submission of the Offer or Sales
Agreement, as the case may be, to Lessee by Lessor; (c) if Lessee exercises its
right of first refusal but fails or refuses to enter into the Agreement to
Purchase (as hereinafter defined) for any reason whatsoever, or if Lessor and
Lessee enter into the Agreement to Purchase and Lessee fails or refuses to
consummate the purchase of Lessor's rights, title and interests in and to the
Real Estate or Improvements or as Lessor under this Lease for any reason
whatsoever, then, in either such event, Lessor shall have the right to proceed
with and consummate the sale of Lessor's rights, title and interests in and to
the Real Estate or Improvements or as Lessor under this Lease to the third party
that made the Offer or the other party to the Sales Agreement upon the terms and
conditions set forth in the Offer or Sales Agreement, as the case may be,
subject to the terms and conditions of this Lease, including, without
limitation, Lessee's right of first refusal under this Article VIII, which right
of first refusal shall apply to and have full force and effect in connection
with all subsequent sales of the Lessor's rights, title and interests in and to
the Real Estate or Improvements or as Lessor under this Lease; (d) if Lessee
fails to exercise its right of first refusal for any reason whatsoever, Lessor
shall have the right to proceed with and consummate the sale of Lessor's rights,
title and interests in and to the Real Estate or Improvements or as Lessor under
this Lease to the third party that made the Offer or the other party to the
Sales Agreement, as the case may be, upon the terms and conditions set forth in
the Offer or Sales Agreement, as the case may be, subject to the terms and
conditions of this Lease including, without limitation, Lessee's right of first
refusal under this Article VIII, which right of first refusal shall apply to and
have full force and effect in connection with all subsequent sales of the
Lessor's rights, title and interests in and to the Real Estate or Improvements
or as Lessor under this Lease; (e) if Lessee fails to exercise its right of
first refusal for any reason whatsoever and Lessor does not consummate the sale
of its rights, title and interests in and to the Real Estate or Improvements or
as Lessor under this Lease to the third party that made the Offer or the other
party to the Sales Agreement, as the case may be, Lessee's right of first
refusal shall not be terminated and shall apply to, and have full force and
effect in connection with, all subsequent sales of all or any of Lessor's
rights, title and interests in and to the Real Estate or Improvements or as
Lessor under this Lease; and (f) if Lessee exercises its right of first refusal,
Lessor and Lessee will promptly (and in any event within thirty (30) days after
Lessor's receipt of Lessee's exercise of its right of first refusal) enter into
a purchase agreement providing for the purchase and sale of Lessor's rights,
title and interests in and to the Real Estate or Improvements or as Lessor under
this Lease upon the same economic terms and conditions of purchaser's
performance as set forth in the Offer or the Sales Agreement, as the case may be
(the "Purchase Agreement"). For purposes of Lessee's right of first refusal, the
word "purchase" shall include a purchase and any other transaction by which any
or all of the Lessor's rights, title and interests in and to the Real Estate or
Improvements or as Lessor under this Lease will be transferred or conveyed. In
the event that Lessor intends to accept an Offer or enter into a Sales Agreement
which involves consideration other than the payment of cash, Lessee shall be
deemed to have matched such Offer or Sales Agreement, as the case may be, if it
agrees to pay Lessor the fair market value of the consideration to be received
by Lessor. Notwithstanding anything contained in this Article VIII to the
contrary, Lessee's right of first refusal hereunder shall not be effective or
applicable to (a) the transfer of all of Lessor's rights, title and interests in
and to the Real Estate and Improvements and as Lessor under this Lease to a
fraternal organization or entity that is controlled by and affiliated with the
Imperial Council of the Ancient Arabic Order of the Nobles of the Mystic Shrine
for North America or its members, or (b) a change in the name of Lessor that
does not result in a change of control of Lessor or its affiliation with the
Imperial Council of the Ancient Arabic Order of the Nobles of the Mystic Shrine
for North America.
Section 8.02. Specific Performance. Lessor and Lessee each shall be
entitled to specific performance to enforce the provisions of this Article VIII,
it being agreed that money damages are not an adequate remedy for any breach
hereof.
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ARTICLE IX
TAXES AND UTILITY EXPENSES
Section 9.01. Lessee's Payment of Taxes and Utilities. Lessee shall pay
and discharge, as and when the same shall become due and payable:
(a) all Lessee's Taxes, and each and every installment thereof,
which shall or may become due and payable with respect to Lessee's
leasehold interest in the Leased Premises or Lessee's personal property,
or any part thereof, or any appurtenances or equipment owned by or leased
to Lessee thereon or therein or any part thereof, including, without
limitation, the installments of Lessee's Real Estate Taxes becoming due
and payable in May and November, 1997, together with all interest and
penalties thereon, under or by virtue of all present or future laws,
ordinances, orders, rules or regulations of any municipality or other
governmental authority having jurisdiction; and
(b) all Lessee's Utility Expenses; provided that Lessor shall
reimburse Lessee for eight and five tenths percent (8.50%) of Lessee's
Utility Expenses (other than charges relating to the providing of water)
within ten (10) days after demand upon Lessor for such reimbursement and
presentation of written invoices for such charges.
Section 9.02. Lessor's Payment of Taxes and Utilities. Lessor shall pay
and discharge, as and when the same shall become due and payable:
(a) all Lessor's Taxes, and each and every installment thereof,
which shall or may become due and payable with respect to the Murat
Premises, the Leased Premises or Lessor's personal property, or any part
thereof, or any appurtenances or equipment owned by or leased to Lessor
thereon or therein or any part thereof, including, without limitation, the
installments of Lessor's Real Estate Taxes becoming due and payable in May
and November, 1996, together with all interest and penalties thereon,
under or by virtue of all present or future laws, ordinances, orders,
rules, regulations of any municipality or other governmental authority
having jurisdiction; and
(b) all Lessor's Utility Expenses.
Section 9.03. Proration of Lessee's Real Estate Taxes. Lessee's Taxes due
and payable during the calendar years in which the Term ends shall be
apportioned pro rata between Lessor and Lessee in accordance with the number of
days within such calendar years that fall within the Term and Lessor and Lessee
shall each pay (or cause to be paid) their pro rata share of such Lessee's Real
Estate Taxes before the same become due and payable. Lessor shall be responsible
for and pay all Lessee's Real Estate Taxes becoming due and payable in all
calendar years after the calendar years in which the Term ends.
Section 9.04. Right to Contest. Lessee and each Mortgagee each shall have
the right to contest all Lessee's Taxes and Lessee's Utility Expenses by
appropriate legal proceedings, or in such other manner as it may deem
appropriate. Any such proceedings may be conducted in the name of Lessor. Lessor
shall cooperate with each such Person contesting any Lessee's Taxes and/or
Lessee's Utility Expenses and shall promptly execute and deliver any
applications, petitions or other documents required by any such Person in
connection therewith. Notwithstanding the foregoing, the Person contesting such
Lessee's Taxes and/or Lessee's Utility Expenses shall pay any such Lessee's
Taxes or Lessee's Utility Expenses prior to the time that the Leased Premises or
any part thereof shall become subject to sale upon foreclosure of the lien
therefor. Such legal proceedings shall include, without limitation, any and all
appropriate appeals or other proceedings and appeals from orders, judgments or
decrees so long as the same are sufficient to prevent a foreclosure sale.
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Section 9.05. Distribution of Overpayment of Taxes. If there shall be any
refunds or rebates on account of the Lessee's Taxes or Lessee's Utility Expenses
paid by Lessee under the provisions of this Lease, such refund or rebate shall
belong to the Person that made such payment, whether or not received by Lessor
during the Term. Any refunds so received by Lessor shall be deemed to be
received by Lessor in trust for the Person that made such payment, and shall be
paid to the Person that made such payment within ten (10) days of Lessor's
receipt thereof. Lessor shall, upon the request of Lessee, sign any receipts
which may be necessary to secure the payment of any such refund or rebate.
Section 9.06. Separate Assessments. Upon request of Lessor or Lessee at
any time, Lessor and Lessee shall make application individually or join in an
application, and will execute such instruments as may be necessary or
appropriate to obtain separate tax assessments for such portions of the Murat
Complex as Lessee shall at any time, and from time to time, designate. If the
Murat Premises and Leased Premises are not assessed as separate tax parcels for
purposes of ad valorem real property taxes, then, for purposes of this Article
IX, (a) the Lessee's Improvement Proportionate Share of any such taxes
attributable to improvements shall be allocated to the Leased Premises and the
Lessee's Land Proportionate Share of any such taxes attributable to land shall
be allocated to the Leased Premises, and (b) the Lessor's Improvement
Proportionate Share of any such taxes attributable to improvements shall be
allocated to the Murat Premises and the Lessor's Land Proportionate Share of any
such taxes attributable to land shall be allocated to the Murat Premises.
Section 9.07. Excluded Taxes and Assessments. Nothing herein or in this
Lease otherwise contained shall require or be construed to require Lessee to pay
any income, gross income, net or supplemental income, gross receipts,
inheritance, estate, succession, transfer, gift, franchise or profit taxes, or
any tax similar to or enacted in lieu or replacement of any of the foregoing,
that are or may be imposed upon Lessor or its successors or assigns, unless the
same constitute Lessee's Real Estate Taxes.
ARTICLE X
MAINTENANCE; REPAIRS
Section 10.01. Maintenance and Repair by Lessee. During the Term, Lessee
shall keep and maintain the interior and exterior portions of the Leased
Premises and Improvements in good condition and repair. Except as expressly
provided in this Lease, Lessor shall not be required to furnish any services or
facilities or to make any improvements, repairs or alterations in or to the
Leased Premises and Improvements during the Term.
Section 10.02. Governmental Authorities. During the Term, Lessee shall
observe and comply with all present and future laws, ordinances, requirements,
orders, rules and regulations of all governmental authorities affecting the
Leased Premises or any part thereof, and Lessee shall pay all costs, expenses,
liabilities, losses, damages, fines, penalties, claims and demands that may be
necessary to achieve such compliance or are imposed due to any failure of
compliance. Lessee and each Mortgagee each shall have the right to contest by
appropriate legal proceedings, or in such other manner as it may deem
appropriate, the validity or application of any law, ordinance, rule, regulation
or requirement of the nature referred to in this Section 10.02. Any such
proceeding may be conducted in the name of Lessor. Lessor shall cooperate with
each such Person commencing or conducting any proceedings contemplated by this
Section 10.02 and shall promptly execute and deliver any applications, petitions
or other documents required by any such Person in connection therewith. If
compliance with any such law, ordinance, requirement, order, rule or regulation
legally may be delayed pending the prosecution of any such proceeding, Lessee
may delay such compliance until a final determination of such proceeding is
made. Notwithstanding the foregoing, the Person commencing or conducting any
proceedings contemplated by this Section 10.02 to comply with any such law,
ordinance, requirement, order, rule or regulation prior to the time that the
Leased Premises or any part thereof shall become subject to sale for
noncompliance with any such law, ordinance, requirement, order, rule or
regulation. Such legal proceedings shall include, without limitation, any and
all
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appropriate appeals or other proceedings and appeals from orders, judgments or
decrees so long as the same are sufficient to prevent a sale of the Leased
Premises or any part thereof.
Section 10.03. Maintenance and Repair by Lessor. During the Term, Lessor
shall keep and maintain the Murat Premises in such condition and state of repair
that it does not interfere with or adversely affect the condition, use or
occupancy of the Leased Premises and in compliance with all present and future
laws, ordinances, requirements, orders, rules and regulations of all
governmental authorities affecting the Murat Premises.
ARTICLE XI
MECHANICS' LIENS;
INDEMNIFICATION AND NON-LIABILITY OF LESSOR
Section 11.01. Mechanics' Liens from Lessee Activities. Lessee shall pay
and discharge within sixty (60) days of filing any and all mechanics' and
materialmen's liens filed against the Leased Premises or Improvements or any
part thereof or interest therein arising out of any services or materials
provided to the Leased Premises for or at the request of Lessee; provided, that
Lessee shall have the right to contest the validity of any such lien by
appropriate legal proceedings or in such other manner as it may deem
appropriate. Any such proceedings may be conducted in the name of Lessor and/or
Lessee, as appropriate. Lessor shall cooperate with each such Person contesting
any such mechanics' or materialmen's lien and shall promptly execute and deliver
any applications, petitions or other documents required by any such Person in
connection therewith. Notwithstanding the foregoing, the Person contesting such
mechanics' or materialmen's lien shall pay any such mechanics' or materialmen's
lien, discharge such mechanics' or materialmen's lien by the posting of a bond
in compliance with applicable law or providing Lessor with other security
reasonably acceptable to Lessor, prior to the time that the Real Estate or
Leased Premises or any part thereof shall become subject to sale upon
foreclosure thereof. Such legal proceedings shall include, without limitation,
any and all appropriate appeals or other proceedings and appeals from orders,
judgments or decrees so long as the same are sufficient to prevent a foreclosure
sale.
Section 11.02. Indemnification by Lessee. Lessee shall indemnify and save
harmless Lessor against and from any and all claims by or on behalf of any
person, firm or corporation, arising from the conduct or management of, or from
any work or thing whatsoever done in or about, the Leased Premises or the
Improvements during the Term, and to indemnify and save Lessor harmless against
and from any and all claims arising from any condition of the Improvements or
arising from any willful or negligent act or omission of Lessee, or any of its
agents, contractors, servants, employees, licensees, customers, sublessees or
invitees, or arising from any accident, injury or damage whatsoever caused to
any Person (in each case other than (a) claims asserted against Lessor to the
extent caused by the willful or grossly negligent act or omission of Lessor or
its agents or contractors or their servants or employees, (b) claims for which
Lessor may be responsible under any other agreement, lease or separate contract,
(c) claims asserted against Lessor that would have been covered by insurance
policies customarily maintained by lessors of commercial real estate located in
the Indianapolis metropolitan area, or (d) claims that arise from or out of
Lessor's use of the Leased Premises or any part thereof as permitted by or in
this Lease) in or about the Leased Premises or the Improvements and from and
against all reasonable costs, counsel fees, expenses and liabilities incurred in
connection with any such claim, or action or proceeding brought with respect
thereto.
Section 11.03. Mechanics' Liens from Lessor Activities. Lessor shall pay
and discharge within sixty (60) days of filing any and all mechanics' and
materialmen's liens filed against the Leased Premises or Improvements or any
part thereof or interest therein arising out of any services or materials
provided to the 1967 Club Real Estate, the 1967 Club Building or the Leased
Premises for or at the request of Lessor; provided, that Lessor shall have the
right to contest the validity of any such lien by appropriate legal proceedings
or in such other manner as it may deem appropriate. Any such proceedings shall
be conducted in the name of Lessor. Lessee shall cooperate with each such Person
contesting any such mechanics' or materialmen's lien and shall promptly execute
and deliver any applications, petitions or other documents required by any such
Person in connection therewith. Notwithstanding the foregoing,
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the Person contesting such mechanics' or materialmen's lien shall pay any such
mechanics' or materialmen's lien, discharge such mechanics' or materialmen's
lien by the posting of a bond in compliance with applicable law or providing
Lessee with other security reasonably acceptable to Lessee, prior to the time
that the Real Estate or Leased Premises or any part thereof shall become subject
to sale upon foreclosure thereof. Such legal proceedings shall include, without
limitation, any and all appropriate appeals or other proceedings and appeals
from orders, judgments or decrees so long as the same are sufficient to prevent
a foreclosure sale.
Section 11.02. Indemnification by Lessor. Lessor shall indemnify and save
harmless Lessee against and from any and all claims by or on behalf of any
person, firm or corporation, arising from the conduct or management of, or from
any work or thing whatsoever done in or about, the 1967 Club Real Estate or the
1967 Club Building during the Term, and to indemnify and save Lessee harmless
against and from any and all claims arising from any condition of the 1967 Club
Real Estate or the 1967 Club Building or arising from any willful or negligent
act or omission of Lessor, or any of its agents, contractors, servants,
employees, licensees, customers, sublessees or invitees, or arising from any
accident, injury or damage whatsoever caused to any Person (in each case other
than (a) claims asserted against Lessee to the extent caused by the willful or
grossly negligent act or omission of Lessee or its agents or contractors or
their servants or employees, (b) claims for which Lessee may be responsible
under any other agreement, lease or separate contract, (c) claims asserted
against Lessee that would have been covered by insurance policies customarily
maintained by lessees of commercial real estate located in the Indianapolis
metropolitan area, or (d) claims that arise from or out of Lessee's use of the
Leased Premises or any part thereof as permitted by or in this Lease) in or
about the 1967 Club Real Estate or the 1967 Club Building and from and against
all reasonable costs, counsel fees, expenses and liabilities incurred in
connection with any such claim, or action or proceeding brought with respect
thereto.
ARTICLE XII
SIGNS
Subject to compliance with the terms and conditions of Article VI of this
Lease, if applicable, Lessee and its assignees and sublessees shall each have
the right to install, maintain and replace in and upon any part of the Leased
Premises, such signs and advertising matter as Lessee or any of its assignees or
sublessees may desire; provided that any and all such signs shall comply with
all applicable present and future laws, ordinances, requirements, orders, rules
and regulations of all governmental authorities having jurisdiction; and
provided further that all such signs and advertising matter shall be removed
from the Leased Premises upon the expiration of the Term or earlier termination
of this Lease. Lessee and its assignees and sublessees shall each have the right
to remove all existing signs and advertising matter located on or in the Leased
Premises. Lessee or its assignees or sublessees, as the case may be, shall
obtain all necessary permits for such purposes without cost or expense to
Lessor. Lessee shall cause all signs and advertising matter installed by Lessee
or its assignees or sublessees pursuant to this Article XII to be removed upon
the expiration of the Term.
ARTICLE XIII
INSURANCE
Section 13.01. Liability Insurance. Lessee shall provide and keep in force
during the Term, general liability insurance with an insurance company or
companies licensed to do business in the state of Indiana and, during the first
ten (10) years of the Term, having a Best rating of A or better, and after the
first ten (10) years of the Term, having a rating reasonably acceptable to
Lessor. Such insurance shall have initial minimum limits of combined coverage of
bodily injury and property damage, including umbrella coverage, of not less than
Ten Million Dollars ($10,000,000.00). On the tenth (10th) anniversary of the
Possession Date and on each tenth (10th) anniversary of the Possession Date
thereafter, the amount of insurance required to be maintained under this Section
13.01 shall be reviewed by Lessor and Lessee and increased to an amount that is
customary for other facilities located in the
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Indianapolis metropolitan area that are engaged in activities similar to those
being conducted in or from the Leased Premises at such time, or if no such
facilities exist, to an amount which is reasonable under the circumstances. Such
policy or policies shall name Lessor, Lessee and each Mortgagee as insureds.
Section 13.02. Casualty Insurance. During the Term of this Lease, Lessee
shall keep the 1909 Property, the 1922 Property and the 1967 Property (as such
terms are hereinafter defined) insured for the benefit of Lessor, Lessee and
each Mortgagee as their respective interests may appear, against loss or damage
by fire or other casualties covered by a customary extended coverage
endorsement, in an initial amount equal to Twenty-One Million Five Hundred
Fifty-Eight Thousand Three Hundred Forty-Five Dollars ($21,558,345) (the "Agreed
Value"). On the tenth (10th) anniversary of the Possession Date and on each
tenth (10th) anniversary of the Possession Date thereafter (or such shorter
intervals if customary in the insurance industry), the amount of the Agreed
Value shall be increased or decreased to an amount that is equal to the
aggregate of the replacement cost values of the 1909 Theatre Building, 1922
Mosque Building, 1967 Club Building and all alterations, changes, replacements,
improvements and additions thereto and all other buildings, fixtures, structures
and improvements located on the Murat Property. Lessor and Lessee shall have the
replacement cost values of the 1909 Theatre Building and all alterations,
changes, replacements, improvements and additions thereto and all other
buildings, fixtures, structures and improvements located on the 1909 Theatre
Real Estate (the "1909 Property"), the 1922 Mosque Building and all alterations,
changes, replacements, improvements and additions thereto and all other
buildings, fixtures, structures and improvements located on the 1922 Mosque Real
Estate (the "1922 Property"), and the 1967 Club Building and all alterations,
changes, replacements, improvements and additions thereto and all other
buildings, fixtures, structures and improvements located on the 1967 Club Real
Estate (the "1967 Property") separately determined by an appraisal performed by
an appraiser mutually acceptable to Lessor and Lessee, or in the event of no
agreement upon an appraiser, by an appraiser selected by two appraisers chosen
one each by Lessor and Lessee. All such policies, or certificates thereof, shall
be held either by the first Mortgagee, if any, or by Lessee. Lessee shall pay
all insurance premiums for the insurance policies referred by this Section 13.02
and Lessor shall pay to Lessee an amount equal to Lessor's Insurance Share of
such premiums within thirty (30) days after receiving Lessee's written request
therefore and copies of invoices evidencing the amount of such premiums. Lessor
shall not carry any insurance concurrent in coverage and contributing in the
event of loss with any insurance required to be maintained hereunder, if the
effect of such separate insurance would be to reduce the protection or the
payment to be made under the insurance policy or policies required to be
maintained hereunder.
Section 13.03. Blanket and Umbrella Policies. Any insurance which is
required to be maintained by this Lease may be provided by blanket property
insurance or umbrella liability insurance covering the Leased Premises and
Improvements and other locations or operations of the party maintaining such
insurance or its affiliates, provided such blanket or umbrella insurance
complies with all of the other requirements of this Lease and of any Mortgage(s)
with respect to the insurance involved. In such event, the required amounts of
coverage set forth herein shall be net of claims filed, if any, and may be
provided for by a minimum coverage endorsement or rider to such policy with
respect to Lessee's property or operations at the Leased Premises.
Section 13.04. Certificates of Insurance. Lessee shall deliver
certificates of insurance to Lessor for each policy of insurance which is
required to be maintained under this Article XIII at the beginning of the Term,
and replacement certificates of insurance not less than ten (10) days prior to
the expiration of the certificates of insurance being replaced.
Section 13.05. Waiver of Subrogation. Lessor and Lessee waive all rights
against each other and against those for whom the other is legally liable for
all losses covered by insurance provided for under this Article XIII to the
extent of the upper limits of such insurance, it being the intent of this
provision to allocate all risk of such loss to such insurance. If the policies
of insurance maintained pursuant to this Article XIII require an endorsement to
provide for continued coverage where there Is a waiver of subrogation, Lessee
will cause them to be so endorsed.
Section 13.06. Special Provisions. If reasonably obtainable, all such
policies of insurance maintained pursuant to this Article XIII shall provide
that the proceeds thereof shall be payable, without regard to any fault or
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negligence of Lessor, any contractor or agent of Lessor or Lessee or any other
person or entity having an interest under any such policy which may have caused
or contributed to such loss, and without any rights of the insurance company of
set-off, counterclaim or deduction.
Section 13.07. Insurance During Alteration or Repair or Restoration. In
addition to the insurance required by Sections 13.01 and 13.02 above, during the
making of major alterations, changes, replacements, improvements or additions to
the Improvements or during repair or restoration of the Improvements as a result
of casualty damage or condemnation, Lessee shall procure and maintain: (a) such
worker's compensation as is required by law and customary additional liability
insurance in the name of, and for the benefit of, Lessor, Lessee and the
construction manager and contractors managing or performing such work; and (b)
such customary builder's risk and fire insurance with extended coverage endorsed
to protect the interests of Lessor, Lessee, and the construction manager and
contractors managing or performing such work, as their respective interests may
appear.
Section 13.08. Use of Proceeds. Subject to the provisions of Article XIV,
the proceeds of any and all policies of casualty and builder's risk insurance
upon the 1909 Property, the 1922 Property and the 1967 Property maintained
pursuant to Sections 13.02 and 13.07 of this Article XIII that are attributable
to or payable as a result of destruction or damage to the Improvements remaining
after any required payments to any Mortgagees shall be paid to the Insurance
Trustee and used as a trust fund toward the repair, reconstruction or rebuilding
of the Improvements and the proceeds of any and all policies of casualty
insurance upon the 1909 Property, the 1922 Property and the 1967 Property
maintained pursuant to Section 13.02 of this Article XIII that are attributable
to or paid as a result of destruction or damage to the 1967 Property shall be
paid to Lessor. Accordingly, all such policies of insurance shall provide that
all proceeds payable at any time and from time to time by any insurance company
under such policies that are attributable to or payable as a result of
destruction or damage to the Improvements shall be paid to the Insurance Trustee
for the benefit of Lessee and the Mortgagees and any other Person having any
interest under any such policy. Lessee shall pay the reasonable charges of the
Insurance Trustee for its services. Lessor, and all Mortgagees and any other
Person having an interest under any such insurance policy shall cooperate with
and aid the Insurance Trustee in collecting any and all casualty and builder's
risk insurance monies that are attributable to or payable as a result of
destruction or damage to the Improvements and shall execute and deliver as
requested by the Insurance Trustee any and all proofs, receipts, releases and
other instruments whatsoever which may be necessary or proper for such purpose.
In the event that any person or entity having an interest under any such
insurance policy shall fail or neglect to cooperate or to execute, acknowledge
and deliver any such instrument, the Insurance Trustee, as the agent or
attorney-in-fact of any such person, may execute and deliver any proofs of loss
or any other instruments as may seem desirable to the Insurance Trustee for the
collection of such insurance monies, and all such persons or entities having
obtained an interest in any such insurance policy shall be deemed to have
irrevocably nominated, constituted and appointed the Insurance Trustee its
proper and legal attorney-in-fact for such purpose.
ARTICLE XIV
DESTRUCTION
Section 14.01. Obligation to Repair Minor Damage. In the event that, at
any time during the Term, the Improvements shall be destroyed or damaged in
whole or in part by fire or other cause within the coverage of the casualty or
builder's risk insurance policies required to be maintained pursuant to Article
XIII of this Lease and such destruction or damage can be repaired, restored,
replaced and rebuilt to the condition and character of the Improvements existing
immediately prior to such occurrence for a total cost not to exceed the greater
of Two Million Five Hundred Thousand Dollars ($2,500,000) or twenty percent
(20%) of the aggregate of the most recently determined replacement cost values
of the 1909 Property and the 1922 Property as determined in accordance with
Section 13.02, as determined by Lessee, then, except as otherwise provided in
Section 14.03 of this Lease, Lessee shall cause the same to be repaired,
restored, replaced or rebuilt, as nearly as practicable, to the condition and
character of the Improvements existing immediately prior to such occurrence and
within a period of time which,
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under all prevailing circumstances, shall be reasonable. All proceeds of
insurance policies maintained pursuant to Article XIII of this Lease that are
attributable to or payable as a result of destruction or damage to the
Improvements remaining after any required payments to Mortgagees shall be
applied to such repair, restoration, replacement and rebuilding. If the
insurance proceeds recovered in respect of any such insured damage or
destruction, less any cost of recovery and any amounts required to be paid to
Mortgagees, shall be insufficient to pay the entire cost of such repair,
restoration, replacement or rebuilding, Lessee shall pay the deficiency, in such
event, the time periods for commencing and completing such repair, restoration,
replacement and rebuilding under this Section 14.01 shall include a reasonable
time to obtain and close the necessary commitments for equity or mortgage loan
financing to cover the deficiency.
Section 14.02. Obligation to Repair Major Damage. In the event that, at
any time during the Term, the Improvements shall be destroyed or damaged in
whole or in part by fire or other cause within the coverage of the casualty or
builder's risk insurance policies required to be maintained pursuant to Article
XIII of this Lease and such destruction or damage cannot be repaired, restored,
replaced and rebuilt to the condition and character of the Improvements existing
immediately prior to such occurrence for a total cost not to exceed the greater
of Two Million Five Hundred Thousand Dollars ($2,500,000) or twenty percent
(20%) of the aggregate of the most recently determined replacement cost values
of the 1909 Property and the 1922 Property as determined in accordance with
Section 13.02, as determined by Lessee, then, except as otherwise provided in
Section 14.03, Lessee shall cause a new facility to be constructed that is
compatible with the 1967 Club Building and within a period of time which, under
all prevailing circumstances, shall be reasonable. All proceeds of insurance
policies maintained pursuant to Article XIII of this Lease that are attributable
to or payable as a result of destruction or damage to the Improvements remaining
after any required payments to Mortgagees shall be applied to such repair,
restoration, replacement and rebuilding. If the insurance proceeds recovered in
respect of any such insured damage or destruction, less any cost of recovery and
any amounts required to be paid to Mortgagees, shall be insufficient to pay the
entire cost of such repair, restoration, replacement or rebuilding, Lessee shall
pay the deficiency, in such event, the time periods for commencing and
completing such repair, restoration, replacement and rebuilding under this
Section 14.02 shall include a reasonable time to obtain and close the necessary
commitments for equity or mortgage loan financing to cover the deficiency.
Section 14.03. Option to Terminate. If the Improvements shall be damaged
or destroyed as provided in Section 14.01 within five (5) years prior to the
expiration of the Term of this Lease or if the Improvements shall be damaged or
destroyed as provided in Section 14.02 or if the proceeds of the insurance
maintained pursuant to Article XIII of this Lease that are attributable to or
payable as a result of destruction or damage to the Improvements plus any loss
deductible amount are less than fifty percent (50%) of the total cost to repair,
replace, restore and rebuild the Improvements to its condition immediately prior
to such damage or destruction, Lessee may, at its option, elect to end the Term
of this Lease by written notice of such election given to Lessor within one
hundred eighty (180) days after such destruction or damage, which notice shall
specify the date of termination of this Lease. The Rents and all other amounts
payable by Lessee under this Lease shall be prorated and paid to the date of
termination, and, after such date, Lessee shall have no further obligations
under this Lease.
Section 14.04. Disbursement of Insurance Proceeds in the Event of Repair.
After any required payments to Mortgagee(s), the Insurance Trustee shall
disburse any insurance proceeds that are attributable to or payable as a result
of destruction or damage to the Improvements paid to it to cover the cost of
such repair, restoration, replacement and rebuilding of the Improvements
pursuant to Section 14.01 or Section 14.02 as the same progresses, payments to
be made against applications for payment properly certified by supervising
architects or other appropriate certifying officials. The Insurance Trustee
shall contribute out of such insurance proceeds with respect to each such
certified application for payment an amount in proportion to such payment as the
whole amount received by the Insurance Trustee [reduced by any required payments
to Mortgagee(s)] shall bear to the total estimated cost of repairing, restoring,
replacement or rebuilding the Improvements. If the insurance proceeds should
exceed the cost of repairing, restoring, replacement or rebuilding the
Improvements, the Insurance Trustee shall pay the balance remaining after
payment of the cost of repairing or rebuilding the Improvements to Lessee. The
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Insurance Trustee may deduct from any insurance proceeds paid to it the amount
of its charges for acting as such trustee and any reasonable expenses incurred
by it in connection with such trust.
Section 14.05. Disbursement of Insurance Proceeds in the Event of
Termination. In the event Lessee elects to terminate this Lease pursuant to
Section 14.03, the Insurance Trustee shall apply any such insurance proceeds
paid to it in the following order of priority:
(a) First, to the payment of expenses and charges of the Insurance
Trustee incurred by it in connection with such trust, including the
reasonable charges of the Insurance Trustee for its services;
(b) Second, to Lessor in an amount equal to the aggregate of (i) One
Million Dollars ($1,000,000), (ii) the cost of demolishing the
Improvements, and (iii) the cost of cleaning and removing all debris from
the Leased Premises and restoring the Leased Premises to a clean and level
site;
(c) Third, to the holders of each Mortgage in the order of priority
of such Mortgages to the extent of the indebtedness secured by such
Mortgages that was used for the making, construction or installation of
Improvements or the refinancing of any such indebtedness; and
(d) Any remaining balance shall be paid to Lessee.
Section 14.06. Prompt Performance of Work. Subject to the provisions of
Section 14.01 and Section 14.02 that provide for an extension of the time period
for commencing the repair, restoration, replacement and rebuilding of the
Improvements under certain circumstances, all work of repairing, replacing,
restoring or rebuilding the Improvements pursuant to Section 14.01 or Section
14.02 shall be commenced within one hundred twenty (120) days after settlement
shall have been made with the insurance companies, the insurance monies shall
have been paid to the Insurance Trustee and all necessary permits for such work
shall have been obtained. In case any Mortgage shall be in force at the time of
any damage to or destruction of the Improvements, then, unless Lessee has
elected to terminate this Lease pursuant to Section 14.03, the holder(s) of such
Mortgage(s) are authorized to repair, replace, restore or rebuild the
Improvements under the terms and conditions set forth in this Article XIV.
ARTICLE XV
CONDEMNATION
Section 15.01. Condemnation Proceeds. All Condemnation Proceeds shall be
paid to the Insurance Trustee for the benefit of Lessor, Lessee, the Mortgagees
and any other Person having an interest therein and shall be apportioned and
paid as provided in this Article XV. Lessor, Lessee, all Mortgagees and any
other Person having an interest in any such Condemnation Proceeds shall
cooperate and aid the Insurance Trustee in collecting any and all Condemnation
Proceeds and shall execute and deliver as requested by the Insurance Trustee any
and all proofs, receipts, releases and other instruments whatsoever which may be
necessary or proper for such purpose. In the event that any Person having an
interest in any such Condemnation Proceeds shall fail or neglect to cooperate or
to execute, acknowledge and deliver any such instrument, the Insurance Trustee
may, as the agent or attorney-in-fact of any such Person, execute and deliver
any proofs of loss or any other instruments as may seem desirable to the
Insurance Trustee for the collection of such Condemnation Proceeds, and all such
Persons having obtained an interest in any such Condemnation Proceeds shall be
deemed to have irrevocably nominated, constituted and appointed the Insurance
Trustee its proper and legal attorney-in-fact for such purpose.
Section 15.02. Total Condemnation. If, at any time during the Term, there
shall be a total taking or a Constructive Total Taking of the Leased Premises in
condemnation proceedings or by any right of eminent domain, Lessee shall have
the option to terminate this Lease by written notice thereof to Lessor, in which
event, this Lease shall terminate on the date that possession is required to be
delivered to the condemning authority.
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Section 15.03. Proceeds of Total Condemnation. In the event of any such
total taking or Constructive Total Taking and the termination of this Lease, the
Insurance Trustee shall cause all Condemnation Proceeds to be apportioned and
paid in the following order of priority:
(a) First, to the payment of expenses and charges of the Insurance
Trustee incurred by it in connection with such trust, including the
reasonable charges of the Insurance Trustee for its services;
(b) Second, to Lessee in an amount equal to the fair market value of
Lessee's Leasehold Estate as determined in accordance with Section 15.08;
(c) Third, to Lessor in an amount equal to the fair market value of
the Real Estate and Improvements less an amount equal to the fair market
value of Lessee's Leasehold Estate as determined in accordance with
Section 15.08; and
(d) Any remaining balance shall be paid to Lessee.
Section 15.04. Partial Condemnation. In the event of a taking less than a
total taking or a Constructive Total Taking (including, without limitation, a
taking of less than a fee interest in the Real Estate that does not constitute a
Constructive Total Taking), this Lease shall not terminate or be affected in any
way, except as provided in Section 15.05 and Section 15.06. The Condemnation
Proceeds remaining after required payments to any Mortgagees shall be used as a
trust fund toward the repair, restoration, replacement or rebuilding of the
Improvements existing immediately prior to such taking as is reasonably possible
under the circumstances. After any required payments to Mortgagee(s), the
Insurance Trustee shall disburse any Condemnation Proceeds paid to it to cover
the cost of such repair, restoration, replacement and rebuilding of the
Improvements pursuant to Section 15.05 as the same progresses, payments to be
made against applications for payment properly certified by supervising
architects or other appropriate certifying officials. The Insurance Trustee
shall contribute out of such Condemnation Proceeds with respect to each such
certified application for payment an amount in proportion to such payment as the
whole amount received by the Insurance Trustee [reduced by any required payments
to Mortgagee(s)] shall bear to the total estimated cost of repairing, restoring,
replacing or rebuilding the Improvements. If the Condemnation Proceeds should
exceed the cost of repairing, restoring, replacing or rebuilding the
Improvements, the Insurance Trustee shall pay the balance remaining after
payment of the cost of repairing, restoring, replacing or rebuilding the
Improvements to Lessee. The Insurance Trustee may deduct from any Condemnation
Proceeds paid to it the amount of its charges for acting as such Trustee and any
reasonable expenses incurred by it in connection with such trust.
Section 15.05. Restoration. In the event of a taking less than a total
taking or a Constructive Total Taking (including, without limitation, a taking
of less than a fee interest in the Real Estate that does not constitute a
Constructive Total Taking), Lessee shall cause, at its sole cost and expense
(but subject to reimbursement from the Condemnation Proceeds), the remaining
portion of the Improvements to be restored, repaired, replaced or rebuilt to as
near as the condition and character of the Improvements existing immediately
prior to such taking as is reasonably possible under the circumstances and
within a period of time, which, under all prevailing circumstances, shall be
reasonable.
Section 15.06. No Rent Adjustment. In the event of a taking of the
character referred to in Sections 15.04 and 15.05 hereof, this Lease shall
terminate as to the portion of the Leased Premises so taken. No such partial
taking shall affect the Rent payable hereunder.
Section 15.07. Rights to Appear. Lessor, Lessee and the holder of any
Mortgage shall have the right to participate in any condemnation proceeding for
the purpose of protecting their respective rights hereunder, and in this
connection, specifically and without limitation, to introduce evidence to
establish the value of or damage to the Real Estate, Leased Premises and/or the
Improvements.
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Section 15.08. Valuation. Lessor and Lessee shall cooperate and use
reasonable efforts to cause the condemning authority to determine the fair
market value of the Lessor's Fee Estate and Lessee's Leasehold Estate for
purposes of determining the Condemnation Proceeds to be paid as a result of a
total taking or a Constructive Total Taking and such determinations, if made,
shall be used for purposes of apportioning and paying the Condemnation Proceeds
as required by Section 15.03. In the event that the condemning authority fails
or refuses to determine the fair market value of the Lessor's Fee Estate and
Lessee's Leasehold Estate as provided above or the Condemnation Proceeds paid as
a result a total taking or Constructive Total Taking are not based upon such
determinations, then the fair market value of the Lessor's Fee Estate and
Lessee's Leasehold Estate shall be determined by an appraiser selected by Lessor
and Lessee or, in the absence of an agreement on a single appraiser, by an
appraiser selected by agreement of appraisers appointed (one each) by Lessor and
Lessee.
ARTICLE XVI
UTILITY EASEMENTS
Lessor grants to Lessee the right to enter into agreements with utility
companies for the creation of easements or other similar agreements affecting
portions of the Leased Premises and Parking Areas in favor of such companies as
may be appropriate in order to service the Improvements, and Lessor shall
execute any and all documents, agreements and instruments, and take all other
appropriate actions, in order to effectuate the same.
ARTICLE XVII
MORTGAGES
Section 17.01. Leasehold Mortgages. Without the prior consent of Lessor,
Lessee, at any time and from time to time, shall have the right to execute one
or more Mortgages of its interests under this Lease, including its interests in
and to the Real Estate and the Improvements or any part or parts thereof,
separately or together with its interest in and to any other property owned or
leased from time to time by Lessee. The execution and delivery of any such
Mortgage shall not be deemed to constitute an assignment or transfer of this
Lease, nor shall the holder of any such Mortgage be deemed (prior to a
foreclosure judgment and the taking of possession as hereinafter provided) an
assignee or transferee of this Lease so as to require such holder to assume the
performance of any of the terms, covenants or conditions on the part of Lessee
to be performed under this Lease.
Section 17.02. Notices and Rights Upon Lessee's Default. If Lessee or the
holder of any Mortgage shall provide to the Lessor written notice specifying the
name and address of a Mortgagee or an Investor, Lessor agrees that, so long as
any such Mortgage shall remain unsatisfied of record or until written notice of
satisfaction is given by such Mortgagee to Lessor, and until written notice is
given by Lessee to Lessor that there is no Investor, the provisions of this
Article XVII shall apply. Following any such notification specifying the name
and address of a Mortgagee or an Investor:
(a) Lessor shall serve upon such Mortgagee and such Investor a copy
of each notice given to or required to be given to Lessee under this
Lease. No such notice to Lessee shall be effective unless and until a copy
thereof is served upon all such Mortgagee(s) and such Investor.
(b) Such Mortgagee and such Investor shall have the right, until
three (3) months after the later of (i) expiration of Lessee's applicable
cure period, or (ii) receipt of its copy of any such notice, to remedy or
cause to be remedied the Event of Default which is the basis of the
notice; and Lessor shall accept performance by such Mortgagee or such
Investor as performance by Lessee.
(c) In case of an Event of Default by Lessee under this Lease, other
than an Event of Default susceptible of being cured solely by the payment
of money, Lessor shall take no action to effect a
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termination of this Lease by service of a notice or otherwise without
first giving to each Mortgagee holding a Mortgage that encumbers Lessee's
interests under this Lease and to the Investor a reasonable time within
which to cure such Event of Default.
(d) Notwithstanding anything to the contrary contained in this
Lease, if Lessor shall purport to terminate this Lease for any reason
prior to the last day of the Term, Lessor shall enter into a new (or
extended) lease for the Leased Premises with any Mortgagee or its designee
(the "Substitute Lessee") for the remainder of what would have been the
Term in the absence of the purported termination, effective as of the date
and time of the purported termination, at the rents and upon the same
terms, covenants and conditions contained herein, and Lessor,
simultaneously with the execution and delivery of such new (or extended)
lease, shall assign and turn over to the Substitute Lessee named therein
the monies and subleases, if any, then being held by Lessor pursuant to
this Lease, which Lessee would have been entitled to but for the purported
termination, and said Substitute Lessee shall assume such subleases
without recourse to Lessor; provided that:
(i) Such Mortgagee shall make written request for such new (or
extended) lease within three (3) months after the date on which such
Mortgagee receives notice of the purported termination; and
(ii) Such Mortgagee shall pay or cause to be paid to Lessor on
the commencement date of the term of the new (or extended) lease,
all rents unpaid which at such time are or would have been due and
payable prior to such commencement date under this Lease but for the
purported termination, shall cure all uncured Events of Default of
Lessee under this Lease which are curable by the payment of money or
otherwise reasonably susceptible of being cured by such Mortgagee,
and shall pay or cause to be paid to Lessor on such commencement
date all expenses, including reasonable attorneys' fees, reasonable
management fees, court costs and disbursements, incurred by Lessor
in connection with any such default and purported termination as
well as in connection with the execution and delivery of the new (or
extended) lease, less the net income collected by Lessor from the
date of such purported termination of this Lease to the commencement
date of such new (or extended) lease, any excess of such net income
over the total of said sums and expenses to be applied by Lessor to
the payment of the rents thereafter becoming due under such new (or
extended) lease.
If all of the foregoing conditions shall have been satisfied, the
purported termination shall be deemed ineffective and void ab initio so
that the new (or extended) lease shall be deemed to be a continuation and
modification of this Lease for all purposes under applicable law. If such
conditions shall not be met, the Lease shall be deemed to have terminated
upon the expiration of the three (3) month period provided for in clause
(i) above in this clause (d).
(e) No modification, surrender or cancellation of this Lease (other
than a termination by Lessor in compliance with the conditions of this
Article XVII) shall be effective without written approval of all
Mortgagees, all Investors and the City; nor shall the acquisition of the
fee, leasehold and subleasehold estates in the Real Estate in one entity
be deemed to effect a merger thereof without the express written consent
of the owner, lessee, all Mortgagees, all Investors and the City at the
time of merger of said fee, leasehold and subleasehold estates.
Section 17.03. Extension. If Lessor shall elect to terminate this Lease by
reason of any Event of Default of Lessee, any Mortgagee shall have, in addition
to the right to nullify any notice of termination by curing such default, as
aforesaid, the right to postpone and extend the specified date for the
termination of this Lease as fixed by Lessor in its notice of termination, for a
period of not more than six (6) months; provided that such Mortgagee shall cure
or cause to be cured any then existing Events of Default curable solely by the
payment of money, and
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undertake and proceed with due diligence to cure any other defaults reasonably
susceptible of being cured by said Mortgagee, and thereafter pay the Rent and
comply with and perform all of the other terms, covenants and provisions of this
Lease on Lessee's part to be complied with and performed (other than past
defaults of obligations not reasonably susceptible of being cured by said
Mortgagee), and provided further that said Mortgagee shall forthwith take steps
to acquire Lessee's interest in this Lease. If, at the end of said six (6) month
period such Mortgagee shall be actively engaged in steps to acquire Lessee's
interest herein, the time of said Mortgagee to comply with the provisions of
this Section 17.03 shall be extended for such period as shall be reasonably
necessary to complete such steps with reasonable diligence and continuity.
Section 17.04. No Obligation to Cure. Nothing herein contained shall
require any Mortgagee to cure or undertake to cure any default of Lessee, unless
and until such Mortgagee elects to exercise any right under Section 17.02 or
17.03 as to which such cure or undertaking to cure is a condition. If any
Mortgagee shall acquire title to Tenant's interest in this Lease, by foreclosure
of a mortgage thereon or by assignment in lieu of foreclosure or by an
assignment from a nominee or wholly owned subsidiary corporation of such
Mortgagee, or under a new lease pursuant to this Article VI, such Mortgagee may
assign such lease without Lessor's consent and shall have no liability for the
performance or observance of the covenants and conditions in such lease
contained on Tenant's part to be performed and observed from and after the date
of such assignment.
Section 17.05. Modification of Lease. If, in connection with Lessee's
efforts to obtain a leasehold Mortgage from a prospective Mortgagee, such
Mortgagee shall request reasonable modifications in this Lease as a condition to
the making of such Mortgage Loan, then Lessor and Lessee shall execute an
agreement in recordable form so modifying this Lease provided that such
modifications do not (a) adversely affect Lessor or Lessee hereunder in any
adverse respect or (b) reduce or increase the Rent payable hereunder.
ARTICLE XVIII
LESSEE RIGHTS
Section 18.01. No Termination. If for any reason this Lease and the
leasehold estate of Lessee hereunder is terminated by Lessor by legal
proceedings or otherwise in accordance with the terms of this Lease, Lessor
covenants and agrees that such termination of this Lease shall not result in a
termination of any sublease affecting the Leased Premises entered into in good
faith, and that the same shall continue so long as any such sublessee is not in
default, for the duration of each sublease's respective term and any extensions
thereof (subject, however, to the prior right of the holder of any Mortgage). So
long as any such sublessee is not in default, it shall not be named or joined in
any action or proceeding by Lessor under this Lease to recover possession of the
Leased Premises or Improvements or for any other relief. Lessor shall, upon
request, execute, acknowledge, and deliver such agreements evidencing and
agreeing to the foregoing as each sublessee shall require.
Section 18.02. Performance by Lessee. Any act required to be performed by
Lessee pursuant to the terms of this Lease may be performed by any sublessee of
Lessee occupying all or any part of the Leased Premises or Improvements, and the
performance of such act shall be deemed to be performance by Lessee and shall be
accepted by Lessor.
Section 18.03. Modification of this Lease. This Lease shall not be
modified or amended without the City's prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed. Any amendment or
modification of this Lease without the City's prior written consent shall be
void and of no force or effect whatsoever.
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ARTICLE XIX
SPECIFIC PERFORMANCE
In addition to any other rights that Lessee or Lessor may have pursuant to
this Lease, if either party fails or refuses to execute, acknowledge and deliver
any instrument or instruments or to take any other action (other than an action
solely involving the payment of any sum of money) required to effectuate the
provisions of this Lease within the time period required by this Lease or, if no
time period therefor is specified herein, within any reasonable time period
specified in any request from the other party, then from and after the date ten
(10) days after the date of delivery of a final written demand to the other
party requesting such execution, acknowledgement and delivery or other action,
the requesting party shall be entitled to specific performance, declaratory
relief, or such other remedies at law or equity which may be appropriate to
effectuate the provisions of this Lease.
ARTICLE XX
QUIET ENJOYMENT
Section 20.01. Lessor's Covenants. Lessee, upon paying the Rent to be paid
by it as herein provided, and observing and keeping its covenants, warranties
and agreements under this Lease, shall have the peaceful and quiet enjoyment of
the Leased Premises during the Term, without hindrance from Lessor or anyone
claiming by, under or through Lessor.
Section 20.02. Lessee's Remedies. If Lessor shall be in default under any
of the terms or provisions of this Lease, Lessee, in addition to any and all
remedies it may have at law or in equity, may terminate this Lease if such
default continues for a period of one (1) month following written notice thereof
to Lessor, unless, as to any default not curable through the payment of money or
otherwise reasonably susceptible of cure within said one (1) month period,
Lessor has undertaken within said period and proceeds thereafter with due
diligence to cure such default. If Lessor does not cure such default within the
periods provided in this Section, Lessee may (but is not obligated to) cure
Lessor's default, if necessary, enter upon the Murat Premises to cure Lessor's
default and recover the amount of such cure from Lessor, which amount shall be
due and payable upon demand. Whether or not this Lease is so terminated, Lessor
shall indemnify, defend and hold Lessee harmless against and from any and all
claims, losses and damages, including, without limitation, all reasonable costs,
counsel fees, expenses and liabilities incurred in connection with any claim,
action or proceeding, arising from such default. All rights and remedies of
Lessee under this Section 20.02 shall be cumulative.
ARTICLE XXI
DEFAULTS
Section 21.01. Events of Default. Each of the following events, if not
remedied as hereinafter provided, shall be deemed an "Event of Default":
(a) The occurrence of any event set forth in Article XXII, as
therein provided;
(b) Lessee's failure to pay any installment of Rent when the same
shall be due and payable and such failure continues for a period of one
(1) month after written notice to Lessee from Lessor; or
(c) Lessee's failure to perform any other covenant or agreement
herein contained on Lessee's part to be kept or performed and such failure
continues for a period of one (1) month after written notice to Lessee
from Lessor specifying the nature of such failure, and provided Lessee
shall not cure said failure as provided in Section 21.02.
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Upon the occurrence of any Event of Default, Lessor, at its option, may
give to Lessee a written notice of election to terminate this Lease upon a date
specified in such notice, which date shall be not less than ninety (90) days
after the date of delivery to Lessee of such notice. Simultaneously with sending
any notice of default or termination to Lessee, Lessor shall send a copy of such
notice to all Mortgagees and all Investors, as required by Section 17.02, and to
all sublessee(s) or other parties in interest, if any, that Lessee has
designated to receive copies of such notices.
Section 21.02. Extensions. If Lessor gives notice of a default that is of
a nature that cannot be cured within the one (1) month period provided in
Section 21.01(c), then such default shall not be deemed an Event of Default so
long as Lessee, following notice from Lessor, proceeds to cure the default as
soon as reasonably possible and continues to take all steps reasonably necessary
to complete the same within a reasonable period of time. In addition, no Event
of Default shall be deemed to have occurred if and so long as Lessee shall be
delayed in or prevented from curing the same within the applicable cure period
by Unavoidable Delay.
Section 21.03. Remedies. Upon any Event of Default pursuant to Section
21.01, or at any time thereafter so long as the same is not cured, Lessor may,
in addition and without prejudice to any other rights and remedies Lessor shall
have at law and in equity, whether or not it elects to terminate the Term,
reenter the Leased Premises, recover possession thereof and dispossess any or
all occupants of the Leased Premises in the manner prescribed by law (subject in
each case to the rights of Mortgagees, Investors and sublessees as provided in
Articles XVII and XVIII hereof, respectively). In case of any such reentry,
recovery of possession and/or dispossession, Lessor, subject to Article XVII,
may terminate this Lease and obtain title to the Improvements as provided in
Section 6.03 hereof and, subject to Article XXIV, recover all damages resulting
from any outstanding Events of Default.
ARTICLE XXII
BANKRUPTCY AND INSOLVENCY
Section 22.01. Certain Events of Default Specified. If, after the
commencement of the Term:
(a) Lessee shall be adjudicated a bankrupt or adjudged to be
insolvent;
(b) A receiver or trustee shall be appointed for Lessee's property
and affairs;
(c) Lessee shall make an assignment for the benefit of creditors or
shall file a petition in bankruptcy or insolvency or for reorganization or
shall make application for the appointment of a receiver or if any similar
petitions are filed against Lessee; or
(d) Any execution or attachment shall be issued against Lessee or
any of Lessee's property, whereby the Leased Premises or any building or
buildings or any improvements thereof shall be taken or occupied or
attempted to be taken or occupied by someone other than the aforesaid
Lessee, except as may herein be permitted;
and such adjudication, appointment, assignment, petition, execution or
attachment shall not be set aside, vacated, discharged or bonded within ninety
(90) days after the issuance of the same, then, subject to Section 22.02, an
Event of Default hereunder shall be deemed to have occurred so that the
provisions of Article XXI hereof shall become effective and Lessor shall have
the rights and remedies provided for therein in addition to all other rights and
remedies available to Lessor at law and in equity.
Section 22.02. Preservation of Leasehold Estate. Notwithstanding anything
to the contrary contained in Article XXI hereof, upon the occurrence of an Event
of Default pursuant to this Article XXII, then (in addition to any rights of
Mortgagees under Article XVII), if the Rent due and payable by Lessee hereunder
continues to be paid
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and the other covenants and agreements of Lessee hereunder are kept and
performed, no Event of Default shall be deemed to have occurred and the
provisions of Article XXI shall not become effective.
ARTICLE XXIII
NON-WAIVER
Failure of Lessor or Lessee to provide to the other party or any Mortgagee
or Investor a notice of default or breach of this Lease, however long the same
may continue, shall not be deemed to be a waiver by said party of any of its
rights hereunder if such notice is subsequently provided in the time and manner
specified herein. No waiver by Lessor or Lessee at any time, express or implied,
of any breach of any provision of this Lease shall be deemed a waiver of a
breach of any other provision of this Lease or a consent to any subsequent
breach of the same or any other provision. No acceptance by Lessor of any
partial payment shall constitute an accord or satisfaction but shall only be
deemed a partial payment on account.
ARTICLE XXIV
THIRD PARTY BENEFICIARIES
Lessor and Lessee acknowledge and agree that the City has provided
material considerations and benefits to Lessor and Lessee as inducements to
enter into this Lease and that the City will receive material considerations and
benefits as a result of Lessor's and Lessee's performance of their respective
obligations hereunder. Lessor further agrees that the City is intended to be a
third party beneficiary of this Lease and the City shall have the right to
enforce the terms and provisions of this Lease against Lessor to the same extent
as if the City were the Lessee hereunder. Lessee further agrees that the City is
intended to be a third party beneficiary of this Lease and the City shall have
the right to enforce the terms and provisions of this Lease against Lessee to
the same extent as if the City were the Lessor hereunder.
ARTICLE XXV
FORCE MAJEURE
In the event that Lessor or Lessee shall be delayed, hindered in, or
prevented from the performance of any act required hereunder by reason of
Unavoidable Delay, excepting acts consisting solely of the payment of money,
then performance of such act shall be excused for the period of the Unavoidable
Delay and the period for the performance of any such act shall be extended for a
period equivalent to the period of the Unavoidable Delay.
ARTICLE XXVI
NOTICES
No notice, approval, consent or other communication authorized or required
by this Lease shall be effective unless the same shall be in writing. Any such
communication shall be effective if (a) (i) hand delivered, with signed receipt
therefor obtained, (ii) sent postage prepaid by United States registered or
certified mail, return receipt requested, (iii) deposited with a national
courier for overnight delivery, or (iv) sent by telefax, with written
confirmation therefor obtained, directed or addressed in each case set forth in
(i) through (iv) above to the other party at its address (or telefax number) set
forth below, or such other address (or telefax number) as either party may
designate by notice given from time to time in accordance with this Article
XXVI; and (b) delivered or sent in the same manner to each Mortgagee entitled to
a copy of such notice pursuant to Section 17.04, and to such other parties in
interest, if any, entitled to such notice under the provisions of the last
paragraph of Section 21.01.
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The address and telefax number for notices to Lessor is:
Murat Temple Association, Inc.
510 North New Jersey Street
Indianapolis, IN 46204
Telefax No. (317) 686-4199
with a copy to:
Alex Rogers, Esq.
Stears, Sullivan, P.C.
251 East Ohio Street, Suite 500
Indianapolis, IN
Telefax No. (317) 264-6810
and
Department of Metropolitan Development
1860 City-County Building
Indianapolis, Indiana 46204
Attention: Director
Telefax No.___________________
and
Controller, City of Indianapolis
2221 City-County Building
Indianapolis, Indiana 46204
Telefax No.__________________
and
John Klipsch, Manager of Project Construction
and also
Evert Hauser, Assistant Manager of Project Construction
Department of Metropolitan Development
200 East Washington Street, Suite 1160
Indianapolis, Indiana 46204
Telefax No. (317) 327-5879
and
Karl P. Haas, Esq.
Baker & Daniels
300 North Meridian Street, Suite 2700
Indianapolis, Indiana 46204
Telefax No. (317) 237-1000
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The address and telefax number for notices to Lessee is:
Murat Centre, Inc.
10089 Allisonville Road
Fishers, Indiana 46038
Attention: P. David Lucas
Telefax No. (317) 579-7843
with a copy to:
Barry Z. Wallack, Esq.
Wallack & Wallack, P.C.
One Indiana Square, Suite 2230
Indianapolis, Indiana 46204
Telefax No. (317) 231-9900
and
Department of Metropolitan Development
1860 City-County Building
Indianapolis, Indiana 46204
Attention: Director
Telefax No.___________________
and
Controller, City of Indianapolis
2221 City-County Building
Indianapolis, Indiana 46204
Telefax No.___________________
and
John Klipsch, Manager of Project Construction
and also
Evert Hauser, Assistant Manager of Project Construction
Department of Metropolitan Development
200 East Washington Street, Suite 1160
Indianapolis, Indiana 46204
Telefax No. (317) 327-5879
and
Karl P. Haas, Esq.
Baker & Daniels
300 North Meridian Street, Suite 2700
Indianapolis, Indiana 46204
Telefax No. (317) 237-1000
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ARTICLE XXVII
CERTIFICATES
Either party shall, without charge, at any time and from time to time,
within ten (10) days after written request of the other party, certify by
written instrument duly executed and acknowledged to any mortgagee, proposed
mortgagee, purchaser or proposed purchaser, or any other person, firm or
corporation specified in such request:
(a) As to whether this Lease has been supplemented or amended, and
if so, the substance and manner of such supplement or amendment;
(b) As to the validity and force and effect of this Lease, in
accordance with its tenor at that time;
(c) As to the existence of any default hereunder;
(d) As to the existence of any offsets, counterclaims or defenses
thereto on the part of either party;
(e) As to the commencement and expiration dates of the Term; and
(f) As to any other matters as reasonably may be requested.
Any certificate referred to in this Article XXVII may be relied upon by
the party requesting it and any other person, firm or corporation to whom the
same may be exhibited or delivered, and the contents of such certificate shall
be binding upon the party executing same.
ARTICLE XXVIII
REPRESENTATIONS AND WARRANTIES
Lessor represents and warrants to Lessee that: (a) to Lessor's knowledge
and except as disclosed in the Environmental Report, there has been no disposal,
escape, leakage, discharge, emission or release of any Hazardous Material on,
from, or affecting the Leased Premises; (b) to Lessor's knowledge and except as
disclosed in the Environmental Report, there is no Hazardous Material present
upon the Leased Premises; (c) except for the lien of non-delinquent real estate
taxes, there are no taxes assessed against or constituting a lien on the Leased
Premises or any part thereof as of the Possession Date; (d) Lessor has paid all
wages, fringe benefits and other payments owing to any employees of Lessor and
made all required contributions to its employees' pension plans, retirement
plans and similar plans as of the Possession Date; (e) there are no agreements,
contracts, bookings or other obligations of any kind whatsoever which would
restrict or in any other manner limit or affect directly or indirectly the way
in which Lessee operates or employs personnel with regard to the Leased
Premises, or its business conducted thereon or therein, or which will obligate
the Lessee in any way after the Execution Date, including, without limitation,
service, maintenance, management, construction and labor agreements
(collectively, the "Operating Agreements"), except for the Approved Contracts;
and (g) after the Execution Date, Lessor shall not enter into or execute any
Operating Agreement. Lessor, at its sole cost and expense, shall indemnify and
save harmless the Lessee and its officers, officials, directors, partners,
agents, trustees, beneficiaries and employees against and from any and all
claims, demands, damages, losses, injuries, liabilities, costs and expenses
(including, without limitation, reasonable attorneys' fees) arising from the
inaccuracy of the representations and warranties of Lessor in this Article
XXVIII. Except as provided and set forth in this Article XXVIII, Lessee's
acceptance of the Leased Premises on the Possession Date shall be "AS IS, WHERE
IS" and without warranty or representation of any kind as to condition, fitness
for Lessee's purposes or otherwise.
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ARTICLE XXIX
COMMON FACILITIES, COMMON STRUCTURAL SUPPORTS
AND COMMON STRUCTURAL MEMBERS
Section 29.01. Steam Facilities. Lessor agrees that Lessee shall have the
right of and a non-exclusive easement for direct access to, use of and service
to the Leased Premises now or hereafter provided by the Steam Facilities located
in, on, under or through the Murat Premises. Lessee agrees that Lessor shall
have the right of and a non-exclusive easement for direct access to, use of and
service to the Murat Premises now or hereafter provided by the Steam Facilities
located in, on, under or through the Leased Premises.
Section 29.02. Maintenance of Steam Facilities. Lessor shall keep and
maintain at all times during the Term the Steam Facilities located in, on, under
or through the Murat Premises in good condition and repair, and shall not alter,
change or remove any such Steam Facilities. Lessee shall keep and maintain at
all times during the Term the Steam Facilities located in, on, under or through
the Leased Premises in good condition and repair.
Section 29.03. Freight Elevator. Lessor agrees that Lessee shall have the
right of and a non-exclusive easement for direct access to, use of and service
to the Leased Premises now or hereafter provided by the Freight Elevator and all
hallways, corridors and walkways located in the 1967 Club Building leading or
providing direct access to the Freight Elevator at all times during the Term.
Section 29.04. Maintenance of Freight Elevator. Lessee shall keep and
maintain at all times during the Term the Freight Elevator in good condition and
repair. Lessee shall pay all charges for keeping and maintaining the Freight
Elevator in good condition and repair, and Lessor shall reimburse Lessee for
eight and five tenths percent (8.50%) of all such charges within ten (10) days
after demand upon Lessor for such reimbursement and presentation of written
invoices for such charges.
Section 29.05. Common Structural Supports. Lessor agrees that Lessee shall
have the following rights at all times during the Term of this Lease:
(a) The right of and a non-exclusive easement for direct access to,
use, support and service to the Leased Premises now or hereafter provided
by, any and all Common Structural Supports located, installed or
constructed within, under or upon the 1967 Club Building, intended or
necessary for the beneficial use, enjoyment or support of or access to any
Improvements upon or serving the Leased Premises; and
(b) The right of and a non-exclusive easement to go in, on, over,
across, under and through the 1967 Club Building with persons, materials
and equipment for the purposes of (a) inspecting, maintaining, repairing,
constructing or reconstructing the Improvements if such inspection,
maintenance, repair, construction or reconstruction can only be reasonably
effected by going upon the 1967 Club Building and (b) performing and
completing the Remodel Work; provided, however, that the exercise of such
rights shall be scheduled and performed so as not to interfere materially
with the use and operation of the 1967 Club Building by Lessor.
Section 29.06. Maintenance of Common Structural Supports. Lessor, at all
times during the Term, shall keep and maintain all Common Structural Supports in
good condition and repair, and shall not alter, change or remove any Common
Structural Supports.
Section 29.07. Common Structural Members. Lessee agrees that Lessor shall
have the following rights at all times during the Term of this Lease:
(a) The right of and a non-exclusive easement for direct access to,
use, support and service to the 1967 Club Building now or hereafter
provided by, any and all Common Structural Members located,
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installed or constructed within, under or upon the Leased Premises,
intended or necessary for the beneficial use, enjoyment or support of or
access to any improvements upon or serving the 1967 Club Real Estate; and
(b) The right of and a non-exclusive easement to go in, on, over,
across, under and through the Leased Premises with persons, materials and
equipment for the purposes of inspecting, maintaining, repairing or
reconstructing the 1967 Club Building if such inspection, maintenance,
repair or reconstruction can only be reasonably effected by going upon the
Leased Premises; provided that the exercise of such rights shall be
scheduled and performed so as not to interfere materially with the use and
operation of the Leased Premises by Lessee.
Section 29.08. Maintenance of Common Structural Members. Lessee shall keep
and maintain at all times during the Term all Common Structural Members in good
condition and repair, and shall not alter, change or remove any Common
Structural Members without Lessor's prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed.
ARTICLE XXX
LESSOR'S RESERVED RIGHTS
Section 30.01. Storage Area. Lessor and Lessee hereby acknowledge that
Lessor desires to use the Storage Area for a period of twenty-four (24) months
after the Possession Date for purposes of storing Lessor's personal property.
Lessor hereby reserves the right to use the Storage Area for purposes of storing
Lessor's personal property subject to and upon the terms and conditions of this
Article XXX during the first two (2) years of the Term. Lessor agrees that it
shall remove all personal and other property located in the Storage Area and
deliver possession of the Storage Area to Lessee in good order, condition and
repair on or before the second anniversary of the Possession Date. Lessor and
Lessee hereby agree that Lessor shall have the right to use the stairs,
elevators, hallways, corridors and walkways located within the 1922 Mosque
Building for purposes of direct ingress to and egress from the Storage Area;
provided that Lessor shall at all times endeavor to exercise such ingress and
egress rights in a manner designed to minimize interference with Lessee's use
and operation of the 1922 Mosque Building; provided that Lessor shall not enter
upon the Leased Premises to access the Storage Area at any time while a
performance or other event is being held in the Leased Premises. All property of
Lessor kept for storage in, upon or about the Leased Premises, including,
without limitation, the Storage Area shall be so kept or stored at the sole risk
of Lessor, and Lessor shall hold Lessee harmless from any and all claims, costs
or expenses, including attorneys' fees, arising out of damage thereto.
Section 30.02. Tours. Lessor and Lessee agree that Lessor shall be
entitled to conduct private tours of the 1909 Theatre Building and the 1922
Mosque Building during normal business hours on any weekday that the Building to
be toured is not being used by Lessee for any previously scheduled event and
otherwise is not unavailable for touring as a result of work being performed in
or about the Leased Premises, set up or tear down for any previously scheduled
event or other circumstances related to Lessee's use of the Leased Premises. Any
private tour conducted by Lessor shall be coordinated with Lessee's property
manager and conducted in such a manner so as to minimize interference with
Lessee's use and operation of the 1909 Theatre Building and the 1922 Mosque
Building.
Section 30.03. Murat Theatre. Lessor shall have the right to use the
theatre located in the 1909 Theatre Building on not more than nine (9) occasions
free of any rental charge during each calendar year for the purpose of holding
meetings of the membership of Lessor, conducting private theatre shows and
musical performances for the membership of Lessor and their guests and spouses
that do not involve ticket sales to the general public and for conducting
private initiation ceremonies for new members of Lessor. Lessor shall provide
Lessee with a written request to use the theatre located in the 1909 Theatre
Building at least eighteen (18) months prior to the date on which Lessor desires
to use the theatre located in the 1909 Theatre Building and Lessee shall respond
to Lessor's
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request within ten (10) days after receipt of any such request. In the event
that the theatre located in the 1909 Theatre Building is scheduled for an event
and otherwise is not unavailable for use as a result of work being performed in
or about the Leased Premises, set up or tear down for any previously scheduled
event or other circumstances related to Lessee's use of the Leased Premises on
the date requested by Lessor in any such notice, Lessee shall so inform Lessor
within ten (10) days after receipt of any such notice, in which event, Lessor
shall not be entitled to use the theatre located in the 1909 Theatre Building on
such date; provided that Lessee shall specify at least three (3) alternative
dates for each such unavailable date. Lessee shall have the right at any time
prior to ninety (90) days before the date of any membership meeting, theatre
show, musical performance or initiation ceremony that has been scheduled by
Lessor to be held in the theatre located in the 1909 Theatre Building pursuant
to this Section 30.03 to change such date if Lessee desires to schedule a show,
performance, concert or similar event to be held in the theatre located in the
1909 Theatre Building on such date. If Lessee so elects to change the date of
any such membership meeting, theatre show, musical performance or initial
ceremony less than one hundred twenty (120) days prior to the date that such
membership meeting, theatre show, musical performance or initiation ceremony is
scheduled to be held, then Lessee shall (a) reimburse Lessor for the cost of
mailing notices of the date change to Lessor's membership and (b) provide Lessor
with twenty-four (24) tickets to the event that necessitated such date change
free of charge.
Section 30.04. Egyptian Room. Lessor shall have the right to use the
Egyptian Room on not more than nine (9) occasions free of any rental charge
during each calendar year for the purpose of holding private dances, social
events, banquets and card parties for the membership and personal guests of
Lessor. Lessor shall provide Lessee with a written request to use the Egyptian
Room at least eighteen (18) months prior to the date on which Lessor desires to
use the Egyptian Room and Lessee shall respond to Lessor's request within ten
(10) days after receipt of any such request. In the event that the Egyptian Room
is scheduled for an event and otherwise is not unavailable for use as a result
of work being performed in or about the Leased Premises, set up or tear down for
any previously scheduled event or other circumstances related to Lessee's use of
the Leased Premises on the date requested by Lessor in any such notice, Lessee
shall so inform Lessor within ten (10) days after receipt of any such notice, in
which event, Lessor shall not be entitled to use the Egyptian Room on such date;
provided that Lessee shall specify at least three (3) alternative dates for each
such unavailable date. Lessor shall have the right to use the Social Room and
Banquet Hall in conjunction with, but subject to and upon the terms and
conditions that are applicable to, its use of the Egyptian Room.
Section 30.05. Indemnification. Lessor assumes all risks and
responsibilities for any and all accidents, injuries and damages to person or
property (including, without limitation, the Leased Premises) and agrees to
indemnify and hold the Lessee and its officers, officials, directors, partners,
agents, trustees, beneficiaries and employees harmless from any and all claims,
liabilities, losses, costs, damages and expenses (including, without limitation,
attorneys' fees) arising from or in connection with: (a) Lessor's use of the
Storage Area pursuant to Section 30.01; (b) any tour of the 1909 Theatre
Building and/or the 1922 Mosque Building pursuant to Section 30.02; (c) Lessor's
use of the theatre located in the 1909 Theatre Building pursuant to Section
30.03; or (d) Lessor's use of the Egyptian Room, Social Room and/or Banquet Hall
located in the 1922 Mosque Building pursuant to Section 30.04.
Section 30.06. Reimbursement. Lessor shall reimburse Lessee for all
reasonable costs and expenses incurred by Lessee in connection with: (a)
Lessor's use of the Storage Area pursuant to Section 30.01; (b) any tour by
Lessor of the 1909 Theatre Building and/or the 1922 Mosque Building pursuant to
Section 30.02; (c) Lessor's use of the theatre located in the 1909 Theatre
Building pursuant to Section 30.03; or (d) Lessor's use of the Egyptian Room,
Social Room and/or Banquet Hall located in the 1922 Mosque Building pursuant to
Section 30.04; provided that nothing contained in this Lease shall require
Lessee to provide any such services. Such costs and expenses shall include,
without limitation, costs and expenses incurred to obtain, provide or furnish
event insurance, set up and tear down, clean up, security or any other
reasonable or customary services, but shall not include any rental charge for
such use. All such costs and expenses shall be paid by Lessor to Lessee upon
receipt of an invoice and demand therefor.
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Section 30.07. Lessor's Right of Inspection. Lessee shall permit Lessor
and its agents to enter upon the Leased Premises at all reasonable times upon
reasonable prior written notice to inspect and examine the Leased Premises;
provided, that, except in cases of emergency, Lessor shall not enter upon the
Leased Premises during any show, live performance, concert or similar event.
Section 30.08. Parking Areas. Lessee's use of the Parking Areas shall be
subject to the following terms and conditions: (a) during the Term of this
Lease, members of the public visiting the 1967 Club Building shall have the
non-exclusive right to park in the parking spaces located within the Parking
Areas between the hours of 11:00 p.m. and 2:00 p.m., Monday through Friday, for
a per space parking fee not to exceed One Dollar ($1.00) on a first-come,
first-serve basis, provided that the fee charged to members of the public for
parking during such hours shall be reviewed by Lessor and Lessee every three (3)
years, commencing on January 1, 1999, and equitably adjusted; (b) during the
Term of this Lease, Lessor shall have the right to reserve up to a maximum of
one hundred seventy-five (175) parking spaces located within the Parking Areas
for events to be held by Lessor at or within the Murat Complex for a per space
parking fee not to exceed the fair market fee charged for similar parking spaces
located in the Indianapolis Downtown area or such lesser rate as is agreed upon
by Lessor and Lessee; (c) during the Term of this Lease, Lessor's members,
spouses of Lessor's members and widows of Lessor's member, shall have the
non-exclusive right to park in the parking spaces located within the Parking
Areas for no charge, on a first-come, first-serve basis; (d) during the Term of
this Lease, employees of Lessor shall have the right to park in the parking
spaces designated for parking by Lessor's employees and contractors performing
work on the Murat Premises within the Parking Areas for no charge; and (e)
during the Term of this Lease, Lessor shall have the exclusive right to use
eighteen (18) permanently reserved and appropriately marked parking spaces to be
located within the Parking Areas immediately adjacent to the 1967 Club Building.
ARTICLE XXXI
GENERAL
Section 31.01. Governing Law. This Lease and the performance thereof shall
be governed, interpreted, construed and regulated by the laws of the State of
Indiana.
Section 31.02. Partial Invalidity. If any term, covenant, condition or
provision of this Lease, or the application thereof to any person or
circumstance, shall at any time or to any extent be held invalid or
unenforceable, the remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each such term,
covenant, condition and provision of this Lease shall continue to be valid,
binding and enforceable to the fullest extent permitted by law.
Section 31.03. Memorandum of Lease. The parties shall execute and deliver
duplicate originals of a memorandum of this Lease in the form and substance of
Exhibit Q attached to this Lease and incorporated herein.
Section 31.04. Remote Vesting. This Lease and all rights and interests
created hereby are intended to comply in all respects with applicable common or
statutory law, including the common law Rule Against Perpetuities or analogous
statutory restrictions. Therefore, any provision of this Lease that shall be
construed by a final, non-appealable judicial determination to create or permit
to arise any interest in the Leased Premises that may vest in the future in any
person, shall be deemed to prohibit the creation of such interest from and after
the date which is twenty-one (21) years after the death of the survivor of
living lawful descendants of any of the attorneys practicing with the firm of
Baker & Daniels in Indianapolis, Indiana, as of the date of this Lease.
Section 31.05. Interpretation. Wherever herein the singular number is
used, the same shall include the plural, and the masculine gender shall include
the feminine and neuter genders, and vice versa, as the context shall require.
The section headings and references to sections used herein are for reference
and convenience only, and shall not enter into the interpretation hereof. This
Lease may be executed in several counterparts, each of which shall
-35-
<PAGE>
be an original, but all of which shall constitute one and the same instrument.
The term "Lessor" whenever used herein shall mean only the owner at the time of
Lessor's interest herein, and upon any sale or assignment of the interest
permitted by the terms of this Lease of Lessor herein, its successors in
interest or assigns shall, during the term of its ownership of Lessor's estate
herein, be deemed to be Lessor. This Lease shall not be construed with resort to
any presumption against the preparer hereof.
Section 31.06. Entire Agreement. No oral statement or prior written matter
shall have any force or effect. Subject to the terms and provisions of Section
18.03, this Lease shall not be modified or cancelled except as provided herein
or by a writing signed by the parties.
Section 31.07. Parties. Except as herein otherwise expressly provided, the
covenants, conditions and agreements contained in this Lease shall bind and
inure to the benefit of Lessor and Lessee and their respective heirs,
successors, administrators and assigns.
Section 31.08. Attorneys' Fees. Each party shall pay to and indemnify the
other against and from all such reasonable legal costs and charges lawfully and
reasonably incurred in successfully enforcing any covenant or agreement of the
other party.
Section 31.09. Authority. Lessee represents and warrants to Lessor that it
has the power and authority to execute and deliver this Lease and to carry out
and perform all covenants to be performed by it hereunder. Lessor represents and
warrants to Lessee that it has the power and authority to execute and deliver
this Lease and to carry out and perform all covenants to be performed by it
hereunder.
Section 31.10. Relationship. Nothing contained herein shall be deemed or
construed by the parties hereto or by any third party as creating between the
parties hereto the relationship of principal and agent, partnership, joint
venture or any relationship other than the relationship of lessor and lessee.
ARTICLE XXXII
APPROVED CONTRACTS
Lessor shall assign the Approved Contracts to Lessee on or before the
Possession Date. Lessee shall honor and perform the terms and conditions of the
Approved Contracts but only in accordance with their stated terms or for their
stated dates, as the case may be; provided that Lessee shall not be required to
apply, extend, renew or modify any of the Approved Contracts in any way; and
provided further that Lessee shall be entitled to cancel, change or modify any
of the Approved Contracts without Lessor's prior approval or consent so long as
Lessor is released from any liability under the Approved Contract that is
cancelled, changed or modified.
ARTICLE XXXIII
LIQUOR LICENSE
Upon request of Lessee at anytime, Lessor shall join in an application,
and execute such instruments as may be necessary or appropriate, for Lessee to
obtain the necessary licenses and permits to sell and dispense alcoholic
beverages in and from the Leased Premises. In the event that Lessee is unable to
obtain the necessary licenses and permits to sell and dispense alcoholic
beverages in and from the Leased Premises, Lessor shall, to the full extent
permitted by applicable law, make application or join in an application, and
execute such instruments as may be necessary or appropriate, for Lessee to use
Lessor's existing alcoholic beverage permit to sell and dispense alcoholic
beverages in and from the Leased Premises.
-36-
<PAGE>
ARTICLE XXXIV
LESSOR DEFAULT
Lessor's failure or refusal to perform any provision of this Lease which
it is obligated to perform or the breach of any covenant herein shall be a
default by Lessor. In the event of a default by Lessor, and without waiving any
other remedy or claim for damages or breach of this Lease, Lessee may:
(a) Emergency Situation. In an Emergency Situation, as hereinafter
defined, if the default is not cured within a reasonable time period after
reasonable notice to (or attempts to notify) Lessor, Lessee may cure the
default at Lessor's expense;
(b) Non-Emergency Situation. In a non-Emergency Situation, if the
default is not cured within thirty (30) days of written notice to Lessor
(or if such default is of such a nature as to not be reasonably
susceptible to cure within said thirty (30) day period, then the period
for cure shall be extended so long as Lessor commences its efforts to cure
within said thirty (30) day period and thereafter diligently pursues the
same to completion), Lessee may cure the default at Lessor's reasonable
expense.
If Lessee incurs any sum because of Lessor's default, the reasonable sums
paid by Lessee shall be due from Lessor upon demand and may be offset against
any amount that is or becomes due and payable to Lessor hereunder. "Emergency
Situation" as used in this Article means a situation which threatens the
physical well-being of persons in or on the Leased Premises, or which disrupts
the Lessee's use and/or occupancy of the Leased Premises or any portion thereof
so as to materially interfere with the ordinary conduct of Lessee's business.
ARTICLE XXXV
EASEMENTS
Section 35.01. Lessor's Easements. Lessee agrees that Lessor shall have
(a) the exclusive right and easement to use the Basement Area, Shrine Museum,
Office Area, Train Room and Kniepe Room and the non-exclusive right and easement
to use the Common Maintenance Shop at all times during the Term and (b) the
non-exclusive right and easement to use the stairs, elevators, hallways,
corridors and walkways located within the 1909 Theatre Building and the 1922
Mosque Building for purposes of direct ingress to and egress from all such
areas; provided, that Lessor shall at all times endeavor to exercise such
ingress and egress rights in a manner designed to minimize interference with
Lessee's use and operation of the Leased Premises; provided that Lessor shall
not enter upon the 1909 Theatre Building and/or the 1922 Mosque Building to
access such areas at any time while a performance or other event is being held
therein. All property of Lessor kept for storage in, upon or about the 1909
Theatre Building and/or the 1922 Mosque Building shall be so kept or stored at
the sole risk of Lessor, and Lessor shall hold Lessee harmless from any and all
claims, costs or expenses, including attorneys' fees, arising out of damage
thereto.
Section 35.02. Indemnification. Lessor assumes all risks and
responsibilities for any and all accidents, injuries and damages to person or
property (including, without limitation, the Leased Premises) and agrees to
indemnify and hold the City and Lessee and its officers, officials, directors,
partners, agents, trustees, beneficiaries and employees harmless from any and
all claims, liabilities, losses, costs, damages and expenses (including, without
limitation, attorneys' fees) arising from or in connection with: (a) Lessor's
use of the Basement Area, Common Maintenance Shop, Shrine Museum, Office Area,
Train Room and/or Kniepe Room pursuant to Section 35.01; (b) Lessor's use of the
stairs, elevators, hallways, corridors and/or walkways located within the 1909
Theatre Building or the 1922 Mosque Building pursuant to Section 35.01.
Section 35.03. Relocation. Lessee shall have the right to relocate the
Basement Area, Common Maintenance Shop, Shrine Museum, Office Area, Train Room
and/or Kniepe Room to other locations within the 1909
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<PAGE>
Theatre Building and/or 1922 Mosque Building so long as (a) such relocation is
accomplished at Lessee's sole cost and expense, (b) the relocated space is built
out and improved to substantially the same condition as the space is in after
completion of the Remodel Work, (c) the relocated space is similar in size as
the original space, and (d) the relocation is approved by Lessor, which approval
shall not be unreasonably withheld, conditioned or delayed.
IN WITNESS WHEREOF, the parties hereto have executed this Indenture of
Lease as of the day and year first above written.
Lessor:
MURAT TEMPLE ASSOCIATION, INC.,
an Indiana not-for-profit corporation
By: /s/ JOEY L. SCOTT
----------------------------------------
Printed: Joey L. Scott
----------------------------------------
Title: President
----------------------------------------
Lessee:
MURAT CENTRE, L.P.,
an Indiana limited partnership
By: MURAT CENTRE, INC., an Indiana corporation
Its: General Partner
By: /s/ P. DAVID LUCAS
----------------------------------------
Printed: P. David Lucas
----------------------------------------
Title: President
----------------------------------------
-38-
<PAGE>
LIST OF EXHIBITS
Exhibit Description
A Approved Contracts
B Murat Property
C 1909 Theatre Real Estate
D 1922 Mosque Real Estate
E Office Area
F Common Maintenance Shop
Basement Area
Banquet Hall
Shrine Museum
G 1967 Club Real Estate
H Social Room
I Egyptian Room
J INTENTIONALLY OMITTED
K INTENTIONALLY OMITTED
L Train Room
Storage Area
Kniepe Room
M INTENTIONALLY OMITTED
N INTENTIONALLY OMITTED
0 Premises Plans and Specifications
P Remodel Plans and Specifications
Q Memorandum of Lease
<PAGE>
EXHIBIT A
Approved Contracts
Agreements made by Murat Temple and the parties listed below:
1. Indiana Moose Association - Egyptian Room - 10/26/96
2. State Board of Law Examiners - Egyptian and Banquet Rooms - 7/24-26/96
3. State Board of Law Examiners - Egyptian and Banquet Rooms - 2/14-16/96
<PAGE>
EXHIBIT B
LEGAL DESCRIPTION
Parcel I
Lots 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, and 18 John
Wood's Subdivision of Square 2 of the Donation Lands of the City of
Indianapolis, as per plat thereof; recorded in Land Record "H", page 27, in the
Office of the Recorder of Marion County, Indiana.
Also, a strip of ground lying south of Lot 5 in John Wood's Subdivision of
Square 2 in the City of Indianapolis, and described as follows, to-wit:
Commencing at a point 50 feet South of the North East corner of Lot 5 in said
Square 2 thence South 20 feet, more or less, to the North East corner of said
Lot 6 in said Square 2; thence West along the North line of Lots 6, 7, 8 and 9
in said Square 2, 200 feet to an alley; thence North 20 feet, more or less, to a
point 5 feet West of the South West corner of said Lot 5; thence East along the
South line of said Lot 5, 200 feet to the place of beginning, formerly known as
Cayuga alley, vacated by Laws 1839; S. Ch. 259. Also, a strip of ground 5 feet
in width, lying West of and adjacent to Lot 5, being part of Ogden Street,
vacated in Town Lot Record 655 page 346.
[ILLEGIBLE] perimeter description of said Parcel is also described as:
Lot 1 through 18, vacated Cayuga alley, and vacated Erie alley in John Wood's
Subdivision of Square Two of the Donation Lands of the City of Indianapolis
recorded in Land Record "H", page 27 in the Office of the Recorder of Marion
County, Indiana being bounded as follows:
Beginning at the Northwestern corner of the intersection of New Jersey Street
(90 foot wide right-of-way) and Michigan Street (90 foot wide right-of-way);
thence South 89 degrees 59 minutes 29 seconds West (assumed bearing) 419.49 feet
(measured, 420 feet by plat) along the Northern right-of-way line of Michigan
Street to the Northeastern corner of the intersection of Michigan Street and
Alabama Street (90 foot wide right-of-way); thence North 00 degrees 00 minutes
00 seconds 419.22 feet (measured, 420 feet by plat) along the Eastern
right-of-way line of Alabama Street to the Southeastern corner of the
intersection of Alabama Street and North Street (90 foot wide right-of-way);
thence South 89 degrees 57 minutes 36 seconds East 419.63 feet (measured, 420
feet by plat) along the Southern right-of-way line of North Street to the
Southwestern corner of the intersection of North Street and New Jersey Street;
thence South 00 degrees 01 minute 08 seconds West 418.87 (measured, 420 feet by
plat) along the Western right-of-way line of New Jersey Street to the Point Of
Beginning.
Page 1 of 2
<PAGE>
Parcel II
Lots 1, 2, 3, 4, 5, and 6 and the South half of vacated Walnut Street (formerly
Wood Street) lying North of and adjacent to said Lot 1, all in John Wood's
Subdivision of Out Lot in the City of Indianapolis, Indiana, the plat of which
is recorded in Land Record "F", page 294 in the Office of the Recorder of Marion
County, Indiana.
All of the above described Real Estate being more particularly described as
follows:
Beginning at the Southeast corner of Lot 6 in the above mentioned John Wood's
Subdivision of Out Lot 2; thence South 89 degrees 58 minutes 00 seconds West
along the North line of North Street 197.19 feet to the East line of Ogden
Street; thence North 00 degrees 00 minutes 00 seconds East along the said East
line of Ogden Street and on a Northerly extension thereof 420.02 feet to the
center line of vacated Walnut Street; thence North 89 degrees 53 minutes 15
seconds East along the said Street center line 196.88 feet to the West line of
New Jersey Street; thence South 00 degrees 02 minutes 45 seconds East along the
said West line of New Jersey Street 420.29 feet to the place of beginning.
The perimeter description of said Parcel is also described as follows:
Lots 1 through 6 and the South half of vacated Wood Street (60 foot wide
right-of-way) in John Wood's Subdivision of Outlot Two in the City of
Indianapolis recorded in Land record "F", page 294 in the Office of the Recorder
of Marion County, Indiana being bounded as follows:
Beginning at the Northwestern corner of the intersection of New Jersey Street
(90 foot wide right-of-way) and North Street (90 foot wide right-of-way); thence
North 89 degrees 57 minutes 36 seconds West (assumed bearing) 196.89 feet
(measured, 195 feet by plat) along the Northern right-of-way line of North
Street to the Northeastern corner of the intersection of North Street and Erie
Alley (also known as Ogden Street having a 30 foot wide right-of-way); thence
North 00 degrees 02 minutes 33 seconds East 420.54 feet (measured, 420 feet by
plat) to the centerline of former Wood Street which is now the Southern
right-of-way line of Walnut Street (50 foot wide right-of-way; see the
Renaissance Place Replat recorded as Instrument #81-70893 in said Recorder's
Office); thence North 89 degrees 59 minutes 58 seconds East 196.69 feet
(measured, 195 feet by plat) along the centerline of former Wood Street which is
now the Southern right-of-way line of Walnut Street to the Southwestern corner
of the intersection of Walnut Street and New Jersey Street; thence South 00
degrees 00 minutes 56 seconds West 420.68 feet (measured, 420 feet by plat)
along the Western right-of-way line of New Jersey Street to the Point Of
Beginning.
Page 2 of 2
<PAGE>
EXHIBIT C
1909 Theatre Real Estate
Area Map
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT D
1922 Mosque Real Estate
Area Map
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT "E"
"OFFICE AREA" - 1,980.45 S.F.
Floor Plan
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT "F"
"COMMON MAINTENANCE SHOP" - 2,638.54 S.F.
Floor Plan
(SHEET 1 of 2)
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT "F"
"BASEMENT AREA" - 617.17 S.F.
"BANQUET HALL" - 5,468.52 S.F.
"SHRINE MUSEUM" - 1,225.55 S.F.
Floor Plan
(SHEET 2 of 2)
[GRAPHIC OMITTED]
<PAGE>
LAND DESCRIPTION
a portion of the Murat Temple building
version 1
8 NOV 95
[AREA MAP OMITTED]
A part of the east half of John Wood's Subdivision of Square 2 of the Donation
Lands of the City of Indianapolis as per plot thereof recorded in Land Record
"H," page 27 in the office of the Recorder of Marion County, Indiana.
Commencing at the southeastern corner of Lot 6 of John Wood's Subdivision of
Square 2 of the Donation Lands of the City of Indianapolis as per plat thereof
recorded in Land Record "H," page 27 in the office of the Recorder of Marion
County, Indiana, said corner being on the western right-of-way line of New
Jersey Street (90.00 foot-wide right-of-way); thence North 00 degrees 01 minute
08 seconds East (assumed bearing) 219.04 feet along the western right-of-way
line of New Jersey Street; thence North 89 degrees 58 minutes 52 seconds West
6.03 feet perpendicular to the western right-of-way line of New Jersey Street to
the POINT OF BEGINNING of this description; thence South 89 degrees 56 minutes
57 seconds West 151.50 feet; thence North 00 degrees 21 minutes 29 seconds East
22.65 feet; thence North 83 degrees 42 minutes 20 seconds East 0.29 feet; thence
North 00 degrees 07 minutes 19 seconds East 22.98 feet; thence South 89 degrees
53 minutes 02 seconds East 15.72 feet; thence North 00 degrees 01 minute 19
seconds East 43.94 feet; thence North 89 degrees 54 minutes 19 seconds East
94.42 feet; thence North 01 degree 01 minute 54 seconds West 8.06 feet; thence
North 84 degrees 06 minutes 06 seconds East 0.62 feet; thence North 45 degrees
16 minutes 25 seconds East 11.33 feet; thence North 85 degrees 38 minutes 57
seconds East 3.11 feet; thence South 45 degrees 34 minutes 53 seconds East 11.33
feet; thence South 73 degrees 50 minutes 09 seconds East 0.52 feet; thence South
00 degrees 03 minutes 43 seconds East 7.98 feet; thence South 89 degrees 41
minutes 14 seconds East 21.15 feet; thence South 00 degrees 19 minutes 50
seconds West 89.58 feet to the POINT OF BEGINNING containing 13,127 square feet,
more or less.
<PAGE>
EXHIBIT "H"
"SOCIAL ROOM" - 9,515.48 S.F.
Floor Plan
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT "I"
"EGYPTIAN ROOM" - 17,717.54 S.F.
Floor Plan
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT "L"
"TRAIN ROOM" - 4,433.27 S.F.
Floor Plan
(SHEET 1 of 2)
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT "L"
"STORAGE" - 16,457.60 S.F.
"KNIEPE ROOM" - 2,704.81 S.F.
Floor Plan
(SHEET 2 of 2)
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT "O"
"PREMISES PLANS & SPECIFICATIONS"
MURAT THEATRE
INDEX SHEET
November 22, 1995
Cover Sheet No Date
Sheet Index No Date
LANDSCAPE
Site Survey 05-10-95
LD100 Site Demolition Plan 09-07-95
L100 Site Plan 09-07-95
L101 Site Layout Plan 09-07-95
L102 Site Grading Plan 09-07-95
L103 Landscape Plan 09-07-95
L104 Site Lighting 11-22-95
L601 Site Details 09-07-95
DEMOLITION
D201 Basement Demolition Plan "Area A" 10-31-95
D202 Basement Demolition Plan "Area B" 09-07-95
D203 Basement Mezzanine Demolition Plan 09-07-95
"Area A"
D204 Basement Mezzanine Demolition Plan 08-30-95
"Area B"
D205 First Floor Demolition Plan "Area A" 08-30-95
D206 First Floor Demolition Plan "Area B" 09-07-95
D207 Second Floor Demolition Plan "Area A" 08-30-95
D208 Second Floor Demolition Plan "Area B" 09-07-95
D209 Third Floor Demolition Plan "Area A" 08-30-95
D210 Third Floor Demolition Plan "Area B" 06-19-95
D211 Third Floor Upper Level Demolition Plan 08-11-95
"Area A"
D212 Not Used
D213 Fourth Floor Demolition Plan "Area A" 09-07-95
D214 Fourth Floor Demolition Plan "Area B" 06-19-95
D401 Building Section Demolition 08-11-95
D402 Building Section Demolition 08-11-95
STRUCTURAL
S201 Not Used
S202 Orchestra Pit Floor Framing Plan "Area A" 10-31-95
<PAGE>
S203 New Stage Floor Framing Plan "Area A" 10-31-95
S204 Not Used
S205 Balcony Framing Plan "Area A" 10-31-95
S206 Attic/Catwalk Framing Plan "Area A" 09-12-95
S207 Roof Framing Plan "Area A" 10-27-95
S208 Stage Roof, Fly, Loading and Pinrail Gallery 09-12-95
Framing Plans (Grid Iron Structural Plans)
S209 Gallery Ladder and Platform Details 09-12-95
S210 Misc. Structural Plans & Details
S601 Structural Details 09-12-95
ARCHITECTURAL
A201 Basement Plan Area "A" 10-18-95
A202 Basement Plan Area "B" 10-18-95
A203 Basement Mezzanine Plan Area "A" 10-18-95
A204 Basement Mezzanine Plan Area "B" 10-30-95
A205 First Floor Plan Area "A" 10-18-96
A206 First Floor Plan Area "B" 10-27-95
A207 Second Floor Plan Area "A" 10-18-95
A208 Second Floor Plan Area "B" 10-18-95
A209 Third Floor Plan Area "A" 10-18-95
A210 Third Floor Plan Area "B" 10-18-95
A211 Third Floor Upper Level Floor Plan Area "A" 10-02-95
A212 Not Used
A213 Fourth Floor Plan Area "A" 10-18-95
A214 Fourth Floor Plan Area "B" 06-19-95
A215 Roof Plan Area "A" 06-19-95
A216 First Floor Seating Plan Area "A" 09-29-95
A217 Balcony Seating Plan Area "A" 09-12-95
A218 First Floor Reflected Ceiling Plan Area "A" 10-02-95
A219 Second Floor Reflected Ceiling Plan Area "A" 10-02-95
A220 Third Floor Reflected Ceiling Plan Area "A" 10-02-95
A301 Exterior Elevations 11-07-95
A401 Building Cross Sections and Details 10-02-95
A402 Building Cross Sections and Details 10-02-95
A403 Building Cross Sections and Details 10-02-95
A404 Building Cross Sections and Details 10-02-95
A405 Building Cross Sections and Details 08-11-95
A406 Miscellaneous Wall Sections/Details 09-12-95
A407 Not Used
A408 Not Used
A409 Not Used
A410 Not Used
A411 Not Used
A412 Not Used
A413 Wall Sections, Structural Plans, Details - 11-07-95
New Canopy "Area B"
A414 Wall Sections - Canopy "Area B" 11-07-95
<PAGE>
A415 Wall Sections - Canopy "Area B" 11-07-95
A501 Door Schedule 10-27-95
A502 Not Used
A503 Not Used
A504 Finish Schedule 10-27-95
I206 Floor Finish Layout 08-24-95
I301 Interior Elevations 10-02-95
I302 Interior Elevations 10-27-95
I601 Casework 10-27-95
PLUMBING
P-1 Basement Floor Plan "Area A" - 09-15-95
Plumbing
P-2 Basement Floor Plan "Area B" 09-28-95
P-3 Basement Mezzanine Floor Plan "Area A" 09-15-95
P-4 Basement Mezzanine Floor Plan "Area B" 09-28-95
P-5 First Floor Plan "Area A" 09-15-95
P-6 First Floor Plan "Area B" 09-28-95
P-7 Second Floor Plan "Area A" 09-15-95
P-8 Second Floor Plan "Area B' 06-23-95
P-9 Mezzanine Floor Plan "Area A" - 06-23-95
Plumbing
P-10 Details and Schedules 06-23-95
STEAM
SA201 Basement "Area A" Floor Plan - Steam 06-19-95
SA202 Basement "Area B" Floor Plan - Steam 06-19-95
SA203 Basement Mezzanine "Area A" Floor Plan - 06-19-95
Steam
SA204 Basement Mezzanine "Area B" Floor Plan - 06-19-95
Steam
SA205 First Floor Plan "Area A" - Steam 06-19-95
SA206 First Floor Plan "Area B" - Steam 06-19-95
SA207 Second Floor Plan "Area A" - Steam 06-19-95
SA208 Second Floor Mezzanine Plan "Area A" - 06-19-95
Steam
HVAC
HV-1 Basement Plan "Area A" 09-14-95
HV-2 Basement Plan "Area B" 09-14-95
HV-3 Basement Mezzanine Plan "Area A" 09-14-95
HV-4 Basement Mezzanine Plan "Area B" 09-15-95
HV-5 First Floor Plan "Area A" 09-14-95
HV-6 First Floor Plan "Area B" 09-14-95
<PAGE>
HV-7 Second Floor Plan "Area A" 09-14-95
HV-8 Second Floor Plan "Area B" 09-14-95
HV-9 Second Floor Plan Mezzanine Plan 09-14-95
"Area A"
HV-10 Second Floor Plan Mezzanine Plan 09-14-95
"Area B"
HV-11 Third Floor/Attic Floor Plan "Area A" 09-14-95
HV-12 Third Floor/Attic Floor Plan "Area B" 09-14-95
HV-13 Roof Plan "Area A" 09-14-95
HV-14 Schedules 09-14-95
ELECTRICAL
E100 Standard Symbol Legend 06-19-95
E101 Site Plan
E201 Basement Lighting Plan "Area A" 11-03-95
E202 Basement Lighting Plan "Area B" 11-03-95
E203 Basement Mezzanine Lighting Plan 11-08-95
"Area A"
E204 Basement Mezzanine Lighting Plan 11-03-95
"Area B"
E205 First Floor Lighting Plan "Area A" 11-03-95
E206 First Floor Lighting Plan "Area B" 11-03-95
E207 Second Floor Lighting Plan "Area A" 11-03-95
E208 Second Floor Lighting Plan "Area B" 08-16-95
E209 Second Floor Mezzanine Lighting Plan 11-03-95
"Area A"
E210 Second Floor Mezzanine Lighting Plan 10-23-95
"Area B"
E211 Second Floor Upper Mezzanine Lighting Plan 10-23-95
"Area A"
E212 Second Floor Upper Mezzanine Lighting Plan 06-16-95
"Area B"
E213 Third/Attic Lighting Plan "Area A" 11-03-05
E214 Third/Attic Lighting Plan "Area B" 06-19-95
E215 Main House Lighting Plan 11-02-95
E301 Basement Power and Special Systems Plan 09-08-95
"Area A"
E302 Basement Power and Special Systems Plan 09-08-95
"Area B"
E3O3 Basement Mezzanine Power and Special 09-09-95
Systems Plan "Area A"
E304 Basement Mezzanine Power and Special 09-08-95
Systems Plan "Area B"
E305 First Floor Power and Special Systems 09-08-95
Plan Area "A"
E306 First Floor Power and Special Systems 09-08-95
Plan "Area B"
E307 Second Floor Power and Special Systems 09-08-95
"Area A"
<PAGE>
E308 Second Floor Power and Special Systems 06-16-95
"Area B"
E309 Second Floor Mezzanine Power and Special 09-08-95
Systems Plan "Area A"
E310 Second Floor Mezzanine Power and Special 06-19-95
Systems Plan "Area B"
E311 Second Floor Upper Mezzanine Power and 08-22-95
Special Systems "Area A"
E312 Second Floor Upper Mezzanine Power and 06-19-95
Special Systems Plan "Area B"
E313 Third/Attic Power and Special Systems 08-22-95
Plan "Area A"
E314 Third/Attic Power and Special Systems 10-09-95
Plan "Area B"
E315 Roof Power and Special Systems Plan 10-09-95
E316 Fire Alarm Riser Diagram 10-02-95
E401 Basement Electrical Demolition Plan 06-19-95
"Area A"
E402 Basement Electrical Demolition Plan 06-19-95
"Area B"
E403 Basement Mezzanine Electrical Demolition 06-19-95
Plan "Area A"
E404 Basement Mezzanine Electrical Demolition 06-19-95
Plan "Area B"
E405 First Floor Electrical Demolition Plan 10-03-95
"Area A"
E408 First Floor Electrical Demolition Plan 10-03-95
"Area B"
E407 Second Floor Electrical Demolition Plan 06-19-95
"Area A"
E408 Second Floor Electrical Demolition Plan 06-19-95
"Area B"
E409 Second Floor Mezzanine Electrical Demolition 06-19-95
Plan "Area A"
E410 Second Floor Mezzanine Electrical Demolition 06-19-95
Plan "Area B"
E411 Second Floor Upper Mezzanine Electrical 06-19-95
Demolition Plan "Area A"
E412 Second Floor Upper Mezzanine Electrical 06-19-95
Demolition Plan "Area B"
E413 Third/Attic Electrical Demolition Plan 06-19-95
"Area A"
E414 Third/Attic Electrical Demolition Plan 06-19-95
"Area B"
E415 Existing Electrical Distribution Single 06-19-95
Line Diagram
E500 Enlarged Electrical Plans 11-15-95
E501 Basement "Area A" Distribution Plan 11-15-95
E502 Enlarged Kitchen Lighting and Power Plans 11-15-95
E503 Basement Mezzanine "Area B" Distribution 11-15-95
Plan
<PAGE>
E505 First Floor "Area A" Distribution Plan 11-15-95
E507 Second Floor "Area A" Distribution Plan 11-15-95
E509 Second Floor Mezzanine "Area A" 11-15-95
Distribution Plan
E513 Third Floor/Attic Mezzanine "Area A" 11-15-95
Distribution Plan
E601 Electrical Distribution Single-Line Diagram 11-15-95
E602 Existing 1922 Building Single-Line Diagram 09-12-95
E701 Light Fixture Schedule 08-22-95
E801 Sound System Riser/Details 06-19-95
E802 Dressing Station Lighting Details 06-19-95
E803 Enlarged Bar Power Plan 10-04-95
E804 Aisle Lighting Plan - Main Floor 08-22-95
E805 Aisle Lighting Plan - Balcony 08-22-95
E903 Basement Mezzanine Sound System Plan 10-04-95
E905 First Floor Sound System Plan 10-04-05
E909 Second Floor Mezzanine Sound System Plan 10-03-95
E911 Second Floor Upper Mezzanine Sound 10-03-95
System Plan
E913 Third Floor/Attic Sound System Plan 10-03-95
Specifications 06-23-95
Note: "Remodeled Plans & Specifications" are contained within and are a part of
the "Premises Plans & Specifications".
<PAGE>
Exhibit P
Remodel Plans and Specifications
The Remodel Plans and Specifications are the portion of the Premises
Plans and Specifications attached to the Lease as Exhibit O as they are
applicable to the following, and only the following, portions of the Murat
Complex:
A. Office Area
B. Shrine Museum
C. Basement Area
D. Train Room
E. Kniepe Room
F. Banquet Hall
<PAGE>
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE, made and entered into by and between the parties
hereto, to evidence their execution of a certain lease dated Sept. 1, 1995
WITNESSETH:
1. The name of the Landlord is Murat Temple Association, Inc. whose
address is 510 N. New Jersey St., Indianapolis, IN 46204
2. The name of the Tenant is Murat Centre, L.P. whose address is 10089
Allisonville Road, Fishers, IN 46038.
(select appropriate paragraph 3)
3. The specific legal description of the Leased Premises is described on
Exhibit A attached hereto and made a part hereof, except for that portion of
such real estate as is described on Exhibit B attached hereto and made a part
hereof.
(select appropriate paragraph 4)
4. The (initial) term of the Lease is from Sept. 1, 1995 and expires Sept.
4, 2045.
(select appropriate paragraph 5)
5A. The Lease grants to the Tenant the option to renew or extend the term
of the Lease (for ____________________ ( ) years) (for five (5) successive
periods of ten (10) years each) from the date of the expiration of the term as
set out in either paragraph 4 or 4A hereof.
6. The Lease does not contain an option to purchase the Leased Premises or
any part thereof.
Tenant is granted the right of first refusal in the event the Landlord wants to
sell or otherwise transfer its interest in the Leased Premises.
7. The following restrictions are imposed upon the use of the Leased
Premises or any part thereof.
EXHIBIT Q
Page 1 of 2
<PAGE>
8. The Lease imposes the following restrictions upon the use of the tract
of real estate owned by the Landlord, the specific legal description of which is
set forth in the survey or plot plan attached hereto and marked as Exhibit B:
9. (List below any other agreements between Landlord and Tenant which
should be set forth as notice to third parties, such as the non-exclusive use of
all access and parking areas as shown on the survey or plot plan marked Exhibit
A attached hereto, limited liability, transfer of title on expiration of lease
term, etc.)
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Lease (have caused this Memorandum of Lease to be executed) this _____ day of
December, 1995.
Murat Temple Association, Inc.
By:_______________________________________
Joe L. Scott, President
Landlord (Lessor)
Murat Centre, L.P.
By: Murat Centre, Inc., general partners
--------------------------------------
By:_______________________________________
P. David Lucas, President
Tenant (Lessee)
(Individual Acknowledgment)
STATE OF _____________)
) SS:
COUNTY OF ____________)
Before me, as Notary Public in and for said County and State, personally
appeared _________________________ who acknowledged the execution of the
foregoing Memorandum of Lease, and who, having been duly sworn, stated that the
representations therein contained are true.
WITNESS my hand and Notarial Seal this ____________ day of _________,
19_______.
---------------------------
---------------------------
Notary Public
My commission expires
- ---------------------
(Corporate Acknowledgment)
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, as Notary Public in and for said County and State, personally
appeared Joe L. Scott and __________, the President and _________________,
respectively, of Landlord (Corporation), who acknowledged the execution of the
foregoing Memorandum of Lease for and on behalf of the Corporation, and who,
having been duly sworn, stated that the representations therein contained are
true.
WITNESS my hand and Notarial Seal this ____ day of December, 1995.
------------------------------
------------------------------
Notary Public
My commission expires Residing in _________________ County, Indiana.
- --------------------
(ADD ADDITIONAL ACKNOWLEDGMENTS IF NECESSARY)
Page 2 of 2
This instrument was prepared by Barry Z. Wallack, Esq., Wallack & Wallack, P.C.,
One Indiana [ILLEGIBLE].
<PAGE>
FIRST AMENDMENT TO INDENTURE OF LEASE
THIS FIRST AMENDMENT TO INDENTURE OF LEASE is entered into this 23 day of
June, 1997, by and between MURAT TEMPLE ASSOCIATION, INC., an Indiana
not-for-profit corporation ("Lessor"), and MURAT CENTRE, L.P., an Indiana
limited partnership ("Lessee").
RECITALS:
WHEREAS, Lessor and Lessee, as of September 1, 1995, entered into an
Indenture of Lease (the "Lease") for the Leased Premises as described in the
Lease; and
WHEREAS, Lessor and Lessee now desire to amend, supplement, and modify
the Lease.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, Lessor and
Lessee agree as follows:
1. The Recitals set forth above are hereby incorporated by reference.
2. In the event of any inconsistency between the provisions of this
Amendment and the Lease, the terms and provisions of this Amendment shall govern
and control.
3. The term "The Indianapolis Shrine Foundation for The Performing Arts
and Community Development, Inc." as used in the definition of Investor in
Section 1.02 of the Lease, and as used in Sections 5.05, 6.01, and all other
references thereto in the Lease, if any, are deleted and the following is
substituted therefor: "Downtown Area Community Development Corporation".
4. In all other respects the Lease, as hereby amended, is ratified,
confirmed, and approved.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment on the
day and year first above written.
LESSEE: LESSOR:
MURAT CENTRE, L.P., MURAT TEMPLE ASSOCIATION, INC.,
an Indiana limited partnership an Indiana not-for-profit
corporation
By: MURAT CENTRE, INC., general partner
By: /s/ Robert E. Hancock, Jr.
-----------------------------
By: /s/ [ILLEGIBLE]
----------------------------------- Printed Name: Robert E. Hancock, Jr.
Title: Pres.
Printed Name:__________________________
Title: Pres.
<PAGE>
AMPHITHEATRE LEASE AND AGREEMENT BETWEEN
THE CITY OF MOUNTAIN VIEW AND
SHORELINE AMPHITHEATRE PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
THIS Lease and Agreement (the "Lease") is made and entered into as
of June 20, 1986 by and between the CITY OF MOUNTAIN VIEW, a Chartered Municipal
Corporation, whose address is 444 Castro Street, Mountain View, California
("City"), the MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY, a special
district, whose address is 444 Castro Street, Mountain View, California,
("Community") and SHORELINE AMPHITHEATRE PARTNERS, a California limited
partnership ("Partnership").
RECITALS
A. City owns that certain real property (hereinafter referred to as
the "Site") generally located off of Stierlin Road near the entrance to
Shoreline Park in the City of Mountain View, all as more particularly described
in the legal description and survey contained on Exhibit "A" to be attached
hereto and incorporated herein by reference at a later date. The legal
description shall conform to the physical boundaries of the Amphitheatre to be
constructed on the site and permanent parking, and shall contain approximately
37 acres.
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B. Partnership desires to construct, promote and operate an
amphitheatre, certain parking areas and related improvements on the Site and
other areas to be made available by City and to enter into an agreement with
Bill Graham Presents, Inc., a California corporation ("BGP") to promote and
operate the Amphitheatre for live entertainment, and for this purpose has
approached City and negotiated various arrangements for the mutual benefit of
City and Partnership in the construction, operation, promotion and maintenance
of such a large cultural entertainment facility.
C. Partnership intends to construct certain parking areas on the
Site and other land to be made available to Partnership by City, which parking
areas will be used by both City and Partnership.
D. City wishes to allow Partnership to lease the Site for the
purpose of constructing, maintaining, promoting and operating an Amphitheatre
for cultural and other live entertainment of a wide variety.
E. BGP has entered into a sublease with Partnership (the "Sublease"
to be attached hereto at a later date as Exhibit "B"), under the terms of which
Sublease BGP is obligated to perform certain functions in connection with
promotion and staging of entertainment events at the proposed Amphitheatre.
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F. As the promotion of entertainment by BGP is a material
consideration in City entering into the Lease with Partnership, BGP has
concurrently herewith entered into a Recognition and Attornment Agreement with
City under the terms of which BGP agrees to attorn to City and City agrees to
recognize BGP in the event this Lease is terminated prior to its scheduled
expiration date.
G. Community has agreed to contribute Eight Million Dollars
($8,000,000) to Partnership capital all as hereinafter set forth for the purpose
of furthering the orderly development of the North Bayshore Area.
NOW, THEREFORE, in consideration of the recitals, mutual obligations
and promises of the parties as herein expressed, City and Partnership agree as
follows:
ARTICLE I
THE LEASED PREMISES; TERM
Section 1.01. The Leased Premises. City hereby leases to Partnership and
Partnership, its successors and assigns, does
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<PAGE>
hereby take and hire from City, the Site upon and subject to the conditions and
limitations hereinafter expressed, together with any buildings, structures,
facilities, fixtures, equipment, paving, surfacing, sewers, storm drains and
other improvements which may now or hereafter be located thereon; reserving to
City the following:
(a) The right to obtain gas containing methane from the Site and other
land to be made available to Partnership and to develop facilities in connection
therewith, the right to grant such rights to others, including, but not limited
to, Pacific Gas and Electric Company ("PG&E") and Genstar Gas Recovery Systems,
Inc. ("Genstar") pursuant to that certain Lease Agreement dated December 5,
1983. A full and complete copy of the Genstar and PG&E agreements have been
delivered to Partnership. City shall not, in connection with the, exercise of
its rights under Paragraph 1.01(a) herein, commence any action which would
substantially affect the operation of the Amphitheatre without the written
consent of Partnership, which shall not be unreasonably withheld. City shall
also direct PG&E and Genstar, as appropriate pursuant to each agreement, not to
commence any action which would substantially affect the operation of the
Amphitheatre.
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<PAGE>
(b) All right, title and interest in any gas, oil, minerals, water or any
other substance beneath the Site, together with the right to grant interests
therein to others; provided that City and its grantees shall not enter upon the
surface of the Site to exercise extraction rights, without first giving
Partnership prior written notice two (2) days in advance, or during performances
at the Amphitheatre unless there is an emergency.
(c) The right to enter the Site for the purpose of making repairs to,
maintaining or constructing municipal facilities located on the Site (including
landfill gas recovery) provided City shall use its best efforts to minimize the
disruption of Partnership's and BGP's operation by such entry.
(d) The right to grant and use easements and rights of way over, under,
along and across the Site for utilities and other municipal purposes, provided
that in the exercise of the reserved rights City will not unreasonably interfere
with Partnership's use of the Site and will reimburse Partnership for physical
damage to the Site resulting from City's exercise of such rights.
(e) The right to reasonable access to the Site for the purpose of
determining compliance with this Lease.
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<PAGE>
In the exercise of the reserved rights, City will not unreasonably
interfere with Partnership's use of the Site and will indemnify Partnership
against any liability, cost or expense incurred by Partnership as a result of
City's exercise of its right of entry, except that no indemnification shall
occur as a result of any noncompliance by Partnership with any provision of this
Lease.
Partnership acknowledges that City has reserved substantial rights
in and to the use of the Site, including, without limitation, the recovery of
landfill gas, oil, minerals, water or any other substance beneath the Site and
the right to grant certain easements on the Site for utilities and other
municipal purposes. In exercising its rights under this Section 1.01 City shall
not take any action which will have a material adverse affect on the
construction and use of the Amphitheatre or a material adverse affect on the
aesthetics of the Amphitheatre setting, unless legally required to do so.
Section 1.02. Term. Possession of the Site shall be delivered to
Partnership upon execution hereof for the purpose of construction of the
Amphitheatre. The term of this Lease (the "Term") shall be thirty-five (35)
years commencing on the date the first entertainment event is performed at the
Amphitheatre and continuing through November 30 of the year in which the
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thirty-fifth anniversary of the term commencement occurs. For purposes of this
Lease, a "Concert Season" shall be April 15 through October 31.
Section 1.03. Options to Extend. Partnership shall have the option to
extend the Term under the same terms and conditions hereof for three (3)
additional five (5) year periods, so long as Partnership gives written notice of
its intention to exercise each option not less than six (6) months prior to the
end of the Term, or extended term and an Event of Default (as such term is
defined in Section 8.01 hereof) does not then exist.
ARTICLE II
AMPHITHEATRE DESIGN AND CONSTRUCTION
Section 2.01. Covenant to Design and Construct Amphitheatre.
Partnership shall design and construct after design approval or conditional
approval by City, the Amphitheatre, parking and related improvements on the Site
and on other property made available to Partnership by City.
Section 2.02. Amphitheatre Design. Partnership shall submit for City
review, conditional approval, approval or denial
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<PAGE>
the design for the Amphitheatre as well as parking and related improvements in
as expeditious a manner as reasonably possible. Partnership understands that
part of the proposed Amphitheatre, parking and related improvements will be on
landfill and will design and engineer these facilities taking the nature of the
landfill into account. City, in reviewing the design for the Amphitheatre as
well as parking and related improvements, may take sixty (60) days or longer for
each submittal. The review process shall take place by submitting to City's
Planning Department plans in a number specified, and with details as prescribed
by City's Planning Department. After reviewing the submittal, City, through the
City Council, may approve, conditionally approve, deny or defer action on the
submitted plans pending revision by the Partnership as directed by the City. If
the plans are ultimately approved, construction shall occur in strict accordance
with the approved plans, unless modifications are subsequently expressly
authorized by City. Minor modifications to the approved plans and specifications
may be approved by the City Planning Director or the City Public Works Director.
The Amphitheatre construction as well as parking and related improvements shall
conform to any and all conditions attached to the approval by City and all such
conditions shall become a part of this Lease as if fully set forth herein;
provided, however, that in the event of an inconsistency between such conditions
and the main body of this Lease, the provisions
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<PAGE>
of the main body of this Lease shall control. In interpreting both the main body
of this Lease and any conditions to be a part of this Lease, the language of
both shall be harmonized so as to prevent any inconsistency if possible. Design
plans for the Amphitheatre, as well as parking and related improvements shall be
submitted by the Partnership as quickly as is reasonably possible and City shall
use reasonable efforts to expedite the review and approval process as it is the
desire of City and Partnership to cause the Amphitheatre to be constructed and
commence entertainment operations at the Amphitheatre during the 1986 Concert
Season. If Partnership is unable to obtain all necessary governmental approvals,
permits and other authorizations, upon conditions satisfactory to Partnership,
then Partnership shall have the right to terminate this Lease upon thirty (30)
days written notice to City. If Partnership terminates this Lease by use of this
provision, the Site shall be restored to its original condition or such lesser
condition as is directed by the City Public Works Director, all at the sole
expense of Partnership.
Partnership may propose, and City may approve, the phased construction
over time of certain buildings and other improvements. Should this occur,
Partnership shall ultimately complete the permanent improvements according to
the approved plans and time schedule granted in allowing such phasing.
Partnership's
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failure to so comply constitutes grounds for City to direct in writing that all
Amphitheatre performances be cancelled, and Partnership herein agrees to
voluntarily comply by ceasing Amphitheatre operations until such time as said
permanent improvements have been completed to City's reasonable satisfaction.
Notwithstanding the foregoing, City will not exercise its right to cancel
Amphitheatre performances during the 1986 concert season.
Section 2.03. Amphitheatre Construction. Upon approval of the Amphitheatre
parking and related improvement design, Partnership shall construct the
Amphitheatre parking and related improvements on the Site and other areas made
available by City in accordance with the design, plans, specifications and
conditions approved pursuant to Section 2.02 above. Consent to rough grading on
the Site has already been granted by City. Completion of construction shall
occur so that, if reasonably practicable, entertainment operations at the
Amphitheatre may commence during the 1986 Concert Season.
The use of a "Mike Brown" stage and the placement of support buildings in
modular structures to the rear of the stage is hereby approved for the 1986
Concert Season only. Partnership shall complete construction of the stagehouse
as shown on approved plans and specifications pursuant to Section 2.02 above
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<PAGE>
for the 1987 Concert Season unless further altered by resolution of the City
Council of City.
Section 2.04. Utilities. City has advised Partnership that access to
water, sewer, telephone, gas and electricity is available within the boundaries
of Stierlin Road near the Site. Partnership has determined the adequacy of such
utilities and shall have the responsibility for extending the utility lines, as
well as the payment of all standard charges, so as to provide on site
utilities, at Partnership's sole expense. City, at no cost to City, shall
cooperate with Partnership in obtaining access to all utilities reasonably
necessary for development and use of the Amphitheatre.
Section 2.05. Dirt.
a. City shall allow Lessee to "borrow" and use in the construction of the
Amphitheatre 185,000 cubic yards of dirt. The Site presently contains 169,000
cubic yards of dirt which Partnership may use in the construction of the
Amphitheatre parking and related improvements. City shall also make available to
Partnership 16,000 cubic yards of dirt, which dirt is located within the City's
70-acre portion of the landfill site east of Stierlin Road. The cost of
excavating and transporting the dirt to the Site from City's land described
above shall be borne by Partnership.
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b. Partnership shall be obligated to acquire and deposit at the City
landfill site located at the northerly end of Stierlin Road (or any other
location designated by City) 185,000 cubic yards of dirt. Not less than
twenty-five percent (25%) of such total amount shall be deposited at the City
landfill site (or other location designated by City) by Partnership over the
period of May through September of each of the following years: 1986, 1987,
1988, and 1989, or some other schedule approved by City. Partnerhsip shall
receive credit against such dirt "repayment" obligations for all dirt, exclusive
of miscellaneous dirt, deposited at the City landfill site (or any other
location designated by City) commencing upon June 1, 1985 hereof and continuing
until all dirt "repayments" required hereunder have been satisfied.
(Miscellaneous dirt is that dirt the City is now receiving at the landfill which
does not originate from a development project. Miscellaneous dirt will typically
originate from small jobs and consist of a few truckloads. Miscellaneous dirt
shall include dirt originating from City capital improvement projects.) City
shall have the right to require that any portion of the dirt to be repaid to be
a low-permeability clay should that be required for City sanitary landfill dirt
needs. City shall determine actual quantity of dirt delivered to be credited to
amount of dirt to be repaid by Partnership and shall notify Partnership of such
determination. City and Partnership shall
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periodically consult regarding the actual dirt repayment to City and the timing
and manner of Partnership "repayment" of the "borrowed" dirt.
c. If the City purchases dirt to be credited to amount of dirt to be
repaid by Partnership, Partnership shall reimburse City for City's costs
incurred in acquiring the dirt, including applicable administration costs,
provided City has received prior approval of Partnership to purchase dirt.
Partnership may arrange for dirt to be delivered to landfill (or any other
location designated by City) or may make sources of dirt known to City. In
addition to the obligation to repay the borrowed dirt, Partnership shall
compensate City for any extra costs incurred by City due to the dirt borrowing.
If City, at any time prior to Partnership placing final parking surface material
on the below-described 45 acres, is in need of dirt in addition to that repaid
as noted in Sections 2.05(b) and (c), and Partnership consents, then City shall
be permitted to remove dirt from the approximate 45-acre portion of City land
west of Stierlin Road and north of Charleston Road (the "45-Acre Parcel"). Each
cubic yard so used by City shall be credited as a cubic yard repaid against the
185,000 cubic yards noted in Section 2.05(b), and each cubic yard so used by
City shall be included in the total cubic yards of dirt which must be replaced
by Partnership pursuant to Section 2.05(e).
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d. In addition to the dirt "borrowed" under Section 2.05(a), City shall
make available to Partnership up to 87,000 cubic yards of additional dirt, which
dirt is also located on the "45-Acre Parcel" for purposes of construction of the
Amphitheatre parking and related improvements. The cost of excavating and
transporting the dirt to the Site shall be borne exclusively by Partnership.
Partnership shall develop methods acceptable to City to accurately monitor dirt
"borrowed" under this subsection (d) so that at completion of Amphitheatre
construction, the actual amount of dirt "borrowed" can be accurately determined.
e. In consideration for allowing Partnership to use up to the 87,000 cubic
yards of dirt noted in Section 2.05(d), which is more economical for
Partnership, Partnership herein commits to subsequently replace the dirt
actually borrowed in order to restore the excavated "45-Acre Parcel" generally
to its present state.
1. The City has the right to give Partnership notice at any time as
to when the "45-Acre Parcel" shall be restored, provided that at least three (3)
months shall be provided; and Partnership herein guarantees that it will
complete the restoration by the due date given.
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2. The dirt is to be placed and compacted by Partnership to
standards acceptable to the City, but generally to the density of the existing
dirt. The City will record random in-place densities prior to the excavation.
3. If continuing Amphitheatre temporary parking is to occur on any
dirt subsequently replaced, then the parking area surfacing or other areas
replaced are to be improved to the same standards of improvement (e.g., surface
treatment) originally required for that area.
Section 2.06. Amphitheatre Quality. The Amphitheatre, parking and related
improvements design shall be of high quality consistent with the Shoreline area
and the emerging image of North Bayshore and shall meet all prior City
approvals. City shall not, however, unreasonably withhold or delay its approval
in the review process. Temporary and/or sellout parking not on the Site may not
be required to be constructed in the same manner or to the same standards as
permanent parking on the Site and may be constructed of less expensive
materials, all subject to prior City approval.
Section 2.07. Bonding. During the Amphitheatre construction period, and an
appropriate period thereafter, Partnership shall maintain Faithful Performance
and Labor and Materials Bonds for
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the construction of the Amphitheatre parking and related improvements in a form
and amount satisfactory to the City Attorney.
Section 2.08. Future Construction or Expansion. There shall be no future
construction or expansion of the Amphitheatre, parking and related improvements,
nor any increase in ticket sales or other intensification, beyond that approved
by the City or provided herein, without the prior approval of City derived in
the same manner as specified in this Article for the original construction of
the Amphitheatre, parking and related improvements.
ARTICLE III
RENT
Section 3.01. Gross Receipts. Partnership shall pay to City, as rent (the
"Rent"), on or before the tenth (10th) day of each month, the following
percentage of Gross Receipts, as defined below, received by Partnership during
the immediately preceding calendar month, collected at, applicable to or arising
out of performances occuring at the Amphitheatre:
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Lease Annual Gross Annual Gross Annual Gross
Years Receipts Receipts Receipts
----- ------------ ------------ ------------
$0-$10 million over $10-$13 million over $13 million
per year per year per year
1-5 2.0 percent 3.0 percent 4.0 percent
6-10 2.5 percent 3.5 percent 4.5 percent
11-15 3.0 percent 4.0 percent 5.0 percent
16-50 4.0 percent 5.0 percent 6.0 percent
For example and not by way of limitation, if Gross Receipts during the
sixth (6th) Lease year were $11,500,000, then in that event, Partnership would
pay City 2.5 percent of its Gross Receipts accumulated until they reached
$10,000,000. The next $1.5 million of Gross Receipts would yield a payment to
City of 3.5 percent. Lease Years shall be calendar years. Partnership hereby
directs BGP to pay the above described rent directly to City out of the Gross
Receipts collected by BGP for the account of Partnership. By Recognition and
Attornment Agreement of even date herewith executed in favor of City, BGP
acknowledges Partnership's direction and agrees to pay the Rent to City as
herein provided. Upon the occurrence of an Event of Default or in the event an
audit pursuant to Section 3.04 discloses an underpayment of 5 percent or more,
City shall have the right to be present at all post-concert settlements with any
artist and also reserves the right to collect City's Rent for that concert at
the post-concert settlement with the artist.
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Gross Receipts are defined as follows:
(a) Ticket sales, including the gross ticket sales less the sum of
surcharges and taxes. Before deducting any surcharges, they must be approved
by the City, which approval shall not be unreasonably withheld. The initial
surcharge of $1.50 is hereby approved.
(b) All food, beverage and T-shirt sales, except that food provided
to the performers shall not be included.
(c) Miscellaneous income, including all other gross receipts
relating to the Amphitheatre and related improvements (such as, but not limited
to, advertising contracts, off-site video and corporate sponsorships, telecast,
broadcast and video production payments and corporate and other sponsorships),
all less applicable Outside Commissions. The Two Million Dollar ($2,000,000)-Ten
Year Sponsorship Agreement with Pepsi-Cola Company shall be included in Gross
Receipts in Two Hundred Thousand Dollar ($200,000.00) increments commencing in
the first year of the Term and continuing thereafter for a total of ten years.
Commissions and expenses actually paid to parties other than Partnership or BGP
in connection with obtaining sponsorships and other ancillary income shall be
excluded from Gross Receipts. Interest income and parking income shall also be
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excluded from Gross Receipts. Sales taxes actually paid by Partnership or its
licensee or concessionaire shall be excluded from Gross Receipts. Any payment
made by any licensee or concessionaire for the right to place a concession in
the Amphitheatre or the right to conduct business in or around the Amphitheatre
shall be included in Gross Receipts.
(d) Gross Receipts shall also include gross receipts of the kind and
nature described above actually received by Partnership, BGP and/or their
affiliates (excluding concession sales of Fillmore Fingers and Winterland
Concessions Company) during a Concert Season from gross ticket and concession
sales made by Partnership, BGP and/or their affiliates from any amphitheatre
(excluding the Concord Pavilion, Oakland Coliseum, San Jose Civic Auditorium,
Kezar Stadium, Candlestick Park, Greek Theatre, Flint Center, Frost
Amphitheatre, San Jose Center for the Performing Arts, San Francisco Civic
Auditorium, Henry J. Kaiser Auditorium and Cow Palace) or any other
entertainment facilities with a seating capacity of more than 7,000 people (and
outside the Concert Season from any similar facility of more than 7,000 seats
which seating is outdoors) located within a thirty-five (35) mile radius of the
Amphitheatre, which amphitheatre or similar entertainment facility is owned,
operated or managed by Partnership, BGP, Bill Graham Enterprises, Inc. (BGE)
and/or their affiliates or any business entity in which Partnership and/or BGP
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has a twenty percent (20%) interest, directly or indirectly. With City's prior
written consent, Partnership, BGP, Bill Graham and/or their affiliates may own,
operate or manage a similar entertainment facility within the 35-mile radius.
Partnership and City further recognize that Bill Graham is important to the
successful operation of the Amphitheatre. Partnership agrees that Bill Graham
shall not, without City's prior written consent, within ten (10) years following
the beginning of the Term, engage in any business which directly competes with
the Amphitheatre with respect to entertainment facilities (other than the
exclusions contained in this subsection 3.01(d)) with a seating capacity of more
than 7,000 people located within a 35-mile radius of the Amphitheatre. This
provision shall apply even in the event Partnership sells or otherwise
hypothecates its interest under the Lease and shall apply regardless of the
termination or assignment of the Sublease.
Section 3.02. Annual Reconciliation. Within ninety (90) days after the
close of each Lease Year, commencing with the first Lease Year in which the
first payments as specified in Section 3.01 are made, an annual reconciliation
shall be completed, wherein an independent auditor, named by City but
compensated by Partnership, shall audit Partnership for compliance with this
Lease and determine what, if any, remaining funds are due and owing city based
upon the rental provisions
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above. City hereby approves Creed & Associates or Phil Yee as the independent
auditor to prepare the annual reconciliation. Subject to prior City approval,
City will permit the independent accounting firm employed by Partnership to
prepare the annual reconciliation. If such reconciliation reflects an
overpayment then that amount shall be deducted from the next payment due City
from Partnership under this Lease. If it is determined that Partnership owes
City funds, then, in that event, Partnership shall forthwith pay City said funds
no more than fifteen (15) days from the date the auditor makes its determination
that funds are due and has notified Partnership. At least two (2) weeks prior to
the annual reconciliation, Partnership shall have an affirmative obligation to
disclose to City and the independent auditor all income Partnership has received
attributable to the operation of the Amphitheatre, parking and related
improvements, but income which Partnership does not include under Gross Receipts
as described above.
Section 3.03. Minimum Rent.
a. If the Amphitheatre does not open for business by July 1, 1987, then
Partnership shall pay to City, as minimum rent, the sum of Ten Thousand Dollars
($10,000), in advance, per month by the first of each month until the start of
the first performance at the Amphitheatre. Subject to delays caused by Force
Majeure
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(as hereinafter defined), if the Amphitheatre does not open for business by July
1, 1988, City may cancel this Lease and terminate all of Partnership's rights
hereunder.
b. Notwithstanding and in addition to subparagraph (a) of this Section
3.03, commencing August 1, 1986 and continuing on the first day of each month
thereafter through July 1, 2006, Partnership shall pay to City, as minimum rent,
the sum of Ninety-Three Thousand Two Hundred Dollars ($93,200), provided,
however, that Partnership shall have the right to pay in whole or in part any
unamortized portion of such minimum rent which relates to the Community's
Capital Contribution to the Partnership specified in Section 5.18 herein.
Section 3.04. Books and Records. Partnership shall maintain accurate and
complete books and records, in a form reasonably satisfactory to City, showing
all Gross Receipts from the Amphitheatre and related improvements and any other
applicable locations, and shall require all licensees, concessionaires, or
others occupying or in any way doing business from the Amphitheatre, parking or
related improvements or any other related premises or any part thereof under
Partnership to do the same, for a period of not less than three (3) years after
the expiration of the Lease Year to which such records relate. Such records
shall show all Gross Receipts received from the operation
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of the Amphitheatre and related improvements, and such Gross Receipts shall be
supported by documents of original entry such as sales slips, cash register
tapes, purchase invoices and tickets issued. In the case of admission charges,
Partnership shall either: (i) issue serially numbered tickets for each paid
admission and keep accurate records of said serial numbers issued and of those
unused; (ii) record admission charges by means of a cash register system which
automatically issues a customer's receipt; or (iii) any other methods
specifically approved by City in writing. City hereby approves the use of BASS,
Ticketron or Ticket Master computerized ticket distribution systems for purposes
of issuing tickets for Amphitheatre events. Partnership shall make available to
City and shall retain for not less than three (3) years copies of all ticket
reconciliation statements and other ticket sale documentation produced by the
ticket agent selected by Partnership. Partnership shall have no obligation to
retain actual ticket stubs for more than ten (10) business days following a
particular performance. All sales and rentals of merchandise and services
rendered other than T-shirts and other concert merchandise sold at the T-shirt
concession stands and mobile concessionaire units which cannot reasonably have
cash registers shall be recorded by means of a cash register system. All said
cash register systems shall have a locked-in total which is constantly
accumulating, which total cannot be reset, and, at the option of City, a
constantly locked-in, accumulating, printed
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transaction counter which cannot be reset, and/or printed detailed audit tape
located within the register. Complete beginning and ending cash register
readings shall be made a matter of daily record. Partnership shall retain for a
period of three (3) years and make available to City those above-referenced
records and supporting documents. Partnership shall retain sales tax returns for
all merchandise (including T-shirts) and services and shall also retain event
inventory sheets for all T-shirt and other concert merchandise sales sold at
the T-shirt concession stand and mobile concessionaire units which cannot
reasonably have cash registers. The books and records shall be kept or made
available at one location within the limits of the City of Mountain View or at
Partnership's or BGP's offices so long as such offices are within the immediate
Bay Area. City shall have the right to examine and audit from time to time (but
in no event more often than four (4) times during any twelve (12) month period),
upon five (5) business days advance written notice, Partnership's and BGP's
records of Gross Receipts, and books of account and the records of Gross
Receipts and supporting documents of Partnership's and BGP's licensees,
concessionaires or others occupying the Amphitheatre, parking or related
improvements, or any part thereof under Partnership or deriving income from the
Amphitheatre at any time during the Term of this Lease and for a period of six
months after the termination of this Lease. Partnership shall include in any
license or concession
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agreement or any other agreement with anyone occupying the Site or doing
business on related improvements or any part thereof, a provision giving the
City the right of examination and audit by an independent certified public
accountant or such other person as City desires, at City's discretion, of such
licensees' and concessionaires' books and records as provided in this Section.
If an audit of Partnership's or licensees' or concessionaires' books by an
independent certified public accountant shall disclose for a period of at least
one (1) concert season an underpayment of five percent (5%) or more of the Rent
due City, then Partnership shall pay for the cost of such audit. Otherwise, the
cost of such audit shall be borne by City (except for the annual reconciliation
audit). Double the amount of any additional Rent which is determined to be
payable pursuant to such audit shall be paid to City within fifteen (15) days of
such determination, with interest on such delinquent sum accruing at a rate
equal to the lesser of three percent (3%) above the "reference rate" announced
from time to time by the Bank of America National Trust and Savings Association
or, the maximum rate an individual is permitted by law to charge (the "Specified
Rate") from the thirtieth (30th) day after the end of the calendar month with
respect to which such Rent is due.
Section 3.06. No Setoff. Partnership shall pay the Rent and all other sums
which may become due hereunder or be payable by
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Partnership hereunder, at the times and in the manner provided in this Lease
without notice or demand and without abatement, reduction or setoff.
ARTICLE IV
SALE, MORTGAGE, ASSIGNMENTS, OTHER
Section 4.01. Sale of Interest. Partnership shall have the right after
five years to sell all or any portion of its interest in the Amphitheatre
parking and related improvements subject to this Lease. Such sale shall be
expressly subject to this Lease and may be consummated only if either BGP
continues as the promoter and operator of the Amphitheatre, parking and related
improvements or finds a substitute which is acceptable to the City. If the
interest of the Partnership in the Amphitheatre parking and/or related
improvements is sold, City shall receive ten percent (10%) of any sales
proceeds, net of sales commissions property transfer taxes and title insurance,
to the extent those proceeds exceed the greater of: (a) Twenty Million Dollars
($20,000,000.00) or (b) the amount of the last refinancing of the Amphitheatre
pursuant to Section 4.02.
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Section 4.02. Refinancing. Partnership shall have the right to refinance
any promissory note secured by a deed of trust recorded against the Amphitheatre
and/or leasehold interest of Partnership, or any other form of original
financing, with the City receiving ten percent (10%) of any net refinancing
proceeds which exceed the greater of: (a) Twenty Million Dollars
($20,000,000.00) or (b) the amount of the last refinancing of the Amphitheatre
pursuant to Section 4.02. Any refinancing of the Partnership's interest in this
Lease may not be accomplished except by a mortgage or deed of trust. Upon any
refinancing, the net refinancing proceeds shall exclude "loan costs."
Partnership's "loan costs" shall include, without limitation, all loan fees,
appraisals, points, escrow fees, title insurance premiums and all other loan
costs and fees imposed by the lender and/or incurred by Partnership in
connection with the subject refinancing. Partnership may not encumber this Lease
and the Amphitheatre with deeds of trust or other financing securing a total
indebtedness in excess of eighty percent (80%) of the then appraised value of
the Amphitheatre, as reflected in a current MAI appraisal to be provided by
Partnership. Any assignment of Partnership's interest hereunder pursuant to a
deed of trust or any other financing mechanism shall be subject to each and all
of the covenants, conditions and restrictions set forth in this Lease, and in
the event of any conflict between the provisions of this Lease and the
provisions of such a deed of trust or other financing mechanism, the provisions
of this Lease shall control.
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Section 4.03. Assignment; Subletting.
(a) Except as permitted under the provisions of Sections 4.01 and
4.02, Partnership, and its successors and assigns shall not assign its interest
in this Lease either voluntarily or by operation of law, or sublease all or any
part of the Site or other areas made available to Partnership or allow any other
person or entity (except BGP's and Partnership's authorized representatives,
concessionaires and licensees) to occupy or use all or any part of the Site or
other areas made available to Partnership without the prior written consent of
City. Notwithstanding the foregoing, Partnership shall have the right to
reasonably change concessionaires, licensees and other parties providing
services and/or materials required in the normal operation of the Amphitheatre
without City consent, but must notify City, in writing, of such change within
ten (10) days after such change has occurred. The types of merchandise, products
and services offered at the Amphitheatre shall be subject to prior City
approval, which approval shall not be unreasonably withheld. City hereby
approves the sale of alcoholic and nonalcoholic beverages, food and concert
merchandise of the type and quality offered for sale by BGP or BGE as of the
date of this Lease at comparable entertainment facilities in the San
Francisco-Oakland Bay Area.
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(b) In giving its consent pursuant to Subsection 4.03(a), City may,
in addition to any other conditions, require compliance with the following:
(i) Any proposed assignee shall have the qualifications and
financial responsibility, as reasonably determined by City, necessary and
adequate to fulfill the obligations undertaken in this Lease by Partnership.
(ii) Any proposed assignee, by instrument in writing, shall,
for itself and its successors and assigns, expressly for the benefit of City,
have assumed all of the obligations of Partnership under this Lease and agree to
be subject to all of the conditions and restrictions to which Partnership is
subject; provided, however, that the fact that any assignee of this Lease or any
other successor in interest whatsoever to this Lease whatever the reason, shall
not have assumed such obligations, shall not, unless and only to the extent
otherwise specifically provided in this Lease or agreed to in writing by City,
relieve or except such assignee or successor of or from such obligations,
conditions, or restrictions or deprive or limit City of, or with respect to, any
rights or remedies or controls with respect to this Lease. It is the intent of
this Lease, to the fullest extent permitted by law and
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equity, and excepting only in the manner and to the extent specifically provided
otherwise in this Lease, that no assignment of this Lease, or any interest
therein, however consummated or occurring and whether voluntary or involuntary,
shall operate, legally or practically, to deprive or limit City of or with
respect to any rights or remedies or controls provided in or resulting from this
Lease that City would have had, had there been no such assignment or change;
(iii) There shall have been submitted to City all instruments
and other legal documents involved in effecting such a transfer. City may
disapprove such transfer if the documents do not contain the provisions required
by the terms of this Lease.
(iv) All subtenants and other users of space on the Site and
other areas made available to Partnership by City shall be of a kind and nature
generally found in and around a quality Amphitheatre; and
(v) Any subleases, license or concession agreements between
Partnership and a subtenant, licensee or concessionaire shall contain the
provisions required by the terms of this Lease; provided, however, that in the
absence of a specific written agreement by City to the contrary, no such
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transfer or approval by City thereof shall be deemed to relieve Partnership or
any other party bound in any way by this Lease or otherwise with respect to the
performance of any term, covenant and condition to this Lease including, without
limitation, the construction and reconstruction of the Amphitheatre, parking or
related improvements, or any of its obligations with respect thereto.
(c) If, notwithstanding the provisions of this Section, this Lease
is assigned by operation of law in connection with any proceedings under State
or Federal insolvency and bankruptcy law, or any comparable law, whether for
liquidation or reorganization, City shall have a right of first refusal to
purchase this Lease. Before any trustee or debtor in possession (collectively
"Trustee") may offer the lease or any interest in this Lease for sale, Trustee
shall notify the City, in writing, of the amount for which the Trustee would be
willing to sell its interest in the Lease. The City shall have three (3) months
after receipt of the Trustee's notice to elect to purchase or not purchase the
Amphitheatre and Lease for the price specified in the Trustee's notice. If prior
to expiration of such three (3) month period, City desires to purchase the lease
but does not wish to purchase for the purchase price designated in the Trustee's
notice, then City may give the Trustee written notice of its intention to
purchase the Amphitheatre and Lease for the fair market value of
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the Amphitheatre and Lease as determined pursuant to Exhibit "C" attached hereto
and incorporated herein by reference. If City gives written notice of its desire
to purchase the Amphitheatre and Lease within such three (3) month period or
fails to close the transaction within six (6) months after its exercise, then
Trustee shall be free, thereafter, to sell the Lease and Amphitheatre to any
third party subject to the terms and conditions of this Lease (except the
obligation to offer the Amphitheatre and Lease to City pursuant to this
Section).
(d) Partnership represents and agrees for itself and any successor
in interest of itself that without the prior written approval of City, as long
as he is alive, Bill Graham shall not reduce his ownership interest, as a
limited partner, to less than 20 percent. Partnership shall notify City in
writing of all transfers (regardless of the percentage amount) of the interest
of any general partner of Partnership within ten (10) days of such transfer.
(e) Partnership shall promptly notify City of any and all
significant changes in the ownership of Partnership or any legal entity
comprising Partnership, whether legal or beneficial, or of any other act or
transaction involving or resulting in any change in the ownership of Partnership
or any legal entity comprising Partnership, with respect to the identity of the
parties in
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control of Partnership or any legal entity comprising Partnership, of which it
or any of its officers have been notified or otherwise have knowledge or
information. Partnership shall, at such time or times as City may request,
furnish City with a complete statement, subscribed to and sworn to by an
appropriate person as approved by City, setting forth all of the partners of
Partnership and the owners of each legal entity comprising Partnership and the
extent of their respective holdings, and if any other parties have a beneficial
interest in Partnership and each legal entity comprising Partnership, their
names and the extent of such interest, all as determined or indicated by the
records of Partnership and each legal entity comprising Partnership, by specific
inquiry made by the appropriate person above-approved by the City of all
parties who on the basis of such record or corporate records own ten percent
(10%) or more of Partnership or any legal entity comprising Partnership, and by
such other knowledge or information as that person may have. Such data and
information shall be furnished to City immediately prior to delivery of the
leasehold interests to Partnership and as a condition precedent thereto, and
annually thereafter on the date of such delivery. This Lease may be terminated
by City in its sole discretion if, during his life, Bill Graham at any time
holds less than a 20 percent interest in the Partnership as a limited partner;
for this purpose, Bill Graham shall be considered to own the Partnership
interest owned by BGP as long
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as Bill Graham owns at least 75 percent of BGP. To the extent legally possible,
all information supplied to City regarding the ownership of Partnership shall
remain confidential, and City shall not disclose any such information to any
other party without the prior written consent of Partnership.
(f) The foregoing provisions regarding assignment, together with the
provisions of subsection (g) below, shall under no circumstances be deemed to
apply to the giving of any deed of trust or other form of financing by
Partnership, its successors or assigns, on the leasehold created hereby or on
any improvements to secure a loan.
(g) No assignment of any interest of this Lease made with City's
consent, or as herein otherwise permitted, shall be effective until there shall
have been delivered to City an executed counterpart of such assignment
containing an agreement, in recordable form, executed by the assignor and the
proposed assignee, wherein such assignee assumes due performance of the
obligations on the assignor's part to be performed under this Lease to the end
of the Term. Shareholders and any partners and/or limited partners of
Partnership shall have no personal liability for the performance of any
obligations hereunder, unless otherwise specified in this Lease.
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(h) The consent by City to an assignment hereunder shall not in any
way be construed to relieve Partnership of the obligation of obtaining the
express consent in writing of City to any further assignment.
(i) Except as otherwise provided herein, notwithstanding an
assignment by Partnership hereunder to which City has consented, Partnership
shall remain responsible for all liabilities and obligations of this Lease.
(j) As long as Bill Graham is alive, he personally shall retain not
less than 75 percent of the voting stock of BGP during the term of this Lease.
Failure to do so shall constitute a default hereunder.
Section 4.04. Assignment of Rents. Subject to the rights of any commercial
lender which is the beneficiary under the first deed of trust or other financing
mechanism secured, in whole or in part, by the Amphitheatre, Partnership hereby
assigns to City, as security for Partnership's performance of all of its
obligations under this Lease, all of Partnership's right, title and interest in
and to all rents due or to become due from any present or future subtenant,
licensee, concessionaire, or other person occupying the Site or other area made
available to Partnership by City, including, without limitation, all sums due
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Partnership under the Sublease with BGP, but such assignment shall be subject to
the right of Partnership to collect such rents until the date of the happening
of any Event of Default under the provisions of this Lease which has not been
cured within the time provided in this Lease. City shall apply any rent amount
collected by it from such subtenants, licensees or concessionaires to the Rent
due under this Lease.
Section 4.05. Attornment. In the event of a termination of this Lease,
each licensee and concessionaire under a sublease, license or concession
agreement with Partnership shall attorn to City unless City shall elect to
dispossess such licensee or concessionaire. Partnership covenants that each
sublease hereafter executed shall contain a clause expressly providing that the
licensee or concessionaire shall attorn to City in the event of a termination of
this Lease, but the absence of such a clause in any sublease, license or
concession agreement shall not relieve the licensee, or concessionaire from the
provisions of this Section.
Section 4.06. City Tax on Amphitheatre Operation. City shall not
arbitrarily impose a gross receipts or any other type of tax or charge on the
operations of the Partnership which would either be discriminatory as to the
Partnership or its activities or solely applicable (either directly or as a
practical matter) to the Partnership's operation of the Amphitheatre.
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Section 4.07. Additional Rent. In addition to the rent provided in
Sections 3.01, 3.03, 4.01 and 4.02, Partnership shall pay City additional rent
determined as follows:
(a) Twenty percent (20%) of the Partnership's Net Available Cash as
determined on an annual basis by the Partnership's regularly engaged Certified
Public Accountant. For purposes of this section, Net Available Cash shall mean
gross income of- the Partnership less all rental payments provided for in this
Lease except for those set forth in this Section 4.07 and Sections 4.01 and
4.02, debt service on any obligations incurred by the Partnership in the
ordinary course of its business regarding the Amphitheatre or to refinance and
pay off all or a portion of the minimum rent obligation set forth in Section
3.03(b), operating expenses, management fees, insurance, an annual cumulative
return (prorated during the first year of the Partnership's existence from the
date on which the Partnership is funded) of Five Hundred Sixty Thousand Dollars
($560,000), and the like. Any amounts due under this paragraph shall be payable
at the same time as, and from, the fundings distributed by the Partnership to
Bill Graham, BGP and/or Shoreline Amphitheatre Ltd. or their successors in
interest. Within ninety (90) days after the end of each calendar year, the
Parntership's regularly engaged Certified Public Accountant shall submit to City
a written report describing
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whether, and to what extent, any amounts are due City under this subparagraph
(a). Any payments due City shall be paid within this ninety (90) day period each
year.
(b) Ten percent (10%) of the Net Gain or Refinancing Proceeds, payable by
the Partnership upon a sale or refinancing of the Amphitheatre. For purposes of
this Section 4.07(b), Net Gain or Refinancing Proceeds shall mean the gross
funds received by the Partnership from a sale or refinancing, less all expenses
of the sale or refinancing, any debt secured by, or involving, the Amphitheatre
(including without limitation the unamortized portion of the minimum rent
described in Section 3.03(b) actually paid off as a result of the sale or
refinancing, and any amount paid City pursuant to Sections 4.01 and/or 4.02.
Such proceeds shall be paid to City within thirty (30) days from the completion
of the sale or refinancing.
ARTICLE V
OPERATION, MAINTENANCE AND PROMOTION
OF THE AMPHITHEATRE
Section 5.01. Use of the Site. Partnership covenants and agrees that
Partnership shall, and Partnership will direct BGP
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and (so long as the Sublease is in effect) BGP shall agree to continuously use
or cause to be used the Site and related parking for the operation of a quality
Amphitheatre for the purpose of presenting cultural and entertainment
performances and will operate, maintain and promote the same with uses
incidental to or customarily related to such primary use. Partnership and BGP
shall also be responsible for the maintenance and operation of the Site and
related parking during that time which is not during the Concert Season, and
Partnership shall direct BGP and (so long as the Sublease is in effect) BGP
shall agree to, use the utmost skill and diligence in the conduct of
Partnership's and BGP's operation of business on the Site and related parking,
to exercise sound business judgment and to undertake such commercially
reasonable acts as may be reasonably necessary so as to produce the maximum
volume of trade and patronage reasonably obtainable from the operation of the
Amphitheatre in a commercially reasonable manner, thereby providing to City a
return of the greatest possible amount of Rent (subject to the requirements of
Section 5.02). Neither Partnership nor BGP shall allow the Site and other areas
made available to Partnership by City to be used for any other purpose without
the prior express written consent of City, nor shall any parking area for the
Amphitheatre be used for anything other than parking for Amphitheatre events
without the prior written approval of City. If a parking operator other than BGP
is contemplated, City's
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prior written consent shall first be obtained. Neither Partnership nor BGP shall
allow the sale of any merchandise or services on the Site or parking and related
improvements unless such selling is conducted as a business regularly licensed
to do so.
The Amphitheatre, parking, landscaping and related improvements shall be
continuously maintained by Partnership to a high standard consistent with
high-quality amphitheatres throughout the State of California. If Partnership,
after being given written notice by City that Partnership's maintenance efforts
have failed to meet the above-referenced standards, does not correct any
specified maintenance problem within 30 days, thereafter City may correct such
problem and charge Partnership for its costs in doing so.
Section 5.02. Balanced Programming. Part of the consideration inherent in
City executing this Lease is the fact that City considers the Amphitheatre a
significant community asset, but only so long as programming at the Amphitheatre
is balanced in substantially the manner hereinafter provided. Amphitheatre
programming shall be balanced so as to ensure a reasonably proportioned blend of
cultural experiences, recognizing and accepting the fact that some (e.g., so
called, "high arts") may not be as profitable as others (e.g., "rock and
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roll"). For the purpose of this Lease, "balance" shall mean a reasonable
assortment of varied types of music events appealing to the varied tastes of the
general population including, without limitation, popular, rock and roll, blues,
soul, jazz, folk, classical, country and western music, comedy and theater. City
and Partnership acknowledge that the examples contained in this Section, though
applicable to 1986 tastes in entertainment, may not be indicative of general
tastes during the entire Term. It is the intent of the parties throughout the
Term to appeal to the varied entertainment tastes of the general public as such
tastes change over time. Notwithstanding the foregoing, Partnership and BGP
shall have no obligation to present and promote entertainment events which are
consistently unprofitable.
Section 5.03. Promotion, Use of Amphitheatre and Advance Notice. In
promoting the Amphitheatre and the events to occur at the Amphitheatre
Partnership and BGP shall conspicuously reference the fact that the Amphitheatre
is in or at the City of Mountain View. Such promotion may include, but not be
limited to, written advertising, television and radio advertising. Partnership
acknowledges that one main sponsor for the Amphitheatre is Pepsi-Cola, Inc., and
that Partnership has entered into a sponsorship agreement with Pepsi-Cola, Inc.
which requires Partnership to promote Pepsi-Cola, Inc. products. Partnership
agrees that "Shoreline Amphitheatre at Mountain View"
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shall receive equal billing and promotional efforts as that given to
Pepsi-Cola, Inc. or such other major sponsor as may replace Pepsi-Cola, Inc.
The amount and location of all on-site advertising must receive the prior
written approval of City. To the extent feasible, Partnership and BGP shall
provide City with maximum advance information regarding performance scheduling,
and will cooperate with City in informing residents of such upcoming events.
Partnership and BGP further agree to submit for City approval prior to any
ticket sales for the first season, a Residents Priority Plan to ensure that
Mountain View residents receive preferred seating at all performances. This is
to be accomplished by some approach acceptable to City and BGP, such as: making
available for purchase by Mountain View residents only, an appropriate number of
choice reserved seats; by allowing a reasonable period of time in advance of
ticket sales to the general public, during which Mountain View residents only
can purchase tickets; a combination of those techniques; or some other procedure
acceptable to City. The aforementioned Resident Priority Plan may require
tickets to be purchased at the Amphitheatre box office and that residents
provide suitable evidence documenting bona fide Mountain View residency. The
Resident Priority Plan may also provide for any tickets held back for Mountain
View residents to be released for general sale a reasonable period of time prior
to the performance. On weekdays, no show shall start before seven (7) p.m. nor
end after midnight
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without the prior written consent of City. On weekends, no shows shall start
before noon nor end after midnight. If consistent traffic congestion is
generated by the starting and ending times of concerts, City and Partnership
shall meet and formulate reasonable solutions to such traffic congestion. If,
after reasonable efforts by Partnership to mitigate the traffic congestion, a
problem persists, then City may further alter the permitted show times bearing
in mind the nature of Partnership's use of the Amphitheatre and the effect the
changed show times may have on booking of performers and attracting audiences to
the Amphitheatre. Partnership shall not allow any public entity other than City
the use of the Amphitheatre, parking or related improvements without the prior
written approval of City. No performance shall be conducted at below the normal
customary market rate for such performance without the prior written approval of
City, except that Stephen Wozniak shall be allowed the use of the Amphitheatre
for two (2) days during each Concert Season, and such use by someone other than
Partnership or BGP, and at below the normal customary rate for any performance,
is hereby approved by City. The use of the Amphitheatre by Stephen Wozniak
shall, however, be subject to each and every other provision of this Lease,
including, without limitation, those provisions regarding Rent delineated in
Section 3.01 and the type of events which may occur at the Amphitheatre.
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Section 5.04. Traffic, Crowd Control and Cleanup. Partnership, at its
expense, shall be responsible for cleanup of the Amphitheatre and related
parking areas, as well as crowd control, security and traffic control.
Partnership shall also pay City no more than fifteen (15) days after billing,
any and all extra costs actually incurred by City related to any performance at
the Amphitheatre. Such costs shall generally include, but not be limited to,
Site, parking and community clean up, crowd control, security (including
off-site security to prevent parking for Amphitheatre events on private property
not available for such parking) and traffic control relating to Amphitheatre
activities or events all to the City's reasonable satisfaction and crowd
control, security and any other similar problems reasonably related to any event
occurring at the Amphitheatre or in the area within a reasonable proximity of
the Amphitheatre parking or related improvements. City shall promptly notify BGP
and Partnership of the exact nature and cost of the additional services
necessitated by Partnership's operation of the Amphitheatre. Within fifteen (15)
business days after receipt of satisfactory documentation supporting the costs
and expenses incurred by City, Partnership shall reimburse City for such costs
and expenses. At any time during the Term, City may allow, at its sole
discretion, Partnership or BGP to provide, at Partnership's or BGP's cost, any
or all of the additional services for which City has or intends to seek
reimbursement
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under this Section 5.04, including, without limitation, crowd and traffic
control and general clean-up reasonably related to any event which has or will
occur at the Amphitheatre, parking or related improvements. For purposes of this
section, Partnership shall, if requested by City Police Chief, undertake traffic
control off-site for Amphitheatre performances, and shall have its employees
trained in such matters by City or its designee, paying all costs of training.
If crowd control, security, cleanup or traffic control are not handled to City's
reasonable satisfaction, then City and Partnership shall meet and formulate
reasonable `solutions. As the first Concert Season may be a period of refining
the handling of such issues, a failure to fully satisfy City during the first
Concert Season shall not constitute a default provided Partnership uses
reasonable and diligent efforts to resolve all problems identified by City.
Section 5.05. Rengstorff Extension. City has already commenced planning
and, as soon as is reasonably practicable and legally possible after the
execution of the Lease, City may commence construction of an extension of
Rengstorff Avenue to Stierlin Road, which extension is expected to serve the
Amphitheatre as well as benefit the broad North Bayshore Area.
Section 5.06. Name. The City shall have the right to approve the name of
the Amphitheatre, as well as any logos
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used. The City shall use its best efforts to name the Rengstorff extension
above-referenced to a name denoting Shoreline or the Amphitheatre's presence so
that there may be a freeway off-ramp designation.
Section 5.07. Sound Limitations. Partnership has the affirmative
obligation to resolve all problems relating to sound emanating from the
Amphitheatre. Without limiting the City's land use and police powers in any way
City acknowledges that, as required by the balanced programming provisions of
Section 5.02, Partnership will be offering a variety of musical and
entertainment events at the Amphitheatre, including rock and roll music. City
further acknowledges that Partnership's ability to promote rock and roll musical
performances at the Amphitheatre is an essential element in the projected
profitability and success of the Amphitheatre and is a material consideration in
Partnership's entering into this Lease. During the Term, in adopting guidelines,
ordinances, laws, statutes, rules and regulations affecting the Amphitheatre and
in permitting further development of the areas adjacent to the Amphitheatre,
City shall give due consideration to the existence of the Amphitheatre. With
regard to future development of areas adjacent to the Amphitheatre, City shall
make the developers aware of the Amphitheatre.
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Partnership shall design, construct and operate the Amphitheatre in a
reasonable manner such that sound emanating from the Amphitheatre, parking or
related improvements shall not create a nuisance or annoyance to nearby uses.
City reserves the right to impose by resolution of the City Council specific
reasonable operational and/or sound level limitations on the operation of the
Amphitheatre.
During the first Concert Season, City and Partnership shall seek to
identify specific noise or sound problems which may exist at the Amphitheatre.
After identification of noise or sound problems, Partnership shall use
reasonable efforts to mitigate the affect of such problems during the balance of
the 1986 Concert Season. If, after reasonable efforts to mitigate, noise
problems persist, then City may require the lowering of sound amplification
equipment power output, so that these noise or sound problems are substantially
mitigated to City's satisfaction. Following the 1986 Concert Season, Partnership
shall use reasonable efforts to correct any further noise and sound problems
identified by City, again, including the obligation to adjust sound
amplification equipment power levels, if Partnership's reasonable mitigation
efforts including the equipment of performers, do not alleviate persistent noise
problems so that reasonable sound levels adopted by City are not exceeded. City
may develop reasonable guidelines for the
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implementation of this Section, and if such guidelines are developed,
Partnership shall follow these guidelines. If after the first Concert Season
Partnership at any time fails to solve these noise and sound problems identified
by the City to the City's reasonable satisfaction within a reasonable time
period, then, thereafter, if Partnership, at any time, exceeds any then existing
sound limitations imposed, City shall have the right to enter the Site for the
purpose of monitoring and, if necessary, adjusting the amplification levels of
all sound equipment at the Amphitheatre so that off-site nuisance or annoyance
is avoided and sound limits are not exceeded. City shall also have the right,
after the first Concert Season, to install sound level governors on all sound
amplification equipment used at the Amphitheatre so that no sound shall exceed
then-existing reasonable sound level limitations imposed by City on the
operation of the Amphitheatre by resolution, ordinance or developmental
approvals given by City. These sound governors may be readjusted from time to
time in order to reflect changes in sound level limitations imposed by City.
City shall also have the right to place such sound governors on any
amplification equipment brought in by any third party other than Partnership or
BGP, including any performers and their staff. City shall not have the right to
install and operate sound governors until Partnership has been given a
reasonable opportunity to cure identified noise problems, and the cure proposal
by Partnership fails to eliminate persistent noise and sound problems.
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The exercise by City of any rights under this Lease shall not act as a bar
to the exercise by City of any other right or remedy it may have in law or
equity for a violation of the sound limitations set by City. The cost of any
sound monitoring system or acoustical consultant hired by City to ensure that
the sound attenuation objectives of this Section 5.07 are satisfied shall be
paid by City but Partnership shall reimburse City one half those costs.
Section 5.08. City Days and Other Community Uses. Partnership shall allow
the Amphitheatre to be used rent free (with all operating maintenance and repair
costs due to City's use at the City's expense) for seven days during the Concert
Season. Unless expressly approved by Partnership, no more than four (4) days of
"City Days" shall be consecutive. Not later than January 1 of each year City
shall give Partnership written notice of the seven (7) days which City desires
to designate as "City Days" during the next occurring Concert Season, except
that no more than three (3) of the "City Days" may occur during the months of
July, August, September or October without the consent of Partnership. City
shall not designate the July 4 or Labor Day weekends for "City Days."
Partnership shall reserve the requested days for City. All costs and expenses
of operating the Amphitheatre during "City Days" shall be borne by City,
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including, without limitation, insurance premiums, traffic and crowd control,
clean-up, and employee salaries and benefits. In addition, City shall pay for
all parties or entertainers used and shall also repair and replace any and all
portions of the Amphitheatre and parking areas damaged due to City's use during
"City Days." In addition to "City Days," the Amphitheatre parking and related
improvements shall be made reasonably available rent-free (except for the
operating costs described above) for City-approved community events occurring
during other than the Concert Season and at other times when such use would not
conflict with use by Partnership or BGP. City shall indemnify Partnership and
BGP against any and all claims, liabilities, expenses and costs arising out of
City's use of the Amphitheatre to the extent such claims, liabilities, expenses
and costs are caused, in whole or in part, by the negligence or willful
misconduct of City, its agents, employees and/or invitees.
Section 5.09. City Attendance at Amphitheatre Events. City shall be
provided, at no cost, a minimum of fourteen (14) premium tickets (including and
not in addition to Mayor's Box seats) for each performance at the Amphitheatre.
Such tickets shall be located in the best one-third (1/3) of the reserved seats
centered and nearest the stage for good viewing. In addition, during each
Concert Season City shall be entitled to up to two
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hundred (200) additional free tickets, which shall be located below the reserved
seating cross aisle and reasonably centered provided that City shall not be
entitled to utilize more than thirty-four (34) of the combined two hundred and
fourteen (214) free tickets for any one performance. These tickets may be used
by City in any manner it deems appropriate. Partnership shall designate a
centrally located box as the "Mayor's Box" so that City may, when needed,
provide for seating of dignitaries during any performance. If constructed, the
"Mayor's Box" shall seat at least eight (8) people. Partnership shall also
reserve nine (9) parking spaces specifically for City use located in the
near-in VIP parking area closest to the Amphitheatre. Annually commencing in
1987 and at no expense to City, Partnership will conduct two (2) catered parties
prior to a concert selected by City. The date of such parties shall be mutually
agreed upon by the parties at least thirty (30) days in advance of the date of
the party. These parties shall be of at least equal quality to that provided
Pepsi-Cola, Inc. pursuant to Pepsi-Cola, Inc.'s agreement with BGP. City will
have the right to invite up to a cumulative total of 150 guests to the two (2)
catered parties and will have the right to conduct other similar parties at
City's sole expense prior to any concert or at other times, subject to BGP's
reasonable approval.
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Section 5.10. Pump; Wells. Upon execution of this Lease, Partnership shall
assume full responsibility and cost for the operation and maintenance of the
existing ground water dewatering pump located on the Site. Upon termination of
Partnership's use of this ground water dewatering pump, Partnership shall
salvage the pump and appurtenances and shall transport and deliver them to
City's Municipal Operations Center or at such other facility within the City of
Mountain View as City shall designate. Partnership shall have the sole
responsibility for dewatering the Site during the Term. City shall have no
responsibility for maintaining the Amphitheatre, parking and related
improvements in a dry condition. Partnership shall pump ground water
(underground water as opposed to surface and storm water) collected by it on
Site directly to Permanente Creek, and shall be responsible for acquiring and
complying with all necessary permits and approvals to do so. Partnership has the
right to use the swale located to the north of the Site for conveying and
discharging surface and storm water so long as such water does not contain
contamination and Partnership upgrades the City pumps, if necessary, at its sole
expense, to handle such water, tests periodically for contaminants at its
discharge point into the swale and pays yearly its pro-rata share of the
maintenance and operation costs of the upgraded pump station. City has a twelve
(12) inch pipeline running close to the northern end of the Site west to
Permanente Creek. City hereby grants ownership of this
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pipeline to Partnership, during the term hereof, and Partnership hereby accepts
such ownership. Partnership shall use this pipeline for the purpose of conveying
ground water collected on the Site for discharge to Permanente Creek during the
Term. City shall also grant to Partnership an easement over City lands for the
sole and exclusive purpose of operating and maintaining the pipeline, such
easement to be in the form attached hereto as Exhibit D.
City shall drill, maintain and operate wells located on the perimeter of
the Site, in such locations intended to detect any ground water contamination
approaching Site. City shall promptly report to Partnership any water
contamination discovered from such wells. In the event of water contamination,
City and Partnership shall work diligently with regulatory agencies and other
responsible parties to seek to prevent such contamination from reaching the
Site. City, however, does not guarantee against such contamination of the Site.
At the opening of the Amphitheatre, or at such earlier time as the City,
in its sole discretion, deems appropriate, City agrees to pay to Partnership the
sum of Five Hundred Thousand Dollars ($500,000), which sum is intended as City's
general contribution to the cost of the Amphitheatre, parking and related
improvements.
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Section 5.11. Landfill Site and Odor. Partnership acknowledges that City
is and will be operating a sanitary landfill on real property adjacent to the
Amphitheatre and that the Amphitheatre will be partially constructed on
excavated landfill. Unless otherwise provided herein, Partnership assumes the
responsibility for the construction and operation of the Amphitheatre on and
near the landfill. City, however, covenants to operate its landfill facility in
keeping with good and prudent sanitary landfill practices and in such a manner
so as to avoid any noxious or unusual odor from the landfill affecting the
Amphitheatre. Upon receipt of notice from Partnership regarding odor problems,
City shall take reasonable actions to obviate such odor problems. If odor
problems relative to exposed garbage exist at the Amphitheatre, then upon 48
hours' advance notice of any concerts or other entertainment events which are to
occur at the Amphitheatre, City shall, on the day of such concert or
entertainment event, cover all exposed garbage with an adequate layer of dirt.
City shall have no obligation to cover garbage pursuant to the provisions of
this Section 5.11 unless and until an odor problem is identified.
Section 5.12. Leachate. In the operation and maintenance by City of the
sanitary landfill, leachate may be created. City assumes responsibility for
control of this sanitary landfill
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leachate and will indemnify and hold harmless Partnership and BGP from any
liability, cost or expense accruing due to the contamination of the water or
acquifer systems on the Site that affect the operation and use of the
Amphitheatre as a result of leachate infiltration from the City sanitary
landfill unless such infiltration is caused by Partnership. Partnership
recognizes that it is constructing an Amphitheatre partially below ground level
so that substantial dewatering is necessary. Such dewatering may cause
leachate to move to the Amphitheatre. Such movement of leachate shall not be
considered a responsibility of City, since it may occur solely due to
Partnership's design and construction of this Amphitheatre. To prevent such
leachate infiltration and contamination from occurring, Partnership shall design
and construct a slurrywall around the Amphitheatre. Partnership takes full and
sole responsibility for the design, construction, operation, maintenance and
effectiveness of the slurry wall. In the case of sanitary landfill leachate
infiltration not caused by Partnership, City will have available reasonable
contingency plans to "clean up" the contamination and will use its utmost
efforts so as to prevent any interruption by the Regional Water Quality Control
Board (or its successor or similar agency) or any other federal, state or local
governmental agency of any operations at the Amphitheatre. In the case of water
contamination not caused by City, Partnership shall have available reasonable
contingency plans to "clean up" the
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contamination and will use its utmost efforts so as to prevent any interruption
by the Regional Water Quality Control Board (or its successor or similar agency)
or any other Federal, State or local governmental agency of any operations at
the Amphitheatre.
Section 5.13. Landfill Gas. Pursuant to the provisions of Section 1.01,
City retains ownership to and the right to extract landfill gas from the Site
and any other property made available pursuant to this Lease to Partnership.
City shall be fully responsible for control of such landfill gases so as not to
unreasonably impact the operation and use of the Amphitheatre unless such impact
is caused by Partnership. Partnership recognizes the existence of such landfill
gas and will reasonably design and construct the Amphitheatre, parking and
related improvements taking into account the landfill gas.
Section 5.14. Existing Buildings. Several buildings, other structures, and
their support facilities exist on the Site. Partnership shall use or demolish
such buildings and structures. If Partnership desires to relocate the "pump
building" or golf course maintenance building, Partnership shall submit
relocation plans to City for its approval. Any relocation of the "pump building"
shall be at Partnership's sole cost and expense. Partnership, at its cost, shall
be responsible for demolition, removal and disposal of all materials. If
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Partnership elects to dispose of any materials at the City landfill, Partnership
shall pay normal resident disposal fees.
Section 5.15. Taxes, Charges and Other Fees. Subject to the limitations
imposed by Section 4.06, Partnership shall pay all taxes, including but not
limited to, possessory interest taxes, charges, whether City or otherwise, and
fees, whether City or otherwise, normally and usually levied by any person,
firm, or corporation, whether public or private, associated with Partnership's
performance under this Lease.
Section 5.16. Hiring Practices. Partnership shall, when reasonably
possible, hire its personnel from Mountain View residents.
Section 5.17. Slurry Wall. Partnership shall indemnify, defend and hold
City harmless from and against any liability, cost, expense or charge incurred
by City as a result of the failure of the slurry wall to prevent contamination
from entering the Site, unless such contamination was caused, either in whole or
in part, by the acts or omissions of City.
Section 5.18. Community Contribution. The Community has determined that
the construction of the Amphitheatre in the North Bayshore Area will
significantly contribute to the progressive
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development of that area, and to that end Community shall contribute to the
capital of Partnership for the construction of the Amphitheatre the sum of Eight
Million Dollars ($8,000,000) paid as follows:
Date Amount
July 3, 1986 $5,000,000
August 2, 1986 $3,000,000
Prior to or concurrently with the payment of each sum above specified,
Partnership shall provide Community reasonable proof of the expenditure of those
sums for the construction of the Amphitheatre, parking and related improvements,
and shall also provide City and Community with lien releases from all
materialmen and labormen who supplied labor or materials for the construction of
the Amphitheatre, parking and related improvements representing work done on the
Amphitheatre, parking, and related improvements for the prior months' invoices.
Due to this capital contribution, Partnership agrees that both City and
Community have the unfettered right to and shall be notified of, all Partnership
meetings.
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ARTICLE VI
PARKING
Section 6.01. Obligation to Provide Land for Permanent, Overflow and
Temporary Parking. City shall, in addition to the Site, make available to
Partnership sufficient land in the North Bayshore Area within a reasonably
proximate distance from the Site so that, together with parking available on the
Site, a total of five thousand six hundred (5,600) parking spaces may be
provided by Partnership.
Section 6.02. Initial Parking Lot Development. Partnership is solely
responsible for ensuring construction of, maintenance, and continuing
accessibility to 5,600 parking spaces to serve the Amphitheatre for the term of
this Lease. Some of the land which City could make available for parking may be
located within Shoreline, in which case it shall be last used, for overflow
events, and may, at the City's option, be developed by Partnership as a
landscaped parking meadow, with additional parking allowed to be developed in
the adjacent PG&E easement. To the extent that the concept of natural meadow
parking and parking in the PG&E easement may represent initial construction
and/or ongoing maintenance costs in excess of similar costs which would have
been incurred by Partnership to build and maintain
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conventional parking, City agrees to assume those additional costs.
Section 6.03. Displacement of Temporary Parking and Future Construction of
Additional Permanent Parking. If City deems it necessary that some of the
required parking be designated as temporary in nature, or for overflow events
only, due to possible future reuse of said land or other City needs, then City
acknowledges that said temporary parking may be of lesser construction
standards. Partnership shall, within 60 days of completion of construction of
any such parking designated as temporary by City, provide City with an itemized
report, approved by City Engineer, setting forth the actual, direct costs
incurred in developing said temporary parking.
If City deems it necessary in the future to displace said temporary
parking, then City hereby agrees to make available additional proximate land,
whereupon Partnership shall, under the same terms as set forth above in this
article, expeditiously develop replacement parking. In the event that such
displacement occurs prior to November 1, 1988, then City shall be responsible to
reimburse Partnership on a pro-rata basis for the remaining value of said
temporary parking, based upon actual original Partnership costs incurred in
developing said temporary parking as above required (and calculating the life of
said temporary
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parking on the basis of 3 1/2 years of life preceding date of displacement,
irrespective of when actually constructed). Said parking cost reimbursement by
City to Partnership shall occur within 90 days of said displacement.
Any land subsequently made available by City to Partnership for the
purpose of accommodating said displaced temporary parking may, at City's sole
option, also be deemed temporary, in which event it shall be subject to the same
cost-to-construct reporting and pro-rata City buyout provision (assuming a
3 1/2-year life) as set forth in this Section. Notwithstanding any provisions
hereof to the contrary, City may displace Partnership's temporary parking and
require Partnership, at its cost, to construct replacement parking no more than
twice during the Term hereof. Any subsequent displacement of Partnership's
temporary parking shall be at City's expense, including the cost of construction
of replacement parking.
Section 6.04. Construction of Future Permanent Parking. In the event that
City does in the future develop, or have developed nearby lands to accommodate
industrial, cultural, parking or other uses deemed appropriate by City, then
Partnership agrees that it will, at City's option, pay for its share in the
actual direct construction cost of up to 1,600 parking spaces (including but not
limited to parking area site preparation, full paving
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section, curbing, landscaping and irrigation, lighting, possible multi-level
parking structure, etc.). Said parking construction cost sharing shall take into
account the Amphitheatre's anticipated proportionate accessibility of those
spaces to be made available by City, but not exceeding 1,600 stalls, for
Amphitheatre use during all Amphitheatre performances (less City Days) which may
occur during an average Concert Season. Said Partnership parking construction
payment shall be calculated on a pro-rata basis, considering the number of
hours per year that said spaces are to be made available for Amphitheatre use by
Partnership and the number of normal business hours that said parking will
reasonably be utilized for nonAmphitheatre use between 7 a.m. and 7 p.m.
weekdays and weekends. City shall be responsible for documenting to Partnership
the construction cost of said parking, which may be developed either as ongrade
parking or structure parking. Partnership's proportionate share of the cost of
construction of the facility containing the additional 1,600 parking spaces
shall be paid to the owner of the parking structure in equal monthly
installments amortized over a twenty (20) year period at an interest rate equal
to the Bank of America reference rate in effect on the date of commencement of
construction of the subject parking facility. The owner of the parking structure
shall be entitled to charge Amphitheatre patrons for the use of the parking
structure at a rate equal to the parking rate then charged by Partnership for
parking in the
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other parking areas. This charge shall be paid in cash by the Amphitheatre
patron if parking is charged separately and not incorporated into the ticket
price. If parking is incorporated into the ticket price, then the parking
structure operator shall collect the parking stubs on the Amphitheatre tickets,
or use some other acceptable means of determining Amphitheatre parking use, and
upon submission of such stubs to Partnership, Partnership shall reimburse the
parking structure operator for the parking charge designated on the stub.
Partnership shall receive a credit against the next accruing payments due for
the cost of construction of the parking structure in an amount equal to the
parking revenues collected by the operator of the parking structure from
Partnership and Amphitheatre patrons pursuant to this Section. In addition to
reimbursement of the construction cost, Partnership shall also be obligated to
pay its proportionate share of maintenance and repair costs associated with
operation and use of the parking structure. Partnership shall receive a credit
against such maintenance and repair obligations in an amount equal to the
remaining parking fee credit after application to the construction cost
repayment.
In addition to the foregoing, at any time following five years after the
first performance at the Amphitheatre, City may displace any of the Amphitheatre
parking beyond the 1,600 spaces herein noted, and excepting that approximately
2,000 spaces to be
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provided immediately adjacent to the Amphitheatre. Should City displace any of
said remaining parking, City accepts responsibility for providing needed
reasonably proximate land for said displaced parking and for bearing the initial
cost to construct said parking. Partnership shall, however, bear reasonable
pro-rata maintenance and repair costs associated with said parking. After any
parking herein specified is constructed, Partnership shall pay to City,
biannually on the first day and 180th day of each Lease Year, its proportionate
share of the costs of maintenance and repair of the parking.
Section 6.05. Use of Parking Lots by City. City shall have the right, upon
not less than forty-eight (48) hours advance written notice, to utilize all
parking areas for the Amphitheatre for its own purposes, so long as such use
does not damage the parking facilities (reasonable wear and tear excepted), and
the use does not interfere in any way with Partnership's operation and use of
the Amphitheatre. If City uses the parking facilities, City shall provide
insurance satisfactory to Partnership or a hold harmless agreement if the City
is self-insured, shall repair any damage to the parking areas occurring during
City's use of the parking areas, shall provide all necessary crowd and traffic
control and cleanup of the parking areas and shall indemnify Partnership and
BGP against any and all claims, costs, expenses and liabilities arising out of
or in connection with City's negligent use of the parking areas.
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Section 6.06. Parking for Increased Amphitheatre Capacity. If Partnership
proposes, and City approves, an increase in the capacity of the Amphitheatre
because of changes in the marketplace or entertainment industry, City shall use
its best efforts to assist Partnership in obtaining the additional parking
necessitated by such expansion.
Section 6.07. Changes In Parking Demand Or Density of Auto Use. For
purposes of determining the number of required parking spaces, the City and
Partnership have assumed that 2.8 people will occupy each car. The number of
available parking spaces is 5,600 less 300 for employee parking. The patron
capacity of the Amphitheatre is 15,000 persons.
Section 6.08. Parking Charges. Partnership shall initially be allowed to
charge separately for parking. If City determines charging for parking creates
unreasonable traffic congestion on City streets or results in Amphitheatre
patrons parking on other private property not available for such parking, City
and Partnership shall meet and propose solutions (other than adding parking
charges to ticket prices) to the identified problems. Partnership shall have a
reasonable period of time to solve City's concerns. Following the first Concert
Season if Partnership's efforts have not reasonably mitigated the
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identified problems, then City may require that Partnership not collect charges
for parking on the Site or parking area, but rather include the cost of parking
in the ticket admission price or issue parking tickets at the time the admission
ticket is purchased. If inclusion of parking charges in ticket prices does not
substantially improve the problem identified by City during the next Concert
Season, then Partnership shall once again be permitted to separately charge for
parking. Thereafter, City and Partnership shall diligently work together to
mitigate the parking and traffic problems.
ARTICLE VII
INSURANCE
Section 7.01. Insurance. During the Term, Partnership shall maintain the
following insurance, at Partnership's sole cost and expense:
(a) A policy of fire and extended coverage insurance (including
flood, settlement, subsidence and water damage coverage) with a full replacement
cost endorsement on the Amphitheatre, parking and all related improvements.
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(b) During any construction, alteration or repair on the Site or any
areas made available to Partnership by City or any part thereof:
(i) adequate workers' compensation insurance covering all
persons employed in connection with such work and with respect to whom death or
bodily injury claims could be asserted against any other party;
(ii) builders' risk insurance for the amount of completed
value on an all-risk form covering all improvements under construction, during
the period of such construction, including building materials;
(c) Comprehensive public liability insurance covering the
Amphitheatre, parking and related improvements.
(d) Automobile public liability insurance covering all owned,
non-owned and hired motor objects to be used in connection with the operation
of the Amphitheatre and any other area made available to Partnership by City,
affording protection for personal injury or death in respect of bodily injury or
death to any number of persons in any one accident or occurrence, and for
property damage.
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(e) Insurance against damage to or destruction of machinery and
equipment located on the Site and any other area made available to Partnership
by City used for heating, ventilating, air-conditioning, power generation and
boiler and machinery insurance in an amount not less than one hundred percent
(100%) of the actual replacement cost of the machinery and equipment.
(f) During the period Minimum Rent is paid City pursuant to Section
3.03(b) and earthquake insurance is commercially available, Partnership shall
cause such insurance to be maintained in an amount sufficient to cover the
unamortized portion of Eight Million Dollars ($8,000,000) amortized over twenty
(20) years (beginning August 1, 1986) at ten and one-half percent (10.5%) per
annum. In addition, Partnership shall cause such insurance to be maintained for
the full replacement value of the Amphitheatre as long as such insurance is
commercially available at commercially reasonable rates. Whether this additional
earthquake insurance is commercially available at commercially reasonable rates
shall be determined before each Concert Season by an insurance broker selected
by Partnership and approved by City; provided, however, that for the first
initial Concert Season, City and Partnership have determined that such full
replacement value earthquake insurance is not commercially available at
commercially reasonable rates.
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(g) Such other insurance, in such amounts and against such other
risks, as is required by any law or ordinance or as is customarily maintained
from time to time with respect to properties which are similar in occupancy and
construction to the Amphitheatre.
(h) After the earlier of the completion of the Amphitheatre as
certified by City or May 1, 1987, business interruption insurance for loss
caused by any of the perils or hazards set forth in and required to be insured
pursuant hereto in an amount not less than the aggregate of all Rent for a
twelve (12) month period, which City and Partnership estimate to be Two Hundred
Thousand Dollars ($200,000). The amount of the initial business interruption
insurance shall be calculated from the earlier of the date of completion of the
Amphitheatre as certified by City or May 1, 1987, and shall be adjusted annually
thereafter. The proceeds of or from or payable under or pursuant to any such
business interruption insurance shall be payable, and applied first, to the
payment of any unpaid and outstanding obligations, including, without
limitation, rental payments hereunder, then to payment of any indebtedness
secured by deeds of trust or other financing mechanism and thereafter to or for
the benefit of Partnership. Partnership shall provide evidence of such business
interruption insurance within thirty (30) days
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after the earlier of the date the Amphitheatre is substantially completed, as
certified by City, or May 1, 1987.
Section 7.02. Carriers; Policies. All insurance provided for pursuant to
Section 7.01 hereof shall:
(a) Be effected under a valid and enforceable policy or policies
issued by insurers of recognized responsibility reasonably satisfactory to City
and having at least an AX status as rated in the most recent edition of Best's
Insurance Reports.
(b) Name City and Partnership as insured parties thereunder, as
their respective interests may appear.
(c) Provide that:
(i) no cancellation, modification or termination thereof on
account of nonpayment of premiums or any other reason shall be effective until
at least thirty (30) days after receipt of written notice thereof by City, and
(ii) to the extent obtainable without additional premium as
determined by City, provide that such insurance shall not be invalidated as to
the interest of City by any act, omission or neglect of Partnership, any
beneficiary under a deed
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of trust or other financial mechanism recorded against Partnership's interest in
the Amphitheatre, parking and related improvements, their respective employees
or agents or any occupant of the Amphitheatre, parking and related improvements
or any other area made available to Partnership by City which might otherwise
result in a forfeiture or suspension of such insurance.
(d) In the case of liability insurance provided for pursuant to
Section 7.01 hereof (including automobile liability), insure against claims for
personal injury or death or property damage occurring upon, in or about the
Amphitheatre, parking or related improvements or any other area made available
to Partnership by City or upon, in or about the adjoining land, streets and
passageways thereof, such, insurance to afford protection in an amount not less
than Five Million Dollars ($5,000,000) combined single limits, which minimum
required amount shall be indexed every year on the anniversary date of the
completion of construction. Notwithstanding any provisions of this Lease to the
contrary, Partnership shall at all times maintain a liability insurance policy
in an amount not less than One Million Dollars ($1,000,000.00). Such liability
insurance coverage shall be maintained at the higher limits up to the Five
Million Dollar ($5,000,000.00) level (plus CPI indexing) provided such insurance
is available at commercially reasonable rates. Notwithstanding any additional
provisions of this Article 7, it
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shall not be a default under this Lease if liability insurance in amounts in
excess of One Million Dollars ($1,000,000.00) from an insurance company
satisfying the requirements of Section 7.02(a) is not available or is not
available at commercially reasonable rates. The temporary unavailability
of liability insurance in amounts in excess of One Million Dollars
($1,000,000.00) shall not relieve Partnership of its obligations to use due
diligence and its best efforts to locate an insurer who will issue such
insurance.
Section 7.03. City's Right to Maintain. If, within thirty (30) days after
receipt of written notice from City, Partnership shall neglect to maintain the
insurance required or shall fail to deliver policies or certificates as required
pursuant hereto, City may, upon giving advance written notice to Partnership,
effect such insurance as the agent of Partnership, by taking out policies in
companies satisfactory to City running for a period not exceeding three (3)
years in any one policy. City shall not be limited in the proof of any damages
which City may claim against Partnership (arising out of or by reason of
Partnership's failure to provide and keep in force insurance as aforesaid) to
the amount of the insurance premium or premiums not paid or incurred by
Partnership and which would have been payable upon such insurance, but shall be
entitled to recover as damages for such breach the amount of any actual loss or
damages incurred
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during any period when Partnership shall have failed or neglected to provide
such insurance.
Section 7.04. Proceeds. Subject to the rights of any beneficiary under any
deed of trust recorded against the Amphitheatre, unless otherwise provided in
this Lease, fire and extended coverage insurance proceeds and boiler and
machinery insurance proceeds paid to Partnership by reason of damage to or
destruction of improvements, shall be used by Partnership to restore the
improvements. If it is determined that such proceeds are insufficient to restore
the improvements, Partnership shall, first, and ahead of any and all other
claims on such insurance proceeds by whomever made, pay to City the unamortized
portion of Eight Million Dollars ($8,000,000) amortized over twenty (20) years
(beginning August 1, 1986) at ten and one-half percent (10.5%) per annum.
Section 7.05. Certificate of Insurance. Partnership shall furnish City a
certificate evidencing Partnership's compliance with the requirements hereof
upon the execution and delivery of this Lease (and in the case of business
interruption insurance on the date thirty (30) days prior to Partnership's
opening for business), and thirty (30) days before the expiration of any
insurance policy required hereunder.
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Section 7.06. Release and Waiver of Subrogation; Parties. City and
Partnership hereby waive all rights of recovery and causes of action, and
release the other from any liability, from all losses and damages occasioned to
the property of each located within or upon or constituting a part of the Site
and all other areas made available to Partnership by City, which losses and
damages are of the type covered under insurance policies maintained by City
and/or Partnership to the extent that such loss is actually reimbursed by an
independent insurer. The policies required by this Article 7 shall provide for
waivers of any right of subrogation that the insurer of such party may acquire
against the other party hereto with respect to any such losses.
ARTICLE VIII
EVENTS OF DEFAULT; TERMINATION
Section 8.01. Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default (regardless of the
pendency of any bankruptcy, reorganization, receivership, insolvency, or other
proceedings, in law, or in equity or before any administrative tribunal which
have or might have the effect of preventing Partnership from complying with the
terms of this Lease):
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(a) Partnership shall fail to pay any sum due to City within ten
(10) days after receipt of written notice of such delinquency; provided,
however, that the failure to pay either (i) more than Seventy-Nine Thousand
Eight Hundred Seventy Dollars ($79,870) of the minimum rent set forth in Section
3.03(b), or (ii) any of such minimum rent if there is a prepayment set forth in
Section 3.03(b), shall not be considered an Event of Default under this Lease;
provided, however, City shall not be required to give such written notice to
Partnership more than two (2) times during any twelve (12) month period;
(b) Subject to force majeure and delay caused by City, Partnership
shall fail to proceed with the construction of the improvements as required
hereby;
(c) Partnership shall fail to perform or comply with any other term
hereof, and such failure shall continue for more than thirty (30) days after
written notice thereof from City, and Partnership shall not within such thirty
(30) day period commence with due diligence and dispatch the curing of such
default, or having so commenced, shall thereafter fail or neglect to prosecute
or complete with diligence and dispatch the curing of such default;
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(d) If, within thirty (30) days after the filing by or against
Partnership of any proceedings under any State or Federal insolvency or
bankruptcy law, or any comparable law that is now or hereafter may be in effect,
whether for liquidation or reorganization such proceeding shall not have been
dismissed;
(e) The entry of an order for relief against Partnership or any
owner under any bankruptcy, insolvency or reorganization case;
(f) If, within thirty (30) days after the appointment of a receiver,
trustee, liquidator, custodian or similar officer of all or any part of the
property of Partnership such appointment shall not have been vacated;
(g) The assignment of all or any part of the property, if any, of
Partnership for the benefit of creditors;
(h) The failure of Partnership to give written notice to City of
Partnership's intention to commence proceedings under any State or Federal
insolvency, bankruptcy, or any comparable law that is now or hereafter may be in
effect, whether for liquidation or reorganization, at least thirty (30) days
prior to the commencement of such proceedings;
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(i) If a writ of attachment or execution is levied on this Lease and
such attachment or execution is not vacated within thirty (30) days thereafter;
or
(j) A default on the part of Partnership shall occur under any other
ground lease between City and Partnership or any other agreement between City
and Partnership.
Then, and in any such event, City, at any time thereafter while such Event
of Default exists, may give a written termination notice to Partnership, and on
the date specified in such notice this Lease shall terminate, and, subject to
any equitable or other rights available at law to prevent or mitigate a
forfeiture, the term of this Lease shall expire and terminate and all rights of
Partnership under this Lease shall cease. Partnership shall reimburse City for
all costs and expenses incurred by or on behalf of City (including, without
limitation, attorneys' fees and expenses) occasioned by any default by
Partnership under this Lease.
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ARTICLE IX
REMEDIES
Section 9.01. City's Remedies. If an Event of Default occurs:
(a) City at any time thereafter may give a written termination notice to
Partnership, and on the date specified in such notice (which shall be not less
than three (3) days after the giving of such notice), Partnership's right to
possession shall terminate and this Lease shall terminate, unless on or before
such date all arrears of rent and all other sums payable by Partnership under
this Lease and all costs and expenses incurred by or on behalf of City hereunder
shall have been paid by Partnership and all other breaches of this Lease by
Partnership at the time existing shall have been fully remedied. Should City
terminate this Lease pursuant to the provisions of this Section, City shall have
all the rights and remedies of a landlord provided by Section 1951.2 of the
California Civil Code or any successor code section. Upon such termination, in
addition to any other rights and remedies to which City may be entitled under
applicable law, City may recover from Partnership: (i) the worth at the time of
award of the unpaid rent which had been earned at the time of termination; (ii)
the worth at the time of award of
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the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rent loss that
Partnership proves could have been reasonably avoided; (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the term
of this Lease after the time of award exceeds the amount of such rent loss that
Partnership proves could be reasonably avoided; and (iv) any other amount
necessary to compensate City for all the detriment proximately caused by
Partnership's failure to perform its obligations under this Lease or which in
the ordinary course of things would be likely to result therefrom. The worth at
the time of award of the amount referred to in clause (iii) above shall be
computed by discounting such amount at a rate equal to the discount rate of the
Federal Reserve Board of San Francisco at the time of award plus one percentage
point.
(b) City shall have the immediate right to reenter the Site and other
areas made available to Partnership and terminate Partnership's right to
possession of the Site and any other area made available to Partnership by City,
in which event Partnership shall promptly surrender possession of the Site and
any other area made available to Partnership by City and pay to City all amounts
due City hereunder and under any terminated leases to the date of termination
and shall pay to City all deposits held by Partnership pursuant to any license,
concession or sublease, and
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City may, but shall have no obligation to, remove all persons and property
therefrom. Such property may be removed and stored in a warehouse or elsewhere
at the expense and risk of and for the account of Partnership. Should City elect
to reenter as herein provided, or should City terminate Partnership's right to
possession pursuant to legal proceedings or to any notice provided for by law,
this Lease shall terminate.
(c) City may, at its option, without terminating this Lease, reenter the
Site and any other area made available to Partnership by City and occupy the
whole or any part thereof for and on account of Partnership and enforce all of
its rights and remedies under this Lease, including the right to recover any
Rent and all other sums recoverable hereunder as the same become due hereunder,
and to refuse, notwithstanding any other term or provision of this Lease, to
permit and to deny the right of Partnership to remove any or all of
Partnership's moveable furniture, to add fixtures, equipment, improvements or
personal property located in, on or upon the Site and to use and take exclusive
possession of the same without payment to Partnership or cost to City for so
long as City so occupies the Site or until this Lease is terminated.
Additionally, City shall be entitled to recover from Partnership all costs of
maintenance and preservation of the Site and any other area made available to
Partnership by City, and all costs, including attorneys' and receivers' fees,
incurred
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in connection with the appointment of and performance by a receiver, to protect
the Site and any other area made available to Partnership by City and City's
interest under this Lease.
(d) City may, even though it reentered the Site and/or any other
area made available to Partnership by City pursuant to the provisions of
Subsection (b) above, thereafter elect to terminate this Lease.
(e) In the event City reenters the Site and/or any other area made
available to Partnership by City pursuant to the provisions of Subsection (b)
above, City shall not be deemed to have terminated this Lease and the liability
of Partnership to pay Rent and sums payable hereunder thereafter shall continue
unless City notifies Partnership in writing that City has so elected to
terminate this Lease. Partnership further acknowledges and agrees that the
service by City of any notice pursuant to the unlawful detainer or similar
statute of the State of California and the surrender of possession pursuant to
such notice shall not be deemed to be a termination of this Lease. Partnership
hereby irrevocably appoints City as agent and attorney in fact of and for
Partnership to so enter upon the Site and/or any other area made available to
Partnership by City in the event of a default by Partnership hereunder to remove
any and all furniture and personal property whatsoever situated upon the
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Site and/or any other area made available to Partnership by City, and to place
such furniture and personal property in storage for the account of and at the
expense of Partnership. In the event that Partnership shall not have paid the
cost of such storage after ninety (90) days, City may, at its discretion, sell
any or all of such furniture and personal property at public or private sale in
such manner and at such times and places as City in its sole discretion may deem
proper, without notice to Partnership or any demand upon Partnership. If City so
elects to sell such furniture and personal property, City shall apply the
proceeds of such sale first, to the cost and expenses of such sale, including
reasonable attorneys' fees actually incurred; second, to the payment of the
costs of or charges for removing and storing any such furniture and personal
property; third, to the payment of any other sums of money which may then or
thereafter be due to City from Partnership under any of the provisions of this
Lease; and fourth, the balance, if any, to Partnership, subject to the rights of
any holder of a permitted security interest. Partnership hereby waives all
claims for damages that may be caused by City's reentering and taking possession
of the Site and/or any other area made available to Partnership by City or
removing and storing furniture and personal property as herein provided, and
will save City harmless from any losses, costs or damages occasioned thereby. No
such reentries shall be considered or construed to be a forceable entry as the
same is
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defined in the Code of Civil Procedure of the State of California.
Section 9.02. Lease Continues Until Termination. Even though Partnership
has breached this Lease, this Lease shall continue in effect for so long as City
does not terminate Partnership's right to possession, and City may enforce all
its rights and remedies under this Lease, including the right to recover the
Rent as it becomes due under this Lease. Acts of maintenance or preservation or
efforts to relet the Amphitheatre or the appointment of a receiver upon
initiative of City to protect City's interest under this Lease shall not
constitute a termination of Partnership's right to possession.
Section 9.03. Remedies, Cumulative. The remedies provided for in this
Lease are in addition to any other remedies available to City at law or in
equity by statute or otherwise.
ARTICLE X
MORTGAGE OF LEASEHOLD
Section 10.01. No Encumbrances Except as Set Forth Herein. Subject to the
provisions of Article 4 Partnership shall not:
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(a) Engage in any financing or other transaction creating any
Mortgage or deed of trust upon the Site or any other areas made available to
Partnership by City, or upon Lessee's leasehold estate therein, without the
prior written approval of City;
(b) Place or suffer to be placed upon the Site or any other areas
made available to Partnership by City, or Partnership's leasehold estate
therein, any lien or other encumbrance (other than a lien upon the leasehold
estate for taxes levied but not delinquent or payable with penalty) unless
Partnership causes such lien to be removed within sixty (60) days after the date
of discovery by Partnership; or
(c) Suffer any levy or attachment to be made on the Site or any
other areas made available to Partnership by City, or on Partnership's leasehold
estate therein if such levy or attachment is not vacated within sixty (60) days
of the date of discovery by Partnership.
Any such mortgage, encumbrance or lien shall be deemed to be a violation
of this covenant on the date of its execution or filing of record regardless of
whether or when it is foreclosed or otherwise enforced.
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Section 10.02. Notice of Deed of Trust or Other Encumbrance. Upon
discovery, Partnership shall notify City promptly of any lien or encumbrance
which has been created on or attached to the Site or any other area made
available to Partnership by City or to Partnership's leasehold estate therein
whether by act of Partnership or otherwise.
Section 10.03. Interest Covered by Deed of Trust. Any deed of trust or any
other financing mechanism shall be without subordination of the title of City in
and to the Site or any other area made available to Partnership by City.
Section 10.04. Insurance Proceeds. Any deed of trust or any other
financing mechanism shall contain provisions permitting the disposition and
application of insurance proceeds in the manner provided in this Lease.
Section 10.5. Rights Subject to Lease. All rights acquired by the
beneficiary under any deed of trust or other financing mechanism shall be
subject to each and all of the covenants, conditions and restrictions set forth
in this Lease, and to all rights of City thereunder, none of which covenants,
conditions, and restrictions is or shall be waived by City by reason of the
giving of such deed of trust or other financing mechanism except
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as expressly provided in this Article 10. Notwithstanding any foreclosure of any
deed of trust or other financing mechanism, Partnership shall remain liable for
the payment of the Rent, and all other sums payable pursuant to this Lease and
the performance of all of the terms, covenants and conditions of this Lease
which by the terms hereof are to be carried out and performed by Partnership.
Notwithstanding any of the provisions of this Lease, including, but not limited
to, those representing covenants running with the land, the beneficiary under
any deed of trust, including any such holder or beneficiary who obtains title to
the leasehold or any part thereof as a result of foreclosure proceedings or
action in lieu thereof, but not including (i) any other party who thereafter
obtains title to the leasehold or such part from or through such holder or
beneficiary, or (ii) any other purchaser at foreclosure sale other than the
holder of the mortgage, or beneficiary itself, shall in no way be obligated by
the provisions of this Lease to construct or complete the improvements or to
guarantee such construction or completion or to cure any defaults accruing prior
to the date such party acquired title to the leasehold; provided, however, that
nothing in this Section or any other Sections or provisions of this Lease shall
be deemed or construed to permit or authorize any such holder or beneficiary to
devote the Site and/or any other areas made available to Partnership under the
Lease or any part thereof to any uses, or to construct any improvements thereon,
other than those uses or improvements provided or authorized in this Lease.
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Section 10.06. Approval of City. Without City approval, Partnership shall
not enter into any leasehold mortgage or execute a promissory note with a deed
of trust for the refinancing for the construction or operation of the
Amphitheatre, parking or related improvements unless through a regular
commercial lending institution.
Section 10.07. Leasehold or Deed of Trust. Concurrently with recordation
of any deed of trust or mortgage, Partnership shall cause a Request for Notice
of Default to be recorded in City's name with respect to each deed of trust or
mortgage recorded against Partnership's leasehold interest. In addition,
Partnership shall use reasonable efforts (not requiring the payment of money) to
incorporate the following provisions into any deed of trust or other financing
mechanism to be recorded against Partnership's interest in the Amphitheatre:
(a) That the Mortgagee or beneficiary shall, by registered or
certified mail and in writing, give notice to City of the occurrence of any
event of default under such mortgage or deed of trust; and
(b) That City shall be given at least thirty (30) days notice of
default in debt service payments before such
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beneficiary will initiate any foreclosure or other action to enforce the
collection thereof. If any payments of principal and/or interest required to be
made under the provisions of the mortgage or deed of trust shall not be
performed which shall constitute a default thereunder, or if there is any other
default thereunder, City may cure such default provided Partnership is given ten
(10) days notice of City's intention to cure such default. If City shall elect
to cure such default, Partnership shall pay the cost thereof to City upon
demand, together with interest thereon at the Specified Rate, unless (i)
Partnership shall cure such default within such ten (10)-day period, or (ii) if
compliance requires more than such ten (10) days, Partnership shall have
commenced compliance within a reasonable time after such notice and shall have
cured such default within thirty (30) days after commencing compliance, and
Partnership shall obtain from the mortgagee or beneficiary a written extension
of time in which to cure such default, together with a separate written
extension of time granting City reasonable additional time to cure such default
if such default is not cured within said extended time, and executed copies
thereof are delivered to City. Partnership authorizes City in City's name,
without any obligation or duty to do so and subject to the notice and cure
provisions of Article VIII, to do any act or thing required of Partnership to
prevent any default under said mortgage or such deed of trust or any
acceleration thereof, or the taking of any
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foreclosure or other action to enforce the collection of the indebtedness, and
Partnership shall indemnify, defend and hold City harmless from any costs,
damages, expenses or liabilities (including attorneys' fees) resulting from City
exercising its right pursuant to this Section.
Section 10.08. Address of Leasehold Mortgagee or Beneficiary. No
beneficiary shall have the rights or benefits mentioned in this Article, nor
shall the provisions of this Article be binding upon City unless and until the
name and address of the mortgagee or beneficiary shall have been delivered to
City, notwithstanding any other form of notice, actual or constructive.
Section 10.09. Mortgage Protection.
(a) As used in this Section the term "lienholder" shall mean any
lender which is a beneficiary under a deed of trust or other encumbrance holding
an of record lien against Partnership's estate created by this Lease and, if
this Lease is assigned and/or the improvements thereon are sold, the beneficiary
or beneficiaries under a deed of trust or deeds of trust or a mortgage under a
mortgage received as full or partial consideration for such assignment or sale.
This Lease may not be terminated (except for a default hereunder), surrendered,
or amended,
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or any provisions hereof waived or deferred by City or Partnership without the
prior written consent of the lienholder having a lien of record against
Partnership's leasehold estate created by this Lease, which consent shall not be
unreasonably withheld.
(b) City shall send to all lienholders (i) a copy of all notices
sent by City to Partnership or received by City from Partnership pertaining to
an Event of Default and (ii) a copy of all notices pertaining to an Event of
Default received by City from, or sent by City to, any other party. City shall
not have any duty to send a copy of any notice to any lienholder who does not by
written notice to it specify the address to which copies are to be sent. All
notices and copies of notices required to be sent or delivered pursuant to this
Subsection (b) shall be sent certified or registered mail, return receipt
requested. Any lienholder's address for receipt of notices may be changed by
written notice to City. Failure by City to send any notice required herein shall
have no effect if lienholders have actual notice of the Event of Default.
(c) The performance of the terms and conditions of this Lease by any
lienholder shall be binding upon City.
(d) Notwithstanding anything to the contrary in this Lease, City may
terminate this Lease because of a default hereunder only
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after City has sent to each lienholder a written notice specifying such default
and:
(i) Such default is a failure by Partnership to pay any funds
to City or to any other party, and no such lienholder cures such default within
thirty (30) days after receipt by all lienholders of the written notice of
default from City; or
(ii) In the event of any other default hereunder susceptible
of being cured by each lienholder, no lienholder commences within thirty (30)
days after receipt by all lienholders of written notice of such default from
City the work of curing such default and carries the same to completion with all
reasonable dispatch. If such default cannot be cured by a lienholder without
such lienholder obtaining possession of the Site and other areas made available
to Partnership by City or title to Partnership's leasehold estate hereby
created, a lienholder commencing and thereafter pursuing to completion
proceedings to obtain possession and/or to foreclose the lien held by such
lienholder or diligently proceeding to obtain title to Partnership's leasehold
estate created hereby by deed in lieu of foreclosure shall be deemed to have
satisfied the above requirement that such lienholder commence and carry to
completion the curing of such default, providing that such lienholder commences
within thirty (30) days after obtaining such possession or such
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title the work of curing such default and carries the same to completion with
all reasonable dispatch.
(e) Any lienholder shall have the right to cure any default under
this Lease, and City shall accept such performance by or at the instance of any
lienholder as if the same had been made by Partnership. Subject to the
provisions of subsection (d) above, no default shall be deemed to exist under
this Lease if proceedings shall in good faith have been commenced promptly to
rectify the same and prosecuted to completion with diligence and continuity.
(f) (i) If this Lease shall terminate prior to the expiration of the
Term for any reason, including, without limitation, operation of law, City may
enter into a new lease in recordable form with the lienholder (a) which holds
the lien against Partnership's leasehold estate created hereby of the highest
priority of the lienholders and demands, within thirty (30) days after the
termination of this Lease, by written notice to City, such new lease, and (b)
executes and delivers such new lease. Such new lease shall have the same
priority as this Lease and shall contain the same terms and provisions as this
Lease.
(ii) Notwithstanding anything to the contrary in such new
lease, the party executing such new lease as the tenant
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thereof shall have the right to assign or transfer such new lease to any person
or entity provided City consents, in writing, to each assignment or transfer,
which consent shall not be unreasonably withheld. No assignment or transfer of
this Lease, however, may be made to Partnership, BGP or their affiliates. The
liability under such new lease of the party executing such new lease as the
tenant thereof shall cease upon the assignment of the new lease to such person
or entity. Such new lease shall be effective as of the date of termination of
this Lease, and shall be effective for the remainder of the Term of this Lease
and at the rent and upon all of the agreements, terms, covenants, and conditions
hereof, including any rights of renewal.
(iii) Upon the execution of such new lease, the tenant thereof
shall pay to City, subject to the adjustments required below, any and all rent
and all other sums payable to City by Partnership through this Lease which
accrued during the period from the date of termination of this Lease to the date
of execution and delivery of such new lease plus any back rent due prior to the
termination of this Lease.
(iv) Following the termination of this Lease and until each
lienholder has failed within such thirty (30) days, to demand a new lease, City
shall not alter or in any way demolish any portion of the Amphitheatre. City,
during that same period,
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shall not remove, replace or change any furniture, furnishing, fixtures or
equipment located on the Site and/or any other areas made available to
Partnership by City. At the time of the execution and delivery of the new lease,
City shall execute and deliver to the party executing such new lease as the
tenant a quitclaim deed to the improvements on the Site and/or any other areas
made available to Partnership by City, and a bill of sale to such furnishings,
fixtures, furniture, equipment, and personal property thereon belonging to City,
both of which documents shall be effective as of the effective date of such new
lease. Concurrently with the delivery of such quitclaim deed and the bill of
sale, City shall deliver to the tenant under such new lease an assignment of
City's rights under all subleases affecting any portion of the Site and/or any
other areas made available to Partnership by City and a memorandum of such new
lease in recordable form.
(v) If a nominee or designee (which nominee or designee must
be approved in writing by City), shall be the tenant under such new lease, the
lienholder, his designee or nominee shall, at its election, have the right to
continue its lien against such new lease and the improvements located on the
Site and/or any other area made available to Partnership by City as well as all
fixtures and personal property located thereon to secure payment of its then
existing outstanding indebtedness.
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(g) While any party who is a lienholder or at any time was a
lienholder or is a designee or nominee of any existing or former lienholder,
holds title to this Lease, or possession of the Site and/or any other area made
available to Partnership by City and/or Amphitheatre through a receiver or
otherwise or is proceeding to foreclose a lien held by it against Partnership's
leasehold estate created hereby or to obtain a deed in lieu of foreclosure, no
provision of this Lease requiring reconstruction or rehabilitation of any
improvements or other property following an insured fire or other casualty shall
be applicable to or enforceable against any such party to an extent in excess of
the net insurance proceeds actually received by reason of such fire or other
casualty, provided at the time of the fire or other casualty the casualty
insurance for damage to the improvements located on the Site and/or any other
area made available to Partnership by City required to be carried by Partnership
pursuant to the terms of this Lease is in full force and effect.
(h) All references in this Lease to a mortgagee or beneficiary under
a deed of trust or a lienholder shall be construed to also refer to any such
mortgagees, beneficiaries, or lienholder's designee or nominee who has been
approved by City in writing prior to such designation.
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(i) City may include in the Lease, by suitable amendment from time
to time any provision which may reasonably be requested by any proposed
leasehold mortgagee or beneficiary for the purpose of implementing the
mortgagee-protection provisions contained in this Lease and allowing such
mortgagee or beneficiary reasonable means to protect or preserve the lien of the
leasehold mortgage on the occurrence of a default under the terms of this Lease.
City and Partnership each agree to execute and deliver (and to acknowledge, if
necessary, for recording purposes) any agreement necessary to effect any such
amendment, so long as such amendment is approved by City; provided, however,
that any such amendment shall not in any way affect the Term or Rent nor
otherwise in any material respect adversely affect any rights of City under this
Lease. Partnership shall give City prior notice of any such leasehold mortgage
or deed of trust and shall accompany the notice with true copies of the note and
leasehold mortgage or deed of trust.
Section 10.10. Landlord's Purchase. Partnership shall obtain the following
agreement from each lender holding a deed of trust or mortgage against
Partnership's leasehold estate. If any holder of a mortgage or beneficiary under
a deed of trust recorded against Partnership's leasehold hereunder shall acquire
title to Partnership's interest in this Lease, by foreclosure of such holder's
mortgage or deed of trust thereon or by assignment
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in lieu of foreclosure, or shall enter into a new lease pursuant to Section
10.09 hereof:
(a) City may, at any time within ninety (90) days after such
acquisition or execution of such new lease, purchase such holder's interest in
this Lease or such new lease for an amount equal to the sum of (i) the total
amount secured by such mortgage or deed of trust and owing to such holder at the
time of the foreclosure or execution of such new lease less all appropriate
credits, including those resulting from collection and application of rentals
received during foreclosure proceedings, and (ii) all fees, costs, and expenses
whatsoever incurred by such holder in connection with such acquisition, and the
mortgage or deed of trust between Lessee and the holder of such mortgage or deed
of trust shall so provide.
(b) Prior to any permitted assignment of such interest by such
holder or beneficiary, such holder or beneficiary shall offer to sell such
interest to City in a writing stating the terms of such sale, and City shall
have thirty (30) days within which to accept or decline such offer, and the
mortgage or deed of trust between Partnership and the holder of such mortgage or
deed of trust shall so provide. If such offer is declined, such holder or
beneficiary may assign such interest one hundred eighty (180) days thereafter
(but the assignee must be approved by City
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in writing prior to any assignment), but only on terms not more favorable to its
assignee than those offered to City; if such an assignment is not consummated
within such one hundred eighty (180) day period, such holder may not assign such
interest (or such new lease) without first offering such interest (or such new
lease) to City as provided in this subsection, and the mortgage or deed of trust
between Partnership and the holder of such mortgage or deed of trust shall so
provide.
(c) If upon foreclosure of a mortgage or deed of trust of
Partnership's leasehold hereunder a party other than the holder thereof, or a
designee or controlled subsidiary of such holder, shall acquire title to
Partnership's interest in this Lease, City may, at any time within ninety (90)
days after such foreclosure, purchase such party's interest in this Lease for an
amount equal to the sum of (i) the amount paid by such party to acquire such
interest, and (ii) the fees and costs incurred by such party in connection with
such acquisition, and the mortgage or deed of trust between Partnership and the
holder of such mortgage or deed of trust shall so provide.
Section 10.11. Assignment by Mortgagee. If any lienholder shall acquire
title to Partnership's interest in this Lease by foreclosure of a mortgage or
deed of trust thereon or by assignment in lieu of foreclosure or under a new
lease pursuant to this
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Article, such lienholder may assign such lease only with City's prior written
consent, which such consent shall not be unreasonably withheld, to an assignee
which is, in the opinion of City, financially responsible and competent, subject
to compliance with Section 10.10 hereof, and the lienholder shall thereupon be
released from all liability for the performance or observance of the covenants
and conditions contained in such lease on Partnership's part to be performed and
observed from and after the date of such assignments, provided that City shall
receive an executed counterpart copy of such assignment, together with the name
and address of the assignee.
ARTICLE XI
MISCELLANEOUS
Section 11.01. No Third Parties Benefit. This Lease is made and entered
into for the benefit of the City and Partnership and their permitted successors
and assigns, and no other persons or entities shall have any right of action
hereon.
Section 11.02. Binding Effect. This Lease shall inure to the benefit of
and shall be binding upon City and Partnership and their successors and assigns.
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Section 11.03. Complete Agreement; Amendments. This Lease represents the
entire agreement between City and Partnership. This Lease may not be amended,
changed, modified or altered except in writing. The parties may at any time
agree to the amendment or termination of this Lease.
Section 11.04. Law Governing. This Lease shall be governed exclusively by
the provisions hereof and by the laws of the State of California as the same
from time to time exist.
Section 11.05. Notices. Any notice, invoice or any other communication to
be given in this Lease to any signatory hereof shall be in writing and shall be
given by U.S. mail, postage prepaid, or by personal delivery, to such party at
such party's respective addresses as follows:
City: City of Mountain View
City Manager
P.O. Box 7540
Mountain View, CA 94039
Partnership: Shoreline Amphitheatre Partners
c/o Bill Graham Presents
260 Fifth Street
San Francisco, CA 94103
Attention: Danny Scher
Copy to: Greene, Radovsky, Maloney & Share
Spear Street Tower, Suite 3200
One Market Plaza
San Francisco, CA 94105
Attention: Richard L. Greene
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Any signatory hereof may, in lieu of the above address and upon notice to
all other parties as provided in this Section, specify a different address for
the delivery of notices, invoices or other communications.
Section 11.06. Article and Section Headings. The headings or titles of the
general articles and sections hereof, and any table of contents appended hereto,
shall be solely for convenience of reference and shall not affect the meaning,
construction or effect of this Lease.
All references herein to "Articles" or "Sections" and other subdivisions
are to the corresponding articles, sections or subdivisions of this Lease and
the words "herein," "hereof," "hereunder," "hereinafter" and any other words of
similar import refer to this Lease as a whole and not to any particular article
or subdivision thereof.
Section 11.07. Execution and Counterparts. This Lease may be executed in
any number of counterparts, each of which shall be deemed to be an original, but
altogether shall constitute but one and the same Lease.
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Section 11.08. Severability. If any one or more of the covenants or
agreements, or portions thereof, provided in this Lease shall be held by a court
of competent jurisdiction in a final judicial action to be void, voidable or
unenforceable, then such covenant or covenants, such agreement or agreements, or
such portions thereof, shall be null and void and shall be deemed separable from
the remaining covenants or agreements or portions thereof and shall in no way
affect the validity of or enforceability of the remaining portions of this
Lease.
Section 11.09. Hold Harmless. Partnership shall indemnify, defend and hold
City harmless from and against any and all liabilities, costs, expenses and
claims arising out of the performance of this agreement resulting in money
damages, to the extent that such liabilities, costs, expenses and/or claims are
the result of willful misconduct of and/or the negligent acts or omissions of
Partnership, its agents and/or employees, except that Partnership agrees that
any money damages which arise out of the sound emanating from the Amphitheatre
shall be paid by Partnership, regardless of the lack of negligence by
Partnership. Partnership further agrees to pay reasonable attorney's fees and
court costs in the defense of any action alleged to have arisen through the
performance of this agreement to the extent that such claims or demands within
such actions are adjudicated to be the result of the negligent or intentional
acts or omissions of Partnership, its agents and employees.
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Partnership further agrees that City shall not be held accountable, at law
or in equity, for any delay, regardless of its cause or by whom it was caused in
the opening of the Amphitheatre. The provisions of this Section 12.09 shall
survive the termination of this Lease with respect to any damage, injury,
illness or death occurring prior to such termination.
Section 11.10. Covenants. Each and every covenant herein shall run with
the land.
Section 11.11. Time of Essence. Time is of the essence of this Lease.
Section 11.12. City Indemnification. City shall hold Partnership and BGP
and their respective agents, employees and officers harmless and defend
Partnership and BGP and their respective agents, employees and officers from and
against any and all losses, damages, claims and/or liability for any damage to
any property or injury, illness or death of any person caused by reason of the
negligence or willful misconduct of City, its employees or agents. The
provisions of this Section 12.12 shall survive the termination of this Lease
with respect to any damage, injury, illness or death occurring prior to such
termination.
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Section 11.13. Reasonableness. Whenever in this Lease the consent or
approval of City is required, City agrees that such consent or approval shall
not be unreasonably withheld or delayed.
Section 11.14. Force Majeure. The time period for performance of any
obligations under this Lease shall be extended by any delay caused by force
majeure. "Force majeure" shall mean delays caused by reason of fire, acts of
God, unreasonable delays in transportation, embargo, weather, strike, other
labor dispute, governmental preemption of priorities or other controls in
connection with a national or other public emergency, shortages of fuel,
supplies or labor or any other cause not within Partnership's reasonable
control.
Section 11.15. Attorneys' Fees. In the event of any action or proceeding
brought by either party against the other under this Lease, the prevailing party
shall be entitled to recover court costs and the fees of its attorneys in such
action or proceeding (whether at the administrative, trial or appellate levels)
in such amount as the court or administrative body may judge reasonable.
Section 11.16. Memorandum of Lease. Concurrently with execution hereof,
City and Partnership shall execute and cause to
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be recorded a memorandum of lease in the form attached hereto as Exhibit E.
Section 11.17. Waiver. City and Partnership hereby waive the provisions of
California Civil Code Section 1933(4) providing for termination of hiring upon
destruction of the thing hired.
Section 11.18. Removal of Personal Property. Upon expiration or earlier
termination of the Lease, Partnership may remove its personal property,
equipment and trade fixtures from the Amphitheatre, unless such expiration or
earlier termination is due to a default by Partnership, in which case, such
personal property, equipment and trade fixtures shall become the property of
City.
Section 11.19. Deed of Trust. All obligations of Partnership under this
Lease are additionally secured by that certain deed of trust, in a form attached
hereto as Exhibit F, to be recorded against the Amphitheatre and Site.
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ARTICLE XII
DEFINITIONS
Section 12.01. Definitions. Unless the context otherwise requires, the
terms defined in this Article shall, for all purposes of this Lease, have the
meanings herein specified.
Section 12.02. Amphitheatre. The term "Amphitheatre" shall mean that
facility for the conducting of live, mostly musical entertainment, with an
initial capacity of approximately fifteen thousand (15,000) persons to be
constructed on the Site.
Section 12.03. City Council. The term "City Council" shall mean City
Council of the City of Mountain View.
Section 12.04. Extra Costs. The term "extra costs" shall mean all those
expenses incurred by City because of the existence of the Amphitheatre which the
City would not have incurred if the Amphitheatre had not existed. These extra
costs include, but are not limited to, such things as extra police needs,
traffic, security, cleanup, directional signing as well as any costs to City
associated with performances at the Amphitheatre, including usual administrative
charges attached to direct costs.
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Section 12.05. Lease. The term "Lease" shall mean this agreement, dated as
of the date above written, made and entered into by and between City and
Partnership.
Section 12.06. North Bayshore Area. The term "North Bayshore Area" shall
mean that area generally within the City of Mountain View bounded by State
Highway 101 and the San Francisco Bay.
Section 12.07. Outside Commissions. The term "Outside Commissions" shall
mean any amounts paid to a person other than BGP or any affiliate of BGP in
connection with generating miscellaneous income.
Section 12.08. Shoreline. The term "Shoreline" shall mean Shoreline Park
in the City of Mountain View within the North Bayshore Area.
Section 12.09. Term. The word "Term" shall mean the term of this Lease
including any extended term due to the exercise of an option to extend the
Lease.
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IN WITNESS WHEREOF, this Lease is executed by the City of Mountain View,
acting by and through its City Manager, and by Shoreline Partners.
APPROVED AS TO CONTENT CITY OF MOUNTAIN VIEW:
FOR CITY AND COMMUNITY:
By:
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- ------------------------- --------------------------------------
MOUNTAIN VIEW SHORELINE
REGIONAL PARK COMMUNITY:
APPROVED AS TO FORM By:
FOR CITY AND COMMUNITY:
/s/ [ILLEGIBLE]
/s/ [ILLEGIBLE] --------------------------------------
- -------------------------
SHORELINE AMPHITHEATRE PARTNERS,
a California limited partnership:
By: SHORELINE AMPHITHEATRE, LTD.,
its general partner
By: /s/ Danny Scher
----------------------------------
Danny Scher, Vice President
Except for the obligations set forth in Section 3.03(b), Bill Graham
Enterprises, Inc., a California corporation, hereby unconditionally guarantees
and promises, to and for the benefit of the City of Mountain View, that
Shoreline Amphitheatre Partners shall perform all of its obligations under the
terms of this Lease.
Dated: 6/24/86 BILL GRAHAM ENTERPRISES, INC.,
a California corporation
By: /s/ Nick Clainos
----------------------------------
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Nick Clainos, President
Except for the obligations set forth in Section 3.03(b), Bill Graham Presents,
Inc., a California corporation, hereby unconditionally guarantees and promises,
to and for the benefit of the City of Mountain View, that Shoreline Amphitheatre
Partners shall perform all of its obligations under the terms of this Lease.
Dated: 6/24/86 BILL GRAHAM PRESENTS, INC.,
a California corporation
By: /s/ Nick Clainos
-------------------------
Nick Clainos, President
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SETTLEMENT AGREEMENT AND AMENDMENT TO AMPHITHEATRE LEASE
AND AGREEMENT BETWEEN THE CITY OF MOUNTAIN VIEW AND SHORELINE
AMPHITHEATRE PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP
THIS AGREEMENT is made by and between the CITY OF MOUNTAIN VIEW, a
chartered municipal corporation, the MOUNTAIN VIEW SHORELINE REGIONAL PARK
COMMUNITY, a special district (jointly referred to herein as "City"), and
SHORELINE AMPHITHEATRE PARTNERS, a California limited partnership (referred to
herein as "Partnership").
RECITALS
A. The parties entered into a Lease and Agreement dated June 20, 1986
(hereinafter the "Lease"), and Partnership constructed the Amphitheatre referred
to in said Lease. As part of that construction, with City's permission,
Partnership cut into a landfill cell owned by City, recontoured the garbage in
that cell into the shape desired by Partnership for the lawn seating area for
Amphitheatre, and recovered it with 3.5 feet to 4.0 feet of soil. Thereafter
problems occurred involving the escape of landfill gases into the Amphitheatre.
Mandeville and Associates, an engineering consultant hired by Partnership to
study and make recommendations concerning the solution to the problems created
by the escape of the above-referenced gases, has recommended certain control
facilities designed to mitigate the escape of these gases.
B. The parties enter into this Agreement in order to provide funding for
the facilities recommended by Mandeville and Associates and to settle their
disagreement over legal responsibility for the escape of the above-referenced
gases.
NOW, THEREFORE, in consideration of the recitals and mutual promises contained
herein, City and Partnership agrees as follows:
1. Purpose of Agreement. An uncertainty exists as to which of the parties
to the Lease should bear the financial responsibility for resolving odor and gas
generation, emission and migration conditions at Shoreline Amphitheatre,
Mountain View, California hereinafter "Arena" all as more specifically shown on
Exhibit "A" attached.
This Agreement shall constitute a full settlement, discharge and
release between the parties of all claims, past, present and future, known and
unknown, all as is more particularly set forth in Paragraphs 4, 5, and 6 herein,
and shall also be considered an amendment to Section 3.01 of the Lease,
increasing the amount of rent based on a percentage of gross receipts all as set
forth in Section 3(d) herein. To the extent that this Agreement may be
inconsistent with Section 5.13 in the Lease, this Agreement shall control.
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2. Obligations of City. The City agrees as follows:
a. In full satisfaction of any and all City responsibilities for the
problems sought to be corrected by the Facilities (hereinafter described)
recommended in the Report (hereinafter described), including without limitation
the City's obligations under Section 5.13 of the Lease, the City shall make
available for use by Partnership up to $2.5 million (including approximately
$160,000 which has previously been incurred by Partnership) solely and
exclusively for the design and construction of those certain gas migration
control facilities (hereinafter "Facilities") recommended for construction by
Mandeville and Associates in a report entitled "Analysis of Alternatives and
Recommendations for Gas Mitigation Control at Shoreline Amphitheatre, Mountain
View, California, Project 1008" dated December, 1986 (hereinafter "Report").
Partnership understands that said above-referenced $2.5 million contribution by
City may not represent the full cost of constructing the Facilities, but that
this amount is the maximum amount City is obligated to make available, under any
circumstances, for the construction of those Facilities, as well as any other
ancillary changes to the Amphitheatre necessitated by the installation of those
Facilities.
The manner in which the $2.5 million may be drawn down and used by
Partnership shall be delineated in a procedure to be approved and implemented by
the City Finance Director and which will be based upon invoices from Apersey
Construction Company, the contractor engaged by Partnership to construct the
Facilities and shall provide for payment of such invoices in due course. Any
portion of said $2.5 million not drawn down and used by Partnership within two
(2) years from the date of this Agreement shall no longer be available to
Partnership but rather shall be the sole property of City.
b. The City shall maintain an ongoing program to mitigate garbage
and/or methane and/or odor impacts from both the adjacent in-place landfill and
the active landfill, including possible relocation of the active landfill to
another site during the Concert Season.
3. Obligations of the Partnership. The Partnership shall:
a. Assume full responsibility for the design and construction of the
Facilities as well as any ancillary changes to the Amphitheatre necessitated by
the installation of those Facilities, subject to the initial review and approval
in concept by the City Council as given on January 6, 1987, and subject to the
further review and approval of the plans for the design and construction of said
Facilities by the Public Works Department.
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b. Assume full responsibility for on-going operation, maintenance,
repair and replacement of the Facilities for as long as such Facilities are
needed.
c. Pay all costs of operation, maintenance, repair and replacement
of such Facilities, and pay all costs of the design and construction, if any, in
excess of the City's contribution to the initial design and construction costs
of $2.5 million.
d. Effective January 1, 1987, permanently increase the percentage
rate based on gross receipts as set forth in Section 3.01 of the Lease by three
quarters of one percent (3/4%) across the board so that said percentage rates
are as follows:
Lease Annual Gross Annual Gross Annual Gross
Years Receipts Receipts Receipts
----- ------------ ------------ ------------
$0-$10 million over $10-$13 million over $13 million
per year per year per year
1-5 2.75 percent 3.75 percent 4.75 percent
6-10 3.25 percent 4.25 percent 5.25 percent
11-15 3.75 percent 4.75 percent 5.75 percent
16-50 4.75 percent 5.75 percent 6.75 percent
4. Prior Events. As to all events occurring at the Arena after
commencement of its construction prior to execution of this Agreement,
Partnership shall indemnify City from all liability whether to Partnership or to
third parties relating to generation, emission, migration, collection and/or
control of gases and odors. Partnership hereby waives and releases and forever
gives up any claims it, or any person, entity or thing acting through or on
behalf of it, may have against City relating to revenue damages or losses of any
nature based on the landfill gas condition at the Amphitheatre during the 1986
Concert Season.
5. Future Events. As to future events, Partnership hereby releases City
from any and all liability which may arise either in whole or in part due to the
generation, emission, migration, collection and/or control of landfill gases and
odors from garbage underneath the Arena; any and all liability which may arise,
either in whole or in part, due to the passage of landfill gases which are
generated outside the Arena and are drawn underground to the Facilities when
they are operating; and any and all liability which may arise out of occurrences
involving problems sought to be corrected by the recommendations of the Report
and shall hold City harmless therefrom pursuant to Section 11.09 of the Lease.
6. Unknown Claims. Partnership expressly acknowledges and agrees that the
releases set forth above are general releases
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that apply to all claims for damages, costs, losses, expenses, whether known or
unknown, foreseen or unforeseen, patent or latent, which Partnership or any
person, entity or thing acting through or on behalf of Partnership may have
against City, and Partnership waives application of California Civil Code
Section 1542.
Partnership certifies that it has read the following provisions of the
California Civil Code Section 1542:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known to him must have materially affected his settlement with the
debtor."
Partnership understands and acknowledges that the significance and
consequence of this waiver of California Civil Code Section 1542 is that even if
the partnership should eventually suffer additional damages arising out of the
facts which are the subject of this Agreement, the Partnership will not be able
to make any claim for those damages. Furthermore, the Partnership acknowledges
that it intends these consequences even as to claims for damages that may exist
as of the date of the releases set forth above but which the Partnership does
not know exists, and which, if known, would materially affect the Partnership's
decision to execute this release, regardless of whether the Partnership's lack
of knowledge is the result of ignorance, oversight, error, negligence, or any
other cause.
Date: Feb. 11, 1987
SHORELINE REGIONAL PARK CITY OF MOUNTAIN VIEW,
COMMUNITY: a municipal corporation
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
- ------------------------- -------------------------------
Mayor City Manager
APPROVED AS TO FORM: SHORELINE AMPHITHEATRE PARTNERS,
a limited partnership
/s/ [ILLEGIBLE] By: Shoreline Amphitheatre
- ------------------------- Limited, a California
City Attorney corporation, its general
partner
By: /s/ [ILLEGIBLE]
-------------------------------
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Either party may request the removal of the parking lot improvements,
provided that at least ninety (90) days written notice is provided to the other
party. Upon such request, PARTNERSHIP shall promptly remove, or cause to be
removed, the chip seal surface and restore the parking lots to their former
condition. The CITY may grant an extension beyond 90 days for the removal of the
parking lot improvements to PARTNERSHIP to avoid negative impacts on
PARTNERSHIP'S parking capacity during the concert season. The CITY shall comply
with the temporary parking displacement requirements as outlined in Section 6.01
of the AMPHITHEATRE LEASE AND AGREEMENT.
6. PARTNERSHIP shall comply with the insurance requirements as outlined
in Article 7 of the LEASE AGREEMENT and the indemnification provisions outlined
in Sections 11.09 and 11.12 of the AMPHITHEATRE LEASE AND AGREEMENT.
APPROVED AS TO CONTENT: "CITY";
CITY OF MOUNTAIN VIEW, a
municipal corporation
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- ------------------------- -----------------------------------
City Attorney City Manager
APPROVED AS TO CONTENT: "PARTNERSHIP":
SHORELINE AMPHITHEATRE PARTNERS,
a California limited partnership
/s/ [ILLEGIBLE]
- ---------------------- Shoreline Amphitheatre Ltd.
City Manager
By: /s/ [ILLEGIBLE]
-------------------------------
Title: Vice President
<PAGE>
AMENDMENT NO. 2 TO AMPHITHEATRE LEASE AND AGREEMENT
BETWEEN THE CITY OF MOUNTAIN VIEW AND SHORELINE PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
THIS AMENDMENT NO. 2 is made and entered into as of September 1st, 1989,
by and between the City of Mountain View, a chartered municipal corporation,
whose address is 444 Castro Street, Mountain View, California (hereinafter
referred to as "City"), the Mountain View Shoreline Regional Park Community, a
special district, whose address is 444 Castro Street, Mountain View, California
(hereinafter referred to as "Community"), and Shoreline Amphitheatre Partners, a
California limited partnership (hereinafter referred to as "Partnership").
RECITALS
A. As of June 20, 1986, City, Community and Partnership entered into that
certain Amphitheatre Lease and Agreement whereby Partnership acquired the right
to use the Site (as defined in the Lease) pursuant to the terms set forth
therein. On February 11, 1987, the parties to the Amphitheatre Lease and
Agreement modified it in certain respects as set forth in that certain
Settlement Agreement and Amendment to Amphitheatre Lease and Agreement. The
original Lease as so amended is hereinafter referred to as the "Lease."
B. Since the date of the Lease, Partnership has completed construction of
the Amphitheatre and operated it for three (3) Concert Seasons (as defined in
the Lease). As a result of this operation, the parties to the Lease have
determined that certain modifications and clarifications are now required in the
terms and provisions of the Lease so as to reflect the parties' understandings
and carry out their original intent as well as incorporation of certain
agreed-to changes, all of which modifications and clarifications are hereinafter
set forth.
NOW, THEREFORE, in consideration of the Recitals, mutual obligations and
promises of the parties as herein expressed, City, Community and Partnership
agree as follows:
1. Effects of This Amendment. Except as expressly and specifically set
forth in this Amendment No. 2, all other terms, provisions and conditions of the
Lease shall remain in full force and effect.
2. Definitions. Except as set forth in this Amendment No. 2, all terms
used in this Amendment No. 2 shall have the meaning given them in the Lease.
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3. Section 1.02 of the Lease shall be amended to read as follows:
"Section 1.02. Term. Possession of the Site shall be delivered to
Partnership upon execution hereof for the purpose of construction of the
Amphitheatre. The term of this Lease (the "Term") shall be thirty-five
(35) years commencing on June 29, 1986 and continuing through November 30
of the year in which the 35th anniversary of the term commencement occurs.
For purposes of this Lease, a "Concert Season" shall be March 15 through
November 15."
4. The second paragraph of Section 2.03 of the Lease is hereby amended to
read as follows:
"The use of a "Mike Brown" stage and the placement of support buildings in
modular structures to the rear of the stage as well as the construction of
the stage house are hereby approved for the term of this Lease."
5. Section 2.08 of the Lease shall be amended to read as follows:
"Section 2.08. Future Construction or Expansion. There shall be no future
construction or expansion of the Amphitheatre, parking, and related
improvements, nor any increase in ticket sales or other intensification,
beyond that approved by the City or provided herein, without the prior
approval of City derived in the same manner as specified in this Article
for the original construction of the Amphitheatre, parking, and related
improvements. If any intensification or expansion involves construction,
the prior approval by City shall be derived in the same manner as
specified in this Article for the original construction of the
Amphitheatre, parking, and related improvements. If there is proposed an
intensification of use by additional sales of tickets beyond the fifteen
thousand (15,000) limit now set, such intensification must be approved by
City acting through its City Manager or his or her designee in advance
upon written request from Partnership to City at any time after the end of
a Concert season and before the beginning of the next Concert Season, and
such approval may be for no more than a capacity of twenty thousand
(20,000) and for the next Concert Season only, so that, each year prior to
the beginning of another Concert Season, Partnership must request approval
for expanded ticket sales." City, in exercising its discretion for
approval of expanded ticket sales, shall not unreasonably withhold such
approval, as long as Partnership and BGP agree to comply with all
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reasonable requests of City for correction of problems specified in
writing by City relating solely to material operating or environmental
matters (including but not limited to parking or security) which have
resulted from an increase in capacity from fifteen thousand (15,000) to
twenty thousand (20,000) persons during the preceding Concert Seasons. If,
at any time during a Concert Season, Partnership or BGP fail to meet all
requirements imposed for the increase of capacity beyond fifteen thousand
(15,000) persons, City shall notify Partnership in writing not later than
seven (7) days after City, at the department head level or higher, becomes
aware of such failure to meet requirements. Partnership shall thereafter
have fourteen (14) days to comply; if compliance does not take place,
thereafter, such approval for expanded ticket sales may be revoked, in
writing, by City acting through its City Manager.
6. Section 3.01(b) shall be amended to read as follows:
"(b) All food, beverage, and T-shirt sales, except that food provided to
the performers and employees of Partnership or its affiliates shall not be
included."
7. Section 4.02 of the Lease shall be amended to read as follows:
"Section 4.02. Refinancing. Partnership shall have the right to refinance
any promissory notes secured by deed of trust recorded against the
Amphitheatre and/or leasehold interest of Partnership, or any other form
of original financing, with the City receiving ten percent (10%) of any
net refinancing proceeds which exceed the greater of: (a) Twenty Million
Dollars ($20,000,000); or (b) the amount of the last refinancing of the
Amphitheatre pursuant to Section 4.02. Any refinancing of the
Partnership's interest in this Lease may not be accomplished except by a
mortgage or deed of trust. Upon any refinancing, the net refinancing
proceeds shall exclude "loan costs."
Partnership's "loan costs" shall include, without limitation, all loan
fees, appraisals, points, escrow fees, title insurance premiums and all
other loan costs and fees imposed by the lender and/or incurred by
Partnership in connection with the subject refinancing. So long as
Partnership is obligated to make payments under Section 3.03b of this
Lease, Partnership may not encumber this Lease and the Amphitheatre with
deeds of trust or other financing securing a total indebtedness in excess
of forty percent (40%) of the then appraised value of the Amphitheatre, as
reflected in a
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<PAGE>
current MAI appraisal to be provided by Partnership; provided, however,
that if Partnership has made all payments required of it under Section
3.03b, this percentage shall increase to fifty percent (50%) on August 1,
1991, sixty percent (60%) on August 1, 1996, seventy percent (70%) on
August 1, 2001, and eighty percent (80%) on August 1, 2006. Any assignment
of Partnership's interest hereunder pursuant to a deed of trust or any
other financing mechanism shall be subject to each and all of the
covenants, conditions and restrictions set forth in this Lease, and in the
event of any conflict between the provisions of this Lease and the
provisions of such a deed of trust or other financing mechanism, the
provisions of this Lease shall control."
8. Section 5.01 of the Lease shall be amended by adding the following
paragraph:
"...Notwithstanding anything contained in Section 4.03(a) or this Section
5.01 to the contrary, subject to prior written approval from the City
Manager or his or her designee, Partnership shall be entitled to use the
Amphitheatre, parking, or other related improvements for other than the
presenting of cultural and entertainment performances as long as such use
does not detract from the image/identity of the Amphitheatre or involve
environmental or operational aspects which are likely to be disruptive to
either Shoreline at Mountain View, adjacent private uses, or to the North
Bayshore Area."
9. Section 5.04 of the Lease shall be amended by adding the following
paragraph at the end thereof:
"If there is a dispute concerning the accuracy, substantiation or
necessity of extra costs as they are defined in Section 5.04, Partnership
shall have the right to arbitration as follows:
(a) If Partnership disputes the amount claimed by City as extra costs,
Partnership may require that City submit the disputes to
arbitration. The arbitration shall be conducted and determined in
the City of San Francisco, California in accordance with the then
prevailing rules of the American Arbitration Association or its
successor for arbitration of commercial disputes, except that the
procedures mandated by such rules shall be modified as follows:
(i) Partnership shall make demand for arbitration in writing
within fifteen (15) days after service of the notice of extra
costs, specifying therein the
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<PAGE>
name and address of the person to act as the arbitrator on
Partnership's behalf. Failure on the part of Partnership to
make the timely and proper demand for such arbitration shall
constitute a waiver of the right thereto. Within
ten (10) business days after the service of the demand for
arbitration, City shall give notice to Partnership specifying
the name and address of the person designated by City to act
as arbitrator on its behalf, which arbitrator shall be
similarly qualified. If City fails to notify Partnership of
the appointment of its arbitrator, within or by the time
specified, then the arbitrator appointed by Partnership shall
be the arbitrator.
(ii) If two arbitrators are chosen pursuant to Subparagraph (i)
above, the arbitrators so chosen shall meet within ten (10)
business days after the second arbitrator is appointed and
shall appoint a third arbitrator, who shall be a competent and
impartial person with qualifications similar to those required
of the first two arbitrators pursuant to Subparagraph (i)
above. If they are unable to agree upon such appointment
within five (5) business days after expiration of such ten
(10) day period, the third arbitrator shall be selected by the
parties themselves. If the parties do not so agree, then
either party, on behalf of both, may request appointment of
such a qualified person by the then presiding judge of the
Santa Clara County Superior Court. The three arbitrators shall
decide the dispute, if it has not been previously resolved, by
following the procedures set forth in Subparagraph (iii)
below.
(iii) The extra costs shall be fixed by the three arbitrators in
accordance with the following procedures. Each of the
arbitrators selected by the parties shall state, in writing,
his determination of the extra costs supported by the reasons
therefor and shall make counterpart copies for each of the
other arbitrators. The arbitrators shall arrange for a
simultaneous exchange of such proposed resolutions. The role
of the third arbitrator shall be to select which of the two
proposed resolutions most closely approximates his
determination of extra costs. The third arbitrator shall have
no right to propose a middle ground or any modification of
either of the two proposed resolutions. The resolution he
chooses
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<PAGE>
as that most closely approximating his determination of the
extra costs shall constitute the decision of the arbitrators
and shall be final and binding upon the parties.
(iv) In the event of a failure, refusal or inability of any
arbitrator to act, his successor shall be appointed by him,
but in the case of the third arbitrator, his successor shall
be appointed in the same manner as that set forth herein with
respect to the appointment of the original third arbitrator.
The arbitrators shall attempt to decide the issue within ten
(10) business days after the appointment of the third
arbitrator. Any decision in which the arbitrator appointed by
City and the arbitrator appointed by Partnership concur shall
be binding and conclusive upon the parties, except that such
arbitrators shall not attempt by themselves to mutually
ascertain the extra costs and any such determination, in a
manner other than that provided for in Subparagraph (iii)
hereof, shall not be binding on the parties. The losing party
(the party whose arbitrator's decision was not chosen by the
third arbitrator) shall pay the fees and expenses of all
arbitrators and reasonable attorneys' fees of the prevailing
party's counsel.
(v) The arbitrators shall not have the right to consult experts
and competent authorities for factual information or evidence
pertaining to a determination of extra costs. The arbitrators
shall render the decision and award in writing with
counterpart copies to each party. The arbitrators shall have
no power to modify the provisions of this Lease."
10. Section 5.08 of the Lease shall be amended to read as follows:
"Section 5.08. City Days and Other Community Uses. Partnership shall allow
the Amphitheatre to be used rent-free (with all operating maintenance and
repair costs due to City's use at the City's expense) for seven (7) days
during the Concert Season. Unless expressly approved by Partnership, no
more than four (4) days of "City Days" shall be consecutive. Not later
than January 1 of each year, City shall give Partnership written notice of
the seven (7) days which City desires to designate as "City Days" during
the next occurring Concert Season, except that no more than three (3) of
the "City Days" may occur during the months of
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<PAGE>
July, August, September or October without the consent of Partnership.
City shall not designate the July 4 or Labor Day weekends for "City Days";
provided, however, that during any Concert Season in which Partnership is
allowed to sell twenty thousand (20,000) tickets to events at the
Amphitheatre, City shall be entitled to designate July 4 as a "City Day."
Partnership shall reserve the requested days for City. All costs and
expenses of operating the Amphitheatre during "City Days" shall be borne
by City, including, without limitation, insurance premiums, traffic and
crowd control, cleanup, and employees' salaries and benefits. In addition,
City shall pay for all parties or entertainers used and shall also repair
and replace any and all portions of the Amphitheatre and parking areas
damaged due to City's use during "City Days." In addition to "City Days,"
the Amphitheatre, parking and related improvements shall be made
reasonably available rent-free (except for the operating costs described
above) for City-approved community events occurring during other than the
Concert Season and at other times when such use would not conflict with
use by Partnership or BGP. City shall indemnify Partnership and BGP
against any and all claims, liabilities, expenses and costs arising out of
City's use of the Amphitheatre to the extent such claims, liabilities,
expenses and costs are caused, in whole or in part, by the negligence or
willful misconduct of City, its agents, employees and/or invitees."
11. Section 5.09 of the Lease shall be amended to read as follows:
"Section 5.09. City Attendance at Amphitheatre Events. City shall be
provided, at no cost, a minimum of twenty (20) premium tickets (including
and not in addition to City Box seats) for each performance at the
Amphitheatre. Fourteen (14) of such tickets shall be located in the best
one-third (1/3) of the reserved seats, centered, and nearest the stage for
good viewing with the remaining six (6) best seats available. In addition,
during each Concert Season, City shall be entitled to up to three hundred
(300) additional free tickets, which shall be the best available located
seats given subscription sales and band ticket sales provided that City
shall not be entitled to utilize more than thirty-four (34) of the
combined three hundred (300) and twenty (20) free tickets for any one
performance. All tickets and parking places referred to in this Section
5.09 may be used by City in any manner it deems appropriate and shall be
provided to City through the City Manager's Office. Partnership shall
designate a centrally located box as the "City Box" so that City may, when
needed, provide for seating of dignitaries during any performance.
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The "City Box" shall seat at least eight (8) people. Partnership shall
reserve twelve (12) parking spaces specifically for City use located in
the near-in VIP parking area closest to the Amphitheatre. Annually, and at
no expense to City, Partnership will conduct at City's request up to three
(3) catered parties with hot catered meals similar in quality to those
meals provided at City parties at the Amphitheatre during the 1987 and
1988 Concert Seasons and show tickets prior to concerts selected by City.
The date of such parties shall be mutually agreed upon by the parties at
least thirty (30) days in advance of the date of the party. These parties
shall be of at least equal quality to that provided by Pepsi-Cola, Inc.
pursuant to Pepsi-Cola, Inc.'s agreement with BGP. City will have the
right to invite up to a cumulative total of two hundred fifty (250) guests
to the catered parties and will have the right to conduct other similar
parties at City's sole expense prior to any concert at any other time,
subject to BGP's reasonable approval. In addition to the above tickets, at
the discretion of BGP, additional lawn seating tickets shall be furnished
to City through the City Manager's Office.
12. Section 6.05 of the Lease is hereby amended to read as follows:
"Section 6.05. Use of Parking Lots by City. Without limiting City's right
to parking and other related improvements all as provided in this Lease,
City and other governmental or nongovernmental entities shall have the
right, upon not less than forty-eight (48) hours' advance written notice
given by City (either for itself or for any other governmental or
nongovernmental entity), to utilize all parking areas within the Site for
the Amphitheatre for its own purposes, so long as such use does not damage
the parking facilities within the Site (reasonable wear and tear
excepted), and the use does not interfere in any way with Partnership's
operation and use of the Amphitheatre. City or other governmental or
nongovernmental entity through City, shall always have the right to use
the parking areas designated for the Amphitheatre outside the Site so long
as such use does not impair the rights granted to Partnership pursuant to
this Lease. If City or another governmental or nongovernmental entity uses
the parking facilities within the site, City or the other entity shall
provide insurance satisfactory to Partnership or a hold harmless agreement
if the City or other entity is self-insured, and shall repair any damage
to the parking areas occurring during the use of the parking areas by the
City or other entity, shall provide all necessary crowd and traffic
control and cleanup of the parking areas, and shall indemnify Partnership
and BGP
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<PAGE>
against any and all claims, costs, expenses and liabilities arising out of
or in connection with City's negligent use of the parking areas."
13. Section 11.05 of the Lease shall be amended to read as follows:
"Section 11.05. Notices. Any notice, invoice or any other communication to
be given in this Lease to any signatory hereof shall be in writing and
shall be given by U.S. mail, postage prepaid, or by personal delivery, to
such party at such party's respective addresses as follows:
City: City of Mountain View; City Manager; P.O. Box 7540; Mountain View,
California, 94039.
Partnership: Shoreline Amphitheatre Partners; In care of Bill Graham
Presents; 260 5th Street; San Francisco, California, 94103; Attention
Danny Scher.
Copy to: Greene, Radovsky, Maloney & Share; Spear Street Tower, Suite
4200; One Market Plaza; San Francisco, California, 94105; Attention
Richard L. Greene.
14. Section 11.20 of the Lease shall be added to read as follows:
"Section 11.20. Late Payment Charge. If any payment due City is not made
on or before the date specified within this Lease for payment, then
thereafter, in addition to all and every other remedy, both equitable and
legal, available to City, a late charge of two percent (2%) of the amount
due City and undisputed by Partnership shall be added and compounded for
each month or portion thereof that the payment remains late and unpaid. If
Partnership wishes to dispute a bill or portion thereof (excluding all
bills for extra costs pursuant to Paragraph 5.04 which may be arbitrated),
it must do so in writing no later than seven (7) days after receipt of the
bill, specifying in detail the particular reasons for said dispute. City
shall then meet with Partnership to resolve any such disputed bill, but if
no such resolution occurs at the meeting, and City so informs Partnership
in writing, Partnership shall nevertheless, within three (3) days, pay the
disputed amount. Such payment of a disputed amount may be done under
protest and shall not affect any legal or equitable action Partnership may
bring to resolve such dispute."
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<PAGE>
IN WITNESS WHEREOF, this Second Amendment to Lease is executed by the City
of Mountain View, acting by and through its City Manager, Mountain View
Shoreline Regional Park Community and by Shoreline Amphitheatre Partners.
APPROVED AS TO CONTENT "CITY":
FOR CITY AND COMMUNITY: CITY OF MOUNTAIN VIEW, a chartered municipal
corporation
By: /s/ [ILLEGIBLE]
- ------------------------- -----------------------------------------
City Manager
APPROVED AS TO FORM "COMMUNITY":
FOR CITY AND COMMUNITY: MOUNTAIN VIEW SHORELINE REGIONAL COMMUNITY, a
special district
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
- ------------------------- -----------------------------------------
Secretary
FINANCIAL APPROVAL "PARTNERSHIP":
SHORELINE AMPHITHEATRE PARTNERS,
a California limited partnership:
/s/ [ILLEGIBLE]
- ------------------------- By: SHORELINE AMPHITHEATRE, LTD., its
general partner
By: /s/ Danny Scher
---------------------------
Danny Scher, Vice President
Except for the obligations set forth in Section 3.03(b), Bill Graham
Enterprises, Inc., a California corporation, hereby unconditionally guarantees
and promises, to and for the benefit of the City of Mountain View, that
Shoreline Amphitheatre Partners shall perform all of its obligations under the
terms of this Lease.
Dated: Oct. 25, 1989 BILL GRAHAM ENTERPRISES, INC.,
a California corporation
By: /s/ [ILLEGIBLE]
---------------------------
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<PAGE>
AMENDMENT NO. 3 TO AMPHITHEATRE LEASE AND AGREEMENT
BETWEEN THE CITY OF MOUNTAIN VIEW AND
SHORELINE AMPHITHEATRE PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
This AMENDMENT NO. 3 is entered into this 30th day of April, 1991, by and
between the CITY OF MOUNTAIN VIEW, a municipal corporation, whose address is 500
Castro Street, Mountain View, California, 94041, hereinafter referred to as
"CITY," and SHORELINE AMPHITHEATRE PARTNERS, a California limited partnership,
whose address is P.O. Box 1994, San Francisco, California, 94101, hereinafter
referred to as PARTNERSHIP."
RECITALS
A. PARTNERSHIP has requested approval from the CITY to install a chip
seal-type surface on Amphitheatre Parking Lots A and B, owned by CITY and
permitted for use by PARTNERSHIP under a revocable license, to control dust and
provide for an all weather parking surface.
B. The CITY considers the chip sealing of Parking Lots A and B to be
appropriate and desirable.
NOW, THEREFORE, in consideration of the recitals and mutual promises
contained herein, CITY and PARTNERSHIP agree as follows:
1. All terms, provisions and conditions set forth in the Amphitheatre
Lease and Agreement Between the City of Mountain View and Shoreline Amphitheatre
Partners, a California Limited Partnership; the Settlement Agreement and
Amendment to Amphitheatre Lease and Agreement Between the City of Mountain View
and Shoreline Amphitheatre Partners, a California Limited Partnership; and
Amendment No. 2 to Amphitheatre Lease and Agreement Between the City of Mountain
View and Shoreline Amphitheatre Partners, a California Limited Partnership,
shall remain in full force and effect.
2. PARTNERSHIP shall be responsible for the cost of installing and
maintaining the chip seal surface in Parking Lots A and B.
3. The parking lot improvements shall remain on Parking Lots A and B for
no more than four (4) years from the date of this AGREEMENT. CITY approval will
be required to allow the improvements to remain after that time.
4. CITY approval for PARTNERSHIP to install temporary parking lot
improvements does not constitute the granting of any type of permanent parking
rights to PARTNERSHIP for parking at the locations of Parking Lots A and B, or
any other location of CITY-owned property. PARTNERSHIP warrants for itself and
the entities described in Paragraph 1 that the license to use said CITY parking
sites shall not be modified by this AGREEMENT other than as expressly stated.
<PAGE>
5. Either party may request the removal of the parking lot improvements,
provided that at least ninety (90) days written notice is provided to the other
party. Upon such request, PARTNERSHIP shall promptly remove, or cause to be
removed, the chip seal surface and restore the parking lots to their former
condition. The CITY may grant an extension beyond 90 days for the removal of the
parking lot improvements to PARTNERSHIP to avoid negative impacts on
PARTNERSHIP'S parking capacity during the concert season. The CITY shall comply
with the temporary parking displacement requirements as outlined in Section 6.01
of the AMPHITHEATRE LEASE AND AGREEMENT.
6. PARTNERSHIP shall comply with the insurance requirements as outlined in
Article 7 of the LEASE AGREEMENT and the indemnification provisions outlined in
Sections 11.09 and 11.12 of the AMPHITHEATRE LEASE AND AGREEMENT.
APPROVED TO FORM: "CITY";
CITY OF MOUNTAIN VIEW, a
municipal corporation
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- ------------------------- --------------------------------------
City Attorney City Manager
APPROVED AS TO CONTENT: "PARTNERSHIP":
SHORELINE AMPHITHEATRE PARTNERS,
a California limited partnership
/s/ [ILLEGIBLE] Shoreline Amphitheatre Ltd.
- -------------------------
City Manager
By: /s/ [ILLEGIBLE]
----------------------------------
Title: Vice President
<PAGE>
AMENDMENT NO. 4
TO AMPHITHEATRE LEASE AND AGREEMENT BETWEEN
THE CITY OF MOUNTAIN VIEW AND SHORELINE AMPHITHEATRE
PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP
THIS AMENDMENT NO. 4 is made and entered into as of October 29, 1993, by
and between the City of Mountain View, a California Charter City, whose address
is 500 Castro Street, Mountain View, California ("City"), the Mountain View
Shoreline Regional Park Community, a special district formed under the laws of
the State of California, whose address is 500 Castro Street, Mountain View,
California ("Community"), and Shoreline Amphitheatre Partners, a California
limited partnership, ("Partnership") whose address is 260 Fifth Street, San
Francisco, CA.
RECITALS
A. As of June 20, 1986, City, Community and Partnership entered into that
certain Amphitheatre Lease and Agreement (hereinafter, the "Lease") whereby
Partnership acquired the right to use the site (as defined in the Lease)
pursuant to the terms set forth therein. On February 11, 1987, the parties to
the Lease modified it in certain respects as set forth in that certain
Settlement Agreement and Amendment to Amphitheatre Lease and Agreement;
thereafter, on September 1, 1989, such parties further modified the Lease in
certain respects as set forth in that certain Amendment No. 2 to Amphitheatre
Lease and Agreement between the City of Mountain View and Shoreline Amphitheatre
Partners, a California limited partnership; and thereafter on April 30, 1991,
such parties further modified the Lease as set forth in that certain Amendment
No. 3 to the Lease. The original Lease as so amended is referred to herein as
the "Lease."
B. Since the date of the Lease, Partnership has completed construction of the
Amphitheatre and operated it for seven (7) Concert Seasons (as defined in the
Lease). Partnership has applied for and obtained approval for expansion of the
current capacity of the Amphitheatre from 15,000, permanently authorized, to
25,000 people, permanently authorized. Pursuant to approval of the Mountain View
City Council given February 9, 1993, the parties to the Lease have determined
that certain modifications and clarifications are desirable in the terms and
provisions of the Lease, all of which modifications and clarifications are set
forth below.
C The parties desire to finalize and incorporate in the Lease Exhibits A, C, D,
E and F, which are specifically referenced in the Lease but were never attached
to the executed Lease.
D. NOW, THEREFORE, in consideration of the Recitals, mutual obligations and
promises of the parties are herein expressed, City, Community and Partnership
agree as follows:
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<PAGE>
1. Effects of this Amendment. Except as expressly set forth in this
Amendment No. 4, all other terms, provisions and conditions of the Lease shall
remain in full force and effect.
2. Definitions. Except as set forth in this Amendment No. 4, all terms
used in this Amendment No. 4 shall have the meaning given them in the Lease.
3. The following Exhibits attached hereto are hereby incorporated by this
reference into the Lease, and each Exhibit shall have the meaning and effect
given to it in the Lease and operate as if the Exhibit was included in the
original Amphitheatre Lease and Agreement executed on June 20, 1986:
(1) Exhibit A, Legal Description of Parcel Map;
(2) Exhibit C, Pair Market Value;
(3) Exhibit D, Groundwater Pipeline Maintenance and Repair Easement;
(4) Exhibit E, Memorandum of Lease;
(5) Exhibit F, Short Form Deed of Trust and Assignment of Rents.
4. Recital A of the Lease shall be amended to read as follows:
A. City owns that certain real property (hereinafter referred to as
the "Site") generally located off of Stierlin Road near the entrance to
Shoreline Park in the City of Mountain View, all as more particularly described
in the legal description of parcel map contained in Exhibit "A" attached hereto
and incorporated herein by reference."
5. Recital E of the Lease shall be amended to read as follows:
"E. BGP has entered into a sublease with Partnership, under the
terms of which sublease BGP is obligated to perform certain functions in
connection with promotion and staging of entertainment events at the proposed
Amphitheatre."
6. Lease Amendments. The following changes in the Lease are hereby made:
a. Section 2.08 is amended to read as follows:
"Section 2.08. Future Construction or Expansion. There shall
be no future construction or expansion of the Amphitheatre, parking and related
improvements, nor any increase in ticket sales or other intensification, beyond
that approved by City or provided herein, without the prior approval of City.
Unless a further increase is approved by the City, the capacity of the
Amphitheatre shall be twenty-five thousand (25,000) people, and the Amphitheatre
shall not sell more than twenty-five thousand (25,000) tickets for any single
Amphitheatre event without the prior written approval of the City."
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<PAGE>
c. Section 5.07 is hereby amended to read as follows:
"Section 5.07. Sound Limitations. Partnership has the
affirmative obligation to resolve all problems relating to sound emanating from
the Amphitheatre. Without limiting the City's land use and police powers in any
way City acknowledges that, as required by the balanced programming provisions
of Section 5.02, Partnership will be offering a variety of musical and
entertainment events at the Amphitheatre, including rock and roll music. City
further acknowledges that Partnership's ability to promote rock and roll musical
performances at the Amphitheatre is an essential element in the projected
profitability and success of the Amphitheatre and is a material consideration in
Partnership's entering into this Lease. During the Term, in adopting guidelines,
ordinances, laws, statutes, rules and regulations affecting the Amphitheatre and
in permitting further development of the areas adjacent to the Amphitheatre,
City shall give due consideration to the existence of the Amphitheatre. With
regard to future development of areas adjacent to the Amphitheatre, City shall
make the developers aware of the Amphitheatre.
Partnership shall design, construct and operate the Amphitheatre in a
reasonable manner such that sound emanating from the Amphitheatre, parking or
related improvements shall not create a nuisance or annoyance to nearby uses.
Partnership hereby agrees to the following limitations: (1) the average sound
level measured at the upper rim of the Amphitheatre shall not exceed 98 dB(A)
during a concert and (2) Partnership shall not redirect the lawn speakers or
increase sound power without the explicit, written approval of City. The average
sound level shall be determined and the sound monitoring equipment calibrated
pursuant to the Technical Protocol set forth in Exhibit G, attached hereto and
incorporated herein by reference. Pursuant to the Technical Protocol,
Partnership shall professionally calibrate its sound monitoring equipment at its
own expense annually. Also pursuant to the Technical Protocol set forth in
Exhibit G, and with prior notice of at least one full business day, and at least
three (3) hours prior to the opening of the Amphitheatre for that particular
event, City, at its own expense, may professionally calibrate the sound
monitoring equipment at all Amphitheatre events. Partnership shall continue to
provide and operate existing sound monitoring equipment for measurement of sound
levels, and shall, upon request, make available for review by City at the
Amphitheatre all strip chart record printouts from such equipment. Such data
shall be preserved by partnership for two years after the end of the concert
season to which it pertains, along with records of calibration of sound
monitoring equipment.
City reserves the right to impose by resolution or ordinance of the City
Council specific reasonable operational and/or sound level limitations on the
operation of the Amphitheatre.
Partnership shall use reasonable efforts, to correct any further noise and
sound problems identified by City, including the obligation to adjust sound
amplification
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<PAGE>
equipment power levels, if Partnership's reasonable mitigation efforts including
the equipment of performers, do not alleviate persistent noise problems so that
reasonable sound levels adopted by City are not exceeded. City may develop
reasonable guidelines for the implementation of this Section, and if such
guidelines are developed, Partnership shall follow such guidelines. If
Partnership at any time fails to solve these noise and sound problems identified
by the City to the City's reasonable satisfaction within a reasonable time
period, then, thereafter, if Partnership, at any time, exceeds any then existing
sound limitations imposed, City shall have the right to enter the Site for the
purpose of monitoring and, if necessary, adjusting the amplification levels of
all sound equipment at the Amphitheatre so that off-site nuisance or annoyance
is avoided and sound limits are not exceeded.
City shall also have the right to install sound level governors on all
sound amplification equipment used at the Amphitheatre so that no sound shall
exceed then-existing reasonable sound level limitations imposed by City on the
operation of the Amphitheatre by resolution, ordinance or developmental
approvals given by City. These sound governors may be readjusted from time to
time in order to reflect changes in sound level limitations imposed by City.
City shall also have the right to place such sound governors on any
amplification equipment brought in by any third party other than Partnership or
BGP, including any performers and their staff. City shall not have the right to
install and operate sound governors until Partnership has been given a
reasonable opportunity to cure identified noise problems, and the cure proposal
by Partnership fails to eliminate persistent noise and sound problems.
The exercise by City of any rights under this Lease shall not act as a bar
to the exercise by City of any other right or remedy it may have in law or
equity for a violation of the sound limitations set by City. Except as otherwise
specifically provided herein, the cost of any sound monitoring system or
acoustical consultant hired by City to ensure that the sound attenuation
objectives of this Section 5.07 are satisfied shall be paid by City, but
Partnership shall reimburse City one half those costs."
IN WITNESS WHEREOF, this Amendment No. 4 to Lease is executed by the City
of Mountain View, acting by and through its City Manager, Mountain View
Shoreline Regional Park Community and Shoreline Amphitheatre Partners.
"City":
APPROVED AS TO CONTENT CITY OF MOUNTAIN VIEW, a
FOR CITY AND COMMUNITY chartered municipal corporation
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
- ------------------------- -------------------------------
City Manager
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<PAGE>
"Community":
APPROVED AS TO FORM MOUNTAIN VIEW SHORELINE
FOR CITY AND COMMUNITY REGIONAL PARK COMMUNITY, a
special district
/s/ [ILLEGIBLE] By: /s/ Patricia Figueroa
- ------------------------- -------------------------------
Mayor
"Partnership":
SHORELINE AMPHITHEATRE PARTNERS,
a California limited partnership
By: SHORELINE AMPHITHEATRE,
LTD., its general partner
By: /s/ [ILLEGIBLE]
-------------------------------
Bill Graham Enterprises, Inc., a California corporation, hereby unconditionally
guarantees and promises to and for the benefit of the City of Mountain View that
Shoreline Amphitheatre Partners shall perform all of its obligations under the
terms of the Lease.
Dated: [ILLEGIBLE] BILL GRAHAM ENTERPRISES, INC.,
a California Corporation
By: /s/ [ILLEGIBLE]
-------------------------------
-5-
<PAGE>
EXHIBIT A
Lot 4 of Parcel Map for Vista Slope - A Four (4) Lot Subdivision.
Recorded October 14, 1994 in Book 659, pages 13 to 19 of the official records of
Santa Clara County Recorders Office.
<PAGE>
Fair Market Value.. "Fair Market Value" shall mean the value of comparable
amphitheatre facilities with similar amenities taking into consideration: age,
quality of construction, location and any other relevant considerations.
(a) Promptly following receipt of City's notice of election to purchase
the Amphitheatre, City and Trustee shall meet and attempt to agree on the Fair
Market Value of the Amphitheatre and Site. If City and Trustee are unable to
agree within twenty (20) days following receipt by Trustee of City's notice,
then the Fair market Value shall be determined by appraisal as hereinafter
provided. The appraisal shall be conducted in San Francisco, California, in the
following manner:
(i) Within thirty (30) days after expiration of the twenty (20)-day
period, Trustee and City shall each give written notice to the other specifying
therein the name and address of the person to act as the appraiser on such
party's behalf. The appraisers shall be qualified MAI real estate appraisers
with at least five (5) years full-time commercial appraisal experience who are
familiar with the fair market value of similar property. Failure on the part of
either party to timely give the notice designating their appraiser shall
constitute a waiver of the right thereto. If either party fails to notify the
other party of the appointment of its appraiser, within or by the time
specified, then the sole appraiser appointed shall be the appraiser to determine
the Fair Market Value of the Amphitheatre.
(ii) If two appraisers are chosen pursuant to paragraph (i) above,
the appraisers so chosen shall meet within ten (10) business days after the
second appraiser is appointed and shall appoint a third appraiser, who shall be
a competent and impartial person with qualifications similar to those required
of the first two appraisers pursuant to Paragraph (i) above. If they are unable
to agree upon such appointment within five (5) business days after expiration of
such ten (10) day period, the third appraiser shall be selected by the parties
themselves. If the parties do not so agree, then either party, on behalf of
both, may request appointment of such a qualified person by the then president
of the San Francisco Real Estate Board. The three appraisers shall decide the
dispute, if it has not been previously resolved, by following the procedures set
forth in Paragraph (iii) below.
(iii) The Fair Market Value shall be fixed by the three appraisers
in accordance with the following procedures. Each of the appraisers selected by
the parties shall state, in writing, his determination of the Fair Market Value
supported by
<PAGE>
the reasons therefor and shall make counterpart copies for each of the other
appraisers. The appraisers shall arrange for a simultaneous exchange of such
proposed resolutions. The role of the third appraiser shall be to select which
of the two proposed resolutions more closely approximates his determination of
Fair Market Value. The third appraiser shall have no right to propose a middle
ground or any modification of either of the two proposed resolutions. The
resolution he chooses as that more closely approximating his determination of
the Fair Market Value shall constitute the decision of the appraisers and shall
be final and binding upon the parties.
(iv) In the event of a failure, refusal or inability of any
appraiser to act, his successor shall be appointed by him, but in the case of
the third appraiser, his successor shall be appointed in the same manner as that
set forth herein with respect to the appointment of the original third
appraiser. Each party shall pay the fees and expenses of its respective
appraiser and both shall share the fees and expenses of the third appraiser.
Attorneys' fees and expenses of counsel and of witnesses for the respective
parties shall be paid by the respective party engaging such counsel or calling
such witness.
(v) The appraisers shall have the right to consult experts and
competent authorities for factual information or evidence pertaining to a
determination of Fair Market Value, but any such consultation shall be made in
the presence of both parties with full right on their part to cross-examine. The
appraisers shall render the decision and award in writing with counterpart
copies to each party. The appraisers shall have no power to modify the
provisions of this Lease.
2
<PAGE>
Exhibit D
RECORDING REQUESTED AND
WHEN RECORDED RETURN TO:
- --------------------------------------------------------------------------------
RICHARD GREENE GREENE, RADOVSKY, MALONEY & SHARE Spear Street Tower, Suite 3200
One Market Plaza San Francisco, CA 94105
APN - -
-------------- ---------- ------------
GROUNDWATER PIPELINE MAINTENANCE AND REPAIR EASEMENT
This Agreement is entered into by and between the CITY OF MOUNTAIN VIEW,
whose address is P.O. Box 7540, Mountain View, California, 94039 (hereinafter
referred to as "GRANTOR"), and SHORELINE AMPHITHEATRE PARTNERS, whose address is
P. 0. Box 429094, San Francisco, California, 94142-9094, hereinafter referred to
as "GRANTEE."
RECITALS
A. GRANTOR is the owner of certain real property known as the Vista Slope
site and generally located in the North Bayshore Area between Amphitheatre
Parkway and the southern boundary of the Shoreline Golf Links at North Bayshore,
in the City of Mountain View, County of Santa Clara, State of California, more
particularly described in Exhibit "X", attached hereto and by reference
incorporated herein, and sometimes referred to as the "Servient Tenement."
GRANTOR is also the owner and lessor of that certain real property generally
known as the Shoreline Amphitheatre, adjacent to the Vista Slope landfill site,
and generally located at the northwest intersection of Amphitheatre Parkway and
North Shoreline Boulevard, as shown on Exhibit "X" and more particularly
described in Exhibit "A" to the original lease and is hereby incorporated by
reference.
B. GRANTEE is the lessee of that certain real property generally known as
the Shoreline Amphitheatre, described above in Paragraph A. GRANTEE is the owner
of the groundwater discharge pipeline which is the subject of this easement.
-1-
<PAGE>
C. GRANTOR and GRANTEE have entered into a certain Lease and Agreement
between the City of Mountain View, the Mountain View Shoreline Regional Park
Community and Shoreline Amphitheatre Partners, dated June 20, 1986, as amended.
This easement is referenced in said Lease and Agreement as Exhibit "D" thereto.
D. GRANTEE desires to acquire certain privileges in GRANTOR's adjacent
Vista Slope landfill site property for the groundwater pipeline.
NOW, THEREFORE, in consideration of the recitals and mutual promises
contained herein and the Lease and Agreement as amended, the parties agree as
follows:
1. Grant of Easement. GRANTOR grants to GRANTEE a nonexclusive easement in
gross, with a nonexclusive right of ingress and egress, for the purpose of
operating, maintaining, repairing, protecting and replacing a groundwater
pipeline, together with appurtenances thereto, along, across, under and in a
portion of that certain parcel described in Paragraph A above as the Vista Slope
landfill site and referred to as the "Servient Tenement." The use of said
pipeline and the easement granted herein shall be for the sole and exclusive
purpose of transporting groundwater, as is more particularly described in that
certain Lease and Agreement, as amended, between the parties and referenced
herein. In exercising these rights, GRANTEE must use reasonable care and may not
unreasonably increase the burden on the Servient Tenement or the GRANTOR or make
any material changes to the Servient Tenement or the pipeline, except for the
express purposes set forth herein, without the prior written consent of GRANTOR.
2. Term. The easement granted in this Agreement shall be for the same term
as the underlying Lease Agreement as amended referenced herein.
-2-
<PAGE>
3. Assignment. This Agreement, including any interest in this Agreement,
shall not be assigned without the prior written consent of the GRANTOR, which
shall not be unreasonably withheld.
Dated this 22nd day of December, 1993.
APPROVED AS TO CONTENT: "GRANTOR":
CITY OF MOUNTAIN VIEW,
a municipal corporation
/s/ Connie Martinez
- ----------------------- By: /s/ [ILLEGIBLE]
Connie Martinez ------------------------------
Deputy City Manager City Manager
FINANCIAL APPROVAL:
"GRANTEE":
SHORELINE AMPHITHEATRE
/s/ [ILLEGIBLE] PARTNERS
- -----------------------
Ass't Finance and
Administrative Services
Director
By: /s/ Danny Scher
-------------------------
Danny Scher
Vice President
APPROVED AS TO FORM:
/s/ C. Shelley Emerson
- -----------------------
City Attorney (Acting)
Acknowledgment of Signatures
-3-
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
County of San Francisco )
On 01-13-94 before me, M.E. Pena, Notary,
-------- --------------------------------------------------------
DATE NAME, TITLE OF OFFICER - E.G., "JANE DOE, NOTARY PUBLIC"
personally appeared /s/ Danny Scher,
-----------------------------------------------------------
NAME(S) OF SIGNER(S)
/X/ personally known to me - OR / / proved to OPTIONAL SECTION
me on the basis of satisfactory CAPACITY CLAIMED BY
evidence to be the person(s) whose SIGNER
name(s) is/are subscribed to the within Though statue does not
instrument and acknowledged to me that require the Notary to fill
he/she/they executed the same in in the data below, doing
his/her/their signature(s) on the so may prove invaluable to
instrument the person(s), or the entity persons relying on the
upon behalf of which the person(s) document
acted, executed the instrument. / / INDIVIDUAL
/ / CORPORATE OFFICER(S)
---------------------
TITLE(S)
/ / PARTNER(S)
/ / LIMITED
/ / GENERAL
/ / ATTORNEY-IN-FACT
/ / TRUSTEE(S)
/ / GUARDIAN/ CONSERVATOR
/ / OTHER
--------------------
--------------------
--------------------
MARIA ELENA PENA WITNESS MY HAND AND SIGNER IS REPRESENTING:
COMM. #981157 OFFICIAL SEAL. NAME OF PERSON(S)
Notary Public - California OR ENTITY(IES)
SAN FRANCISCO COUNTY _____________________
My Comm. Expires /s/ Maria Elena Pena _____________________
DEC 21, 1996 --------------------
260 5th Street SIGNATURE OF NOTARY
San Francisco, CA 94131
================================OPTIONAL SECTION================================
THIS CERTIFICATE MUST BE ATTACHED TITLE OR TYPE OF DOCUMENT _________________
TO THE DOCUMENT DESCRIBED AT RIGHT: NUMBER OF PAGES ___________
________________________________ DATE OF DOCUMENT ____________
Though the date requested here is SIGNER(S) OTHER THAN NAMED ABOVE __________
not required by law, it could
prevent fraudulent reattachment of
this form.
- --------------------------------------------------------------------------------
(c) 1993 NATIONAL NOTARY ASSOCIATION
8236 Remmet Ave., P.O. Box 7184
Canoga Park, CA 91309-71
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF CALIFORNIA )
County of Santa Clara ) ss.
City of Mountain View )
On this 11th day of January, in the year 1994, before me, Katherine
Koliopoulos, City Clerk in and for the City of Mountain View, State of
California, personally appeared Kevin C. Duggan known to me to be the City
Manager of the City of Mountain View, a municipal corporation, and the municipal
corporation described in and that executed the within instrument, and also known
to me to be the person who executed the within instrument on behalf of the said
City of Mountain View, and acknowledged to me that such municipal corporation
executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal in the aforesaid County and State the day and year in this certificate
first above written.
/s/ Katherine B. Koliopoulos
------------------------------------
Katherine B. Koliopoulos, City Clerk
City of Mountain View
<PAGE>
EXHIBIT "E"
Recording Requested By and
When Recorded, Return to:
- --------------------------------------------------------------------------------
MEMORANDUM OF LEASE
This Memorandum of Lease (the "Memorandum") is made as of October ___,
1993, by and between the City of Mountain View, a chartered municipal
corporation, whose address is 500 Castro Street, Mountain View,
California ("City"), the Mountain View Shoreline Regional Park Community, a
special district formed under the laws of the State of California, whose address
is 500 Castro Street, Mountain View, California ("Community"), and Shoreline
Amphitheatre Partners, a California limited partnership ("Partnership"), who
agree as follows:
1. Term and Premises. City leases to Partnership, and Partnership leases
from City, certain real property located at One Amphitheatre Parkway, City of
Mountain View, County of Santa Clara, California (the "Property"), as shown on
Record of Survey for the Lease Area of Shoreline Amphitheatre and described in
Exhibit A attached to this Memorandum, for a term of thirty-five (35) years,
commencing on June 29, 1986 and continuing through November 30 of the year in
which the thirty-fifth (35th) anniversary of the term commencement occurs (the
"Term"). Pursuant to Section 1.03 of that certain lease dated June 20, 1986
between City, Community and Partnership, as amended (the "Lease"), the Term is
subject to extension by Partnership pursuant to the provisions of the Lease. The
parties hereby acknowledge that City has reserved certain rights in connection
with the Property as set forth in Section 1.01 of the Lease, which provision is
hereby specifically made a part hereof as fully and completely as if herein
specifically set forth in full, and any and all rights of City, Community and
Partnership to the Property are as set forth in the Lease.
2. Quitclaim Deed. Partnership shall execute and deliver to City on the
expiration or termination of the Lease, upon City's request, a quitclaim deed to
the Property, in recordable form, designating City as transferee.
3. Provisions Binding. The provisions of the Lease to be performed by City
and/or Community, whether to be performed at the Property or at any other
location, and whether affirmative or negative in nature, are intended to
1
<PAGE>
and shall bind City and Community and their respective successors and assigns at
any time, and shall inure to the benefit of Partnership and its successors and
assigns. The provisions of the Lease to be performed by Partnership, whether to
be performed at the Property or at any other location, and whether affirmative
or negative in nature, are intended to and shall bind Partnership and its
successors and assigns at any time, and shall inure to the benefit of City and
Community and their respective successors and assigns.
4. Purpose of Memorandum. This Memorandum is prepared for the purpose of
recordation, and, except for paragraph 2 hereof, it in no way modifies the
provisions of the Lease.
"City":
APPROVED AS TO CONTENT CITY OF MOUNTAIN VIEW, a
FOR CITY AND COMMUNITY chartered municipal corporation
By:
- --------------------------- -------------------------------
City Manager
"Community":
APPROVED AS TO FORM MOUNTAIN VIEW SHORELINE
FOR CITY AND COMMUNITY REGIONAL PARK COMMUNITY, a
special district
By:
- --------------------------- -------------------------------
Mayor
"Partnership":
SHORELINE AMPHITHEATRE PARTNERS,
a California limited partnership
By: SHORELINE AMPHITHEATRE,
LTD., its general partner
By:
-------------------------------
2
<PAGE>
SHORELINE AT MOUNTAIN VIEW
[MAP OMITTED]
EXHIBIT "X"
GROUNDWATER PIPELINE
MAINTENANCE AND REPAIR EASEMENT
SEE EXHIBIT "D"
<PAGE>
AMENDMENT #5 TO AMPHITHEATRE LEASE AND AGREEMENT
BETWEEN THE CITY OF MOUNTAIN VIEW AND SHORELINE
AMPHITHEATRE PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP
This AMENDMENT #5 is dated for identification February 20, 1995, by and between
the CITY OF MOUNTAIN VIEW, a California Charter City (hereinafter, "CITY"),
MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY, a special district (hereinafter
"COMMUNITY"), and SHORELINE AMPHITHEATRE PARTNERS, a California limited
partnership (hereinafter, "PARTNERSHIP") and is made with reference to the
following facts and understandings:
RECITALS
A. By Amendment #3 to the above-referenced lease, PARTNERSHIP requested and CITY
approved use of lots A and B, owned by CITY, for parking and the installation of
a chip seal surface on said lots under a revocable license for Amphitheatre
patrons.
B. The license granted to PARTNERSHIP through Amendment #3 was for a period of
no more than four (4) years from April 30, 1991, and said period is set to
expire on April 29, 1995. The parties to this Amendment desire to extend the
revocable license agreement for the majority of lots A and B for an additional
twelve (12) month period, with the portion of lots A and B not so extended to
revert to the control of the CITY for the development of a park adjacent to the
new westerly boundary of lots A and B.
NOW, THEREFORE, in consideration of the recitals and mutual promises contained
herein, the parties agree as follows:
1. All terms, provisions and conditions set forth in the Amphitheatre Lease and
Agreement between the CITY OF MOUNTAIN VIEW and SHORELINE AMPHITHEATRE PARTNERS,
a California limited partnership; the Settlement Agreement and Amendment to
Amphitheatre Lease and Agreement between the CITY OF MOUNTAIN VIEW and SHORELINE
AMPHITHEATRE PARTNERS, a California limited partnership; and
1
<PAGE>
Amendment # 2 to the Amphitheatre Lease and Agreement between the CITY OF
MOUNTAIN VIEW and SHORELINE AMPHITHEATRE PARTNERS, a California limited
partnership; and the aforementioned Amendment #3, shall remain in full force and
effect.
2. Except as provided in paragraph 3, below, the parking lot and improvements
authorized and made pursuant to the aforementioned Amendment #3 on parking lots
A and B may remain until April 29, 1996, unless otherwise terminated pursuant to
the terms of this Agreement or the above-referenced Agreements. The City Manager
may enter into a written agreement to extend the terms of this Agreement for a
period not to exceed twelve (12) months.
3. The westerly portion of lots A and B that is adjacent to the easterly portion
of the proposed park site and as more particularly described in the attached
Exhibit A (hereinafter the Relinquished Portion"), shall be relinquished to CITY
for the development of the park. The Relinquished Portion comprises
approximately 3 to 4 acres.
(a) Fencing. When the Relinquished Portion is defined with accuracy, CITY
shall, at its sole expense, place a chain link fence at or near the boundary
line, which fence shall remain during construction activity.
4. Offsite Grading. The development of the adjacent park site will require some
offsite grading activity to prepare the park site in accordance with the plan
for the park. CITY will make every effort to minimize any related impacts on the
Amphitheatre.
5. Movement of Entryway. The area of lots A and B not extended for the
additional twelve month period will necessitate the relocation of the parking
lot entrance along Amphitheatre Parkway. CITY shall relocate this entryway at
its expense and in a manner approved by the Director of Public Works, after
consultation with BGP.
(a) Mobile Trailer. The trailer and electrical connections and facilities
presently located on Lots A and B shall be relocated as may be required by the
2
<PAGE>
relinquishment described above and the relocation of the driveway. The
relocation of the trailer and electrical facilities shall be accomplished at the
expense of CITY.
(b) Repair of Damages. CITY shall at its sole cost and expense, repair any
damage to the chip seal or lighting caused by the work performed pursuant to
this Agreement.
6. Relocation of Parking Activities. The parking that may or may not be
displaced by the relinquishment of those portions of lots A and B that are not
extended under this amendment for future parking, and/or those parking areas
impacted by offsite grading activities, shall be relocated, to the extent
determined necessary by the Director of Community Development and Chief of
Police, to lots E and F.
(a) With respect to relocation or replacement parking, CITY shall move
with all deliberate speed to expand Lot E as conceptually shown on Exhibit "B"
to provide at least 500 new spaces on or before April 30,1995. Said improvements
to Lot E shall be similar in kind and quality to current parking improvements on
Lot E. The improvements to Lot E shall be paid for by CITY.
(b) CITY shall use best efforts to study the possibility of making two (2)
lanes of traffic to flow into Lot E during Amphitheatre events, so long as one
lane immediately adjacent to the Shoreline Park gatehouse remains dedicated to
park entry. CITY shall implement same, if feasible.
7. Adequate Parking. As a condition of the City's waiver in February 1994 of
BGP's obligation to construct a berm at the back of the lawn seating area of the
Amphitheatre as was originally proposed as a part of the Amphitheatre's seating
capacity expansion to 25,000, BGP was required to work with City staff during
the 1994 concert season to evaluate the actual parking demand for larger concert
events. CITY and BGP have conducted parking surveys and counts and based on
same, along with the history of the venue with respect to capacity events, the
parties agree that sufficient parking exists for the venue. This Agreement by
the parties does not relieve either party from continuing
3
<PAGE>
to explore alternatives and provide incentives, etc. aimed at minimizing the
number of cars that seek to access the facility.
8. As to each right, covenant and/or obligation of CITY or COMMUNITY herein,
each right, covenant and/or obligation shall apply equally, to both entities. As
to each right, covenant and/or obligation of PARTNERSHIP or BGP, each right,
covenant and/or obligation shall apply equally, to both entities.
IN WITNESS WHEREOF, this Fifth Amendment to the Lease is executed by the CITY OF
MOUNTAIN VIEW, acting by and through its City Manager, Mountain View Shoreline
Regional Park Community and by SHORELINE AMPHITHEATRE PARTNERS.
"City":
APPROVED AS TO CONTENT CITY OF MOUNTAIN VIEW, a
FOR CITY chartered municipal corporation
/s/ Michael D. Martello By: /s/ [ILLEGIBLE]
- ----------------------- --------------------------
Michael D. Martello City Manager
City Attorney
"Community":
APPROVED AS TO FORM MOUNTAIN VIEW SHORELINE
FOR COMMUNITY REGIONAL PARK COMMUNITY, a
special district
/s/ Michael D. Martello By: /s/ [ILLEGIBLE]
- ----------------------- --------------------------
Michael D. Martello Executive Director
City Attorney
4
<PAGE>
APPROVED AS TO FORM "Partnership":
FOR PARTNERSHIP
SHORELINE AMPHITHEATRE PARTNERS,
a California limited partnership
3/6/95 SHORELINE AMPHITHEATRE, LTD.,
- --------------------------- its general partner
By: /s/__________________
Bill Graham Enterprises, Inc., a California corporation, hereby unconditionally
guarantees and promises to and for the benefit of the City of Mountain View that
Shoreline Amphitheatre Partners shall perform all of its obligations under the
terms of the Lease.
Dated 3/6/95 BILL GRAHAM ENTERPRISES, INC.,
- --------------------------- a California corporation
By: /s/__________________
5
<PAGE>
AMENDMENT NO. 6 TO AMPHITHEATRE LEASE AND AGREEMENT
BETWEEN THE CITY OF MOUNTAIN VIEW
AND SHORELINE AMPHITHEATRE PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
This AMENDMENT NO. 6 amends that certain AMPHITHEATRE LEASE AND AGREEMENT
BETWEEN THE CITY OF MOUNTAIN VIEW AND SHORELINE AMPHITHEATRE PARTNERS, A
CALIFORNIA LIMITED PARTNERSHIP (hereinafter "LEASE") dated for identification
the 1st day of October, 1996, by and between the CITY OF MOUNTAIN VIEW, a
California Charter City (hereinafter "CITY"), MOUNTAIN VIEW SHORELINE REGIONAL
PARK COMMUNITY, a special district (hereinafter "COMMUNITY"), and SHORELINE
AMPHITHEATRE PARTNERS, a California limited partnership (hereinafter
"PARTNERSHIP"), and is made with reference to the following facts and
understandings:
RECITALS
A. By Amendment No. 3 to the LEASE, PARTNERSHIP requested and CITY
approved use of Lots A and B, owned by CITY, for parking and the installation of
a chip seal surface on said lots under a revocable license for Amphitheatre
patrons.
B. The license granted to PARTNERSHIP through Amendment No. 3 was for a
period of no more than four (4) years from April 30, 1991. The revocable license
was extended by Amendment No. 5 to the LEASE for an additional twelve (12) month
period, set to expire on April 29, 1996. The parties to this Amendment desire to
extend the revocable license agreement pursuant to the terms set forth herein.
As permitted in Section 2 of Amendment No. 5, the revocable license agreement
was further extended by mutual agreement of CITY and PARTNERSHIP to April 29,
1997.
C. This Amendment addresses the traffic, parking, ingress and egress
issues related to the move of patron parking off of Lots A and B and onto the
western portion of the Crittenden site.
D. This Agreement also resolves the traffic, circulation, parking, ingress
and egress issues between PARTNERSHIP, the COMMUNITY and CITY resulting from the
development of the Farmer's Field and Crittenden sites by Silicon Graphics, Inc.
E. Except as otherwise provided hereinwith respect to traffic improvements
made and the relocation of parking, this Agreement does not resolve all future
traffic, parking, circulation, ingress and egress issues in the North Bayshore
Area, and Bill Graham Presents (hereinafter "BGP") and PARTNERSHIP reserve all
rights with respect to same.
-1-
<PAGE>
NOW, THEREFORE, in consideration of the recitals and mutual promises
contained herein, the parties agree as follows:
1. This Agreement may be referred to as the "The 1996 North Bayshore
Precise Plan Traffic Agreement" and implements the North Bayshore Precise Plan
traffic requirements by providing detailed parking and circulation changes in
the North Bayshore and by implementing replacement parking and pedestrian and
vehicular linkages between parking lots, the Amphitheatre and by providing
access to Shoreline at Mountain View during Amphitheatre concerts.
2. All terms, provisions and conditions set forth in the LEASE; the
Settlement Agreement and Amendment to Amphitheatre Lease and Agreement Between
the City of Mountain View and Shoreline Amphitheatre Partners, a California
Limited Partnership; and Amendments Nos. 2, 3, 4 and 5 to the LEASE shall remain
in full force and effect, except as expressly modified by reference to the
section or subsection number of those Agreements.
3. The parties and PARTNERSHIP agree that the following traffic
improvements will benefit the Amphitheatre and agree to transition the parking
for Amphitheatre patrons as follows:
a. Level One Improvements:
(1) The improvements to be constructed as part of the Level
One Improvements are as follows:
(i) Increase the number of entrance lanes on the west side
of Lot E from one lane to three lanes.
(ii) Grading four lanes across Lot F from Crittenden Lane to
the east entry of Lot E.
(iii) Increasing the number of entrance lanes at the east
entrance into Lot E from one lane to three lanes.
(iv) Adding a right-hand turn lane on the east side of North
Shoreline Boulevard between Amphitheatre Parkway (Stierlin Court) and Crittenden
Lane.
(v) Relocating the gatehouse and entrance to Shoreline at
Mountain View in conjunction with the widening of the west entrance to Lot E.
(2) Construction. The improvements will be constructed by
CITY; however, CITY and PARTNERSHIP may agree by separate written agreement to
have PARTNERSHIP construct the improvements.
-2-
<PAGE>
(3) Funding. BGP and PARTNERSHIP will agree to an increase in
the minimum rent for the Amphitheatre as provided in Section 3.03(b)(1) of the
LEASE (see below), and CITY will pay for the installation of said improvements.
If any of the Level One Improvements referenced in this section are not
installed, the adjustment to the minimum rent may be renegotiated if the cost
for installation of the improvements installed falls below Four Hundred Thousand
Dollars ($400,000).
b. Level Two Improvements:
(1) The improvements contemplated by Level Two include
improvements to the energy trail through Shoreline at Mountain View as a
one-lane paved bicycle/pedestrian trail which would be utilized by BGP for
postconcert exit traffic. The project for improvement of the energy trail may be
approved as a paved trail that could be used as an ingress route for Shoreline
at Mountain View patrons during Amphitheatre concert events as well as an exit
route for postconcert event Amphitheatre traffic.
(2) Construction. The installation will be conducted by CITY;
however, PARTNERSHIP and CITY may agree by separate written agreement to have
PARTNERSHIP construct and install the improvements.
(3) Funding. In consideration for the Level Two Improvements,
BPG and PARTNERSHIP agree to an increase in the minimum rent for the
Amphitheatre as provided in Section 3.03(b)(2) of the LEASE (see below), and
CITY shall pay for the installation of said improvements.
(4) Guarantee of Continued Access. Once constructed, access
for exiting patrons will be made available to BGP for all events per the adopted
annual traffic plan. This access shall not be foreclosed or eliminated after
parking is relocated off Lots A and B unless a suitable equivalent exitway is
provided to CITY.
c. Level Three Improvements:
(1) Improvements. The Level Three Improvements include the
addition of dirt to the western portion of the Crittenden site described in
Exhibit A. The grading and compacting of that dirt to provide a surface upon
which patrons of the Amphitheatre may park their vehicles shall be the
responsibility of the CITY. When sufficient dirt is delivered to the site,
compacted and graded, the surface of the Crittenden site will be improved with a
chip seal and lighted similar to the improvements that have been made to Lots A
and B under Amendment No. 2 to the LEASE.
(2) Timing. The Crittenden site must be ready for concert
parking for the start of the Year 2000 concert season and all Level One and
Level Two improvements must be in place. If the Crittenden site is prepared and
ready for
-3-
<PAGE>
concert parking prior to that time, BGP will be permitted to utilize both the
Crittenden site and Lots A and B through the 1999 concert season.
(3) Acquisition of Dirt. BGP shall use reasonable efforts to
acquire good, clean fill dirt that meets the standards and approval of CITY for
filling the Crittenden site to the contours as specified in Exhibit B. To the
extent BGP is successful in securing such dirt for delivery and deposit on the
Crittenden site, BGP shall receive credit for any obligation due for the
provision of dirt under Section 2 of the LEASE. If BGP is attempting to secure
dirt as a result of this Agreement and CITY requires dirt for a project, CITY
shall first contact BGP and give BGP the opportunity to secure dirt on behalf of
CITY, and BPG shall receive credit for the dirt secured. If, by the end of the
1998 concert season, sufficient dirt has not been secured to bring the
Crittenden site to an acceptable grade, CITY may take over the dirt acquisition
operation and secure dirt through any means it determines appropriate.
(4) Surface Improvements. Surface improvements shall be
installed at the sole expense of CITY.
(5) Funding. Any dirt secured by BGP shall be at its sole cost
and expense. It is expressly understood that BGP is not obligated to provide
dirt to the Crittenden site. All grading and compaction activity and surface
improvements shall be at the sole cost and expense of CITY.
Section 2.05(f) is hereby added to the LEASE and shall read as follows:
(f) Credit for Crittenden Dirt. PARTNERSHIP shall receive
credit for any dirt they may owe pursuant to this Section for any dirt deposited
by PARTNERSHIP or BGP on the westerly portion of the Crittenden site after
September 1,1996 as it is being prepared for concert patron parking. If
PARTNERSHIP causes 75,000 cubic yards of dirt to be deposited on the site, or
such other site as PARTNERSHIP and CITY may agree, all obligation for dirt or
grading that may exist under the LEASE shall be fulfilled.
d. Lots A and B:
The parking lot and improvements authorized and made pursuant
to Amendment No. 3. to the LEASE on Parking Lots A and B may remain until
November 30, 1999, unless otherwise terminated pursuant to the terms of this
Agreement or the above-referenced Agreements. The City Manager may enter into a
written agreement to extend the term of this Agreement for a period not to
exceed twelve (12) months.
e. Traffic and Circulation
The parties acknowledge and agree that upon the completion of
the installation of the North Road (see Exhibit C) and the widening of
Crittenden Lane
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<PAGE>
to four traffic lanes, the Amphitheatre shall have exclusive use of four lanes
of traffic on Crittenden Lane for concert event traffic to facilitate the use of
the Crittenden site parking area and Lots E and F. The parties likewise
acknowledge and agree that SGI will be provided exclusive use of two traffic
lanes for ingress and egress of employee, visitor and trucking traffic from the
Crittenden campus along the North Road to North Shoreline Boulevard; and (1)
priority access to one lane of northbound North Shoreline Boulevard from
Amphitheatre Parkway to the North Road during concert ingress; (2) priority
access to one lane of southbound North Shoreline Boulevard from the North Road
to Amphitheatre Parkway during concert ingress; (3) priority access to one lane
of westbound Amphitheatre Parkway from North Shoreline Boulevard to the
Rengstorff Avenue/Highway 101 interchange during concert ingress; (4)
prioritized traffic control at the intersection of the North Road and North
Shoreline Boulevard during concert ingress and egress.
Except as described in No. 4 above, the parties also acknowledge and agree
that no priority traffic considerations will be made during concert egress.
(f) Within fifteen (15) days after the end of the first full Concert
Season, after Lots A and B have not been used for parking, the CITY and BGP
shall meet to evaluate the traffic reports issued by the Police Department and
BGP's representatives for that season to determine whether or not they jointly
believe that the traffic flow into and out of the Amphitheatre is the same as,
better or worse than that for the 1995 Concert Season using criteria to be
developed by BGP and the CITY prior to the start of the 1997 Concert Season (the
"Criteria").
If either of the parties believe that the traffic flow is worse than
the 1995 Concert Season, when adjusted for the size of and number of concerts,
the CITY and BGP shall meet to explore and implement changes that are reasonable
in terms of costs and the CITY's ability to implement same, which changes shall
be aimed at improving the traffic flow. The consideration of potential changes
shall include, but not be limited to, revisiting the traffic lane dedication in
the SCI Lease and DDA as well as the expansion of use of the energy trail for
ingress traffic and the possibility of additional capacity. BGP acknowledges
CITY's right to remove it from Lots A and B after the 1999 Concert Season
provided that the Crittenden parking lot is operational and the level one and
level two improvements have been completed.
If BGP and the CITY cannot agree that the use of the Crittenden
parking lot meets the Criteria as developed per this subparagraph, then BGP
shall not be considered to have accepted the Crittenden lot as "proximate land"
within the meaning of ss.6.03 of the Lease and the CITY and BGP shall be
obligated to resolve this issue as required by the Lease.
g. Payments for Improvements:
Only the approval and installation of Level One and Level Two
Improvements involve increased minimum rent payments by BGP and
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<PAGE>
PARTNERSHIP. Because the parties have agreed that BGP and PARTNERSHIP will
recognize the value of these improvements to their leasehold through an
adjustment to the minimum rent, the following amendments are made to the LEASE
and shall read as follows:
Subsection (b)(1) shall be added to Section 3.03 of the LEASE and
shall read as follows:
Section 3.03. Minimum Rent.
(b)(1) The Minimum Rent shall be increased by Two Thousand Seven Hundred
Eighty-Three Dollars ($2,783) above that Minimum Rent specified in Section (b)
above, and shall be due and payable on May 1, 1997 and continuing on the first
day of each month thereafter through April 30, 2017, provided that PARTNERSHIP
shall cease paying the $93,200 portion of the Minimum Rent after July 1, 2006.
Any prepayment option that exists under the LEASE, as amended, shall remain in
effect.
h. Revision to Allowable Surcharge:
Subsection (1) is hereby added to Section 3.01(a) and shall
read as follows:
(1) Effective beginning with the 1997 concert season, the
initial surcharge of $1.50, as provided above, is hereby revised to allow BGP to
deduct a surcharge of up to ten percent (10%) of the average ticket price per
season, with a cap of $3.50 per ticket.
i. Concessionaire:
Section 3.01(c) of the LEASE is hereby amended to read as
follows:
(c) Miscellaneous income, including all other gross receipts
relating to the Amphitheatre and related improvements (such as, but not limited
to advertising contracts, off-site video and corporate sponsorships, telecast,
broadcast arid video production payments and corporate and other sponsorships),
all less applicable Outside Commissions. The Two Million Dollar
($2,000,000)-Ten-Year Sponsorship Agreement with Pepsi-Cola Company shall be
included in Gross Receipts in Two Hundred Thousand Dollar ($200,000) increments
commencing in the first year of the Term and continuing thereafter for a total
of ten years. Commissions and expenses actually paid to parties other than
PARTNERSHIP or BGP in connection with obtaining sponsorships and other ancillary
income shall be excluded from Gross Receipts. Interest income and parking income
shall also be excluded from Gross Receipts. Sales taxes actually paid by
PARTNERSHIP or its licensee or concessionaire shall be excluded from Gross
Receipts. Any payment made by any licensee or concessionaire for the right to
place a concession in the
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Amphitheatre or the right to conduct business in or around the Amphitheatre
shall be included in Gross Receipts, 35 percent of gross receipts of the food
concessionaire (shall be included in gross receipts). All miscellaneous receipts
not specifically included in this new section which originate from the
Amphitheatre shall be Gross Receipts.
4. Partnership Agreement. No changes shall be made to the Partnership
Agreement, or to any contract or agreement between the operator and PARTNERSHIP,
or any other entity or party and PARTNERSHIP, which affects the calculation
determination of or amount of rent due the CITY without the approval of the
CITY.
5. Additional Costs. Except as expressly provided herein, all costs for
development of the improvements contemplated by this Agreement in excess of
those estimated costs shall be borne by CITY. BGP and PARTNERSHIP's obligations
and remunerations shall be limited to those expressly provided herein.
6. As to each right, covenant and/or obligation of CITY or COMMUNITY
herein, each right, covenant and/or obligation shall apply equally, to both
entities. As to each right, covenant and/or obligation of PARTNERSHIP or BGP,
each right, covenant and/or obligation shall apply equally, to both entities.
IN WITNESS WHEREOF, this Amendment No. 6 to the LEASE is executed by the
CITY OF MOUNTAIN VIEW, acting by and through its City Manager, MOUNTAIN VIEW
SHORELINE REGIONAL PARK COMMUNITY and by SHORELINE AMPHITHEATRE PARTNERS.
APPROVED AS TO CONTENT FOR "CITY":
CITY: CITY OF MOUNTAIN VIEW,
a chartered municipal corporation
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
- --------------------------------- ------------------------------
City Attorney City Manager
APPROVED AS TO FORM FOR
COMMUNITY: "COMMUNITY":
MOUNTAIN VIEW SHORELINE
REGIONAL PARK COMMUNITY, a
/s/ [ILLEGIBLE] special district
- ---------------------------------
Community Counsel
By: /s/ [ILLEGIBLE]
------------------------------
Executive Director
FINANCIAL APPROVAL
/s/
- ---------------------------------
Asst. Finance and Administrative
Services Director
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<PAGE>
APPROVED AS TO FORM FOR "PARTNERSHIP":
PARTNERSHIP: SHORELINE AMPHITHEATRE
PARTNERS, a California limited
partnership
- ---------------------------------
By: SHORELINE AMPHITHEATRE,
LTD., its general partner
By: /s/ [ILLEGIBLE]
------------------------------
Except for the obligations set forth in Section 3.03(b), Bill Graham
Enterprises, Inc. a California corporation, hereby unconditionally guarantees
and promises to and for the benefit of the City of Mountain View and the
COMMUNITY that PARTNERSHIP shall perform all of its obligations under the terms
of the LEASE.
Dated Oct. 17, 1996 BILL GRAHAM ENTERPRISES, INC.,
a California corporation
By: /s/ [ILLEGIBLE]
------------------------------
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<PAGE>
[MAP OMITTED]
<PAGE>
[MAP OMITTED]
NORTH BAYSHORE
TRAFFIC IMPROVEMENTS MAP
Improve PG&E Energy Trail for Automobile Traffic One Lane
Relocated Shoreline Park Gatehouse and Entrance
Improve and Widen West Entrance into Lot E to 3 lanes
Grade and Improve Lot E East Entrance to 3 Lanes from Lot F
Install North Road from Crittenden Site to Shoreline Blvd.
Grade Lot F to Facilitate 4 Lanes
Fill and Improve Front of Crittenden to move Lot A/B parking
Widen Crittenden Lane to Four Lanes from Shoreline Blvd. to Lot F
Widen Eastside of Shoreline Blvd. to Lot F
Widen Eastside of Shoreline Blvd. to Add a Right Hand Turn
Lane Between Ampitheatre Parkway and Crittenden Lane
Lots A/B - Current Ampitheatre parking
Bayshore Freeway Route 101 Signage Improvements
<PAGE>
PARTNERSHIP AGREEMENT
FOR
PAVILION PARTNERS
a partnership between
SM/PACE, INC.,
a wholly owned subsidiary of
PACE Music Group, Inc.
and
AMPHITHEATER ENTERTAINMENT PARTNERSHIP
a Delaware general partnership
whose sole general partners are
(i) YM Corp., a wholly-owned
subsidiary of Sony Music Entertainment Inc. and
(ii) Charlotte Amphitheater Corporation, an indirect
wholly-owned subsidiary of
Blockbuster Entertainment Corporation and
(iii) The Westside Amphitheatre Corporation,
an indirect wholly-owned subsidiary of
Blockbuster Entertainment Corporation
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions ..........................................................1
1.1 Admission Agreement.......................................1
1.2 Affiliate.................................................1
1.3 Amphitheater..............................................1
1.4 Amphitheater Cost Limit...................................2
1.5 Amphitheater Loan.........................................2
1.6 Amphitheater Pro Forma....................................3
1.7 Annual Operating Budget...................................3
1.8 Approved Project..........................................3
1.9 Balloon Amphitheater Loan.................................3
1.10 Blockbuster...............................................3
1.11 Blockbuster's Initial Contribution Amount.................3
1.12 Blockbuster Guaranty......................................3
1.13 Blockbuster Specific Obligations..........................3
1.14 Blockbuster Subsidiary....................................4
1.15 Blockbuster Subsidiary Cash Amount........................4
1.15A Budget Year...............................................4
1.16 Budgeted Project Cost.....................................4
1.17 Camden Amphitheater.......................................4
1.18 Camden Asset..............................................4
1.19 Capital Account...........................................5
1.20 Cash Flow.................................................5
1.21 Cash Flow from Operations.................................5
1.22 Charlotte Amphitheater....................................5
1.23 Charlotte Asset ..........................................5
1.24 Charlotte Loan ...........................................5
1.25 Code......................................................5
1.26 Concession Loan...........................................5
1.27 Construction/Acquisition Recourse Obligations.............5
1.28 Construction Completion Date..............................6
1.29 Construction Costs........................................6
1.30 Contributed Project Funds............................ ....6
1.31 Controlling Interest......................................6
1.32 Cost Overruns.............................................6
1.33 CPI.......................................................6
1.34 Debt Coverage Ratio.......................................7
1.35 Defaulting Partner........................................7
1.36 Effective Date of Termination.............................7
1.37 Event of Withdrawal.......................................7
<PAGE>
1.38 Executive Committee ...................................... 7
1.39 Executory Contract ....................................... 7
1.40 Existing Assets .......................................... 7
1.41 Existing Blockbuster Assets .............................. 8
1.42 Existing Facility Closing ................................ 8
1.43 Existing Pace Assets ..................................... 8
1.44 Existing Sony Assets ..................................... 8
1.45 Existing Sony/Block Assets ............................... 8
1.46 First Group .............................................. 8
1.47 Fiscal Year .............................................. 8
1.48 Foregone Concession Advance Amount ....................... 8
1.49 Free Cash ................................................ 8
1.50 Gross Asset Value ........................................ 8
1.51 Hard Costs ............................................... 9
1.52 Land Acquisition Costs ................................... 9
1.53 London Amphitheater ...................................... 9
1.54 Major Capital Improvements ............................... 9
1.55 Manager .................................................. 9
1.56 Market ................................................... 9
1.57 Maximum Rate ............................................. 9
1.58 MCA/Pace Amphitheaters ................................... 9
1.59 Nashville Amphitheater ................................... 10
1.60 Nashville Asset .......................................... 10
1.61 Nashville Partnership .................................... 10
1.62 Net Value ................................................ 10
1.63 New Amphitheater ......................................... 10
1.64 Non-Defaulting Partner ................................... 10
1.65 Non-Recourse Amphitheater ................................ 10
1.66 Non-Recourse Loan ........................................ 11
1.67 Nonrecourse Deductions ................................... 11
1.68 Nonrecourse Liability .................................... 11
1.69 Old Partnership Agreement ................................ 11
1.70 Operating Obligations .................................... 11
1.71 Operational Shortfall .................................... 11
1.72 Pace ..................................................... 11
1.73 Pace Rejected Amphitheater ............................... 12
1.74 Pace's Initial Contribution Amount ....................... 12
1.75 PEC ...................................................... 12
1.76 PMG ...................................................... 12
1.77 Partner Default .......................................... 12
1.78 Partner Nonrecourse Debt ................................. 12
1.79 Partner Nonrecourse Debt Minimum Gain .................... 12
1.80 Partner Nonrecourse Deductions ........................... 12
1.81 Partners ................................................. 12
ii
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1.82 Partnership .............................................. 12
1.83 Partnership Act .......................................... 13
1.84 Partnership Interest ..................................... 13
1.85 Partnership Minimum Gain ................................. 13
1.86 Percentage Interest ...................................... 13
1.87 Person or person ......................................... 13
1.88 Phoenix Amphitheater ..................................... 13
1.89 Phoenix Asset ............................................ 13
1.90 Pittsburgh Amphitheater .................................. 13
1.91 Pittsburgh ............................................... 13
1.92 Plans and Specifications ................................. 14
1.93 Pre-opening Concessionaire Advances ...................... 14
1.94 Principal Reduction Amount ............................... 14
1.95 Project Budget ........................................... 14
1.96 Project Costs ............................................ 15
1.97 Project Loan ............................................. 15
1.98 Proposed Amphitheater Approval Meeting ................... 15
1.99 Proposed Amphitheater Approval Request ................... 15
1.100 Proposed Project Budget .................................. 15
1.101 PWOC ..................................................... 15
1.102 Qualified Amphitheater ................................... 15
1.103 Qualified Market ......................................... 16
1.104 R&D Expenditures ......................................... 16
1.105 Raleigh Amphitheater ..................................... 16
1.106 Raleigh Asset ............................................ 16
1.107 Raleigh Leasehold Estate ................................. 16
1.108 Raleigh Partnership ...................................... 16
1.109 Regulations .............................................. 17
1.110 Representative ........................................... 17
1.111 Renewal Loan ............................................. 17
1.112 Replacement Loan ......................................... 17
1.113.Restricted Funds ......................................... 17
1.114 Restricted Portion of the Earth .......................... 17
1.115 San Bernardino Amphitheater .............................. 17
1.116 San Bernardino Asset ..................................... 17
1.117 Second Group ............................................. 17
1.118 Short Term Rate .......................................... 17
1.119 Sinking Fund ............................................. 17
1.120 SMP ...................................................... 17
1.121 Soft Costs ............................................... 17
1.122 Sony ..................................................... 18
1.123 Sony's Initial Contribution Amount ....................... 18
1.124 Sony/Block ............................................... 18
1.125 Sony/Block Note #1 ....................................... 18
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1.126 Sony/Block Note #2 ....................................... 18
1.127 Sony/Block Notes ......................................... 18
1.128 Sony/Block Rejected Amphitheater ......................... 19
1.129 Sony/Block Related Party ................................. 19
1.130 Sony/Block Shared Obligations ............................ 19
1.131 Sony Guaranty ............................................ 20
1.132 Sony Specific Obligations ................................ 20
1.133 Sony Subsidiary .......................................... 20
1.134 Sony Subsidiary Cash Amount .............................. 20
1.135 Tampa Amphitheater ....................................... 21
1.136 Tampa Asset .............................................. 21
1.137 Tampa Purchase Agreement ................................. 21
1.138 Termination Notice ....................................... 21
1.139 Treasury Rate ............................................ 21
1.140 Unamortized Amount ....................................... 21
1.141 Unrestricted Funds ....................................... 21
1.142 Unwind Amphitheater Loans ................................ 22
1.143 Unwind Assets ............................................ 22
1.144 Unwind Concession Loan ................................... 22
1.145 Unwind Procedure ......................................... 22
1.146 Westside ................................................. 22
1.147 Woodlands Agreement ...................................... 22
1.148 Woodlands Amphitheater ................................... 22
1.149 Woodlands Asset .......................................... 22
1.150 Cross-References to other Defined Terms .................. 22
ARTICLE II
Continuation, Name and Commencement ............................ 26
2.1 Continuation of Partnership .............................. 26
2.2 Partnership Name ......................................... 26
2.3 Offices .................................................. 26
2.4 Term of Partnership ...................................... 26
ARTICLE III
Purposes and Powers ............................................ 27
3.1 Purposes of the Partnership .............................. 27
3.2 Powers of the Partnership ................................ 27
ARTICLE IV
Existing Assets and
Capital Contributions .......................................... 28
iv
<PAGE>
4.1 Contribution of Woodlands Asset .......................... 28
4.2 Contribution of Nashville Asset .......................... 28
4.3 Ownership of the Raleigh Asset, the
Camden Asset, the Tampa Asset and
the Pittsburgh Asset ..................................... 28
4.4 [Intentionally Left Blank] ............................... 28
4.5 Contribution of Phoenix Asset ............................ 28
4.6 Contribution of Charlotte Asset .......................... 28
4.7 Contribution of San Bernardino Asset ..................... 28
4.8 Capital Accounts; Percentage Interests ................... 28
4.9 Transfer of the Sony Subsidiary's
Partnership Interest to Sony/Block ....................... 29
4.10 Sony/Block's Initial Cash Contribution ................... 29
4.11 Capital Contributions for Budgeted
Project Cost of Approved Projects ........................ 32
4.12 Operational Shortfalls ................................... 33
4.13 Cost Overruns ............................................ 33
4.14 No Other Capital Contribution Obligations ................ 34
4.15 Interim Development Costs ................................ 34
4.16 Repayment of Temporary Construction Advance............... 35
4.17 Special Provisions Relating to the
Woodlands Agreement ...................................... 35
4.18 Minneapolis/St. Paul...................................... 39
ARTICLE V
Project Loans, Renewal Loans and Replacement Loans ............. 41
5.1 Obligation of Sony/Block to Provide Project
Loan .................................................... 41
5.2 Definition of Project-Loan .............................. 43
5.3 Protection of Sony/Block Related Parties ................ 48
5.4 Renewal Loans ........................................... 49
5.5 Replacement Loans ....................................... 52
5.6 Special Provisions Relating to Charlotte
Amphitheater............................................. 53
5.7 Certain Defined Terms Used in Article V ................. 55
ARTICLE VI
Partnership's Obligation to Construct and
Acquire Amphitheaters .......................................... 58
6.1 Construction of Approved Projects ........................ 58
6.2 Purchase of Existing Amphitheaters ....................... 58
v
<PAGE>
ARTICLE VII
Provisions Relating to the MCA/PACE Amphitheaters .............. 60
7.1. Generally ................................................ 60
7.2 Pace's Obligations to Partnership Regarding
MCA/PACE Amphitheaters ................................... 60
7.3 Number of New Amphitheaters .............................. 63
7.4 Best Efforts to Obtain a Transferable
Interest .................................................
ARTICLE VIII
Tax Allocations, Maintenance of Capital Accounts
and Distributions of Cash ...................................... 64
8.1 Tax Allocations .......................................... 64
8.2 Transferor/Transferee Allocations ........................ 67
8.3 Maintenance of Capital Accounts .......................... 67
8.4 Partnership's Use and Distribution
of Free Cash ............................................. 70
8.5 Provisions Regarding Sinking Funds ....................... 73
8.6 Distribution of Proceeds from Sale of an Amphitheater .... 73
8.7 Pace's Priority Distribution .............................
ARTICLE IX
Unwind Procedure ............................................... 75
9.1 Generally ................................................ 75
9.2 Commencement of Unwind Procedure ......................... 75
9.3 Timing of Closing the Unwind Procedure ................... 75
9.4 Unwind Closing ........................................... 76
9.5 Other Provisions Relating to the Unwind
Procedure ................................................ 86
9.6 Effect of Partner Default on Unwind
Procedure ................................................ 87
ARTICLE X
Management of Partnership Affairs .............................. 91
10.1 Management ............................................... 91
10.2 Executive Committee ...................................... 91
10.3 Manager .................................................. 92
10.4 Meetings of the Executive Committee ...................... 95
10.5 Annual Operating ......................................... 97
vi
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10.6 Development of Proposed Amphitheaters .................... 99
10.7 Management, Booking and Consulting Services ............. 103
10.8 Removal of Manager .......................................104
10.9 Provisions Regarding Qualified Markets ...................106
ARTICLE XI
Rights and Obligations Following Termination
of Pace as Manager .............................................110
11.1 Generally ................................................110
11.2 Pace's Right to Commence Unwind Procedure ................110
11.3 Selection and Designation of Successor
Manager ..................................................111
11.4 Minimum Economic Criteria to be Imposed
Upon Successor Manager ...................................112
11.5 Special Provisions Relating to Construction
of Approved Projects by the Partnership after
Removal of Pace as Manager ...............................114
ARTICLE XII
Exclusivity, Non-Compete and Interaction with
partners .......................................................116
12.1 Exclusivity ..............................................116
12.2 Exceptions to Exclusivity ................................116
12.3 Continuing Noncompete Covenant After
Certain Circumstances ....................................117
12.4 Reformation of Unenforceable Provisions ..................121
12.5 Partners Arms-Length Dealing with
Partnership ..............................................121
12.6 Special Provisions Relating to Rejection
of Qualified Amphitheaters ...............................122
ARTICLE XIII
Fiscal Matters .................................................127
13.1 Fiscal Year ..............................................127
13.2 Books and Records ........................................127
13.3 Partnership Bank Accounts ................................127
13.4 Tax Matters and Reports ..................................127
13.5 Tax Returns ..............................................128
13.6 Tax Matters Partner ......................................128
13.7 Section 754 Election .....................................128
13.8 Reimbursement of Expenses ................................128
vii
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13.9 Indemnity for Constructive Termination ...................129
ARTICLE XIV
Representations and Warranties of Partners .....................131
14.1 Representations and Warranties of Pace ...................131
14.2 Representations and Warranties of
Sony/Block ...............................................131
14.3 Indemnification Provisions ...............................133
ARTICLE XV
Transfer Restrictions ..........................................137
15.1 Partner Interest .........................................137
15.2 Ownership Interests in Partners ..........................138
15.3 Transfer Triggering Events................................142
15.4 Limited Right of Sony/Block to Admit
Minority Partners ........................................148
15.5 Notices ..................................................149
15.6 Representations and Covenants Relating
to Certain Voting Rights and Matters .....................150
ARTICLE XVI
Dissolution and Termination ....................................151
16.1 Dissolution ..............................................151
16.2 Option to Purchase Partnership Interest
of Withdrawing Partner ...................................151
16.3 Dissolution in the Event Option is Not
Exercised ................................................151
16.4 Waiver ...................................................152
16.5 Distributions Upon Termination ...........................152
16.6 Voluntary Withdrawal .....................................153
ARTICLE XVII
Default of a Partner ...........................................154
17.1 Default ..................................................154
17.2 Rights and Remedies ......................................154
17.3 Special Provisions Relating to Sony/Block
being a Defaulting Partner ...............................156
ARTICLE XVIII
viii
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Miscellaneous Provisions .......................................164
18.1 Notices ..................................................164
18.2 Delaware Law to Apply ....................................165
18.3 Other Instruments ........................................165
18.4 Headings .................................................165
18.5 Parties Bound ............................................165
18.6 Legal Construction .......................................165
18.7 Counterparts .............................................166
18.8 Gender ...................................................166
18.9 Entire Agreement, Modification, Consents
and Waivers ..............................................166
18.10 Press Release; Right to Use of Certain Names .............166
18.11 Joinder by Parents .......................................166
18.12 Acquisition of Partners' Interests .......................168
18.13 Selection of Deciding Voter ..............................169
18.14 Amendment and Restatement ................................170
ix
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT "A"
EXHIBIT "B"
EXHIBIT "C"
EXHIBIT "D"
EXHIBIT 5.3(a)(1)
EXHIBIT 5.3(a)(2)
x
<PAGE>
PARTNERSHIP AGREEMENT
[PAVILION PARTNERS]
This Partnership Agreement ("Agreement") is made and entered into
effective as of the 1st day of April, 1994 ("Effective Date"), by and among (a)
SM/PACE, INC., a Texas corporation, (b) YM CORP., a Delaware corporation, (c)
THE WESTSIDE AMPHITHEATRE CORPORATION, an Arizona corporation, (d) CHARLOTTE
AMPHITHEATER CORPORATION, a Delaware corporation, and (e) AMPHITHEATER
ENTERTAINMENT PARTNERSHIP, a Delaware general partnership. For and in
consideration of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
Definitions
As used in this Agreement, the following terms shall have the respective
meanings indicated:
1.1 Admission Agreement: That certain Agreement to Admit New Partner and
to Amend and Restate Partnership Agreement dated October 29, 1993 and entered
into by and among the Partnership, Pace, the Sony Subsidiary, the Blockbuster
Subsidiary and Sony/Block.
1.2 Affiliate: With respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. The term
"control," (including, with correlative meanings, the terms "controlled by" and
"under common control with") as used in the immediately preceding sentence, when
used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise. For purposes of
this Agreement, (a) neither (i) H. Wayne Huizenga nor (ii) any Person (other
than Blockbuster and any Person directly or indirectly controlled by
Blockbuster) directly or indirectly controlled by Wayne Huizenga shall be an
Affiliate of Blockbuster unless, at any time hereafter, H. Wayne Huizenga shall
own, directly or indirectly, through one or more intermediaries, 50% or more of
Blockbuster's voting securities (or the equivalent thereof) and (b) the only
Affiliates of the Sony Subsidiary shall be (i) Sony and (ii) Persons that are,
directly or indirectly, through one or more intermediaries, controlled by Sony.
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1.3 Amphitheater: Any existing or proposed open-air (with or without some
covered seating) or partially enclosed facility (excluding sports stadiums)
which has a capacity for 2,500 patrons or more and is designed primarily as a
venue for the presentation of live musical concerts. By way of example, and not
limitation, the following facilities are Amphitheaters:
(a) Star Lake (Pittsburgh);
(b) Walnut Creek (Raleigh);
(c) Pine Knob (Michigan);
(d) Shoreline (California);
(e) Great Woods (Massachusetts); and
(f) Starplex (Dallas).
As the context may require, the term "Amphitheater" may also mean and include
the fee or leasehold interest in the facility and the land upon which it is
situated, all furniture, fixtures and equipment affixed to or otherwise used in
connection with the operation of the facility, all appurtenances to the land and
the facility and all other interests, privileges and other rights associated
with or related to one or both of the land and the facility.
1.4 Amphitheater Cost Limit: With respect to (i) a proposed Amphitheater
located within North America, Hawaii or the Caribbean Islands, $15,000,000.00
and (ii) a proposed Amphitheater located anywhere else in the Restricted Portion
of the Earth, $17,000,000.00. For purposes of the immediately preceding
sentence, the amounts "$15,000,000.00" and "$17,000,000.00" shall be deemed to
be increased on April 1, 1995 and on each successive April 1st thereafter in
the same proportionate amount by which the CPI most recently reported prior to
such date exceeds the CPI most recently reported prior to April 1, 1994.
1.5 Amphitheater Loan: With respect to (i) any Unwind Asset (other than
the Camden Asset and the Charlotte Asset), the loan or loans which are secured
by such Unwind Asset (or by the Amphitheater related to such Unwind Asset) at
the time of the Existing Facility Closing, (ii) the Charlotte Asset, the
Charlotte Loan and (iii) any other Amphitheater (or interest therein), the loan
or loans, whether secured by such Amphitheater or not, which funded any portion
of the Project Costs or purchase price of such Amphitheater or the proceeds of
which were used to reimburse to the Partnership any portion of said Project
Costs or purchase price originally paid from other funds of the Partnership.
The term "Amphitheater Loan" shall include any and
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Article I - Definitions
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all renewals, extensions, rearrangements, replacements or consolidations of the
loan or loans described in the immediately preceding sentence. Notwithstanding
anything to the contrary contained in, or implied by, the provisions of this
Section 1.5, a loan or grant for which both of the following conditions are
satisfied shall not be an "Amphitheater Loan" for purposes of this Agreement:
(a) The Partnership, the Partners, the Affiliates of the Partners
and the Sony/Block Related Parties have no legal liability or obligation
to repay any portion of such loan or grant; and
(b) The Partnership's ownership interest or possessory rights in the
Amphitheater to which such loan or grant relates are not subject to being
terminated, sold, restricted, foreclosed upon or limited by reason of any
failure to repay such loan or grant.
1.6 Amphitheater Pro Forma: With respect to any Amphitheater being
considered by the Manager for construction by the Partnership, a pro forma of
operating costs and operating revenue projected for the first four full years
for such proposed Amphitheater prepared by the Manager in good faith in
accordance with generally accepted accounting principles. In addition, such pro
forma shall be based upon such assumptions as shall be reasonable and consistent
with the financing, construction and operating history of the Partnership and
general economic conditions prevailing at the location of the site proposed for
construction of such Amphitheater.
1.7 Annual Operating Budget: The budget for the Partnership's operations
for each Budget Year to be established in accordance with, and pursuant to, the
provisions of Section 10.5 hereof.
1.8 Approved Project: A proposed Amphitheater which the Executive
Committee has approved in accordance with the provisions of Section 10.6(b)
hereof as an Amphitheater which the Partnership will construct. Notwithstanding
anything to the contrary contained in this Agreement, the Camden Amphitheater is
an Approved Project for all purposes of this Agreement.
1.9 Balloon Amphitheater Loan: An Amphitheater Loan which has a scheduled
amortization period extending beyond the scheduled maturity date for such
Amphitheater Loan.
1.10 Blockbuster: (i) Blockbuster Entertainment Corporation, a Delaware
corporation, and its successors or (ii) if different, the ultimate corporate
parent of the affiliated group which is currently owned, directly or indirectly,
through one or more intermediaries, by Blockbuster Entertainment Corporation.
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1.11 Blockbuster's Initial Contribution Amount: A pecuniary amount equal
to the sum of (i) the Net Value of the Phoenix Asset, (ii) the Net Value of
the San Bernardino Asset and (iii) the Net Value of the Charlotte Asset.
1.12 Blockbuster Guaranty: The unconditional and irrevocable guaranty
required to be executed by Blockbuster in the form of Exhibit "B" attached
hereto if Sony/Block elects to deliver Sony/Block Note #2 to the Partnership
pursuant to the provisions of Section 4.10(b)(2) of this Agreement.
1.13 Blockbuster Specific Obligations: The following obligations for which
Sony/Block is responsible for performing, observing or discharging pursuant to
this Agreement:
(a) The obligation of Sony/Block to contribute the Blockbuster
Subsidiary Cash Amount pursuant to Section 4.1O(b)(1) and the obligation
of Sony/Block to make payments on Sony/Block Note #2 as they become due.
(b) The obligation of Sony/Block to indemnify the Partnership
pursuant to one or both of Section 14.3 and Section 9.4(n) hereof to the
extent that either such indemnity relates to one or more of the Phoenix
Amphitheater, the Charlotte Amphitheater and the San Bernardino
Amphitheater.
(c) The obligation of Sony/Block to make a payment to Pace at the
closing of the Unwind Procedure pursuant to Section 9.4(g)(2) or Section
9.4(k)(4) or (5) hereof.
(d) The obligations, restrictions and limitations imposed upon
Sony/Block and the Sony/Block Related Parties pursuant to the provisions
of Articles XII and XV hereof, to the extent that such provisions apply to
one or more of the Blockbuster Subsidiary and the Affiliates of the
Blockbuster Subsidiary.
(e) The obligations imposed upon Sony/Block pursuant to the
provisions of Section 11.3(a) hereof to the extent that such provisions
apply to the Blockbuster Subsidiary or its Affiliates.
(f) The obligation imposed upon Sony/Block to make a capital
contribution pursuant to Section 4.15(b) hereof.
(g) The obligations imposed upon Sony/Block pursuant to Section 9.6
to the extent related to one or more of the Existing Blockbuster Assets.
1.14 Blockbuster Subsidiary: Both individually and collectively, The
Westside Amphitheatre Corporation, an Arizona corporation, and Charlotte
Amphitheater
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Article I - Definitions
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Corporation, a Delaware corporation, both of which are wholly-owned by
Blockbuster through one or more intermediaries.
1.15 Blockbuster Subsidiary Cash Amount: The amount of the initial capital
contribution required to be made by Sony/Block pursuant to Section 4.10(b) of
this Agreement.
1.15A Budget Year: The fiscal year of the Partnership for financial
accounting and book reporting purposes, which shall end on October 31, unless
the Partners mutually designate a different financial accounting and book fiscal
year.
1.16 Budgeted Project Cost: With respect to any Amphitheater to be
constructed by the Partnership, the total budgeted amount of Project Costs set
forth in the Project Budget for such Amphitheater.
1.17 Camden Amphitheater: The proposed Amphitheater to be located on a
site located near the Beckett Street Terminal on the Delaware River in Camden,
New Jersey, together with all of the Partnership's interests, privileges and
other rights associated therewith or related thereto.
1.18 Camden Asset: All of the Partnership's rights, titles and interests
in and to the Camden Amphitheater.
1.19 Capital Account: The tax capital account maintained by the
Partnership for each Partner in accordance with, and as required by, the
provisions of Section 8.3 of this Agreement.
1.20 Cash Flow: For any Amphitheater, during any period of time, (a) the
amount of all revenues, receipts and other funds received by the owner of a
Controlling Interest in such Amphitheater, on a cash basis, from the operation,
ownership or use of such Amphitheater during such period of time minus (b) the
amount of (i) all expenditures paid by the owner of such Controlling Interest in
such Amphitheater, on a cash basis, during such period of time for any expenses,
costs or charges which are related to the use, ownership, maintenance,
management or operation of such Amphitheater and (ii) regularly scheduled
principal and interest payments paid, on a cash basis, by the owner of such
Controlling Interest in such Amphitheater during such period of time on any
Amphitheater Loan which relates to such Amphitheater.
1.21 Cash Flow from Operations: For any Amphitheater during any period of
time, (i) the Cash Flow of the owner of a Controlling Interest in such
Amphitheater during such period of time plus (ii) the amount of regularly
scheduled principal and interest payments paid during such period of time, on a
cash basis, by the owner of
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Article I - Definitions
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such Controlling Interest in such Amphitheater on any Amphitheater Loan which
relates to such Amphitheater.
1.22 Charlotte Amphitheater: The currently existing Amphitheater located
at 707 Blockbuster Boulevard in Charlotte, North Carolina and owned in fee
simple by the Partnership, together with all of the Partnership's interests,
privileges and other rights associated therewith or related thereto.
1.23 Charlotte Asset: All of the Partnership's rights, titles and
interests in and to the Charlotte Amphitheater.
1.24 Charlotte Loan: Shall have the meaning assigned to it pursuant to the
provisions of Section 5.6(a) hereof.
1.25 Code: The Internal Revenue Code of 1986, as amended.
1.26 Concession Loan: Any lump sum payment, advance or loan made by a
concessionaire to the owner of a Controlling Interest in an Amphitheater in
exchange for the right to sell food, beverages, novelties, merchandise or
other concessions at such Amphitheater, regardless of whether such payment,
advance or loan is required to be repaid to the concessionaire.
1.27 Construction/Acquisition Recourse Obligations: With respect to the
Partnership's construction of, or acquisition of a Controlling Interest in, any
Amphitheater the following:
(a) the Project Costs paid by the Partnership in connection with
the development and construction of such Amphitheater other than any
Project Costs funded by, or reimbursed from, a Non-Recourse Loan; and
(b) other contractual liabilities or obligations (which are not
included in the Project Costs of such Amphitheater) undertaken or assumed
by the Partnership in consideration for its acquisition of a Controlling
Interest in such Amphitheater (such as, by way of example, annual rental
obligations under a ground lease or annual guaranties on management
agreement) other than any liabilities or obligations for which the obligee
has recourse against the Partnership's Interest in such Amphitheater only
and not against any other asset of the Partnership, either Partner, any
Affiliate of a Partner or a Sony/Block Related Party.
For purposes of calculating the amount of Construction/Acquisition Recourse
Obligations that are attributable to clause (b) above, any prospective
obligations shall be discounted to present value using the Treasury Rate as the
discount factor.
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1.28 Construction Completion Date: With respect to an Amphitheater being
constructed, the date on which the owner of a Controlling Interest in such
Amphitheater either (i) obtains a permanent certificate of occupancy for such
Amphitheater or (ii) obtains a temporary certificate of occupancy which permits
the use of such Amphitheater for its intended purpose.
1.29 Construction Costs: With respect to any Amphitheater, all costs
(other than Land Acquisition Costs and Soft Costs) directly associated with or
attributable to the actual construction of such Amphitheater including, without
limitation, (i) all costs associated with the obtaining of materials and
services relating to the construction of such Amphitheater, (ii) all fees and
other sums payable to any contractor relating to or in connection with the
construction of such Amphitheater and (iii) all interest which accrues on the
Amphitheater Loan related to such Amphitheater through the Construction
Completion Date.
1.30 Contributed Project Funds: Cash funds of the Partnership received
from (i) contributions to the capital of the Partnership pursuant to Section
4.10(a)(1) or Section 4.10(b)(1) or (ii) principal payments under either of the
Sony/Block Notes.
1.31 Controlling Interest: With respect to any Amphitheater, any ownership
interest, direct or indirect, or management right in such Amphitheater for which
the owner of such interest or right is obligated or entitled to direct and
control the management and operation of such Amphitheater. As currently owned,
the Partnership has a Controlling Interest in each of the Amphitheaters related
to the Existing Assets.
1.32 Cost Overruns: With respect to any Amphitheater constructed by the
Partnership, all Project Costs incurred by the Partnership with respect to such
Amphitheater which are, when taken together with all previously expended Project
Costs with respect to such Amphitheater, in excess of the Budgeted Project Cost
of such Amphitheater.
1.33 CPI: Consumer Price Index for All Urban Consumers (all U.S. cities),
1982-84 equals 100 Base, published monthly by the U.S. Department of Labor's
Bureau of Labor of Statistics, or any successor publication.
1.34 Debt Coverage Ratio: For any Amphitheater, during any period of time,
the ratio of (a) the Cash Flow from Operations of the Partnership for such
Amphitheater during such period of time to (b) the amount of regularly scheduled
principal and interest payments due on the Amphitheater Loans of the Partnership
which relate to such Amphitheater during such period of time.
1.35 Defaulting Partner: Shall have the meaning assigned pursuant to the
provisions of Section 17.1 of this Agreement.
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1.36 Effective Date of Termination: The date upon which a Termination
Notice is effective in accordance with the provisions of Section 10.8(a) hereof.
1.37 Event of Withdrawal: The occurrence of any of the following events in
respect of a Partner: (i) the withdrawal by such Partner from the Partnership in
violation of the provisions of Section 16.6 hereof, (ii) the granting of relief
against such Partner in an involuntary case under the Federal Bankruptcy Code
which is not removed or discharged within ninety (90) days, or in any such
involuntary case, the approval of the petition by such Partner as properly
filed, or the admission of such Partner of material allegations contained in the
petition, (iii) the execution by such Partner of a general assignment for the
benefit of creditors, (iv) the commencement of a voluntary case under the
Federal Bankruptcy Code by such Partner, or (v) the appointment of a receiver
for a Partner or for all or a substantial part of the assets of such Partner and
such receivership proceedings are not removed or discharged within ninety (90)
days after the receiver's appointment.
1.38. Executive Committee: The committee of three (3) individuals
selected from time to time, by the Partners pursuant to the provisions of
Section 10.2(c) of this Agreement, to whom the responsibility of managing and
controlling the operations of the Partnership is delegated.
1.39. Executory Contract: Collectively, the several written contracts
entered into of even date with the Admission Agreement between and among the
Partners, the Partnership and all of the respective owners of the Existing
Assets in which, among other things, (i) the owner of each Existing Asset not
owned by the Partnership at the time of execution of the Admission Agreement
agreed to transfer, convey and assign such Existing Asset to the Partnership at
the Existing Facility Closing on and subject to the terms, conditions and
provisions contained therein and (ii) the Sony Subsidiary and Pace, as the sole
partners of the owner of the other Existing Assets, made certain
representations, warranties and covenants with respect to such Existing Assets
for the benefit of the Partnership.
1.40 Existing Assets: The Raleigh Asset, the Pittsburgh Asset, the
Woodlands Asset, the Nashville Asset, the Phoenix Asset, the Charlotte Asset,
the Camden Asset, the Tampa Asset and the San Bernardino Asset.
1.41 Existing Blockbuster Assets: The Phoenix Asset, the Charlotte Asset
and the San Bernardino Asset.
1.42 Existing Facility Closing: The closing of even date herewith of
the transfer to the Partnership of the Phoenix Asset, the Charlotte Asset, the
San Bernardino Asset, the Woodlands Asset and the Nashville Asset in accordance
with,
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Article I - Definitions
Page 9
and as contemplated by, the provisions of the Admission Agreement and the
Executory Contract.
1.43 Existing Pace Assets: The Woodlands Asset, the Nashville Asset, an
undivided one-half interest in the Raleigh Asset, an undivided one-half interest
in the Pittsburgh Asset, an undivided one-half interest in the Camden Asset and
an undivided one-half interest in the Tampa Asset.
1.44 Existing Sony Assets: An undivided one-half interest in the Raleigh
Asset, an undivided one-half interest in the Pittsburgh Asset, an undivided
one-half interest in the Camden Asset, and an undivided one-half interest in the
Tampa Asset.
1.45 Existing Sony/Block Assets: The Phoenix Asset, the Charlotte Asset,
the San Bernardino Asset, an undivided one-half interest in the Raleigh Asset,
an undivided one-half interest in the Pittsburgh Asset, an undivided one-half
interest in the Camden Asset and an undivided one-half interest in the Tampa
Asset.
1.46 First Group: The first six (6) New Amphitheaters.
1.47 Fiscal Year: The fiscal year of the Partnership for federal income
tax purposes, which shall end on October 31, unless the Partners mutually
designate a different fiscal year which complies with the provisions and
limitations contained in the Code and the Treasury Regulations promulgated
thereunder.
1.48 Foregone Concession Advance Amount: With respect to each Unwind
Asset, the Unamortized Amount at the time of the closing of the Unwind Procedure
of the Partnership's share of any Concession Loan obtained after the Existing
Facility Closing with respect to the Amphitheater related to such Unwind Asset.
1.49 Free Cash: The portion of the Partnership's cash held on or about
November 1 of each calendar year which the Executive Committee determines is
available for use by the Partnership in accordance with the provisions of
Section 8.4 hereof for prepayments on Amphitheater Loans and distributions to
the Partners.
1.50 Gross Asset Value: Subject to the adjustments described in the next
succeeding sentence, the fair market value of each item of Partnership property
at the time of contribution to the capital of the partnership or, if applicable,
at the time of the determination required to be made under Section 8.3 (e)
hereof. The Gross Asset Value of each item of Partnership property shall be
adjusted by depreciation, amortization or other cost recovery deductions
determined pursuant to Section 8.3(c)(ii) of this Agreement.
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1.51 Hard Costs: With respect to any Amphitheater, the sum of (x) all
Construction Costs incurred or expended in connection with such Amphitheater by
the owner of a Controlling Interest in such Amphitheater and (y) all Land
Acquisition Costs incurred or expended in connection with such Amphitheater by
the owner of a Controlling Interest in such Amphitheater.
1.52 Land Acquisition Costs: With respect to any Amphitheater, all amounts
expended and costs incurred (other than Construction Costs and Soft Costs) in
connection with the acquisition of a site for the construction of such
Amphitheater, including, without limitation, (i) the payment of the purchase
price for such site, (ii) all brokerage fees and other commissions incurred in
connection with the Acquisition of such site, (iii) all option payments and fees
payable in connection with the Partnership's acquisition of such site and (iv)
all lease payments and lease deposits payable until the Construction Completion
Date under the terms of any ground lease which grants to the owner of such
Amphitheater possessory rights to, and use of, such site.
1.53 London Amphitheater: The currently existing Amphitheater located in
Milton Keynes, England and commonly referred to as "The National Bowl."
1.54 Major Capital Improvements: With respect to any Amphitheater, any
reconstruction, rehabilitation or capital improvements made with respect to such
Amphitheater after completion of its initial construction involving,
individually or in the aggregate, no less than $100,000.00 in costs, but
specifically excluding (i) any routine repair or maintenance and (ii)
reconstruction or repair following damage from any casualty to the extent of
casualty insurance proceeds.
1.55 Manager: The Person that has (i) the authority to, and the
responsibility of, overseeing and directing the day-to-day operations of the
Partnership in the manner described in Section 10.3 hereof and (ii) the
obligation to provide the management, booking and consulting services in
connection with the development, construction, maintenance and operation of the
Partnership's Amphitheaters as described in Section 10.7(a) hereof. Unless and
until Pace has been removed as the Manager pursuant to the provisions of Section
10.8 hereof, the Manager shall be Pace.
1.56 Market: The greater of any Area of Dominant Influence (as defined by
the Arbitron Ratings Service) or Standard Metropolitan Statistical Area within
the United States or any equivalent metropolitan designation in any other part
of the Restricted Portion of the Earth.
1.57 Maximum Rate: The lesser of (a) eighteen percent (18%) per annum or
(b) the maximum non-usurious interest rate permitted by applicable law from time
to time in effect.
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1.58 MCA/Pace Amphitheaters: Starplex Amphitheater located in Dallas,
Texas and Lakewood Amphitheater located in Atlanta, Georgia, both of which are
owned by MCA/Pace Amphitheaters Group, L.P., a Delaware limited partnership.
1.59 Nashville Amphitheater: The currently existing Amphitheater located
in Davidson County, Tennessee and commonly known as "Starwood Amphitheater."
1.60 Nashville Asset: All of the Partnership's rights, titles and
interests in and to the Nashville Partnership.
1.61 Nashville Partnership: Starwood Amphitheater Operating Company, a
Tennessee general partnership which has as its sole general partners
Belz-Starwood, Inc. and the Partnership. The Nashville Partnership owns the
Nashville Amphitheater.
1.62 Net Value: With respect to (i) any asset contributed to the capital
of the Partnership at the Existing Facility Closing, such asset's fair market
value at the time of the Existing Facility Closing net of liabilities assumed by
the Partnership with respect to the contributed asset or to which the
contributed asset is subject and (ii) any asset owned by the Partnership at the
time of the Existing Facility Closing, such asset's fair market value at the
time of the Existing Facility Closing net of liabilities of the Partnership with
respect to such asset or to which such asset is subject. The parties to this
Agreement previously set forth their agreement as to the Net Value of each of
the Existing Assets in the Admission Agreement.
1.63 New Amphitheater: Except for any Non-Recourse Amphitheater and the
Camden Amphitheater, any Amphitheater that is described below:
(a) An Amphitheater that the Partnership constructs at any time
after the Existing Facility Closing; or
(b) Any previously constructed Amphitheater in which the Partnership
acquires a Controlling Interest at any time after the Existing Facility
Closing.
1.64 Non-Defaulting Partner: Shall have the meaning assigned to it
pursuant to the provisions of Section 17.1 of this Agreement.
1.65 Non-Recourse Amphitheater: Any Amphitheater which satisfies both of
the following criteria:
(a) the Partnership constructs, or acquires a Controlling Interest
in, such Amphitheater after the Existing Facility Closing; and
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Article I - Definitions
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(b) in connection with the construction of, or acquisition of the
Partnership's Controlling Interest in, such Amphitheater, the Partnership
incurs $1,000,000.00 or less of Construction/Acquisition Recourse
Obligations.
1.66 Non-Recourse Loan: Any Amphitheater Loan for which the lender thereof
shall have recourse only against the Partnership's interest in the Amphitheater
to which such Amphitheater Loan relates and not against any other asset of the
Partnership, either Partner, any Affiliate of a Partner or any Sony/Block
Related Party.
1.67 Nonrecourse Deductions: Shall have the meaning set forth in
Section 1.7O4-2(b)(1) of the Regulations.
1.68 Nonrecourse Liability: Shall have the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
1.69 Old Partnership Agreement: That certain Partnership Agreement dated
April 6, 1990 entered into by and between Pace and the Sony Subsidiary pursuant
to which this Partnership was originally formed. This Agreement is a complete
amendment and restatement of the Old Partnership Agreement.
1.70 Operating Obligations: Any and all obligations of the Partnership to
make payments or expenditures which are not Project Costs. Specifically included
within the term "Operating Obligations," but subject to the provisions of the
immediately preceding sentence, shall be all of the Partnership's obligation
to pay overhead, operating and other expenses such as (i) salaries for employees
and staff for the Amphitheaters, (ii) the reimbursement of Pace's overhead costs
pursuant to Section 10.7(b) hereof, (iii) utility costs for the Partnership's
Amphitheaters, (iv) insurance costs related to the maintenance of casualty and
liability insurance for the Partnership's Amphitheaters, (v) regularly scheduled
payments of principal and interest on indebtedness related to the Partnership's
Amphitheaters such as Amphitheater Loans and Concession Loans, (vi) costs
relating to maintenance, repair and upkeep of the Partnership's Amphitheaters
and the personal property and equipment used in connection with the operation of
the Partnership's Amphitheaters, (vii) costs for the purchase of office supplies
and equipment at the Partnership's Amphitheaters, (viii) the costs directly
attributable to or associated with the booking, production, presentation or
promotion of any performance or events at any of the Partnership's Amphitheaters
(such as artist costs, advertising costs and costs of staging), (ix) costs or
expenses in excess of insurance proceeds which may be incurred as the result
of any emergency, casualty or other unforeseeable occurrence at any of the
Amphitheaters, (x) costs for defense or settlement of litigation, claims or
assessments against the Partnership, (xi) any adverse judgments entered
against the Partnership which are not covered by insurance and (xii) any and all
rent and other payments due and
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Article I - Definitions
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payable by the Partnership under and pursuant to the terms of any lease
agreement to which it is a party.
1.71 Operational Shortfall: Shall mean the occurrence or happening, at
any time, of the circumstance of the Partnership having an insufficient amount
of Unrestricted Funds to pay its Operating Obligations as they become due.
1.72 Pace: SM/Pace, Inc. (formerly known as PACE Concerts, Inc.), a Texas
corporation, one of the general partners in the Partnership and a wholly owned
subsidiary of PMG.
1.73 Pace Rejected Amphitheater: A Qualified Amphitheater which is
proposed for development after Pace has been removed as Manager pursuant to the
provisions of Section 10.8 and which satisfies the following conditions:
(a) The Executive Committee, at a Proposed Amphitheater Approval
Meeting, declines to approve such Qualified Amphitheater as an
Amphitheater which the Partnership will construct; and
(b) The Representatives designated by Sony/Block present at the
Proposed Amphitheater Approval Meeting voted in favor of approving such
Qualified Amphitheater as an Amphitheater which the Partnership will
construct.
1.74 Pace's Initial Contribution Amount: A pecuniary amount equal to the
sum of (i) the Net Value of the Woodlands Asset, (ii) the Net Value of the
Nashville Asset, (ii) one-half (1/2) of the Net Value of the Raleigh Asset, (iv)
one-half (1/2) of the Net Value of the Pittsburgh Asset, (v) one-half (1/2) of
the Net Value of the Camden Asset and (vi) one-half (1/2) of the Net Value of
the Tampa Asset.
1.75 PEC: (i) PACE Entertainment Corporation, a Texas corporation and its
successors or (ii) if different, the ultimate corporate parent of the affiliated
group which is currently owned, directly or indirectly, through one or more
intermediaries, by PACE Entertainment Corporation.
1.76 PMG: PACE Music Group, Inc., a Texas corporation and a wholly-owned
subsidiary of PEC.
1.77 Partner Default: Shall have the meaning assigned pursuant to the
provisions of Section 17.1 hereof.
1.78 Partner Nonrecourse Debt: Shall have the meaning set forth in
Section 1.704-2(b)(4) of the Regulations.
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1.79 Partner Nonrecourse Debt Minimum Gain: An amount, with respect to
each Partner Non-recourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704-2(i)(3) of the
Regulations.
1.80 Partner Nonrecourse Deductions: Shall have the meaning set forth in
Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
1.81 Partners: (i) Prior to the assignment of the Partnership interest of
the Sony Subsidiary to Sony/Block as contemplated by the provisions of Section
4.9 hereof, Pace, the Sony Subsidiary and Sony/Block and (ii) after the
assignment of the Partnership Interest of the Sony Subsidiary to Sony/Block as
contemplated by provisions of Section 4.9 hereof, Pace and Sony/Block.
1.82 Partnership: The Partnership created by the Old Partnership Agreement
and continued by this Agreement
1.83 Partnership Act: The Delaware Uniform Partnership Act, Title 6,
Chapter 15 of the Delaware Code (1974 Revision), as amended from time to time.
1.84 Partnership Interest: All of the interest of any Partner in the
Partnership, including its respective (a) capital interest in the Partnership,
(b) right to a distributive share of the profits and losses of the Partnership,
(c) right to a distributive share of the assets of the Partnership, and (d)
right to participate in the management of the affairs of the Partnership as
provided herein.
1.85 Partnership Minimum Gain: Shall have the meaning set forth in
Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
1.86 Percentage Interest: The respective Partnership Interest of each
Partner in the Partnership expressed as a percentage of the Partnership
Interests owned by all Partners. The Percentage Interest of Pace is thirty-three
and one-third percent (33-1/3%). Prior to the assignment of the Partnership
Interest of the Sony Subsidiary to Sony/Block as contemplated by the provisions
of Section 4.9 hereof, the respective Percentage Interest of the Sony Subsidiary
and Sony/Block shall be determined in accordance with the provisions of Section
4.8 hereof. After the assignment of the Partnership Interest of the Sony
Subsidiary to Sony/Block, as contemplated by the provisions of Section 4.9
hereof, the Percentage Interest of Sony/Block will be sixty-six and two-thirds
percent (66-2/3%).
1.87 Person or person: Any Individual corporation, partnership, business
trust, business association, governmental entity, governmental authority or
other legal entity.
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1.88 Phoenix Amphitheater: The currently existing Amphitheater located at
2121 North 83rd Avenue in Phoenix, Arizona.
1.89 Phoenix Asset: The leasehold estate currently owned by the
Partnership which creates a possessory right to the Phoenix Amphitheater and
created pursuant to that certain Amended and Restated Operator Lease Agreement
dated September 26, 1989 and entered into by and between Westside, as operator
and lessee, and The City of Phoenix, as landlord, together with all interests,
privileges and other rights associated therewith or related thereto.
1.90 Pittsburgh Amphitheater: The currently existing Amphitheater located
in Hanover Township, Pennsylvania and commonly known as "Star Lake
Amphitheater."
1.91 Pittsburgh Asset: The leasehold estate and option rights currently
owned by the Partnership which creates a possessory right to the Pittsburgh
Amphitheater and created pursuant to (a) that certain Lease Agreement between
Crossroads Properties, Inc., as landlord, and PMG, as tenant, executed by the
landlord on December 1, 1989 and the tenant on November 29, 1989, as assigned
to the Partnership by PMG pursuant to that certain Assignment of Ground Lease
dated April 6, 1990 and recorded in Book 2403, Page 374 with the Recorder of
Deeds in Washington County, Pennsylvania and (b) that certain Option Agreement
between Crossroads Properties, Inc. and PMG dated January 10, 1989, together
with all interests, privileges and other rights associated therewith or related
thereto.
1.92 Plans and Specifications: With respect to any proposed Amphitheater
being considered by the Manager as a possible project for construction by the
Partnership, the plans and specifications, including a site plan, of such
proposed Amphitheater prepared by a qualified architect or civil engineer
consistent in form and format with the plans and specifications prepared for the
Raleigh Amphitheater and the Pittsburgh Amphitheater.
1.93 Pre-opening Concessionaire Advances: With respect to (i) any newly
constructed Amphitheater, any Concessionaire Loan made to the Partnership prior
to the first public use of such Amphitheater and (ii) any existing Amphitheater
with respect to which the Partnership is acquiring a Controlling Interest, any
Concessionaire Loan made to the Partnership prior to the first use of such
Amphitheater by the Partnership. "Pre-opening Concessionaire Advances" shall not
include Concession Loans made to the Partnership upon the renewal of an existing
concession arrangement (unless and except such renewal coincides with the
Partnership's acquisition of a Controlling Interest in an Amphitheater).
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Article I - Definitions
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1.94 Principal Reduction Amount: With respect to any Unwind Asset, an
amount of money equal to the sum of the following:
(a) (i) The Partnership's share of the amount of principal
outstanding under the Amphitheater Loan which relates to such Unwind Asset
at the time of the Existing Facility Closing minus (ii) the Partnership's
share of the amount of principal outstanding under the Amphitheater Loan
which relates to such Unwind Asset at the time of the closing of the
Unwind Procedure; and
(b) (i) The Partnership's share of the Unamortized Amount of the
Unwind Concession Loan which relates to such Unwind Asset at the time of
the Existing Facility Closing minus (ii) the Partnership's share of the
Unamortized Amount of the Unwind Concession Loan which relates to such
Unwind in Asset at the time of the closing of the Unwind Procedure.
As used throughout this Agreement, the term "Partnership's share" shall mean (i)
100% for the Pittsburgh Asset, the Phoenix Asset, the Charlotte Asset, the
Woodlands Asset and the San Bernardino Asset, (ii) 66-2/3% for the Raleigh
Asset, and (iii) 50% for the Nashville Asset. Notwithstanding anything to the
contrary contained in this Section 1.91, the Principal Reduction Amount shall be
$0.00 for any Unwind Asset which is not distributed at the closing of the Unwind
Procedure because the Partnership sold, distributed or otherwise transferred all
of its interest therein prior to the closing of the Unwind Procedure.
1.95 Project Budget: With respect to any proposed Amphitheater being
considered by the Manager as a possible project for construction by the
Partnership, the budget for the Project Costs for such proposed Amphitheater
which has been approved by the Executive Committee following delivery of a
Proposed Amphitheater Approval Request pursuant to Section 10.6(b) hereof. A
Project Budget may only be amended in accordance with the provisions of Section
10.6(c) hereof.
1.96 Project Costs: With respect to any Amphitheater, all of the Hard
Costs and all of the Soft Costs associated with such Amphitheater.
1.97 Project Loan: A loan extended to the Partnership for the funding of
the Project Costs of an Approved Project upon the terms and conditions
described in Section 5.2 hereof.
1.98 Proposed Amphitheater Approval Meeting: The meeting of the Executive
Committee required to be held pursuant to Section 10.6(b) hereof following
delivery of a Proposed Amphitheater Approval Request by the Manager to the
Representatives.
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1.99 Proposed Amphitheater Approval Request: With respect to any proposed
Amphitheater being considered by the Manager as a possible project for
construction by the Partnership, a formal written request provided to the
Representatives by the Manager pursuant to Section 10.6(b) hereof requesting
that the Executive Committee meet to determine whether the proposed Amphitheater
will be constructed by the Partnership.
1.100 Proposed Project Budget: With respect to any proposed Amphitheater
being considered by the Manager as a possible project for construction by the
Partnership, a proposed budget of the Project Costs for such Amphitheater
prepared by the Manager in good faith, in a manner consistent with and in
accordance with generally accepted accounting principles. A Proposed Project
Budget shall set forth in reasonable detail the projected total Project Costs
for such Amphitheater divided into three separate sections composed of the
projected amount of Construction Costs, Soft Costs and Land Acquisition Costs
for such proposed Amphitheater. The Manager may include in a Proposed Project
Budget a line item for "contingencies" or "cost overruns" equal to no more than
10% of the other Project Costs reflected therein, and the amount included in
such contingency line item shall be classified as a part of the Project Costs
for the proposed Amphitheater.
1.101 PWOC: Pace Woodlands Operating Company, a Texas corporation and
wholly-owned subsidiary of PMG.
1.102 Qualified Amphitheater: Any Amphitheater which the Manager proposes
for development by the Partnership and which satisfies the following conditions:
(a) the Manager has determined, in its reasonable discretion, that
the site which has been selected for the development of such Amphitheater
is suitable for such development;
(b) the projections contained in the Amphitheater Pro Forma and the
Proposed Project Budget for such proposed Amphitheater indicate that the
Debt Coverage Ratio (assuming, for these purposes, that a Project Loan
bearing an interest rate which is reasonable based on information made
available to Pace by Sony/Block, but in no event greater than the Treasury
Rate, will be extended to the Partnership on the terms described in
Section 5.2 hereof) for such Amphitheater in each of the first four full
years of operation will be no less than 1.3 to 1.0;
(c) the site which has been selected for the development of such
Amphitheater is located in a Qualified Market; and
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Article I - Definitions
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(d) the total budgeted amount of Project Costs projected in the
Proposed Project Budget for such Amphitheater (including any budgeted
contingencies) is less than the then applicable Amphitheater Cost Limit.
1.103 Qualified Market: Any Market which is designated as a Qualified
Market pursuant to the provisions of Section 10.9 hereof, until such Market is
removed from the list of Qualified Markets in accordance with, or as required
by, the provisions of Section 10.9(c) hereof.
1.104 R&D Expenditures: With respect to any Market which the Manager
considers as a potential site for the development of an Amphitheater by the
Partnership, all reasonable amounts expended or incurred by the Partnership
which are associated with or attributable to activities related to the
determination by the Partnership as to the feasibility of developing an
Amphitheater in such Market including, without limitation, (i) travel expenses
which are directly expended or incurred in connection with the research and
development of such market or attempts to acquire a site for the Amphitheater in
such market, (ii) all costs and professional fees expended or incurred by the
Partnership in connection with demographic studies, feasibility studies and
other pre-development studies of such Market or specific sites in such Market
and (iii) all other miscellaneous expenses expended or incurred by the
Partnership which are directly attributable to or incurred in connection with
the research and development of a potential Amphitheater in such Market.
1.105 Raleigh Amphitheater: The currently existing Amphitheater located
Raleigh, North Carolina and commonly referred to as the "Walnut Creek
Amphitheater."
1.106 Raleigh Asset: All of the Partnership's rights, titles and
interests in and to the Raleigh Partnership.
1.107 Raleigh Leasehold Estate: The leasehold estate currently owned by
the Raleigh Partnership with respect to the Raleigh Amphitheater and created
pursuant to that certain Lease Agreement dated December 1, 1990 and entered by
and between the City of Raleigh, North Carolina, as landlord, and the
Partnership, as tenant.
1.108 Raleigh Partnership: Walnut Creek Amphitheater Partnership, a New
York general partnership, which has as its sole general partners the Partnership
and CDC Amphitheaters/I, Inc., a North Carolina corporation, which was formed
pursuant to a Partnership Agreement dated July 1, 1991 and entered into by and
between the Partnership and CDC Amphitheaters/I, Inc. The Raleigh Partnership
owns the Raleigh Leasehold Estate.
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Article I - Definitions
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1.109 Regulations: The Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
1.110 Representative: One of the individuals who serves on the Executive
Committee.
1.111 Renewal Loan: A loan extended to the Partnership in connection with
a matured Balloon Amphitheater Loan upon the terms and conditions set forth in
Section 5.4 of this Agreement.
1.112 Replacement Loan: A loan extended to the Partnership as a "takeout"
loan for any existing Amphitheater Loan in accordance with, and as contemplated
by, the provisions of Section 5.5 hereof.
1.113 Restricted Funds: All Sinking Funds and all Contributed Project
Funds.
1.114 Restricted Portion of the Earth: The geographical areas encompassed
by (a) the continents of North America, Europe and Australia, (b) the State of
Hawaii and (c) the Caribbean Islands.
1.115 San Bernardino Amphitheater: The currently existing Amphitheater in
San Bernardino, California.
1.116 San Bernardino Asset: The leasehold estate currently owned by the
Partnership which creates a possessory right to the San Bernardino Amphitheater
and created pursuant to that certain Concession Lease dated October 19, 1992 and
entered into by and between San Bernardino Amphitheater Corporation, as lessee,
and the County of San Bernardino, California, as lessor.
1.117 Second Group: All New Amphitheaters not included in the First Group.
1.118 Short Term Rate: A rate of interest per annum equal to the per annum
yield on newly issued three year U.S. Treasury Notes, as it may vary from time
to time.
1.119 Sinking Fund: The sinking fund maintained in accordance with the
provisions of Section 8.5 of this Agreement.
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Article I - Definitions
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1.120 SMP: Sony Music/Pace Partnership 1994, a New York general
partnership created of even date herewith and whose sole general partners are
the Sony Subsidiary and Pace.
1.121 Soft Costs: With respect to any Amphitheater, all out-of-pocket
costs incurred by the owner of a Controlling Interest in such Amphitheater which
are directly associated with or attributable to the research, development,
design or construction of such Amphitheater or the obtaining of, or attempts to
obtain, a site for the construction of such Amphitheater, other than the Hard
Costs associated with such Amphitheater. Soft Costs shall include, without
limitation, (a) pre-development costs incurred in connection with such
Amphitheater, (b) all fees and payments made to architects, land planners,
engineers and other consultants which are directly attributable to the design
and construction of such Amphitheater, (c) all attorneys' fees and other
consultants' fees incurred in connection with and directly attributable to the
planning, developing, designing and constructing of such Amphitheater or the in
acquisition of or attempts to acquire, a site for the construction of such
Amphitheater, (d) travel expenses which are directly attributable to or incurred
in connection with the planning, developing, designing or constructing of such
Amphitheater or the acquisition of, or attempts to acquire, a site for the
construction of such Amphitheater, (e) all R&D Expenditures expended or incurred
in connection with the city, population center or other market in which such
Amphitheater is located and (f) all start-up expenses (including but not limited
to salaries, office rental and supply costs expended or incurred prior to the
first entertainment event held at such Amphitheater) incurred with respect to
such Amphitheater.
1.122 Sony: (i) Sony Music Entertainment Inc., a Delaware corporation, and
its successors or (ii) if different, the Person or Persons which directly own
(and not any parent Person) the United States recorded music business presently
owned by Sony Music Entertainment Inc.
1.123 Sony's Initial Contribution Amount: A pecuniary amount equal to the
sum of (i) one-half (1/2) of the Net Value of the Raleigh Asset, (ii) one-half
(1/2) of the Net Value of the Pittsburgh Asset, (iii) one-half (1/2) of the Net
Value of the Camden Asset and (iv) one-half (1/2) of the Net Value of the Tampa
Asset.
1.124 Sony/Block: Amphitheater Entertainment Partnership, a Delaware
general partnership, and one of the general partners in the Partnership. The
current sole general partners of Amphitheater Entertainment Partnership are the
Blockbuster Subsidiary and the Sony Subsidiary.
1.125 Sony/Block Note #1: The promissory note in the form of Exhibit "A"
which may be executed and delivered to the Partnership by Sony/Block pursuant
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Article I - Definitions
Page 21
to the right created in Section 4.1O(a)(2) in lieu of a current cash
contribution to the capital of the Partnership pursuant to Section 4.10(a)(1)
hereof.
1.126 Sony/Block Note #2: The promissory note in the form of Exhibit "A"
attached hereto which may be executed and delivered to the Partnership by
Sony/Block pursuant to the right created in Section 4.1O(b)(2) in lieu of a
current cash contribution to the capital of the Partnership pursuant to Section
4.10(b)(1) hereof.
1.127 Sony/Block Notes: Collectively, Sony/Block Note #1 and Sony/Block
Note #2.
1.128 Sony/Block Rejected Amphitheater: A Qualified Amphitheater which
satisfies one of the following conditions:
(a) (i) the Partnership elects to abandon further development
activities with respect to such Qualified Amphitheater, at any time, as a
result of an affirmative vote by the Executive Committee and (ii) the
Representative designated by Pace present at the Executive Committee
meeting voted against the resolution to abandon further development
activities with respect to such Qualified Amphitheater; or
(b) (i) the Executive Committee, at a Proposed Amphitheater Approval
Meeting, declines to approve such Qualified Amphitheater as an
Amphitheater which the Partnership will construct and (ii) the
Representative designated by Pace present at the Proposed Amphitheater
Approval Meeting voted in favor of approving such Qualified Amphitheater
as an Amphitheater which the Partnership will construct.
1.129 Sony/Block Related Party: Any one of Sony/Block, the Sony
Subsidiary, the Blockbuster Subsidiary, any Affiliate of the Sony Subsidiary or
any Affiliate of the Blockbuster Subsidiary.
1.130 Sony/Block Shared Obligations: All obligations for which Sony/Block
is responsible for performing, observing or discharging pursuant to this
Agreement other than the Sony Specific Obligations and the Blockbuster Specific
Obligations. The Sony/Block Shared Obligations shall include, without
limitation, the following:
(a) The obligation of Sony/Block to make capital contributions to
the Partnership for the Budgeted Project Cost of each Approved Project
pursuant to Section 4.11 hereof.
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Article I - Definitions
Page 22
(b) The obligation of Sony/Block to make loans to the Partnership
for any Operational Shortfall pursuant to section 4.12 hereof.
(c) The obligation of Sony/Block to make loans to the Partnership
for any Cost Overruns pursuant to Section 4.13 hereof.
(d) The obligation of Sony/Block to make Project Loans to the
Partnership for each Approved Project pursuant to Section 5.1 hereof.
(e) The obligation of Sony/Block to make Renewal Loans pursuant to
Section 5.4 hereof.
(f) The obligation of Sony/Block to make Replacement Loans pursuant
to Section 5.5 hereof.
(g) The obligation of Sony/Block to make loans to the Partnership
pursuant to Section 6.2(a) hereof.
(h) The obligation of Sony/Block to make capital contributions to
the Partnership pursuant to Section 62(b) hereof.
(i) The obligations, restrictions and limitations imposed upon
Sony/Block pursuant to the provisions of Articles XIV and XV hereof, to
the extent that such provisions apply to Sony/Block itself.
(j) The obligation of Sony/Block to indemnify Pace under clause (y)
of Section 5.1 (b) hereof.
1.131 Sony Guaranty: The unconditional and irrevocable guaranty required
to be executed by Sony in the form of Exhibit "B" attached hereto if Sony/Block
elects to deliver Sony/Block Note #1 to the Partnership pursuant to the
provisions of Section 4.1O(a)(2) of this Agreement.
1.132 Sony Specific Obligations. The following obligations for which
Sony/Block is responsible for performing, observing or discharging pursuant to
this Agreement;
(a) The obligation of Sony/Block to contribute the Sony Subsidiary
Cash Amount pursuant to Section 4.1O(a)(1) hereof and the obligation of
Sony/Block to make required payments on Sony/Block Note #1.
(b) The obligation of Sony/Block to indemnify the Partnership
pursuant to one or both of Section 14.3 and Section 9.4(n) hereof to the
extent that
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Article I - Definitions
Page 23
either such indemnity relates to the Raleigh Amphitheater, the Pittsburgh
Amphitheater or the Camden Amphitheater.
(c) The obligations, restrictions and limitations imposed upon
Sony/Block and the Sony/Block Related Parties pursuant to the provisions
of Articles XII and XV hereof, to the extent that such provisions apply to
one or more of the Sony Subsidiary and the Affiliates of the Sony
Subsidiary.
(d) The obligation imposed upon Sony/Block pursuant to the
provisions of Section 11.3(a) to the extent that such provisions apply to
the Sony Subsidiary or its Affiliates.
(e) The obligation imposed upon Sony/Block pursuant to the
provisions of Section 9.6 hereof to the extent related to one or more of
the Raleigh Asset, the Pittsburgh Asset and the Camden Asset.
(f) The obligation imposed upon Sony/Block pursuant to the
provisions of Section 18.12(a) hereof.
1.133 Sony Subsidiary: YM Corp., a Delaware corporation and wholly-owned
subsidiary of Sony.
1.134 Sony Subsidiary Cash Amount: The amount of the initial capital
contribution required to be made by Sony/Block pursuant to Section 4.10(a) of
this Agreement.
1.135 Tampa Amphitheater: The proposed Amphitheater to be constructed on
several tracts of land located in Hillsborough County, Florida, which are
covered by and included within the Tampa Purchase Agreement.
1.136 Tampa Asset: All of the Partnership's rights, titles and interests
in and to the Tampa Purchase Agreement and the Tampa Amphitheater.
1.137 Tampa Purchase Agreement: Collectively, (i) that certain Contract
for Sale and Purchase of Real Property dated August 29, 1991 and entered into by
and between Consolidated Minerals, Inc., as seller, and the Partnership, as
purchaser, as such Contract has been subsequently amended and revised and
covering a tract of land containing approximately 110 acres in Hillsborough
County, Florida, (ii) that certain Sale and Purchase Agreement dated February 7,
1992 and entered into by and among B. Ann Roberts and Don L. Roberts, as seller,
and the Partnership, as purchaser, as such Agreement has been subsequently
amended from time to time and covering a tract of land containing approximately
23 acres in Hillsborough County, Florida, and (iii) that certain Sale and
Purchase Agreement dated September 2, 1992,
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Article I - Definitions
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and entered into by and among George W. Gibbs and wife, Marie Gibbs, as seller,
and the Partnership, as purchaser, and covering a tract of land containing
approximately 2.04 acres located in Hillsborough County, Florida.
1.138 Termination Notice: A notice provided by Sony/Block to Pace pursuant
to Section 10.8 hereof terminating Pace as the Manager.
1.139 Treasury Rate: At anytime, (a) the then per annum yield on newly
issued ten year U.S. Treasury notes plus (b) three percent (3%).
1.140 Unamortized Amount: With respect to any Concession Loan, the
unamortized balance of such Concession Loan at a particular time determined in
accordance with the following provisions:
(a) If a Concession Loan is required to be repaid in full by its
terms, then the Unamortized Amount with respect to such Concession Loan
shall be, as of any time, the outstanding principal balance of such
Concession Loan at such time.
(b) If a Concession Loan is not required to be repaid in full by
its terms, then the initial amount of such Concession Loan shall
be amortized in equal annual installments over the term of the agreement
creating the concession rights to which such Concession Loan relates for
purposes of determining the Unamortized Amount of such Concession Loan at
any given time.
1.141 Unrestricted Funds: All cash funds of the Partnership other than the
Restricted Funds.
1.142 Unwind Amphitheater Loans: The Amphitheater Loans which relate to
the Unwind Assets.
1.143 Unwind Assets. The Existing Assets other than the Tampa Asset.
1.144 Unwind Concession Loan: With respect to any of the Unwind Assets,
any Concession Loan made to the owner (or its predecessor in interest) of such
Unwind Asset prior to the occurrence of the Existing Facility Closing pursuant
to, or in connection with, a concession agreement which remains in effect at the
time of the Existing Facility Closing and is related to the sale of concessions
at the Amphitheater related to such Unwind Asset.
1.145 Unwind Procedure: The right governed by the provisions of Article IX
of this Agreement to cause the Unwind Assets to be distributed by the
Partnership in accordance with the provisions thereof.
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Article I - Definitions
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1.146 Westside: The Westside Amphitheater Corporation, an Arizona
corporation.
1.147 Woodlands Agreement: The Events Management Agreement dated February
14, 1990 entered into by and between The Woodlands Center for the Performing
Arts (d/b/a Cynthia Woods Mitchell Center for the Performing Arts), as owner,
and PWOC, as facility manager, pursuant to which PWOC obtained the right to
manage and operate the Woodlands Amphitheater.
1.148 Woodlands Amphitheater: The currently existing Amphitheater located
in The Woodlands, Texas and commonly known as the "Cynthia Woods Mitchell
Pavilion."
1.149 Woodlands Asset: All of the Partnership's rights, titles and
interests in and to the Woodlands Agreement.
1.150 Cross-References to other Defined Terms. The following terms are
defined in the Sections of this Agreement indicated below.
Acceptable Form 9.4(j)(2)
Accused Partner 9.6
Acquired Person 12.2(c)
Acquiring Person 12.2(c)
Acting Party 13.9(b)
Advocating Partner 10.5(b)
Applicable Criteria 18.13(f)
Applicable Two Year Periods 10.9(c)(2)(i)
Applicable Percentage 6.2(a)
Approved Project Contribution Amount 4.11
Blockbuster Actual Contribution Amount 17.3(a)(7)(v)(B)
Blockbuster Parties 15.2(e)(7)
Blockbuster's Allocated Debt 8.4(c)(6)
Camden Make-Up Amount 9.4(h)
Casualty Termination Provision 4.17(a)(4)
Charlotte Distribution Amount 5.7(k)
Charlotte Excess Receipts 5.7(i)
Charlotte Phantom Loan Account 5.7(g)
Charlotte Scheduled Principal Payment Amount 5.7(h)
Clause K Sum 9.4(k)
Clause G & K Sum 9.4(k)
Clause G Sum 9.4(g)
Communications 18.1
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Article - I Definitions
Page 26
Consecutive Turndown Rejection Triggering Event 12.6(a)(3)
Constructive Termination 13.9
Constructive Termination Damage Notice 13.9(b)
Constructive Termination Notice 13.9(b)
control 15.2(e)(8)
Corresponding Price 15.3(b)(1)
Debt Prepayment Portion of Free Cash 8.4(c)(1)
Default Notice 17.1
Disputed Changes 10.5(b)
Distributed Assets 9.6(b)(2)
Distributee 9.4(m)(1)
Division of Responsibility Notice 17.3
Effective Date opening paragraph
Equalizing Purchase Option 15.3(b)
Equalizing Purchase Price 15.3(b)(1)
Equalizing Partnership interest 15.3(b)
Existing MCA Concession Loan 7.2(d)(3)
General Funds 9.4(h)(2)
Indemnitee 14.3(c)
Indemnitor 14.3(c)
Innocent Partner 9.6
Interim Development Costs 4.15(a)
Management Selection Dispute Resolution
Notice 11.3(b)(1)
Management Selection Plan 11.3(b)(3)
MCA Partnership 7.1
MCA Purchase Option 7.2(a)
Measuring Amphitheaters 9.4(j)(1)
Minimum Economic Standards 11.4.
Minimum Number 10.9(a)
Neutral Selector 18.13
Nominal Principal Balance 8.4(c)(2)
Non-Debt Related Charlotte Operation
Expenditures 5.7(j)
Nonreceiving Partner 8.3(d)(1)
Objecting Partner 10.5(b)
Objecting Party's Proposed Changes 10.5(b)(2)
Objection Notice 10.5(b)
Offer 12.2(c)(2)
Ordinary Distributions 15.1(b)
Other Facilities Make-Up Amount 9.4(i)
Other Partner Equity Contribution Amount 9.4(i)
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Article I - Definitions
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Owner's Early Termination Option 4.17(a)(3)
Pace Party 2.3(a)(2)
Pace Designated Markets 12.3(a)
Pace Controlled MCA Amphitheaters 7.2
Pace Preferred Account 8.7(b)
Pace Rejection Triggering Event 12.6(a)(2)
Pace's Allocated Debt 8.4(c)(4)
Pace's Permitted Number 12.6(a)(2)
PAI 7.1
Parent Corporation 9.6(c)(2)
Partnership MCA Amphitheaters 7.2(d)
Partnership's share 1.94
Permitted Blockbuster Persons 15.2(e)(1)
Permitted Sony Persons 15.2(e)(2)
Preliminary Budget Unwind Notice 1O.5(b)(2)
Previously Allocated Interim Development
Deductions 4.16(b)
Project Loan 5.2
Proposed Annual Operating Budget 10.5(a)
Real Principal Balance 8.4(c)(3)
Rejection Dispute Notice 12.6(d)
Rejection Occurrence Notice 12.6(d)
Required Woodlands Distribution Amount 4.17(b)(2)
S/B Partners 17.3
SCA Limited Parties 15.2(e)(4)
SCA Total Parties 15.2(e)(5)
SCA 15.2(e)(3)
Secondary Manner 2.5
Sony Actual Contribution Amount 17.3(a)(7)(v)(A)
Sony/Block Rejection Triggering Event 12.6(a)(1)
Sony/Block Guarantor 5.3(a) and (b);
5.4(c);5.5(c)
Sony Parties 15.2(e)(6)
Sony/Block's Permitted Number 12.6(a)(1)
Sony's Allocated Debt 8.4(c)(5)
Special Miami Amphitheater 12.2(d)
Special Rejection Event 1O.6(d)(2)
Special Woodlands Contribution Amount 4.17(b)(2)
Special Woodlands Termination 4.17(c)(2)
Special Woodlands Use Impairment 4.l7(c)(1)
Transfer Triggering Event 15.3(c)
Transferred Liabilities 9.4(I)(1)
Unacceptable Person 15.4
Unwind Debt Amount 8.4(b)(1)(iv)
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Unwind Notice 9.2
Voting Representations 15.5
Woodlands Reduction Amount 4.17(c)(3)
Woodlands Reduction Percentage 4.17(c)(4)
[END OF ARTICLE I]
<PAGE>
Article II - Continuation, Name and Commencement
Page 29
ARTICLE II
Continuation, Name and Commencement
2.1 Continuation of Partnership. The Partners do hereby continue, and
confirm the continuation of, pursuant to the Partnership Act, the general
partnership originally formed pursuant to the Old Partnership Agreement. The
rights and liabilities of the Partners shall, except as may be hereinafter
expressly stated to the contrary, be as provided for in the Partnership Act.
2.2 Partnership Name. From and after the date hereof, the name of the
Partnership shall be, and the business of the Partnership shall be conducted
under the name of PAVILION PARTNERS or such other name or names as the Partners
may select from time to time. The Partners shall execute and file such
certificates, if any, as are required by the provisions of any assumed name law
or statute in any jurisdiction in which the Partnership conducts business, as
may be required to reflect the Partnership's operation under such names.
2.3 Offices. The principal place of business of the Partnership shall be
at 515 Post Oak Boulevard, Suite 300, Houston, Texas 77027. Substitute or
additional places of business may be established at such other locations as may,
from time to time, be approved by the Executive Committee.
2.4 Term of Partnership. The Partnership commenced on April 6, 1990 and
shall remain effective until the earlier to occur of (a) thirty-five (35) years
after the date of this Agreement or (b) the Partnership being dissolved and
terminated pursuant to any provision of this Agreement.
[END OF ARTICLE II]
<PAGE>
Article III - Purposes and Powers
Page 30
ARTICLE III
Purposes and Powers
3.1 Purposes Partnership. The Partnership shall have as its purpose the
development, acquisition, construction, ownership, management, use, leasing and
operation of Amphitheaters in the Restricted Portion of the Earth.
3.2 Powers of the Partnership. The Partnership shall have the power, in
fulfilling the purposes set forth in Section 3.1, to conduct any business or
take any action which is lawful and which is not prohibited by the Partnership
Act.
[END OF ARTICLE III]
<PAGE>
Article IV - Existing Assets and Capital Contributions
Page 31
ARTICLE IV
Existing Assets and
Capital Contributions
4.1 Contribution of Woodlands Asset. Pace contributed, or caused to be
contributed, the Woodlands Asset to the capital of the Partnership at the
Existing Facility Closing in accordance with the terms of the Executory
Contract.
4.2 Contribution of Nashville Asset. Pace contributed, or caused to be
contributed, the Nashville Asset to the capital of the Partnership at the
Existing Facility Closing in accordance with the terms of the Executory
Contract.
4.3 Ownership of the Raleigh Asset, the Camden Asset, the Tampa Asset and
the Pittsburgh Asset. The Partnership owned prior to the occurrence of the
Existing Facility Closing, and will continue to own hereafter, the Raleigh
Asset, the Camden Asset, the Tampa Asset and the Pittsburgh Asset. At the
Existing Facility Closing, the Gross Asset Value of each of the Raleigh Asset,
the Camden Asset, the Tampa Asset and the Pittsburgh Asset have been adjusted,
and the Capital Accounts of the Sony Subsidiary and Pace have been charged or
credited, as provided and contemplated in Section 3(d) of the Admission
Agreement.
4.4 [Intentionally Left Blank]
4.5 Contribution of Phoenix Asset. Sony/Block contributed, or caused to be
contributed, the Phoenix Asset to the capital of the Partnership at the Existing
Facility Closing in accordance with the terms of the Executory Contract.
4.6 Contribution of Charlotte Asset. Sony/Block contributed, or caused to
be contributed, the Charlotte Asset to the capital of the Partnership at the
Existing Facility Closing in accordance with the terms of the Executory
Contract.
4.7 Contribution of Bernardino Asset. Sony/Block contributed, or caused to
be contributed, the San Bernardino Asset to the capital of the Partnership at
the Existing Facility Closing in accordance with the terms of the Executory
Contract.
4.8 Capital Accounts; Percentage Interests. Immediately after the
completion of the contributions to the capital of the Partnership and the
adjustments to the Capital Accounts at the Existing Facility Closing as referred
to in Sections 4.1 through 4.7 hereof, the balance of the Capital Accounts of
the Partners shall be as follows:
<PAGE>
Article IV - Existing Assets and Capital Contributions
Page 32
(a) The balance of Pace's Capital Account shall be equal to Pace's
Initial Contribution Amount.
(b) The balance of the Sony Subsidiary's Capital Account shall be
equal to Sony's Initial Contribution Amount.
(c) The balance of Sony/Block's Capital Account shall be equal to
the sum of (i) Blockbuster's Initial Contribution Amount and (ii) the cash
sums, if any, contributed to the Partnership upon execution hereof by
Sony/Block pursuant to Sections 4.1O(a)(1) and 4.1O(b)(1) hereof.
Prior to the transfer of the Sony Subsidiary's Partnership Interest to
Sony/Block as contemplated by the provisions of Section 4.9 hereof, the
Percentage Interest of (i) the Sony Subsidiary shall be equal to (x) 66-2/3%
multiplied by (y) a fraction, the numerator of which is the balance of the
Capital Account of the Sony Subsidiary immediately after completion of the
Existing Facility Closing as determined in accordance with the foregoing
provisions and the denominator of which is the sum of the balances of the
Capital Account of the Sony Subsidiary and Sony/Block immediately after
completion of the Existing Facility Closing as determined in accordance with the
foregoing provisions and (ii) Sony/Block shall be equal to (x) 66-2/3%
multiplied by (y) a fraction, the numerator of which is the balance in the
Capital Account of Sony/Block immediately after completion of the Existing
Facility Closing as determined in accordance with the foregoing provisions and
the denominator of which is the sum of the balances of the Capital Account of
the Sony Subsidiary and Sony/Block immediately after completion of the Existing
Facility Closing as determined in accordance with the foregoing provisions;
provided, however, for these purposes by the Capital Account of Sony/Block
immediately after completion of the Existing Facility Closing shall be deemed to
have been increased by the then outstanding principal balance under the
Sony/Block Notes.
4.9 Transfer of the Sony Subsidiary's Partnership Sony/Block. Within seven
(7) days after the Effective Date, but in no event before the next day after the
Effective Date, the Sony Subsidiary shall assign its Partnership Interest to
Sony/Block as a contribution to the capital of Sony/Block. Immediately following
the assignment of the Partnership Interest of the Sony Subsidiary to Sony/Block,
as contemplated by the provisions contained in the immediately preceding
sentence, the sole partners in the Partnership shall be Pace, with a Percentage
Interest of thirty-three and one-third percent (33-1/3%), and Sony/Block with a
Percentage Interest of sixty-six and two-thirds percent (66-2/3%). The Capital
Accounts of the Sony Subsidiary and of Sony/Block shall be combined into one
Capital Account for all purposes hereof upon the assignment of the Sony
Subsidiary's Partnership Interest to Sony/Block.
<PAGE>
Article IV - Existing Assets and Capital Contributions
Page 33
4.10 Sony/Block's Initial Cash Contribution.
(a) Sony Subsidiary.
(l) Upon execution hereof, Sony/Block shall contribute to the
capital of the Partnership a cash sum ("Sony Subsidiary Cash
Amount") equal to (i) Pace's Initial Contribution Amount minus (ii)
Sony's Initial Contribution Amount.
(2) Notwithstanding the foregoing, Sony/Block shall have the
right and option, exercisable in its sole discretion, to satisfy the
obligation contained in clause (1) of this Section 4.10(a) by
delivering, or causing to be delivered, to the Partnership,
simultaneously with the execution hereof, (i) a promissory note
("Sony/Block Note #1") originally executed by an authorized partner
or other agent on behalf of Sony/Block in the original principal
amount of the Sony Subsidiary Cash Amount and in substantially the
same form as is attached hereto as Exhibit "A," (ii) a guaranty
("Sony Guaranty") originally executed by an authorized officer of
Sony in substantially the same form as the Guaranty attached hereto
as Exhibit "B" pursuant to which Sony guarantees the full and final
repayment of Sony/Block Note #1, (iii) such evidence as may be
necessary, including extracts from minutes of a meeting of the board
of directors of the Sony Subsidiary and the Blockbuster Subsidiary,
to demonstrate that the execution and delivery of Sony/Block Note #1
by Sony/Block is fully authorized and (iv) extracts from minutes of
a meeting of the board of directors of Sony authorizing the
execution and delivery of the Sony Guaranty and certified to by the
Secretary or Assistant Secretary of Sony. Pace shall have the right
to retain possession of Sony/Block Note #1 and the Sony Guaranty
for, and on behalf of, the Partnership.
(b) Blockbuster Subsidiary.
(1) Upon execution hereof, Sony/Block shall contribute to the
capital of the Partnership a cash sum ("Blockbuster Subsidiary Cash
Amount"), equal to (i) Pace's Initial Contribution Amount minus (ii)
Blockbuster's Initial Contribution Amount.
(2) Notwithstanding the foregoing, Sony/Block shall have the
right and option, exercisable in its sole discretion, to satisfy the
obligation contained in clause (1) of this Section 4.10(b) by
delivering, or causing to be delivered, to the Partnership,
simultaneously with the execution hereof, (i) a promissory note
("Sony/Block Note #2") originally
<PAGE>
Article IV - Existing Assets and Capital Contributions
Page 34
executed by an authorized partner or other agent on behalf of
Sony/Block in the original principal amount of the Blockbuster Subsidiary
Cash Amount and in substantially the same form as is attached hereto as
Exhibit "A," (ii) a guaranty ("Blockbuster Guaranty") originally executed
by an authorized officer of Blockbuster in substantially the same form as
the Guaranty attached hereto as Exhibit "B" pursuant to which Blockbuster
guarantees the full and final repayment of Sony/Block Note #2, (iii) such
evidence as may be necessary, including extracts from minutes of a meeting
of the board of directors of the Blockbuster Subsidiary and the Sony
Subsidiary, to demonstrate that the execution and delivery of Sony/Block
Note #2 by Sony/Block is fully authorized and (iv) extracts from minutes
of a meeting of the board of directors of Blockbuster authorizing the
execution and delivery of the Blockbuster Guaranty and certified to by the
Secretary or Assistant Secretary of Blockbuster. Pace shall have the
right, to retain possession of Sony/Block Note #2 and the Blockbuster
Guaranty for, and on behalf of, the Partnership.
(c) Limitations on Use of Contributed Project Funds. All Contributed
Project Funds shall be (i) maintained in a separate interest bearing bank
account (or in such other investments as may be approved by the Executive
Committee) in the name of the Partnership and in no event commingled with
any other funds of the Partnership and (ii) applied or used (subject to
the budgetary restrictions contained elsewhere in this Agreement) for only
one or more of the following purposes:
(l) Payment of R&D Expenditures or other Project Costs related
to any Amphitheater being considered by the Manager as a possible
project for construction by the Partnership;
(2) Payment of any portion of the Budgeted Project Cost of an
Approved Project as contemplated by the provisions of Section
4.11(c) hereof;
(3) Payment of the purchase price or other costs related to
the acquisition of an existing Amphitheater by the Partnership as
contemplated by the provisions of Section 6.2(b) hereof;
(4) For distribution to Sony/Block at the closing of the
Unwind Procedure as contemplated by Section 9.4(f) hereof;
<PAGE>
Article IV. Existing Assets end Capital Contributions
Page 35
(5) Payment of the Temporary Construction Advance (as such
term is defined in Section 2(d) of the Admission Agreement) pursuant
to the provisions of Section 4.16 hereof;
(6) For distribution to Sony/Block pursuant to the provisions
of Section 4.17(b)(2)(i) hereof, following the occurrence of a
Special Woodlands Termination or a Special Woodlands Use Impairment;
(7) For reimbursement to Pace and the Sony Subsidiary of the
amounts described in Section 4.18 hereof for R&D Expenditures
relating to the Minneapolis/St. Paul Market; and
(8) For distribution to the Partners upon dissolution of the
Partnership pursuant to, and in accordance with, the provisions of
Article XVI hereof.
Notwithstanding anything to the contrary contained herein or implied
hereby, interest earned on Contributed Project Funds and all interest
which accrues on the Sony/Block Notes shall not be Restricted Funds but
shall instead become a part of the Partnership's Unrestricted Funds
immediately upon receipt by the Partnership.
(d) Demand for Principal Payments on Sony/Block Notes. The principal
outstanding under each of the Sony/Block Notes shall be payable within
three (3) business days after demand of the Manager in accordance with the
following provisions:
(1) No demand may be made by the Manager for payment of any
principal outstanding under either of the Sony/Block Notes at any
time that the Partnership has in its possession unexpended
Contributed Project Funds.
(2) The aggregate amount of principal payments which may be
demanded, at any time, shall not exceed the then amounts which are
due and payable from the Partnership for one or more of the
permitted uses of Contributed Project Funds described in clause (c)
of this Section 4.10.
(3) Each demand for payment of principal under the Sony/Block
Notes by the Manager shall be allocated between the Sony/Block Notes
in proportion to the then principal balance of each of the
Sony/Block Notes.
<PAGE>
Article IV - Existing Assets and Capital Contributions
Page 36
(4) Simultaneously with the making of each demand for payment
of principal under the Sony/Block Notes, the Manager shall notify
Sony/Block of the intended use of the amount being demanded.
4.11 Capital Contributions for Budgeted Project Cost of Approved Projects.
The Budgeted Project Cost of each Approved Project shall be paid or reimbursed
from the following sources:
(a) The proceeds of the Project Loan for such Approved Project;
(b) The proceeds of any and all Pre-opening Concessionaire Advances
for such Approved Project;
(c) The Contributed Project Funds (including unpaid principal
amounts under the Sony/Block Notes which are payable upon the demand of
the Manager); and
(d) Unrestricted Funds of the Partnership to the extent that the
Executive Committee determines that such funds will not be needed for the
payment of Operating Obligations of the Partnership.
If sufficient funds are not available from the foregoing sources to pay the
entire amount of the Budgeted Project Cost of any Approved Project, then the
Partners shall be obligated to contribute to the capital of the Partnership an
amount ("Approved Project Contribution Amount") equal to that amount which is
necessary to cause the total amount of funds available to in the Partnership for
payment of the Project Costs of such Approved Project, when combined with all
funds available from the sources listed above, to equal the Budgeted Project
Cost for such Approved Project. Contributions to the capital of the Partnership
required to be made pursuant to this Section 4.11 shall be due and payable, at
such times and in such amounts as may be necessary to enable the Partnership to
pay all Project Costs with respect to the applicable Approved Project as such
amounts become due and payable. The Manager shall provide notice to the Partners
as to the amount and due date of contributions to be made pursuant to this
Section 4.11 in accordance with the standards set forth in the immediately
preceding sentence. However, in no event shall the total amount required to be
contributed by the Partners pursuant to this Section 4.11 with respect to any
Approved Project exceed the Approved Project Contribution Amount for that
Approved Project. The amounts to be contributed to the capital of the
Partnership pursuant to this Section 4.11 shall be made by the Partners in
proportion to their respective Percentage interests.
4.12 Operational Shortfalls. If an Operational Shortfall occurs at any
time, then the Manager shall deliver a notice to the Partners specifying that an
Operational
<PAGE>
Article IV - Existing Assets and Capital Contributions
Page 37
Shortfall has occurred, the reasons for the occurrence of such Operational
Shortfall, the amount of funds needed to cover such Operational Shortfall and
stating that each Partner is obligated to loan to the Partnership, in proportion
to their respective Percentage Interests, that amount of funds needed to cover
such Operational Shortfall. The loan which each Partner is obligated to make to
the Partnership pursuant to the provisions of this Section 4.12 must be fully
advanced to the Partnership within fifteen (15) days after the Manager has
provided the notice referred to in the immediately preceding sentence. The loan
required to be made pursuant to the provisions of this Section 4.12 shall be
governed by the following provisions:
(a) Interest shall accrue on the principal balance outstanding
thereunder from time to time at a variable rate equal to the Short Term
Rate.
(b) Installments shall be payable on such loan on the last day of
each of the next three calendar months following the advancement of such
loan by the Partners to the Partnership. Each such installment shall be in
an amount equal to the amount (if any) of the Partnership's Unrestricted
Funds as of such date that the Manager determines will not be needed for
the payment of Operating Obligations of the Partnership. If such loan is
not repaid in full with the three monthly installments referred to in the
immediately preceding sentence, then it may only be repaid thereafter from
distributions made pursuant to Section 8.4(b)(2)(i) hereof.
(c) All payments made on any such loan shall be applied first
against the accrued, unpaid interest thereon and, second, to reduce the
outstanding principal balance thereunder.
4.13 Cost Overruns. Cost Overruns with respect to any Amphitheater shall
be paid, to the extent that the Executive Committee determines that all or any
portion of such Cost Overruns need to be paid to protect the Partnership from
adverse legal proceedings or to enable the construction of the Amphitheater to
be completed, from the Partnership's Unrestricted Funds (to the extent that the
Executive Committee determines that such funds will not be needed for the
payment of Operating Obligations of the Partnership). If sufficient funds are
not available from the foregoing source to pay the Cost Overruns described in
the immediately preceding sentence, then the Partners shall be obligated to loan
to the Partnership, in proportion to their respective Percentage Interests, that
amount necessary to cause the total amount of funds available to the
Partnership, when combined with the available Unrestricted Funds as described
above, to equal the amount of the Cost Overruns which must be paid by the
Partnership. The loan which each Partner is obligated to make to the Partnership
pursuant to the provisions of this Section 4.13 must be fully advanced to the
Partnership within fifteen (15) days after the Manager has provided notice to
the Partners of the amounts required to be loaned in accordance with the
provisions of
<PAGE>
Article IV - Existing Assets and Capital Contributions
Page 38
this Section 4.13. The loan required to be made by each Partner pursuant to this
Section 4.13 shall be governed by the following provisions:
(a) Interest shall accrue on the principal balance outstanding
thereunder from time to time at a variable rate equal to the Short Term
Rate.
(b) Payments shall be due on such loan on the last day of each of
the next three calendar months following the advancement of such loan by
the Partners to the Partnership. Each such installment shall be in an
amount equal to the amount (if any) of the Partnership's Unrestricted
Funds as of such date that the Manager determines will not be needed for
the payment of Operating Obligations of the Partnership. If such loan is
not repaid in full with the three monthly installments referred to in the
immediately preceding sentence, then it may only be repaid thereafter from
distributions made pursuant to Section 8.4(b)(2)(i) hereof.
(c) All payments made on any such loan shall be applied first
against in the accrued, unpaid interest thereon and, second, to reduce the
outstanding principal balance thereunder.
4.14 No Other Capital Contribution Obligations. Except for the specific
obligations to make contributions to the capital of the Partnership as expressly
set forth in this Agreement, neither Partner shall have any other obligation to
make contributions to the capital of the Partnership.
4.15 Interim Development Costs.
(a) Definition. As used herein, the term "Interim Development Costs"
shall mean all R&D Expenditures and other Project Costs incurred by the
Partnership after the date upon which the Admission Agreement was signed
and prior to the date of the occurrence of the Existing Facility Closing
in connection with any Market other than the Markets in which the
Amphitheaters related to the Existing Assets are located.
(b) Special Provisions Related to Interim Development Costs. Upon
execution hereof, Sony/Block shall contribute to the capital of the
Partnership an amount equal to one-third (1/3rd) of the amount of the
Interim Development Costs; provided however, in no event shall the total
amount required to be contributed by Sony/Block to the capital of the
Partnership pursuant to the provisions of this Section 4.15(b) exceed
one-third (1/3rd) of the total amount projected to be incurred for Interim
Development Costs in the budget attached to the Admission Agreement. If
any portion of the deductions and losses attributable to the Interim
Development Costs have been, or will be, allocated
<PAGE>
Article IV. Existing Assets and Capital Contributions
Page 39
50% to Pace and 50% to Sony as contemplated by the provisions of Section 7
of the Admission Agreement (the "Previously Allocated Interim Development
Deductions"), then, notwithstanding anything to the contrary contained in
Section 8.1 hereof, a special allocation of Partnership deductions and
losses equal to one-third of the amount of Previously Allocated interim
Development Deductions shall be made to Sony/Block in the first Fiscal
Year ending after the execution of this Agreement.
4.16 Repayment of Temporary Construction Advance.
(a) Upon execution of this Agreement, the Partnership shall repay
the principal amount of, and all accrued unpaid interest on, the Temporary
Sony/Pace Construction Advance (as such term is defined in Section 2(b) of
the Admission Agreement), one-half to Pace and one-half to the Sony
Subsidiary. Such repayment shall be made with Contributed Project Funds.
The amount of Contributed Project Funds so applied towards repayment of
the Temporary Sony/Pace Construction Advance, to the extent it relates to
the Camden Amphitheater, shall be, for purposes of clause (1) of Section
9.4(h) and clause (iv) of Section 9.4(i) of this Agreement, deemed to have
been expended on Project Costs for the Camden Amphitheater.
(b) Upon execution of this Agreement, the Partnership shall repay
the principal amount of, and all accrued unpaid interest on, the Temporary
Blockbuster Construction Advance (as such term is defined in Section 2(c)
of the Admission Agreement). Such repayment shall be made with Contributed
Project Funds.
4.17 Special Provisions Relating to the Woodlands Agreement.
(a) Factual Recitals. Reference is made to the following:
(l) The Net Value of the Woodlands Asset was agreed upon
between the Partners on the assumption that the rights acquired by
the Partnership under the Woodlands Agreement would continue until
October 31, 2003.
(2) The current stated term of the Woodlands Agreement expires
December 31, 1999.
(3) Pursuant to the provisions of Section 7.04(a) of the
Woodlands Agreement ("Owner's Early Termination Option"), the owner
of the Woodlands Amphitheater has the unilateral right to terminate
the Wood-
<PAGE>
Article IV - Existing Assets and Capital Contributions
Page 40
lands Agreement prior to its stated term for expiration on, subject
to and in accordance with the terms and provisions contained
therein.
(4) Pursuant to the provisions of Section 7.03 of the
Woodlands Agreement ("Casualty Termination Provision"), the owner of
the Woodlands Amphitheater has the unilateral right to terminate the
Woodlands Agreement following a major casualty which results in the
Woodlands Amphitheater no longer being able to be used for its
intended purposes without the making of significant capital repairs
and improvements.
(b) Equalization of Initial Contribution Amounts Upon the Occurrence
of a Special Woodlands Termination or a Special Woodlands Use Impairment.
If, prior to October 31, 2003, (i) a Special Woodlands Termination becomes
effective or (ii) a Special Woodlands Use Impairment occurs, then the
following provisions shall apply:
(1) The Net Value of the Woodlands Asset shall promptly be
retroactively reduced effective as of the Existing Facility Closing
by the Woodlands Reduction Amount and Pace's Capital Account shall
accordingly be reduced by an amount equal to the Woodlands Reduction
Amount.
(2) The Partnership shall promptly thereafter make a
distribution of cash to Sony/Block in an amount ("Required Woodlands
Distribution Amount") equal to (x) two (2.0) multiplied by (y) the
Woodlands Reduction Amount. The distribution required to be made by
the provisions of the immediately preceding sentence shall be paid
from the following sources in the order of priority listed:
(i) first, to the extent thereof, the Contributed
Project Funds (including unpaid principal amounts under the
Sony/Block Notes which are payable upon the demand of the
Manager); and
(ii) second, Unrestricted Funds of the Partnership to
the extent that the Executive Committee determines that such
funds will not be needed for the payment of Operating
Obligations of the Partnership.
If sufficient funds are not available from the foregoing sources to
make the entire distribution required to be made to Sony/Block
pursuant to the provisions of this Section 4.17(b)(2), then (x) the
remainder of such distribution, notwithstanding the other provisions
of this Section 4.17(b),
<PAGE>
Article IV - Existing Assets and Capital Contributions
Page 41
shall not be made and (y) Pace shall, in lieu thereof, be obligated
to contribute to the capital of the Partnership a cash sum equal to
one-half (1/2) of the amount by which the Required Woodlands
Distribution Amount exceeds the amount actually distributed to
Sony/Block pursuant to clauses (i) and (ii) of this Section
4.17(b)(2).
(3) After the occurrence of a Special Woodlands Use Impairment
and after completion of the distributions and, if applicable,
contribution contemplated by the provisions of Section 4.17(b)(2)
hereof, the Partnership shall promptly distribute to Pace all of its
rights, titles and interest, if any, in and to the Woodlands Asset.
The fair market value of the Woodlands Asset shall be deemed to
equal $0.00 at such time for all purposes hereof. Pace (and its
Affiliates) may thereafter be or become interested in the Woodlands
Amphitheater without being deemed to have violated the restrictions
contained in Article XII hereof.
(c) Certain Definitions used in this Section 4.17. As used herein,
the following terms shall have the respective meanings indicated:
(1) "Special Woodlands Use Impairment" shall mean the
occurrence of any event or circumstance, other than (i) a Special
Woodlands Termination or (ii) a Pace Default (as such term is
defined in the Woodlands Agreement), which results in the
Partnership suffering a material impairment (or termination) of its
right to book, produce, present and promote T&P Events (as such term
is defined in the Woodlands Agreement) at the Woodlands Amphitheater
pursuant to the provisions of the Woodlands Agreement. The following
are examples (which are intended to be illustrative and not
exclusive) of events or circumstances which would constitute a
"Special Woodlands Use Impairment" for purposes of this Agreement:
(i) The owner of the Woodlands Amphitheater losing its
possessory right to the Woodlands Amphitheater as a result of
a failure of title or any other reason.
(ii) A determination that the Woodlands Amphitheater is
an unsafe locale for the presentation of public events because
of the presence of toxic or hazardous waste on the site at
which the Woodlands Amphitheater is located.
The election as to whether an event or circumstance which materially
impairs the Partnership's right to book, produce, present and
promote
<PAGE>
Article IV - Existing Assets and Capital Contributions
Page 42
T&P Events will be deemed to be a "Special Woodlands Use Impairment"
for purposes hereof shall be made exclusively by the Executive
Committee. Notwithstanding anything to the contrary contained
herein, or implied hereby, the occurrence of any event or
circumstance which would give rise to the Partnership having the
right to terminate the Woodlands Agreement pursuant to the
provisions of Section 6.04 or Section 7.04(b), (c) or (d) thereof
shall not constitute a "Special Woodlands Use Impairment."
(2) "Special Woodlands Termination" shall mean the termination
of the Partnership's rights under the Woodlands Agreement (i) upon
the expiration of its stated term (including any extensions thereof
by written agreement with the owner of the Woodlands Amphitheater),
(ii) pursuant to an exercise of the Owner's Early Termination Right
or (iii) pursuant to the Casualty Termination Provision.
(3) "Woodlands Reduction Amount" shall mean, as of the date
that a Special Woodlands Termination becomes effective or that a
Special Woodlands Use Impairment occurs, an amount equal to (i) the
then Woodlands Reduction Percentage multiplied by (ii) the Net Value
of the Woodlands Asset as determined in accordance with the
provisions of the Admission Agreement.
(4) "Woodlands Reduction Percentage" shall mean, as of the
effective date of a Special Woodlands Termination or the date of
occurrence of a Special Woodlands Use Impairment, the percentage
specified in the table below:
<PAGE>
Article IV - Existing Assets and Capital Contributions
Page 43
Effective Date of
Special Woodlands Termination
or Date of Occurrence of Woodlands Reduction
Special Woodlands Use Impairment Percentage
-------------------------------- ----------
After the Effective Date but
before October 31, 1994 100.00%
After October 30, 1994 but 87.29%
before October 31, 1995
After October 30, 1995 but 75.28%
before October 31, 1996
After October 30, 1996 but 63.92%
before October 31, 1997
After October 30, 1997 but, 53.19%
before October 31, 1998
After October 30, 1998 but 43.04%
before October 31,1999
After October 30, 1999 but 33.44%
before October 31, 2000
After October 30, 2000 but 24.86%
before October 31, 2001
After October 30, 2001 but 16.75%
before October 31, 2002
After October 30, 2002 but 9.08%
before October 31, 2003
After October 30, 2003 0.00%
(d) Termination of These Provisions. The provisions of this Section
4.17 shall automatically terminate and be of no further force or effect
after the closing of the Unwind Procedure.
<PAGE>
Article IV - Existing Assets and Capital Contributions
Page 44
4.18 Minneapolis/St. Paul. If the Partnership should construct an
Amphitheater in the Minneapolis/St. Paul Market, then the Partnership shall be
obligated to reimburse $140,590.00 to Pace and $111,590.00 to the Sony
Subsidiary for R&D Expenditures previously incurred by such parties for or on
behalf of the Partnership in such Market. Such reimbursement shall be made from
the following sources in the order of priority listed:
(a) first, to the extent thereof, the Contributed Project Funds
(including unpaid amounts under the Sony/Block Notes which are payable
upon demand of the Manager); and
(b) second, Unrestricted Funds to the extent that the Executive
Committee determines that such funds will not be needed for the payment of
Operating Obligations of the Partnership.
Pace and the Sony Subsidiary each represent and warrant to the Partnership that
the amounts specified above are the true and actual amounts previously expended
by each such Person for R&D Expenditures in the Minneapolis/St. Paul Market.
[END OF ARTICLE IV]
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 45
ARTICLE V
Project Loans, Renewal Loans and Replacement Loans
5.1 Obligation of Sony/Block to Provide Project Loans.
(a) Generally. Subject to the provisions of clause (b) of this
Section 5.1, Sony/Block shall make a Project Loan to the Partnership for
each Approved Project. Sony/Block shall have the right and option,
exercisable in its sole discretion, to fulfill the obligation set forth in
the immediately preceding sentence with respect to any Approved Project by
causing a financially responsible lender to make a Project Loan to the
Partnership for such Approved Project. Each Project Loan must close on or
before the later to occur of (i) the scheduled date for commencement of
construction of the Approved Project to which such Project Loan relates
(provided that the Manager shall have given Sony/Block at least thirty
(30) days prior written notice of such date and provided, further, that
the Partnership is able to commence construction on such scheduled date)
or (ii) the date which is sixty (60) days after the Proposed Amphitheater
Approval Meeting at which the Approved Project to which such Project Loan
relates was approved by the Executive Committee as an Amphitheater that
the Partnership would construct.
(b) Limited Exception to Obligation. If, notwithstanding the
obligation created by the provisions of Section 5.1(a) hereof, Sony/Block
elects not to make, or cause to be made, a Project Loan to the Partnership
for any Approved Project, then Sony/Block shall be excused and relieved
from such obligation by (x) paying directly to Pace an amount equal to
one-third (1/3rd) of all Project Costs incurred by the Partnership since
the date upon which the proposed Amphitheater became an Approved Project
(any amount payable from Sony/Block to Pace pursuant to the provisions of
this clause (x) of Section 5.1(b) shall be, for all purposes of this
Agreement, deemed to have been contributed to the capital of the
Partnership by Sony/Block and deemed to have been immediately thereafter
distributed by the Partnership to Pace), (y) executing an instrument, in
form reasonably satisfactory to Pace, in which Sony/Block agrees to
indemnify, defend and hold harmless the Partnership and Pace from any and
all claims, demands, liabilities and other losses (including the loss of
any earnest money deposits and any reasonable attorneys' fees) relating
to, arising out of or otherwise attributable to the failure of Sony/Block
to make such Project Loan and (z) executing an instrument, in form
reasonably satisfactory to Pace, in which Sony/Block agrees that Pace (or
its Affiliates) shall have the right, notwithstanding the provisions of
Section 12.1 hereof, to construct and develop, at any time thereafter,
such Approved Project for its own account outside of the Partnership
without any duty, liability or obligation
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 46
to the Partnership the Partners. The following additional provisions shall
apply with respect to any Approved Project for which Sony/Block elects not
to a make, or cause to be made, a Project Loan to the Partnership pursuant
to the provisions of this Section 5.1(b):
(1) Whether such Approved Project shall be deemed to be a
Sony/Block Rejected Amphitheater for purposes of this Agreement
shall be determined in accordance with the following provisions:
(i) If Sony/Block's Permitted Number is zero at the time
that Sony/Block elects not to make, or cause to be made, a
Project Loan to the Partnership pursuant to the right created
in this Section 5.1(b), then such Approved Project shall be
deemed to be a Sony/Block Rejected Amphitheater for all
purposes of this Agreement immediately upon the making of such
election by Sony/Block, regardless of whether Pace (or its
Affiliates) elect to construct and develop, at any time
thereafter, such Approved Project outside of the Partnership.
(ii) Subject to the provisions of clause (i) of this
Section 5.1(b)(1), such Approved Project shall not be a
Sony/Block Rejected Amphitheater if Pace (or any of its
Affiliates) elect to construct and develop, within 2 years
thereafter, such Approved Project outside of the Partnership.
(iii) Subject to the provisions of clause (i) of this
Section 5.1(b)(1), if Pace (and its Affiliates) elect not to
construct and develop such Approved Project outside of the
Partnership, then upon the making of such election, such
Approved Project shall be deemed to be a Sony/Block Rejected
Amphitheater for all purposes of this Agreement. If Pace has
not made its election within 2 years, then it shall be deemed,
for purposes of this clause (iii) only, to have elected not
to construct and develop such Approved Project outside of the
Partnership.
(2) If Pace (or any of its Affiliates) elect to construct and
develop any such Approved Project outside of the Partnership, then
Pace shall (i) be required and obligated to reimburse to the
Partnership all Project Costs previously incurred by the Partnership
with respect to such Approved Project, (ii) return to Sony/Block any
amounts previously paid to Pace pursuant to the provisions of clause
(x) of Section 5.1(b) hereof and (iii) release Sony/Block from any
further obligation to make any payments to Pace pursuant to such
clause (x) of Section 5.1(b) hereof.
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Article V - Project Loans, Renewal Loans and Replacement Loans
Page 47
Any amounts returned to Sony/Block by Pace pursuant to clause (ii)
of the immediately preceding sentence shall be, for all purposes of
this Agreement, deemed to have been contributed to the capital of
the Partnership by Pace and immediately thereafter distributed by
the Partnership to Sony/Block.
(c) Pace Procured Project Loans. Pace shall have the specific right
to seek Project Loans for the Partnership from its own lending sources. If
Pace is successful in obtaining a commitment to make any Project Loan with
respect to an Approved Project (i) with a lower effective rate of interest
than is obtained by Sony/Block (taking into account any commitment fees,
loan origination fees, or similar fees charged by the lender of the loans
being compared and the guaranty fee payable to Sony/Block pursuant to
Section 5.2(c)(1)(ii) hereof, if any), (ii) which does not impose any
negative covenants on Sony or Blockbuster or require the delivery of any
financial statements or information by Sony or Blockbuster and (iii) that
otherwise satisfies all of the conditions of Section 5.2 hereof, then the
following provisions shall apply:
(1) Sony/Block shall be obligated to cause, if requested, Sony
and Blockbuster to execute a guaranty pursuant to which each
severally guarantees the repayment of 50% of such Project Loan.
(2) The Partnership shall accept such loan obtained by Pace as
the Project Loan for such Approved Project.
(d) Partner Nonrecourse Debt. The Partnership may not incur any
Partner Nonrecourse Debt without the unanimous approval of the Executive
Committee.
(e) Requirement of Parent Guaranty. Notwithstanding any provision a
herein to the contrary, if the lender of any Project Loan for an
Amphitheater in the First Group is not a Sony/Block Related Party, then
Sony/Block shall be required to cause the full faith and credit of Sony
and Blockbuster to be utilized in the obtaining of such Project Loan.
5.2 Definition of Project Loan. As used in this Agreement, the term
"Project Loan" shall mean a loan to the Partnership in connection with an
Approved Project upon substantially the following terms:
(a) Use of Project Loan Advances. Principal advances to the
Partnership under a Project Loan may be used by the Partnership solely for
payment or reimbursement of Project Costs for the Approved Project to
which the Project Loan relates.
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Article V - Project Loans, Renewal Loans and Replacement Loans
Page 48
(b) Principal Amount. The principal amount available to the
Partnership under a Project Loan shall be equal to an amount determined in
accordance with the following provisions:
(1) For a Project Loan which relates to an Approved Project in
the First Group or to the Camden Amphitheater, the principal amount
shall be equal to (x) eighty-five percent (85%) of the Budgeted
Project Cost of the Approved Project to which the Project Loan
relates minus (y) the amount of Pre-opening Concessionaire Advances
for the Approved Project to which the Project Loan relates.
(2) For a Project Loan which relates to an Approved Project in
the Second Group, the principal amount shall be equal to (x) seventy
percent (70%) of the Budgeted Project Cost of the Approved Project
to which the Project Loan relates minus (y) the amount of
Pre-opening Concessionaire Advances for the Approved Project to
which the Project Loan relates.
(c) Interest Rate. The interest rate which shall accrue on the
principal balance outstanding from time to time under a Project Loan shall
be determined in accordance with the following provisions:
(1) Subject to the provisions of clause (2) below, the
interest rate shall be a fixed rate of interest per annum during the
term of such Project Loan determined in accordance with the
following provisions:
(i) If a Sony/Block Related Party is the lender of such
Project Loan, the interest rate shall be (i) the lender's cost
of funds plus (ii) 0.75% per annum.
(ii) If the lender of such Project Loan is not a
Sony/Block Related Party, but the Project Loan is fully and
unconditionally guaranteed by one or both Sony and
Blockbuster, then (i) the interest rate shall be the fixed
rate per annum charged by such lender and (ii) Sony/Block
shall have the right to charge the Partnership a guaranty fee
of 0.75% per annum on that portion of the outstanding
principal balance outstanding from time to time under such
Project Loan which is guaranteed by one or both of Sony and
Blockbuster.
(iii) If the lender of such Project Loan is not a
Sony/Block Related Party, and the Project Loan is not required
to be guaran-
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 49
teed by one or both of Sony and Blockbuster, then the interest
rate shall be the fixed rate per annum charged by such
lender.
(2) Notwithstanding the provisions of clause (1) above, the
following provisions shall apply:
(i) If (x) the fixed rate of interest per annum payable
by the Partnership for any Project Loan (including any
guaranty fee payable to Sony/Block) exceeds the Treasury Rate
at the time of the making of such Project Loan and (y) the
full faith and credit of one or both of Sony and Blockbuster
were not utilized in the obtaining of such Project Loan or in
the obtaining of the source of funding for the Project Loan,
then Sony/Block shall be required to obtain another Project
Loan for the Partnership utilizing the full faith and credit
of both Sony and Blockbuster in an attempt to reduce the fixed
rate of interest payable by the Partnership with respect to
such Project Loan, in which event the deadline for closing
such Project Loan, as provided in Section 5.1 hereof, shall be
extended for an additional thirty (30) days.
(ii) If (x) the aggregate interest rate payable by the
Partnership for any Project Loan (including any guaranty fee
payable to Sony/Block) exceeds the Treasury Rate and (y) the
full faith and credit of both Sony and Blockbuster were
utilized in obtaining the Project Loan or the source of
funding for such Project Loan, then the Representative
designated by Pace shall have the right and option to withdraw
his prior approval for the Approved Project to which such
Project Loan relates, in which event (i) the Partnership will
not construct such Approved Project and (ii) such Approved
Project shall be deemed, for all purposes of this Agreement,
to be a Sony/Block Rejected Amphitheater (unless Sony/Block
can reasonably demonstrate that Sony and Blockbuster,
combined, do not have a sufficient amount of available funds
of their own to make the Project Loan).
(iii) To avoid any ambiguity or uncertainty, it is
hereby specifically recognized, agreed and acknowledged that a
guaranty arrangement whereby Sony and Blockbuster, on a
several basis, each guarantee 50% of a Project Loan (or a
Renewal Loan) or the source of funding for a Project Loan (or
a Renewal Loan) shall, for all purposes of Section 5.1(e),
this Section 5.2(c)(2) and Section 5.4(b)(3), be deemed to be
the utilization of the full faith and credit of both Sony and
Blockbuster in obtaining such Project Loan
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 50
(or such Renewal Loan) or such source of funding for such
Project Loan (or such Renewal Loan).
(d) Amortization. On or about the Construction Completion Date
for the Approved Project to which a Project Loan relates, the
outstanding principal balance of the Project Loan shall be placed
on an amortization schedule of at least twenty (20) years with
equal quarterly combined payments of principal and interest. Prior
to the Construction Completion Date for the Approved Project to
which a Project Loan relates, interest only shall be due and payable
no more frequently than once per calendar month.
(e) Term. The entire unpaid principal balance and all accrued
unpaid interest on a Project Loan shall be due and payable no sooner
than ten (10) years after the Construction Completion Date of the
Approved Project to which such Project Loan relates.
(f) Prepayment Rights. For a Project Loan made by a Sony/Block
Related Party, the Partnership shall have the right to prepay all or
any portion of the principal of such Project Loan at any time
without payment of any premium or penalty. For any other Project
Loan, Sony/Block shall attempt, but shall not be obligated, to
obtain an agreement from the lender permitting the Partnership to
have the right to prepay all or any portion of the principal balance
of such Project Loan at any time without payment of any premium or
penalty.
(g) Conditions on Advances. If required by the lender of a
Project Loan, the obligation of such lender to make advances under
the Project Loan may be conditioned upon commercially reasonable and
customary requirements set forth in a loan agreement, mortgage
instrument or other written agreement with the Partnership. The
following are non-exclusive examples of commercially reasonable and
customary requirements which may be imposed as conditions to the
making of advances under a Project Loan:
(1) That advances may not be made more often than once
per month.
(2) That the lender of the Project Loan has received (i)
copies of the construction plans (approved by the appropriate
governmental authorities) and specifications and all
construction contracts, (ii) a certificate from the
Amphitheater's architect certifying that the plans and
specifications have been approved by him and that the
construction contracts executed to date are acceptable to him
and satisfactorily provide for the construction of the
Amphitheater, (iii) a copy of the building permit for the
Amphitheater, (iv) an original current survey of
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 51
the land upon which the Amphitheater is to be constructed
prepared by a registered public surveyor in form reasonably
acceptable to the lender, (v) copies of insurance polices or
certificates of insurance indicating that appropriate policies
of liability and property insurance are in place, (vi) written
statements from the applicable agencies or municipalities
which, when taken together, provide evidence satisfactory to
the lender of the Project Loan that all utilities and related
services necessary for the construction of the Amphitheater
and the operation thereof for its intended purpose are (or
will be prior to commencement of construction of the
Amphitheater) available to the boundaries of the land upon
which the Amphitheater shall be constructed, (vii) a written
report of soil tests prepared by a qualified engineering firm
acceptable to the lender of the Project Loan containing no
information deemed to be unsatisfactory by the lender in its
reasonable discretion, (viii) a copy of a written
environmental audit or assessment with respect to the land
upon which the Amphitheater shall be constructed by an
engineering firm acceptable to such lender and containing no
information deemed to be unacceptable by lender in its
reasonable discretion, (ix) evidence that the Partnership has
adequate funds available to complete construction of the
Amphitheater if the Budgeted Project Cost exceeds the
principal amount of the Project Loan and (x) evidence that
there is or will be appropriate public access to the site,
through direct access, easements or otherwise.
(3) That the lender has received (i) a legal opinion
from counsel to the Partnership that the loan documents
evidencing the Project Loan are duly authorized and
enforceable in accordance with their terms and as to such
other matters as such lender may reasonably request, (ii)
executed originals of a promissory note, deed of trust,
mortgage or other lien creating instrument and such other
reasonable loan documents as are typically required to
document a construction loan similar to the Project Loan and
(iii) a copy of this Agreement, with all amendments thereto,
and such other documents required by the lender to evidence in
a manner reasonably acceptable to the lender that the person
executing the loan documents related to the Project Loan on
behalf of the Partnership has proper authorization and
authority to do so.
(4) That the lender has received a mortgagee policy of
title insurance in form reasonably acceptable to it and, for
each advance, a down-date endorsement to such policy showing
no additional liens or exceptions to title.
(5) That the lender has received a written request for
advance in form and substance reasonably acceptable to lender
certifying as to
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 52
the Project Costs to be paid or reimbursed from the requested
advance under the Project Loan, with such supporting data and
invoices and architect's certification as the Lender may
require.
(6) If permitted in the applicable jurisdiction, lien
waivers from contractors and subcontractors.
(7) With respect to the final advance, a temporary or
permanent certificate of occupancy, guaranties and warranties
from contractors and subcontractors, final lien waivers and
releases from contractors and subcontractors.
(h) Collateral. If required by the lender of a Project Loan,
payment and performance of the obligations and liabilities of the
Partnership in respect of such Project Loan shall be secured by a
first and prior lien on the Partnership's interest in the Approved
Project to which such Project Loan relates and such lien shall be
created by a mortgage, deed of trust or other lien creating
instrument which contains commercially reasonable and customary
terms and provisions.
(i) Closing Costs. The Partnership shall pay, if required,
commitment fees, loan origination fees, or similar fees and such
actual out-of-pocket expenses of the lender which directly relate to
such Project Loan and which are customarily paid by borrowers when
obtaining a construction loan similar to the Project Loan, such as
the lender's attorneys' and consultants' fees, filing fees,
recording costs and the cost of obtaining a mortgagee policy of
title insurance for the lender. Notwithstanding the provisions
contained in the immediately preceding sentence, the Partnership
will not be required to pay any "commitment fees," "loan origination
fees" or other similar fees in respect of any Project Loan made by a
Sony/Block Related Party.
5.3 Protection of Sony/Block Related Parties.
(a) Collateral for Guarantor. If (i) the lender of a Project Loan is
not a Sony/Block Related Party, (ii) the lender of such Project Loan does
not require that the Project Loan be secured by a lien on the
Partnership's interest in the Approved Project to which the Project Loan
relates and (iii) a Sony/Block Related Party ("Sony/Block Guarantor")
has guaranteed the repayment of all or any portion of the Project Loan,
then the Partnership shall do each and all of the following simultaneously
with the closing of the Project Loan:
(1) Execute, acknowledge and deliver to the Sony/Block
Guarantor an instrument in the form attached hereto as Exhibit
5.3(a)(1)
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 53
pursuant to which the Partnership indemnifies and holds harmless the
Sony/Block Guarantor from and against any and all liability, loss
or expense (including reasonable attorneys' fees and disbursements)
arising out of or relating to the guaranty of the Project Loan.
(2) Execute, acknowledge and deliver to the Sony/Block
Guarantor a first mortgage encumbering the Partnership's interest in
the Approved Project to which the Project Loan relates as security
for the performance by the Partnership of its obligations under the
indemnity instrument delivered pursuant to clause (1) of this
Section 5.3(a). Any such mortgage instrument shall be in the form
attached hereto as Exhibit 5.3(a)(2), with such modifications as may
be reasonably necessary to conform to the requirements of the local
jurisdiction.
(3) Pay for and deliver to the Sony/Block Guarantor a title
insurance policy insuring the mortgage delivered pursuant to clause
(2) of this Section 5.3(a), free of any title exceptions except
those that are reasonably satisfactory to Sony/Block.
(4) Deliver to the Sony/Block Guarantor an endorsement to the
casualty insurance policy naming the Sony/Block Guarantor as
mortgagee.
(b) Restrictions on Loan Advances for Benefit of Guarantor. If (i)
the lender of a Project Loan is not a Sony/Block Related Party, (ii) the
lender does not impose any requirements upon the Partnership which must be
satisfied as conditions to the making of advances to the Partnership under
the Project Loan and (iii) a Sony/Block Related Party ("Sony/Block
Guarantor") has guaranteed repayment of all or any portion of the Project
Loan, then the following provisions shall apply:
(1) Sony/Block may receive advances under the Project Loan on
behalf of the Partnership and hold such funds in a separate account.
(2) Sony/Block may condition the release of such funds held
pursuant to clause (1) of this Section 5.3(b) upon the satisfaction
of certain commercially reasonable and customary requirements set
forth in a separate written instrument between the Partnership and
Sony/Block. Non-exclusive examples of commercially reasonable and
customary requirements which may be imposed as conditions for
release of such funds to the Partnership are set forth in Section
5.2(g) of this Agreement.
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Article V - Project Loans, Renewal Loans and Replacement Loans
Page 54
(c) Limited Exception to Exclusivity Provisions. If a Sony/Block
Related Party should ever acquire the Partnership's ownership interest in
an Amphitheater as a result of a foreclosure under a mortgage provided
pursuant to Sections 5.3(a)(2), 5.4(c)(2) or 5.5(c)(2) hereof, then such
Sony/Block Related Party may thereafter own, manage and otherwise operate
such Amphitheater without being deemed to be in violation of the
exclusivity provisions or restrictions contained in Article XII of this
Agreement.
5.4 Renewal Loans.
(a) Funding Sources for Balloon Amphitheater Loans. The Partnership
shall fund the remaining principal balance due on any Balloon Amphitheater
Loan at its maturity from the Sinking Fund. If (i) sufficient funds are
not available from the foregoing source to pay the entire amount of the
remaining principal balance due on any Balloon Amphitheater Loan at its
maturity and (ii) the Manager has not been able to obtain for the
Partnership, notwithstanding its reasonable best efforts to do so (which
shall require, at a minimum, offering to prospective lenders the
opportunity to receive a lien upon the then unencumbered assets of the
Partnership), another source of funding reasonably satisfactory to Pace,
then Sony/Block shall be obligated to make a loan ("Renewal Loan") to the
Partnership at the maturity of such Balloon Amphitheater Loan in an amount
necessary to cause the funds available to the Partnership, when combined
with all funds available from the Sinking Fund, if any, to equal the final
installment due on such Balloon Amphitheater Loan. Sony/Block shall have
the right and option, exercisable in its sole discretion, to fulfill the
obligations set forth in the immediately preceding sentence with respect
to any Balloon Amphitheater Loan by causing a financially responsible
lender to make a Renewal Loan to the Partnership for such Balloon
Amphitheater Loan.
(b) Required Terms of Renewal Loan. As used in this Agreement, the
term "Renewal Loan" shall mean a loan to the Partnership in connection
with a matured Balloon Amphitheater Loan, upon substantially the following
terms:
(1) The principal of the Renewal Loan shall be advanced in a
single installment for the sole purpose of paying all amounts then
due and payable in respect of the Balloon Amphitheater Loan to which
the Renewal Loan relates.
(2) The principal amount to be advanced under the Renewal Loan
shall be in an amount equal to the (i) final installment due on the
Balloon Amphitheater Loan to which the Renewal Loan relates minus
(ii) the then balance of the Sinking Fund.
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Article V - Project Loans, Renewal Loans and Replacement Loans
Page 55
(3) Interest shall accrue on the principal balance outstanding
from time to time under a Renewal Loan at a fixed rate of interest
per annum determined in accordance with the following provisions:
(i) If a Sony/Block Related Party is the lender of such
Renewal Loan, the interest rate shall be (i) the lender's
cost of funds plus (ii) 1.0% per annum.
(ii) If the lender of such Renewal Loan is not a
Sony/Block Related Party, but the Renewal Loan is guaranteed
by one or both of Sony and Blockbuster, then (i) the
interest rate shall be the fixed rate per annum charged by
such lender and (ii) Sony/Block shall have the right to charge
the Partnership a guarantee fee of 1.0% per annum on the
portion of the principal amount outstanding from time to time
under such Renewal Loan which is guaranteed by one or both
Sony and Blockbuster.
(iii) If the lender of such Project Loan is not a
Sony/Block Related Party, and the Project Loan is not required
to be guaranteed by one or both of Sony and Blockbuster, then
the interest rate shall be the fixed rate per annum charged by
such lender.
If (x) the interest rate per annum payable by the Partnership for
any Renewal Loan (including any guaranty fee payable to Sony/Block)
exceeds the Treasury Rate and (y) the full faith and credit of one
or both of Sony and Blockbuster were not utilized in the obtaining
of such Renewal Loan or in the obtaining of the source of funding
for the Renewal Loan, then Sony/Block shall be required to obtain
another Renewal Loan for the Partnership utilizing the full faith
and credit of both Sony and Blockbuster in an attempt to reduce the
interest rate payable by the Partnership with respect to such
Renewal Loan. Notwithstanding the provisions contained in the
immediately preceding sentence, with respect to any Renewal Loan to
be obtained to fund the Amphitheater Loan related to the Nashville
Amphitheater upon its stated maturity, in no event shall Sony/Block
be required to provide or obtain a guaranty from Sony in excess of
twenty-five percent (25%) of such Renewal Loan or from Blockbuster
in excess of twenty-five percent (25%) of such Loan.
(4) A Renewal Loan shall be amortized with equal quarterly
combined payments of principal and interest equal to the quarterly
payments which were payable under the Balloon Amphitheater Loan to
which such Renewal Loan relates.
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Article V - Project Loans, Renewal Loans and Replacement Loans
Page 56
(5) The Renewal Loan shall have as its scheduled maturity date
the date upon which the Renewal Loan is to be fully paid and
amortized based upon the amount of equal quarterly payments made
pursuant to clause (4) of this Section 5.4(b).
(6) If required by the lender of a Renewal Loan, payment and
performance of the obligations and liabilities of the Partnership in
respect of the Renewal Loan shall be secured by a first and prior
lien on the Partnership's interest in the Amphitheater which had its
Project Costs originally funded by the Balloon Amphitheater Loan to
which the Renewal Loan relates.
(c) Protection of Sony/Block Related Party Guarantor. If (i) the
lender of a Renewal Loan is not a Sony/Block Related Party, (ii) the
lender of such Renewal Loan does not require that the Renewal Loan be
secured by a lien on the Partnership's interest in the Amphitheater which
had its Project Costs originally funded by the Balloon Amphitheater Loan
to which the Renewal Loan relates and (iii) a Sony/Block Related Party
("Sony/Block Guarantor") has guaranteed repayment of all or any portion of
the Renewal Loan, then the Partnership shall do each and all of the
following simultaneously with the closing of the Renewal Loan:
(1) Execute, acknowledge and deliver to the Sony/Block
Guarantor an instrument in the form attached hereto as Exhibit
5.3(a)(1) pursuant to which the Partnership indemnifies and holds
harmless the Sony/Block Guarantor from and against any and all
liability, loss or expense (including reasonable attorneys' fees and
disbursements) arising out of or relating to the guaranty of the
Renewal Loan.
(2) Execute, acknowledge and deliver to the Sony/Block
Guarantor a first mortgage encumbering the Partnership's interest in
the Amphitheater which had its Project Costs originally funded by
the Balloon Amphitheater Loan to which the Renewal Loan relates as
security for performance by the Partnership of its obligations under
the indemnity instrument provided pursuant to clause (1) of this
Section 5.4(c). The form of such mortgage instrument shall be in
the form attached hereto as Exhibit 5.3(a)(2), with such
modifications as may be reasonably necessary to conform to the
requirements of the local jurisdiction.
(3) Pay for and deliver to the Sony/Block Guarantor a title
insurance policy insuring the mortgage delivered pursuant to clause
(2)
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Article V - Project Loans, Renewal Loans and Replacement Loans
Page 57
of this Section 5.4(c), free of any title exceptions except those
that are reasonably satisfactory to Sony/Block.
(4) Deliver to the Sony/Block Guarantor an endorsement to the
casualty insurance policy naming the Sony/Block Guarantor as
mortgagee.
5.5 Replacement Loans.
(a) Determination of Need for Replacement Loan. If the Executive
Committee unanimously agrees that the economic effect to the Partnership
of the interest rate, amortization schedule, maturity date, prepayment
rights and other terms of any Amphitheater Loan related to any of the
Unwind Assets could be improved by replacing such Amphitheater Loan with a
new loan on the same general economic terms described in Section 5.2
hereof (taking into account any guaranty fee which may be payable to
Sony/Block), then Sony/Block shall make a loan ("Replacement Loan") or
cause a financially responsible lender to make a Replacement Loan.
(b) Required Terms of a Replacement Loan. As used herein, the term
"Replacement Loan" shall mean a loan made by Sony/Block or a financially
responsible lender on substantially the following terms:
(1) The Replacement Loan shall be made to the owner of the
Amphitheater which secures repayment of the existing Amphitheater
Loan being replaced.
(2) The proceeds of the Replacement Loan shall be used solely
to pay and discharge the existing Amphitheater Loan being replaced.
(3) The principal balance of the Replacement Loan shall be
equal to the then principal balance outstanding, together with
accrued and unpaid interest thereon and all other amounts then due,
under the existing Amphitheater Loan being replaced.
(4) If required by a lender of a Replacement Loan, payment and
performance of the obligations and liabilities of the obligor of
such Replacement Loan shall be secured by a first and prior lien on
the same assets and properties which secured payment of the existing
Amphitheater Loan being replaced and such lien shall be created by a
mortgage, deed of trust or other lien creating instrument which
contains commercially reasonable and customary terms and provisions.
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 58
(5) The other economic terms of the Replacement Loan shall be
the same as those that are required for Project Loans as described
in Section 5.2 hereof.
(c) Protection of Sony/Block Related Party Guarantor. If (i) the
lender of a Replacement Loan is not a Sony/Block Related Party, (ii) the
lender of the Replacement Loan does not require that the Replacement Loan
be secured by a lien on the assets and properties which secure the
existing Amphitheater Loan being replaced and (iii) a Sony/Block Related
Party ("Sony/Block Guarantor") has guaranteed repayment of all or any
portion of the Replacement Loan, then the borrower of the Replacement Loan
shall, as a condition to the closing of such loan, do each and all of the
following simultaneously with the closing of the Renewal Loan:
(1) Execute, acknowledge and deliver to the Sony/Block
Guarantor an instrument in the form attached hereto as Exhibit
5.3(a)(1) pursuant to which the borrower indemnifies and holds
harmless the Sony/Block Guarantor from and against any and all
liability, loss or expense (including reasonable attorneys' fees and
disbursements) arising out of or relating to the guaranty of the
Replacement Loan.
(2) Execute, acknowledge and deliver to the Sony/Block
Guarantor a first mortgage encumbering the same assets or properties
which secured repayment of the existing Amphitheater Loan being
replaced as security for the performance by the borrower of its
obligations under the indemnity agreement delivered pursuant to
clause (1) of this Section 5.5(c). The form of such mortgage
instrument shall be in the form attached hereto as Exhibit
5.3(a)(2), with such modifications as may be reasonably necessary to
conform to the requirements of the local jurisdiction.
(3) Pay for and deliver to the Sony/Block Guarantor a title
insurance policy insuring the mortgage delivered pursuant to clause
(2) of this Section 5.5(c), free of any title exceptions except
those that are reasonably satisfactory to Sony/Block.
(4) Deliver to the Sony/Block Guarantor an endorsement to the
casualty insurance policy naming the Sony/Block Guarantor as
mortgagee.
5.6 Special Provisions Relating to Charlotte Amphitheater. Notwithstanding
anything to the contrary contained elsewhere in this Agreement, the following
provisions shall apply with respect to the Charlotte Amphitheater:
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 59
(a) The Charlotte Loan. Reference is made to the fact that the
Charlotte Asset has been contributed to the capital of the Partnership of
even date herewith at the Existing Facility Closing subject to an
Amphitheater Loan ("Charlotte Loan") generally described as follows:
(1) The initial principal balance at the Existing Facility
Closing of the Charlotte Loan is $8,000,000. No accrued unpaid
interest is outstanding under the Charlotte Loan at the Existing
Facility Closing.
(2) Interest shall accrue on the Charlotte Loan at a fixed
rate of seven percent (7.0%) per annum.
(3) Quarterly payments of $186,640.00 shall be payable on the
Charlotte Loan based on a 20 year amortization schedule. Each
payment shall be applied first against the accrued unpaid interest
thereon and then against the principal balance thereof.
(4) On April 1, 2004, the entire unpaid principal balance of
the Charlotte Loan, together with all accrued unpaid interest
thereon shall become due and payable. Prepayments of principal under
the Charlotte Loan shall be expressly permitted without any penalty.
(5) The form and content of the promissory note evidencing the
Charlotte Loan and the mortgage on the Charlotte Asset securing the
Charlotte Loan shall be in form and content reasonably acceptable to
the Executive Committee.
The obligation to perform and discharge the Charlotte Loan in accordance
with its terms is hereby contractually assumed by the Partnership.
(b) Priority Equity Distributions for Charlotte. Within forty-five
(45) days after the end of each Debt Free Charlotte Year, the Charlotte
Distribution Amount shall be disbursed by the Partnership as follows:
(1) Sixty-five percent (65%) of the Charlotte Distribution
Amount shall be distributed to Sony/Block as a special priority
distribution; provided, that in no event shall any distribution made
pursuant to this clause (1) ever be in excess of the then balance of
the Charlotte Preferred Cash Distribution Account; and
(2) Thirty-five percent (35%) of the Charlotte Distribution
Amount shall be distributed to the Partners in proportion to their
respective Percentage Interests.
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 60
Notwithstanding the other provisions of this Section 5.6(b), for the first
Debt Free Charlotte Year only, the Charlotte Distribution Amount shall be
reduced by the sum of the amount, if any, by which the balance of the
Charlotte Phantom Loan Account exceeded the principal balance of the
Charlotte Loan as of the first day of such Debt Free Charlotte Year.
(c) Special Distributions of Proceeds from Sales of Charlotte Asset.
Notwithstanding the provisions of Section 8.6 hereof, but subject to the
provisions of Section 16.5 hereof, the net cash proceeds received by the
Partnership upon the disposition of the Charlotte Amphitheater or any
portion thereof or any interest therein, after payment and discharge of
the Amphitheater Loan related to the Charlotte Amphitheater, shall be
distributed, as soon after the completion of such disposition as is
reasonably practicable, to the Partners in accordance with the following
provisions:
(1) First, to Sony/Block to the extent of the balance of the
Charlotte Preferred Cash Distribution Account at the time of the
closing of such disposition; and
(2) Second, to the Partners in proportion to their respective
Percentage Interests.
(d) Termination of these Provisions. The provisions of this Section
5.6 shall automatically terminate, with no action required by any party
hereto, upon the earlier to occur of (i) the balance in the Charlotte
Preferred Cash Distribution Account becoming $0.00, (ii) the Partnership
completing a disposition of its entire interest in the Charlotte
Amphitheater or (iii) the closing of the Unwind Procedure.
5.7 Certain Defined Terms Used in Article V. As used in this Article V,
the following terms shall have the meanings indicated:
(a) Charlotte Operations Expenditures: For any Charlotte Year, the
sum of the following:
(1) All Operating Obligations (including regularly scheduled
principal and interest payments under the Amphitheater Loan related
to the Charlotte Amphitheater) attributable to such Charlotte Year
which are related to the use, ownership or operation of the
Charlotte Amphitheater;
(2) All amounts applied against the Amphitheater Loan related
to the Charlotte Amphitheater during such Charlotte Year which are
not
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 61
regularly scheduled payments of principal and interest thereon, such
as principal prepayments.
(3) The cost of any capital improvements or refurbishments
made to the Charlotte Amphitheater during such Charlotte Year which
are either approved by the Executive Committee or expressly
contemplated by the Annual Operating Budget applicable to such
Charlotte Year; and
(4) The Special Charlotte Ratio for such Charlotte Year
multiplied by (i) the total amount required to be reimbursed to
Pace pursuant to the provisions of Section 10.7(b) hereof during
such Charlotte Year or (ii) such other amount that may be payable to
a successor Manager for the provision of its management, booking and
consulting services to the Partnership during such Charlotte Year.
(b) Charlotte Receipts: With respect to any Charlotte Year, all
revenues, receipts and other funds received by the Partnership from the
operation, ownership or use of the Charlotte Amphitheater during such
Charlotte Year (but specifically excluding any amounts received from a
sale of the Charlotte Asset by the Partnership).
(c) Charlotte Year: A fiscal year beginning on November 1 of each
calendar year and ending on October 31 of the following calendar year.
(d) Debt Free Charlotte Year: Any one of the following described
Charlotte Years:
(1) The Charlotte Year in which the Charlotte Phantom Loan
Account becomes $0.00.
(2) The Charlotte Year in which the balance of the Charlotte
Preferred Cash Distribution Account becomes $0.00.
(3) All Charlotte Years between the Charlotte Years described
in clauses (1) and (2) of this Section 5.7(d).
(e) Special Charlotte Ratio: With respect to any Charlotte Year, a
fraction, the numerator of which is one and the denominator of which is
the total number of existing Amphitheaters in which the Partnership has a
Controlling Interest as of the end of such Charlotte Year.
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 62
(f) Charlotte Preferred Cash Distribution Account: A bookkeeping
account which shall be established and maintained in accordance with the
following provisions:
(1) The initial balance of the Charlotte Preferred Cash
Distribution Account shall be $7,000,000.
(2) The balance of the Charlotte Preferred Cash Distribution
Account shall be decreased by (i) the amount of any distribution
made to Sony/Block pursuant to Section 5.6(b)(1) hereof and (ii) the
amount of any distribution made to Sony/Block pursuant to the
provisions of Section 5.6(c)(1) hereof.
(g) Charlotte Phantom Loan Account: A bookkeeping account which
shall be established and maintained in accordance with the following
provisions:
(1) The initial balance of the Charlotte Phantom Loan Account
shall be $8,000,000.00.
(2) Except for the Charlotte Years covered by the provisions
of clause (3) below, as of the last day of each Charlotte Year which
ends after the Effective Date, the Charlotte Phantom Loan Account
shall be reduced by the lesser of:
(i) the actual amount by which the principal balance of
the Charlotte Loan (or, if applicable, renewal, extension,
rearrangement, replacement or consolidation thereof) was
reduced by way of scheduled principal payments and principal
prepayments made during such Charlotte Year; or
(ii) the sum of (x) the Charlotte Scheduled Principal
Payment Amount for such Charlotte Year and (y) 65% of any
Excess Charlotte Receipts for such Charlotte Year.
For purposes of clause (i) of this Section 5.7(g)(2), any principal
prepayments made on the Charlotte Loan pursuant to the provisions of
Section 8.4(b) hereof within sixty (60) days after the end of any
Charlotte Year shall be deemed to have been made during such
Charlotte Year.
(3) As of the last day of the Charlotte Year in which the
Charlotte Loan (or, if applicable, renewal, extension,
rearrangement, replacement or consolidation thereof) is fully and
finally discharged by the Partnership and each Charlotte Year
thereafter, the Charlotte
<PAGE>
Article V - Project Loans, Renewal Loans and Replacement Loans
Page 63
Phantom Loan Account shall be reduced by the sum of (i) the
Charlotte Scheduled Principal Payment Amount for such Charlotte Year
and (ii) 65% of any Excess Charlotte Receipts for such Charlotte
Year.
(h) Charlotte Scheduled Principal Payment Amount: For any Charlotte
Year, the total amount of regularly scheduled principal payments due on
the Charlotte Loan during such Charlotte Year based upon the original 20
year amortization schedule assuming, for these purposes, that (i) no
prepayments of principal are ever made on the Charlotte Loan and (ii) the
remaining principal balance of the Charlotte Loan is due on April 1, 2014
instead of April 1, 2004.
(i) Excess Charlotte Receipts: For any Charlotte Year, the amount,
if any, by which (x) the total amount of Charlotte Receipts for such
Charlotte Year exceeds (y) the sum of $746,560.00 and the amount of
Non-Debt Related Charlotte Operating Expenditures for such Charlotte Year.
(j) Non-Debt Related Charlotte Operating Expenditures: For any
Charlotte Year, all Charlotte Operating Expenditures for such Charlotte
Year other than those attributable to principal and interest payments on
the Charlotte Loan.
(k) Charlotte Distribution Amount: For any Debt Free Charlotte Year,
the amount by which the total amount of Charlotte Receipts for such Debt
Free Charlotte Year exceeds the total amount of Charlotte Operating
Expenditures for such Debt Free Charlotte Year.
[END OF ARTICLE V]
<PAGE>
Article VI - Partnership's Obligation to Construct and Acquire Amphitheaters
Page 64
ARTICLE VI
Partnership's Obligation to Construct and Acquire Amphitheaters
6.1 Construction of Approved Projects. The Partnership shall construct all
Approved Projects.
6.2 Purchase of Existing Amphitheaters. The Partnership will not acquire
or purchase any interest in a previously existing Amphitheater without the
unanimous consent of the Representatives attending a duly called and held
meeting of the Executive Committee at which a quorum of the Representatives are
present. However, the following provisions shall apply with respect to any
existing Amphitheater which the Executive Committee does so approve for purchase
by the Partnership:
(a) At the closing of the purchase of an interest in a previously
existing Amphitheater, Sony/Block shall make a loan or cause a loan to be
made by a financially responsible lender, upon the same economic terms and
with the same collateral described in Section 5.2 hereof that are required
for a Project Loan related to an Approved Project, but in a single
principal advance in the amount of (i) the Applicable Percentage (herein
defined) of the gross purchase price of such previously existing
Amphitheater minus (ii) the amount of any Pre-opening Concessionaire
Advances for such previously existing Amphitheater. As used in the
immediately preceding sentence, the term "Applicable Percentage" shall
mean (i) 85% if the existing Amphitheater to be purchased will be in the
First Group and (ii) 70% if the existing Amphitheater to be purchased will
be in the Second Group. If applicable, a Sony/Block Guarantor shall be
entitled to the same rights, protections and privileges in respect of any
loan made pursuant to this Section 6.2(a) as are provided for in Section
5.3 hereof with respect to a Project Loan. The loan to be extended to the
Partnership pursuant to the provisions of this Section 6.2(a) shall be an
"Amphitheater Loan" related to the Amphitheater (or the interest therein)
being purchased by the Partnership for all purposes of this Agreement.
(b) The balance of the purchase price shall be paid from the
following sources:
(1) The Contributed Project Funds (including unpaid principal
amounts under the Sony/Block Notes which are payable upon the demand
of the Manager); and
<PAGE>
Article VI - Partnership's Obligation to Construct and Acquire Amphitheaters
Page 65
(2) Unrestricted Funds of the Partnership to the extent that
the Executive Committee reasonably determines that such funds will
not be needed for the payment of Operating Obligations of the
Partnership.
If sufficient funds are not available from the foregoing sources to pay
the balance of the purchase price of any such existing Amphitheater, then
the Partners shall be obligated to contribute to the capital of the
Partnership an amount equal to that amount which is necessary to cause the
total amount of funds available to the Partnership for the payment of such
purchase price, when combined with all funds available from the sources
listed in clause (b) above, to equal the balance of the purchase price for
such existing Amphitheater. The amounts to be contributed to the capital
of the Partnership pursuant to this Section 6.2 shall be made in
proportion to the Percentage Interest of the Partners.
[END OF ARTICLE VI]
<PAGE>
Article VII - Provisions Relating to the MCA/PACE Amphitheaters
Page 66
ARTICLE VII
Provisions Relating to the MCA/PACE Amphitheaters
7.1 Generally. Reference is made to the fact that PACE Amphitheatres, Inc.
("PAI"), an Affiliate of Pace, is a 32.5% partner in MCA/Pace Amphitheaters
Group, L.P. ("MCA Partnership"). No interest in the MCA/Pace Amphitheaters has
been contributed to the Partnership. Pace represents and warrants to the
Partnership that the MCA Partnership owns a Controlling Interest in each of the
MCA/Pace Amphitheaters. Pace represents and warrants to the Partnership that
PAI's ownership interest in the MCA Partnership is not a Controlling Interest in
the MCA/Pace Amphitheaters.
7.2 Pace's Obligations to Partnership Regarding MCA/PACE Amphitheaters. If
Pace, or any one or more of Pace's Affiliates, should at any time hereafter
acquire a transferrable Controlling Interest in one or both of the MCA/Pace
Amphitheaters ("Pace Controlled MCA Amphitheaters"), then the following
provisions shall apply:
(a) Offer to Sell to Partnership. Pace shall be required to offer,
or cause to be offered, to the Partnership the option to purchase ("MCA
Purchase Option") such Controlling Interest in the Pace Controlled MCA
Amphitheaters upon the following terms:
(1) With respect to any Pace Controlled MCA Amphitheaters, the
MCA Purchase Option must be extended to the Partnership in a written
notice from Pace to Sony/Block on or before 120 days after Pace, or
any one or more of Pace's Affiliates, acquire such Controlling
Interest in such Amphitheater.
(2) The MCA Purchase Option must be open for exercise by the
Partnership for at least 90 days following delivery of the notice
provided to Sony/Block pursuant to clause (1) of this Section
7.2(a).
(3) The Partnership shall have the right and option to
purchase all, but not a portion of, such Controlling Interest in the
Pace Controlled MCA Amphitheaters pursuant to the MCA Purchase
Option for a purchase price equal to the sum of the following:
(i) For that portion of such Controlling Interest which
is attributable to the 32.5% partnership interest in the MCA
Partnership currently owned by Pace Amphitheaters, Inc., the
sum of (A) $6,400,341.00 if both MCA/Amphitheaters are
involved,
<PAGE>
Article VII - Provisions Relating to the MCA/PACE Amphitheaters
Page 67
$1,285,165.00 if only Lakewood Amphitheater (Atlanta) is
involved or $5,115,176.00 if only Starplex Amphitheater
(Dallas) is involved and (B) 32.5% of the amount by which the
principal balance of the currently existing Amphitheater Loans
related to the MCA/Pace Amphitheaters are reduced (if any)
between the date of this Agreement and the date that the MCA
Purchase Option is extended by Pace to the Partnership; and
(ii) For the remaining portion of such Controlling
Interest in the Pace Controlled MCA Amphitheaters, Pace's (or
its Affiliates') actual cost of acquiring such remaining
portion of the Controlling Interest (such cost to specifically
include the principal balance of any debt which Pace or its
Affiliates assumes or takes subject to in connection with the
acquisition of such Controlling Interest; provided, that the
Partnership (x) shall apply the payment of the purchase price
funded in the manner described in clause (c) below first
against the discharge and payment of such debt or (y) may,
upon unanimous consent of the Partners, pay this portion of
the purchase price by assuming such debt or taking subject
thereto).
(4) Pace shall promptly provide to Sony/Block all relevant
financial data and other information that is reasonably necessary to
assist in the calculation and determination of the purchase price
described in clause (3) of this Section 7.2(a).
(b) Sony/Block's Decision. Notwithstanding any other provision of
this Agreement to the contrary, the decision as to whether the Partnership
will exercise the MCA Purchase Option shall be made unilaterally by
Sony/Block.
(c) Financing of Purchase Price. If the Partnership exercises the
MCA Purchase Option, the purchase price of the Controlling Interest in
the Pace Controlled MCA Amphitheaters shall be financed in accordance with
the provisions of Section 6.2 hereof.
(d) Effect on Unwind Procedure. If the Partnership purchases a
Controlling Interest in any Pace Controlled MCA Amphitheater ("Partnership
MCA Amphitheaters") pursuant to the MCA Purchase Option, then (i) the
Amphitheater Loan related to such Partnership MCA Amphitheaters shall
thereafter be included in Pace's Allocated Debt for purposes of the
provisions of a Section 8.4 hereof and (ii) the Partnership's Controlling
Interest in such Partnership MCA Amphitheaters shall be distributed to
Pace (or its designee)
<PAGE>
Article VII - Provisions Relating to the MCA/PACE Amphitheaters
Page 68
at the closing of the Unwind Procedure and Pace shall be required to do
the following at the closing of the Unwind Procedure as a result:
(1) If any Major Capital Improvements were made by the Partnership
with respect to the Partnership MCA Amphitheaters, then Pace shall pay to
Sony/Block an amount equal to two-thirds of the total cost of such Major
Capital Improvements pursuant to clause (g) of Section 9.4 hereof.
(2) Pace shall pay to Sony/Block an amount equal to the sum of the
following:
(i) 100% of the Contributed Project Funds previously applied
to the purchase price of the Partnership MCA Amphitheaters.
(ii) Two-thirds of the Partnership's General Funds (as such
term is defined in clause (h)(2) of Section 9.4 hereof) previously
applied to the purchase price of the Partnership MCA Amphitheaters.
All amounts payable to Sony/Block pursuant to this clause (2) shall be
deemed, to be payable pursuant to Section 9.4(h) hereof at the closing of
the Unwind Procedure.
(3) Pace shall pay to Sony/Block an amount equal to two-thirds of
the sum of the following:
(i) (A) The Partnership's share of the amount of principal
outstanding under the Amphitheater Loans which relate to the
Partnership MCA Amphitheaters at the time the Controlling Interest
in such Amphitheaters is acquired by the Partnership minus (B) the
Partnership's share of the amount of principal outstanding under the
Amphitheater Loans which relate to the Partnership MCA Amphitheaters
at the time of the closing of the Unwind Procedure; and
(ii) (A) The Unamortized Amount of any Existing MCA Concession
Loans at the time that the Controlling Interest in such
Amphitheaters was acquired by the Partnership minus (B) the
Unamortized Amount of such Existing MCA Concession Loans at the time
of the closing of the Unwind Procedure.
<PAGE>
Article VII - Provisions Relating to the MCA/PACE Amphitheaters
Page 69
All amounts payable to Sony/Block pursuant to this clause (3) shall
be deemed to be payable pursuant to Section 9.4(k) hereof at the
closing of the Unwind Procedure. As used above, the term "Existing
MCA Concession Loan" shall mean any Concession Loan made to the
owner (or its predecessor in interest) of a Partnership MCA
Amphitheater prior to the acquisition of such Partnership MCA
Amphitheater (or a Controlling Interest therein) by the Partnership
pursuant to, or in connection with, a concession agreement which
remains in effect at the time of such acquisition and is related to
the sale of concessions at such Partnership MCA Amphitheater.
(4) If Pace, or any one or more Pace's Affiliates, acquires a
Controlling Interest in one or both of the MCA/PACE Amphitheaters
after the closing of the Unwind Procedure, then none of the
provisions of this Section 7.2 shall apply and Pace shall have no
obligation or duty to offer any of its Controlling Interest in such
Amphitheaters to the Partnership pursuant to this Section 7.2.
7.3 Number of New Amphitheaters. Notwithstanding anything to the contrary
contained in this Agreement, if the Partnership acquires a Controlling Interest
in both MCA/Pace Amphitheaters at any time after the date hereof, such
Amphitheaters shall, for all purposes hereof, be deemed to be only one (1) New
Amphitheater.
7.4 Best Efforts to Obtain a Transferrable Interest. If Pace or any of its
Affiliates should ever enter negotiations with the other partners in the MCA
Partnership in connection with the possible acquisition by Pace or any of its
Affiliates of a Controlling Interest in one or both of the MCA/Pace
Amphitheaters, then Pace hereby covenants and agrees with Sony/Block that it
will exercise its best efforts to structure such acquisition in a manner that
Pace or its Affiliate will acquire a Controlling Interest in such Amphitheaters
that will be transferable on a reasonable basis.
[END OF ARTICLE VII]
<PAGE>
Article VIII - Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 70
ARTICLE VIII
Tax Allocations, Maintenance of Capital Accounts
and Distributions of Cash
8.1 Tax Allocations.
(a) Generally. Except as provided to the contrary elsewhere in this
Section 8.1, all of the Partnership's income, gain, losses, deductions and
credits shall be allocated among the Partners in proportion to their
respective Percentage Interests.
(b) Section 704(c). Income, gain, loss and deduction with respect to
any item of property contributed to the Partnership shall, solely for
federal income tax purposes, be allocated between the Partners so as to
take into account any difference between the Gross Asset Value of such
item of property and its adjusted basis for federal income tax purposes on
the date of such contribution, in accordance with the requirements of
Section 704(c) of the Code. If the Gross Asset Value of any Partnership
property is adjusted pursuant to Section 8.3(e) hereof, subsequent
allocations of income, gain, loss and deduction with respect to such
property shall take account of any variation between the adjusted basis of
such property and its Gross Asset Value as so adjusted, in the same manner
as provided for under Section 704(c) of the Code. All allocations under
this Section 8.1(b) shall be made in such a manner as the Partners shall
determine reasonably reflects the requirements of Section 704(c) of the
Code. No allocations pursuant to this Section 8.1(b) shall be reflected as
an adjustment to any Partner's Capital Account.
(c) Gain or Loss upon Sale of an Amphitheater. Notwithstanding
clause (a) of this Section 8.1, but subject to the provisions of clause
(b) of this Section 8.1,
(1) the gain, if any, recognized by the Partnership upon any
disposition of any Amphitheater (other than the Charlotte
Amphitheater) or any portion thereof or any interest therein shall
be allocated as follows:
(i) first, to any Partner the balance of whose Capital
Account is negative, in the amount necessary to restore such
balance to zero;
(ii) second, to the Partners to the extent and in the
ratios necessary to cause the balances in the respective
Capital Ac-
<PAGE>
Article. VIII - Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 71
counts of they Partners to be in the ratios of their
respective Percentage Interests (provided, that for purposes
of this clause (c)(1)(ii) only, prior to the allocation
required by this clause (c)(1)(ii), Sony/Block's Capital
Account shall be deemed to have been increased by the then
outstanding principal balance of the Sony/Block Notes unless
such outstanding principal balance has previously been
reflected as an increase in Sony/Block's Capital Account
pursuant to the provisions of clause (x) or (y) of Section
8.3(i) hereof); and
(iii) any remaining gain shall be allocated among the
Partners in the ratios of their respective Percentage
Interests.
(2) the gain, if any, recognized by the Partnership upon any
disposition of the Charlotte Amphitheater or any portion thereof or
any interest therein shall be allocated as follows:
(i) First, to Sony/Block to the extent of the balance of
the Charlotte Preferred Cash Distribution Account at the time
of the closing of such disposition; and
(ii) Any remaining gain shall be allocated between the
Partners in accordance with the provisions of clause (1) of
this Section 8.1(c).
(3) the loss, if any, recognized by the Partnership, upon any
disposition of any Amphitheater or any portion thereof or any
interest therein shall be allocated as follows:
(i) First, to the Partners to the extent and in the
ratios necessary to cause the balances in the respective
Capital Accounts of the Partners to be in the ratios of their
respective Percentage Interests (provided, that for purposes
of this clause (c)(3)(i) only, prior to the allocation
required by this clause (c)(3)(i), Sony/Block's Capital
Account shall be deemed to have been increased by the then
outstanding principal balance of the Sony/Block Notes unless
such outstanding principal balance has previously been
reflected as an increase in Sony/Block's Capital Account
pursuant to the provisions of clause (x) or (y) of Section
8.3(i) hereof); and
(ii) Any remaining loss shall be allocated among the
Partners in the ratios of their respective Percentage
Interests.
<PAGE>
Article VIII- Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 72
(d) Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Section 8.1, if there is a net decrease in Partnership Minimum Gain during
any Fiscal Year, each Partner shall be specially allocated items of
Partnership income and gain for such Fiscal Year (and, if necessary,
subsequent Fiscal Years) in an amount equal to such Partner's share of the
net decrease in Partnership Minimum Gain, determined in accordance with
Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to
be allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Sections 1.704-2(f)(6)
and 1.704-2(j)(2) of the Regulations. This Section 8.1(d) is intended to
comply with the minimum gain chargeback requirement in Section 1.704-2(f)
of the Regulations and shall be interpreted consistently therewith.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal
Year or other period shall be specially allocated among the Partners in
proportion to their Percentage Interests.
(f) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, notwithstanding any other
provision of this Section 8.1, if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to a Partner Nonrecourse Debt
during any Fiscal Year, each Partner who has a share of the Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Section 1.704-2(i)(5) of the
Regulations, shall be specially allocated items of Partnership income and
gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in
an amount equal to such Partner's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion
to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the
Regulations. This Section 8.1(f) is intended to comply with the minimum
gain chargeback requirement in Section 1.704-2(i)(4) of the Regulations
and shall be interpreted consistently therewith.
(g) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(1).
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Article VIII- Tax Allocations, Maintenance of Capital Accounts and
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(h) Special Income Allocation for Charlotte. Notwithstanding any
other provision of this Section 8.1, for each Fiscal Year, Sony/Block
shall be specially allocated items of Partnership gross income equal to
the amount of cash distributions made to Sony/Block during such Fiscal
Year pursuant to the provisions of Section 5.6(b)(1) hereof.
(i) Special Allocations Related to Abandonment of an Approved
Project. Notwithstanding any other provision of this Section 8.1,
(1) For any Fiscal Year in which Sony/Block makes a deemed
capital contribution pursuant to clause (x) of Section 5.1(b)
hereof, Sony/Block shall be specially allocated items of Partnership
deduction and loss equal to (i) three (3.0) multiplied by (ii) the
amount of such deemed capital contributions made by Sony/Block
during such Fiscal Year pursuant to the provisions of clause (x) of
Section 5.1(b) hereof. To the extent possible, the items of
Partnership deduction and loss specially allocated to Sony/Block
pursuant to the immediately preceding sentence shall consist of
those deductions and losses related to the Project Costs referred to
in clause (x) of Section 5.1(b) hereof.
(2) For any Fiscal Year in which Pace makes a deemed capital
contribution pursuant to clause (ii) of Section 5.1(b)(2) hereof,
Pace shall be specially allocated items of Partnership deduction and
loss equal to (i) one and one-half (1.5) multiplied by (ii) the
amount of such deemed capital contributions made by Pace during such
Fiscal Year pursuant to the provisions of clause (ii) of Section
5.1(b)(2) hereof.
(j) Interim Development Costs. Notwithstanding any other provision
of this Section 8.1, certain special allocations of Partnership deductions
and losses shall be made to Sony/Block, if applicable, in accordance with
the provisions of Section 4.15(b) hereof in the first Fiscal Year which
ends after the execution of this Agreement.
(k) Special Income Allocation for Distributions Attributable to the
Pace Preferred Account. Notwithstanding any other provision of this
Section 8.1, for each Fiscal Year, Pace shall be specially allocated items
of Partnership gross income equal to the amount of cash distributions made
to Pace during such Fiscal Year pursuant to the provisions of Section
8.7(a) hereof.
8.2 Transferor/Transferee Allocations. If a Partnership Interest is
transferred during any year, the income, gains, losses and deductions allocable
in respect of that Partnership Interest shall be prorated between the transferor
and the transferee on the
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Distributions of Cash
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basis of the number of days in the year that each was the holder of that
Partnership Interest without regard to the results of the Partnership operations
during the period before and after the transfer (unless either the transferor or
the transferee elects to use an allocation based on the results as of the record
date of transfer, to the extent permitted by the Code, and agrees to reimburse
the Partnership for the cost of making and recording such allocation).
8.3 Maintenance of Capital Accounts. A Capital Account shall be
established and maintained for each Partner in accordance with the following
provisions:
(a) Increases in Capital Accounts. Each Partner's Capital Account
shall be increased by (i) the amount of cash and the fair market value of
all property contributed by such Partner to the Partnership (net of
liabilities assumed by the Partnership or to which the contributed
property is subject), (ii) that Partner's allocable share of income and
gain for federal income tax purposes (excluding any allocations made
pursuant to Section 8.1(b) hereof), (iii) that Partner's allocable share
of the unrealized gain attributable to property with respect to which an
adjustment shall have been effected pursuant to subsection (d) or (e)
below, and (iv) that Partner's allocable share (determined by reference to
its share of the proceeds of such items under the terms of this Agreement)
of income exempt from tax described in section 705(a)(1)(B) of the Code.
(b) Decreases in Capital Accounts. Each Partner's Capital Account
shall be decreased by (i) the amount of cash and the fair market value of
all property distributed to such Partner (net of liabilities assumed by
the Partner or to which the property is subject), (ii) that Partner's
allocable share of losses and other items of deduction for federal income
tax purposes (excluding any allocations made pursuant to Section 8.1(b)
hereof), (iii) that Partner's allocable share of the unrealized loss
attributable to property with respect to which an adjustment shall have
been effected pursuant to subsection (d) or (e) below, and (iv) that
Partner's allocable share of expenditures described in Section
705(a)(2)(B) of the Code.
(c) Use of Gross Asset Value. For purposes of computing the amount
of any item of income, gain, loss, or deduction to be reflected in the
Partners' Capital Accounts, the determination, recognition and
classification of such items shall be the same as their determination,
recognition and classification for federal income tax purposes, except
that (i) gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal
income tax purposes (including any deemed disposition required by the
provisions of Section 8.3(d) hereof) shall be computed with reference to
the Gross Asset Value of the property disposed of, rather than its
adjusted basis, and (ii) depreciation, amortization, or other cost
recovery
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Article VIII- Tax Allocations, Maintenance of Capital Accounts and
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deductions with respect to an item of Partnership property shall be computed
with reference to the Gross Asset Value of such property rather than its
adjusted basis.
(d) Effect of Distributions In Kind on Capital Accounts. If any
asset of the Partnership is distributed in kind, then pursuant to Section
1.704-1(b)(2)(iv)(e) of the Regulations, such asset shall be treated as
if it were sold in a taxable disposition equal to its then fair market
value (determined by taking into account the effect of Section 7701(g) of
the Code, if applicable) just prior to its distribution and the resulting
deemed gain or loss shall be allocated pursuant to the following
provisions for purposes of adjusting the balances of the Capital Accounts
of the Partners only:
(1) If such asset of the Partnership is being distributed
pursuant to the Unwind Procedure, then (i) the deemed gain from such
asset shall be allocated first to the Partner which does not receive
and is not deemed to receive the distribution of such asset
("Nonreceiving Partner") to the extent of depreciation deductions
with respect to such asset previously allocated to the Nonreceiving
Partner and then to the Partner which receives or is deemed to
receive the distribution of such asset; and (ii) the deemed loss
from such asset shall be allocated to the Partner which receives or
is deemed to receive the distribution of such asset; and
(2) If such asset is being distributed for any other reason,
then deemed gain or loss from such asset shall be allocated in the
manner described in Section 8.1(c) hereof.
(e) Effect of New Partners or Retiring Partners on Capital Accounts.
Upon the acquisition of an additional interest in the Partnership by any
new or existing partner in exchange for more than a de minimis capital
contribution, or immediately prior to the distribution by the Partnership
to a Partner of more than a de minimis amount of money or other
Partnership property as consideration for an interest in the Partnership,
at the request of any Partner made within 60 days of such acquisition or
distribution, the Gross Asset Value of all Partnership properties shall be
determined, and the unrealized gain or loss that would have been realized
if the sale of such properties at their Gross Asset Values had occurred
shall be charged or credited to the Capital Accounts of the Partners as if
such properties had actually been sold by the Partnership.
(f) Compliance with Treasury Regulations. The foregoing provisions
and the other provisions of this Agreement relating to they maintenance of
Capital Accounts are intended to comply with the Treasury Regulations
issued
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Article VIII - Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 76
pursuant to Section 704(b) of the Code, and shall be interpreted and
applied in a manner consistent with such regulations. If the Partners
shall determine that it is prudent to modify the manner in which the
capital accounts are computed or maintained in order to comply with such
regulations, the Partners may make such modification.
(g) Transferee of Partnership Interest. A transferee of an interest
in the Partnership shall succeed to the Capital Account of the transferor.
(h) Capital Account Make-Up Provision. If a Partner's Capital
Account has a deficit balance following liquidation (as defined in
Treasury Regulation Section 1.704-1(b)(2)(ii)(g)) of the Partner's
interest in the Partnership (after taking into account all Capital Account
adjustments for the taxable year of the Partnership in which liquidation
occurs), the Partner shall, by the end of such taxable year (or, if later,
within 90 days after the date of such liquidation), contribute to the
Partnership an amount necessary to increase the balance in its Capital
Account to zero. Any amount so contributed shall be distributed as
provided in Section 16.5 hereof.
(i) Effect of Sony/Block Notes on Capital Accounts. Pursuant to
Section 1.704-1(b)(2)(iv)(d)(2) of the Regulations, the Capital Account of
Sony/Block shall not be increased by the principal amount of the
Sony/Block Notes upon contribution of the Sony/Block Notes to the
Partnership; however, Sony/Block's Capital Account shall be increased upon
(x) a taxable disposition of the Sony/Block Notes by the Partnership or
(y) any principal payments being made on the Sony/Block Notes (to the
extent of such payments). Interest payments made on the Sony/Block Notes
shall not be treated as contributions to the capital of the Partnership
and therefore shall not be credited to the Capital Account of Sony/Block.
8.4 Partnership's Use and Distribution of Free Cash.
(a) Determination of Amount of Free Cash. On November 1 of each
calendar year, the Executive Committee shall determine the amount of cash
then held by Partnership which is "Free Cash." For purposes of the
immediately preceding sentence, the Partnership's Free Cash, at any given
time, shall be all of the Partnership's cash on hand at such time except
for:
(1) subject to the adjustment to the amount of the Sinking
Fund required by Section 8.5(c) hereof, the Restricted Funds of the
Partnership;
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Article VIII - Tax Allocations, Maintenance of Capital Accounts and
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(2) that portion of the Partnership's Unrestricted Funds which
the Manager reasonably determines will be needed to pay the
Partnership's Operating Obligations between the date of the
determination of the amount of Free Cash and the next revenue
generating period for the Partnership;
(3) the proceeds of any Pre-opening Concessionaire Advances
which are then held by the Partnership and required to be applied
against the Project Costs of the Amphitheater to which such
Pre-opening Concessionaire Advances relate pursuant to the
provisions of this Agreement;
(4) that portion of the Partnership's Unrestricted Funds which
the Executive Committee has previously determined shall be used (i)
to pay a portion of the Budgeted Project Cost of any Approved
Project pursuant to the provisions of Section 4.11(d) hereof, (ii)
to pay for any Cost Overruns pursuant to the provisions of Section
4.13 hereof or (iii) to apply towards the purchase price of an
existing Amphitheater pursuant to the provisions of Section 6.2(b)
(2) hereof;
(5) any Partnership funds attributable to any Charlotte
Receipts received by the Partnership during any Debt Free Charlotte
Year which shall be governed by the provisions of Section 5.6(b)
hereof;
(6) all net cash proceeds received by the Partnership from the
disposition of its interest in any Amphitheater, after payment and
discharge of any Amphitheater Loan related to such Amphitheater,
which shall be governed by the provisions of Sections 5.6(c) or 8.6
hereof; and
(7) that portion of the Partnership's Unrestricted Funds
needed to fund the priority equity distribution then required to be
made to Pace pursuant to the provisions of Section 8.7(a) hereof.
(b) Distribution and Use of Free Cash. Within fifteen (15) days
after the determination of the amount of Free Cash held by the Partnership
pursuant to the provisions of clause (a) of this Section 8.4, the
Partnership shall utilize, apply and distribute all of the Free Cash in
accordance with the following provisions:
(1) Prepayment of Amphitheater Loans. The Debt Prepayment
Portion of the Free Cash (herein defined) shall be segregated from
the other funds of the Partnership to be specifically used for the
reduction
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Article VIII - Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
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of the principal balance of the Partnership's share of the
Amphitheater Loans in accordance with the following provisions:
(i) The Debt Prepayment Portion of Free Cash shall be
allocated between and among the Amphitheater Loans relating to
the Amphitheaters in which the Partnership has a Controlling
Interest in such amounts and in such proportions as may be
determined by the Executive Committee.
(ii) Subject to the provisions of clauses (iii) and (iv)
below, the part of the Debt Prepayment Portion of Free Cash
allocated to each Amphitheater Loan in accordance with the
provisions of clause (i) above shall be paid to the lender of
such Amphitheater Loan as a principal prepayment thereon.
(iii) With respect to any Amphitheater Loan that the
Executive Committee has determined cannot be prepaid without a
material adverse effect on the economic interest of the
Partnership, the part of the Debt Prepayment Portion of Free
Cash which is allocated to such Amphitheater Loan pursuant to
the provisions of clause (i) above shall be held in a separate
account maintained by the Partnership ("Sinking Fund") and
thereafter governed by the provisions of Section 8.5 hereof.
Examples of reasons why the Executive Committee might
determine an Amphitheater Loan cannot be prepaid without a
material adverse effect on the economic interest of the
Partnership include (x) the existence of a material prepayment
penalty under the terms of the Amphitheater Loan or (y) the
Amphitheater Loan is owed by a partnership in which the
Partnership is only a partner and the other partners in such
partnership are not willing to pay their proportionate share
of such a principal prepayment.
(iv) If any amount ("Unwind Debt Amount") of the Debt
Prepayment Portion of Free Cash is allocated to any of the
Unwind Amphitheater Loans pursuant to the provisions of clause
(i) above, then, unless the Executive Committee unanimously
agrees otherwise, the following provisions shall apply:
(A) The Unwind Debt Amount, or any part thereof,
may only be paid to the lenders of the Unwind
Amphitheater Loans to which it has been allocated as
principal prepayments thereon to the extent that the
principal balance of Pace's Allocated Debt, Sony's
Allocated Debt and Block-
<PAGE>
Article VIII- Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 79
buster's Allocated Debt will be reduced equally as a
result of such principal prepayments.
(B) Any part of the Unwind Debt Amount which is
not paid to the lenders of the Unwind Amphitheater Loans
as a principal prepayment thereon shall be held in the
Sinking Fund and thereafter governed by the provisions
of Section 8.5 hereof.
(2) Distribution to Partners. The remainder of the Free
Cash shall be distributed to the Partners in the following
order of priority and in accordance with the following
provisions:
(i) First, to the Partners for application against
any outstanding loans previously made by the Partners to
the Partnership pursuant to Sections 4.12 or 4.13
hereof, in proportion to, and to the extent of, the
outstanding principal balance of, and accrued unpaid
interest on, such loans.
(ii) Second, to the Partners, the balance of any
Free Cash in proportion to their respective Percentage
Interests.
(c) Defined Terms Used in Article VIII. As used in this
Article VIII, the following terms shall have the respective meanings
indicated:
(1) "Debt Prepayment Portion of Free Cash" shall mean,
at the time that the Executive Committee determines the amount
of Free Cash held by the Partnership pursuant to clause (a) of
this Section 8.4, an amount equal to the lesser of (i) the
Real Principal Balance at such time or (ii) 65% of the amount
of Partnership cash determined by the Executive Committee to
be Free Cash at such time.
(2) "Nominal Principal Balance" shall mean, at any time,
an amount of money equal to the sum of the Partnership's share
of the then actual principal balance of all of the
Amphitheater Loans relating to the Amphitheaters in which the
Partnership has a Controlling Interest.
(3) "Real Principal Balance" shall mean, at any time,
(i) the Nominal Principal Balance at such time minus (ii) the
amount of funds then held in the Sinking Fund.
(4) "Pace's Allocated Debt" shall mean (i) all of the
Partnership's share of the Amphitheater Loans related to the
Nashville Asset
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Article VIII- Tax Allocations, Maintenance of Capital Accounts and
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and the Woodlands Asset and (ii) one-half of the Partnership's
share of the Amphitheater Loans related to the Pittsburgh
Asset, the Raleigh Asset and the Camden Asset.
(5) "Sony's Allocated Debt" shall mean one-half of the
Partnership's share of the Amphitheater Loans related to the
Pittsburgh Asset, the Raleigh Asset and the Camden Asset.
(6) "Blockbuster's Allocated Debt" shall mean all of the
Partnership's share of the Amphitheater Loans related to the
Phoenix Asset, the San Bernardino Asset and the Charlotte
Asset.
8.5 Provisions Regarding Sinking Funds. The funds required to be held in
the Sinking Fund pursuant to Section 8.4(b)(1)(iii) and Section
8.4(b)(1)(iv)(B) hereof shall be governed by the following provisions:
(a) Separate Account for the Sinking Fund. All funds held in the
Sinking Fund shall be held in a separate interest bearing bank account (or
any other investment approved by the Executive Committee) in the
Partnership's name and in no event commingled with any other funds of the
Partnership.
(b) Application of Sinking Funds against Amphitheater Loans. The
funds contained in the Sinking Fund shall be paid and applied against the
principal balance of any one or more Amphitheater Loans as soon as such
application can be made without violating the restrictions contained in
clauses (iii) and (iv) of Section 8.4(b)(1) hereof.
(c) Release of Excess Sinking Funds to Unrestricted Funds.
Immediately before determining the amount of the Partnership's cash which
is Free Cash in accordance with the provisions of Section 8.4(a) hereof,
the portion of the Sinking Fund which exceeds the then Nominal Principal
Balance shall be released from the Sinking Fund and become part of the
Partnership's Unrestricted Funds.
(d) Interest on Sinking Funds. All interest and other income earned
on the Sinking Fund shall be a part of the Sinking Fund.
8.6 Distribution of Proceeds from Sale of an Amphitheater. Subject to the
provisions of Sections 5.6(c) and 16.5 hereof, the net cash proceeds received by
the Partnership from the disposition of its interest in an Amphitheater, after
payment and discharge of any Amphitheater Loan related to such Amphitheater,
shall be distributed as soon after the completion of such sale as is reasonably
practicable, to the Partners in proportion to their respective Percentage
Interests.
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Article VIII - Tax Allocations, Maintenance of Capital Accounts and
Distributions of Cash
Page 81
8.7 Pace's Priority Distribution.
(a) The Priority Distribution. On November 1 of each calendar year,
a priority distribution of cash shall be made to Pace, prior to the
determination of the amount of Free Cash pursuant to the provisions of
Section 8.4(a) hereof, in an amount equal to the lesser of the following
amounts:
(1) The sum of (i) $666,666.67 plus (ii) the amount added
pursuant to Section 8.7(b)(2) to the Pace Preferred Account since
the immediately preceding November 1;
(2) The then balance of the Pace Preferred Account; or
(3) The amount of Cash Flow attributable to the Partnership's
interest in the Woodlands Amphitheater for the most recently
completed Fiscal Year.
(b) The Pace Preferred Account. As used in this Agreement, the term
"Pace Preferred Account" shall mean a bookkeeping account which shall be
established and maintained in accordance with the following provisions:
(1) The initial balance of the Pace Preferred Account shall be
$2,000,000.00.
(2) The balance of the Pace Preferred Account shall be
increased on the last day of each Fiscal Year after the Effective
Date by an amount equal to 7.0% of the then balance of the Pace
Preferred Account.
(3) The balance of the Pace Preferred Account shall be
decreased by the amount of each distribution made to Pace pursuant
to Section 8.7(a) hereof.
(c) Termination of Provisions. The provisions of this Section 8.7
shall automatically terminate, with no action required by any party
hereto, upon the earlier to occur of (i) the balance of the Pace Preferred
Account becoming $0.00, (ii) the Partnership completing a disposition of
its entire interest in the Woodlands Amphitheater, (iii) the closing of
the Unwind Procedure, (iv) the occurrence of a Special Woodlands
Termination or (v) the occurrence of a Special Woodlands Use Impairment.
[END OF ARTICLE VIII]
<PAGE>
Article IX - Unwind Procedure
Page 82
ARTICLE IX
Unwind Procedure
9.1 Generally. If Pace wishes to commence the Unwind Procedure pursuant to
an express right to do so set forth in this Agreement, then the provisions of
this Article IX shall apply and govern. For ease of reference, the following is
a cross-reference to the provisions in this Agreement which create a right in
favor of Pace to commence the Unwind Procedure:
(a) Section 12.6(b), relating to the occurrence of a certain number
of Qualified Amphitheaters having become Sony/Block Rejected
Amphitheaters.
(b) Section 11.2, relating to Sony/Block's election to terminate
Pace as the Manager or subsequent changes in the identity of the Manager
of the Partnership.
(c) Section 15.3(a), relating to certain changes in the ownership of
Sony/Block or the partners of Sony/Block which occur prior to April 1,
1996.
(d) Section 10.5(b)(2), relating to a failure to unanimously approve
an Annual Operating Budget.
9.2 Commencement of Unwind Procedure. If Pace desires to commence the
Unwind Procedure pursuant to a right set forth in this Agreement, Pace must
first provide, within the specific time limit required by the provision
contained in this Agreement which creates such right, notice ("Unwind Notice")
thereof to Sony/Block with (i) a statement setting forth the specific basis upon
which Pace is exercising its right to commence the Unwind Procedure and (ii) a
citation to the specific provision contained in this Agreement which creates
such right.
9.3 Timing of Closing the Unwind Procedure. The closing of the Unwind
Procedure shall occur on the date determined in accordance with the following
provisions:
(a) If the Unwind Notice is provided during the calendar months of
October, November or December of any year, then the closing of the Unwind
Procedure shall occur on the date which is sixty (60) days after the
giving of the Unwind Notice.
(b) If the Unwind Notice is provided at any other time during a
year, then the closing of the Unwind Procedure shall occur on the next
November 30 following the giving of the Unwind Notice.
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Article IX - Unwind Procedure
Page 83
Between the date of the Unwind Notice and the occurrence of the closing of the
Unwind Procedure, the Partnership shall continue its business operations in
accordance with, and subject to, all of the provisions of this Agreement.
9.4 Unwind Closing. At the closing of the Unwind Procedure, each of the
Partners shall, in accordance with the terms and provisions set forth below,
take such actions as are required to cause the following to occur:
(a) Distributions to SMP. The Partnership shall convey, as a
distribution in-kind, all of its rights, titles and interests in and to
the Raleigh Amphitheater, the Pittsburgh Amphitheater and the Camden
Amphitheater to SMP. This conveyance shall be made to SMP (or its
designees) for the account of Pace (as to a fifty percent (50%) interest
therein) and Sony/Block (as to a fifty percent (50%) interest therein).
Accordingly, Pace and Sony/Block shall be deemed to have each received a
distribution of a one-half interest in such assets for purposes of making
adjustments to the Capital Accounts of the Partners.
(b) [Intentionally Left Blank]
(c) Distributions to Pace. The Partnership shall convey, as a
distribution in-kind, all of its rights, titles and interests in and to
the Woodlands Amphitheater and the Nashville Amphitheater to Pace (or its
designees).
(d) Distributions to Blockbuster. The Partnership shall convey, as a
distribution in-kind, all of its rights, titles and interests in and to
the Phoenix Amphitheater, the Charlotte Amphitheater and the San
Bernardino Amphitheater to Sony/Block (or its designees).
(e) Sinking Fund. If, at the time of the closing of the Unwind
Procedure, the total amount of the Sinking Fund exceeds the combined
aggregate principal balance of the Amphitheater Loans relating to those
Amphitheaters (if any) in which the Partnership has a Controlling Interest
and that are not being distributed at the closing of the Unwind Procedure,
then such excess shall be distributed to the Partners in proportion to
their Percentage Interests at the closing of the Unwind Procedure.
(f) Distribution of Proceeds of Sony/Block Notes. The Sony/Block
Notes (if any principal balance remains outstanding) shall be due and
payable, in full, at the closing of the Unwind Procedure. At the closing
of the Unwind Procedure, all unexpended Contributed Project Funds, after
full payment and discharge by Sony/Block of its obligations under the
Sony/Block Notes at the closing of the Unwind Procedure, shall be
distributed to Sony/Block; provided, however, if the Partnership is
obligated to construct, or otherwise acquire a
<PAGE>
Article IX - Unwind Procedure
Page 84
Controlling Interest in, an Amphitheater at the time of the closing of the
Unwind Procedure, then a sufficient portion of Contributed Project Funds
shall be withheld by the Partnership to fund the Project Costs or
acquisition cost of such Amphitheater (or interest therein) in accordance
with the terms and provisions of this Agreement.
(g) Make-up for Major Capital Improvements. If any Major Capital
Improvements are made by the Partnership after the Existing Facility
Closing with respect to any of the Amphitheaters distributed at the
closing of the Unwind Procedure utilizing any source of funds other than
an Amphitheater Loan relating to such Amphitheater, then certain cash
amounts shall be payable at the closing of the Unwind Procedure in
accordance with the following provisions:
(1) If such Major Capital Improvements were made with respect
the Woodlands Amphitheater or the Nashville Amphitheater, then Pace
shall pay to Sony/Block an amount equal to two-thirds of the total
cost of such Major Capital Improvements.
(2) If such Major Capital Improvements were made with respect
to the Phoenix Amphitheater, the Charlotte Amphitheater or the San
Bernardino Amphitheater, then Sony/Block shall pay to Pace an amount
equal to one-third of the total cost of such Major Capital
Improvements.
(3) If such Major Capital Improvements were made with respect
to the Raleigh Amphitheater, the Camden Amphitheater or the
Pittsburgh Amphitheater, then Pace shall pay to Sony/Block an amount
equal to 16-2/3% of the total cost of such Major Capital
Improvements.
If amounts are payable by each Partner to the other Partner pursuant to
the provisions of this clause (g), then such amounts shall be applied
against each other and a single net sum ("Clause G Sum") shall be
calculated as being due from one Partner to the other. The final net
amount payable from one Partner to the other pursuant to the foregoing
provisions shall be, for all purposes of this Agreement, deemed to have
been contributed to the capital of the Partnership by the paying Partner
and deemed to have been immediately thereafter distributed by the
Partnership to the receiving Partner.
(h) Make-up for Camden. If the Partnership's interest in the Camden
Amphitheater is distributed at the closing of the Unwind Procedure as
provided for herein, then Pace shall pay to Sony/Block in cash at the
closing of the Unwind Procedure an amount ("Camden Make-Up Amount") equal
to the sum of the following:
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Article IX - Unwind Procedure
Page 85
(1) One-half of the total amount of Contributed Project Funds
previously expended on Project Costs for the Camden Amphitheater;
and
(2) 16-2/3% of the amount of all General Funds (herein
defined) expended on Project Costs after the Existing Facility
Closing for the Camden Amphitheater (where "General Funds" means any
funds of the Partnership other than (i) Contributed Project Funds
and (ii) funds advanced to the Partnership pursuant to an
Amphitheater Loan).
The amount payable from Pace to Sony/Block pursuant to the provisions of
this clause (h) shall be, for all purposes of this Agreement deemed to
have been contributed to the capital of the Partnership by Pace and deemed
to have been immediately thereafter distributed by the Partnership to
Sony/Block.
(i) Make-up for Other Facilities. If, at the time of the closing of
the Unwind Procedure, the Partnership (a) owns a Controlling Interest in
any existing Amphitheater which is not required to be distributed pursuant
to the provisions hereof at the closing of the Unwind Procedure or (b) is
obligated to construct, or otherwise acquire a Controlling Interest in,
any other Amphitheater, then Pace shall be required and obligated to make
a payment in cash to Sony/Block at the closing of the Unwind Procedure in
an amount ("Other Facilities Make-Up Amount") equal to one-third (1/3rd)
of the Other Partner Equity Contribution Amount. As used in the
immediately preceding sentence, the term "Other Partner Equity
Contribution Amount" shall mean, at the time of the closing of the Unwind
Procedure, (i) the aggregate original principal amount of the Sony/Block
Notes plus (ii) the amount (if any) of cash funds contributed to the
Partnership by Sony/Block upon execution of this Agreement pursuant to
Sections 4.10(a)(1) and 4.l0(b)(1) hereof minus (iii) the total amount of
Contributed Project Funds previously or then being distributed to
Sony/Block pursuant to the provisions of Section 9.4(f) or Section 4.17
(b)(2)(i) hereof minus (iv), the total amount of Contributed Project
Funds previously expended by the Partnership for any one or more of (x)
Project Costs related to the Camden Amphitheater, (y) Major Capital
Improvements with respect to any of the Amphitheaters distributed at the
closing of the Unwind Procedure and (z) the purchase price of the
Partnership's Controlling Interest in any Partnership MCA/Pace
Amphitheaters. Any amount paid by Pace to Sony/Block at the closing of the
Unwind Procedure pursuant to the provisions of this Section 9.4(i) shall
be, for all purposes of this Agreement, deemed to have been contributed to
the capital of the Partnership by Pace and immediately thereafter
distributed by the Partnership to Sony/Block.
(j) Deferral of Pace's Camden and Other Facility Make-up
Obligations. Pace may, at its sole option, elect to make the payment of
the amounts due to
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Sony/Block pursuant to the provisions of clauses (h) and (i) by doing the
following at the closing of the Unwind Procedure:
(1) Executing and delivering to Sony/Block a promissory note
in Acceptable Form, in the principal amount of the sum of the Camden
Make-Up Amount and the Other Facilities Make-Up Amount and providing
for interest thereon at the Short Term Rate. The payment provisions
of such promissory note shall provide that annual payments shall be
due thereunder on each November 30 following the closing of the
Unwind Procedure, each such annual payment to be in an amount equal
to two-thirds of Pace's share of the Cash Flow for the Woodlands
Amphitheater and the Nashville Amphitheater ("Measuring
Amphitheaters") for the twelve month period then ended; provided,
however, if, at any time during which any principal amounts remain
outstanding under the promissory note referred to herein, Pace (or
any of its Affiliates) should no longer own substantially the same
interest in one of the Measuring Amphitheaters, then the annual
payment due thereunder shall be equal to two-thirds of Pace's share
of the Cash Flow for the remaining Measuring Amphitheater and one
other Amphitheater in which Pace (or any of its Affiliates) owns an
interest and which has historically produced an amount of Cash Flow
to Pace comparable to the Cash Flow previously produced to Pace by
the Measuring Amphitheater in which Pace (or its Affiliates) no
longer owns an interest. In any event, the entire unpaid principal
balance and all interest accrued thereon of such promissory note
shall be payable on or before the third anniversary of the closing
of the Unwind Procedure. Pace shall be required to (i) cause each of
the Measuring Amphitheaters to be operated in a manner consistent
with past practices and (ii) prohibit any Major Capital Improvements
to be made in respect of either Measuring Amphitheater during the
time that any amounts remain outstanding under the promissory note
delivered pursuant to the provisions of this clause (1).
(2) Executing and delivering to Sony/Block such mortgages,
security agreements or other security instruments reasonably
satisfactory to Sony/Block and as may be necessary to create valid,
binding and perfected first priority liens or security interests on
Pace's Partnership Interest (if the Partnership is to remain in
existence after the closing of the Unwind Procedure) and Pace's (or
its Affiliates') interest in the Woodlands Amphitheater, the
Nashville Amphitheater, the Raleigh Amphitheater, the Pittsburgh
Amphitheater and the Camden Amphitheater in order to secure payment
of the promissory note delivered pursuant to clause (1) of this
Section 9.4(j).
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If Pace exercises its option to deliver the above-described promissory
note then such promissory note shall be deemed to have been contributed to
the capital of the Partnership and immediately thereafter distributed by
the Partnership to Sony/Block. As used herein the term "Acceptable Form"
shall mean, with respect to the promissory note which Pace may deliver to
Sony/Block pursuant to the provisions of clause (1) of this Section
9.4(j), a promissory note issued by Pace to Sony/Block containing, among
other things which may be reasonably requested by Sony/Block, provisions
concerning (A) the acceleration of such promissory note, if (x) payments
of principal and interest on such note are not paid when due, (y) a
default occurs under any other promissory note issued by Pace to
Sony/Block, (z) an Event of Withdrawal occurs with respect to Pace or any
guarantor of such promissory note and (B) payment of legal fees and
disbursements incurred by the holder of such note in the event an
enforcement action is commenced with respect to said note.
(k) Make-up Provision for Principal Reductions. Certain cash amounts
shall be payable at the closing of the Unwind Procedure in accordance with
the following provisions:
(1) Pace shall pay to Sony/Block an amount equal to two-thirds
of the Principal Reduction Amount for the Nashville Asset and the
Woodlands Asset.
(2) Pace shall pay to Sony/Block an amount equal to 16-2/3% of
the Principal Reduction Amount for the Raleigh Asset and the
Pittsburgh Asset.
(3) If the Partnership's interest in the Camden Amphitheater
is distributed at the closing of the Unwind Procedure as provided
for herein, then Pace shall pay to Sony/Block 16-2/3% of an amount
equal to the sum of the following:
(i) (x) the largest principal balance outstanding at any
time under the Amphitheater Loan which relates to the Camden
Amphitheater minus (y) the principal balance of the
Amphitheater Loan which relates to the Camden Amphitheater at
the time of the closing of the Unwind Procedure; and
(ii) (x) the initial amount of the Concession Loan
related to the Camden Amphitheater (to the extent such amount
was used to fund or reimburse Project Costs for the Camden
Amphitheater) minus (y) the Unamortized Amount of the
Concession
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Loan related to the Camden Amphitheater at the time of the
closing of the Unwind Procedure.
(4) Sony/Block shall pay to Pace an amount equal to one-third
of the Principal Reduction Amount for the Phoenix Asset, the
Charlotte Asset and the San Bernardino Asset.
(5) If the Partnership's interest in the Charlotte
Amphitheater is distributed at the closing of the Unwind Procedure
as provided for herein, then Sony/Block shall pay to Pace an amount
equal to one-third of the amount by which (if any) (i) $7,000,000
exceeds (ii) the balance of the Charlotte Preferred Cash
Distribution Account as of the time of the closing of the Unwind
Procedure.
If the amount specified as being payable from one Partner to the other in
any of the above clauses in this Section 9.4(k) is, in fact, a negative
amount, then the other Partner shall owe the absolute amount thereof to
the first Partner. The amounts payable pursuant to this clause (k) of
Section 9.4 shall be added to and applied against each other and a single
net sum ("Clause K Sum") shall be calculated as being due from one Partner
to the other. The Clause K Sum and the Clause G Sum shall then be added
to, or netted against, each other, as applicable, to arrive at final net
sum ("Clause G & K Sum") being due from one Partner to the other pursuant
to the provisions of clauses (g) and (k) of this Section 9.4. If, after
the calculations referred to in the immediately preceding sentences,
Sony/Block owes to Pace a final net sum pursuant to the provisions of
clauses (g) and (k) of this Section 9.4 and if Pace has elected to execute
and deliver a promissory note pursuant to the right created in clause (j)
of this Section 9.4, then Sony/Block may cause the Clause G & K Sum to be
offset against the principal of such promissory note, to the extent
thereof. The final amount payable from one Partner to the other pursuant
to the foregoing provisions shall be, for all purposes of this Agreement,
deemed to have been contributed to the capital of the partnership by the
paying Partner and deemed to have been immediately thereafter distributed
by the Partnership to the receiving Partner.
(l) Amphitheater Loans, Receivables, Payables, Concession Loans,
etc.
(1) Each Amphitheater (or the Partnership's interest therein)
being distributed at the closing of the Unwind Procedure shall be
distributed subject to the following liabilities and obligations
("Transferred Liabilities"), but no others:
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(i) the obligation to repay the Amphitheater Loan (other
than past due amounts) relating to such Amphitheater;
(ii) the obligation to pay the Partnership's accounts
payable which directly relate to such Amphitheater and which
were incurred in the ordinary course of the operation, use,
management or ownership of such Amphitheater;
(iii) the obligation to make or pay lease or rental
payments (other than past due amounts) directly relating to
the occupancy or use of such Amphitheater or to the use or
possession of any equipment or furnishings used directly in
connection with the ownership, operation, management or
ownership of such Amphitheater;
(iv) the Partnership's obligations (other than past due
amounts) in respect of concession agreements, sponsor
agreements, employment agreements and other similar types of
contractual obligations which directly relate to the
operation, use, ownership or management of such Amphitheater
and which were either in existence at the time of the Existing
Facility Closing or were entered into thereafter by the
Partnership in accordance with the provisions of this
Agreement; and
(v) the obligation to pay (other than past due amounts)
all real estate taxes, ad valorem taxes, insurance premiums,
and utility bills directly related to the use, operation,
management or ownership of such Amphitheater.
(2) Each Amphitheater (or the Partnership's interest therein)
being distributed at the closing of the Unwind Procedure shall
include a transfer of (i) all of the Partnership's benefits,
privileges, assets, licenses, permits, easements, equipment,
supplies, sound systems, lighting systems, computers, contractual
rights and other benefits or ownership interests relating directly
to the use, operation, management, maintenance or ownership of such
Amphitheater, (ii) all of the Partnership's accounts receivable
which are directly related to, and which arose out of, the use,
operation, management or ownership of such Amphitheater and (iii)
the cash on hand then held in such Amphitheater's operating bank
account.
(3) The state and local transfer taxes, if any, payable by
reason of the distribution of each Amphitheater (or the
Partnership's interest
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Article IX - Unwind Procedure
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therein) at the closing of the Unwind Procedure shall be paid by the
Partnership at the closing of the Unwind Procedure.
(4) A special distribution of cash shall be made by the
Partnership to the Partners simultaneously with the distribution of
the Unwind Assets at the closing of the Unwind Procedure in the
amounts designated below:
(i) to Pace, an amount equal to the sum of the
following:
(A) 66-2/3% of the Foregone Concession Advance
Amount for the Nashville Asset and the Woodlands Asset.
(B) 16-2/3% of the Foregone Concession Advance
Amount for each of the Camden Asset, the Pittsburgh
Asset and the Raleigh Asset.
(ii) to Sony/Block, an amount equal to the sum of the
following:
(A) 66-2/3% of the Foregone Concession Advance
Amount for the Phoenix Asset, the Charlotte Asset and
the San Bernardino Asset.
(B) 16-2/3% of the Foregone Concession Advance
Amount for each of the Camden Asset, the Pittsburgh
Asset and the Raleigh Asset.
(m) Indemnification by Partnership.
(1) With respect to each of the Amphitheaters (or the
Partnership's interest therein) being distributed at the closing of
the Unwind Procedure, the Partnership shall reimburse, indemnify,
defend and hold the Person ("Distributee") receiving the
distribution of such Amphitheater (or the interest therein)
harmless, on an after-tax basis, from and against:
(i) any and all damages, losses, deficiencies,
liabilities, costs and expenses based upon, resulting from,
relating to or arising out of any one or more of the following
matters:
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Article IX - Unwind Procedure
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(A) any of the representations expressly made by
the Partnership in connection with, or relating to, such
Amphitheater in any document or instrument executed and
delivered as a part of the closing of the Unwind
Procedure;
(B) the material breach or violation of any
covenant or agreement made by the Partnership in
connection with, or relating to, such Amphitheater in
any document or instrument executed as a part of the
closing of the Unwind Procedure;
(C) any liabilities, duties, responsibilities or
obligations, other than the Transferred Liabilities, to
the extent that such liabilities, duties,
responsibilities or obligations relate to or arose out
of, the operation, use, management, maintenance or
ownership of such Amphitheater after the Existing
Facility Closing and before the closing of the Unwind
Procedure;
(D) any liability, responsibility or obligation
arising from existing litigation or claims or subsequent
litigation to the extent that any of such matters arise
out of, or relate to, an occurrence or event happening
at, or in connection with, such Amphitheater after the
Existing Facility Closing and before the closing of the
Unwind Procedure; and
(E) any liability based upon, arising from or
attributable to claims made before, on or after the
closing of the Unwind Procedure for personal injuries
(including claims for wrongful death), property damages
or consequential damages with respect thereto, to the
extent that such liability arises or results from or is
attributable to the operations of the Partnership at
such Amphitheater after the Existing Facility Closing
and before the closing of the Unwind Procedure; and
(ii) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines,
judgments, costs and other expenses (including, without
limitation, reasonable attorneys' fees) incident to (A) any of
the matters listed and described in clause (1)(i) above or (B)
the enforcement of the provisions of this Section 9.4(m).
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Article IX - Unwind Procedure
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(2) If any Distributee receives notice of any claim or the
commencement of any action or proceeding with respect to which the
Partnership is obligated to provide indemnification pursuant to this
Section 9.4(m), the Distributee shall promptly give the Partnership
and the Partners notice thereof. Such notice shall be a condition
precedent to any liability or obligation of the Partnership or the
Partners under the provisions for indemnification contained in this
Section 9.4(m) unless the Distributee can establish that the
Partnership and the Partners have not been materially prejudiced
thereby. If the Partnership (or the Partners) choose to defend any
claim, it (or they) shall be permitted to do so (unless the
Distributee can establish that (x) it is reasonably likely to bear a
greater portion of the potential losses associated with such claim
or (y) pendency of such claim is reasonably likely to have a
material adverse effect on the Distributee's continued business
operations) and the Distributee shall make available to the
Partnership and the Partners any books, records or other documents
within its control that are necessary or appropriate for such
defense. The Distributee shall not settle any claim or liability for
which it is claiming indemnification hereunder without the consent
of the Partnership (such consent not to be unreasonably withheld).
At the closing of the Unwind Procedure, the Partnership shall execute and
deliver such instruments or other documents in favor of the various
Distributees as may be reasonably necessary to further evidence and
document the indemnity obligations imposed upon the Partnership pursuant
to the provisions of this Section 9.4(m).
(n) Indemnification of the Partnership.
(1) With respect to each of the Amphitheaters (or the
Partnership's interest therein) being distributed at the closing of
the Unwind Procedure, the Distributee of such Amphitheater (or the
Partnership's interest therein) shall reimburse, indemnify, defend
and hold the Partnership harmless, on an after-tax basis, from and
against:
(i) any and all damages, losses, deficiencies,
liabilities, costs and expenses based upon, resulting from,
relating to or arising out of any Transferred Liabilities
relating to such Amphitheater to the extent that such damages,
losses, deficiencies, liabilities, costs or expenses arise
after the closing of the Unwind Procedure; and
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Article IX - Unwind Procedure
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(ii) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines,
judgments, costs and other expenses (including, without
limitation, reasonable attorneys' fees) incident to (A) any
of the matters listed and described in clause (1)(i) above or
(B) the enforcement of the provisions of this Section 9.4(n).
(2) If the Partnership receives notice of any claim or the
commencement of any action or proceeding with respect to which a
Distributee is obligated to provide indemnification pursuant to this
Section 9.4(n), the Partnership shall promptly give the Distributee
notice thereof. Such notice shall be a condition precedent to any
liability or obligation of the Distributee under the provisions for
indemnification contained in this Section 9.4(n) unless the
Partnership can establish that the Distributee has not been
materially prejudiced thereby. If the Distributee chooses to defend
any claim, it shall be permitted to do so (unless the Partnership
can establish that (x) it is reasonably likely to bear a greater
portion of the potential losses associated with such claim or (y)
pendency of such claim is reasonably likely to have a material
adverse effect on the Partnership's continued business operations)
and the Partnership shall make available to the Distributee any
books, records or other documents within its control that are
necessary or appropriate for such defense. The Partnership shall
not settle any claim or liability for which it is claiming
indemnification hereunder without the consent of the Distributee
(such consent not to be unreasonably withheld).
At the closing of the Unwind Procedure, each Distributee shall be
required, as a condition to the distribution of the Amphitheater (or the
Partnership's interest therein) being distributed to such Distributee,
such instruments or other documents in favor of the Partnership as may be
reasonably necessary to further evidence and document the indemnity
obligations imposed upon each Distributee pursuant to the provisions of
this Section 9.4(n).
(o) Continuing Noncompete Covenants. The Partners, PMG, PEC, Sony
and Blockbuster shall each execute such documents as may be necessary to
evidence their respective agreement to the continuing noncompete
covenants described in Section 12.3 hereof.
The Partnership shall execute such documents and instruments of conveyance, and
obtain such consents and releases, as may be necessary to complete the foregoing
distributions utilizing the same form of conveyancing documents as were used in
the original transfer of these assets to the Partnership at the Existing
Facility Closing. To the extent that the Partnership's rights to any of the
Unwind Assets may not be
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Article IX - Unwind Procedure
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assigned and distributed without the consent or approval of another person which
is not obtained at or before the closing of the Unwind Procedure, the provisions
of this Article IX shall not constitute an agreement to assign and distribute
the same if an attempted assignment and distribution would constitute a breach
of any agreement or obligation or be unlawful, and the Partnership, at its
expense, shall use its best efforts to obtain any such required consent or
approval as promptly as possible. If any such consent or approval shall not be
obtained or any attempted assignment or distribution would be ineffective or
impair the Distributee's right to the Unwind Asset in question so that the
Distributee would not in effect acquire the benefit of all of the Partnership's
rights in and to such Unwind Asset, the Partnership, to the maximum extent
permitted by law, shall act after the closing of the Unwind Procedure as the
Distributee's agent in order to obtain for the Distributee the benefits
thereunder, and shall cooperate, to the maximum extent permitted by law, with
the Distributee in any other reasonable arrangements designed to provide such
benefits to the Distributee. Without limiting the generality of the provisions
contained in the immediately preceding sentence, the Partnership acknowledges
and agrees that its obligation contained herein is to place each Distributee in
a position at the closing of the Unwind Procedure to effectively manage the
operations of such Distributee's Unwind Asset and to receive all revenues
derived therefrom to the same extent that such Distributee would have received
such revenues had the Partnership obtained all required consents and approvals
to the distribution and transfer of such Unwind Asset to the Distributee and the
Distributee had obtained title to such Unwind Asset at the closing of the Unwind
Procedure. Each distributee shall be entitled to have the same closing
procedures used as were followed at the Existing Facility Closing (such as, by
way of example, if the Partnership received a policy of title insurance with
respect to any asset conveyed to it at the Existing Facility Closing, then the
distributee of that same asset at the closing of the Unwind Procedure will be
also entitled to the same type and quality of title insurance). If the
Partnership's interest in any of the Amphitheaters which are required by the
provisions of this Section 9.4 to be distributed at the closing of the Unwind
Procedure has been previously sold, distributed or otherwise transferred by the
Partnership, then, notwithstanding the provisions of this Section 9.4, the
Partnership's interest in any such Amphitheater shall not be distributed at the
closing of the Unwind Procedure and no adjustments shall be required to be made
between the Partners as a result thereof.
9.5 Other Provisions Relating to the Unwind Procedure. The additional
following provisions shall apply with regard to the Unwind Procedure:
(a) If, after completion of the closing of the Unwind Procedure, the
Partnership (i) does not own a Controlling Interest in any existing
Amphitheater and (ii) is not obligated to construct, or otherwise acquire
a Controlling Interest in, any other Amphitheater, then the Partnership
shall be deemed to be dissolved immediately following the completion of
the closing of the Unwind
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Article IX - Unwind Procedure
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Procedure and the Partnership shall commence to wind up the affairs of the
Partnership and distribute its assets in accordance with the provisions of
Article XVI hereof.
(b) Following the giving of an Unwind Notice pursuant to Section 9.2
hereof, no further Amphitheaters (or interests therein) will be acquired,
developed or constructed by the Partnership (other than (i) any proposed
Amphitheater which became an Approved Project prior to the giving of such
Unwind Notice and (ii) any existing Amphitheater which the Partnership was
obligated to acquire a Controlling Interest in prior to the giving of such
Unwind Notice).
(c) Following the giving of an Unwind Notice pursuant to Section 9.2
hereof, notwithstanding the provisions of Section 10.5(c), no further
R&D Expenditures shall be budgeted or expended by the Partnership at any
time thereafter.
(d) If, after the closing of the Unwind Procedure, the Partnership
(i) owns a Controlling Interest in any existing Amphitheater or (ii) is
obligated to construct, or otherwise acquire a Controlling Interest in,
any other Amphitheater, then the Partnership shall continue in existence
in accordance with all of the terms, provisions and conditions contained
in this Agreement, with the exception that the general exclusivity
provisions contained in Section 12.1 of this Agreement shall terminate;
provided, however, that, pursuant to the provisions of Section 12.3
hereof, certain continuing noncompete and exclusivity provisions shall
continue to be in effect as specified therein.
9.6 Effect of Partner Default on Unwind Procedure. If, at the time of the
closing of the Unwind Procedure, either Partner ("Innocent Partner") asserts or
alleges that a Partner Default has occurred with respect to the other Partner
("Accused Partner"), then the closing of the Unwind Procedure shall still occur
in accordance with the provisions of Section 9.4 hereof, but subject to the
following special provisions and conditions:
(a) Notwithstanding any other provision hereof, the Partnership
shall not dissolve following the closing of the Unwind Procedure until a
final non-appealable determination is made by a court of competent
jurisdiction concerning the Innocent Partner's allegations of a Partner
Default with respect to the Accused Partner. The Accused Partner shall
continue to be liable and responsible to the Partnership and the Innocent
Partner for all damages and remedies to which the Partnership or the
Innocent Partner is entitled pursuant to the provisions of this Agreement,
at law or in equity if it is ultimately determined by a court of competent
jurisdiction that a Partner Default has occurred with
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Article IX - Unwind Procedure
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respect to the Accused Partner prior to the closing of the Unwind
Procedure.
(b) If the Innocent Partner obtains, after the closing of the Unwind
Procedure, a final, nonappealable judgment of a court of competent
jurisdiction that (i) a Partner Default had occurred with respect to the
Accused Partner prior to the closing of the Unwind Procedure and (ii) as a
part of its damages, the Innocent Partner is entitled to purchase the
Accused Partner's Partnership Interest pursuant to Section 17.2(e) hereof,
then, in order that the Innocent Partner shall be entitled to the full
benefit of any and all remedies to which it would have been entitled
pursuant to the provisions of Section 17.2(e) hereof as if the closing of
the Unwind Procedure had never occurred, the following provisions shall
apply:
(1) The Accused Partner shall be obligated to immediately
after the entry of such judgment convey, or cause to be conveyed, to
the Partnership, as a contribution to capital, all of the assets and
interests which were distributed, or deemed to be distributed, to
the Accused Partner at the closing of the Unwind Procedure in the
same manner, and utilizing the same procedures, as were used in the
distribution of such interests and assets at the closing of the
Unwind Procedure. The Accused Partner's Capital Account shall be
increased as a result of the contribution to capital described in
the immediately preceding sentence in the same amount as it was
decreased as a result of the distribution of assets made, or deemed
to have been made, at the Closing of the Unwind Procedure to the
Accused Partner.
(2) The Accused Partner shall be obligated, with respect to
each of the assets or interests which were distributed or deemed to
be distributed to the Accused Partner at the closing of the Unwind
Procedure (the "Distributed Assets"), to immediately after the entry
of such judgment pay to the Partnership, as damages and not as a
contribution to capital, an amount equal to the Cash Flow from the
Distributed Assets, since the occurrence of the closing of the
Unwind Procedure as if such closing had not occurred. The Accused
Partner shall make all books and records reflecting the financial
results from the operation, ownership and management of the
Distributed Assets available to the Innocent Partner in order to
assist in the calculation and determination of the amount of funds
payable by the Accused Partner in accordance with the provisions
contained in the immediately preceding sentence.
(3) The Accused Partner shall indemnify and hold the
Partnership and the Innocent Partner harmless, on an after-tax
basis, from and
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Article IX - Unwind Procedure
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against any taxes and any other cost, loss, damage or expense
(including, but not limited to, additional federal, state or local
taxes being owed or the due date of any such taxes being
accelerated) in connection with, or arising out of, (i) the
original occurrence of the Unwind Procedure and (ii) the subsequent
transfer of assets to the Partnership by the Accused Partner
pursuant to clauses (1) and (2) of this Section 9.6(b). The Accused
Partner shall also be required to reimburse the Partnership and the
Innocent Partner for their respective actual out-of-pocket costs for
any attorneys', fees, accountants' fees or other fees of other
professionals or advisors in enforcing or determining the amount of
the indemnity obligation created pursuant to the preceding sentence.
The indemnity obligations contained in this Section 9.6(b)(3) shall
operate independently of, and in addition to, the indemnity
obligations created pursuant to the provisions of Section 13.9(c)
hereof.
(4) The Innocent Partner shall thereafter be entitled to
exercise its right to purchase the Partnership Interest of the
Accused Partner in accordance with the provisions of Section 17.2(e)
hereof.
(c) As a condition to the closing of the Unwind Procedure, the
Accused Partner must cause the following to occur at the closing of the
Unwind Procedure:
(1) Each Distributee which receives any interest in an
Amphitheater at the closing of the Unwind Procedure which is being
deemed to have been distributed to the Accused Partner, shall be
required to execute and deliver to the Partnership such mortgages or
other security instruments reasonably satisfactory to the Innocent
Partner as may be necessary to create valid, binding and perfected
first priority liens or security interests (subject only to any
liens or security interests securing the applicable Amphitheater
Loans in existence at the time of the closing of the Unwind
Procedure) on the Distributee's interest in such distributed assets
or interests in order to secure payment and performance of the
obligations, responsibilities and liabilities of the Accused Partner
under and pursuant to the provisions of this Section 9.6. The
mortgages or other security instruments required to be executed by
the Accused Partner pursuant to the foregoing provisions shall
include (i) a covenant from the Accused Partner to continue the
management and operation of all Amphitheaters which are distributed,
or deemed to have been distributed, to the Accused Partner at the
closing of the Unwind Procedure in a manner consistent with the
operation and management thereof by the Partnership and (ii)
restrictions prohibiting the sale or other conveyance
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Article IX - Unwind Procedure
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of any such Amphitheaters (or interest therein) or the placing of
any other liens or security interests thereon.
(2) The Accused Partner's Parent Corporation (herein defined)
shall be required to execute a guaranty in form reasonably
acceptable to the innocent Partner, pursuant to which the Parent
Corporation guarantees the full and final performance, payment and
discharge of all liabilities, duties, responsibilities and
obligations of the Accused Partner under and pursuant to the
provisions of this Section 9.6 (provided, however, that the guaranty
provided pursuant to this clause (2) shall be limited, in absolute
amount, to an amount equal to the sum of (i) the total net value of
the Distributed Assets plus (ii) the Cash Flow from such Distributed
Assets after the closing of the Unwind Procedure). As used in the
immediately preceding sentence, the term "Parent Corporation" shall
mean (i) PEC and PMG, with respect to Pace, (ii) Sony and
Blockbuster, with respect to Sony/Block.
(d) Subject first to the Accused Partner having complied with the
provisions of this Section 9.6, each of the Partners expressly waives
any right to enjoin or otherwise prohibit, through any judicial
proceeding, receivership proceeding or otherwise, the occurrence of the
closing of the Unwind Procedure, it being agreed that the contractual
remedies set forth in this Section 9.6, as to the Unwind Assets and the
Unwind Procedure, are exclusive.
(e) Notwithstanding anything to the contrary contained herein, if
(i) the Accused Partner is Sony/Block, (ii) a final non-appealable
determination is made by a court of competent jurisdiction that Sony/Block
is a Defaulting Partner and (iii) the breached obligation which gave rise
to such determination is also judicially determined to be a Sony Specific
Obligation or a Blockbuster Specific Obligation only, then the following
provisions shall apply:
(1) if it is a Blockbuster Specific Obligation, then, for
purposes of this Section 9.6, only the Blockbuster Subsidiary shall
be deemed to be the Accused Partner and only the Blockbuster
Subsidiary's Distributed Assets will have to be returned to the
Partnership as required by the provisions of clause (b)(1) of this
Section 9.6.
<PAGE>
Article IX - Unwind Procedure
Page 99
(2) If it is a Sony Specific Obligation, then, for purposes of
this Section 9.6, only the Sony Subsidiary shall be deemed to be the
Accused Partner and only the Sony Subsidiary's Distributed Assets
will have to be returned to the Partnership as required by the
provisions of clause (b)(1) of this Section 9.6.
[END OF ARTICLE IX]
<PAGE>
Article X - Management of Partnership Affairs
Page 100
ARTICLE X
Management of Partnership Affairs
10.1 Management. The management and control of the Partnership's business
shall be vested in the Partners, who shall exercise such management and control
exclusively through and by virtue of their respective selection of the
Representatives to serve on the Executive Committee in accordance with the
provisions of this Article X.
10.2 Executive Committee.
(a) Executive Committee's Authority. The Executive Committee shall,
subject to the provisions of clause (b) of this Section 10.2, have (i)
full, exclusive and complete authority and discretion to manage and
control, and shall make all decisions affecting, the Partnership's
business; (ii) full authority to effectuate the purposes of the
Partnership and to take any action required, permitted or authorized
pursuant to the terms of this Agreement; and (iii) full power to exercise
all rights and powers generally inferred or conferred by law in connection
therewith. The Executive Committee shall generally have the duties and
responsibilities of the Board of Directors of a corporation.
(b) Unanimous Partner Approval Required for Certain Decisions.
Notwithstanding the provisions of clause (a) of this Section 10.2, but
subject to the provisions of Articles XVI and XVII hereof, none of the
following actions may be taken on behalf of the Partnership without the
specific authorization and approval of both Partners:
(1) selling or transferring all or any portion of the
Partnership's interest in any Amphitheater;
(2) borrowing money from any lender in any amount other than
(i) the loans specifically contemplated by the provisions of this
Agreement and (ii) normal trade payables and accounts incurred in
the ordinary course of business consistent with the current Annual
Operating Budget;
(3) (i) constructing or undertaking to construct any
Amphitheater which is not an Approved Project or (ii) subject to the
provisions of Article VII hereof, purchasing or undertaking to
purchase any existing Amphitheater;
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Article X - Management of Partnership Affairs
Page 101
(4) subject to the provisions of Section 11.3(a) hereof,
granting a right of possession or management rights to any Person at
any of the Partnership's Amphitheaters, by lease, license, sublease
or other arrangement for a term of two years or more;
(5) except as otherwise expressly provided to the contrary in
this Agreement, entering into any type of contractual relationship
with either Partner, any Affiliate of either Partner or any
Sony/Block Related Party;
(6) offering any partnership or other ownership interests in
the business of the Partnership to any other Person, including,
without limitation, an initial public offering;
(7) (a) selection of a successor Manager pursuant to Section
11.3(b) hereof and (b) removal of a successor Manager selected
pursuant to the provisions of Section 11.3(b) hereof except in the
limited circumstances described in clause (i) and (iii) of Section
11.3(b)(9) hereof.
(8) doing any act which would make it impossible to carry on
the ordinary business of the Partnership;
(9) doing any act which is outside of, or not directly related
to, the purposes of the Partnership described in Article III hereof;
or
(10) electing to dissolve the Partnership pursuant to the
provisions of Section 16.1(a) hereof.
(c) Selection of Representatives on Executive Committee. The
Executive Committee shall be comprised of three (3) individual
Representatives. Sony/Block shall have the right, at any time, and from
time to time, to designate and select two (2) out of the three (3)
Representatives who shall serve on the Executive Committee. Pace shall
have the right, at any time, and from time to time, to designate and
select one (1) out of the three (3) Representatives who shall serve on the
Executive Committee. Except as provided in Articles XVI and XVII hereof,
each Partner's Representatives on the Executive Committee may be removed
or replaced at any time, for any reason, temporarily or permanently by
such Partner.
(d) Brian E. Becker. Pace shall exercise its reasonable best
efforts to cause, for at least the first five (5) years after the
effective date of the execution of this Agreement, Brian E. Becker to (i)
be Pace's chief executive
<PAGE>
Article X - Management of Partnership Affairs
Page 102
officer and president, (ii) perform, with respect to the Partnership, the
same or similar functions and roles as he has performed historically with
respect to the Partnership and (iii) attend, subject to his scheduling and
availability, the meetings of the Executive Committee.
10.3 Manager. Subject to the provisions of Section 10.8 of this Agreement,
the Manager shall be Pace. The Manager shall be responsible for the general
supervision and management of the business, affairs and property of the
Partnership and for the implementation of the decisions of the Executive
Committee, and shall have the authority to conduct the day-to-day affairs of the
Partnership. The Manager shall generally have the duties and responsibilities of
the President and Chief Executive Officer of a corporation. Without limitation
of the generality of the preceding provisions of this Section 10.3, the Manager
shall have the authority to take or cause to be taken on behalf of the
Partnership, and shall use its reasonable best efforts to take or cause to be
taken on behalf of the Partnership, the following actions:
(a) Implement or cause to be implemented any matters which are
consistent with, or contemplated by, the current Annual Operating Budget;
(b) Supervise the construction, development, operation and
maintenance of any Amphitheater owned, managed or leased by the
Partnership or in which the Partnership has an interest;
(c) Take such actions in the ordinary course as the Manager may
reasonably determine are necessary and appropriate to preserve and
maintain all rights and privileges of the Partnership, including
preserving the interest of the Partnership in and to any of its assets;
(d) Pay all taxes, assessments, and other impositions applicable to
the assets and business of the Partnership as and when the same are due
and payable; provided, however, that the Manager shall not be required to
pay any such tax, assessment or other imposition if the validity or amount
thereof shall be contested in good faith by proper proceedings;
(e) Take such actions as the Manager may reasonably determine are
necessary and appropriate to collect sums due to the Partnership and
otherwise enforce all material agreements to which the Partnership is a
party; provided, however, that the commencement of any litigation against
a third party shall require the consent of the Executive Committee;
(f) Cause all books of account and other records of the Partnership
to be kept in accordance with generally accepted accounting principles;
and such books and records shall fully and accurately reflect each and
every
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Article X - Management of Partnership Affairs
Page 103
financial transaction with respect to the operation of the business of
the Partnership in accordance with generally accepted accounting
principles;
(g) Retain or employ and coordinate the services of all employees,
supervisors, engineers, attorneys and other persons necessary or
appropriate to carry out the business of the Partnership;
(h) Pay all debts and other obligations of the Partnership, as and
when the same are due and payable; provided, however, that the Manager
shall not be required to pay any debt or other obligation of the
Partnership if the validity or amount thereof shall be contested in good
faith by proper proceedings;
(i) Enter into, make and perform all contracts, agreements and other
undertakings binding the Partnership as may be necessary, appropriate or
advisable in furtherance of the purposes of the Partnership, including,
without limitation, such contracts, agreements and other undertakings as
may be necessary for the Partnership's pursuit and completion of any
Approved Project; provided, however, that the Manager shall not enter into
any agreement where the transaction contemplated thereunder is required by
the terms of this Agreement to be approved by the Executive Committee or
by all of the Partners or is outside the scope of this Agreement unless
and until such transaction has been approved by the Executive Committee or
all of the Partners (as the case may be);
(j) Maintain all funds of the Partnership in an account with a bank
or banks approved by the Executive Committee;
(k) When the amount of Free Cash is determined by the Executive
Committee, make required prepayments on Amphitheater Loans, make provision
for payments into the Sinking Fund and make distributions to the
Partners in accordance with the provisions of this Agreement;
(l) Maintain with financially sound and reputable insurers insurance
with respect to the properties and business of the Partnership against
loss or damage of the kind and in the amounts customarily insured against
by businesses of established reputation engaged in the same or a similar
business and similarly situated;
(m) Cause the Partnership to comply with the requirements of all
applicable laws, rules, regulations, or orders of any governmental
authority, and all agreements to which the Partnership is a party, the
noncompliance with which laws, rules, regulations, orders and agreements
could reasonably be expected to materially adversely affect the business
or assets of the Partnership
<PAGE>
Article X - Management of Partnership Affairs
Page 104
or the business reputation of either Partner or any Affiliate thereof or
any Sony/Block Related Party;
(n) Promptly notify the Partners of any event which occurs or notice
received which could reasonably be expected to have a material adverse
effect on the business or assets of the Partnership including, without
limitation, any notice received from any lender of an Amphitheater Loan
which accelerates, or threatens to accelerate, the indebtedness
represented thereby or claims that a default has occurred or may occur
(with the passage of time or the giving of notice, or both) under any
Amphitheater Loan;
(o) At the request of any Partner for information concerning any
aspect of the business of the Partnership, to promptly supply such Partner
with the information so requested, if such information is available or can
be obtained or compiled without unreasonable effort or unreasonable
expense;
(p) Promptly report to all of the Partners if the Partnership does
not have sufficient Unrestricted Funds to cause any of the actions listed
in this Section 10.3 to be implemented or enacted;
(q) Such other actions as are expressly set forth in this Agreement
which require action to be taken by the Manager; and
(r) Perform other normal business functions, and otherwise operate
and manage the day-to-day business and affairs of the Partnership in the
ordinary course thereof.
The Manager shall act as a fiduciary hereunder and act in good faith in the
performance of its obligations hereunder, but shall not be liable to the
Partners or the Partnership for any decision made or action taken in connection
with the discharge of its duties hereunder except where such action or decision
was not taken or made in good faith or was grossly negligent. The provisions
contained in the immediately preceding sentence are intended to exculpate the
Manager, on and subject to the terms thereof, from tort liability for
mismanagement of the Partnership affairs. Accordingly, such exculpatory
provisions shall not limit, restrict or otherwise adversely affect Sony/Block's
right to assert any claim or cause of action against Pace for breach of a
contractual duty, liability or obligation created pursuant to the provisions of
this Agreement or otherwise assert that Pace is a Defaulting Partner. The
Representatives, the Manager and all agents, employees, officers, directors and
other representatives of the Manager shall be indemnified and held harmless by
the Partnership, to the extent of the assets of the Partnership, from and
against any and all claims, demands, liabilities, costs (including, without
limitation, the cost of litigation and reasonable attorneys' fees), damages and
causes of action of any nature
<PAGE>
Article X - Management of Partnership Affairs
Page 105
whatsoever arising out of a claim asserted by a third party and relating to the
management of the affairs of the Partnership, except where the claim at issue is
based upon the proven gross negligence or willful misconduct of the indemnified
party. The indemnification rights herein contained shall be cumulative of, and
in addition to, any and all rights, remedies and recourses to which the
indemnified parties described herein shall be entitled, whether pursuant to
some other provision of this Agreement, at law or in equity. The provisions of
this Section 10.3 shall not apply with respect to any successor Manager
following the removal of Pace pursuant to an exercise of the rights created in
Section 10.8 hereof; provided, however, that the Management Agreement entered
into by and between the Partnership and such successor Manager shall (absent
some compelling reason to the contrary) contain provisions substantially similar
to this Section 10.3 with such necessary modifications as may be necessary to
accommodate the fact that such successor Manager is not a Partner.
10.4 Meetings of the Executive Committee.
(a) Meetings of the Executive Committee may be held at such regular
times as may be specified by the Executive Committee and, in addition, may
be called by any Representative or the Manager by giving at least ten (10)
days prior notice thereof to the Manager and each of the Representatives.
Notice of each meeting shall be in writing and shall state the date, time,
and place at which such meeting is to be held (which must be a place in
either Houston, Texas or Ft. Lauderdale, Florida) and the purposes for
which such meeting is called. The attendance of a Representative at a
meeting shall constitute a waiver of notice of such meeting. For so long
as Pace is the Manager, Pace shall designate the Representative who will
serve as the chairman of the Executive Committee; thereafter, Sony/Block
shall designate the Representative who will serve as the chairman of the
Executive Committee.
(b) An annual meeting of the Executive Committee shall be held on
the first Monday of April in each year (unless such date is a holiday, in
which event such meeting shall be held on the next business day
thereafter) or at such other time and place as the Partners may mutually
designate.
(c) Any action required or permitted to be taken at a meeting of the
Executive Committee may be taken, (i) by means of a telephone conference
in which all Representatives participating in the meeting and
constituting a quorum can hear and speak to each other or (ii) by means
of unanimous written consent executed by all of the Representatives. All
action taken pursuant to the immediately preceding sentence shall be
deemed for all purposes to have been taken at a meeting of the Executive
Committee.
<PAGE>
Article X - Management of Partnership Affairs
Page 106
(d) The presence at a meeting of at least two (2) of the
Representatives shall constitute a quorum for the transaction of all
business of the Executive Committee. Any meeting of the Executive
Committee which is properly called and at which a quorum is present may be
adjourned to a date which is no later than twenty-one (21) days from the
date upon which the initial meeting was called. In the event that a
meeting was called and a quorum was not obtained for such meeting, any
matters which were set forth in the notice of meeting to be discussed
thereat shall, at the written election of the Partner then having the
right to select a minority of the Representatives to the Executive
Committee, served upon all of the members of the Executive Committee, be
deemed rejected by the Executive Committee.
(e) Except for those decisions specified elsewhere in this Agreement
which require the unanimous vote of the Representatives present at a
meeting of the Executive Committee, all decisions of the Executive
Committee shall be made by a majority vote of the Representatives present
at a meeting of the Executive Committee at which a quorum is present. For
ease of reference, but without in any way limiting any other provision of
this Agreement, the following is a list of decisions which require
unanimous approval of the Representatives present at a meeting of the
Executive Committee:
(1) A decision to incur Partner Nonrecourse Debt as referenced
in Section 5.1(d) hereof.
(2) The determination pursuant to Section 5.5(a) hereof that
the economic effect to the Partnership of any Amphitheater Loan
related to any of the Unwind Assets could be improved by replacing
such Amphitheater Loan with a Replacement Loan.
(3) The decision pursuant to Section 6.2 hereof to acquire or
purchase an interest in a previously existing Amphitheater.
(4) A decision to disregard the provisions of Section
8.4(b)(1)(iv) hereof.
(5) The adoption of an Annual Operating Budget for any Budget
Year pursuant to Section 10.5(b) or (d) hereof.
(6) The decision to approve, pursuant to Section 10.6(c)
hereof, a proposed Amphitheater as an Approved Project.
<PAGE>
Article X - Management of Partnership Affairs
Page 107
(7) A decision to disregard the restriction contained in
Section 10.9(a), as to the maximum number of Qualified Markets which
may be located outside of the United States and Canada.
10.5 Annual Operating Budget.
(a) Proposed Operating Budget. On or before September 1 of each
year, Manager shall submit to the Executive Committee a proposed budget
("Proposed Annual Operating Budget"), which shall be prepared by the
Manager in good faith and shall set forth an overall program for the
Partnership for the twelve (12) month period commencing on November 1 of
that same year and ending on October 31 of the following year, showing in
reasonable detail (i) all anticipated operating expenses and operating
receipts to be incurred or received (as the case may be) by the
Partnership for such twelve (12) month period, (ii) the estimated amount
of R&D Expenditures to be expended by the Partnership for such twelve (12)
month period and (iii) the projected amount of general and administrative
expenses for the Partnership during such twelve (12) month period. Each
Proposed Annual Operating Budget shall be prepared based upon such
assumptions as shall be reasonable considering the operating history of
the Partnership's Amphitheaters and shall specifically project the amount
of Cash Flow from Operations for each of the Partnership's Amphitheaters
in the Budget Year covered thereby.
(b) Approval of Annual Operating Budget. The Proposed Annual
Operating Budget shall be considered for approval by the Executive
Committee at the next regularly held meeting of the Executive Committee
after submission thereof by the Manager or, if sooner, at a special
meeting of the Executive Committee called for such purpose pursuant to the
provisions of Section 10.4(a) hereof. Each Representative attending such
meeting at which the Proposed Annual Operating Budget is being considered
may require changes or modifications to the Proposed Annual Operating
Budget; provided, that, so long as Pace is the Manager, its Representative
may not require an increase in any amounts contained in the Proposed
Annual Operating Budget submitted by the Manager pursuant to Section
10.5(a) hereof. Upon unanimous approval by the Representatives attending a
duly called and held meeting of the Executive Committee at which a quorum
is present, such operating budget so approved shall be the Annual
Operating Budget of the Partnership for the Budget Year to which it
relates, if the Annual Operating Budget is not adopted in accordance with
the foregoing provisions within fifteen (15) days after the commencement
of the Budget Year to which it relates, then, the following provisions
shall apply:
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Article X - Management of Partnership Affairs
Page 108
(1) So long as no Annual Operating Budget is so adopted for
the Budget Year, the Annual Operating Budget shall be deemed to
include all line items as to which unanimous agreement has been
reached by the Representatives and, with respect to each other line
item, the Annual Operating Budget shall be deemed to be the greater
of (i) the smallest amount for such line item approved by any of the
Representatives, or (ii) the amount for the same line item specified
in the Annual Operating Budget for the immediately preceding Budget
Year with such line item increased in the same proportionate amount
by which the CPI most recently reported prior to the first day of
such Budget Year exceeds the CPI most recently reported prior to the
first day of the immediately preceding Budget Year.
(2) If, at such time, (i) there are not nine (9) or more New
Amphitheaters and (ii) the Partnership has not committed to
construct, or acquire a Controlling Interest in, an Amphitheater
which will be the ninth New Amphitheater upon construction or
acquisition thereof, then Pace may thereafter, but in no event later
than July 1 of such Budget Year, provide notice ("Preliminary Budget
Unwind Notice") to Sony/Block that an Annual Operating Budget has
not been adopted in accordance with the provisions hereof with
respect to such Budget Year. If no Annual Operating Budget has been
adopted for such Budget Year within thirty (30) days following
delivery of a Preliminary Budget Unwind Notice then Pace shall have
the right and option to commence the Unwind Procedure pursuant to
the provisions of Article IX hereof by providing notice of the
election to exercise such right and option to Sony/Block on or
before the date which is 60 days after the delivery of the
Preliminary Budget Unwind Notice, if Pace fails to exercise the
right and option to commence the Unwind Procedure created pursuant
to this Section 10.5(b)(2) any time that such right may arise prior
to the expiration of the time period referred to in the immediately
preceding sentence, then Pace shall be deemed to have elected to not
exercise such right and option with respect to that specific
instance giving rise to the right and option.
(c) R&D Expenditures. Notwithstanding anything to the contrary
contained in this Agreement, the Partnership shall not incur any R&D
Expenditures or any general administrative expenditures unless the same is
consistent with the amounts contemplated in the Annual Operating Budget or
is otherwise approved by the Executive Committee. Each Annual Operating
Budget shall provide for R&D Expenditures in an amount that is
commensurate with the general business and development plan of the
Partnership, taking into account, in any particular Budget Year, the
number of Markets in which the Partnership
<PAGE>
Article X - Management of Partnership Affairs
Page 109
then has active and significant development activities. The Annual
Operating Budget will provide reasonable detail as to the projected use of
the budgeted amount of R&D Expenditures by detailing a budgeted amount for
various specific Markets and a separate amount to be unallocated to any
specific Market.
10.6 Development of Proposed Amphitheaters. With respect to each proposed
Amphitheater being considered by the Manager as a possible project for
construction by the Partnership, the following provisions shall apply:
(a) Generally.
(1) Current Information to the Executive Committee. The
Manager shall exercise all reasonable efforts as may be required to
keep the Executive Committee informed of all significant
negotiations, developments and decisions relating to any such
proposed Amphitheater by providing periodic written reports to the
Representatives with copies of all materials and documents which
relate to the proposed Amphitheater. Without limiting the
foregoing, the Manager shall provide to the Representatives copies
of site acquisition contracts, lease agreements, governmental
agreements (bond financing or otherwise), preliminary budgets, the
development plan presented for zoning approval, environmental
reports, development schedules, material written communications from
surrounding landowners or other citizen groups opposing the proposed
development, traffic studies, demographic reports and similar
materials.
(2) Development Costs. With respect to each proposed
Amphitheater which is beyond the initial research and development
stage, the Manager shall submit to the Executive Committee, from
time to time, proposed development budgets detailing the then
anticipated Project Costs which are to be incurred by the
Partnership in connection with such proposed Amphitheater. Except
for R&D Expenditures (which will be governed by the Annual Operating
Budget), no Project Costs may be incurred or expended by the
Partnership during the development phase of any proposed
Amphitheater except and unless (i) such expenditure is consistent
with, and contemplated by, a development budget which has been
approved by the Executive Committee or (ii) specifically approved by
the Executive Committee.
(3) Abandonment of a Proposed Amphitheater. The Executive
Committee shall have the authority, by a majority vote of the
Representatives present at a meeting of the Executive Committee at
which a
<PAGE>
Article X - Management of Partnership Affairs
Page 110
quorum is present, to elect to abandon further development
activities with respect to any specific proposed Amphitheater, at
any time and for any reason. Following any such affirmative vote by
the Executive Committee, the Manager shall not expend or incur any
further R&D Expenditures or any Project Costs with respect to such
specific proposed Amphitheater. A decision by the Executive
Committee to deny approval for the expenditure of any Project Costs
for a proposed Amphitheater which will have the effect of materially
and adversely affecting the Partnership's ability to continue the
development of such proposed Amphitheater shall be deemed to be an
affirmative decision by the Executive Committee to abandon further
development activities with respect to such proposed Amphitheater if
the Manager provides notice thereof to the Executive Committee and
30 days to change its prior decision with regard to such
expenditure.
(b) Proposed Amphitheater Approval Request. After the Manager has,
on behalf of the Partnership, (i) obtained the rights to acquire a site
for construction of a proposed Amphitheater and (ii) prepared, or caused
to be prepared, Plans and Specifications, a Proposed Project Budget and an
Amphitheater Pro Forma for such proposed Amphitheater, the Manager may at
any time thereafter, by formal written notification ("Proposed
Amphitheater Approval Request") to the Representatives, request that the
Executive Committee approve such proposed Amphitheater as an Amphitheater
which the Partnership will construct. With the Proposed Amphitheater
Approval Request, the Manager shall send to each Representative, to the
extent not previously provided, a copy of the following materials relating
to the proposed Amphitheater:
(1) The contract, lease or other agreement pursuant to which
the Partnership obtained the right to acquire the site for
construction, along with all materials and documents relating to
such site, including any environmental reports, title reports, soils
reports, traffic studies and other related matters which the
Partnership or the Manager possesses.
(2) The Plans and Specifications.
(3) The Proposed Project Budget.
(4) The Amphitheater Pro Forma.
The Executive Committee shall hold a meeting ("Proposed Amphitheater
Approval Meeting") within thirty (30) days after receipt of the Proposed
Amphi-
<PAGE>
Article X - Management of Partnership Affairs
Page 111
theater Approval Request for the purpose of determining whether the
Executive Committee will approve the proposed Amphitheater as an
Amphitheater which the Partnership will construct. If, at or prior to a
Proposed Amphitheater Approval Meeting, any Representative reasonably
believes that additional information or clarification is needed to be
delivered by the Manager to permit such Representative to decide and
determine whether the Amphitheater being proposed for construction by the
Partnership should become an Approved Project, then such Representative
may adjourn the Proposed Amphitheater Approval Meeting for no more than
thirty (30) days by providing a written request to the Manager as to the
additional information or clarifying matters which such Representative
believes is needed to so permit a decision with regard to such
determination. As long as the Manager has made a reasonable, good faith
effort to comply with the specific requested additional or clarifying
information, to the extent such information can be obtained and provided,
then the Proposed Amphitheater Approval Meeting shall be thereafter
reconvened in accordance with the provisions hereof, but in no event later
than thirty (30) days after the original scheduled date for the Proposed
Amphitheater Approval Meeting. In no event may a Proposed Amphitheater
Approval Meeting be adjourned and subsequently reconvened more than once
pursuant to the foregoing provisions. Notwithstanding the provisions of
Section 10.4(e) hereof, the Executive Committee shall only be deemed to
have approved a proposed Amphitheater as an Amphitheater which the
Partnership will construct if the Representatives present at the Proposed
Amphitheater Approval Meeting unanimously vote in favor of such approval.
If a quorum of the Representatives do not attend a Proposed Amphitheater
Approval Meeting, then it shall be deemed, for all purposes hereof, that
the Executive Committee, at such Proposed Amphitheater Approval Meeting,
declined to approve such proposed Amphitheater as an Amphitheater which
the Partnership will construct.
(c) Subsequent Changes to Approved Matters. If there are any
significant or material changes or modifications to the site acquisition
contract, the Plans and Specifications, the Project Budget or the
Amphitheater Pro Forma with respect to any Approved Project (or, with
respect to the Camden Amphitheater, any other information or material that
was relied upon by the Representatives in deciding to approve the Camden
Amphitheater as an Approved Project), then the Executive Committee shall
be so advised by the Manager, and the Executive Committee shall meet to
decide whether it will approve such significant or material changes or
modifications (such approval not to be unreasonably withheld). If (i) any
such changes or modifications are not approved unanimously by the
Executive Committee at such meeting and (ii) the Manager determines that
the Partnership shall not construct the proposed Amphitheater with respect
to which such changes or modifications relate without the making of such
changes or modifications, then (x) such proposed
<PAGE>
Article X - Management of Partnership Affairs
Page 112
Amphitheater shall no longer be an Approved Project for purposes hereof,
(y) the Partnership shall not construct such proposed Amphitheater and (z)
such proposed Amphitheater shall, for purposes of the defined terms
"Sony/Block Rejected Amphitheater" and "Pace Rejected Amphitheater," be
deemed to have been rejected by the Executive Committee at a Proposed
Amphitheater Approval Meeting; provided, however, if such proposed
Amphitheater is not a Qualified Amphitheater with such material changes or
modifications implemented, then it will not, regardless of any provision
to the contrary contained herein, be a "Sony/Block Rejected Amphitheater"
or a "Pace Rejected Amphitheater." For purposes of this Section 10.6(c),
it is specifically understood and acknowledged that any change to a
Project Budget which results in any increase in the Budgeted Project Cost
of the Amphitheater to which such Project Budget relates shall be deemed
to be a material change or modification to such Project Budget; provided,
however, changes or modifications to a Project Budget which only involve
the reallocation of amounts between and among line items contained in such
Project Budget but which does not result in an increase in the Budgeted
Project Cost shall be deemed to be an immaterial change to such Project
Budget.
(d) Rejection for Material Adverse Change or Failure to Meet Certain
Physical Criteria.
(1) Notwithstanding anything to the contrary contained in this
Agreement, if it is determined that a Special Rejection Event (herein
defined) exists with respect to any proposed Amphitheater, then the
following actions or decisions may be taken with regard to such proposed
Amphitheater without causing such proposed Amphitheater to become a
Sony/Block Rejected Amphitheater or a Pace Rejected Amphitheater:
(i) By majority vote of the Executive Committee, the
Partnership may elect to abandon further development activities with
respect to such proposed Amphitheater.
(ii) Any Representative may decline to approve such proposed
Amphitheater for construction by the Partnership at a Proposed
Amphitheater Approval Meeting.
(iii) Any Representative may withdraw, within thirty (30) days
after receipt of notice from the Manager that a Special Rejection
Event has occurred with respect to such proposed Amphitheater, his
previous consent and approval to such proposed Amphitheater at a
Proposed Amphitheater Approval Meeting, in which event such proposed
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Article X - Management of Partnership Affairs
Page 113
Amphitheater shall no longer be an "Approved Project" for purposes
of this Agreement.
(2) As used in this Section 10.6(d), a "Special Rejection Event"
shall mean, with respect to any proposed Amphitheater the happening or
occurrence of any one or more of the following conditions or circumstances
in regard to such proposed Amphitheater:
(i) A determination that any zoning variance or governmental
permits or approvals which are necessary to permit the construction
and development of such proposed Amphitheater cannot be obtained or
issued without causing the total projected amount of Project Costs
for such Amphitheater to exceed the Budgeted Project Cost of such
Amphitheater.
(ii) An environmental report having been issued which
indicates that hazardous materials (within the scope of state or
federal environmental laws) are present on the proposed site for
construction of such proposed Amphitheater and cannot be removed or
remediated without causing the total projected amount of Project
Costs for such Amphitheater to exceed the Budgeted Project Cost of
such Amphitheater.
(iii) The issuance of a final soils report reflecting that the
site selected for the development of such proposed Amphitheater
contains or possesses adverse soil conditions which cannot be
corrected without causing the total projected amount of Project
Costs for such Amphitheater to exceed the Budgeted Project Cost of
such Amphitheater.
(3) As soon as the Manager has determined that a Special Rejection
Event has occurred with respect to any proposed Amphitheater, the Manager
shall provide notice thereof immediately to the Representatives.
10.7 Management, Booking and Consulting Services.
(a) In addition to the services which the Manager is required to
perform in accordance with the other provisions contained in this
Agreement, the Manager shall be obligated to provide to the Partnership
such management, booking and consulting services in connection with the
development, construction, maintenance and operation of the Amphitheaters
in which the Partnership owns a Controlling Interest, from time to time,
to the extent that such management, booking and consulting services may be
necessary to fulfill the Partnership's purposes contemplated by the
provisions of this Agreement.
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Article X - Management of Partnership Affairs
Page 114
(b) Until such time as Pace may be removed as Manager pursuant to
the provisions of Section 10.8 hereof, the Partnership shall pay to Pace,
as complete reimbursement of its overhead expenses related to the
management, booking and consulting services provided to the Partnership as
required by the provisions of clause (a) of this Section 10.7 and the
performance of all services imposed elsewhere in this Agreement upon the
Manager, an annual amount determined in accordance with the following
provisions:
(1) The annual amount payable to Pace pursuant to this Section
10.7(b) shall be (i) an Operating Obligation of the Partnership and
included in each Annual Operating Budget and (ii) determined,
subject to the provisions of this Section 10.7(b), for each Budget
Year as a part of the process of adopting the Annual Operating
Budget of the Partnership.
(2) Notwithstanding the provisions of clauses (1) and (3) of
this Section 10.7(b), the amount payable to Pace pursuant to this
Section 10.7(b) from April 1, 1994 until adoption of the Annual
Operating Budget for the Budget Year beginning on November 1, 1994,
shall be based upon an annualized amount of $1,400,000.00.
(3) The annual amount payable to Pace pursuant to this Section
10.7(b) shall be, for any Budget Year, the budgeted projection of
Pace's (and its Affiliates') actual costs for providing the
management, booking and consulting services required by the
provisions of Section 10.7(a) hereof. It is understood, recognized
and acknowledged that the calculation of Pace's actual cost is, to
some extent, subjective in that it requires allocations of the costs
of various corporate overhead between and among the services to be
rendered by Pace pursuant to this Agreement and other business
functions and operations of Pace's Affiliates. Pace agrees that it
will, when determining the amount to be included in any Proposed
Annual Operating Budget as the amount to be paid to Pace pursuant to
this Section 10.7(b), use commercially reasonable methods of
allocation of corporate overhead generally consistent with the
manner and method which was used in arriving at the initial
annualized amount of $1,400,000.00. Upon Sony/Block's request, Pace
shall provide such reasonable support, data and other information as
may be reasonably necessary to document the amount of Pace's actual
cost in providing the management, booking and consulting services
required by the provisions of this Section 10.7(a) hereof.
All amounts payable to Pace by the Partnership pursuant to the provisions of
this Section 10.7(b) shall be payable as an Operating Obligation of the
Partnership in equal monthly installments, commencing on April 1, 1994. Exhibit
"C" attached hereto
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Article X - Management of Partnership Affairs
Page 115
outlines and describes the various categories of Pace's corporate overhead which
are covered by and being reimbursed from the annual payment to be made to Pace
pursuant to the provisions of this Section 10.7(b). Exhibit "D" attached hereto
outlines and describes the various categories of Pace's out-of-pocket costs
which are not covered by or being reimbursed from the annual payment to be made
to Pace pursuant to the provisions of this Section 10.7(b) and which are
therefore subject to reimbursement by the Partnership pursuant to Section 13.8
hereof. The provisions of this Section 10.7(b) shall not apply with respect to
any successor Manager following the removal of Pace pursuant to an exercise of
the rights created in Section 10.8 hereof.
10.8 Removal of Manager. At any time after the second anniversary of the
execution of this Agreement, Sony/Block shall have the right to terminate Pace
as the Manager of the Partnership. In order to exercise the right described in
the immediately preceding sentence, Sony/Block shall provide written notice
("Termination Notice") thereof to Pace. The following provisions shall apply
upon and after the delivery of Termination Notice by Sony/Block to Pace:
(a) Regardless of when a Termination Notice may be provided by
Sony/Block to Pace, it shall not become effective until the Effective Date
of Termination (herein defined). As used herein, the term "Effective Date
of Termination" shall mean, with respect to any Termination Notice, the
next November 15th following the date upon which such Termination Notice
is given by Sony/Block to Pace.
(b) Between the date upon which a Termination Notice is given by
Sony/Block to Pace and the Effective Date of Termination, (i) the business
of the Partnership shall continue to be conducted and operated in
accordance with all of the other provisions of this Agreement, (ii) the
duties, liabilities, responsibilities, rights, authorities, and
responsibilities of the Manager, the Partners and the Representatives
shall be unchanged and (iii) each Partner shall use its reasonable efforts
to prevent disclosure to any Person of the fact that the Termination
Notice has been provided by Sony/Block to Pace. Notwithstanding the
restriction contained in clause (iii) in the immediately preceding
sentence, it is specifically understood, agreed and acknowledged that
Sony/Block shall have the right to commence interviewing and negotiating
with potential successor Managers on (x) the next September 15 following
the date upon which a Termination Notice is given by Sony/Block to Pace or
(y) if a Termination Notice is provided between September 15 and November
15 of a calendar year, then immediately upon the delivery of such
Termination Notice.
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Article X - Management of Partnership Affairs
Page 116
(c) Subject to the provisions contained below, on and after the
Effective Date of Termination, (i) Pace shall no longer have any rights,
responsibilities, authorities or duties as the Manager of the Partnership
(but such termination shall not release Pace from any liabilities or
obligations it may have to the Partnership which arose prior to the
Effective Date of Termination), (ii) Pace shall have no further obligation
to provide any management, booking or consulting services pursuant to, or
as required by, the provisions of Section 10.7(a) hereof, (iii) the
Partnership shall have no further obligation to make the reimbursement
payments to Pace as described in Section 10.7(b) hereof and (iv) a
successor Manager shall thereafter be selected, from time to time, in
accordance with, and pursuant to, the provisions of Section 11.3 hereof.
Notwithstanding the provisions contained in the immediately preceding
sentence, Sony/Block shall have the right to require that Pace provide
certain transitional consulting, booking and management services in
accordance with the following provisions after the Effective Date of
Termination:
(1) Sony/Block shall have the right to require, by providing
notice thereof to Pace on the later to occur of the giving of a
Notice of Termination or 30 days before the Effective Date of
Termination, that Pace provide certain transitional management,
booking and consulting services during the thirty (30) days
immediately following the Effective Date of Termination, in which
event (i) Pace and its permanent staff shall provide such reasonable
advice, consultation and other transitional services as may be
necessary to assist the Partnership in continuing its business
operations in substantially the same manner as they were conducted
immediately prior to such termination, (ii) the Partnership shall be
obligated to pay and reimburse to Pace the actual cost of its
corporate overhead allocated to the performing of such services
during such thirty (30) day period but in no event more than
$250,000.00 and (iii) the Partnership shall reimburse to Pace all
out-of-pocket costs and expenses for the types of items described on
Exhibit "D" attached hereto which Pace pays in connection with the
performance of such services during such thirty (30) day period.
Pace shall provide such reasonable support, data and other
information as may be reasonably requested by Sony/Block to document
the amount of costs incurred by Pace and required to be reimbursed
to it in accordance with the provisions contained in the immediately
preceding sentence.
(2) Sony/Block shall additionally have the right and option to
require Pace to continue to provide certain transitional management,
booking and consulting services for an additional one year period by
providing written notice thereof to Pace on or before the Effective
Date of Termination or, if Sony/Block previously elected to exercise
the right
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Article X - Management of Partnership Affairs
Page 117
contained in clause (1) above, on or before the date which is thirty
(30) days after the Effective Date of Termination. If Sony/Block
elects to extend Pace's obligation to provide such transitional
management services for an additional one year period pursuant to
the provisions of this clause (2), Pace shall provide such
assistance and transitional services for the Partnership and the
successor Manager as may be reasonably necessary to assist in the
efficient transition of management until the next November 15
following the Effective Date of Termination and the Partnership
shall continue to be obligated to pay the full amount which would
otherwise be payable to Pace during such additional period pursuant
to Section 10.7(b) of this Agreement.
(d) Notwithstanding the provisions of clauses (a), (b) and (c) of
this Section 10.8, if a Partner Default has occurred with respect to
Pace, then Sony/Block may terminate Pace as the Manager of the Partnership
effective immediately upon provision of a Termination Notice to Pace.
(e) Notwithstanding anything to the contrary contained in, or
implied by, the provisions of this Section 10.8, the provision of a
Termination Notice to Pace pursuant to any of the provisions of this
Section 10.8 shall not affect Pace's right to act as the Manager of the
Partnership with respect to the Woodlands Asset only. Accordingly, so long
as the Partnership continues to own the Woodlands Asset, Pace shall, in
all respects and at all times, (i) act as the Manager with respect to such
Asset, (ii) provide the management, booking and consulting services
referenced in Section 10.7 hereof with respect to the Woodlands Asset and
(iii) be reimbursed pursuant to the provisions of Section 10.7(b) hereof
for its actual costs of providing such management, booking and consulting
services.
10.9 Provisions Regarding Qualified Markets. The development efforts of
the Partnership will be primarily focused in the Qualified Markets; provided,
however, that it is understood that the Manager shall be expressly permitted, on
behalf of the Partnership, to conduct preliminary studies and other analyses in
other Markets, subject to the limitations of the then effective Annual Operating
Budget in regard to R&D Expenditures. The Partners shall designate certain
Markets, from time to time, as Qualified Markets in accordance with the
following provisions:
(a) Minimum Number. At all times during which Pace is the Manager,
no less than the Minimum Number (herein defined) of Markets in the
Restricted Portion of the Earth shall be designated, in accordance with
the provisions hereof, as Qualified Markets. Without the unanimous consent
of the Executive Committee, no more than 30% of the Qualified Markets may
be located outside of the United States and Canada. As used herein, the
term "Minimum
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Article X - Management of Partnership Affairs
Page 118
Number" shall mean ten (10), as such amount may be adjusted pursuant to
the provisions of clause (c)(2)(ii) of this Section 10.9.
(b) Initial Qualified Markets. The initial ten (10) Qualified
Markets have been designated by the Partners in a letter signed of even
date with the Admission Agreement.
(c) Removal of Qualified Markets. Once a Market has been designated
a Qualified Market, it will remain a Qualified Market until the earlier to
occur of the following with respect to such Market:
(1) The Partnership constructs, or otherwise acquires a
Controlling Interest in, an Amphitheater in that Market.
(2) The Manager notifies the Partners that, after reasonable
analysis, diligence, market study and other research, it has
determined that such Market is not suitable for the development of
an Amphitheater by the Partnership. In such notice, the Manager
shall provide the specific reasons as to why such Market should not
continue to be a Qualified Market. The following provisions shall
apply with respect to the Manager's right to require that a Market
should not continue to be a Qualified Market:
(i) In no event may the Manager exercise the right
created pursuant to the provisions of this clause (2) more
frequently than once in any one of the Applicable Two Year
Periods. As used in the immediately preceding sentence, the
term "Applicable Two Year Periods" shall mean the separate
sets of two calendar year periods (x) commencing with calendar
years 1994 and 1995 as the first Applicable Two Year Period,
(y) continuing with calendar years 1996 and 1997 as the second
Applicable Two Year Period and (z) thereafter continuing with
successive sets of two calendar year periods.
(ii) If the Manager requires that a Market no longer be
designated as a Qualified Market pursuant to the right
contained in this clause (2), Sony/Block shall have the
express right and authority, by notice to Pace, to require
that such Market remain as a Qualified Market until determined
otherwise by Sony/Block. If Sony/Block elects to continue any
Market as a Qualified Market pursuant to the right contained
in the immediately preceding sentence, then the Minimum Number
shall be automatically increased by one with no further action
required by any party here-
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Article X - Management of Partnership Affairs
Page 119
to. If Sony/Block subsequently elects to discontinue any
Market as a Qualified Market which it has previously required
pursuant to the right contained in this clause (ii) of this
Section 1O.9(c)(2), then such Market shall no longer be a
Qualified Market and the Minimum Number shall be automatically
decreased by one with no further action required by any party
hereto.
(3) The mutual agreement of the Partners that such Market
should no longer be a Qualified Market.
(d) Mutual Agreement. If, at any time, there are less Qualified
Markets than the Minimum Number, then either Partner may, at any time
thereafter, recommend to the other Partner which Market should be
designated as a Qualified Market to cause the number of Qualified Markets
to equal the Minimum Number. To be designated as a Qualified Market, any
such Market must be approved by both Partners.
(e) Procedure When No Mutual Agreement. If at any time the Partners
are unable to agree upon which Market should be designated as a Qualified
Market to cause the number of Qualified Markets to equal the Minimum
Number, then an additional Market shall be designated as a Qualified
Market in accordance with the following provisions:
(1) If no Market has been previously designated as a Qualified
Market pursuant to the procedure described in this clause (e), then
Pace shall designate a Market as a Qualified Market by providing
written notice thereof to Sony/Block and such Market shall
thereafter be a Qualified Market for all purposes hereof.
(2) If a Market has been previously designated as a Qualified
Market pursuant to the procedure described in this clause (e), then
the Partner which did not designate the last Qualified Market which
was so designated pursuant to the provisions of this clause (e)
shall have the right to designate the additional Qualified Market by
providing written notice thereof to the other Partner and such
Market shall thereafter be a Qualified Market for all purposes
hereof; however, if a Partner holds the right to designate an
additional Qualified Market pursuant to this clause (2) at a time
when there are less Qualified Markets than the Minimum Number, then
the other Partner may provide written notice to the first Partner
requesting that such Partner designate an additional Qualified
Market within thirty days after the receipt of such notice and, if
an additional Qualified Market is not designated as a Qualified
Market within such thirty day period by such Partner, then the other
Partner
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Article X - Management of Partnership Affairs
Page 120
shall have the right, at any time thereafter, to designate the
additional Qualified Market by providing written notice thereof to
the first Partner.
(f) Additional Qualified Markets. The Partners may always designate
by mutual agreement any Market as a Qualified Market and there is no
limitation or restriction which would preclude the Partners from
designating, at any time, more Qualified Markets than the Minimum Number.
[END OF ARTICLE X]
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Article XI - Rights and Obligations Following Termination of Pace as Manager
Page 121
ARTICLE XI
Rights and Obligations Following Termination of
Pace as Manager
11.1 Generally. The provisions of this Article XI shall apply following
the delivery of a Termination Notice by Sony/Block to Pace pursuant to the
provisions of Section 10.8 hereof.
11.2 Pace's Right to Commence Unwind Procedure.
(a) Pace shall have the right and option to commence the Unwind
Procedure pursuant to the provisions of Article IX hereof upon the
occurrence of Sony/Block delivering a Termination Notice to Pace pursuant
to the provisions of Section 10.8 hereof. Pace may exercise such right and
option at any time on or before 30 days after Sony/Block has provided
written notice to Pace designating the name of the Person which will serve
as the successor Manager. The giving of the notice by Sony/Block referred
to in the immediately preceding sentence shall not be a condition
precedent to Pace's right to exercise the right to commence the Unwind
Procedure. If Pace fails to exercise the right and option to commence the
Unwind Procedure created pursuant to this Section 11.2(a) prior to the
expiration of the time period referred to in the second preceding
sentence, then Pace shall be deemed to have elected not to exercise such
right and option.
(b) If Pace does not elect to commence the Unwind Procedure pursuant
to the right contained in clause (a) of this Section 11.2, Pace shall
thereafter have the right and option to commence the Unwind Procedure
pursuant to the provisions of Article IX hereof each time that a Manager
is replaced by another Manager pursuant to Sony/Block's unilateral right
described in Section 11.3(a) hereof (including the situation in which the
Person designated as the initial successor Manager in the notice to Pace
described in Section 11.2(a) hereof is not subsequently engaged by the
Partnership but instead a different Person [other than an Affiliate of the
initially designated Person] is engaged as the initial successor Manager).
Pace may exercise such right and option, each time that it may arise, at
any time on or before 30 days after Sony/Block has provided written notice
to Pace designating the name of the Person which will serve as Manager of
the Partnership in replacement of the prior Manager. The giving of the
notice by Sony/Block referred to in the immediately preceding sentence
shall not be a condition precedent to Pace's right to exercise the right
to commence the Unwind Procedure. If Pace fails to exercise the right and
option to commence the Unwind Procedure created pursuant to this Section
11.2(b) at any time that such right may arise prior to
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Article XI - Rights and Obligations Following Termination of Pace as Manager
Page 122
the expiration of the time period referred to in the second preceding
sentence, then Pace shall be deemed to have elected not to exercise such
right and option with respect to that specific instance giving rise to the
right and option. To avoid any ambiguity or uncertainty, it is understood
and agreed that Pace shall not have the right to commence the Unwind
Procedure pursuant to the provisions of this Section 11.2 after it has the
right to select the successor Manager pursuant to Section 11.3(c) hereof.
11.3 Selection and Designation of Successor Manager.
(a) Selection of First Successor. After the delivery of a
Termination Notice to Pace by Sony/Block pursuant to the provisions of
Section 10.8 hereof, Sony/Block shall have the sole and unilateral right,
authority and power to select, retain, engage and designate the Person,
upon terms acceptable to Sony/Block, which will serve as the Manager of
the Partnership in place of Pace. So long as Sony/Block's designated
Manager has met the Minimum Economic Standards described in Section 11.4
hereof, the right referred to in the immediately preceding sentence shall
include the right to designate subsequent Managers following the
resignation or termination of any other Manager. In no event may the
Person selected to serve as the Manager of the Partnership by Sony/Block
pursuant to the provisions of this Section 11.3(a) be any Sony/Block
Related Party. In addition, Sony/Block covenants with Pace that (i) no
Sony/Block Related Party or the Partnership will attempt to hire, or
employ the services of, any senior executive officers of Pace or its
Affiliates who are engaged in the Amphitheater business and (ii)
Sony/Block will cause the Partnership to obtain, from each successor
Manager chosen by Sony/Block pursuant to the right contained in this
Section 11.3(a), a covenant to not attempt to hire, or employ the services
of, any senior executive officers of Pace or its Affiliates who are
engaged in the Amphitheater business during such successor Manager's term
of engagement with the Partnership.
(b) Selection of Successor Manager Following Economic Criteria
Default. Notwithstanding anything to the contrary contained in, or implied
by the provisions of this Agreement, if either Partner exercises the right
created pursuant to the provisions of Section 11.4 hereof to require that
a successor Manager resign as a result of the Partnership failing to meet
the Minimum Economic Standards for any Fiscal Year, then no new Manager
may thereafter be engaged by the Partnership without the unanimous
approval of the Partners.
(c) Procedure When No Mutual Agreement. If the Partners are unable
to agree upon the selection and designation of the Manager as required by
the provisions of clause (b) of this Section 11.3, then the following
provisions shall
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Article XI - Rights and Obligations Following Termination of Pace as Manager
Page 123
provide the method by which the successor Manager will be designated,
selected and retained by the Partnership:
(1) If no successor Manager has been previously selected
pursuant to the procedure described in this clause (c), then Pace
shall designate, select and retain, upon terms acceptable to Pace,
the successor Manager by providing written notice thereof to
Sony/Block, and such successor Manager shall thereafter be, subject
to the provisions of Section 11.3(d) hereof, the Manager for all
purposes hereof.
(2) If a successor Manager has been previously designated
pursuant to the procedure described in this clause (c), then the
Partner which did not designate the last successor Manager pursuant
to the provisions of this clause (c), shall have the right to
designate, select and retain, upon terms acceptable to such Partner,
the successor Manager by providing written notice thereof to the
other Partner, and such successor Manager shall thereafter be,
subject to the provisions of Section 11.3(d) hereof, the Manager for
all purposes hereof.
So long as the successor Manager which has been designated by a Partner
pursuant to the procedure described in this clause (c) has met the Minimum
Economic Standards described in Section 11.4 hereof, such Partner's right
to designate, select and retain the successor Manager shall include the
right to designate subsequent successor Managers following the resignation
or termination of any Manager. It shall be expressly permitted for a
successor Manager designated, selected and retained by a Partner pursuant
to the procedure described in this clause (c) to be an Affiliate of that
Partner; provided, however, if Pace should ever designate, select and
retain Pace or an Affiliate of Pace as the Manager pursuant to the
procedure described in this clause (c), then Sony/Block shall have the
right to terminate Pace (or its Affiliate) as the Manager of the
Partnership pursuant to the provisions of Section 10.8 hereof at any time
after the fourth anniversary of the designation, selection and retention
of Pace (or an Affiliate of Pace) as the Manager pursuant to the procedure
described in this clause (c) notwithstanding the fact that Sony/Block has
previously exercised such right pursuant to the provisions thereof.
(d) Subsequent Removal. After a successor Manager has been selected,
retained and engaged by the Partnership, either pursuant to the procedure
described in clause (c) of this Section 11.3 or by mutual agreement of the
Partners, the Manager may not be thereafter discharged or terminated by
the Partnership except for (i) failure to meet the minimum economic
criteria established pursuant to the provisions of Section 11.4 hereof,
(ii) the unanimous approval of the Partners or (iii) violation or breach
of the manage-
<PAGE>
Article XI - Rights and Obligations Following Termination of Pace as Manager
Page 124
ment agreement pursuant to which such Manager is retained and engaged by
the Partnership (which violation or breach, if capable of being cured, is
not cured within thirty (30) days after the occurrence of such violation
or breach).
11.4 Minimum Economic Criteria to be Imposed Upon Successor Manager.
Following the delivery of a Termination Notice, the Partnership shall establish
certain minimum economic performance standards ("Minimum Economic Standards")
which the Partnership must meet on an annual basis as a condition to the right
of each subsequent Manager being entitled to retain its engagement with the
Partnership. The Minimum Economic Standards shall be determined in accordance
with the following provisions:
(a) The Minimum Economic Standards shall be determined and selected
based upon the Partnership's average earnings during the last two Fiscal
Years that Pace was the Manager, with appropriate adjustments for Fiscal
Years thereafter to reflect changes in the CPI.
(b) The earnings of the Partnership which were attributable to
Amphitheaters in which the Partnership (i) owned a Controlling Interest
during the last two Fiscal Years that Pace was the Manager and (ii) will
thereafter continue to own a Controlling Interest shall control the
determination and establishment of the Minimum Economic Standards. In
determining the earnings of the Partnership attributable to only one or a
few of the Partnership's Amphitheaters, only an appropriate portion of the
annual reimbursement payment payable to Pace pursuant to Section 10.7(b)
hereof and other general administrative expenditures of the Partnership
shall be allocated to such Amphitheater or Amphitheaters.
(c) The Minimum Economic Standards shall thereafter be (i)
appropriately decreased in the event that any Amphitheater in which the
Partnership previously owned a Controlling Interest is sold, distributed
or otherwise transferred and (ii) appropriately increased in the event
that the Partnership constructs, or otherwise acquires a Controlling
Interest in, any new Amphitheater.
(d) Utilizing the foregoing standards and descriptions, the
Executive Committee, acting in its reasonable discretion, shall establish
the Minimum Economic Standards which are to be in force and effect with
respect to all subsequent Managers after the removal of Pace.
If the Partnership should fail to meet the Minimum Economic Standards for any
Fiscal Year after the removal of Pace as Manager, either Partner shall have the
right,
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Article XI - Rights and Obligations Following Termination of Pace as Manager
Page 125
exercisable in its sole discretion, within thirty (30) days after such Partner
has been provided with a complete and final unaudited set of financial
statements for the Partnership's operations during such Fiscal Year, to require
that the Manager resign effective as of the next succeeding November 15. If such
notice is not given within the aforesaid thirty (30) day period, then each
Partner's right to cause the Manager to resign for the failure to meet the
Minimum Economic Standards for such Fiscal Year shall be waived, but shall not
affect such right with respect to any other failures to meet the Minimum
Economic Standards in any subsequent Fiscal Years. Each successor Manager, after
removal of Pace as Manager pursuant to the provisions of Section 10.8 hereof,
shall specifically agree in writing (i) to observe and perform each of the
material obligations imposed upon the Manager pursuant to the terms of this
Agreement (with appropriate modifications to reflect that such Person is not a
Partner) and (ii) that such Manager's continued engagement by the Partnership is
conditioned upon the Partnership meeting the Minimum Economic Standards during
each Fiscal Year that it continues to serve as the Manager hereunder (which
written instrument shall be deemed to be a part of the management agreement
pursuant to which such Manager is engaged and retained by the Partnership).
11.5 Special Provisions Relating to Construction of Approved Projects by
the Partnership after Removal of Pace as Manager. If Pace does not elect to
commence the Unwind Procedure following receipt of a Termination Notice, then
the following provisions shall apply,
(a) with respect to any Approved Project following receipt of such
Termination Notice:
(1) if such Approved Project will be the first New
Amphitheater, then neither PEC nor PMG shall have any obligation to
provide any guaranty or otherwise participate in the obtaining of
the Project Loan for such Approved Project.
(2) if such Approved Project will not be the first New
Amphitheater, then the obligation of Sony/Block to provide a Project
Loan pursuant to the provisions of Section 5.1 hereof for such
Approved Project shall be the several obligation of Pace, as to
one-third of the required principal thereof, and Sony/Block, as to
two-thirds of the required principal thereof (and, under such
circumstances, any obligation of Sony/Block to cause Sony and
Blockbuster to guarantee such loan, shall be the obligation to cause
Sony and Blockbuster to each guarantee 33 1/3% of such loan and Pace
shall be obligated to cause PEC to guarantee 33 1/3% of such loan);
provided, however, that it is specifically confirmed and
acknowledged that Pace shall have the right to be relieved and
excused of such obligation in the same manner, and to the
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Article XI - Rights and Obligations Following Termination of Pace as Manager
Page 126
same extent, that Sony/Block may be so excused and relieved pursuant
to the provisions of Section 5.1(b) hereof, subject to the terms and
obligations thereof (and, in the event Pace elects to avail itself
of such right, Sony/Block shall have the rights of Pace set forth in
such Section 5.1(b)).
(b) with respect to any previously constructed Amphitheater which
the Partnership is to acquire or purchase pursuant to the provisions of
Section 6.2 hereof following receipt of such Termination Notice:
(1) if such Amphitheater will be the first New Amphitheater,
then neither PEC nor PMG shall have any obligation to provide any
guaranty or otherwise participate in the obtaining of the loan
required to be extended pursuant to the provisions of Section
6(2)(a) hereof in respect of such Amphitheater.
(2) if such Amphitheater will not be the first New
Amphitheater, then the obligation of Sony/Block to provide the loan
required to be extended pursuant to the provisions of Section 6.2(a)
hereof in respect to such Amphitheater shall be the several
obligation of Pace, as to one-third of the required principal
thereof, and Sony/Block, as to two-thirds of the required principal
thereof (and, under such circumstances, any obligation of Sony/Block
to cause Sony and Blockbuster to guarantee such loans, shall be the
obligation to cause Sony and Blockbuster to each guarantee 33 1/3%
of such loan and Pace shall be obligated to cause PEC to guarantee
33 1/3% of such loan).
(c) Pace shall be required to cause PMG and PEC to guarantee Pace's
Percentage Interest of each Renewal Loan and Replacement Loan which are
thereafter made to the Partnership so long as there are then one or more
New Amphitheaters.
[END OF ARTICLE XI]
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Article XII - Exclusivity, Non-Compete and Interaction with Partners
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ARTICLE XII
Exclusivity, Non-Compete and Interaction with Partners
12.1 Exclusivity. Subject to the provisions of Sections 12.2 and 12.3
hereof and the other express provisions to the contrary contained herein, the
Partners agree as follows:
(a) Except for, the MCA/Pace Amphitheaters and the London
Amphitheater, this Agreement shall constitute an exclusive arrangement
between the Partners for the development, acquisition, construction,
management and operation of Amphitheaters anywhere within the Restricted
Portion of the Earth.
(b) None of Pace, any Affiliate of Pace or any Sony/Block Related
Party shall, directly or indirectly, be an owner, manager, operator,
lender, equity participant or consultant in or to any Amphitheater
anywhere in the Restricted Portion of the Earth, other than any one or
more of the MCA/Pace Amphitheaters and the London Amphitheater.
12.2 Exceptions to Exclusivity. The provisions of Section 12.1 shall not
prohibit the following activities:
(a) Either Partner, any Affiliate of a Partner or any Sony/Block
Related Party may provide booking services and production services (such
as logistical, technical and staging support services) for a fee at any
Amphitheater other than Amphitheaters which are within seventy-five (75)
miles of any Amphitheater in which the Partnership owns a Controlling
Interest.
(b) Either Partner, any Affiliate of a Partner or any Sony/Block
Related Party may act as a local promoter of any live entertainment event
in any Amphitheater other than Amphitheaters which are within seventy-five
(75) miles of any Amphitheater in which the Partnership owns a Controlling
Interest.
(c) Either Partner, any Affiliate of a Partner or any Sony/Block
Related Party ("Acquiring Person") may acquire control, or purchase all or
substantially all of the assets, of any Person ("Acquired Person") which
has ownership interests in Amphitheaters in the Restricted Portion of the
Earth so long as both of the following conditions are satisfied:
(1) The Acquired Person has not, during its most recently
completed fiscal year, obtained or derived more than five percent
(5%) of its gross revenue or its earnings (on a consolidated basis)
from the
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Article XII - Exclusivity, Non-Compete and Interaction with Partners
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development, acquisition, construction, management and operation of
Amphitheaters; and
(2) Within one hundred eighty (180) days after the acquisition
of control, or purchase of all or substantially all of the assets,
of the Acquired Person, the Acquiring Person has offered ("Offer")
to the Partnership the opportunity to purchase all of the acquired
Person's interests in Amphitheaters for a purchase price determined
at such time utilizing the same valuation procedures and methods
utilized in the valuation of the assets contributed to the capital
of the Partnership at the Existing Facility Closing. If the
Acquiring Person is Sony/Block, then Pace shall make the decision
and election, on behalf of the Partnership, as to whether the Offer
shall be accepted. If the Acquiring Person is Blockbuster or an
Affiliate of Blockbuster, then Pace and the Sony Subsidiary shall
jointly make the election and decision, on behalf of the
Partnership, as to whether the Offer shall be accepted. If the
Acquiring Person is Sony or an Affiliate of Sony, then Pace and the
Blockbuster Subsidiary shall jointly make the decision and election,
on behalf of the Partnership, as to whether the Offer shall be
accepted. If the Acquiring Person is Pace or an Affiliate of Pace,
then Sony/Block shall make the election and decision, on behalf of
the Partnership, as to whether the Offer shall be accepted. If the
Offer is accepted by the Partnership in accordance with the
foregoing provisions, then the purchase price shall be financed in
accordance with the provisions of Section 6.2 hereof.
(d) Blockbuster (or its Affiliates) may become an owner, manager,
operator, lender, equity participant or consultant of, in or to a Special
Miami Amphitheater. As used in the immediately preceding sentence, the
term "Special Miami Amphitheater" shall mean an Amphitheater which is (i)
located within ten (10) miles north or south of the county line dividing
Dade County and Broward County, Florida from the Everglades in the west to
the Atlantic Ocean in the east and (ii) a part of a larger integrated
project which includes other significant entertainment facilities and
attractions. To avoid any uncertainty or ambiguity, it is specifically
understood and acknowledged that nothing contained in this Section 12.2(d)
shall imply, or be deemed to imply, that (x) the Partners do not consider
the metropolitan areas included within south Florida, such as Miami, Miami
Beach and West Palm Beach as viable Markets for the development of
Amphitheaters by the Partnership or (y) the Partnership will not seek
development opportunities for Amphitheaters in south Florida.
12.3 Continuing Noncompete Covenant After Certain Circumstances. The
exclusivity provisions of Section 12.1 shall terminate upon (i) closing of the
Unwind
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Article XII - Exclusivity, Non-Compete and Interaction with Partners
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Procedure, (ii) dissolution and termination of the Partnership pursuant to
Article XVI hereof or (iii) a purchase of a Partner's Partnership Interest
pursuant to Sections 16.2 or 17.2(e) hereof. However, notwithstanding the
termination of the exclusivity provisions of Section 12.1 hereof pursuant to the
provisions contained in the immediately preceding sentence, the Partners shall
be bound by certain exclusivity and non-compete provisions upon the following
terms and under the following described circumstances:
(a) Unwind Procedure - Less than Six New Amphitheaters. If,
when Pace exercises the right to commence the Unwind Procedure
pursuant to a right contained in this Agreement, (x) there are less
than six (6) New Amphitheaters and (y) the Partnership has not
committed to construct, or acquire a Controlling Interest in an
Amphitheater which will be the sixth New Amphitheater upon
construction or acquisition thereof, then no Sony/Block Related
Party shall, for a period of three (3) years following the closing
of the Unwind Procedure, develop, acquire, construct, manage or own
(or take any action in contemplation of, or preparation for, any of
the foregoing) any Amphitheater in the Pace Designated Markets
(herein defined) other than (i) any Amphitheaters which a Sony/Block
Related Party may acquire at the Unwind Closing and (ii) through
Sony/Block's continuing interest in the Partnership (if applicable).
As used in the immediately preceding sentence, the term "Pace
Designated Markets" shall mean those Markets which are designated by
Pace providing notice thereof to Sony/Block at the closing of the
Unwind Procedure which, in any event, shall not exceed (x) five (5)
Qualified Markets and (y) five (5) other Markets. The following
additional provisions shall also apply with respect to these
matters:
(1) Within one (1) year after the closing of the Unwind
Procedure, Pace shall be obligated to pay to the Partnership the
total amount of Project Costs incurred by the Partnership prior to
the occurrence of the closing of the Unwind Procedure with respect
to the Pace Designated Markets.
(2) If, at any time during the three (3) years following the
closing of the Unwind Procedure, Pace or any Affiliate of Pace
(herein called a "Pace Party") commits to construct, or otherwise
acquire an interest in, an Amphitheater in any Qualified Market
which is not a Pace Designated Market, then the Pace Party shall
offer to Sony/Block the opportunity to participate in the
construction, or other acquisition of such interest in, such
Amphitheater on an equal basis with the Pace Party.
(b) Unwind Procedure - Six or More New Amphitheaters. If, when Pace
exercises its right to commence the Unwind Procedure pursuant to a right
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Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 130
contained in this Agreement, (x) there are six (6) or more New
Amphitheaters or (y) the Partnership has committed to construct, or
acquire a Controlling Interest in, an Amphitheater which will be the sixth
New Amphitheater upon construction or acquisition thereof, then the
Qualified Markets shall be allocated between the Partners in the manner
described below and neither Partner shall, for a period of three (3) years
after the closing of the Unwind Procedure, develop, acquire, construct,
manage or own (or take any action in contemplation of, or preparation for,
any of the foregoing) any Amphitheater which is located in any of the
Qualified Markets allocated to the other Partner as described below. The
allocation of the Qualified Markets between the Partners shall be made in
accordance with the following:
(1) At the closing of the Unwind Procedure, the Partners will
determine which of the Partners will select the first Qualified
Market by the toss of a U.S. minted coin. The toss of such coin
shall be governed by the following provisions:
(i) A representative of Pace at the closing of the
Unwind Procedure shall be responsible for selecting the coin
to be tossed and then subsequently tossing the coin.
(ii) A representative of Sony/Block shall have the
opportunity to inspect the coin selected by the representative
of Pace and the parties shall agree as to which side of the
coin will be designated the "head" of the coin and which side
will be designated as the "tail" of the coin. After these
initial agreements have been reached, the representative of
Pace will toss the coin in the air. While the coin is in the
air, the representative of Sony/Block will call either "heads"
or "tails" in a loud, audible voice. The representative of
Pace who tosses the coin into the air will allow it to fall to
the floor.
(iii) If the side of the coin called by the
representative of Sony/Block is facing up, then Sony/Block
shall be deemed the "winner of the flip." Otherwise, Pace
shall be deemed to be the "winner of the flip."
(2) At the closing of the Unwind Procedure, the "winner of the
flip" shall then proceed to select one of the Qualified Markets as a
Market which will be allocated to it. The other Partner shall then
proceed to select a Qualified Market which will be allocated to it
for purposes of this Section 12.3(b). The Partners shall continue
to
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Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 131
alternate selecting the Qualified Markets in this manner until all
Qualified Markets have been allocated between the Partners.
The noncompete covenant contained in this clause (b) shall apply to both
Partners and their respective Affiliates (and, in the case of Sony/Block,
to all of the Sony/Block Related Parties). If, during the three (3) year
period after the closing of the Unwind Procedure, either of the Partners
or any Affiliate of either of the Partners (and, in the case of
Sony/Block, any Sony/Block Related Party) should become interested in any
Amphitheater in any of the Qualified Markets which were allocated to it
pursuant to the foregoing provisions, then such Partner shall be obligated
to immediately reimburse to the Partnership all Project Costs previously
incurred by the Partnership with respect to such Qualified Market prior to
the closing of the Unwind Procedure. If (x) the provisions of this Section
12.3(b) are applicable at the closing of the Unwind Procedure instead of
the provisions of Section 12.3(a) hereof solely because the Partnership
has committed to construct, or acquire a Controlling Interest in, an
Amphitheater which will be the sixth New Amphitheater upon construction or
acquisition thereof and (y) the Partnership should at any time after the
closing of the Unwind Procedure for any reason (other than any default by
Pace or any of its Affiliates of its obligations under this Agreement)
elect not to construct or acquire such Amphitheater, then the Partners
shall immediately thereafter take such actions as may be reasonably
necessary to rescind all actions taken at the closing of the Unwind
Procedure pursuant to the provisions of this Section 12.3(b) and to
implement the provisions of Section 12.3(a) hereof effective retroactively
as of the time of the closing of the Unwind Procedure.
(c) Purchase of Interest for a Default or Withdrawal. If a Partner
has its Partnership Interest purchased pursuant to Section 16.2 hereof or
Section 17.2(e) hereof, then such Partner and its Affiliates (and, in the
case of Sony/Block, all Sony/Block Related Parties) may not, for a period
of two (2) years after the purchase of its Partnership Interest, develop,
acquire, construct, manage or own (or take any action in contemplation of,
or preparation for, any of the foregoing) any Amphitheater anywhere in the
Restricted Portion of the Earth other than an interest in an Amphitheater
which was acquired prior to such purchase in a manner which did not
violate the provisions of this Article XII.
(d) Dissolution. If the Partnership is dissolved and terminated
pursuant to Article XVI hereof as the result of an occurrence of an Event
of Withdrawal with respect to a Partner, then the withdrawing Partner and
its Affiliates (and, in the case of Sony/Block, all of the Sony/Block
Related Parties) may not, for a period of two (2) years after the
dissolution and termination of
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Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 132
the Partnership, develop, acquire, construct, manage or own (or take any
action in contemplation of, or preparation for, any of the foregoing) any
Amphitheater anywhere in the Restricted Portion of the Earth other than
(i) an Amphitheater which such Person acquired upon the final liquidating
distribution of the Partnership's assets and (ii) an interest in an
Amphitheater which was acquired prior to such dissolution and termination
in a manner which did not violate the provisions of this Article XII.
(e) Existing Market Noncompetes. In addition to all of the
foregoing, after (i) completion of the Unwind Closing, (ii) purchase of an
interest in the Partnership pursuant to Sections 16.2 or 17.2(e) or (iii)
dissolution and termination of the Partnership pursuant to Article XVI
hereof, neither Partner shall, for a period of twenty-five (25) years
after such occurrence, develop or construct (or take any action in
contemplation of, or preparation for, the development or construction of),
directly or indirectly, any Amphitheater which is located in the same
Market that an Amphitheater with respect to which the Partnership owned a
Controlling Interest prior to such occurrence is located and which
Controlling Interest is thereafter owned, in whole or in part by the other
Partner or its Affiliates (or, in the case of Sony/Block, by any
Sony/Block Related Party). The noncompete covenant contained in the
immediately preceding sentence shall apply to both Partners and their
respective Affiliates (and, in the case of Sony/Block, to all of the
Sony/Block Related Parties).
The provisions of this Section 12.3 shall survive the dissolution and
termination of the Partnership.
12.4 Reformation of Unenforceable Provisions. If any provision contained
in this Article XII is held to be unenforceable because of the scope, duration
or area of its applicability, the court making such determination shall have the
power to modify such scope, duration or area or all of them, and such provision
shall then be applicable in such modified form. Since a violation of this
Article XII will result in irreparable harm, the nondefaulting party shall be
entitled to an injunction restraining the commission or continuation of any
violation of the provisions of this Article XII or any other appropriate decree
of specific performance. Such remedies shall not be exclusive and shall be in
addition to any other remedy expressly provided for under the terms of this
Agreement or permitted at law or in equity.
12.5 Partners Arms-Length Dealing with Partnership.
(a) Subject to the provisions of Section 10.2(b)(5) hereof, it is
hereby recognized and acknowledged by and between the Partners that the
Partnership shall have the express right and authority to enter into
contracts and agreements, on an arms-length basis, with either of the
Partners or any Affiliates of
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Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 133
either of the Partners (and, in the case of Sony/Block any Sony/Block
Related Party) and all rights accruing to such Partner or such Affiliate
(or such Sony/Block Related Party) under such arms-length contract shall
be the sole and exclusive property of such contracting party and neither
the Partnership nor the other Partner or its Affiliate shall have any
participation rights therein or thereto.
(b) Just as with other contractual arrangements between the Partners
and their Affiliates, on the one hand, and the Partnership, on the other
hand, arrangements whereby Pace Concerts, Inc., an affiliate of Pace, acts
as the local promoter of events presented at any Amphitheater of the
Partnership shall require the unanimous approval of the Executive
Committee; provided, however, that it is hereby stipulated, acknowledged
and agreed that Pace Concerts, Inc. (or any successor thereto) shall have
the express right and authority, without any further consent or approval
from the Executive Committee, to act as the local promoter for all events
presented at the Woodlands Amphitheater upon, and subject to the following
terms, conditions and provisions:
PACE Concerts, Inc. is entitled to receive 20% of cash flow
related to the Woodlands Asset after all direct operating expenses,
including direct staff expenses for a marketing director,
production manager, sponsorship position, accounting position,
program sales position, a ticketing manager and two interns.
(c) The Partners acknowledge that each of them, and each of their
respective Affiliates, is engaged and may in the future be engaged in a
number of businesses related to the business of the Partnership and
(i) except as specifically provided in Sections 12.1 and 12.3 hereof,
nothing in this Agreement is intended to prohibit any Partner or any of
its Affiliates from owning, managing, operating, investing and
participating in their current businesses and investment interests or from
owning, managing, operating, investing and participating in additional
businesses and investment interests, and (ii) neither the Partnership nor
any other partner shall have any rights in or to any such businesses or
investments of such Partner or its Affiliates or any income or profits
derived therefrom.
(d) Notwithstanding any other provisions to the contrary contained
herein, the Partners hereby agree that Pace and each of its Affiliates
shall have the right to employ and use, at no cost or charge Pace or any
of its Affiliates, the services and time of the permanent staff at each of
the Partnership's Amphitheaters to assist in the entertainment promotion
businesses of Pace and its Affiliates in the Market in which such
Amphitheater is located, so long as such use does not interfere with the
management, use
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Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 134
or operation of such Amphitheater. In no event shall any one employee at
any of the Partnership's Amphitheaters spend a substantial portion of his
or her working time, on an annual basis, in connection with the provision
of any services or time to Pace or any of its Affiliates in assisting in
its entertainment promotion businesses pursuant to the provisions of the
immediately preceding sentence.
12.6 Special Provisions Relating to Rejection of Qualified Amphitheaters.
(a) Rejection Triggering Events. As used in this Section 12.6, the
following terms shall have the meanings indicated:
(1) "Sony/Block Rejection Triggering Event" shall mean the
occurrence of a Qualified Amphitheater becoming a Sony/Block
Rejected Amphitheater at a time when Sony/Block's Permitted Number
(herein defined) is zero. As used herein, the term "Sony/Block's
Permitted Number" shall mean, at any time, an integer determined in
accordance with the following provisions:
(i) Sony/Block's Permitted Number shall initially be 2.
(ii) Each time that a Qualified Amphitheater becomes a
Sony/Block Rejected Amphitheater, Sony/Block's Permitted
Number shall immediately thereafter be decreased by 1.
(iii) Each time that the Partnership commits to
construct, or acquire a Controlling Interest in, any
Amphitheater which will be a New Amphitheater upon
construction or acquisition thereof, Sony/Block's Permitted
Number shall immediately thereafter be increased by 1;
provided, however, if, for any reason (other than any default
by Pace or any of its Affiliates of its obligations under this
Agreement) the Partnership should subsequently fail to
construct, or acquire a Controlling Interest in, any such
Amphitheater notwithstanding its prior commitment,
Sony/Block's Permitted Number shall be reduced by 1 as if it
had never been increased as a result of the Partnership's
original commitment to construct, or acquire a Controlling
Interest in, such Amphitheater.
(iv) Notwithstanding anything to the contrary contained
herein, in no event shall Sony/Block's Permitted Number, at
any time, be greater than 3 or less than zero.
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Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 135
(v) When the Partnership commits to construct, or
acquire a Controlling Interest in, the Amphitheater which will
be the sixth New Amphitheater upon construction or acquisition
thereof, Sony/Block's Permitted Number shall immediately
thereafter be 3; provided, however, if, for any reason (other
than any default by Pace or any of its Affiliates of its
obligations under this Agreement), the Partnership should
subsequently fail to construct, or acquire a Controlling
Interest in, such Amphitheater notwithstanding its prior
commitment, Sony/Block's Permitted Number shall retroactively
return to the number which it had been prior to the
Partnership's commitment to construct, or acquire a
Controlling Interest in, such Amphitheater.
(2) "Pace Rejection Triggering Event" shall mean the
occurrence of a Qualified Amphitheater becoming a Pace Rejected
Amphitheater at a time when Pace's Permitted Number (herein defined)
is zero. As used herein, the term "Pace's Permitted Number" shall
mean, at any time, an integer determined in accordance with the
following provisions:
(i) Pace's Permitted Number shall initially be 2.
(ii) Each time that a Qualified Amphitheater becomes a
Pace Rejected Amphitheater, Pace's Permitted Number shall
immediately thereafter be decreased by 1.
(iii) Each time that the Partnership commits to
construct, or acquire a Controlling Interest in, any
Amphitheater which will be a New Amphitheater upon
construction or acquisition thereof, Pace's Permitted Number
shall immediately thereafter be increased by 1; provided,
however, if, for whatever reason, the Partnership should
subsequently fail to construct, or acquire a Controlling
Interest in, any such Amphitheater notwithstanding its prior
commitment, Pace's Permitted Number shall be reduced by one as
if it had never been increased as a result of the
Partnership's original commitment to construct, or acquire a
Controlling Interest in, such Amphitheater.
(iv) Notwithstanding anything to the contrary contained
herein, in no event shall Pace's Permitted Number, at any
time, be greater than three or less than zero.
(3) "Consecutive Turndown Rejection Triggering Event" shall
mean the occurrence of a Qualified Amphitheater, other than the
first
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Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 136
Sony/Block Rejected Amphitheater, becoming a Sony/Block Rejected
Amphitheater unless the Partnership has, since the last time that a
Qualified Amphitheater became a Sony/Block Rejected Amphitheater,
(i) constructed or acquired a New Amphitheater or (ii) committed
(and not withdrawn such commitment) to construct, or acquire
Controlling Interest in, an Amphitheater which will be a New
Amphitheater upon construction or acquisition thereof.
(b) Right to Commence Unwind Procedure. If, at the time of the
occurrence of a Sony/Block Rejection Triggering Event, (x) there are less
than nine (9) New Amphitheaters and (y) the Partnership has not committed
to construct, or acquire a Controlling Interest in, an Amphitheater which
will be the ninth New Amphitheater upon construction or acquisition
thereof, then Pace shall have the right and option to commence the Unwind
Procedure pursuant to the provisions of Article IX hereof upon the
occurrence of such Sony/Block Rejection Triggering Event. Pace may
exercise such right and option, each time that it may arise, at any time
on or before 45 days after Sony/Block has provided written notice to Pace
that such right and option has arisen in accordance with the provisions of
the immediately sentence. The giving of the notice by Sony/Block referred
to in the immediately preceding sentence shall not be a condition
precedent to Pace's right to exercise the right to commence the Unwind
Procedure. If Pace fails to exercise the right and option to commence the
Unwind Procedure created pursuant to this Section 1 2.6(b) any time that
such right may arise prior to the expiration of the time period referred
to in the second preceding sentence, then Pace shall be deemed to have
elected not to exercise such right and option with respect to that
specific instance giving rise to the right and option. If (i) Pace does
not have the right and option to commence the Unwind Procedure upon the
occurrence of a Sony/Block Rejection Triggering Event solely because the
Partnership has committed to construct, or acquire a Controlling Interest
in, an Amphitheater which will be the ninth New Amphitheater upon
construction or acquisition thereof and (ii) the Partnership should at any
time after the occurrence of such Sony/Block Rejection Triggering Event,
for any reason (other than any default by Pace or any of its Affiliates of
its obligations under this Agreement), elect not to construct, or acquire
a Controlling Interest in, such Amphitheater, then Pace shall thereafter
have the right to exercise the right and option to commence the Unwind
Procedure pursuant to the provisions of Article IX hereof upon a
determination that such Amphitheater will not be constructed or acquired
by the Partnership, exercisable at any time on or before 45 days after
Sony/Block has provided written notice to Pace that such right and option
has arisen in accordance with the provisions of this sentence.
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Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 137
(c) Effect of Rejection Triggering Events on Exclusivity Provisions.
Notwithstanding the provisions of Section 12.1 hereof,
(1) if a Sony/Block Rejection Triggering Event or a
Consecutive Turndown Rejection Triggering Event has occurred, then
Pace shall have the right to construct, or otherwise acquire a
Controlling Interest in, and thereafter manage, operate and use, the
Sony/Block Rejected Amphitheater which caused such Sony/Block
Rejection Triggering Event or such Consecutive Turndown Rejection
Triggering Event to occur for its own account outside of the
Partnership with or without one or more other participants or
partners without owing any obligation, liability or duty to
Sony/Block; and
(2) if a Pace Rejection Triggering Event has occurred, then
Sony/Block shall have the right to construct, or otherwise acquire a
Controlling Interest in, and thereafter manage, operate and use, the
Pace Rejected Amphitheater which caused such Pace Rejection
Triggering Event to occur for its own account outside of the
Partnership with or without one or more other participants or
partners without owing any obligation, liability or duty to Pace.
If either Partner elects to construct or acquire any Amphitheater outside
of the Partnership pursuant to the foregoing exclusions to the exclusivity
provisions of Section 12.1 hereof, then such Partner shall be required and
obligated to reimburse to the Partnership all Project Costs previously
incurred by the Partnership with respect to such Amphitheater.
(d) Disputes Related to Rejected Amphitheaters. If Pace believes a
proposed Amphitheater has become a Sony/Block Rejected Amphitheater, then
it shall provide written notice ("Rejection Occurrence Notice") thereof
to Sony/Block within 120 days after the event, circumstance or occurrence
which Pace believes caused such proposed Amphitheater to become a
Sony/Block Rejected Amphitheater. If Sony/Block does not provide written
notice to Pace within thirty (30) days after receipt of a Rejection
Occurrence Notice that Sony/Block disputes Pace's belief that such
proposed Amphitheater has become a Sony/Block Rejected Amphitheater, then
such proposed Amphitheater shall, for all purposes hereof, be deemed to be
a Sony/Block Rejected Amphitheater. If Sony/Block does provide written
notice ("Rejection Dispute Notice") to Pace within thirty (30) days after
receipt of a Rejection Occurrence Notice that it disputes Pace's belief
that such proposed Amphitheater has become a Sony/Block Rejected
Amphitheater, then the determination of whether such proposed Amphitheater
is a Sony/Block Rejected Amphitheater shall be made in accordance with the
following provisions:
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Article XII - Exclusivity, Non-Compete and Interaction with Partners
Page 138
(1) A deciding voter shall be selected in accordance with the
provisions of Section 18.13 hereof as soon as possible after
Sony/Block has provided to Pace a Rejection Dispute Notice.
(2) Within thirty (30) days after the selection of the
deciding voter referred to in clause (1) above, both Pace and
Sony/Block shall submit to the deciding voter written statements in
support of each such Partner's position concerning the dispute as to
whether such proposed Amphitheater has become a Sony/Block Rejected
Amphitheater.
(3) Within forty-five (45) days after selection of the
deciding voter referred to in clause (1) above, a meeting shall be
convened in New York, New York between and among the deciding voter
and representatives of both of the Partners at which meeting each
Partner shall be given an opportunity to present arguments to the
deciding voter in favor of its position concerning the dispute
related to whether such proposed Amphitheater has become a
Sony/Block Rejected Amphitheater.
(4) Within fifteen (15) days after the holding of such
meeting, the deciding voter shall be required to determine whether
such proposed Amphitheater has become a Sony/Block Rejected
Amphitheater. The decision of the deciding voter shall be final and
binding and each Partner agrees not to institute any litigation
concerning the decision of the deciding voter.
[END OF ARTICLE XII]
<PAGE>
Article XIII - Fiscal Matters
Page 139
ARTICLE XIII
Fiscal Matters
13.1 Fiscal Year. The Fiscal Year of the Partnership, for federal income
tax purposes, shall end on October 31, unless the Partners mutually designate a
different Fiscal Year which meets the requirements and provisions of the Code.
The Budget Year of the Partnership shall also end on October 31, unless the
Partners mutually designate a different financial accounting and book fiscal
year.
13.2 Books and Records. Proper books and records shall be kept, or caused
to be kept, in accordance with generally accepted accounting principles, by the
Manager with reference to all Partnership transactions, and each Partner shall
at all reasonable times during business hours have access thereto. Within ninety
(90) days after the close of each Budget Year, the Partnership shall furnish to
each Partner with respect to such Budget Year (i) a statement of income, (ii) a
statement of source and application of funds and (iii) a balance sheet as of the
close of such Budget Year. The foregoing financial statements shall be prepared
on the basis of generally accepted accounting principles, consistently applied,
and shall be audited and reported on by the independent certified accountants to
the Partnership hereafter selected, from time to time, by the Executive
Committee. Unless the Executive Committee shall subsequently agree otherwise,
(i) Price Waterhouse shall be the independent certified accountants to the
Partnership for its first five (5) Budget Years, (ii) Arthur Andersen shall be
the independent certified accountants to the Partnership for the next five (5)
Budget Years and (iii) Price Waterhouse and Arthur Andersen shall thereafter
alternate serving as the independent certified accountants to the Partnership in
successive five year periods thereafter. The Manager shall cooperate with said
accountants and shall provide them with all information which they may
reasonably request in order to audit the financial statements of the
Partnership. The cost of preparing the statements and of each audit shall be
paid for by the Partnership. Within thirty (30) days after the close of each
month, the Manager shall furnish to each Partner a monthly unaudited financial
report and operating statement of the Partnership (consisting of the same
financial statements as the financial statements prepared on an annual basis)
prepared in accordance with generally accepted accounting principles,
consistently applied, including a report of the Partnership's activities during
the period.
13.3 Partnership Bank Accounts. All funds of the Partnership shall be
deposited in its name in an account or accounts maintained at one or more
national or state banks selected by the Manager and approved by the Executive
Committee. Checks shall be drawn upon the Partnership and may be signed by the
Manager or such officers of the Partnership as may be designated by the Manager.
Duplicate copies of the monthly reconciliation statements sent by any such bank
to the Partner-
<PAGE>
Article XIII- Fiscal Matters
Page 140
ship shall be sent by the Manager to each Partner within ten (10) days of
receipt thereof by the Partnership.
13.4 Tax Matters and Reports. Any provision hereof to the contrary
notwithstanding, solely for United States Federal Income Tax purposes, each of
the Partners hereby recognizes that the Partnership will be subject to all
provisions of Subchapter K of Chapter 1 of Subtitle A of the Code; provided,
however, the filing of U.S. Partnership Returns of Income shall not be construed
to extend the purposes of the Partnership or expand the obligations or
liabilities of the Partners.
13.5 Tax Returns. The Manager shall cause to be prepared and filed all tax
returns and statements, if any, which must be filed on behalf of the Partnership
with any taxing authority. Prior to filing any such return or statement, the
Manager shall (i) deliver a copy of all income tax returns or statements to the
Partners for their review and comment at least thirty (30) days before the due
date (including all extensions) for such return and (ii) provide to the
Partners, and their designated representatives, access to the Partnership's tax
and audit workpapers upon request. The Manager shall cause a copy of all filed
tax returns to be delivered to the Partners promptly after the filing of such
return.
13.6 Tax Matters Partner. Pace shall be the "Tax Matters Partner" pursuant
to Section 6231(a)(7) of the Code and the applicable Treasury Regulations
promulgated thereunder. In its capacity as "Tax Matters Partner," Pace shall be
required to provide copies to Sony/Block of all material information relating to
any tax controversy involving the Partnership and, to the extent practicable,
allow participation by Sony/Block in any such tax controversy.
13.7 Section 754 Election. In the case of distribution of Partnership
property within the provisions of Section 734 of the Code or in the case of a
transfer of a Partnership Interest permitted by this Agreement made within the
provisions of Section 743 of the Code, the Partnership shall file an election
under Section 754 of the Code in accordance with the procedures set forth in the
applicable Treasury Regulations upon the request of any Partner. All accounting,
legal and other costs associated with the making of such election by the
Partnership shall be borne by the requesting Partner.
13.8 Reimbursement of Expenses. Provided that any such costs and expenses
are within the limits contained in the applicable Annual Operating Budget
approved by the Executive Committee, the Partnership shall be obligated to
reimburse the Partners and their respective Affiliates and employees for any and
all out-of-pocket costs and expenses of the types described in Exhibit D"
attached hereto and which relate to the business of the Partnership.
Notwithstanding the foregoing, it is specifically understood and acknowledged
that nothing contained in this Section 13.8 shall
<PAGE>
Article XIII - Fiscal Matters
Page 141
obligate the Partnership to reimburse any Partner or any of its Affiliates for
any salaries or overhead expenses.
13.9 Indemnity for Constructive Termination.
(a) Subject to the provisions contained clause (b) of this Section
13.9, if the Partnership should ever be considered terminated for purposes
of, and pursuant to, Section 708(b)(1)(B) of the Code (herein referred to
as a "Constructive Termination") as the result of any actual or
constructive transfer of Sony/Block Partnership's Interest, then
Sony/Block shall indemnify and hold harmless (on an after-tax basis
considering both (x) the federal, state and local income taxes which will
be owed by Pace on any payment or other amount received from Sony/Block
pursuant to this indemnity and (y) any federal, state and local income tax
benefits which will be realized by Pace on account of the indemnified
items) against any actual loss, cost or damage (including, but not limited
to, additional federal, state or local taxes being owed or the due date of
any such taxes being accelerated on account of the closing of the
Partnership's then current tax year) suffered by Pace as the result of the
occurrence of such Constructive Termination. Sony/Block shall also
reimburse Pace for its actual out-of-pocket costs for any attorneys' fees,
accountants' fees or other fees of other professionals or advisors in
enforcing or determining the amount of the indemnity obligation created
pursuant to the preceding sentence as the result of (i) the occurrence of
a Constructive Termination required to be indemnified pursuant to the
provisions contained in the immediately preceding sentence or (ii) the
receipt of a Constructive Termination Notice pursuant to clause (b) of
this Section 13.9.
(b) If Sony/Block or the partners in Sony/Block (Acting Party")
intend to take any action or make any transfer which will result in the
occurrence of a Constructive Termination or may result in a Constructive
Termination if Pace thereafter exercises its Equalizing Purchase Option,
then the Acting Party may provide a notice ("Constructive Termination
Notice") to Pace that such action or transfer is about to occur. If Pace
does not provide to Sony/Block, within 60 days after receipt of the
Constructive Termination Notice, a written notice ("Constructive
Termination Damage Notice") stating that such Constructive Termination
will result in an adverse tax consequence to Pace with a reasonably
detailed description of the type and magnitude of such adverse tax
consequences, then Sony/Block shall have no obligation to Pace under the
indemnity described in clause (a) of this Section 13.9. If Pace does
provide a Constructive Termination Damage Notice to Sony/Block within 60
days after receipt of a Constructive Termination Notice, then Sony/Block's
liabilities under the indemnity described in clause (a) of this Section
13.9 shall be limited to the
<PAGE>
Article XIII - Fiscal Matters
Page 142
type and magnitude of adverse tax consequences described by Pace in the
Constructive Termination Notice.
(c) The indemnity and other obligations imposed upon Sony/Block
pursuant to the provisions of Section 13.9(a) (as limited by the
provisions of Section 13.9(b) hereof) shall also be applicable to Pace, in
the event of a Constructive Termination resulting from any actual or
constructive transfer of Pace's Partnership Interest at any time after the
exercise by Pace of its right to purchase the Equalizing Partnership
Interest pursuant to the Equalizing Purchase Option described in Section
15.3(b) hereof.
(d) The indemnity obligations contained in this Section 13.9 shall
not apply with respect to any Constructive Termination which may be caused
in connection with, or as the result of, the occurrence of the Unwind
Procedure.
[END OF ARTICLE XIII]
<PAGE>
Article XIV - Representations and Warranties of Partners
Page 143
ARTICLE XIV
Representations and Warranties of Partners
14.1 Representations and Warranties of Pace. In order to induce Sony/Block
to enter into this Agreement, Pace hereby makes the following representations
and warranties to Sony/Block.
(a) Pace has taken or caused to be taken all necessary action to
authorize the execution, delivery and performance of this Agreement and
the transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligations of Pace, enforceable in accordance
with its terms, except to the extent that enforcement thereof may be
limited by applicable bankruptcy, insolvency or other similar laws
affecting the enforcement of creditor's rights generally and the
availability of equitable remedies. Neither the execution and delivery of
this Agreement, nor compliance with any of the provisions hereof, by Pace,
will violate any law or regulation, or any order, writ or decree of any
court or governmental instrumentality, or will conflict with, or result in
the breach of, or constitute a default in any respect under, any
indenture, mortgage, deed of trust, agreement or other instrument to which
Pace, PMG or PEC is a party or may be bound or by which any of its
properties may be affected or will violate any provision of the
certificate or articles of incorporation (as amended to date) or by-laws
(as currently in effect) of Pace.
(b) There is no claim, litigation, proceeding or governmental
investigation pending, or, so far as is known to Pace, threatened, against
or relating to Pace, PEC or PMG or any of their respective properties or
assets which questions the validity or enforceability of this Agreement or
any of the transactions contemplated hereby.
(c) None of Pace, PEC or PMG is in default under any indenture,
mortgage, deed of trust, agreement or other instrument to which it is a
party, or by which it or any of its properties may be bound or affected,
except for such defaults which, individually or in the aggregate, will not
have a material and adverse effect on the business, operations, property
or assets or in the condition, financial or otherwise, of Pace or PMG.
(d) All information, reports, papers, financial data and other
materials given to Sony/Block or any Sony/Block Related Party with respect
to Pace or any of its Affiliates or any of the Amphitheaters or
partnerships owning Amphitheaters which Pace or its Affiliates have any
ownership interest in are accurate, complete and correct in all material
respects and do not omit any
<PAGE>
Article XIV - Representations and Warranties of Partners
Page 144
fact, the inclusion of which is necessary to prevent the facts contained
therein from being materially misleading.
14.2 Representations and Warranties of Sony/Block. In order to induce Pace
to enter into this Agreement, Sony/Block hereby makes the following
representations and warranties to Pace.
(a) Sony/Block has taken or caused to be taken all necessary action
to authorize the execution, delivery and performance of this Agreement and
the transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligations of Sony/Block, enforceable in
accordance with its terms, except to the extent that enforcement thereof
may be limited by applicable bankruptcy, insolvency or other similar laws
affecting the enforcement of creditor's rights generally and the
availability of equitable remedies. Neither the execution and delivery of
this Agreement, nor compliance with any of the provisions of hereof, by
Sony/Block, will violate any law or regulation, or any order, writ or
decree of any court or governmental instrumentality, or will conflict
with, or result in the breach of, or constitute a default in any respect
under, any indenture, mortgage, deed of trust, agreement or other
instrument to which Sony/Block is a party or may be bound or by which any
of its properties may be affected or will violate any provision of the
partnership agreement of Sony/Block (as amended to date) or the
certificate or articles of incorporation (as amended to date) or by-laws
(as currently in effect) of the Sony Subsidiary or the Blockbuster
Subsidiary.
(b) There is no claim, litigation, proceeding or governmental
investigation pending, or, so far as is known to Sony/Block, threatened,
against or relating to Sony/Block or any of its respective properties or
assets which questions the validity or enforceability of this Agreement or
any of the transactions contemplated hereby.
(c) Sony/Block is not in default under any indenture, mortgage, deed
of trust, agreement or other instrument to which it is a party, or by
which it or any of its properties may be bound or affected, except for
such defaults which, individually or in the aggregate, will not have a
material and adverse effect on the business, operations, property or
assets or in the condition, financial or otherwise of Sony/Block.
(d) All information, reports, papers, financial data and other
materials given to Pace or any of the Affiliates of Pace with respect to
Sony/Block or any Sony/Block Related Party or any of the Amphitheaters in
which any of the Sony/Block Related Parties have an ownership interest are
accurate, complete and correct in all material respects and do not omit
any fact, the inclusion of
<PAGE>
Article XIV - Representations and Warranties of Partners
Page 145
which is necessary to prevent the facts contained therein from being
materially misleading.
14.3 Indemnification Provisions.
(a) Pace shall reimburse, indemnify and hold the Partnership
harmless from and against:
(1) Any and all damages, losses, deficiencies, liabilities,
costs and expenses based upon, resulting from, relating to or
arising out of any one or more of the following matters:
(i) Any of the representations expressly made by Pace in
this Agreement being false or misleading to a material extent;
(ii) Any of the representations expressly made by the
owner of any Existing Pace Asset in the Executory Contract or
the Admission Agreement being false or misleading;
(iii) The breach or violation of any covenant or
agreement made in the Executory Contract with respect to any
Existing Pace Asset by the owner of such Existing Pace Asset;
and
(2) Any duty, responsibility, obligation or liability of any
kind or nature relating to any of the Existing Pace Assets or any of
the owners of the Existing Pace Assets which are not expressly
assumed by the Partnership pursuant to the terms of the Executory
Contract or the Admission Agreement.
(3) Any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments,
costs and other expenses (including, without limitation, reasonable
attorneys' fees) incident to (i) any of the matters listed and
described in clauses (a)(1) or (2) above or (ii) the enforcement of
the provisions of this Section 14.3(a).
(b) The Sony Subsidiary shall reimburse, indemnify and hold the
Partnership harmless from and against:
(1) Any and all damages, losses, deficiencies, liabilities,
costs and expenses based upon, resulting from, relating to or
arising out of any one or more of the following matters:
<PAGE>
Article XIV - Representations end Warranties of Partners
Page 146
(i) Any of the representations expressly made by
Sony/Block in this Agreement, to the extent such
representations relate to Sony/Block, the Sony Subsidiary or
any Affiliate of the Sony Subsidiary, being false or
misleading to a material extent;
(ii) Any of the representations expressly made by the
owner of an Existing Sony Asset in the Executory Contract or
the Admission Agreement being false or misleading;
(iii) The breach or violation of any covenant or
agreement made in the Executory Contract with respect to any
Existing Sony Asset by the owner of such Existing Sony Asset;
and
(2) Any duty, responsibility, obligation or liability of any
kind or nature relating to any of the Existing Sony Assets or any of
the owners of the Existing Sony Assets which are not expressly
assumed by the Partnership pursuant to the terms of the Executory
Contract or the Admission Agreement.
(3) Any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments,
costs and other expenses (including, without limitation, reasonable
attorneys' fees) incident to (i) any of the matters listed and
described in clauses (b)(1) or (2) above or (ii) the enforcement of
the provisions of this Section 14.3(b).
(c) The Blockbuster Subsidiary shall reimburse, indemnify and hold
the Partnership harmless from and against:
(1) Any and all damages, losses, deficiencies, liabilities,
costs and expenses based upon, resulting from, relating to or
arising out of any one or more of the following matters:
(i) Any of the representations expressly made by
Sony/Block in this Agreement, to the extent such
representations relate to Sony/Block, the Blockbuster
Subsidiary or any Affiliate of the Blockbuster Subsidiary,
being false or misleading to a material extent;
(ii) Any of the representations expressly made by the
owner of an Existing Blockbuster Asset in the Executory
Contract or the Admission Agreement being false or misleading;
<PAGE>
Article XIV - Representations and Warranties of Partners
Page 147
(iii) The breach or violation of any covenant or
agreement made in the Executory Contract with respect to any
Existing Blockbuster Asset by the owner of such Existing
Blockbuster Asset; and
(2) Any duty, responsibility, obligation or liability of any
kind or nature relating to any of the Existing Blockbuster Assets or
any of the owners of the Existing Blockbuster Assets which are not
expressly assumed by the Partnership pursuant to the terms of the
Executory Contract or the Admission Agreement.
(3) Any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments,
costs and other expenses (including, without limitation, reasonable
attorneys' fees) incident to (i) any of the matters listed and
described in clauses (c)(1) or (2) above or (ii) the enforcement of
the provisions of this Section 14.3(c).
(d) If the Partnership (herein called the "Indemnitee") receives
notice of any claim or the commencement of any action or proceeding with
respect to which a Person ("Indemnitor") is obligated to provide
indemnification pursuant to the provisions of this Section 14.3, then the
Indemnitee shall promptly provide the Indemnitor notice thereof. Such
notice shall be a condition precedent to the Indemnitor's obligation to
provide any indemnity under this Section 14.3 unless the Indemnitee can
establish that the Indemnitor has not been materially prejudiced thereby.
If the Indemnitor chooses to defend any claim, it shall be permitted to do
so (unless the Indemnitee can establish that (x) it is reasonably likely
to bear a greater portion of the potential losses associated with such
claim or (y) the pendency of such claim is reasonably likely to have a
material adverse effect on the Indemnitee's continued business operations)
and the Indemnitee shall make available to the Indemnitor any books,
records or other documents within its control that are necessary or
appropriate for such defense. The Indemnitee shall not settle any claim
or liability for which it is claiming indemnification hereunder without
the consent of the Indemnitor (such consent not to be unreasonably
withheld).
(e) With respect to the obligations to reimburse, indemnify and hold
the Partnership harmless pursuant to the provisions of this Section 14.3
relating to any Existing Asset which is, in undivided interests, both an
Existing Pace Asset and an Existing Sony Asset, such obligations to
reimburse, indemnify and hold the Partnership harmless shall be the
several obligation of the Sony Subsidiary and Pace in proportion to their
respective undivided interests.
<PAGE>
Article XIV - Representations and Warranties of Partners
Page 148
(f) Notwithstanding anything to the contrary contained in this
Section 14.3, in no event shall any Indemnitor be obligated to the
Partnership pursuant to the provisions hereof except and to the extent
that the total indemnity obligation of such Indemnitor pursuant to this
Section 14.3 exceeds, in the aggregate, $75,000.00.
(g) If an Indemnitor should ever have any indemnity obligation to
the Partnership pursuant to the provisions of this Section 14.3, such
Indemnitor shall have the right to defer payment of such obligation until
the next succeeding November 1st so as to enable such Indemnitor to apply,
by way of offset, its right to a distribution under Section 8.4 hereof
against such indemnity obligation; provided, however, that (i) if the
Executive Committee determines that, for cash flow purposes, the
Partnership requires immediate payment of any such indemnity obligation,
then no right of deferral and offset shall be available and (ii) in any
event, no deferral of any indemnity obligation may extend beyond the next
succeeding November 1st.
[END OF ARTICLE XIV]
<PAGE>
Article XV - Transfer Restrictions
Page 149
ARTICLE XV
Transfer Restrictions
15.1 Partner Interest.
(a) Except for (i) a transfer of a Partnership Interest made
pursuant to the provisions of Section 16.2, Section 17.2(e) or Section
17.3 of this Agreement, (ii) a pledge of a Partner's right to receive cash
distributions pursuant to the provisions of clause (b) of this Section
15.1 or (iii) a pledge of Sony/Block's Partnership Interest to the Sony
Subsidiary or the Blockbuster Subsidiary pursuant to a requirement
contained in the Partnership Agreement of Sony/Block, neither Partner
shall have the right to sell, assign, convey, transfer, pledge or
hypothecate, by operation of law or otherwise, all or any portion of its
Partnership Interest without the prior consent of the other Partner, it
being agreed and acknowledged that such consent may be withheld in such
other Partner's sole discretion for any reason whatsoever or for no
reason. Any purported sale, assignment, conveyance, transfer, pledge or
hypothecation of any Partner's Partnership Interest in violation of the
provisions of this Section 15.1(a) shall be voidable at the option of the
other Partner ab initio.
(b) Notwithstanding the provisions of Section 15.1(a) hereof, each
Partner shall have the limited right and authority to pledge or
hypothecate such Partner's right to receive Ordinary Distributions (herein
defined) as security for the payment of borrowed money. Any lender
accepting a pledge or hypothecation of a Partner's right to receive
Ordinary Distributions from the Partnership shall be required, as a
condition to the effectiveness of such pledge or hypothecation, to execute
and deliver to the Partnership and the other Partner an instrument, in
form and content reasonably acceptable to the other Partner, evidencing
and acknowledging the following matters:
(1) That such lender's security interest or lien attaches only
to the pledging Partner's right to receive Ordinary Distributions
from the Partnership.
(2) That such lender's security interest or lien does not
attach to, or otherwise affect, any other rights, titles or
interests of the pledging Partner in, to or under the Partnership.
(3) That the lender's lien or security interest is subordinate
and subject to any and all rights, privileges, liens, claims or
other matters of the Partnership and the other Partner (including,
without limitation, any claim made under the provisions of Article
XVII hereof), whether created
<PAGE>
Article XV - Transfer Restrictions
Page 150
pursuant to the terms of this Agreement or any other agreement and
whether currently existing or hereafter arising.
(4) That the lender accepting such pledge or hypothecation
shall, in no event, have any greater right to receive any Ordinary
Distributions than the pledging Partner would have had to receive
such Ordinary Distributions in the event that such pledge had never
been made.
As used in this Section 15.1(b), the term "Ordinary Distributions" shall
mean only those distributions required to be made to the Partners by the
Partnership pursuant to the provisions of Section 8.4(b)(2)(ii) or Section
8.6 hereof.
15.2 Ownership Interest in Partners.
(a) Capital Stock of Pace. None of the capital stock of Pace may, at
any time, be issued, sold, conveyed or transferred to any person other
than an Affiliate of Allen J. Becker (or, after the death of Allen J.
Becker, an Affiliate of a lineal descendant of Allen J. Becker). If any
capital stock of Pace is hereafter to be issued, sold, conveyed or
transferred to an Affiliate of Allen J. Becker (or, after the death of
Allen J. Becker, an Affiliate of a lineal descendant of Allen J. Becker)
pursuant to the exception contained in the immediately preceding sentence,
then concurrently with the closing of such issuance, sale, conveyance or
transfer, the transferee shall deliver a written instrument to Sony/Block
in which it agrees to be bound by the transfer restrictions on such
transferee's stock in Pace contained in this Section 15.2(a). All share
certificates evidencing the capital stock in Pace shall include an
appropriate legend which references the transfer restrictions contained
in this Section 15.2(a).
(b) Issuance of Sony/Block Partnership Interests. Subject to the
provisions of Section 15.4 hereof, no partnership interest in Sony/Block
shall be issued to any Person other than a Sony/Block Related Party.
(c) Blockbuster's Ownership Interests. None of the capital stock of
the Blockbuster Subsidiary or the partnership interest of the Blockbuster
Subsidiary in Sony/Block may, at any time, be issued, sold, conveyed or
transferred to any person other than a Permitted Blockbuster Person. If
any capital stock of the Blockbuster Subsidiary or the partnership
interest of the Blockbuster Subsidiary in Sony/Block is hereafter to be
issued, sold, conveyed or transferred to a Permitted Blockbuster Person
pursuant to the exception contained in the immediately preceding sentence,
then, concurrently with the closing of such issuance, sale, conveyance or
transfer to such Permitted Blockbuster Person, such Permitted Blockbuster
Person shall deliver a written
<PAGE>
Article XV - Transfer Restrictions
Page 151
instrument to Pace in which such Permitted Blockbuster Person agrees to be
bound by the transfer restrictions on the stock in the Blockbuster
Subsidiary or the partnership interest in Sony/Block, whichever is
applicable, contained in this Section 15.2(c). All share certificates
evidencing the capital stock in the Blockbuster Subsidiary shall contain
an appropriate legend which references the transfer restrictions contained
in this Section 15.2(c). The following additional provisions shall apply:
(1) If any SCA Limited Party acquires all or any portion of
the capital stock of the Blockbuster Subsidiary or the partnership
interest of the Blockbuster Subsidiary in Sony/Block, then the last
sentence of Section 1.2 of this Agreement shall be deemed amended in
such a manner that such SCA Limited Party shall at all times
thereafter be deemed to be one of the Affiliates of the Sony
Subsidiary for all purposes hereof.
(2) If all or any portion of the partnership interest of the
Blockbuster Subsidiary in Sony/Block is sold, conveyed or
transferred to any Permitted Blockbuster Person, then the following
provisions shall apply:
(i) If the Permitted Blockbuster Person is a Blockbuster
Party and has acquired all of the partnership interest of the
Blockbuster Subsidiary in Sony/Block, then such Blockbuster
Party shall (x) thereafter be, for all for purposes of this
Agreement, the "Blockbuster Subsidiary" and (y) be required,
as a condition to the completion of such sale, conveyance or
transfer, to cause its shareholders to deliver a written
instrument to Pace to agree to be bound by the transfer
restrictions on the stock in the Blockbuster Subsidiary
contained herein.
(ii) If the Permitted Blockbuster Person is a
Blockbuster Party and has acquired only a portion of the
partnership interest of the Blockbuster Subsidiary in
Sony/Block, then such Blockbuster Party shall (x) thereafter
be, together with the Blockbuster Subsidiary, collectively the
"Blockbuster Subsidiary" for all purposes of this Agreement
and (y) be required, as a condition to the closing of such
sale, conveyance or transfer, to cause its shareholders to
deliver a written instrument to Pace to agree to be bound by
the transfer restrictions on the stock in the Blockbuster
Subsidiary contained herein.
(iii) If the Permitted Blockbuster Person is an SCA
Total Party and has acquired only a portion of the partnership
interest
<PAGE>
Article XV - Transfer Restrictions
Page 152
of the Blockbuster Subsidiary in Sony/Block, then (x) such SCA
Total Party shall (A) thereafter be, together with the Sony
Subsidiary, collectively the "Sony Subsidiary" for all
purposes of this Agreement and (B) be required, as a condition
to the closing of such sale, conveyance or transfer, to cause
its shareholders to deliver a written instrument to Pace to
agree to be bound by the transfer restrictions on the stock in
the Sony Subsidiary contained herein and (y) the Blockbuster
Subsidiary shall continue to be the "Blockbuster Subsidiary"
for all purposes of this Agreement.
(iv) If the Permitted Blockbuster Person is an SCA Total
Party and has a acquired all of the partnership interest of
the Blockbuster Subsidiary in Sony/Block, then such SCA Total
Party shall (x) thereafter be, for all purposes of this
Agreement, the "Blockbuster Subsidiary" and (y) be required,
as a condition to the closing of such sale, conveyance or
transfer, to cause its shareholders to deliver a written
instrument to Pace to agree to be bound by the transfer
restrictions on the stock in the Blockbuster Subsidiary
contained herein.
(d) Sony's Ownership Interests. None of the capital stock of the
Sony Subsidiary or the partnership interest of the Sony Subsidiary in
Sony/Block may, at any time, be issued, sold, conveyed or transferred to
any person other than a Permitted Sony Person. If any capital stock of the
Sony Subsidiary or the partnership interest of the Sony Subsidiary in
Sony/Block is hereafter to be issued, sold, conveyed or transferred to any
Permitted Sony Person pursuant to the exception contained in the
immediately preceding sentence, then concurrently with the closing of such
issuance, sale, conveyance or transfer to such Permitted Sony Person, such
Permitted Sony Person shall deliver a written instrument to Pace in which
such Permitted Sony Person agrees to be bound by the transfer restrictions
on the stock in the Sony Subsidiary or the partnership interest in
Sony/Block whichever is applicable, contained in this Section 15.2(d). All
share certificates evidencing the capital stock in the Sony Subsidiary
shall contain an appropriate legend which references the transfer
restrictions contained in this Section 15.2(d). The following additional
provisions shall apply:
(1) If any SCA Limited Party acquires all or any portion of
the capital stock of the Sony Subsidiary or the partnership interest
of the Sony Subsidiary in Sony/Block, then the last sentence of
Section 1.2 of this Agreement shall be deemed amended in such a
manner that such SCA Limited Party shall at all times thereafter be
deemed to be one of the Affiliates of the Sony Subsidiary for all
purposes hereof.
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Article XV - Transfer Restrictions
Page 153
(2) If all or any portion of the partnership interest of the
Sony Subsidiary in Sony/Block is sold, conveyed or transferred to
any Permitted Sony Person, then the following provisions shall
apply:
(i) If the Permitted Sony Person is an SCA Total Party
and has acquired all of the partnership interest of the Sony
Subsidiary in Sony/Block, then such Permitted Sony Person
shall (x) thereafter be for all purposes of this Agreement,
the "Sony Subsidiary" and (y) be required, as a condition to
the completion of such sale, conveyance or transfer, to cause
its shareholders to deliver a written instrument to Pace to
agree to be bound by the transfer restrictions on the stock in
the Sony Subsidiary contained herein.
(ii) If the Permitted Sony Person is an SCA Total Party
and has acquired only a portion of the partnership interest of
the Sony Subsidiary in Sony/Block, then such SCA Total Party
shall (x) thereafter be, together with the Sony Subsidiary,
collectively the "Sony Subsidiary" for all purposes of this
Agreement and (y) be required, as a condition to the closing
of such sale, conveyance or transfer, to cause its
shareholders to deliver a written instrument to Pace to agree
to be bound by the transfer restrictions on the stock in the
Sony Subsidiary contained herein.
(iii) If the Permitted Sony Person is a Blockbuster
Party and has acquired only a portion of the partnership
interest of the Sony Subsidiary in Sony/Block, then (x) such
Blockbuster Party shall (A) thereafter be, together with the
Blockbuster Subsidiary, collectively the "Blockbuster
Subsidiary" for all purposes of this Agreement and (B) be
required, as a condition of the closing of such sale,
conveyance or transfer, to cause its shareholders to deliver a
written instrument to Pace to agree to be bound by the
transfer restrictions on the stock in the Blockbuster
Subsidiary contained herein and (y) the Sony Subsidiary shall
continue to be the "Sony Subsidiary" for all purposes of this
Agreement.
(iv) If the Permitted Sony Person is a Blockbuster Party
and has acquired all of the partnership interest of the Sony
Subsidiary in Sony/Block, then such Blockbuster Party shall
(x) thereafter be, for all purposes of this Agreement, the
"Sony Subsidiary" and (y) be required, as a condition of the
closing of such sale, conveyance or transfer, to cause its
shareholders to deliver a
<PAGE>
Article XV - Transfer Restrictions
Page 154
written instrument to Pace to agree to be bound by the
transfer restrictions on the stock in the Sony Subsidiary
contained herein.
(e) Certain Defined Terms. As used in this Section 15.2, the
following terms shall have the respective meanings indicated:
(1) "Permitted Blockbuster Persons": (i) the SCA Total
Parties, (ii) the Blockbuster Parties and (iii) so long as there has
been no prior divestiture of a material portion of Blockbuster's
assets (determined on a consolidated basis) any Person which
acquires all or substantially all of the assets of Blockbuster.
(2) "Permitted Sony Persons": (i) the SCA Total Parties, (ii)
the Blockbuster Parties and (iii) so long as there has been no prior
divestiture of a material portion of Sony's assets (determined on a
consolidated basis), any Person which acquires all or substantially
all of the assets of Sony.
(3) "SCA": Sony Corporation of America, a New York
corporation.
(4) "SCA Limited Parties": The SCA Total Parties other than
the Sony Parties.
(5) "SCA Total Parties": (i) SCA and (ii) Persons that are,
directly or indirectly, through one or more intermediaries,
controlled by SCA.
(6) "Sony Parties": (i) Sony and (ii) Persons that are,
directly or indirectly, through one or more intermediaries,
controlled by Sony.
(7) "Blockbuster Parties": Blockbuster and its Affiliates.
(8) "control": When used with respect to any specified Person,
the power to direct the management and policies of the specified
Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise.
15.3 Transfer Triggering Events. Without in any way limiting, expanding or
otherwise affecting the transfer restrictions set forth elsewhere in this
Article XV, the following provisions shall apply upon the occurrence at any
time, or from time to time, of any Transfer Triggering Event:
<PAGE>
Article XV - Transfer Restrictions
Page 155
(a) Pace's Right to Unwind for a Transfer Triggering Event Prior to
April 1, 1996. Pace shall have the right and option to commence the Unwind
Procedure pursuant to the provisions of Article IX hereof each time that a
Transfer Triggering Event occurs prior to April 1, 1996. Pace may exercise
the right and option to commence the Unwind Procedure pursuant to this
Section 15.3(a) each time that it may arise, at any time on or before
thirty (30) days after Sony/Block has provided written notice to Pace that
a Transfer Triggering Event has occurred. The giving of the notice by
Sony/Block referred to in the immediately preceding sentence shall not be
a condition precedent to Pace's right to exercise the right to commence
the Unwind Procedure. If Pace fails to exercise the right and option to
commence the Unwind Procedure created pursuant to this Section 15.3(a) any
time that such right may arise prior to the expiration of the time period
referred to in the second preceding sentence, then Pace shall be deemed to
have elected not to exercise such right and option with respect to that
specific instance giving rise to the right and option. Pace shall not
have the right and option to commence the Unwind Procedure pursuant to the
provisions of this Section 15.3(a) upon the occurrence of any Transfer
Triggering Event which occurs on or after April 1, 1996.
(b) Pace's Right to Purchase a 16-2/3rds% Percentage Interest from
Sony/Block. If, upon the occurrence of a Transfer Triggering Event, Pace
either (x) elects not to exercise its right and option to commence the
Unwind Procedure or (y) does not have the right and option to commence the
Unwind Procedure because such Transfer Triggering Event occurs on or after
April 1, 1996, then Pace shall have a right and option ("Equalizing
Purchase Option"), exercisable by notice to Sony/Block at any time within
30 days after notice is provided to Pace by Sony/Block pursuant to Section
15.5(a) hereof with respect to such Transfer Triggering Event, to purchase
and acquire a 16-2/3% Percentage Interest in the Partnership ("Equalizing
Partnership Interest") from Sony/Block upon the following terms,
conditions and provisions:
(1) Equalizing Purchase Price. The purchase price ("Equalizing
Purchase Price") of the Equalizing Partnership Interest shall be
determined by making the appropriate mathematical computations to
the corresponding price ("Corresponding Price") of the direct or
indirect interest in Sony/Block which was made the subject of a
transfer that gave rise to the occurrence of the Transfer Triggering
Event, subject to the following provisions:
(i) If Sony/Block owns assets other than its Partnership
Interest in the Partnership, then the Corresponding Price
shall be appropriately allocated between Sony/Block's
Partnership Interest in the Partnership and the other assets
of Sony/Block. Only that
<PAGE>
Article XV - Transfer Restrictions
Page 156
portion of the Corresponding Price allocated to Sony/Block's
Partnership Interest in the Partnership shall be utilized in
determining the Equalizing Purchase Price.
(ii) The Corresponding Price shall be only that portion
of the purchase price attributable to the equity interest
acquired in the transfer which gave rise to the Transfer
Triggering Event net of any Sony/Block or Partnership debt
assumed or otherwise involved in such transfer.
(iii) Sony/Block shall be obligated to provide to Pace
all relevant financial data and other information that is
reasonably necessary to assist in the calculation or
determination of the Corresponding Price; provided, that Pace
shall use its reasonable efforts to prevent disclosure to any
Person of such data and information.
(iv) If the Corresponding Price is not readily
determinable, or if the Partners are unable to agree upon the
amount of the Corresponding Price or the resulting
determination of the Equalizing Purchase Price, then the
Equalizing Purchase Price shall be determined as follows:
(A) A deciding voter shall be selected in
accordance with the provisions of Section 18.13 hereof
as soon as possible after one Partner has given notice
to the other Partner that it has been unable to agree
with the other Partner as to the calculation of the
Equalizing Purchase Price.
(B) Within ten (10) business days after the
selection of the deciding voter referred to in clause
(1) above, each of the Partners shall submit to the
deciding voter such written information as may be
necessary to support such Partner's determination and
calculation of the Equalizing Purchase Price.
(C) Within fifteen (15) business days after the
selection of the deciding voter referred to in clause
(A) above, a meeting shall be convened in New York, New
York between and among the deciding voter and
representatives of the Partners at which meeting each
Partner shall be given an opportunity to present
arguments to the deciding
<PAGE>
Article XV - Transfer Restrictions
Page 157
voter in favor of such Partner's method of calculating
the Equalizing Purchase Price.
(D) Within five (5) days after the holding of such
meeting, the deciding voter shall be required to
determine which Partner's calculation of the Equalizing
Purchase Price is more reasonable and proper. The
deciding voter shall be required to select between the
two proposed determinations and calculations of the
Equalizing Purchase Price and shall not, without the
prior consent of both Partners, make any compromises
pursuant to which portions of the two competing
calculations and computations are combined. The decision
of the deciding voter shall be final and binding and
each Partner agrees not to institute any litigation
concerning the decision of the deciding voter.
(E) All costs paid or incurred in connection with
the process of determining the Equalization Purchase
Price pursuant to the provisions of this Section
15.3(b)(1)(iv) shall be paid by the Partner whose
calculation and computation of the Equalization Purchase
Price is not selected by the deciding voter.
If, pursuant to the foregoing procedures, the deciding voter
does not select Pace's computation and calculation of the
Equalizing Purchase Price, then Pace shall have the right and
option, for a period of five (5) days after publication of the
deciding voter's decision, to rescind its prior election
pursuant to the Equalizing Purchase Option to purchase and
acquire the Equalizing Partnership Interest. Unless rescinded
pursuant to the provisions contained in the immediately
preceding sentence, upon the giving of notice of exercise of
the Equalizing Purchase Option pursuant to the provisions
hereof, Pace shall be irrevocably obligated to consummate the
Equalizing Purchase Option as herein provided.
(2) Example. To assist in the interpretation of the provisions
of clause (1) of this Section 15.3(b) assume that (x) the Sony
Subsidiary sells its partnership interest in Sony/Block to an
Affiliate of the Blockbuster Subsidiary in 1998 for a cash purchase
price of $5,333,333 plus an assumption and indemnification for all
Sony/Block and Partnership debts and obligations, (y) Sony/Block
owns one other asset at the time other than the Partnership Interest
in the Partnership and the parties
<PAGE>
Article XV - Transfer Restrictions
Page 158
stipulate that the value of the Partnership Interest constitutes 75%
of the value of Sony/Block's assets and the other asset constitutes
25% of the value of Sony/Block's assets and (z) there are no
minority partners in Sony/Block so that the Blockbuster Affiliate is
acquiring a 50% interest in Sony/Block from the Sony Subsidiary.
Based upon the assumed facts contained in the immediately preceding
sentence, the Equalizing Purchase Price would be $2,000,000
calculated as follows:
(i) The Corresponding Price of $5,333,333 represents the
purchase price of a 50% partnership interest in Sony/Block.
Accordingly, the total value of Sony/Block, based upon such
Corresponding Price is $10,666,666.
(ii) Of the $10,666,666 value of Sony/Block, only 75%,
or $8,000,000, is allocable to Sony/Block's Partnership
Interest in the Partnership.
(iii) Since the Equalizing Partnership Interest is
one-fourth of the Sony/Block Partnership Interest in the
Partnership (16-2/3% divided by 66-2/3%), the value of the
Equalizing Partnership Interest is one-fourth of $8,000,000 or
$2,000,000.
(3) Closing of Purchase Pursuant to the Equalizing Purchase
Option. If Pace timely elects pursuant to the foregoing provisions
to acquire the Equalizing Partnership Interest following a Transfer
Triggering Event, then on a date selected by Pace in a written
notice to Sony/Block, but in no event later than thirty (30) days
after the date upon which the Equalizing Purchase Price is agreed
upon between the Partners or determined by the deciding voter
pursuant to the provisions of clause (iv) of Section 15.3(b)(1) (or
if the Equalizing Purchase Price has been determined prior to the
closing of the transfer or other transaction giving rise to the
Transfer Triggering Event as a result of the procedures described in
Section 15.5 hereof, then within five (5) days after the closing of
such transfer or other transaction), Pace and Sony/Block shall close
the sale and transfer of the Equalizing Partnership Interest. At
such closing, the following provisions shall apply:
(i) Pace shall pay to Sony/Block, in immediately
available funds, the Equalizing Purchase Price.
(ii) Sony/Block shall execute such instruments of
assignment or conveyance as may be reasonably required or
requested
<PAGE>
Article XV - Transfer Restrictions
Page 159
to evidence the sale, transfer and assignment of a 16-2/3%
Percentage Interest in the Partnership to Pace.
(iii) Pace shall cause PEC and PMG to provide a joint
and several guaranty to Sony/Block, in form reasonably
acceptable to Sony/Block, as to 16-2/3% of all then
outstanding Amphitheater Loans which are then guaranteed by
one or both of Sony and Blockbuster.
(iv) Pace shall execute a security agreement in form
reasonably acceptable to Sony/Block which shall create a first
priority security interest on Pace's Partnership Interest in
favor of Sony/Block to secure (x) the obligations undertaken
by PEC and PMG in the guaranty provided pursuant to clause
(iii) of this Section 15.3(b)(3) and (y) the obligations to
thereafter be undertaken by PEC and PMG in any subsequent
guaranty provided to Sony/Block with respect to any future
Approved Project as referenced in clause (D) of Section
15.3(b)(3)(v) hereof.
(v) The Partners shall execute and enter into a written
amendment to this Agreement that is necessary to reflect the
following changes, provisions, and agreements:
(A) That Pace will not have the right and option
to commence the Unwind Procedure at any time thereafter
for any reason pursuant to the provisions of this
Agreement.
(B) That Pace and Sony/Block shall at all times
thereafter each have a 50% Percentage Interest in the
Partnership.
(C) That the Executive Committee shall thereafter
be comprised of two Representatives, one of which will
be designated by Sony/Block and one of which will be
designated by Pace.
(D) That, while Sony/Block will still be obligated
to obtain the Project Loan for each Approved Project
thereafter in accordance with the provisions of Section
5.1 hereof, Pace shall be required to cause PEC and PMG
to jointly and severally guaranty, to Sony/Block and, if
requested by Sony/Block, the lender of such Project
Loan, an aggregate amount equal to 16-2/3% of such
Project Loan thereafter
<PAGE>
Article XV - Transfer Restrictions
Page 160
obtained by Sony/Block, so long as Sony or Blockbuster
have guaranteed at least 83-1/3% of such Project Loan.
(E) That Sony/Block shall have no further right to
remove Pace as Manager except and unless (i) the Actual
Cumulative Amphitheatre Cash Flow is less than the
Minimum Cumulative Amphitheatre Cash Flow (as such terms
are defined in the Old Partnership Agreement) as of the
end of any Fiscal Year thereafter, (ii) an Event of
Withdrawal shall occur with respect to Pace, (iii) a
Partner Default shall be deemed to have occurred with
respect to Pace or (iv) the holder of any promissory
note evidencing an Amphitheater Loan accelerates the
payment of the principal or interest, or any portion
thereof, of such note prior to its stated maturity,
unless the acceleration is the result of the default by
Sony or Blockbuster under a guaranty of such
Amphitheater Loan.
(F) That, at all times thereafter, the selection
and designation of any successor Manager after
resignation or removal of Pace as Manger shall be made
in accordance with the provisions of Section 11.3(b)
hereof.
(G) Any other matters which are reasonably
necessary or required to reflect that Pace and
Sony/Block are equal Partners in the Partnership, each
with a 50% Percentage Interest.
(4) Electing to Not Purchase Equalizing Partnership Interest.
If Pace, for whatever reason, does not exercise the right and option
to purchase and acquire the Equalizing Partnership Interest
following the occurrence of a Transfer Triggering Event, then all of
the provisions of this Agreement shall continue in full force and
effect with no changes or amendments.
(c) Definition of Transfer Triggering Event. As used herein, the
term "Transfer Triggering Event" shall mean the occurrence of any one or
more of the following:
(1) The occurrence of any transfer, sale, issuance, merger,
consolidation, reorganization or other transaction or circumstance
which results in the Blockbuster Subsidiary becoming an Affiliate of
an SCA Total Party.
<PAGE>
Article XV - Transfer Restrictions
Page 161
(2) The occurrence of any sale, transfer, issuance, merger,
consolidation, reorganization or other transaction or circumstance
which results in the Sony Subsidiary becoming an Affiliate of
Blockbuster.
(3) For any reason, including the transfer of all or any
portion of the Blockbuster Subsidiary's or the Sony Subsidiary's
partnership interest in Sony/Block to the other, any one or more of
the Voting Representations become untrue in any respect.
(4) Following the delivery of the Division of Responsibility
Notice, the Partnership Interest of either of the S/B Partners is
acquired by the other S/B Partner pursuant to the exclusive purchase
options described in Section 17.3(a)(12)(i) or 17.3(a)(13)(i)
hereof.
15.4 Limited Right of Sony/Block to Admit Minority Partners.
Notwithstanding the restrictions set forth in clauses (b), (c) and (d) of
Section 15.2 hereof with respect to the issuance, sale, conveyance or transfer
of any partnership interest in Sony/Block, it is specifically understood, agreed
and acknowledged that the Blockbuster Subsidiary, the Sony Subsidiary and
Sony/Block may permit partnership interests in Sony/Block to be assigned or
issued to one or more minority partners in Sony/Block in strict accordance with
the following limitations and provisions:
(a) No new partner admitted into Sony/Block may be an Unacceptable
Person (herein defined) without the prior consent of Pace.
(b) No new partner admitted into Sony/Block may have, when combined
with the percentage economic interest of any other new partners previously
admitted into Sony/Block, a percentage economic interest in Sony/Block of
more than 49%.
(c) No new partner admitted into Sony/Block shall have the right,
power or authority to do any one or more of the following:
(1) designate, or have any vote concerning the designation of,
any Representative to serve on the Executive Committee of this
Partnership;
(2) attend any meetings of the Executive Committee; or
(3) cast any vote or have any veto power under the terms of
the Sony/Block Partnership Agreement in regard to any of the
following matters:
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Article XV - Transfer Restrictions
Page 162
(i) any vote to be taken or consent to be given by
Sony/Block as contemplated or permitted by the provisions of
this Agreement;
(ii) the process of approving and revising an Annual
Operating Budget pursuant to the provisions of Section 10.5 of
this Agreement;
(iii) the process of making the decision to whether a
proposed Amphitheater should become an Approved Project; and
(iv) the decision or action relating to the removal of
Pace as the Manager of this Partnership pursuant to the
provisions of Section 10.8 hereof or in the selection of the
successor Manager to replace Pace after it has been removed as
Manager of the Partnership.
As used herein, the term "Unacceptable Person" shall mean any Person which owns,
in its own capacity or through any of its Affiliates, a Controlling Interest in
two or more Amphitheaters.
15.5 Notices. Sony/Block hereby covenants and agrees with Pace that it
will provide prompt notice to Pace of the following matters:
(a) The occurrence of a Transfer Triggering Event with (i) such
reasonable information concerning the details of the underlying transfer
or other transaction which gave rise to such Transfer Triggering Event as
may be requested by Pace and (ii) a written statement setting forth, in
reasonable detail, Sony/Block's calculation and determination of the
Equalizing Purchase Price; and
(b) The admission of any new partner in Sony/Block pursuant to the
provisions of Section 15.4 hereof with such reasonable information
concerning he new partner as may be requested by Pace.
If Sony/Block or any Sony/Block Related Party has entered into a contract to
complete a transaction which would give rise to a Transfer Triggering Event,
conditioned upon, among other things, a prior determination that Pace will not
exercise its rights which will result from the occurrence of such Transfer
Triggering Event pursuant to Section 15.3(a) hereof (if applicable) and Section
15.3(b) hereof, then Sony/Block (or the Sony/Block Related Party) shall have the
express right to provide notice to Pace that such contractual commitment exists
along with (i) such reasonable information concerning the details of such
transaction as may be requested by Pace and (ii) a
<PAGE>
Article XV - Transfer Restrictions
Page 163
written statement setting forth, in reasonable detail, Sony/Block's calculation
and determination of the Equalizing Purchase Price. Upon receipt of any such
notice, Pace shall have a period of thirty (30) days from receipt of such notice
to elect whether or not it will exercise its rights which will result from the
occurrence of such Transfer Triggering Event pursuant to Section 15.3(a) hereof
(if applicable) or Section 15.3(b) hereof; provided, however, that Pace shall
have the express right to dispute the calculation and determination of the
Equalizing Purchase Price made by Sony/Block pursuant to the provisions of
clause (iv) of Section 15.3(b)(1) hereof and then subsequently rescind its
election to exercise its rights under Section 15.3(b) hereof if Sony/Block's
computation and calculation of the Equalizing Purchase Price ultimately
prevails. If Pace fails to notify Sony/Block within such thirty (30) day period
that it will exercise its rights under Section 15.3(a) hereof (if applicable) or
Section 15.3(b) hereof upon the occurrence of such proposed transaction, then
Pace may not exercise its rights under Section 15.3(a) (if applicable) or
Section 15.3(b) hereof as a result of the completion of such transaction if
Sony/Block (or the Sony/Block Related Party) completes the transaction described
in the notice within one hundred twenty (120) days after the expiration of such
thirty (30) day period.
15.6 Representations and Covenants Relating to Certain Voting Rights and
Matters. Sony/Block hereby represents and warrants to Pace as follows (the
"Voting Representations"):
(a) The Sony Subsidiary and the Blockbuster Subsidiary each possess
the sole, unfettered and unilateral right to designate one of the two
Representatives which Sony/Block has the power to designate pursuant to
the provisions of Section 10.2(c) hereof.
(b) The Sony Subsidiary and the Blockbuster Subsidiary each possess
the equal power and authority, without the requirement of obtaining any
other Person's consent or approval, to direct and determine Sony/Block's
decisions as to the following matters:
(1) All matters that come to a vote of the Partners in this
Partnership.
(2) All matters that require the consent or approval of a
Partner in this Partnership.
(3) All rights of Sony/Block under this Agreement to make any
selections or designations on behalf of the Partnership or in
connection with the business of the Partnership.
<PAGE>
Article XV - Transfer Restrictions
Page 164
Sony/Block hereby covenants and agrees with Pace that it will provide to Pace
written notice promptly upon the occurrence of any circumstance or event which
causes any one or more of the Voting Representations to no longer be true in any
respect.
[END OF ARTICLE XV]
<PAGE>
Article XVI - Dissolution and Termination
Page 165
ARTICLE XVI
Dissolution and Termination
16.1 Dissolution. The Partnership shall be dissolved upon the occurrence
of any of the following:
(a) The unanimous agreement of the Partners;
(b) The expiration of thirty-five (35) years from the date hereof;
(c) The occurrence of an Event of Withdrawal with respect to a
Partner and the failure by a designee of the nonwithdrawing partner to
purchase the Partnership Interest of the withdrawing partner as provided
in Section 16.2 below; or
(d) As required by the provisions of Section 9.5(a) hereof, the
condition or circumstance of the Partnership (i) owning no Controlling
Interest in any existing Amphitheaters or (ii) not being obligated to
construct, or otherwise acquire a Controlling Interest in, any
Amphitheaters following the completion of the closing of the Unwind
Procedure.
16.2 Option to Purchase Partnership Interest of Withdrawing Partner. Upon
the occurrence of an Event of Withdrawal, the nonwithdrawing partner shall have
the option of nominating a designee of its choice to purchase the entire
Partnership Interest of the withdrawing partner, which option shall be
exercisable by the giving of written notice to the withdrawing partner or its
legal representatives within one hundred twenty (120) days after the
nonwithdrawing partner first has actual knowledge of the Event of Withdrawal.
The purchase price for the Partnership Interest of the withdrawing partner and
the manner of payment thereof, and the procedures for a closing of such
purchase, shall be the same as if the withdrawing partner were a Defaulting
Partner and its Partnership Interest was being purchased pursuant to the
provisions of Section 17.2(e) hereof (except that the closing shall occur on
that date designated by the designee of the nonwithdrawing partner which is
within forty-five (45) days from the exercise of such option). The option set
forth in this Section is being provided in view of the fact that the prospects
for the Partnership and the Partnership Interest of the nonwithdrawing partner
will be placed in jeopardy upon the occurrence of an Event of Withdrawal, all
with potential damages to the nonwithdrawing partner and the Partnership which
cannot be foreseen.
16.3 Dissolution in the Event Option is Not Exercised. Upon the occurrence
of an Event of Withdrawal and the failure by the designee of the nonwithdrawing
<PAGE>
Article XVI - Dissolution and Termination
Page 166
partner to exercise the option to purchase the Partnership Interest of the
withdrawing partner as provided in Section 16.2 above, the provisions of
paragraphs (a) through (d) below shall control such dissolution notwithstanding
anything to the contrary contained in Section 16.5 below.
(a) The withdrawing partner shall thereafter be deemed to be an
assignee of a Partner's interest (and accorded only the limited rights
provided pursuant to the Partnership Act to such an assignee) and shall
have no voting, consent or approval rights under Section 10.2 or any other
provision of this Agreement, and the nonwithdrawing partner may send such
notice or other advice of the dissolution to each such Person as the
nonwithdrawing partner may deem appropriate and necessary under the
circumstances.
(b) The nonwithdrawing partner shall settle the business of the
Partnership as expeditiously as the nature of such business will permit.
(c) The nonwithdrawing partner shall be entitled to, but shall not
be obligated to seek or obtain, administration of the assets of the
Partnership by a receiver, referee, trustee or court of bankruptcy.
(d) In the event of a liquidation and distribution pursuant to this
Article XVI as a result of the occurrence of an Event of Withdrawal, the
withdrawing partner shall have no power or authority to bind the
Partnership or the Partners but shall cooperate with and, to the extent
requested, assist the nonwithdrawing partner in the dissolution and
winding up of the Partnership and the distribution of the assets thereof.
16.4 Waiver. Each Partner hereby waives and renounces, to the fullest
extent permitted by law, all right and benefit conferred by any statute or rule
of law upon such Partner to dissolve, terminate or liquidate, or to petition a
court for the dissolution, termination or liquidation of, the Partnership in any
manner other than as provided in this Agreement. Each Partner hereby waives and
renounces, to the fullest extent permitted by law, all rights and entitlements
conferred upon or available to such Partner by reason of any statute or rule of
law to seek, or to petition a court for, the partition of any property of the
Partnership.
16.5 Distributions Upon Termination. On dissolution of the Partnership,
the Partners (except as otherwise expressly provided in Section 16.3 hereof)
shall proceed diligently to wind up the affairs of the Partnership and
distribute its assets. Except as otherwise provided in Section 16.3 hereof, the
Partners shall decide which Partnership assets are to be sold for cash and which
are to be distributed in kind. The Partnership's assets, or the proceeds of
their sale, shall be applied or distributed in the
<PAGE>
Article XVI Dissolution and Termination
Page 167
following order of priority (after giving effect to all allocations of gain,
loss, deduction and credits of the Partnership pursuant to Article VIII for the
Fiscal Year in which the final distribution is being made, including the deemed
gain and deemed loss described in Section 8.3(d) of this Agreement):
(a) In payment of all liabilities of the Partnership, including any
liabilities owed to a Partner. If any liability is contingent or uncertain
in amount, a reserve equal to the maximum amount for which the Partnership
could be reasonably held liable shall be established. Any liabilities
still remaining shall then be borne by the Partners in accordance with
their respective Percentage Interest.
(b) To the Partners in repayment of the then balances of their
Capital Accounts.
16.6 Voluntary Withdrawal. No Partner shall have the right to, and each
Partner agrees that it will not, withdraw voluntarily from the Partnership. If
any Partner withdraws from the Partnership in contravention of this Agreement,
such withdrawing Partner shall remain liable for its Percentage Interest of the
Partnership liabilities in existence at the time of its withdrawal and shall, in
addition, be liable to the other Partner for all damages attributable to its
breach of this Agreement. The nonwithdrawing Partner shall in addition have the
rights and remedies set forth in Articles XVI and XVII hereof. Any Partner which
withdraws from the Partnership in contravention of this Section 16.6 shall no
longer be entitled to designate any Representatives to the Executive Committee
pursuant to Section 10.2 of this Agreement and the, nonwithdrawing Partner shall
have the immediate right to designate the Manager thereafter without regard to
the provisions of Article XI hereof.
[END OF ARTICLE XVI]
<PAGE>
Article XVII - Default of a Partner
Page 168
ARTICLE XVII
Default of a Partner
17.1 Default. If any Partner (the "Defaulting Partner") fails to perform
any of its material obligations contained in this Agreement, or materially
violates the terms of this Agreement, then the other Partner (the
"Non-Defaulting Partner") shall have the right to give the Defaulting Partner a
notice (the "Default Notice") specifically setting forth the nature of such
failure or violation and stating that such Defaulting Partner shall have a
period of ten (10) days to pay any sums of money specified herein as due and
owing to the Partnership or to any Partner or, if the failure or violation is a
non-monetary default and is capable of being cured, thirty (30) days to cure
such default specified therein. If (i) the monies specified in the Default
Notice are not paid within such ten (10) day period or (ii) such non-monetary
failures or violations are not capable of being cured or, if capable of being
cured, such Defaulting Partner has not cured such nonmonetary failures or
violations within such thirty (30) day period, then a "Partner Default" shall be
deemed to have occurred with respect to such Partner. For all purposes of this
Agreement, (i) the obligation of any Partner to make payments as they become due
under any promissory note executed and delivered pursuant to, or as required by,
the provisions of this Agreement shall be deemed to be a material obligation of
such Partner under this Agreement and (ii) the obligation of Pace to perform and
fulfill its duties and functions as Manager, at all times prior to Pace being
removed as Manager pursuant to the provisions of Section 10.8 hereof, shall be
deemed to be a material obligation of Pace under this Agreement. If PEC, PMG,
Sony or Blockbuster, as the case may be, is in default of their respective
obligations under any guaranty executed, respectively, by PEC, PMG, Sony or
Blockbuster pursuant to any provision of this Agreement, and such default is not
cured within the notice and cure period set forth above for a Partner Default,
then a Partner Default shall be deemed to have occurred with respect to Pace (in
the case of a default by PEC or PMG) or Sony/Block (in the case of a default by
Sony or Blockbuster).
17.2 Rights and Remedies. Upon the occurrence of a Partner Default, the
Non-Defaulting Partner and the Partnership shall each have the following rights,
options and remedies which shall be cumulative and may be exercised concurrently
or singularly in the sole and absolute discretion of the Non-Defaulting Partner:
(a) The right to bring an action at law by or on behalf of the
Partnership or the Non-Defaulting Partner in order to recover the amounts
owed, if any, and any incidental or consequential damages arising from
such default (including, without limitation, reasonable attorneys fees and
disbursements incurred by the Partnership or the Non-Defaulting Partner,
as the case may be, in prosecuting any such action).
<PAGE>
Article XVII - Default of a Partner
Page 169
(b) The right to bring any proceeding in the nature of injunction,
specific performance or other equitable remedy, it being acknowledged by
each of the Partners that damages at law may be an inadequate remedy for
such default.
(c) If a sum of money is owed to the Partnership (whether a capital
contribution or a loan), the Non-Defaulting Partner may advance the sum of
money owed to the Partnership by the Defaulting Partner with the following
results:
(1) the sum thus advanced shall be deemed to be a loan from
the Non-Defaulting Partner to the Defaulting Partner;
(2) The principal balance of such deemed loan shall be due and
payable in whole upon written demand from the Non-Defaulting Partner
to the Defaulting Partner;
(3) The principal balance of such deemed loan shall bear
interest at the Maximum Rate compounded monthly; and
(4) All distributions from the Partnership that would
otherwise be made to the Defaulting Partner (whether before or after
dissolution of the Partnership) shall, instead, be paid to the
Non-Defaulting Partner until such loan and all interest accrued
thereon has been repaid in full.
(d) For purposes of voting, giving any consents or approvals under
any provisions of this Agreement or making any selections or designations
pursuant to this Agreement, the right to deny the Defaulting Partner any
of its voting, consent or approval rights under this Agreement (and to
take any action or omit to take any action without the consent, vote or
approval of the Defaulting Partner) and its authority and power to make
selections or designations under this Agreement and to immediately replace
with its own designees any Representatives of the Defaulting Partner on
the Executive Committee.
(e) If, as a result of the nature of the default, failure, breach or
omission which gave rise to such Partner Default, the damages suffered or
incurred as a result thereof by the Non-Defaulting Partner are difficult
or impossible to ascertain, then the Non-Defaulting Partner shall have, as
liquidated damages and not as a penalty, the right and option to purchase
all, but not a portion of, the Partnership Interest of the Defaulting
Partner at a purchase price equal to seventy five (75%) percent of the
<PAGE>
Article XVII - Default of a Partner
Page 170
then balance in its Capital Account, which shall be payable in ten (10)
equal annual installments of principal, together with interest at a
variable rate equal to the Short Term Rate, with the first installment due
on the first anniversary following the closing hereinafter referred to.
The option to purchase the interest of the Defaulting Partner shall be
exercisable on or before the ninetieth (90th) day following the expiration
of the period of time in which the Defaulting Partner could have cured
such default (or if such default is not capable of being cured, on or
before the ninetieth (90th) day following the giving of the Default
Notice) by the giving of written notice to the Defaulting Partner. The
closing of any such purchase shall take place on a date and at a place
designated by the Non-Defaulting Partner (but the date designated for such
closing shall in any event be a date which is not later than thirty (30)
days from the exercise of such option). At the closing, the Non-Defaulting
Partner shall deliver to the Defaulting Partner the required consideration
in exchange for an instrument or instruments (and such other documents as
counsel to the Non-Defaulting Partner may reasonably request) validly
assigning the interest of the Defaulting Partner to the Non-Defaulting
Partner free and clear of all liens, claims and encumbrances. The
obligation to pay the purchase price to the Defaulting Partner shall be an
obligation of the Non-Defaulting Partner alone and in any event shall not
be an obligation included within the provisions of Section 18.11 hereof.
Any Defaulting Partner whose Partnership Interest is purchased under the
provisions of this clause (e) shall remain liable for its Percentage
Interest of the Partnership's liabilities in existence at the time of
closing of such purchase. The Non-Defaulting Partner may, at its sole
option, designate any third party of its choosing to exercise the option
granted to it in this clause (e).
17.3 Special Provisions Relating to Sony/Block being a Defaulting Partner.
If Pace, as a Non-Defaulting Partner, should ever provide a Default Notice to
Sony/Block as a Defaulting Partner, pursuant to the provisions contained in the
first sentence of Section 17.1 hereof, then either of the partners of Sony/Block
("S/B Partners") may provide a notice ("Division of Responsibility Notice") to
Pace and the other S/B Partner, at anytime within thirty (30) days following the
entry of a final, nonappealable judgment of a court of competent jurisdiction
that Sony/Block is a Defaulting Partner in connection with such Default Notice,
that such S/B Partner wishes to allocate and divide the rights and obligations
of Sony/Block created pursuant to this Agreement between the S/B Partners in
accordance with the provisions of this Section 17.3. Following the timely
delivery of a Division of Responsibility Notice to Pace and the other S/B
Partner by either of the S/B Partners, the following provisions shall apply:
<PAGE>
Article XVII - Default of a Partner
Page 171
(a) Subject to the provisions of clause (c) of this Section 17.3,
without any further action required by any party hereto, (i) Sony/Block's
Partnership Interest shall be deemed to have been distributed by
Sony/Block in equal shares to the Sony Subsidiary and the Blockbuster
Subsidiary and (ii) this Agreement shall be deemed to have been amended in
a manner necessary to effectuate the following provisions:
(1) The Sony Subsidiary and the Blockbuster Subsidiary shall
be substituted as Partners in the Partnership in place of
Sony/Block, each with a Percentage Interest of 33-1/3%. Except as
specifically contemplated to the contrary in the other provisions of
this Section 17.3(a), all references to Sony/Block in this Agreement
shall thereafter be a reference to both the Sony Subsidiary and the
Blockbuster Subsidiary.
(2) The Sony Subsidiary, as a new Partner in the Partnership,
shall only be obligated to perform (i) those obligations of
Sony/Block contained in this Agreement which are Sony Specific
Obligations and (ii) one-half of each obligation of Sony/Block
contained in this Agreement which is a Sony/Block Shared Obligation.
(3) The Blockbuster Subsidiary, as a new Partner in the
Partnership, shall only be obligated to perform (i) those
obligations of Sony/Block contained in this Agreement which are
Blockbuster Specific Obligations and (ii) one-half of each
obligation of Sony/Block contained in this Agreement which is a
Sony/Block Shared Obligation.
(4) Sony/Block's Capital Account shall be separated into
separate Capital Accounts for the Sony Subsidiary and the
Blockbuster Subsidiary, with the balance of Sony/Block's Capital
Account being split between the Sony Subsidiary and the Blockbuster
Subsidiary in proportion to the then balances in their respective
capital accounts in Sony/Block as of the date of the giving of the
Division of Responsibility Notice. For purposes of making the deemed
increase to the Capital Account of Sony/Block under Section
8.1(c)(1)(ii) and Section 8.l(c)(3)(i), the Capital Account of the
Sony Subsidiary shall be increased by the outstanding principal
balance of Sony/Block Note #1 and the Capital Account of the
Blockbuster Subsidiary shall be increased by the outstanding
principal balance of Sony/Block Note #2. For purposes of increasing
the Capital Account of Sony/Block under Section 8.3(i) hereof, the
increase in the Capital Account of the Blockbuster Subsidiary shall
be made with reference to Sony/Block Note #2 and the increase in the
Capital Account of the Sony Subsidiary shall be made with reference
to Sony/Block Note #1.
<PAGE>
Article XVII - Default of a Partner
Page 172
(5) The cash distributions required to be made (i) under
Section 4.17(b)(2) shall be made one-half to the Blockbuster
Subsidiary and one-half to the Sony Subsidiary and (ii) under
Sections 5.6(b)(1) and 5.6(c)(1) shall be made to the Blockbuster
Subsidiary.
(6) The special tax allocations to be made to Sony/Block
pursuant to (i) Section 8.1(c)(2)(i), Section 8.1(h) and Section
8.1(j) shall be made to the Blockbuster Subsidiary and (ii) Section
8.1(i) shall be made one-half to the Sony Subsidiary and one-half to
the Blockbuster Subsidiary.
(7) At any subsequent closing of the Unwind Procedure, the
following provisions shall apply:
(i) Those distributions deemed to be received by
Sony/Block pursuant to clauses (a) and (b) of Section 9.4
hereof shall be deemed received by the Sony Subsidiary.
(ii) The distributions required to be made to Sony/Block
pursuant to clause (d) of Section 9.4 hereof shall be made to
the Blockbuster Subsidiary (or its designees).
(iii) Any unexpended Contributed Project Funds
attributable to Sony/Block Note #1, to the extent required to
be distributed to Sony/Block pursuant to the provisions of
Section 9.4(f) hereof, shall be distributed to the Sony
Subsidiary.
(iv) Any unexpended Contributed Project Funds
attributable to Sony/Block Note #2, to the extent required to
be distributed to Sony/Block pursuant to the provisions of
Section 9.4(f) hereof, shall be distributed to the Blockbuster
Subsidiary.
(v) Any amounts payable to Sony/Block pursuant to (i)
Section 9.4(g)(1) or 9.4(k)(1) hereof shall be payable
one-half to the Sony Subsidiary and one-half to the
Blockbuster Subsidiary and (ii) Section 9.4(i) hereof shall be
payable to the Sony Subsidiary and the Blockbuster Subsidiary
in the same ratio that the Sony Actual Contribution Amount
bears to the Blockbuster Actual Contribution Amount provided,
however, to the extent that the G&K Sum is a net amount due to
Pace from Sony/Block, then such amount shall be utilized to
reduce the note payable to the Blockbuster Subsidiary only. As
used in the immediately preced-
<PAGE>
Article XVII - Default of a Partner
Page 173
ing sentence, the following terms shall have the meanings
indicated:
(A) "Sony Actual Contribution Amount" shall mean
an amount equal to (i) the original principal amount of
Sony/Block Note #1 plus (ii) the amount (if any) of cash
funds contributed to the Partnership by Sony/Block upon
execution of this Agreement pursuant to Section
4.10(a)(1) hereof minus (iii) the amount of Contributed
Project Funds distributed to the Sony Subsidiary at the
closing of the Unwind Procedure pursuant to the
provisions of Section 9.4(f) hereof by way of Section
17.3(a)(7)(iii) hereof.
(B) "Blockbuster Actual Contribution Amount" shall
mean an amount equal to (i) the original principal
amount of Sony/Block Note #2 plus (ii) the amount (if
any) of the cash funds contributed to the Partnership by
Sony/Block upon execution of this Agreement pursuant to
Section 4.10(b)(1) hereof minus (ii) the amount of
Contributed Project Funds distributed to the Blockbuster
Subsidiary at the closing of the Unwind Procedure
pursuant to the provisions of Section 9.4(f) hereof by
way of Section 9.3(a)(7)(iv) hereof.
(vi) Any amounts payable to Sony/Block pursuant to
Section 9.4(g)(3), 9.4(h), 9.4(k)(2) or (3) or
9.4(l)(4)(ii)(A) hereof shall be payable to the Blockbuster
Subsidiary.
(vii) Any amounts payable to Sony/Block pursuant to
Section 9.4(l)(4)(ii)(B) shall be payable to the Sony
Subsidiary.
(viii) If Pace elects, pursuant to the right set forth
in Section 9.4(j) hereof, to defer payment of any amount due
to Sony/Block pursuant to clauses (h) and (i) of Section 9.4
hereof, then the following provisions shall apply:
(A) A separate promissory note shall be executed
for the amount payable pursuant to Section 9.4(h)
hereof, the original principal amount of the Camden
Make-Up Amount and shall be made payable to the
Blockbuster Subsidiary.
<PAGE>
Article XVII - Default of a Partner
Page 174
(B) Two separate promissory notes shall be
executed for the amount payable pursuant to Section
9.4(i) hereof, (i) one payable to the Blockbuster
Subsidiary in the original principal amount of the
portion of the Other Facilities Make-Up Amount which is
payable to the Blockbuster Subsidiary pursuant to
Section 17.3(a)(7)(v)(ii) hereof and (ii) the other one
payable to the Sony Subsidiary in the original principal
amount of the portion of the Other Facilities Make-Up
Amount which is payable to the Sony Subsidiary pursuant
to Section 17.3(a)(7)(v)(ii) hereof.
(C) The annual payment obligation which would have
been payable with respect to the single promissory note
contemplated by the provisions of Section 9.4(j)(1)
hereof shall be allocated among the promissory notes
delivered pursuant to clauses (A) and (B) of this
Section 17.3(a)(7)(vii) in proportion to the original
principal balance of each.
(D) The mortgages or other security instruments
required to be executed and delivered by Pace to
Sony/Block pursuant to Section 9.4(j)(2) shall be
executed and delivered to both the Sony Subsidiary and
the Blockbuster Subsidiary (if both receive promissory
notes pursuant to clauses (A) and (B) of this Section
17.3(a)(7)(vii) or only to the Blockbuster Subsidiary
(if no promissory notes are issued by Pace pursuant to
clause (B) of this Section 17.3(a)(7)(vii)). If such
mortgages or security instruments are executed and
delivered to both the Blockbuster Subsidiary and the
Sony Subsidiary, then they shall secure proportionately
all promissory notes issued pursuant to clauses (A) and
(B) of this Section 17.3(a)(7)(vii) and the exercise of
any remedy thereunder shall require the consent of both
the Blockbuster Subsidiary and the Sony Subsidiary.
(ix) With respect to each Project Loan for which a
guaranty fee is payable to Sony/Block under the provisions of
Article V hereof, such guaranty fee shall be payable to the
Blockbuster Subsidiary and the Sony Subsidiary in proportion
to the principal amount of such Project Loan which is
guaranteed by Blockbuster and Sony, respectively.
<PAGE>
Article XVII - Default of a Partner
Page 175
(8) Sony/Block's right to designate two (2) of the three (3)
Representatives on the Executive Committee, as provided in Section
10.2(c) hereof, shall be divided between the Sony Subsidiary and the
Blockbuster Subsidiary such that each will designate one of the
Representatives on the Executive Committee.
(9) (i) Sony/Block's right to terminate Pace as the Manager of
the Partnership, as provided in Section 10.8 hereof, (ii)
Sony/Block's right to require that Pace provide additional
management services pursuant to clauses (1) or (2) of Section
10.8(c) and (iii) Sony/Block's right under Section 7.2(b) hereof may
only be exercised by the unanimous approval of the Blockbuster
Subsidiary and the Sony Subsidiary.
(10) Sony/Block's unilateral right described in Section
11.3(a) with respect to the selection of the first Manager after the
delivery of the Termination Notice shall thereafter be exercised by
a majority vote of the Executive Committee.
(11) The obligations of Sony/Block to reimburse, indemnify and
hold the Partnership harmless pursuant to the provisions of Section
14.3(b) shall be allocated such that (i) the Sony Subsidiary shall
be obligated in respect of such indemnity provisions to the extent
that they relate to one or more of the Raleigh Asset, the Pittsburgh
Asset and the Camden Asset and (ii) the Blockbuster Subsidiary shall
be obligated in respect of such indemnity provisions to the extent
that they relate to one or more of the Phoenix Asset, the San
Bernardino Asset and the Charlotte Asset.
(12) For purposes of Article XVI hereof, if an Event of
Withdrawal should occur with respect to either the Sony Subsidiary
or the Blockbuster Subsidiary, then the other of such parties and
Pace shall collectively be the "nonwithdrawing partner" as such
term is used in Article XVI hereof, and the following provisions
shall apply:
(i) For the first 90 days of the 120 day period referred
to in Section 16.2 hereof, the Sony Subsidiary or the
Blockbuster Subsidiary, whichever is not the withdrawing
partner, shall have the exclusive option to purchase the
Partnership Interest of the withdrawing partner pursuant to
the provisions of Section 16.2 hereof.
(ii) If the Partner with the exclusive option to
purchase the withdrawing partner's Partnership Interest
pursuant to clause
<PAGE>
Article XVII - Default of a Partner
Page 176
(i) of this Section 17.3(a)(12) does not exercise such
exclusive option within the first 90 days of the 120 day
period referred to in Section 16.2 hereof, then such option
may thereafter be exercised during the remaining 30 days of
the 120 day option period by one or both of the Partners
constituting the nonwithdrawing partner (and if both exercise
such right then each will purchase one-half of the
withdrawing partner's Partnership Interest).
(iii) All other elections, consents, approvals,
decisions and obligations provided to, or imposed upon, the
nonwithdrawing partner by the provisions of Article XVI hereof
shall be made, taken and completed by the Partners
constituting the nonwithdrawing partner by unanimous and equal
action.
(13) For purposes of Article XVII hereof, if a Partner Default
should occur with respect to either the Sony Subsidiary or the
Blockbuster Subsidiary, then the other of such parties and Pace
shall collectively be the "Non-Defaulting Partner," as such term is
used in Article XVII hereof, and the following provisions shall
apply:
(i) If the remedy of purchasing the Defaulting Partner's
Partnership Interest pursuant to Section 17.2(e) hereof is
available, then, for the first 60 days of the 90 day period
referred to in Section 17.2(e) hereof, the Sony Subsidiary
or the Blockbuster Subsidiary, whichever is not the Defaulting
Partner shall have the exclusive option to purchase the
Partnership Interest of the Defaulting Partner pursuant to
the provisions of Section 17.2(e) hereof.
(ii) If the Partner with the exclusive option to
purchase the Defaulting Partner's Partnership Interest
pursuant to clause (i) of this Section 17.3(a)(13) does not
exercise such exclusive option within the first 60 days of the
90 day period referred to in Section 17.2(e) hereof, then such
option may thereafter be exercised during the remaining 30
days of the 90 day option period by one or both of the
Partners constituting the Non-Defaulting Partner (and if both
exercise such right then each will purchase one-half of the
Defaulting Partner's Partnership Interest).
(iii) All other elections, consents, approvals,
decisions and obligations provided to, or imposed upon, the
Non-Defaulting Partner by the provisions of Article XVII
hereof shall be made,
<PAGE>
Article XVII - Default of a Partner
Page 177
taken and completed by the Partners constituting the
Non-Defaulting Partner by unanimous and equal action.
(b) if a Division of Responsibility Notice is timely given in
accordance with the provisions of this Section 17.3 and immediately
thereafter one of the S/B Partners is not in default of an obligation
which is allocated to such S/B Partner pursuant to clause (2) or (3) of
Section 17.3(a) hereof, then a Partner Default shall be deemed to have not
occurred with respect to such S/B Partner. Until the earlier of (i) the
expiration of the period of time within which Division of Responsibility
Notice under this Section 17.3 may be timely given or (ii) the giving of
the Division of Responsibility Notice pursuant to the provisions of this
Section 17.3, Pace shall not take any action against Sony/Block or its
Partners pursuant to clauses (d) or (e) of Section 17.2 hereof as a result
of the occurrence of a Partner Default with respect to Sony/Block. Upon
the giving of a Division of Responsibility Notice, Sony/Block shall not be
liable or responsible for any Blockbuster Specific Obligations or Sony
Specific Obligations, it being agreed that such obligations shall be the
responsibility and obligation of the Sony Subsidiary and the Blockbuster
Subsidiary pursuant to the provisions of Section 17.3(a)(2) or (3) hereof.
(c) An S/B Partner which will not be in default pursuant to the
provisions of Section 17.3(b) following the timely delivery of a Division
of Responsibility Notice may restructure the transactions contemplated by
this Section 17.3 so as to approach as nearly as possible the result
contemplated by the provisions hereof but so as to prevent the occurrence
of a Constructive Termination. So long as such restructuring does not
result in a material adverse change to any substantive rights of Pace
created hereby, both Pace and the other S/B Partner shall fully cooperate
in such restructuring. Each Partner hereby irrevocably constitutes and
appoints the other Partner and each officer of the other Partner and their
respective successors, acting singly, as its true and lawful
attorney-in-fact with full right of substitution, in its name, place and
stead, to take all actions, and to make, execute, acknowledge, swear to
and file any document, instrument, agreement or amendment, in each case
that may be required to effectuate the restructuring referred to in this
Section 17.3(c). Provided Pace complies with the provisions of this
Section 17.3(c), nothing contained in this Section 17.3(c) shall limit
Pace's right to indemnification under the provisions of Section 13.9 of
this Agreement.
(d) If, following the delivery of a Division of Responsibility
Notice, the Partnership Interest of either of the S/B Partners is acquired
completely by (i) the other S/B Partner pursuant to the exclusive purchase
options described in Sections 17.3(a)(12)(i) or 17.3(a)(13)(i) hereof or
(ii) one of the Partners pursuant to the non-exclusive purchase options
described in Sections
<PAGE>
Article XVII - Default of a Partner
Page 178
17.3(a)(12)(ii) or 17.3(a)(13)(ii) hereof, then the following provisions
shall apply:
(1) The acquiring Partner shall, at all times thereafter, be
required to fulfill the responsibilities and obligations of the S/B
Partner whose interest was acquired under and pursuant to this
Agreement; provided, however, in no event shall such acquiring
Partner be under any liability or obligation to cure, correct or
perform any responsibilities or obligations of the S/B Partner which
has had its interest so acquired which was in default or breach at
the time of such acquisition.
(2) The acquiring Partner shall, at all times thereafter, have
all of the rights, powers and authorities of such S/B Partner
including, without limitation, such S/B Partner's right to designate
a Representative to serve on the Executive Committee.
[END OF ARTICLE XVII]
<PAGE>
Article XVIII - Miscellaneous Provisions
Page 179
ARTICLE XVIII
Miscellaneous Provisions
18.1 Notices. All notices, offers, approvals, elections, consents,
acceptances, waivers, reports, requests and other communications required or
permitted to be given hereunder (all of the foregoing hereinafter collectively
referred to as "Communications") shall be in writing and shall be deemed to have
been duly given if delivered personally with receipt acknowledged or sent by
registered or certified mail or equivalent, if available, return receipt
requested, or by facsimile (with an appropriate answer back code), telex or
cablegram (which shall be confirmed by a writing sent by registered or certified
mail or equivalent on the same day that such facsimile, telex or cablegram is
sent), or by recognized overnight courier for next day delivery, addressed or
sent to the parties at the following addresses and facsimile numbers or to such
other or additional address or facsimile number as any party shall hereafter
specify by Communication to the other parties:
Pace: S/M Pace, Inc.
515 Post Oak Blvd., Suite 300
Houston, Texas 77027
Fax No. (713) 622-9461
Attention: Mr. Jeffry B. Lewis
with a copy to: Sewell & Riggs
333 Clay, Suite 800
Houston, Texas 77002
Fax No. (713) 652-8808
Attention: Mr. Michael F. Rogers
The Blockbuster
Subsidiary: c/o Blockbuster Entertainment Corporation
One Blockbuster Plaza
Ft. Lauderdale Florida 33301
Fax No. (305) 832-3929
Attention: Mr. Adam D. Phillips
The Sony Subsidiary: c/o Sony Music Entertainment, Inc.
550 Madison Avenue
New York, New York 10022-3211
Facsimile No. (212) 833-4007
Attention: Mr. Allen J. Smith
Vice President
<PAGE>
Article XVIII - Miscellaneous Provisions
Page 180
Sony Music, A Group of Sony Music
Entertainment Inc.
with a copy to: Sony Music Entertainment, Inc.
550 Madison Avenue
New York, New York 10022-3211
Facsimile No. (212) 833-8083
Attention: Mr. David H. Johnson
Senior Vice President, General Counsel
and with a copy to: Sony Corporation of America
Nine West 57th Street
New York, New York 10019
Facsimile No. (212) 418-9434
Attention: Mr. Marinus N. Henny
Senior Vice President
Sony/Block To both the
Blockbuster Subsidiary and the Sony Subsidiary
Notice of change of address shall be deemed given when actually received or upon
refusal to accept delivery thereof; all other Communications shall be deemed to
have been given, received and dated on the earlier of: (i) when actually
received or upon refusal to accept delivery thereof; or (ii) on the date when
delivered personally, one (1) day after being sent by facsimile, cable, telex or
overnight courier and four (4) business days after mailing, as aforesaid.
18.2 Delaware Law to Apply. This Agreement shall be construed under and in
accordance with laws of the State of Delaware, without giving effect to the
choice of law provisions thereof.
18.3 Other Instruments. The parties hereto covenant and agree that they
will execute such other and further instruments and documents as are or may
become necessary to effectuate and carry out the Partnership created by this
Agreement.
18.4 Headings. The headings used in this Agreement are used for
administrative purposes only and do not constitute substantive matter to be
considered in construing the terms of this Agreement.
18.5 Parties Bound. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors, and assigns where permitted
by this Agreement.
<PAGE>
Article XVIII - Miscellaneous Provisions
Page 181
18.6 Legal Construction. In case any one or more of the provisions
contained in this Partnership Agreement shall, be invalid or unenforceable in
any respect, the validity and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision which shall
be a reasonable substitute for such invalid and unenforceable provision in light
of the tenor of this Agreement and, upon so agreeing, shall incorporate such
substitute provision in this Agreement.
18.7 Counterparts. This Agreement may be executed any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original.
18.8 Gender. Wherever the context shall so require, all words herein in
the male gender shall be deemed to include the female or neuter gender, all
singular words shall include the plural, and all plural words shall include the
singular.
18.9 Entire Agreement, Modification, Consents and Waivers. This Agreement
contains the entire agreement of the parties with respect to the subject matter
hereof (except for letters executed contemporaneously herewith) and no
interpretation, change, termination or waiver of or extension of time for
performance under any provision of this Agreement shall be binding upon any
party unless in writing and signed by the party intended to be bound thereby.
Receipt by any party of money or other consideration due under this Agreement,
with or without knowledge of breach, shall not constitute a waiver of such
breach or any provision of this Agreement. Except as otherwise provided in this
Agreement, no waiver of or other failure to exercise any right under, or default
or extension of time for performance under, any provision of this Agreement
shall affect the right of any party to exercise any subsequent right under or
otherwise enforce said provision or any other provision hereof or to exercise
any right or remedy in the event of any other default, whether or not similar.
18.10 Press Release; Right to Use of Certain Names. All press releases
which are issued by the Partnership or any Partner (or any Affiliate of a
Partner or any Sony/Block Related Party) concerning the subject matter of this
Agreement shall first be approved by all of the Partners before the release
thereof. Prior to the use by any Partner or the Partnership of the name "Sony,"
"Blockbuster" or "Pace" to advertise, promote or otherwise market the activities
of the Partnership, such parties shall have obtained the prior written approval
of the Sony Subsidiary, the Blockbuster Subsidiary or Pace, respectively, to the
proposed use of such names (which may be withheld for any reason or no reason).
In the event that Pace or Sony/Block, as the case may be, ceases for any reason
to be a Partner in the Partnership, or the Sony Subsidiary or the Blockbuster
Subsidiary shall cease to be a partner of Sony/Block, the Partnership shall
immediately cease to use the name "Sony" and "Blockbuster" (in the case that
<PAGE>
Article XVIII - Miscellaneous Provisions
Page 182
Sony/Block ceases to be a Partner, or the name "Sony" in the event the Sony
Subsidiary shall cease to be a partner of Sony/Block and the name "Blockbuster"
in the event Blockbuster shall cease to be a Partner of Sony/Block) or "Pace"
(in the case that Pace ceases to be a Partner).
18.11 Joinder by Parents.
(a) The Sony Subsidiary shall cause Sony to execute of even date
herewith a letter addressed to Pace, in form reasonably acceptable to
Pace, in order to indicate Sony's agreement to (i) be bound by the
exclusivity and non-compete covenants contained in Article XII of this
Agreement, (ii) be bound by the transfer restrictions on Sony's stock in
the Sony Subsidiary contained in Section 15.2(d) of this Agreement, (iii)
guarantee, severally, fifty percent (50%) of the obligations of Sony/Block
to make the loans, advances, payments and capital contributions required
pursuant to the provisions of this Agreement (other than the obligation
created pursuant to Section 8.3(h) hereof), (iv) guarantee, severally,
one-third of the Partnership's indemnity obligations created pursuant to
Section 9.4(m) hereof (provided, however, that the guaranty provided
pursuant to this clause (iv) shall be limited, in absolute amount, to an
amount equal to the total net value of the assets distributed, or deemed
to be distributed, to the Sony Subsidiary pursuant to the closing of the
Unwind Procedure), (v) guarantee the indemnity obligations created
pursuant to the provisions in Section 9.4(n) hereof to the extent that
such indemnity obligations are made by Distributees that receive the
distribution of Amphitheaters (or the Partnership's interest therein) at
the closing of the Unwind Procedure which are distributed, or deemed to
be distributed, to the Sony Subsidiary and (vi) guarantee the indemnity
obligations of the Sony Subsidiary created pursuant to the provisions of
Section 14.3(b) hereof.
(b) Pace shall cause PMG and PEC to execute of even date herewith a
letter addressed to Sony/Block, in form reasonably acceptable to
Sony/Block, in order to indicate PMG's and PEC's agreement to (i) be bound
by the exclusivity and noncompete covenants contained in Article XII of
this Agreement, (ii) be bound by the transfer restrictions on PMG's stock
in Pace contained in Section 15.2(a) of this Agreement, and, (iii)
guarantee all of the obligations of Pace to make the loans, advances,
payments (including payments pursuant to promissory notes issued by Pace
pursuant to this Agreement) and capital contributions required by the
provisions of this Agreement (other than (x) the obligation to extend
loans to the Partnership pursuant to Section 4.12 hereof for Operational
Shortfalls and (y) the obligation created pursuant to Section 8.3(h)
hereof), (iv) guarantee, severally, one-third of the Partnership's
indemnity obligations created pursuant to Section 9.4(m) hereof (provided,
however, that the guaranty obligation pursuant to this clause (iv) shall
have an
<PAGE>
Article XVIII - Miscellaneous Provisions
Page 183
absolute limitation equal to the total net value of the assets
distributed, or deemed to be distributed, to Pace at the closing of the
Unwind Procedure), (v) guaranty the indemnity obligations created pursuant
to the provisions of Section 9.4(n) hereof to the extent that such
indemnity obligations are made by Distributees that receive the
distribution of an Amphitheater (or the Partnership's interest therein)
at the closing of the Unwind Procedure which are distributed, or deemed to
be distributed, to Pace and (vi) guaranty the indemnity obligations of
Pace created pursuant to the provisions of Section 14.3(a) hereof.
(c) The Blockbuster Subsidiary shall cause Blockbuster to execute of
even date herewith a letter addressed to Pace, in form reasonably
acceptable to Pace, in order to indicate Blockbuster's agreement to (i) be
bound by the exclusivity and noncompete covenants contained in Article
XII of this Agreement, (ii) honor the transfer restrictions on the stock
in the Blockbuster Subsidiary contained in Section 15.2(c) of this
Agreement, (iii) guarantee, severally, fifty percent (50%) of the
obligations of Sony/Block to make the loans, advances, payments and
capital contributions required by the provisions of this Agreement (other
than the obligation created pursuant to Section 8.3(h) hereof), (iv)
guarantee, severally, one-third of the Partnership's indemnity obligations
created pursuant to Section 9.4(m) hereof (provided, however, that the
guaranty obligation created pursuant to this clause (iv) shall have an
absolute limit equal to the aggregate net value of the assets
distributed, or deemed to be distributed, to the Blockbuster Subsidiary at
the closing of the Unwind Procedure), (v) guaranty the indemnity
obligations created pursuant to the provisions of Section 9.4(n) hereof
to the extent that such indemnity obligations are made by Distributees
that receive the distribution of an Amphitheater (or the Partnership's
interest therein) at the closing of the Unwind Procedure which are
distributed, or deemed to be distributed, to the Blockbuster Subsidiary
and (vi) guaranty the indemnity obligations of the Blockbuster Subsidiary
created pursuant to the provisions of Section 14.3(c) hereof.
(d) For purposes of the guaranties to be provided pursuant to
clauses (iv) and (v) of Section 18.11(a) and pursuant to clauses (iv) and
(v) of Section 18.11(c) the following provisions shall apply:
(1) At the closing of the Unwind Procedure, the Partnership's
interest in the Pittsburgh Asset, the Raleigh Asset and the Camden
Asset which are distributed to Sony/Block shall be deemed to have
been distributed to the Sony Subsidiary; and
(2) At the closing of the Unwind Procedure, the Partnership's
interest in the Phoenix Asset, the San Bernardino Asset and the
<PAGE>
Article XVIII - Miscellaneous Provisions
Page 184
Charlotte Asset that are distributed to Sony/Block shall be deemed
to have been distributed to the Blockbuster Subsidiary.
(3) At the closing of the Unwind Procedure, those cash amounts
(if any) which are distributed to Sony/Block pursuant to one or both
of clauses (e) and (f) of Section 9.4 hereof shall be deemed to have
been distributed one-half to the Blockbuster Subsidiary and one-half
to the Sony Subsidiary.
Execution by each of the above letters by Sony, PMG, PEC and Blockbuster,
respectively, shall be a condition to the effectiveness of this Agreement.
18.12 Acquisition of Partners' Interests. If the Partners should ever
unanimously agree to purchase (i) the partnership interest in the Raleigh
Partnership which is not currently owned by the Partnership of even date
herewith or (ii) the partnership interest in the Nashville Partnership which is
not being conveyed to the Partnership at the Existing Facility Closing pursuant
to Section 4.2 hereof, then the following provisions shall apply:
(a) With respect to the Raleigh Partnership, Pace and Sony/Block
shall each reimburse the Partnership for one-half of the excess (if any)
of the purchase price of such partnership interest over the value of such
interest based upon the Net Value assigned to the Raleigh Asset.
(b) With respect to the Nashville Partnership, Pace shall be
required to reimburse the Partnership for the excess (if any) of the
purchase price of such partnership interest over the value of such
interest based upon the Net Value assigned to the Nashville Asset.
18.13 Selection of Deciding Voter. The selection of a deciding voter
required pursuant to any provision of this Agreement shall be made in accordance
with the following provisions:
(a) Within ten (10) days after a notice is given by one Partner to
the other that a deciding voter will need to be selected pursuant to
another provision contained in this Agreement, the Partners shall select a
mutually acceptable individual to serve as the "Neutral Selector"
hereunder. If (i) that individual is unwilling or unable to serve as the
Neutral Selector hereunder for whatever reason or (ii) a mutually
acceptable person cannot be agreed upon within such ten (10) day period,
then the American Arbitration Association in New York, New York will serve
as the Neutral Selector.
<PAGE>
Article XVIII - Miscellaneous Provisions
Page 185
(b) The Neutral Selector shall, as soon as is reasonably possible,
provide to each of the Partners an identical list of ten names, numbered 1
through 10, of individuals who would be willing to serve as a deciding
voter hereunder and who meet the Applicable Criteria (herein defined). The
list shall include each individual's address, phone number and employer.
The Partners may contact the individuals listed solely for the purpose of
investigating their respective employment history and business experience.
(c) Within seven (7) days after receipt of the list of names
referred in clause (b) above, each Partner shall be required to return to
the Neutral Selector such list of names with no more than five of the
names deleted. The highest name remaining on the two lists returned by the
Partners which was not deleted on either list shall be the deciding voter.
If there is no name which was not deleted on both lists, then the Neutral
Selector shall issue a new list of ten other names in the same manner as
before and the procedure shall be repeated until a deciding voter is
chosen.
(d) No deciding voter selected in accordance with the foregoing
provisions shall be qualified to serve as a deciding voter hereunder if it
is subsequently determined that such individual is, or was within the past
five (5) years, (i) an officer, employee or director of either of the
Partners, any Affiliate of the Partners or any Sony/Block Related Party or
(ii) a party, directly or indirectly, as a principal, shareholder or
senior executive officer of any entity, to any contract or arrangement
with either Partner, any Affiliate of a Partner or any Sony/Block Related
Party in which the aggregate annual compensation or other amounts payable
thereunder exceeded $300,000.00.
(e) Any fees or costs payable to the Neutral Selector and the
deciding voter selected in accordance with the foregoing provisions shall
be paid by the Partnership as an Operating Obligation.
(f) As used herein, the term "Applicable Criteria" shall mean the
following:
(1) with respect to the selection of a deciding voter pursuant
to the provisions of Section 15.3(b)(1)(iv)(A) of this Agreement,
an individual who has been an active, practicing public accountant
with substantial experience in the entertainment industry over the
past 15 years, at least 10 of which shall have been with a "big 6"
accounting firm (or their predecessors); and
(2) With respect to the selection of a deciding voter pursuant
to the provisions of Section 12.6(d) hereof, an individual who has
been
<PAGE>
Article XVIII - Miscellaneous Provisions
Page 186
an active, practicing attorney for no less than fifteen years with a
private law firm consisting of thirty lawyers or more in a
metropolitan area of 1,000,000 people or more.
18.14 Amendment and Restatement. This Agreement is a complete amendment
and restatement of the Old Partnership Agreement and shall, as of the Effective
Date, supersede and replace in all respects the terms, provisions and conditions
contained in the Old Partnership Agreement. Notwithstanding anything to the
contrary contained herein, neither (i) the transfer and assignment of the Sony
Subsidiary's Partnership Interest as contemplated by the provisions of Section
4.9 hereof, (ii) the amendment and restatement of the Old Partnership Agreement
or (iii) the subsequent purchase by Pace of an Equalizing Partnership Interest
pursuant to the provisions of Section 15.3(b) hereof is intended to be, or shall
be, a termination of the general partnership created by, and pursuant to, the
terms and provisions contained in the Old Partnership Agreement and continued
pursuant to the terms and provisions contained in this Agreement, it being the
intent of the Partners to continue the Partnership in existence without
termination:
[END OF ARTICLE XVIII]
<PAGE>
187
EXECUTED as of the day and year first written above.
SM/PACE, INC., a Texas corporation
By: /s/ Brian E. Becker
---------------------------------
Name: Brian E. Becker
Tile: President
"PACE"
AMPHITHEATER ENTERTAINMENT PARTNER-
SHIP, a Delaware general partnership
By: YM CORP.
By: /s/ Marvin Cohn
--------------------------
Name: Marvin Cohn
Title: Vice President
By: THE WESTSIDE AMPHITHEATRE COR-
PORATION
By: /s/ Allen Flexer
---------------------------
Name: Allen Flexer
Title: President
By: CHARLOTTE AMPHITHEATER CORPO-
RATION
By: /s/ Allen Flexer
--------------------------
Name: Allen Flexer
Title: Vice President
"SONY/BLOCK"
YM CORP.
By: /s/ Marvin Cohn
---------------------------------
Name: Marvin Cohn
Title: Vice President
"SONY SUBSIDIARY"
<PAGE>
188
THE WESTSIDE AMPHITHEATRE CORPORA-
TION, an Arizona corporation
By: /s/ Allen Flexer
---------------------------------
Name: Allen Flexer
Title: President
CHARLOTTE AMPHITHEATER CORPORA-
TION, a North Carolina corporation
By: /s/ Allen Flexer
---------------------------------
Name: Allen Flexer
Title: Vice President
individually and collectively, the
"BLOCKBUSTER SUBSIDIARY"
<PAGE>
189
SCHEDULE OF EXHIBITS
Exhibit "A" - Form of Sony/Block Notes
Exhibit "B" - Form of Guaranty of Sony/Block Notes
Exhibit "C" - Pace's corporate overhead which are covered by and
being reimbursed from the annual payment to be made to
Pace
Exhibit "D" - Pace's out-of-pocket costs which are not covered by or
being reimbursed from the annual payment to be made to
Pace
Exhibit 5.3(a)(1) - Form of Indemnification
Exhibit 5.3(a)(2) - Form of Mortgage Instrument
<PAGE>
EXHIBIT "A"
Form of Sony/Block Note
NON-NEGOTIABLE PROMISSORY NOTE
$_________ April 1, 1994
FOR VALUE RECEIVED, after date, in the manner, on the dates and in the
amounts so herein stipulated, the undersigned, AMPHITHEATER ENTERTAINMENT
PARTNERSHIP ("Borrower"), a Delaware general partnership, PROMISES TO PAY TO
PAVILION PARTNERS ("Lender"), 515 Post Oak Boulevard, Suite 300, Houston, Texas
77027 the principal sum of _______________________________ DOLLARS ($______) in
lawful money of the United States of America, which shall be legal tender in
payment of all debts and dues, public and private, at the time of payment, and
to pay interest on the unpaid principal amount from date until maturity at a
fixed rate per annum which shall be equal to the lesser of (a) the Short Term
Rate (as such term is defined in the Partnership Agreement) per annum as in
effect on the date of this Note or (b) the maximum non-usurious interest rate
permitted by applicable law from time to time in effect as such law may be
interpreted, amended, revised, supplemented or enacted ("Maximum Rate").
Reference is made to the Partnership Agreement ("Partnership Agreement")
of Lender dated of even date herewith pursuant to which a general partnership
was continued between (i) Borrower and (ii) SM/Pace, Inc. Capitalized terms used
in this Promissory Note which are not defined herein shall have the respective
meanings assigned to them pursuant to the provisions of the Partnership
Agreement.
This Note shall be payable as follows:
(a) On the last day of each March, June, September and December
while any principal amounts remain outstanding under this Note, all
accrued unpaid interest hereon shall be due and payable.
(b) The entire unpaid principal balance of this Note, together with
all accrued unpaid interest hereon, shall be due and payable on the
earlier to occur of (i) the third anniversary of the date of this Note,
(ii) dissolution of the Lender pursuant to Article XVI of the Partnership
Agreement or
_________________
Initials
<PAGE>
(iii) the closing of the Unwind Procedure pursuant to the provisions of
Article IX of the Partnership Agreement.
(c) In addition, principal installments shall be payable upon demand
of Lender in accordance with the provisions of Section 4.10(d) of the
Partnership Agreement.
If the entire principal balance of this Note becomes due and payable as a result
of the dissolution of the Lender, such payment shall be, in any event, paid
before the final liquidating distribution to the Partners pursuant to Section
16.5 of the Partnership Agreement.
It is agreed that time is of the essence of this agreement. In the event
of default in the payment of any installment of principal or interest on this
Note when due, and such default shall not be cured within fifteen (15) days
after notice thereof is provided to Borrower, Lender may accelerate and declare
this Note immediately due and payable. Any failure to exercise this option shall
not constitute a waiver by Lender of the right to exercise the same at any other
time. All notices hereunder shall be provided in the manner specified in Section
18.1 of the Partnership Agreement.
In the event of default in the making of any payment herein provided,
either of principal or interest beyond the expiration of the fifteen (15) day
grace period referenced above, or in the event this Note is declared due,
interest shall accrue at the Maximum Rate.
Borrower hereby agrees to pay all expenses incurred, including reasonable
attorneys' fees, all of which shall become a part of the principal hereof, if
this Note is placed in the hands of an attorney for collection or if collected
by suit or through any bankruptcy or any other legal proceedings.
Interest charges will be calculated on the principal amount from time to
time outstanding on the actual number of days these amounts are outstanding on
the basis of a 365-day year, except for calculations of the Maximum Rate which
will be on the basis of a 365-day or 366-day year, as is applicable. It is the
intention of the parties hereto to comply with all applicable usury laws;
accordingly, it is agreed that notwithstanding any provision to the contrary in
this Note, or in any of the documents securing payment hereof or otherwise
relating hereto, no such provision shall require the payment or permit the
collection of interest in excess of the Maximum Rate. If any excess of interest
in such respect is provided for, or shall be adjudicated to be so provided for,
in this Note or in any of the documents securing payment hereof or otherwise
relating hereto, then in such event (1) the provisions of this paragraph shall
govern and control, (2) neither Borrower, endorsers or guarantors, nor their
heirs, legal representatives, successors or assigns nor any other party liable
for the payment hereof, shall be obligated to pay the amount of such interest to
the extent that it is in excess of the Maximum Rate, (3) any such excess which
may have been collected shall be either applied as a credit against the then
unpaid principal amount hereof or refunded to Borrower, and (4) the provisions
of this Note and
<PAGE>
any documents securing payment of this Note shall be automatically reformed so
that the effective rate of interest shall be reduced to the Maximum Rate. For
the purpose of determining the Maximum Rate, all interest payments with respect
to this Note shall be amortized, prorated and spread throughout the full term of
the Note so that the effective rate of interest on account of this Note is
uniform throughout the term hereof.
The provisions of this Note shall be governed by the laws of the State of
Delaware.
Except as expressly provided herein to the contrary, each maker, surety,
guarantor and endorser waives demand, grace, notice, presentment for payment,
notice of intention to accelerate the maturity hereof, notice of acceleration of
the maturity hereof and protest, and agrees that this Note may be renewed, and
the time of payment extended from time to time, without notice and without
releasing any of the foregoing.
Borrower may prepay this Note, in whole or in part, at any time prior to
maturity without penalty, and interest shall cease on any amount prepaid.
AMPHITHEATER ENTERTAINMENT PARTNERSHIP,
a Delaware general partnership
By: YM Corp.,
a Delaware corporation
By:________________________________
Name:___________________________
Title:__________________________
By: CHARLOTTE AMPHITHEATER CORPORATION,
a North Carolina corporation
By:________________________________
Name:___________________________
Title:__________________________
Exhibit "A"
Page 3 of 2
<PAGE>
By: THE WESTSIDE AMPHITHEATRE CORPORATION,
an Arizona corporation
By:________________________________
Name:___________________________
Title:__________________________
Exhibit "A"
Page 4 of 2
<PAGE>
EXHIBIT "B"
Form of Sony/Block Guaranty
SPECIFIC GUARANTY
This SPECIFIC GUARANTY ("Guaranty") is executed by [SONY MUSIC
ENTERTAINMENT, INC. OR BLOCKBUSTER ENTERTAINMENT CORPORATION, AS APPLICABLE]
("Guarantor"), a ______________________________ corporation, in favor of
PAVILION PARTNERS ("Lender"), a Delaware general partnership.
W I T N E S S E T H:
WHEREAS, AMPHITHEATER ENTERTAINMENT PARTNERSHIP ("Borrower"), a Delaware
general partnership, and Guarantor desire Lender to extend financial and credit
accommodations to Borrower;
WHEREAS, Lender is willing to extend credit and financial accommodations
to Borrower only upon the condition that Guarantor executes and delivers to
Lender this Guaranty and undertake the obligations of Guarantor set out herein;
NOW, THEREFORE, in consideration of the extension of financial and credit
accommodation by Lender to Borrower, and other good and valuable consideration,
receipt of which is hereby acknowledged, Guarantor agrees as follows:
1. Obligation of Guarantor. Reference is hereby made to that certain
Promissory Note ("Note") dated of even date herewith, executed by Borrower,
payable to Lender and in the original principal amount of $__________. Guarantor
hereby irrevocably, absolutely and unconditionally guarantees to Lender the full
and timely payment of the Note and all sums to become due to Lender under the
Note (the principal of, interest on and all other amounts, payments and premiums
due under the Note, herein being called the "Indebtedness"), as and when the
same shall be due and payable, whether by lapse of time, acceleration of
maturity or otherwise. The obligations of Guarantor contained in this Guaranty
shall be absolute and unconditional without regard to the validity, legality,
regularity or enforceability of the Indebtedness, or any instrument evidencing,
securing or relating to the Indebtedness, and shall not be reduced or affected
in any way by any failure or omission to enforce any right against Borrower or
Guarantor or by any other action which may in any manner or to any extent vary
the risks of Guarantor, or which might otherwise constitute a legal or equitable
discharge of Guarantor; it being the purpose and intent of Guarantor and Lender
that (a) this Guaranty and the obligations of Guarantor hereunder shall be
absolute and unconditional under any and all circumstances and shall not be
discharged except by payment and performance as herein provided, (b) this
Guaranty be construed as a payment guaranty and not as a guaranty of collection
and (c) Guarantor's liability under this Guaranty shall be primary, and not
secondary. Guarantor agrees that, without the necessity of any reservation of
rights against Guarantor and without notice to or further assent by Guarantor,
(1) any demand for payment of any or all of the Indebtedness may be rescinded by
the party making such
<PAGE>
demand, and the Indebtedness reinstated or continued, and (2) the Indebtedness
or any collateral security therefor or rights of offset with respect thereto
may, from time to time, in whole or in part, be renewed, extended, modified,
rearranged, consolidated, compromised or released by Lender, and without notice
to or further assent by Guarantor, who will remain bound hereunder
notwithstanding any such rescission, renewal, extension, modification,
rearrangement, consolidation, compromise or release.
2. Waiver by Guarantor. Guarantor waives:
(i) presentment, demand for payment, protest, notice of intent to
accelerate maturity, notice of acceleration of maturity, and notice of
dishonor of the Indebtedness;
(ii) any other notice to which Guarantor might be entitled;
(iii) any defense (other than payment of the Indebtedness) arising
by reason of any disability, insolvency, lack of authority or power,
death, insanity, minority, change in composition or structure, dissolution
or any other defense of Borrower or Guarantor (even though rendering same
void, unenforceable or otherwise uncollectible), it being agreed that
Guarantor shall remain liable hereon regardless of whether Borrower or
Guarantor be found not liable thereon for any reason; and
(iv) joinder of Borrower in any suit or action to enforce this
Guaranty:
3. Rights of Lender. Lender may, at any time without the consent of, or
notice to, Guarantor, and without impairing or releasing the obligations of
Guarantor.
(i) with the agreement of Borrower, change the manner, place, time
or terms of payment, renew, extend or alter the payment schedule of the
Indebtedness, or increase the interest rate on any Indebtedness; and
(ii) exercise or refrain from exercising any rights against
Borrower, any Obligor or others, or otherwise act or refrain from acting;
4. Parties in Interest. This Guaranty shall continue in full force and
effect notwithstanding the dissolution of Guarantor and shall be binding on the
successors and assigns of Guarantor, and shall inure to the benefit of Lender
and its successors and assigns.
5. Additional Obligations of Guarantor. In addition to obligations of
Guarantor set forth elsewhere herein, Guarantor agrees absolutely and
unconditionally to pay to Lender all costs, reasonable attorneys' fees and other
expenses incurred by Lender in an effort to enforce and/or collect the
Indebtedness and the Guarantor's obligations hereunder.
Exhibit "B"
Page 2 of 7
<PAGE>
6. Compliance with Laws. It is expressly stipulated and agreed to be the
intent of Guarantor and Lender at all times to comply with the applicable
Delaware law governing the maximum non-usurious rate or amount of interest
payable on or in connection with the Indebtedness (or applicable United States
federal law to the extent that it permits Lender to contract for, charge, take,
reserve or receive a greater amount of interest than under Delaware law). If the
applicable law is ever judicially interpreted so as to render usurious any
amount called for under the Note or contracted for, charged, taken, reserved or
received with respect to the loan evidenced by the Note, or if the acceleration
of the maturity of the Indebtedness or if any prepayment by Guarantor results in
Guarantor having paid any interest in excess of the maximum non-usurious rate
permitted by law, then it is Guarantor's and Lender's express intent that all
excess amounts theretofore collected by Lender be credited on the principal
balance of the Indebtedness (or, if the Indebtedness has been or would thereby
be paid in full, refunded to Guarantor), and the provisions of the Note
immediately be deemed reformed and the amounts thereafter collectible thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder. The right to accelerate
maturity of the Indebtedness does not include the right to accelerate any
interest which has not otherwise accrued on the date of such acceleration. All
sums paid or agreed to be paid to Lender for the use, forbearance or detention
of the Indebtedness shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of the
Indebtedness until payment in full so that the rate or amount of interest on
account of the Indebtedness does not exceed the applicable usury ceiling.
7. No Waiver By or Estoppel Against Lender. No failure to exercise nor any
delay in exercising on the part of Lender any right, power or privilege
hereunder or at law or in equity shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or privilege preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law or in equity.
8. Subrogation. Guarantor hereby agrees that Guarantor shall not be
entitled to be subrogated to any of the rights of Lender or any of its
successors, endorsees and assigns against the Borrower until all of the
Indebtedness has been paid in full, performed and discharged.
9. Reinstatement of Obligations. This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment of any of
the Indebtedness is rescinded or must otherwise be restored or returned to
Borrower on account of any insolvency, bankruptcy or reorganization of Borrower,
or on account of any preferential transfer, all as though such payment had never
been made.
10. Governing Law. This Guaranty has been executed and delivered in, and
shall be construed and enforced in accordance with the laws of, the State of
Delaware.
Exhibit "B"
Page 3 of 7
<PAGE>
11. Severability. If any clause or portion of this Guaranty shall be
declared unenforceable, invalid, or illegal, the remaining clauses and portions
shall not be affected thereby.
12. Entire Agreement Guarantor acknowledges that this Guaranty sets forth
all the terms of the agreement between Lender and Guarantor regarding the
subject matter of this Guaranty, and that any statements, representations or
affirmations made by Lender and its agents or Guarantor prior to, or
contemporaneously, with the execution of this Guaranty are to be of no force and
effect whatever in determining the liability of Guarantor under this Guaranty.
Without limiting the foregoing, Guarantor warrants, represents and acknowledges
that Guarantor is not relying on any representations or statements of Lender or
any other party concerning the financial condition of Borrower, the likelihood
that Guarantor will be required to pay or perform the Indebtedness hereby
guaranteed, or any other representations or statements other than as expressly
set forth herein, and all other representations or agreements, if any, are
merged into this Guaranty.
13. Benefit to Guarantor. Guarantor, by executing and delivering this
Guaranty, agrees, acknowledges, represents and warrants that (i) Guarantor will
benefit, directly or indirectly, by the extension of credit to Borrowers
pursuant to the terms of the Note and (ii) without the execution and delivery of
this Guaranty and Guarantor's agreement to be bound by the provisions hereof,
Lender would not have agreed to advance funds to Borrower.
14. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and may be personally served
or sent by telex, telecopier, mail or the express mail service of the United
States Postal Service, Federal Express or other equivalent overnight or
expedited delivery service and (i) if given by personal service, telex
(confirmed by telephone) or telecopier (confirmed by telephone), it shall be
deemed to have been given upon receipt, (ii) if sent by telex or telecopier
without telephone confirmation, it shall be deemed to have been given
twenty-four (24) hours after being given, (iii) if sent by mail, it shall be
deemed to have been given upon receipt and (iv) if sent by Federal Express, the
Express Mail Service of the United States Postal Service or other equivalent
overnight or expedited delivery service, it shall be deemed given twenty-four
(24) hours after delivery to such overnight or expedited delivery service,
delivery charges prepaid and properly addressed to Guarantor or Lender, as the
case may be. For purposes hereof, the address of Guarantor and Lender shall be
as follows:
Guarantor:
______________________________
______________________________
______________________________
Attention: ___________________
Exhibit "B"
Page 4 of 7
<PAGE>
Lender:
The addresses specified for all of the Partners of Lender in the
Partnership Agreement of Lender.
Any party may, by proper written notice hereunder to the other parties, change
the address to which notices shall thereafter be sent to it.
EXECUTED this the ____ day of _____________, 1993.
___________________________________
By:________________________________
Name:___________________________
Title:__________________________
Exhibit "B"
Page 5 of 7
<PAGE>
Exhibit "C" to Partnership Agreement
GENERAL AND ADMINISTRATIVE/CORPORATE DEPARTMENT STRUCTURE AND SCHEDULE
PROGRAMMING AND BOOKING
Principal Programmer 250,000
Senior Booker 85,000
Junior Booker 45,000
Contract Administration 30,000
Clerical (2) 45,000
---------
Total 455,000
=========
FINANCE AND ACCOUNTING
Controller 60,000
Senior Accountant 40,000
Clerical 20,000
MIS Support 30,000
---------
Total Finance and Accounting Salaries 150,000
=========
OPERATIONS
Chief Operating Officer 210,500
Operations Manager 35,000
Clerical 20,000
SM/Block Liaison, Promotions 40,000
Sponsorships 40,000
---------
Total Operations Salaries 345,500
=========
ADMINISTRATION
Legal 42,000
Clerical 20,000
---------
Total Administrations Salaries 62,000
=========
TOTAL FACILITY MANAGEMENT SALARIES 1,012,500
FRINGE @ 25% 253,125
RENT (HOUSTON & NEW YORK) 60,000
COMPUTER SUPPORT 15,000
Miscellaneous including corporate
advertising, conferences and seminars 125,000
---------
TOTAL FACILITY GROUP MANAGEMENT OVERHEAD 1,465,625
=========
NOTE: SALARIES INCLUDE PROJECTED BONUSES
NUMBERS BASED ON 1993-1994 NUMBERS.
DEVELOPMENT
Director of Development 125,000
Project Manager 75,000
Clerical 28,560
---------
Total Development Salaries 228,560
=========
Fringe @ 25% 57,140
---------
Total Development Salary and Fringe 285,700
=========
<PAGE>
EXHIBIT "D" to
Partnership Agreement
Types of Costs to be Directly
Reimbursed and Not Included in
the Reimbursement Fee
- Delivery charges for amphitheatre communications
- Travel for operations, sales, financial, legal and booking support
to amphitheatres
- Travel for development staff to projects
- Local site managers for new projects
- Long distance telephone and fax
- Travel and Entertainment - Managing Director
- Postage
<PAGE>
Exhibit [ILLEGIBLE]
to Partnership Agreement
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT ("Agreement") is executed by PAVILION PARTNERSHIP
("Obligor"), a Delaware general partnership having an office at 515 Post Oak
Boulevard, Suite 300, Houston, Texas 77027, as of the ___ day of ________,
_______, for the benefit of [SONY/BLOCK GUARANTOR], having an office at
_________________ and [SONY/BLOCK GUARANTOR], having an office at
________________(individually, "Obligee" and collectively, "Obligees").
Recitals
A. [Name of Lender] ("Lender") has extended to the Obligor a loan in the
principal amount of $______ (which loan, as the same may hereafter be amended,
extended, modified or renewed, shall be called herein the "Loan").
B. As a material inducement to Lender's agreement to make the Loan to
Obligor, each Obligee has or is about to execute and deliver certain guaranty
or similar instruments with respect to the Loan (each of said instruments shall
be called herein a "Guarantee").
C. As a material inducement to Obligees to agree to provide Lender with
their respective Guarantee and as required by the Partnership Agreement for
Obligor dated as of _______, ______, 1994, as amended (the "Partnership
Agreement"), Obligor is hereby agreeing to indemnify and hold harmless each of
the Obligees in connection with their respective Guarantee and the Loan as
further provided in this Agreement.
<PAGE>
Agreement
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by Obligor, and intending to be legally bound, Obligor agrees as
follows for the express benefit of [both] of the Obligees:
1. Obligor shall indemnify and hold harmless each of the Obligees from and
against any and all liability, loss or expense (including reasonable attorneys'
fees and disbursements) incurred by [either] of the Obligees under or with
respect to their respective Guarantee or otherwise under or with respect to the
Loan. The indemnity and hold harmless set forth herein is absolute,
unconditional and irrevocable.
2. The indemnity obligations of Obligor set forth in this Agreement shall
not be terminated, affected or impaired by reason of (a) any amendment or
modification of the Partnership Agreement or a Guarantee; (b) the waiver of any
term, covenant or provision of a Guarantee by Lender; (c) any restriction
imposed by Lender on the subrogation rights of an Obligee with respect to the
Loan, (d) any bankruptcy, insolvency, merger, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding or occurrence
involving or affecting the Obligor; or (e) any other circumstances, conditions,
transactions or events which might otherwise constitute a defense to said
indemnity obligations.
-2-
<PAGE>
3. Obligor irrevocably consents that any legal action or proceeding
against it under, arising out of or in any manner relating to this Agreement or
the transactions contemplated herein may, but shall not be required to be,
brought in any Federal or New York State court of competent jurisdiction located
within the City, County and State of New York. Obligor, by its execution and
delivery of this Agreement, irrevocably: (a) consents and submits to the
personal jurisdiction of any of such courts in any such action or proceeding,
and (b) consents to the service of any complaint, summons, notice or other
process relating to any such action or proceeding by delivery thereof to it in
the manner provided, and at the address of S/M Pace, Inc. set forth, in Section
18.1 of the Partnership Agreement. Obligor waives any claim or defense in any
such action in any such court or proceeding based on any alleged lack of
personal jurisdiction, improper venue or forum non conveniens or any similar
basis.
4. Obligor shall pay, on demand, all costs and expenses (including,
without limitation, reasonable attorneys fees and disbursements) incurred by
[either] Obligee in connection with the enforcement by [either] of them of their
respective rights under this Agreement.
5. This Agreement is governed in all respects by the internal laws of the
State of New York without giving effect to the principles of conflicts of law
and cannot be changed or terminated orally. This Agreement is binding upon
Obligor and its legal representatives, successors and assigns and shall inure to
-3-
<PAGE>
the benefit of each Obligee, and their respective legal representatives,
successors and assigns.
6. Obligees shall not have any recourse against any of the Affiliates (as
that term is defined in the Partnership Agreement) of S/M Pace, Inc., in
enforcing any of their rights or remedies under this Agreement.
Executed as of the ___ day of __________, ____.
PAVILION PARTNERSHIP
By: S/M Pace, Inc.
By:_________________________
By: [Sony/Block]
By:_________________________
-4-
<PAGE>
Exhibit [ILLEGIBLE]
to Partnership Agreement
LEASEHOLD MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE, made as of the day of _______, ________, between PAVILION
PARTNERSHIP, a Delaware general partnership whose only general partners are S/M
Pace, Inc., a Texas corporation, and [Sony/Block], a Delaware general
partnership, having an office at 515 Post Oak Boulevard, Suite 300, Houston,
Texas 77027 ("Mortgagor"), and [Sony/Block Guarantor], a corporation, with
offices at __________________________________ and [Sony/Block Guarantor], a
corporation with offices ________________ (individually and collectively, the
"Mortgagee");
WHEREAS, by Lease Agreement, dated __________________, a memorandum of which was
recorded on ___________________, in the office of the Recorder, County of
_________________________________, State of ________, in Book ____, at page
_____, ___________ as Landlord, did demise and let unto the Mortgagor,
_________, as Tenant, all and singular the premises hereinafter mentioned and
described, together with their appurtenances, to have and to hold the same unto
the Mortgagor and its successors and assigns, for and during and until the full
end and term commencing on __________ and expiring on _________, [subject to a
renewal option in favor of the Mortgagor for [one] renewal term of ____________
( ) years], at the rent and upon the covenants, conditions, agreements and
provisions therein contained (the "Lease"); and
[If Mortgagor's interest is not a leasehold interest, appropriate changes will
be made to this instrument to reflect the Mortgagor's ownership interest]
WHEREAS, the Mortgagor executed and delivered to the Mortgagee that certain
Indemnity Agreement of even date herewith (such Indemnity Agreement, together
with all modifications, amendments, renewals and restatements thereof, herein
being called the "Indemnity Agreement") pursuant to which the Mortgagor
indemnifies and holds harmless each Mortgagee from and against any liability,
loss or expense (including reasonable attorneys' fees and disbursements)
incurred by each Mortgagee in connection with their respective Guarantee (as
that term is defined in the Indemnity Agreement); and
WITNESSETH, that to secure the obligations of the Mortgagor, to the extent
of________________ ($ ) DOLLARS, lawful money of the United States (the
"Secured Principal
<PAGE>
Amount"), of all sums which may now or hereafter be owing by the Mortgagor to
the Mortgagee pursuant to the Indemnity Agreement and to secure the payment of
any other sums payable pursuant to this Mortgage and the performance and
observance of all the provisions of the Indemnity Agreement and this Mortgage,
the Mortgagor hereby gives, grants, bargains, sells, warrants, aliens, remises,
releases, conveys, assigns, transfers, mortgages, hypothecates, deposits,
pledges, sets over and confirms to the Mortgagee:
ALL of the leasehold estate created by the Lease in that certain plot, piece or
parcel of land, with the buildings and improvements thereon erected or to be
erected (hereinafter called the "Premises"), more particularly bounded and
described in Schedule A annexed hereto and made a part hereof;
TOGETHER with all right, title and interest, if any, of the Mortgagor of, in and
to the land lying in the streets, roads or avenues, open or proposed, in front
of and adjoining the Premises and of, in and to any strips or gores of land
adjoining the Premises;
TOGETHER, ALSO, with the Mortgagor's right, title and interest in and to all
fixtures, chattels and articles of personal property now owned by the mortgagor
and now or hereafter attached to or located in or upon the Premises and used or
usable in connection with any present or future operation or letting of the
Premises or the activities at any time conducted therein (hereinafter called
"Building Equipment"), including but not limited to furnaces, boilers, oil
burners, radiators and piping, coal stokers, plumbing and bathroom fixtures,
refrigeration, air conditioning and sprinkler systems, wash-tubs, sinks, gas and
electric fixtures, stoves, ranges, awnings, screens, window shades, elevators,
motors, dynamos, refrigerators, kitchen cabinets, incinerators, plants and
shrubbery and all other machinery, appliances, fittings, furniture, furnishings
and fixtures of every kind used in the operation of the buildings standing or
hereafter erected on the Premises, together with any and all replacements
thereof and additions thereto, and all right, title and interest of the
Mortgagor in and to any Building Equipment which may be subject to any security
agreements, as defined in subdivision (1)(1) of Section 9105 of the Uniform
Commercial Code of the _________________ (hereinafter called "Security
Agreements"), superior in lien to the lien of this Mortgage; it being understood
and agreed that all Building Equipment is part and parcel of the Premises and
appropriated to the use thereof and, whether
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<PAGE>
affixed or annexed to the Premises or not, shall, for the purpose of this
Mortgage, be deemed conclusively to be real estate and all of the Mortgagor's
right, title and interest in and to the Building Equipment shall be deemed
mortgaged hereby; and the Mortgagor agrees to execute and deliver, from time to
time, such further instruments (including further Security Agreements) as may be
requested by the Mortgagee to confirm the lien of this Mortgage on the
Mortgagor's right, title and interest in and to any Building Equipment;
TOGETHER, ALSO, with any and all awards, including interest thereon, heretofore
and hereafter made to the Mortgagor for the taking by eminent domain of the
whole or any part of the Premises or any easement therein, including any awards
for changes of grade of streets, which said awards are hereby assigned to the
Mortgagee, who is hereby authorized to collect and receive the proceeds of such
awards and to give proper receipts and acquittances therefor, and to apply the
same as herein provided; and the Mortgagor hereby agrees, upon request, to make,
execute and deliver any and all instruments sufficient for the purpose of
confirming such assignment of said awards to the Mortgagee, free, clear and
discharged of any encumbrances of any kind or nature whatsoever;
TOGETHER, ALSO, with all the Mortgagor's interest in all agreements, contracts,
certificates, instruments and other documents, now or hereafter entered into,
pertaining to the construction, operation or management of any structure or
building now or hereafter erected on the Premises;
TOGETHER, ALSO, with all the Mortgagor's interest in all franchises, permits,
licenses and rights therein and thereto respecting the use, occupation or
operation of the Premises;
TOGETHER, ALSO, with all the Mortgagor's interest in all easements,
rights-of-way, and appurtenances whatsoever in any way belonging, relating or
appurtenant to the Premises, whether now owned or hereafter acquired by
Mortgagor;
TOGETHER with the appurtenances and all the estate and rights of the Mortgagor
of, in and to the Premises under and by virtue of the Lease;
TO HAVE AND TO HOLD the Lease and renewal thereby, and the above granted
Mortgagor's interest in and to the Premises, Building Equipment and other
property and rights unto the Mortgagee, its successors and assigns, for and
during all
-3-
<PAGE>
the rest, residue and remainder of the said term of years yet to come and
unexpired, in the Lease and the renewal therein provided for; subject,
nevertheless, to the rents, covenants, conditions and provisions in the Lease
mentioned.
PROVIDED, HOWEVER, that these presents are upon the condition that if the
Mortgagor shall pay, perform or cause to be paid and performed all of the
Mortgagor's obligations under the Indemnity Agreement, at the times and in the
manner therein and herein provided, and shall keep, perform and observe all and
singular the covenants, agreements and provisions in the Indemnity Agreement and
in this Mortgage expressed to be kept, performed and observed by or on the part
of the Mortgagor, and provided, further, that the Indemnity Agreement shall no
longer be of any force or effect, then this Mortgage and the estate and rights
hereby granted shall cease, determine and be void but otherwise shall be and
remain in full force and effect.
AND the Mortgagor covenants with the Mortgagee as follows:
1. That the Mortgagor will pay and perform the indebtedness and obligations as
hereinbefore provided.
2. (a) That the Mortgagor, at its sole cost and expense, shall maintain the
following insurance:
(i) Insurance on any building and any other improvements covered by the
lien of this Mortgage (hereinafter sometimes collectively referred to as the
"Building") and the Building Equipment against loss or damage by fire and
against loss or damage by other risks now or hereafter embraced by "All-Risks"
insurance, so called, in an amount sufficient to prevent the Mortgagor from
becoming a co-insurer under the applicable policies but, in any event, not less
than 100% of the "full replacement cost" thereof, without deduction for
depreciation, and with a replacement cost endorsement and agreed amount
endorsement satisfactory to the Mortgagee. As used herein, "full replacement
cost" shall mean (A) with reference to the Building, the cost of replacing the
Building, exclusive of the cost of excavations, foundations and footings below
the lowest basement floor, and (B) with reference to the Building Equipment, the
cost of replacing the Building Equipment, and in either case, without deduction
for the physical depreciation thereof.
(ii) When reasonably required by the Mortgagee, such other insurance in
such amounts as may from time to
-4-
<PAGE>
time be reasonably required by Mortgagee against other insurable hazards which
at the time are commonly insured against and generally available in the case of
premises similarly situated due regard being or to be given to the height and
type of the Building, its construction, use and occupancy.
(b) [Intentionally Deleted].
(c) That all insurance provided for in this Article 2 shall be effected
under valid and enforceable policies issued by financially responsible insurers
authorized to do business in the ___________________. Upon the execution of this
Mortgage and thereafter, not less than thirty (30) days prior to the expiration
dates of the expiring policies theretofore furnished pursuant to this Article 2
or any other Article of this Mortgage, originals or certified copies of the
policies bearing notations evidencing the payment of not less than one year's
premiums, or accompanied by other evidence satisfactory to the Mortgagee of such
payment, shall be assigned and delivered by the Mortgagor to the Mortgagee.
(d) That all policies of insurance required by clause (i) and, if
appropriate, clause (ii) of subdivision (a) of this Article 2 shall contain the
standard non-contributory mortgagee endorsement in favor of the Mortgagee
(entitling the Mortgagee to collect any and all proceeds payable under such
insurance). All policies of liability insurance that may be required pursuant to
clause (ii) of subdivision (a) of this Article 2 shall name the Mortgagee as an
additional insured. All insurance maintained by the Mortgagor shall be
reasonably satisfactory in all material respects to the Mortgagee and shall
provide that no cancellation, material change or reduction in the coverage or
amounts thereof shall be effective until at least thirty (30) days after
receipt by the Mortgagee of written notice thereof. If binders for any of the
insurance required by this Article 2 were delivered upon the execution of this
Mortgage, originals or certified copies of the policies of insurance to be
issued pursuant to such binders shall be delivered to the Mortgagee within
thirty (30) days from the date hereof.
(e) That, if the Mortgagor shall fail to procure, pay for or deliver to
the Mortgagee any policy or policies of insurance and/or renewals thereof as in
this Article 2 required, the Mortgagee may, at its option, but shall be under no
obligation to do so, effect such insurance and pay the premium therefor, and the
Mortgagor will repay to the
-5-
<PAGE>
Mortgagee on demand any premiums so paid, with interest thereon at the rate set
forth in Article 4 hereof. Any amount so expended by the Mortgagee, with
interest thereon, shall be secured by the lien of this Mortgage. The Mortgagor
hereby waives any claim against the Mortgagee by reason of the failure of the
Mortgagee to (i) notify the Mortgagor of the cancellation or non-renewal of any
insurance required by this Article 2, or (ii) effect any such insurance.
(f) All insurance proceeds shall be paid by the Mortgagee to the
Mortgagor, from time to time, for the purpose of allowing the Mortgagor to pay
for the repair or reconstruction of the Premises provided that, at the time such
proceeds are payable to the Mortgagor, no defaults under this Mortgage shall
have occurred and be continuing. If at the time any such insurance proceeds are
payable to the Mortgagor a default under this Mortgage shall have occurred and
be continuing, then the Mortgagee shall have the right to apply such proceeds
against any indebtedness or obligation secured by this Mortgage.
(g) That, in the event of a foreclosure of this Mortgage, the purchase of
the Premises shall succeed to all the rights of the Mortgagor, including any
rights to the proceeds of insurance and to unearned premiums, in and to a11
policies of insurance required by this Article.
3. That no building or other property now or hereafter covered by the lien of
this Mortgage shall be removed, demolished or materially altered without the
prior written consent of the Mortgagee, except that the Mortgagor shall have
the right, without such consent, to remove and dispose of, free from the lien of
this Mortgage, such Building Equipment as from time to time may become worn out
or obsolete, provided that either (a) simultaneously with or prior to such
removal, any such equipment shall be replaced with other equipment of a value at
least equal to that of the replaced equipment and free from any Security
Agreement, and by such removal and replacement the Mortgagor shall be deemed to
have subjected such Building Equipment to the lien of this Mortgage, or (b) any
net cash proceeds received from such disposition shall be paid over promptly to
the Mortgagee to be applied to the last installments due on the indebtedness
secured, without any charge for prepayment. As long as YM Corp. remains as a
partner in the Mortgagor, and provided that any removal, demolition or material
alteration described in the foregoing sentence which requires the Mortgagee's
consent is not in violation of the Partnership
-6-
<PAGE>
Agreement of the Mortgagor (such Partnership Agreement, as it may be amended and
restated, herein being called the "Partnership Agreement"), then such consent
shall be deemed to have been given. The Mortgagee understands that the Mortgagor
is constructing an amphitheatre on the Premises. The consent of the Mortgagee
shall not be required for such construction or any work incident thereto.
4. That in the event of any default in the performance of any of the Mortgagor's
covenants or agreements herein, the Mortgagee may, at the option of the
Mortgagee, perform the same and the cost thereof, with interest at three (3%)
percent in excess of the rate of interest designated, and in effect from time to
time, by Citibank, N.A., in New York, New York, as its prime rate (but in no
event in excess of the maximum rate allowed by law to be charged to the
Mortgagor), shall immediately be due from the Mortgagor to the Mortgagee and
secured by this Mortgage.
5. (a) That the Mortgagor will pay all taxes, assessments, water rates, sewer
rents and other charges now or hereafter levied against the Premises or any
part thereof, and also any and all license fees or similar charges which may be
imposed by the municipality in which the Premises are situated for the use of
walks, chutes, areas and other space beyond the lot line and on or abutting the
public sidewalks in front of or adjoining the Premises, together with any
penalties or interest on any of the foregoing, and in default thereof the
Mortgagee may pay the same and the Mortgagor will repay the same with interest
thereon at the rate per annum specified in Article 4 hereof and the same shall
be added to the indebtedness secured hereby and be secured by this Mortgage;
that upon request of the Mortgagee, the Mortgagor will exhibit to the Mortgagee
receipts for the payment of all items specified in this Article prior to the
date when the same shall become delinquent.
(b) That the Mortgagor will not claim any credit or any deduction from the
indebtedness secured by this Mortgage by reason of the payment of any taxes upon
the Premises.
6. That the Mortgagee shall have the right in case of failure of the Mortgagor
to perform any of the acts, covenants, and conditions in this Mortgage, upon a
complaint filed or any proper action being commenced for the foreclosure of this
Mortgage, to apply for, and the Mortgagee shall be entitled as a matter of
right, without consideration of the value of the Mortgagor's interest in the
Premises as
-7-
<PAGE>
security for the amounts due the Mortgagee, or of the solvency of any person or
persons obligated for the payment of such amounts, to the appointment by any
competent court or tribunal, without notice to any party, of a receiver of the
rents, issues, and profits of the Premises, with power to lease the Premises, or
such part thereof as may not then be under lease, and with such other powers as
may be deemed necessary, who, after deducting all proper charges and expenses
attending the execution of the trust as receiver, shall apply the residue of the
rents and profits to the payment and satisfaction of the amount remaining
secured hereby, or to any deficiency which may exist after applying the proceeds
of any judicially decreed sale of the Mortgagor's interest in the Premises to
the payment of the amount due, including interest and the costs of the
foreclosure and sale.
7. That the Mortgagor, within five days upon request in person or within ten
days upon request by mail, will furnish a written statement duly acknowledged of
the amount due on this Mortgage and whether any offsets or defenses exist
against the mortgage debt.
8. That notice and demand or request shall be made in writing and shall be
served in person or by registered or certified mail, return receipt requested,
addressed to the party to be served at its address above set forth or at such
other address as shall have been given by like notice from the party to be
served to the party giving the notice.
9. (a) The Mortgagor warrants that it is the owner and holder of the leasehold
estate in the Premises created by the Lease and that the Lease is a valid lease
of the Premises and is in full force and effect in accordance with its terms
without modification except as aforesaid, and, to the best of the Mortgagor's
knowledge, no default under the Lease by either the lessor or the Mortgagor or
its predecessor(s) as lessee under the Lease has occurred and is continuing.
(b) That the Mortgagor shall execute and deliver, from time to time, such
further instruments (including further Security Agreements) as may be requested
by the Mortgagee to confirm the lien of this Mortgage on the Mortgagor's
interest in any Building Equipment.
(C) That the Mortgagor, upon request, shall make, execute and deliver any
and all instruments sufficient for the purpose of confirming the assignment to
the Mortgagee of awards for the taking by eminent domain of the whole or any
-8-
<PAGE>
part of the Mortgagor's interest in the Premises or any easement therein,
including any awards for changes of grade of streets, free, clear and discharged
of any encumbrances of any kind or nature whatsoever.
10. That in case of a foreclosure sale, the Mortgagor's interest in the
Premises, or so much thereof as may be affected by this Mortgage, may be sold in
one parcel.
11. That if any action or proceeding be commenced (including an action to
foreclose this Mortgage or to collect the debt secured hereby), in which the
Mortgagee becomes a party or participates, by reason of being the holder of this
Mortgage or the debt secured hereby, all sums paid by the Mortgagee for the
expense of so becoming a party or participating (including reasonable counsel
fees) shall on notice and demand be paid by the Mortgagor, together with
interest thereon at the rate per annum specified in Article 4 hereof, and shall
be a lien on the leasehold estate in the Premises created by the Lease, prior
to any right or title to, interest in, or claim upon, the leasehold estate in
the Premises created by the Lease subordinate to the lien of this Mortgage, and
shall be deemed to be secured by this Mortgage. In any action or proceeding to
foreclose this Mortgage, or to recover or collect the debt secured hereby, the
provisions of law respecting the recovering of costs, disbursements and
allowances shall apply in addition to the foregoing.
12. That the Mortgagor will maintain the Premises and the Building Equipment in
good condition and repair, will not commit or suffer any waste thereof or the
conduct of any nuisance or unlawful occupation or business on, or use of, the
Premises, and will comply with, or cause to be complied with, all statutes,
ordinances and requirements of any governmental authority relating to the
Premises; that the Mortgagor will promptly repair, restore, replace or rebuild
any part of the Premises or the Building Equipment now or hereafter covered by
the Lease which may be damaged or destroyed by any casualty whatsoever or which
may be affected by any proceeding of the character referred to in Article 13;
and that, the Mortgagor will not initiate, join in, or consent to any change in
any private restrictive covenant, zoning ordinance or other public or private
restrictions, limiting or defining the uses which may be made of the Premises,
or any part thereof, except if [Sony/Block] remains as a partner in the
Mortgagor and such change or the consent to such change, as the case may be, is
not in violation of the Partnership Agreement.
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13. That notwithstanding any taking by eminent domain or other governmental
action causing injury to, or decrease in value of, the Premises and creating a
right to compensation therefor, including, without limitation, the change of the
grade of any street, the Mortgagor shall continue to perform its obligations
under the Indemnity Agreement. All condemnation and eminent domain proceeds
shall be applied in the manner set forth in Paragraph 2(f) to the same extent as
if such proceeds were insurance proceeds. If, prior to the receipt by the
Mortgagee of such award or compensation, the Mortgagor's interest in the
Premises shall have been sold on foreclosure of this Mortgage, the Mortgagee
shall have the right to receive said award or compensation to the extent of any
deficiency found to be due upon such sale, with legal interest thereon, whether
or not a deficiency judgment on this Mortgage shall have been sought or
recovered or denied, together with reasonable counsel fees and the costs and
disbursements by the Mortgagee in connection with the collection of such award
or compensation.
14. That the Mortgagee and any Persons authorized by the Mortgagee shall have
the right to enter and inspect the Premises at all reasonable times.
15. [Intentionally Deleted].
16. That the Mortgagor hereby assigns to the Mortgagee, as further security for
the payment of the indebtedness secured hereby, the rents, issues and profits of
the Premises, together with all leases and other documents evidencing such
rents, issues and profits now or hereafter in effect and any and all deposits
held as security under said leases, and shall, upon demand, deliver to the
Mortgagee an executed counterpart of each such lease or other document. Nothing
contained in the foregoing sentence shall be construed to bind the Mortgagee to
the performance of any of the covenants, conditions or provisions contained in
any such lease or other document or otherwise to impose any obligation on the
Mortgagee (including, without limitation, any liability under the covenant of
quiet enjoyment contained in any lease in the event that any tenant shall have
been joined as a party defendant in any action to foreclose this Mortgage and
shall have been barred and foreclosed thereby of all right, title and interest
and equity of redemption in the Premises), except that the Mortgagee shall be
accountable for any money actually received pursuant to such assignment. The
Mortgagor hereby further grants to the Mortgagee the right (i) to enter upon and
take possession of the Premises for the purpose of collecting the said rents,
issues and
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profits; (ii) to dispossess by the usual summary proceedings any tenant
defaulting in the payment thereof to the Mortgagee; (iii) to let the Premises,
or any part thereof, and (iv) to apply said rents, issues and profits, after
payment of all necessary charges and expenses, on account of said indebtedness.
Such assignment and grant shall continue in effect until the indebtedness
secured by this Mortgage is paid, the execution of this Mortgage constituting
and evidencing the irrevocable consent of the Mortgagor to the entry upon and
taking possession of the Premises by the Mortgagee pursuant to such grant,
whether foreclosure has been instituted or not and without applying for a
receiver. The Mortgagee, however, hereby waives the right to enter upon and take
possession of the Premises for the purpose of collecting said rents, issues and
profits, and the Mortgagor shall be entitled to collect and receive the same
until the occurrence of a default by the Mortgagor under any of the covenants,
conditions or agreements contained in this Mortgage and the continuation of same
beyond any applicable grace period. The Mortgagor agrees to use said rents,
issues and profits in payment of amounts becoming due on this Mortgage and in
payment of taxes, assessment, water rates, sewer rents and carrying charges
becoming due against the Premises and the Rent (hereafter defined) due under the
Lease. Such right of the Mortgagor to collect and receive said rents, issues and
profits may be revoked by the Mortgagee upon any such default by the Mortgagor
and the continuation of same beyond any applicable grace period by the Mortgagee
giving not less than five (5) days' written notice of such revocation, served
personally upon or sent by registered or certified mail to the record owner of
the leasehold estate in the Premises. In the event of any default under this
Mortgage and the continuation of same beyond any applicable grace period, the
Mortgagor will pay monthly in advance to the Mortgagee, on its entry into
possession pursuant to the foregoing grant, or to any receiver appointed to
collect said rents, issues and profits, the fair and reasonable rental value for
the use and occupation of the Premises or of such part thereof as may be in the
possession of the Mortgagor, and upon default in any such payment will vacate
and surrender the possession of the Premises or such part thereof, as the case
may be, to the Mortgagee or to such receiver, and, in default thereof, may be
evicted by summary proceedings.
17. [Intentionally Deleted.]
18. That the whole of the Secured Principal Amount and the interest thereon
shall become due at the option of the
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Mortgagee: (a) after default in the payment of any sums due under the Indemnity
Agreement when the same is due and payable and the continuation of said default
for five (5) days after notice; or (b) if the Mortgagor shall fail to make
payment of any other sums required to be paid hereunder within the period
required by specific provision of this Mortgage or, if no such period is so
provided, by not later than five (5) days after written notice; or (c) if the
Mortgagor shall fail to comply with any other covenants or conditions contained
in this Mortgage and, except with respect to failure to pay money, such failure
shall continue unremedied for the period within which performance is required to
be made by specific provision of this Mortgage, or, if no such period is so
provided, for a period of fifteen (15) days after written notice thereof shall
have been given by the Mortgagee or, with respect to any such default which
shall be of such nature that it cannot reasonably be cured or remedied within
fifteen (15) days or other period specified in this Mortgage, if the Mortgagor
shall not promptly commence and exercise due diligence and continuous effort to
remedy the same; or (d) if the Mortgagor (not acting through [Sony/Block])
shall: (i) admit in writing its inability to pay its debts generally as they
become due; (ii) file a petition in bankruptcy or a petition to take advantage
of any insolvency act; (iii) make an assignment for the benefit of creditors;
(iv) consent to, or acquiesce in, the appointment of a receiver, liquidator or
trustee of itself or of the whole or any substantial part of its properties or
assets; (v) file a petition or answer seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under the
federal bankruptcy laws or any other applicable law; or (e) (i) if, without the
Mortgagor's consent or acquiescence, a court of competent jurisdiction shall
enter an order, judgment or decree appointing a receiver, liquidator, or trustee
of the Mortgagor, or of the whole or any substantial part of the property or
assets of the Mortgagor and such order, judgment or decree shall remain
unvacated, or not set aside, or unstayed for thirty (30) days, or (ii) if a
petition shall be filed against the Mortgagor seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the federal bankruptcy laws or any other applicable law and such
petition shall remain undismissed for thirty (30) days, or (iii) if, under the
provisions of any other law for the relief or aid of debtors, any court of
competent jurisdiction shall assume custody or control of the Mortgagor of the
whole or any substantial part of its property or assets, and such custody or
control shall remain
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unterminated or unstayed for thirty (30) days; or (f) if any representation,
warranty or statement contained herein or in any writing delivered to the
Mortgagee simultaneously with the execution and delivery hereof, shall prove to
be incorrect in any material respect; or (g) if, without the prior written
consent of the Mortgagee, (i) the leasehold estate in the Premises created by
the Lease or any portion thereof or interest therein shall be sold or otherwise
transferred by the Mortgagor, or (ii) any mortgage lien other than the lien of
this Mortgage shall be placed on the leasehold estate in the Premises created by
the Lease; or (h) if there shall occur any other default under the Lease by the
Mortgagor that is not cured prior to the expiration of any applicable grace
period therein provided; or (i) if the Lease is canceled or terminated for any
reason whatsoever (including, without limitation, by the lessor thereunder upon
the occurrence of any casualty or the condemnation of all or a portion of the
Premises).
18A. That in the event that, pursuant to Article 18 hereof, the Mortgagee
exercises its option to declare the Secured Principal Amount due, the Mortgagee
may foreclose this Mortgage notwithstanding that (a) all or any portion of the
indebtedness of the Mortgagor under the Indemnity Agreement is not then due and
payable, and/or (b) the Mortgagee may not or does not proceed against the
Mortgagor to collect such indebtedness by reason of the bankruptcy of the
Mortgagor or otherwise. The proceeds arising from such action to foreclose this
Mortgage shall, at the option of the Mortgagee, be applied in payment of the
indebtedness of the Mortgagor under the Indemnity Agreement, if then due and
payable, and/or held by the Mortgagee as cash collateral for the obligations of
the Mortgagor under the Indemnity Agreement. Any such cash collateral shall be
held in an interest bearing account and all interest earned thereon shall be
retained by the Mortgagee as cash collateral for the obligations of the
Mortgagor under the Indemnity Agreement.
19. That any payment made in accordance with the terms of this Mortgage by any
person at any time liable for the payment of the whole or any part of the sums
now or hereafter secured by this Mortgage, or by any subsequent owner of the
leasehold estate in the Premises created by the Lease, or by any other person
whose interest in the leasehold estate in the Premises created by the Lease
might be prejudiced in the event of a failure to make such payment, or by any
stockholder, officer or director of a corporation which at any time may be
liable for such payment or may own or have such
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an interest in the leasehold estate of the Premises created by the Lease, shall
be deemed, as between the Mortgagee and all persons who at any time may be
liable as aforesaid or may own the leasehold estate in the Premises created by
the Lease, to have been made on behalf of all such persons.
20. That any failure by the Mortgagee to insist upon the strict performance by
the Mortgagor of any of the terms and provisions hereof shall not be deemed to
be a waiver of any of the terms and provisions hereof, and the Mortgagee,
notwithstanding any such failure, shall have the right thereafter to insist upon
the strict performance by the Mortgagor of any and all of the terms and
provisions of this Mortgage to be performed by the Mortgagor; that neither the
Mortgagor nor any other person now or hereafter obligated for the payment of the
whole or any part of the sums now or hereafter secured by this Mortgage shall be
relieved of such obligation by reason of the failure of the Mortgagee to comply
with any request of the Mortgagor, or of any other person so obligated, to take
action to foreclose this Mortgage or otherwise enforce any of the provisions of
this Mortgage or any obligations secured by this Mortgage, or by reason of the
release, regardless of consideration, of the whole or any part of the security
held for the indebtedness secured by this Mortgage, or by reason of any
agreement or stipulation between any subsequent owner or owners of the leasehold
estate in the Premises created by the Lease and the Mortgagee extending the time
of payment or modifying the terms of the Indemnity Agreement or this Mortgage
(so long as the Mortgagor's obligations thereunder are not increased) without
first having obtained the consent of the Mortgagor or such other person, and in
the latter event, the Mortgagor and all such other persons shall continue liable
to make such payments according to the terms of any such agreement of extension
or modification unless expressly released and discharged in writing by the
Mortgagee; that, regardless of consideration and without the necessity for any
notice to or consent by the holder of any subordinate lien on the leasehold
estate in the Premises created by the Lease, the Mortgagee may release the
obligation of anyone at any time liable for any of the indebtedness secured by
this Mortgage or any part of the security held for the indebtedness without, as
to the security or the remainder thereof, in anywise impairing or affecting the
lien hereof or the priority thereof over any subordinate encumbrance; and that
the Mortgagee may resort for the payment of the indebtedness secured hereby to
any other security therefor held by the Mortgagee in such order and manner as
the Mortgagee may elect.
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21. [Intentionally Deleted].
22. That when and if the Mortgagor and the Mortgagee shall respectively become
the Debtor and Secured Party in any Uniform Commercial Code Financing Statement
affecting the Mortgagor's interest in the Building Equipment or other property
referred to or described herein, this Mortgage shall be deemed the Security
Agreement as defined in the Uniform Commercial Code of the State of
__________________ and the remedies for any violation of the covenants, terms
and conditions of the agreements herein contained shall be (i) as prescribed
herein, (ii) by general law, or (iii), as to such part of the security which is
also reflected in said Financing Statement, by the specific statutory
consequences now or hereafter enacted and specified in said Uniform Commercial
Code, all at Mortgagee's sole election. The filing of such a Financing Statement
in the records normally having to do with personal property shall never be
construed as in any way derogating from or impairing this declaration and hereby
stated intention of the parties hereto, that all items of Building Equipment and
other property used in connection with the production of income from the
Premises (furniture only excepted) or adapted for use therein and/or which is
described or reflected in this Mortgage are, and at all times and for all
purposes and in all proceedings, both legal and equitable, shall be, regarded as
part of the real estate irrespective of whether or not (i) any such item is
physically attached to the improvements, (ii) serial numbers are used for the
better identification of certain equipment items capable of being thus
identified in a recital contained herein or in any list filed with the Mortgagee
or (iii) any such item is referred to or reflected in any such Financing
Statement so filed at any time. Similarly, the mention in any such Financing
Statement of (1) the rights in or the proceeds of any fire and/or hazard
insurance policy, (2) any award in eminent domain proceedings for a taking or
for loss of value or (3) the debtor's interest as lessor in any present or
future lease or rights to income growing out of the use or occupancy of the
Premises, whether pursuant to a lease or otherwise, shall never be construed as
in any way altering any of the rights of the Mortgagee as determined by this
instrument or impugning the priority of the Mortgagee's lien granted hereby or
by any other recorded document, but such mention in the Financing Statement is
declared to be for the protection of the Mortgagee in the event any court or
judge shall at any time hold with respect to (1), (2) or (3) that notice of the
Mortgagee's priority of interest, to be effective against a particular class of
persons, including but not limited to the Federal government and any
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<PAGE>
subdivisions or entity of the Federal government, must be filed in the Uniform
Commercial Code records.
23. That the Mortgagor will not at any time insist upon, or plead, or in any
manner whatever claim or take any benefit or advantage of any stay or extension
or moratorium law, any exemption from execution or sale of the Premises or any
part thereof, wherever enacted, now or at any time hereafter in force, which may
affect the covenants and terms of performance of this Mortgage, nor claim, take
or insist upon any benefit or advantage of any law now or hereafter in force
providing for the valuation or appraisal of the Premises, or any part thereof,
prior to any sale or sales thereof which may be made pursuant to any provision
herein, or pursuant to the decree, judgment or order of any court of competent
jurisdiction; nor, after any such sale or sales, claim or exercise any right
under any statute heretofore or hereafter enacted to redeem the property so sold
or any part thereof and the Mortgagor hereby expressly waives all benefit or
advantage of any such law or laws and covenants not to hinder, delay or impede
the execution of any power herein granted or delegated to the Mortgagee, but to
suffer and permit the execution of every power as though no such law or laws had
been made or enacted. The Mortgagor, for itself and all who may claim under it,
waives, to the extent that it lawfully may, ail right to have the Premises
marshaled upon any foreclosure hereof.
24. That if the Mortgagor consists of more than one party, such parties shall
be jointly and severally liable under any and all obligations, covenants and
agreements of the Mortgagor contained herein.
25. That the Mortgagor shall keep this Mortgage a valid lien upon the leasehold
estate in the Premises created by the Lease; shall not at any time create or
allow to accrue or exist any other lien or encumbrance upon the leasehold estate
in the Premises created by the Lease or any part thereof; and shall not cause or
permit the lien of this Mortgage to be diminished or impaired in any way.
26. That wherever used in this Mortgage, unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, the word
"lease" shall mean "tenancy, subtenancy, lease or sublease", the word
"Mortgagor" shall mean "Mortgagor and any subsequent owner or owners of the
leasehold estate in the Premises created by the Lease", the word "Mortgagee"
shall mean "Mortgagee or any subsequent holder or holders of this Mortgage", the
word "person" shall
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mean "an individual, corporation, partnership or unincorporated association" and
the word "Premises" shall include the real estate hereinbefore described,
together with all Building Equipment, condemnation awards and any other rights
or property interests at any time made subject to the lien of this Mortgage by
the terms hereof.
27. That the execution of this Mortgage has been duly authorized by the board of
directors of the Mortgagor, if a corporation.
28. That the Mortgagor shall pay all fees and charges incurred in connection
with the preparation of the Indemnity Agreement and this Mortgage, including
without limitation, the reasonable fees and disbursements of the Mortgagee's
attorneys, charges for appraisals, fees and expenses relating to examination of
title, title insurance premiums, surveys and mortgage recording, documents,
transfer or other similar taxes and revenue stamps.
29. That the Mortgagor recognizes that, in general, borrowers who experience
difficulties in honoring their loan obligations, in an effort to inhibit or
impede lenders from exercising the rights and remedies available to lenders
pursuant to mortgages, notes, loan agreements or other instruments evidencing or
affecting loan transactions, frequently present in court the argument, without
merit, that some loan officer or administrator of the lender made an oral
modification or made some statement which could be interpreted as an extension
or modification or amendment of one or more debt instruments and that the
borrower relied to its detriment upon such "oral modification of the loan
document". For that reason, and in order to protect the Mortgagee from such
allegations in connection with the transactions contemplated by this Mortgage,
the Mortgagor acknowledges that this Mortgage, the Indemnity Agreement, and all
instruments referred to in any of them can be extended, modified or amended
only in writing executed by the Mortgagee and that none of the rights or
benefits of the Mortgagee can be waived permanently except in a written document
executed by the Mortgagee. The Mortgagor further acknowledges the Mortgagor's
understanding that no officer or administrator of the Mortgagee has the power or
the authority from the Mortgagee to make an oral extension or modification or
amendment of any such instrument or agreement on behalf of the Mortgagee.
30. That the Mortgagor shall pay the fixed rent, additional and other charges
mentioned in and made payable by the Lease
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(collectively, the "Rent") within three (3) days after the applicable portion of
the Rent is payable.
31. That the Mortgagor will also observe and perform all of the other provisions
of the Lease on the lessee's part to be observed and performed at least ten (10)
days prior to the expiration of the period within which such observance or
performance is therein required, or as soon thereafter as may be practicable.
32. [Intentionally Deleted].
33. That the Mortgagor shall not exercise any rights it might have to cancel,
terminate, modify or amend the Lease without obtaining the prior written consent
of the Mortgagee, nor shall it surrender the Lease or otherwise abandon any
portion of the Premises demised thereunder.
34. That the Mortgagor shall at all times fully perform and comply with all the
terms, covenants and conditions imposed upon or assumed by the Mortgagor under
the Lease, and if the Mortgagor shall fail to do so, then the Mortgagee may
(but shall not be obligated to) take any action that the Mortgagee deems
necessary or desirable to prevent or cure any default by the Mortgagor in the
performance of or compliance with any of said terms, covenants, and conditions
under the Lease. Upon receipt by the Mortgagee from the lessor under the Lease
of any notice of a default by the Mortgagor under the Lease, the Mortgagee may
rely thereon and take any action to cure such default even though the existence
of such default or the nature thereof be questioned or denied by the Mortgagor,
or by any party on behalf of the Mortgagor. The Mortgagor hereby expressly
grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute
and immediate right, to the extent not prohibited by the Lease or applicable
law, to enter in and upon the Premises, or any part thereof, to such extent and
as often as the Mortgagee, in its sole discretion, deems necessary or desirable
in order to prevent or to cure any such default by the Mortgagor. The Mortgagee
may pay and expend such sums of money as is reasonably necessary for such
purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately
and upon demand, all such sums so paid and expended by the Mortgagee, together
with interest thereon from the date of each such payment at the rate set forth
in Article 4 of this Mortgage. All sums so paid and expended by the Mortgagee
and the interest thereon shall be added to and secured by the lien of this
Mortgage.
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35. That the Mortgagor shall deliver to the Mortgagee, upon demand, proof of
payment of all items which are required to be paid by the Mortgagor pursuant to
the Lease and proof of payment of which is required to be given to the lessor
under the Lease.
36. That the Mortgagor shall not waive any of its rights under the Lease, or
refrain from exercising any right or remedy accorded to it under the Lease on
account of any default by the lessor thereunder or release such lessor from any
liability or condone or excuse any improper actions of the lessor thereunder
without first obtaining the written consent of the Mortgagee.
37. That for the purpose of preventing or curing any default by the Mortgagor
under the Lease, the Mortgagee may (but shall be under no obligation to) do any
act or execute any document in the name of the Mortgagor or as its
attorney-in-fact, as well as in the name of the Mortgagee. The Mortgagor hereby
irrevocably appoints the Mortgagee its true lawful attorney-in-fact in its name
or otherwise to do any and all acts and to execute any and all documents which
in the opinion of the Mortgagee may be necessary or desirable to prevent or cure
any default under the Lease or to preserve any rights of the Mortgagor in, to or
under the Lease, or any sublease thereof, including the right to effectuate a
renewal of the Lease or to preserve any rights of the Mortgagor whatsoever in
respect of any part of the Premises. Notwithstanding any provision to the
contrary contained in this Article 37, the Mortgagee shall not exercise any of
the rights granted to it under this Article 37 unless and until the Mortgagor is
in default under the Lease or the Mortgagee has received notice from the lessor
under the Lease that the Mortgagor is in default under the Lease or that an
event has occurred which, with the passage of time or giving of notice, or both,
would constitute a default by the Mortgagor under the Lease.
38. That the Mortgagor shall notify the Mortgagee promptly of (a) the occurrence
of any default by the lessor under the Lease or the occurrence of any event
which, with the passage of time or service of notice, or both, would constitute
a default by the lessor under the Lease, (b) the receipt by the Mortgagor of any
notice (written or oral) from the lessor under the Lease and of any notice
(written or oral) noting or claiming the occurrence of any default by the
Mortgagor under the Lease or the occurrence of any event which, with the passage
of time or service of notice, or both, would constitute a default by the
Mortgagor under the
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Lease, and (c) any request made by either party to the Lease for arbitration
proceedings pursuant to the Lease and of the institution or commencement of
arbitration proceedings thereunder. The Mortgagor shall permit the Mortgagee to
participate in any arbitration proceedings in association with the Mortgagor,
and if at the time any such arbitration proceedings shall be initiated, the
Mortgagor shall be in default hereunder beyond any applicable grace periods, the
Mortgagee is hereby granted the sole and exclusive right to designate and
appoint any arbitrators to be appointed by Mortgagor under the Lease.
39. That promptly upon demand by the Mortgagee, the Mortgagor shall use its best
efforts to obtain from the lessor under the Lease and furnish to the Mortgagee
the estoppel certificate of such lessor required to be delivered by such lessor
pursuant to Subsection _________ of the Lease.
40. That promptly upon request by the Mortgagee, the Mortgagor shall give its
unqualified consent in writing to any and all modifications of the Lease which
the lessor thereunder agrees to make at the request of the Mortgagee for the
purpose of improving, maintaining or preserving the Mortgagee's security in the
Lease, so long as such modification does not adversely affect the Mortgagor's
rights under the Lease.
41. (a) That the Mortgagor shall not sell or assign the Lease or any of its
rights thereunder or the leasehold estate created thereby or sublease all or any
portion of the Premises without the prior written consent of the Mortgagee.
(b) That all references in Article 16 hereof, and elsewhere in this
Mortgage, to a lease of the Premises shall be deemed to include any sublease of
all or any portion of the Premises.
42. That each sublease entered into by the Mortgagor as lessor shall provide
that such sublease is subordinate to the lien of this Mortgage, and any
extensions, replacements or modifications hereof, and that (a) the sublessee
thereunder will attorn to the Mortgagor if the Mortgagor acquires fee title to
the Premises by exercising its purchase option under the Lease, and (b) if the
Mortgagee enters into a new lease with the lessor under the Lease under the
circumstances therein stated such sublessee agrees to attorn to the Mortgagee
and that the sublease will remain in full force and effect in accordance with
its terms notwithstanding the termination of the Lease.
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43. (a) That so long as the indebtedness and obligations secured hereby shall
remain unpaid, unless the Mortgagee shall otherwise consent in writing, the fee
title to the Premises and the leasehold estate in the Premises created by the
Lease shall not merge but shall always be kept separate and distinct,
notwithstanding the ownership of both such estates by the lessor or the lessee
under the Lease, or by a third party. Nothing hereunder contained shall be
construed as authorizing the sale or transfer by the Mortgagor of its leasehold
estate under the Lease without the written consent of the Mortgagee.
(b) That in the event that the Mortgagor becomes the owner of the fee
title to the Premises, the lien of this Mortgage shall spread to the Premises
upon the acquisition of such fee title by the Mortgagor. The foregoing sentence
shall be self-operative and such spreading of said lien shall not require the
execution of any further instruments. However, upon request by the Mortgagee,
the Mortgagor shall execute, acknowledge and deliver instruments in recordable
form confirming the spreading of the lien of this Mortgage to the fee title of
the Premises.
44. (a) That the Mortgagor hereby represents and warrants that the Premises is
not currently used nor, to the best of the Mortgagor's knowledge after diligent
investigation, had it been used in the past, by the Mortgagor, prior owners,
tenants, operators, or any other persons or organizations, in a manner that
violates any applicable federal, state, or local law, statute, ordinance or
regulation, or any court or administrative order or decree of any governmental
or quasi-governmental authority or agency or any private agreement pertaining to
environmental matters or hazardous substances (hereinafter collectively called
"Environmental Requirements"), and there are no conditions existing at, or
materials currently located on, the Premises that would violate any
Environmental Requirements or give rise to liability for hazardous substances
(including, without limitation, solid wastes, toxic materials, radon, asbestos
and oil) or any substances that would require special handling in collection,
storage, treatment or disposal (hereinafter collectively called "Hazardous
Substances"). The Mortgagor will not place or permit to be placed on the
Premises any Hazardous Substances or use or permit the use of the Premises in a
manner that would violate any applicable Environmental Requirements or give rise
to any liability for Hazardous Substances. The Mortgagor further covenants and
agrees that it will not use or permit the use or operation of the Premises in a
manner that would
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authority or agency concerning Environmental Requirements or environmental
issues affecting the Premises or sent by the Mortgagor to any such authority or
agency regarding the same, within five (5) days after such receipt or
transmittal by the Mortgagor.
(d) That if the Premises are being used or operated in a manner, or that a
condition exists on the Premises, which would (i) violate any Environmental
Requirements, or (ii) give rise to potential liability for Hazardous Substances,
the Mortgagee may, but shall not be obligated to, perform or cause to be
performed any remedial action, including, but not limited to, removal and
clean-up, which the Mortgagee in its sole discretion believes necessary or
prudent under the circumstances and the Mortgagee may make advances or payments
towards performance or satisfaction of such Environmental Requirements, but
shall be under no obligation to do so. The Mortgagor shall execute and deliver,
promptly after request, such instruments as the Mortgagee may deem useful or
required to permit the Mortgagee to take any such action. All sums so advanced
or paid and all expenses incurred by the Mortgagee, including, without
limitation, attorneys' fees, fines or other penalty payments and all sums
advanced or paid in connection with any judicial or administrative investigation
or proceeding relating thereof, shall immediately, upon demand, be due from the
Mortgagor and shall bear interest at the rate set forth in Article 4 hereof from
the date the same shall become due and payable until the date paid, and all sums
so advanced or paid and expenses, incurred, with interest as aforesaid, shall be
secured by the lien of this Mortgage. The Mortgagor shall reimburse the
Mortgagee for all such sums so advanced or paid and expenses incurred regardless
of whether the Mortgagor would have ultimately been responsible for such costs
under applicable law. The Mortgagee by the payment of any such fees, fines or
other penalty payments, may, if it sees fit, be thereby subrogated to the rights
of the federal, state or local governmental entity or agency otherwise entitled
to such rights, under the applicable Environmental Requirements; but no such
advance by the Mortgagor shall be deemed to relieve the Mortgagor from any
default hereunder or impair any right or remedy consequent thereon.
(e) That the Mortgagor hereby agrees to indemnify, hold harmless,
reimburse, and, upon request of the Mortgagee, defend the Mortgagee from and
against any and all losses, liabilities, damages, injuries, costs, expenses and
claims of any and every kind whatsoever (including, without
-23-
<PAGE>
IN WITNESS WHEREOF, this Mortgage has been duly executed by the Mortgagor.
IN PRESENCE OF:
PAVILION PARTNERSHIP
By: S/M Pace, Inc.
Attest:
By:_______________________
Name:
_______________________ Title:
By: [Sony/Block]
Attest:
By:_______________________
Name:
_______________________ Title:
(Acknowledgments to be added)
-25-
<PAGE>
------------------------------
PURCHASE AGREEMENT
by and among
SM/PACE, INC.
and
PACE ENTERTAINMENT CORPORATION
and
CHARLOTTE AMPHITHEATER CORPORATION
and
THE WESTSIDE AMPHITHEATRE CORPORATION
and
VIACOM INC.
------------------------------
Dated as of December 19, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
1. Defined Terms ........................................................ 2
1.1 Cross-References .............................................. 2
1.2 Other Defined Terms ........................................... 3
1.3 Special Defined Terms ......................................... 3
1.4 Knowledge ..................................................... 8
2. Purchase and Sale .................................................. 8
2.1 Transferred Interest .......................................... 8
2.2 Charlotte Loan ................................................ 8
2.3 Instruments of Conveyance, Transfer and Assumption and
Release ..................................................... 8
(a) Instruments of Conveyance and Transfer ................ 8
(b) Instruments of Assumption ............................. 9
2.4 Blockbuster Group Release ..................................... 9
2.5 Mutual Releases ............................................... 9
3. Closing; Purchase Price; Liabilities ................................. 10
3.1 Closing Date .................................................. 10
3.2 Purchase Price and Payment at Closing ......................... 10
3.3 Assumed Liabilities; Excluded Liabilities; Retained
Liabilities ................................................. 11
(a) Assumed Liabilities ................................... 11
(b) Retained Liabilities .................................. 12
4. Representations and Warranties ....................................... 12
4.1 Representations and Warranties of the Blockbuster Group ....... 12
(a) Due Organization; Good Standing and Power ............. 12
(b) Authorization of Agreement ............................ 12
(c) No Approvals or Notices Required; No Conflict of
Instruments ......................................... 13
(d) Ownership of Transferred Interest ..................... 13
(e) Ownership of Charlotte Loan ........................... 13
(f) Legal Proceedings ..................................... 13
(g) Certain Fees .......................................... 14
(h) Sony/Block Representations ............................ 14
4.2 Representations and Warranties of the PACE Group .............. 14
(a) Due Organization; Good Standing and Power ............. 14
(b) Authorization and Validity of Agreement ............... 15
(c) No Approvals or Notices Required; No Conflict with
Instruments ......................................... 15
(d) Certain Fees .......................................... 15
(e) Legal Proceedings ..................................... 15
4.3 Survival of Representations and Warranties .................... 15
4.4 Blockbuster Acknowledgment .................................... 16
-i-
<PAGE>
5. Covenants; Actions Prior to Closing .................................. 16
5.1 Access to Information ......................................... 16
5.2 No Disposition of Transferred Assets; Modification of
Specific Indemnification Obligations ........................ 16
5.3 Further Actions ............................................... 17
5.4 Notification .................................................. 17
6. Conditions Precedent ................................................. 17
6.1 Conditions Precedent to Obligations of All Parties ............ 17
(a) No Lawsuits ........................................... 17
(b) Mutual Third Party Consents and Approvals ............. 18
(c) Name-in-Title Agreement ............................... 18
6.2 Conditions Precedent to the Obligations of the Blockbuster
Group ....................................................... 18
(a) Accuracy of Representations and Warranties ............ 18
(b) Performance of Agreements ............................. 18
(c) PACE Group's Officer's Certificate .................... 18
(d) Actions and Proceedings ............................... 19
(e) Carowinds Amphitheater ................................ 19
6.3 Conditions Precedent to Obligations of the PACE Group ......... 19
(a) Accuracy of Representations and Warranties ............ 19
(b) Performance of Agreements ............................. 19
(c) Blockbuster Officer's Certificate ..................... 19
(d) Actions and Proceedings ............................... 19
(e) The PACE Group Special Consents and Approvals ......... 20
(f) Funding Amounts ....................................... 20
7. Termination .......................................................... 21
7.1 General ....................................................... 21
7.2 No Liabilities in Event of Termination ........................ 21
8. Covenants and Actions Subsequent to Closing .......................... 21
8.1 Covenant Not to Compete ....................................... 21
8.2 Performance Guarantee ......................................... 22
8.3 Tax Matters ................................................... 22
9. Indemnification ...................................................... 22
9.1 Indemnification by the PACE Group ............................. 22
9.2 Indemnification by the Blockbuster Group ...................... 23
9.3 Matters Involving Third Parties ............................... 23
10. Miscellaneous ........................................................ 24
10.1 Public Announcements .......................................... 24
-ii-
<PAGE>
10.2 Expenses ...................................................... 24
10.3 Remedy ........................................................ 25
10.4 Notices ....................................................... 26
10.5 Delaware Law to Apply ......................................... 26
10.6 Headings ...................................................... 26
10.7 Legal Construction ............................................ 26
10.8 Counterparts .................................................. 26
10.9 Gender ........................................................ 26
10.10 Binding Effect; Benefit ....................................... 26
10.11 Assignability ................................................. 26
10.12 Entire Agreement, Modification, Consents and Waivers .......... 27
-iii-
<PAGE>
LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
Schedules
Schedule 4.1(c) - Blockbuster Approvals
Schedule 4.1(d) - Transferred Interest
Schedule 4.1(e) - Charlotte Loan
Schedule 4.1(f) - Litigation
Schedule 4.2(c) - PACE Approvals
-iv-
<PAGE>
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is entered into as of this 19th
day of December, 1997 by and among (i) SM/PACE, INC., a Texas corporation (the
"PACE Subsidiary"), (ii) PACE ENTERTAINMENT CORPORATION, a Texas corporation
(the "PACE Parent"), and the parent corporation of PACE Subsidiary, (iii)
CHARLOTTE AMPHITHEATER CORPORATION, a Delaware corporation ("CAC"), and THE
WESTSIDE AMPHITHEATRE CORPORATION, an Arizona corporation ("WAC", and together
with CAC, the "Blockbuster Subsidiary"), and (iv) VIACOM INC. (successor in
interest by merger to Blockbuster Entertainment Corporation), a Delaware
corporation (the "Blockbuster Parent"), and the parent corporation of the
Blockbuster Subsidiary. The PACE Subsidiary and the PACE Parent are hereinafter
collectively referred to as the PACE Group, and the Blockbuster Subsidiary and
the Blockbuster Parent are hereinafter collectively referred to as the
"Blockbuster Group".
RECITALS:
1. Pavilion Partners (the "Pavilion Partnership") is a Delaware general
partnership created by and pursuant to the provisions contained in that certain
Partnership Agreement ("Pavilion Partnership Agreement") entered into by and
among the PACE Subsidiary, the Blockbuster Subsidiary, Amphitheater
Entertainment Partnership ("Sony/Block"), a Delaware general partnership whose
sole general partners are the Blockbuster Subsidiary and YM Corp, a Delaware
corporation (the "Sony Subsidiary"), and the Sony Subsidiary.
2. Pursuant to the terms of the Pavilion Partnership Agreement, the PACE
Subsidiary currently owns a thirty-three and one-third percent (33-1/3%)
Percentage Interest in Pavilion Partnership and Sony/Block currently owns a
sixty-six and two-thirds percent (66-2/3%) Percentage Interest in Pavilion
Partnership. Pursuant to the terms of the Partnership Agreement of Sony/Block
(the "Sony/Block Partnership Agreement"), each of the Blockbuster Subsidiary and
the Sony Subsidiary currently owns a fifty percent (50%) interest in Sony/Block.
3. As part of the transactions contemplated by this Agreement, the
Blockbuster Group desires to have the Blockbuster Subsidiary assign and sell to
the PACE Subsidiary, and the PACE Group desires for the PACE Subsidiary to
purchase from the Blockbuster Subsidiary, all of the Blockbuster Subsidiary's
fifty percent (50%) interest in Sony/Block (the "Transferred Interest").
4. After giving effect to the transactions contemplated by this Agreement,
(i) the Sony Subsidiary's fifty percent (50%) interest in Sony/Block will be
unchanged, the PACE Subsidiary will own a fifty percent (50%) interest in
Sony/Block, and the Blockbuster Subsidiary will not own any interest in
Sony/Block, (ii) the direct ownership of the Pavilion Partnership will be
unchanged,
<PAGE>
and (iii) the Blockbuster Group shall be fully released from all Liabilities
arising under the Amphitheater Loans and the Assumed Agreements.
5. As part of the transactions contemplated by this Agreement, the
Blockbuster Parent shall also sell to the PACE Subsidiary that certain loan (the
Charlotte Loan) which (i) is evidenced by that certain Promissory Note in the
original principal amount of $8,000,000, dated April 1, 1994, executed by CAC in
favor of the Blockbuster Parent (the "Charlotte Note"), (ii) is secured by that
certain North Carolina Deed of Trust dated April 1, 1994, executed by CAC in
favor of the Blockbuster Parent and covering the Charlotte Asset (the "Charlotte
Deed of Trust"), and (iii) has been contractually assumed by the Pavilion
Partnership pursuant to Section 5.6 of the Pavilion Partnership Agreement.
6. In consideration for the sale of the Transferred Assets, the PACE
Subsidiary shall pay the Cash Purchase Price provided for herein and assume the
Assumed Liabilities and shall release or cause to be released the Blockbuster
Group from certain liabilities and obligations as specified herein, all subject
to the terms and provisions hereinafter set forth.
7. The PACE Parent is joining in the execution of this Agreement for the
purpose of making certain representations and warranties to, and covenants and
agreements with, the Blockbuster Group, including to evidence its agreement to
indemnify the Blockbuster Group from any Damages it incurs which arise out of
any of the Assumed Liabilities.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto do hereby agree as
follows:
1. Defined Terms.
1.1 Cross References. The following terms are defined in this Agreement in
the Sections indicated below:
Amphitheater Loan Release Section 2.4
Assumed Agreements Section 2.4
Assumed Liabilities Section 3.3(a)
Blockbuster Executory Contracts Section 1.3 (in the definition of
Indemnification Obligations)
Blockbuster Group Preamble
Blockbuster Parent Preamble
Blockbuster Subsidiary Preamble
CAC Preamble
Cash Purchase Price Section 3.2(d)
2
<PAGE>
Charlotte Deed of Trust Recitals
Charlotte Loan Recitals
Charlotte Note Recitals
Charlotte Parking Obligations Section 3.3(a)(iii)
Closing Section 3.1
Closing Date Section 3.1
Communications Section 10.4
Damages Section 9.1
Financial Closing Obligations Section 3.3(a)(ii)
Indemnified Party Section 9.3(a)
Indemnifying Party Section 9.3(a)
Liabilities Section 3.3(b)
Loan Purchase Price Section 3.2(a)
Miscellaneous Payable
Obligations Section 3.3(a)(iv)
New Pavilion Partnership
Agreement Section 6.3(e)(i)
New Sony/Block Partnership
Agreement Section 6.3(e)(iii)
Noncompete Covenant Section 8.1
PACE Group Preamble
PACE Parent Preamble
PACE Subsidiary Preamble
Partner Note Obligations Section 3.3(a)(i)
Pavilion Partnership Recitals
Pavilion Partnership Agreement Recitals
Reimbursement Amount Section 3.2(b)
Retained Liabilities Section 3.3(b)
Sony/Block Recitals
Sony/Block Partnership
Agreement Recitals
Sony Subsidiary Recitals
Third Party Claim Section 9.3(a)
Transferred Interest Recitals
Transferred Interest Cash Amount Section 3.2(b)
WAC Preamble
1.2 Other Defined Terms. Except as otherwise specified herein, other
capitalized terms used herein which are not specifically defined herein shall
have the respective meanings assigned pursuant to the terms of the Pavilion
Partnership Agreement.
1.3 Special Defined Terms. As used in this Agreement, the following terms
shall have the respective meanings indicated:
3
<PAGE>
"affiliate" means, with respect to any person, any other person
that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such person;
provided however, with respect to the Blockbuster Group, the definition of
"affiliate" shall not be deemed to include National Amusements Inc.
"Amphitheater Loans" means the Camden Loan and the West Palm Beach
Loan.
"Applicable Law" means any statute, law, rule or regulation or any
judgment, order, writ, injunction or decree of any Governmental Entity to
which a specified person or property is subject.
"Applicable Releasing Parties" means (i) the members of the PACE
Group, (ii) the members of the Sony Group, (iii) the Pavilion Partnership,
(iv) Sony/Block and (v) any third party to whom any member of the
Blockbuster Group has undertaken a direct contractual obligation at any
time on or before the Closing Date in connection with indebtedness of the
Pavilion Partnership for borrowed funds, including, without limitation,
The Sanwa Bank, Limited.
"Camden Loan" means that certain $23,630,000 loan extended by The
Sanwa Bank, Limited to the Pavilion Partnership and evidenced by (i) that
certain Loan Agreement dated July 3, 1995 and entered into by and between
The Sanwa Bank, Limited and the Pavilion Partnership and (ii) that certain
Promissory Note dated July 3, 1995 executed by the Pavilion Partnership,
payable to the order of The Sanwa Bank, Limited and in the original
principal amount of $23,630,000.
"Camden Loan Indemnification Agreement" means that certain
Indemnification Agreement dated October 5, 1994, and executed by the
Blockbuster Parent in favor of the Sony Parent relating to the Camden
Loan.
"Cost Overrun Obligations" means the obligations of the Blockbuster
Group to the City of Phoenix under Section 3.1 of the Phoenix Amphitheater
Lease (and the Development Agreement referred to therein) arising out of
or existing due to the final construction costs of the Phoenix
Amphitheater exceeding Eleven Million Dollars ($11,000,000.00), which
obligations have been previously fully and finally released and
discharged.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on
voting, sale, transfer, disposition or otherwise), and other encumbrances
of every type and description, whether imposed by law, agreement,
understanding or otherwise.
4
<PAGE>
"Governmental Entity" means any court or tribunal in any
jurisdiction or any public, governmental or regulatory body, agency,
department, commission, board, bureau or other authority or
instrumentality.
"Indemnification Obligations" means any indemnification obligation
of the Blockbuster Group to the Pavilion Partnership or arising under the
Pavilion Partnership Agreement, including, without limitation, any such
indemnification obligation related to any one or more of (i) the Partner
Note Obligations, the Financial Closing Obligations, the Charlotte Parking
Obligations, the Cost Overrun Obligations, or the Miscellaneous Payable
Obligations; (ii) the obligation of the Blockbuster Group related to the
cost, expense and obligation of maintaining, collateralizing and/or
securing the letters of credit required by the terms of the Phoenix
Amphitheater Lease, if any; (iii) any obligation of the Blockbuster Group
to the Pavilion Partnership for a breach of any representation or warranty
made by the Blockbuster Subsidiary (which for purposes of this definition
includes San Bernardino Amphitheater Corporation) under the Executory
Contracts relating to the Existing Blockbuster Assets (the "Blockbuster
Executory Contracts"), (iv) the Stagehand Union Lawsuit Obligation, (v)
the Phoenix Tax Obligation, or (vi) the San Bernardino Representation
Obligation.
"Name-in-Title Agreement" means that certain agreement to be
executed by and between the Blockbuster Group and the Pavilion Partnership
on terms reasonably agreed to by such parties and consistent with the
following:
(a) The Name-in-Title Agreement shall provide that through and
until the second anniversary of the Closing Date, the "Blockbuster"
name will, at the option of the Blockbuster Group, continue to be
displayed and utilized consistent with past practices in connection
with the name of the Glen Helen Blockbuster Pavilion in San
Bernardino, California, the Desert Sky Pavilion in Phoenix, Arizona,
and the Blockbuster Pavilion in Charlotte, North Carolina (the "Old
Blockbuster Amphitheaters"). The Name-in-Title Agreement will
provide that the Blockbuster Group will be granted a right of first
offer on the name-in-title rights at each of the Old Blockbuster
Amphitheaters as follows:
(1) If the Pavilion Partnership desires to seek, at any
time, a name-in-title sponsor for any of the Old Blockbuster
Amphitheaters with respect to any period of time after the
second anniversary of the Closing Date, the Pavilion
Partnership shall be required to first offer to the
Blockbuster Group the right to purchase a name-in-title
sponsorship for such Old Blockbuster Amphitheater for a price
to be designated by the Pavilion Partnership (the "First
Offer").
5
<PAGE>
(2) If the Blockbuster Group rejects a First Offer with
respect to any Old Blockbuster Amphitheater, or does not
accept a First Offer with respect to any Old Blockbuster
Amphitheater within thirty (30) days following the making of
such First Offer to the Blockbuster Group, then (i) subject to
clause (ii) below, the Pavilion Partnership shall be free at
any time within the next twelve (12) months following the
making of such First Offer, without any contractual obligation
to the Blockbuster Group, to sell the name-in-title
sponsorship for such Old Blockbuster Amphitheater on the same
or better terms as to the Pavilion Partnership and (ii) the
Pavilion Partnership shall be prohibited from selling the
name-in-title sponsorship rights with respect to such Old
Blockbuster Amphitheater upon terms materially less favorable
to the Pavilion Partnership without having first made a second
offer to the Blockbuster Group to acquire such rights upon the
same terms.
(3) Such right of first offer shall expire with respect
to each of the Old Blockbuster Amphitheaters upon the
execution of the first name-in-title sponsorship agreement of
such Old Blockbuster Amphitheater with a person other than the
Blockbuster Group.
(b) The Name-in-Title Agreement will provide that the Pavilion
Partnership will have the right to sell after the Closing a
name-in-title sponsorship with any third party at the Coral Sky
Amphitheater in West Palm Beach, Florida and the Entertainment
Center in Camden, New Jersey (or at either such facility) without
any contractual obligation to the Blockbuster Group; provided,
however, the Pavilion Partnership will be required to display, at
the option of the Blockbuster Group, the "Blockbuster" name through
and until the second anniversary of the Closing Date, (i) on the
exterior of each such facility in a secondary position, (ii) on an
interior sign tower at each such facility, and (iii) in print media
related to each such facility. Each of the foregoing displays of the
"Blockbuster" name shall be in accordance with exhibits to be
attached to the Name-in-Title Agreement in a form reasonably
approved by the parties.
"Paramount Amphitheaters" means those certain outdoor concert venues
which are located on the property of, and operated in connection with,
certain amusement parks located in North America owned and operated by
Paramount Parks Inc., an affiliate of the Blockbuster Parent.
6
<PAGE>
"Permitted Encumbrances" means any Encumbrances contained in,
created by or under the Sony/Block Partnership, the Pavilion Partnership
Agreement or the Blockbuster Executory Contracts.
"Phoenix Amphitheater Lease" means that certain Amended and Restated
Operator Lease Agreement dated September 26, 1989 entered into by and
between WAC, as operator and lessee, and the City of Phoenix, as landlord.
"Phoenix Tax Obligation" means any obligation or liability for any
Privilege License (Sales) and Use Tax assessed by the City of Phoenix with
respect to the Phoenix Amphitheater for any period prior to April 1, 1994.
"reasonable best efforts" means a party's best efforts in accordance
with reasonable commercial practice and without the incurrence of
unreasonable expense.
"San Bernardino Representation Obligation" means the obligation of
the Blockbuster Group to the County of San Bernardino (and any
indemnification obligation of the Blockbuster Group to the Pavilion
Partnership related thereto) arising out of any representations alleged by
the County of San Bernardino to have been made by the Blockbuster Group or
their affiliates at the time of the execution of that certain Concession
Lease dated October 19,1992 entered into by and between the Amphitheater
Entertainment Corporation and The County of San Bernardino, California
Regional Parks Department, related to the San Bernardino Amphitheater.
"Sony Group" means the Sony Subsidiary and the Sony Parent,
collectively.
"Sony Parent" means Sony Music Entertainment Inc.
"Stagehand Union" means the International Alliance of Theatrical
Stage Employees and Moving Picture Machine Operators.
"Stagehand Union Lawsuit Obligation" means any liabilities, costs or
expenses arising out of or relating to the existing lawsuit between CAC
and the Stagehand Union and any indemnification obligation of the
Blockbuster Group to the Pavilion Partnership related thereto.
"Transferred Assets" means collectively, the Transferred Interest
and all rights to the Charlotte Loan to be transferred to the PACE
Subsidiary pursuant to the provisions of Section 2.2 hereof, including the
Charlotte Note and the Charlotte Deed of Trust.
"West Palm Beach Loan" means that certain $8,000,000 loan extended
by The Sanwa Bank, Limited to the Pavilion Partnership as evidenced by (i)
that certain Loan Agreement dated December 15, 1995 and entered into by
and between The Sanwa Bank,
7
<PAGE>
Limited and the Pavilion Partnership and (ii) that certain Promissory Note
dated December 15, 1995, executed by the Pavilion Partnership, payable to
the order of The Sanwa Bank, Limited and in the original principal amount
of $8,000,000.
1.4 Knowledge. For all purposes under this Agreement, a party shall be
deemed to have knowledge only on matters of which it had actual knowledge
without any obligation to make any specific investigation or inquiry of any
kind.
2. Purchase and Sale
2.1 Transferred Interest. Subject to the terms and conditions of this
Agreement, at the Closing, the Blockbuster Subsidiary shall assign, sell,
transfer, convey and deliver to the PACE Subsidiary, and the PACE Subsidiary
shall purchase, acquire and accept from the Blockbuster Subsidiary, the
Transferred Interest, free and clear of all Encumbrances other than any
Permitted Encumbrances. Upon consummation of the transactions contemplated by
this Agreement, the Blockbuster Subsidiary will not own any rights or interests,
directly or indirectly, in the Transferred Interest, or to any other securities
or interests of Pavilion Partnership or Sony/Block Partnership or have any
option, warrant or other right to acquire any such interests or securities.
2.2 Charlotte Loan. Subject to the terms and conditions of this Agreement,
at the Closing, the Blockbuster Parent shall assign, sell, transfer, convey and
deliver to the PACE Subsidiary and the PACE Subsidiary shall purchase, acquire
and accept the Charlotte Note, together with the liens, security interests, and
all other collateral of whatsoever type, kind, or character, held by the
Blockbuster Parent created by the Charlotte Deed of Trust, together with all
other rights, equities, remedies, privileges, titles, powers and interests of
the Blockbuster Parent relating to the Charlotte Loan, free and clear of all
Encumbrances other than any Permitted Encumbrances.
2.3 Instruments of Conveyance, Transfer and Assumption and Release.
(a) Instruments of Conveyance and Transfer. On the Closing Date, the
Blockbuster Group shall deliver or cause to be delivered to the PACE Subsidiary
the following:
(i) An assignment of the Transferred Interest executed by the
Blockbuster Subsidiary in a form reasonably satisfactory to the PACE Subsidiary,
transferring to the PACE Subsidiary Blockbuster Subsidiary's right to the
Transferred Interest, free and clear of all Encumbrances other than Permitted
Encumbrances; and
(ii) An (A) Assignment of the Charlotte Note and Charlotte
Deed of Trust executed by the Blockbuster Parent in a form reasonably
satisfactory to the PACE Subsidiary, transferring to the PACE Subsidiary the
Blockbuster Parent's rights to and under the Charlotte Note and the Charlotte
Deed of Trust, free and clear of all Encumbrances, other than those contained in
or created by or under the Pavilion Partnership Agreement or the Sony/Block
8
<PAGE>
Partnership Agreement, if any, and (B) the original of the Charlotte Note
endorsed to the PACE Subsidiary (or, in lieu thereof, a lost note affidavit and
other agreements customarily provided in connection therewith) in a form
reasonably satisfactory to the PACE Subsidiary.
(b) Instruments of Assumption. On the Closing Date, the PACE Group
shall execute, as applicable, and deliver or cause to be delivered to the
Blockbuster Group instruments in a form reasonably satisfactory to the
Blockbuster Group pursuant to which (i) the PACE Subsidiary assumes the Assumed
Liabilities and accepts the Transferred Assets in accordance with the terms
hereof, (ii) the PACE Group releases the Blockbuster Group from all the Assumed
Liabilities and (iii) each Applicable Releasing Party releases the Blockbuster
Group from the Assumed Liabilities owed to such Applicable Releasing Party.
2.4 Blockbuster Group Release. On the Closing Date, the PACE Group shall
cause the Blockbuster Group to be released and discharged in full from (A) all
of its obligations and liabilities under (i) the Amphitheater Loans, including
without limitation, any obligations and liabilities under the Camden Loan
Indemnification Agreement (the "Amphitheater Loan Release"), and (ii) the
Blockbuster Executory Contracts (other than any liability excluded from the
"Assumed Liabilities" under the Blockbuster Executory Contracts pursuant to the
provisions of Section 2.5(b)(ii) thereof), the Sony/Block Partnership Agreement,
the Pavilion Partnership Agreement, the Charlotte Note and the Charlotte Deed of
Trust (such agreements, as modified by the immediately preceding parenthetical,
being herein collectively called the "Assumed Agreements"), (B) the Partner Note
Obligations, the Financial Closing Obligations, the Charlotte Parking
Obligations and the Miscellaneous Payable Obligations and (C) any and all claims
and causes or causes of action arising under any of the foregoing, which
releases shall be evidenced by instruments in forms reasonably satisfactory to
the Blockbuster Group and shall include, without limitation, (1) an instrument
executed by The Sanwa Bank, Limited releasing the Blockbuster Group from any
liabilities or obligations under the West Palm Beach Loan, (2) an instrument
executed by the Sony Group releasing the Blockbuster Group from any liabilities
or obligations under the Camden Loan Indemnification Agreement and the
Sony/Block Partnership Agreement and (3) the cancellation of any of the letters
of credit maintained by the Blockbuster Group with respect to the Phoenix
Amphitheater by the issuer banks and the holders thereof and any cancellation
fees related thereto.
2.5 Mutual Releases. On the Closing Date, (i) the Blockbuster Group shall
execute and deliver to the PACE Group an instrument in a form reasonably
satisfactory to the PACE Group in which the Blockbuster Group releases the PACE
Group, the Sony Group, the Pavilion Partnership and Sony/Block from any and all
claims, rights or causes of action, known or unknown, liquidated or
unliquidated, in contract, tort or otherwise, arising out of any act, event,
circumstance or occurrence in connection with the Pavilion Partnership which
existed or occurred on or before the Closing Date, and (ii) the PACE Group shall
execute, as applicable, and deliver, or cause to be delivered to the Blockbuster
Group, instruments in a form reasonably satisfactory to the Blockbuster Group in
which the PACE Group, the Sony Group, the Pavilion Partnership and Sony/Block
releases the Blockbuster Group from any and all claims, rights or causes of
action,
9
<PAGE>
known or unknown, liquidated or unliquidated, in contract, tort or otherwise,
arising out of any act, event, circumstance or occurrence in connection with the
Pavilion Partnership which existed or occurred on or before the Closing Date.
Notwithstanding anything to the contrary, the releases to be delivered pursuant
to this Section 2.5 shall not, and shall expressly provide that they will not,
affect, limit, negate or lessen the contractual obligations undertaken by any of
the parties pursuant to this Agreement.
3. Closing; Purchase Price; Liabilities.
3.1 Closing Date. The closing of the transactions provided for in this
Agreement (the "Closing") shall take place (i) at the offices of Viacom Inc.,
1515 Broadway, New York, New York 10036, at 10:00 a.m., local time, within five
(5) business days after the conditions to the obligations of the parties set
forth in Article 6 have been satisfied or waived, or (ii) at such other time or
place or on such other date as the parties hereto shall agree. The date on which
the Closing is required to take place is herein referred to as the "Closing
Date".
3.2 Purchase Price and Payment at Closing.
(a) Subject to the terms and conditions of this Agreement, the PACE
Subsidiary shall pay to the Blockbuster Parent as the purchase price for the
Charlotte Loan (the "Loan Purchase Price"), an amount equal to (i) the
outstanding principal of the Charlotte Note as of the Closing Date and (ii)
accrued and unpaid interest on the Charlotte Note as of the Closing Date. The
Loan Purchase Price shall be payable in cash at Closing pursuant to Section
3.2(c). As of September 30, 1997, the outstanding principal balance and accrued
and unpaid interest of the Charlotte Note was $9,507,257.
(b) Subject to the terms and conditions of this Agreement, the PACE
Subsidiary shall, as the purchase price for the Transferred Interest, (i)
assume, pay, perform and discharge the Assumed Liabilities as provided for in
Section 3.3(a) hereof, (ii) pay to the Blockbuster Subsidiary in cash the sum of
Five Hundred Twenty-One Thousand Sixty Dollars ($521,060.00) as reimbursement to
the Blockbuster Subsidiary for the amounts previously paid by the Blockbuster
Subsidiary for the Cost Overrun Obligations (the Reimbursement Amount"), and
(iii) pay to the Blockbuster Subsidiary in cash the sum of Three Million Six
Hundred Fifty Thousand and no/100 Dollars ($3,650,000.00) (the "Transferred
Interest Cash Amount").
(c) The Reimbursement Amount, the Loan Purchase Price and the
Transferred Interest Cash Amount are herein collectively referred to as the
"Cash Purchase Price". The Cash Purchase Price shall be payable in cash at the
Closing by wire transfer of immediately available funds to such bank accounts as
may be designated by the Blockbuster Group prior to the Closing Date.
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3.3 Assumed Liabilities; Excluded Liabilities; Retained Liabilities.
(a) Assumed Liabilities. From and after the Closing Date, the PACE
Subsidiary shall assume and pay, perform, fulfill and discharge the following
obligations and Liabilities of the Blockbuster Group (the "Assumed
Liabilities"):
(i) The obligation of the Blockbuster Group for the
outstanding principal balance and accrued and unpaid
interest under Sony/Block Note #2 and the related
Blockbuster Guaranty (the "Partner Note Obligations") as
of the Closing Date, the outstanding principal balance
of which Sony/Block Note #2 is $608,750 as of the date
hereof;
(ii) The obligations of the Blockbuster Group to make the
cash contributions to the Pavilion Partnership
contemplated by Section 6.1(e) of each of the Executory
Contracts relating to the Existing Blockbuster Assets,
as such obligations were modified by that certain
Post-Closing Agreement dated effective April 1, 1994, by
and among the Pavilion Partnership, the PACE Subsidiary,
the Sony Subsidiary, the Blockbuster Subsidiary,
Sony/Block and the other parties named therein (the
"Financial Closing Obligations"), the amount of which
Financial Closing Obligations is agreed among the
parties to be $1,196,003;
(iii) The obligations of the Blockbuster Group to the Pavilion
Partnership under the Executory Contract (Charlotte
Asset) for the failure of the Charlotte Asset to have
the parking spaces that are necessary to satisfy the
current or reasonably anticipated business activities of
the Charlotte Asset (the "Charlotte Parking
Obligations"), the amount of which Charlotte Parking
Obligations is agreed among the parties to be
$1,049,667;
(iv) The amount of other miscellaneous payable obligations
(if any) due from the Blockbuster Group to the Pavilion
Partnership as of the Closing Date (the "Miscellaneous
Payable Obligations"); and
(v) Any and all Liabilities and obligations of the
Blockbuster Group (1) under the Assumed Agreements
(including, without limitation, the Indemnification
Obligations) or (2) arising from or accruing with
respect to any contract entered into by, or the
operations of, the Pavilion Partnership, any action or
inaction on the part of the Pavilion Partnership.
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It is understood and agreed that the PACE Subsidiary shall assume the full
amount of the Assumed Liabilities, regardless of whether the amount of any
Assumed Liability is different from the amount for such Assumed Liability set
forth above.
(b) Retained Liabilities. From and after the Closing Date, the PACE
Subsidiary will not assume any direct or indirect duties, liabilities or
obligations of the Blockbuster Group of any kind or nature, fixed or unfixed,
choate or inchoate, liquidated or unliquidated, secured or unsecured, known or
unknown, accrued, absolute, contingent or otherwise (collectively, the
"Liabilities") other than the Assumed Liabilities. It is understood and agreed
that all Liabilities of the Blockbuster Group other than the Assumed Liabilities
are retained by the Blockbuster Group (the "Retained Liabilities"), and the
Blockbuster Group shall be responsible for the payment and discharge of all such
Retained Liabilities; provided, however, (1) the Retained Liabilities shall not
include any Liabilities relating to the Charlotte Loan, the Amphitheater Loans
or any other loans or financing arrangements entered into by the PACE Group or
entered into by and in connection with the Pavilion Partnership and (ii)
notwithstanding anything herein to the contrary, the Retained Liabilities shall
include, and the Assumed Liabilities shall exclude, any Liability of the
Blockbuster Group for any federal, state or local income tax obligation of the
Blockbuster Group.
4. Representations and Warranties.
4.1 Representations and Warranties of the Blockbuster Group. The
Blockbuster Group hereby makes the following representations and warranties to
the PACE Group, which representations and warranties shall be true and accurate
as of the date hereof and as of the Closing Date as if made on that date:
(a) Due Organization; Good Standing and Power. Each member of the
Blockbuster Group is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation. Each member of the
Blockbuster Group has the corporate power and authority to enter into this
Agreement and to perform its obligations hereunder.
(b) Authorization of Agreement. The execution, delivery and
performance of this Agreement by the Blockbuster Group and the consummation by
the Blockbuster Group of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the Blockbuster Group's part. No
other corporate, director, shareholder, or partner action or approval is
necessary for the authorization, execution, delivery and performance by the
Blockbuster Group of this Agreement and the consummation by the Blockbuster
Group of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Blockbuster Group and, assuming due authorization,
execution and delivery by the PACE Group, constitutes the legal, valid and
binding obligations of the Blockbuster Group, enforceable against them in
accordance with its terms, subject as to enforceability, to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance or similar laws
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affecting creditors' rights generally and to the effect of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(c) No Approvals or Notices Required; No Conflict of Instruments.
Except as described in Schedule 4.1(c) hereto, the execution, delivery and
performance of this Agreement by the Blockbuster Group and the consummation by
the Blockbuster Group of the transactions contemplated hereby (i) will not
violate (with or without the giving of notice or the lapse of time or both), or
require any consent, approval, filing or other notice under, any provision of
any Applicable Law except where the failure to obtain such consent, approval, or
make such filing or notice would not prevent the transactions contemplated
hereby being consummated in accordance with the terms hereof and (ii) assuming
all consents, approvals and other acts described in Schedule 4.1(c) hereto have
been obtained and all filings and notifications listed in Schedule 4.1(c) have
been made and except as may result from any facts or circumstances relating
solely to the PACE Group or the Sony Group or as described in Schedule 4.1(c),
will not conflict with, or result in the breach or termination of any provision
of, or constitute a default under, or require any consent or approval, or result
in the acceleration of the performance of the obligations of the Blockbuster
Group under, or result in the creation of an Encumbrance upon any portion of the
Transferred Assets pursuant to, the charter or bylaws of any member of the
Blockbuster Group, the Pavilion Partnership Agreement, or the Sony/Block
Partnership Agreement, or any indenture, mortgage, deed of trust, lease,
contract, instrument or other agreement to which any member of the Blockbuster
Group is a party or by which any member of the Blockbuster Group or any of the
Transferred Assets are bound or affected.
(d) Ownership of Transferred Interest. Except as set forth in
Schedule 4.1(d) hereto, the Blockbuster Subsidiary owns and has good and
marketable title to the Transferred Interest. At Closing, the Transferred
Interred shall be transferred to the PACE Subsidiary, free and clear of all
Encumbrances, other than the Permitted Encumbrances.
(e) Ownership of Charlotte Loan. Except as set forth in Schedule
4.1(e) hereto, the Blockbuster Parent owns and has good and marketable title to
the Charlotte Note and is the beneficiary (as successor-in-interest by merger to
the Blockbuster Entertainment Corporation) to the Charlotte Deed of Trust. At
Closing, upon consummation of the transactions contemplated by this Agreement,
the Charlotte Note and Charlotte Deed of Trust shall be transferred to the PACE
Subsidiary, free and clear of all Encumbrances other than the Permitted
Encumbrances, and the PACE Subsidiary shall be vested with good and marketable
title to the Charlotte Note, the Charlotte Deed of Trust, and all the other
liens, security interests, rights, equities, remedies, privileges, titles,
powers and interests of the Blockbuster Parent relating to the Charlotte Loan,
free and clear of all Encumbrances, other than the Permitted Encumbrances.
(f) Legal Proceedings. Except as described in Schedule 4.1(f)
hereto, (i) there is no litigation, proceeding, claim or governmental
investigation pending or, to the knowledge of the Blockbuster Group, threatened,
seeking relief or damages which, if granted, would materially and adversely
affect Sony/Block, the Transferred Assets or which to the knowledge of the
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Blockbuster Group would prevent the consummation of the transactions
contemplated by this Agreement and (ii) the Blockbuster Group and Sony/Block
have not been charged with the violation of or threatened, in writing, with a
charge of violation of any provision of Applicable Law or regulation which
charge or violation, if determined adversely to the Blockbuster Group or
Sony/Block, would materially and adversely affect the right of the PACE
Subsidiary to own the Transferred Assets.
(g) Certain Fees. Neither the Blockbuster Group nor, to the
knowledge of the Blockbuster Group, any of their respective officers, directors
or employees have employed any broker or finder or incurred any other liability
for any brokerage fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement.
(h) Sony/Block Representations. To the Blockbuster Group's
knowledge, neither the Blockbuster Group nor any of their affiliates has
breached any provision of (x) Sections 15 or 18.10 of the Pavilion Partnership
Agreement (and no Event of Withdrawal has ever occurred with respect to the
Blockbuster Subsidiary) or (y) the Sony/Block Partnership Agreement (and the
Blockbuster Group has not undertaken any action to withdraw from or otherwise
cause the dissolution of the Sony/Block Partnership). To the Blockbuster Group's
knowledge, (i) the Sony/Block Partnership Agreement is in full force and effect,
(ii) the ownership of Sony/Block is as described in the Recitals to this
Agreement and that no person other than the Sony Subsidiary and the Blockbuster
Subsidiary holds any ownership interest in Sony/Block or has any option,
warrant, call, subscription or other right or agreement to acquire any interest
in Sony/Block, (iii) Sony/Block has no assets or properties other than its
Partnership Interest in the Pavilion Partnership (and the Blockbuster Group has
not taken any action to create or approve any Encumbrances other than the
Permitted Encumbrances on such Partnership Interest) and conducts no business
activities unrelated to such ownership, (iv) Sony/Block has no Liabilities other
than Liabilities as a general partner of the Pavilion Partnership and Sony/Block
is not a party to any contract or commitment other than those entered into with
the Pavilion Partnership or the PACE Group, and (v) Sony/Block has not employed
any employees.
4.2 Representations and Warranties of the PACE Group. The PACE Group
hereby makes the following representations and warranties to the Blockbuster
Group, which representations and warranties shall be true and correct as of the
date hereof and as of the Closing Date as if made on that date:
(a) Due Organization; Good Standing and Power. Each member of the
PACE Group is a corporation duly organized, validly existing and in good
standing under the laws of Texas. Each member of the PACE Group has all
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder.
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(b) Authorization and Validity of Agreement. The execution, delivery
and performance of this Agreement by the PACE Group and the consummation by the
PACE Group of the transactions contemplated hereby have been duly authorized by
all requisite corporate action on the PACE Group's part. No other corporate,
director, shareholder or partner action is necessary for the authorization,
execution, delivery and performance by the PACE Group of this Agreement and the
consummation by the PACE Group of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the PACE Group and, assuming
due authorization, execution and delivery by the Blockbuster Group, constitutes
the legal, valid and binding obligations of the PACE Group, enforceable against
them in accordance with its terms, subject as to enforceability, to the effect
of any applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance or similar laws affecting creditors' rights generally and to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) No Approvals or Notices Required; No Conflict with Instruments.
Except as disclosed on Schedule 4.2(c) the execution, delivery and performance
of this Agreement by the PACE Group and the consummation by the PACE Group of
the transactions contemplated hereby (i) will not violate (with or without the
giving of notice or the lapse of time or both), or require any consent,
approval, filing or notice under, any provision of any Applicable Law except
where the failure to obtain such consent, approval, or make such filing or
notice would not prevent the transactions contemplated hereby being consummated
in accordance with the terms hereof and (ii) assuming all consents, approvals
and other acts described in Schedule 4.2(c) hereto have been obtained and all
filings and notifications listed in Schedule 4.2(c) have been made and except as
may result from any facts or circumstances relating solely to the Blockbuster
Group or as described in Schedule 4.2(c) will not conflict with, or result in
the breach or termination of any provision of, or constitute a default under, or
require any consent or approval, or result in the acceleration of the
performance of the obligations of the PACE Group under, the charter or bylaws of
any member of the PACE Group, the Pavilion Partnership Agreement or any
indenture, mortgage, deed of trust, lease, contract, instrument or other
agreement to which any member of the PACE Group is a party or by which any
member of the PACE Group or any of their assets or properties are bound or
affected.
(d) Certain Fees. Neither the PACE Group, nor to the knowledge of
the PACE Group, any of their respective officers, directors or employees, have
employed any broker or finder or incurred any other liability for any brokerage
fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
(e) Legal Proceedings. There is no litigation, proceeding, claim or
governmental investigation pending or, to the knowledge of the PACE Group,
threatened which would prevent the consummation of the transactions contemplated
by this Agreement.
4.3 Survival of Representations and Warranties. Notwithstanding any right
of a party to investigate the affairs of the other party, each party shall have
the right to rely fully upon the
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representations and warranties, covenants and agreements of the other party
contained in this Agreement and to pursue all rights and remedies in connection
therewith. The representations and warranties of the parties set forth in
Sections 4.1(b), 4.1(c), 4.1(d), 4.1(e), 4.2(b) and 4.2(c) shall survive in full
force and effect until the second anniversary of the Closing Date. All other
representations and warranties of the parties set forth in this Agreement shall
survive in full force and effect for a period of six months after the Closing
Date. The covenants and agreements of the parties set forth in Sections 4.4,
5.3, 8.2, 8.3, 9 and 10 (except as otherwise noted therein) shall survive the
execution and delivery of this Agreement and the Closing without limitation
(except that the Blockbuster Parent's obligations under Section 8.2 shall
terminate at Closing). The covenants of the Blockbuster Group set forth in
Section 8.1 shall survive the execution and delivery of this Agreement and the
Closing in accordance with the terms thereof. All other covenants and agreements
of the parties contained in or made pursuant to the terms of this Agreement or
any certificate furnished pursuant hereto shall terminate at the Closing.
4.4 Blockbuster Acknowledgment. The Blockbuster Group acknowledges that in
order to consummate this transaction, the PACE Group has entered discussions
with the Sony Group in order to secure certain required consents contemplated by
this Agreement. Those discussions include the terms of a potential purchase of
the Sony Group's interest in Sony/Block. The Blockbuster Group agrees that the
PACE Group is not required to advise the Blockbuster Group of the content of any
such discussions or the terms of any transaction which may result from such
discussions, it being acknowledged and agreed that the Blockbuster Group is
sophisticated and experienced in business matters and has determined to enter
into this Agreement after its own independent evaluation of the merits of the
transactions contemplated hereby.
5. Covenants; Actions Prior to Closing.
5.1 Access to Information. Neither title nor right to possession of the
Transferred Assets shall pass to the PACE Subsidiary until the Closing, but
during the period commencing on the date hereof and ending on the Closing Date,
the Blockbuster Subsidiary shall give or cause to be given to the PACE Group and
its representatives reasonable access, during normal business hours, to the
properties, books and records of the Blockbuster Subsidiary relating to the
Transferred Assets as the PACE Group shall from time to time reasonably request;
provided, however, that such investigation shall not unreasonably interfere with
the businesses or operations of the Blockbuster Subsidiary.
5.2 No Disposition of Transferred Assets; Modification of Specific
Indemnification Obligations. During the period commencing on the date hereof and
ending on the Closing Date, (a) the Blockbuster Group shall not (i) sell or
otherwise dispose of any right, title and interest in and to the Transferred
Assets, (ii) permit or allow the Transferred Assets to become subject to any
Encumbrances, other than in the ordinary course of business and consistent with
past practice, (iii) otherwise modify or change in any material respect any
rights of the Blockbuster Group relating to the Transferred Assets (other than
in the manner contemplated by this Agreement), (iv) solicit from any
corporation, business or person any proposals or offers, or enter into any
negotiations,
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relating to the disposition of the Transferred Assets, (v) directly or
indirectly provide to any other person any non-public information concerning the
Transferred Assets except that which is on the advice of counsel required in
governmental filings or judicial, administrative or arbitration proceedings,
(vi) modify or change in any respect the Indemnification Obligations, or modify
or change or waive any rights or obligations related thereto, other than in the
ordinary course of business consistent with past practice, or (vii) agree,
whether in writing or otherwise, to do any of the foregoing and (b) the PACE
Group shall use its reasonable best efforts to not permit and shall not take any
action which will (x) cause the Transferred Assets to become subject to any
Encumbrances or (y) modify or change or affect in any respect any rights of the
Blockbuster Group relating to the Transferred Assets.
5.3 Further Actions. Subject to the terms and conditions hereof, prior to
and after the Closing, the Blockbuster Group and the PACE Group will each use
their reasonable best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement, including:
(i) to obtain prior to the Closing Date all consents or approvals as are
necessary for the consummation of the transactions contemplated hereby; (ii) to
effect all necessary registrations and filings; and (iii) to execute and
deliver, or cause to be executed and delivered, without further consideration,
such other documents and papers, to take such further actions and to furnish to
each other such information and assistance, as reasonably may be requested in
connection with any of the foregoing. Nothing herein shall require either party,
after Closing, to pay any money or incur any out-of-pocket expenses (other than
minor expenses, such as long distance charges and copying charges) to accomplish
the foregoing.
5.4 Notification. Each of the parties hereto shall promptly notify the
other in writing and keep the other advised as to (i) any litigation or
administrative proceeding filed or pending against the Blockbuster Group or the
PACE Group, or to the Blockbuster Group's knowledge or to the PACE Group's
knowledge, threatened against any of them that challenges the transactions
contemplated hereby and (ii) any variance from the representations and
warranties contained in Section 4.1 or Section 4.2 hereof, as applicable, or of
any failure or inability on the part of the Blockbuster Group or the PACE Group
to comply with any of their respective covenants contained in this Article 5.
6. Conditions Precedent.
6.1 Conditions Precedent to Obligations of All Parties. The respective
obligations of the parties to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction (or waiver by each party) at or
prior to the Closing Date of each of the following conditions:
(a) No Lawsuits. No action of any private party or Governmental
Entity shall have been taken or explicitly threatened in writing and no statute,
rule, regulation or executive order shall have been proposed, promulgated or
enacted by any Governmental Entity which seeks
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to restrain, enjoin or otherwise prohibit or to obtain damages or other relief
in connection with this Agreement or the transactions contemplated hereby.
(b) Mutual Third Party Consents and Approvals. All consents or
approvals of third parties (including all Governmental Entities) required to be
obtained by or on the part of the parties hereto or otherwise reasonably
necessary for the consummation of the transactions contemplated hereby (other
than those specified in Section 6.3(e) below) shall have been obtained in a form
reasonably acceptable to the PACE Group and the Blockbuster Group and shall be
in full force and effect at the time of the Closing, including without
limitation, to the extent required, the consent or agreement by the Sony Group
(or Sony/Block) to (i) the transfer of the Transferred Interest to the PACE
Subsidiary pursuant to the terms of this Agreement and (ii) the execution and
delivery of the Name-in-Title Agreement and the agreement contemplated by
Section 6.2(e) (unless the requirement for such agreement has been waived by the
Blockbuster Group) as contemplated by the terms of this Agreement.
(c) Name-in-Title Agreement. The Pavilion Partnership shall have
executed and delivered to the Blockbuster Group the Name-in-Title Agreement.
6.2 Conditions Precedent to the Obligations of the Blockbuster Group. The
obligations of the Blockbuster Group under this Agreement are subject to the
satisfaction (or waiver by the Blockbuster Group) at or prior to the Closing
Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. All representations
and warranties of the PACE Group contained herein or in any certificate or
document delivered to the Blockbuster Group pursuant hereto shall be true and
correct on and as of the Closing Date, in all material respects, with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date.
(b) Performance of Agreements. The PACE Group shall have performed
all obligations and agreements, and complied with all covenants and conditions,
contained in this Agreement to be performed or complied with by it prior to or
at the Closing Date, including without limitation, (x) executing and delivering
the instruments contemplated by Section 2.3(b) of this Agreement, (y) delivering
the Cash Purchase Price as provided for in Section 3.2(c) hereof and (z)
effecting, obtaining and delivering the Amphitheater Loan Release and the other
releases (including, without limitation, the releases from the Applicable
Releasing Parties) provided for in Sections 2.3 (b) and 2.4 hereof.
(c) PACE Group's Officer's Certificate. The Blockbuster Group shall
have received a certificate dated on the Closing Date executed by an appropriate
corporate officer of each member of the PACE Group to the effect that the
conditions specified in Sections 6.2(a) and (b) have been satisfied.
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(d) Actions and Proceedings. All corporate actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all other related legal matters shall
be reasonably satisfactory to counsel for the Blockbuster Group, and such
counsel shall have been furnished with such certified copies of such corporate
actions and proceedings and such other instruments and documents as it shall
have reasonably requested.
(e) Carowinds Amphitheater. The Pavilion Partnership shall have
executed and delivered to the Blockbuster Group a written instrument in form
reasonably acceptable to the Blockbuster Group whereby the Pavilion Partnership
agrees that it will not exercise any right which it may now or hereafter have,
to prevent or preclude Cellar Door Productions, Inc. or its affiliates ("Cellar
Door") from acting as a booking agent (but not any right it has to prevent or
preclude Cellar Door from acting as a promoter) at the Carowinds Amphitheater in
Charlotte, North Carolina in a manner consistent with Cellar Door's current
authority, responsibility and capacity at such amphitheater, but not otherwise.
6.3 Conditions Precedent to Obligations of the PACE Group. The obligations
of the PACE Group under this Agreement are subject to the satisfaction (or
waiver by the PACE Group) at or prior to the Closing Date of each of the
following conditions:
(a) Accuracy of Representations and Warranties. All representations
and warranties of the Blockbuster Group contained herein or in any certificate
or document delivered to the PACE Group pursuant hereto shall be true and
correct on and as of the Closing Date, in all material respects, with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date.
(b) Performance of Agreements. The Blockbuster Group shall have
performed all obligations and agreements, and complied with all covenants and
conditions, contained in this Agreement to be performed or complied with by them
prior to or at the Closing Date, including executing and delivering the
conveyancing instruments and other documents contemplated by Section 2.3 of this
Agreement.
(c) Blockbuster Officer's Certificate. The PACE Group shall have
received a certificate dated on the Closing Date executed by an appropriate
officer of each member of the Blockbuster Group to the effect that the
conditions specified in Sections 6.3(a) and (b) have been satisfied.
(d) Actions and Proceedings. All corporate actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all other related legal matters shall
be reasonably satisfactory to counsel for the PACE Group, and such counsel shall
have been furnished with such certified copies of such corporate actions and
proceedings and such other instruments and documents as it shall have reasonably
requested.
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(e) The PACE Group Special Consents and Approvals. The following
consents, agreements, and approvals shall have been obtained in a manner
reasonably acceptable to the PACE Group and shall be in full force and effect at
the time of the Closing:
(i) The consent and agreement by the Sony Subsidiary and the
Sony Parent to the amendment and restatement of the
Pavilion Partnership Agreement (the "New Pavilion
Partnership Agreement") in a manner acceptable to the
PACE Group, including to reflect that all rights to the
Charlotte Preferred Cash Distribution Account and any
amounts distributable pursuant thereto shall inure to
the benefit of the PACE Subsidiary;
(ii) The PACE Group shall obtain the waiver or consent from
its lender described in Schedule 4.2(c) to the extent
necessary to permit the PACE Group to complete the
transactions contemplated by this Agreement without
violating any covenants or restrictions contained herein
and in the Credit Agreement described in Schedule
4.2(c); and
(iii) The consent by the Sony Subsidiary and the Sony Parent
to an amendment and restatement of the Sony/Block
Partnership Agreement (the "New Sony/Block Partnership
Agreement") in a manner acceptable to the PACE Group,
including (x) to reflect that the PACE Subsidiary shall
not have any liability or obligation under the
Sony/Block Partnership Agreement or the New Sony/Block
Partnership Agreement except as specifically provided
for in the New Sony/Block Partnership Agreement (without
negating, limiting or lessening, as between the
Blockbuster Group and the PACE Group, any obligation or
liability undertaken herein by any member of the PACE
Group) and (y) to reflect that all rights to the
Charlotte Preferred Distribution Account and any amounts
distributable pursuant thereto shall inure to the
benefit of the PACE Subsidiary.
(f) Funding Amounts. The PACE Group shall have obtained third party
financing on terms reasonably acceptable to the PACE Group in an amount
sufficient to effect the Amphitheater Loan Release and to fund the Loan Purchase
Price without imposing any obligation or liability on the Blockbuster Group or
otherwise encumbering any of the assets of the Blockbuster Group (other than
encumbrances upon the Transferred Asset to take effect upon occurrence of the
Closing).
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7. Termination.
7.1 General. This Agreement may be terminated and the transactions
contemplated herein may be abandoned (a) by mutual consent of the PACE Group and
the Blockbuster Group or (b) by any party by written notice to the other parties
in the event that the Closing Date shall not have occurred on or before May 31,
1998; provided, however, that if the Closing Date shall not have occurred on or
before such date due to a breach of this Agreement by one of the parties, the
breaching party may not terminate this Agreement.
7.2 No Liabilities in Event of Termination. In the event of any
termination of this Agreement as provided above, this Agreement shall forthwith
become wholly void and of no further force or effect and there shall be no
liability on the part of the PACE Group, the Blockbuster Group or their
respective officers, directors, or agents, except that the provisions of
Sections 10.2 and 10.5 hereof shall remain in full force and effect, and
provided that nothing contained herein shall release any party from liability
for any willful failure to comply with any provision, covenant or agreement
contained herein.
8. Covenants and Actions Subsequent to Closing.
8.1 Covenant Not to Compete. In order to allow the PACE Group to realize
the full benefit of its bargain in connection with the purchase of the
Transferred Assets, the Blockbuster Group hereby agrees as follows:
(a) The Blockbuster Group shall not permit Blockbuster Entertainment
Inc. or any direct or indirect subsidiary of Blockbuster Entertainment Inc.
which has its operations managed by the operational management of Blockbuster
Entertainment Inc. (including the Blockbuster Subsidiary) (collectively, the
"Included Blockbuster Entities") to become (and shall prevent any such entity
from becoming), at any time for a period of two (2) years following the Closing
Date, directly or indirectly, an owner, manager, operator, or equity participant
in or to any Amphitheater anywhere in the United States of America.
(b) In the event of a breach of the Noncompete Covenant, it is
understood and agreed that the PACE Group shall be entitled to injunctive relief
as well as any and all other applicable remedies at law or in equity available
to the PACE Group against the Blockbuster Group. If a court of competent
jurisdiction should declare the Noncompete Covenant unenforceable, in whole or
in part, due to any unreasonable restriction of duration and/or geographical
area and/or activity, then the PACE Group and the Blockbuster Group hereby
acknowledge and agree that such court of law or equity shall have the express
authority of the parties to reform the Noncompete Covenant to a reasonable
restriction and/or grant the PACE Group any and all other relief, at law or in
equity, that may be reasonable or necessary to protect the interests of the PACE
Group.
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<PAGE>
(c) The parties expressly acknowledge and agree that neither the
Blockbuster Parent nor any affiliate of the Blockbuster Parent other than the
Included Blockbuster Entities shall be restricted or limited by the terms of the
Non-Compete Covenant.
8.2 Performance Guarantee. The PACE Parent and the Blockbuster Parent
hereby agree to guarantee the performance of any and all obligations of the PACE
Subsidiary and the Blockbuster Subsidiary, respectively, under the terms of this
Agreement.
8.3 Tax Matters. The Blockbuster Group will have the right to participate
in any tax audit or administrative or judicial proceeding or of any demand or
claim relating to the Assumed Agreements which affects any taxable period ending
on or before or including the Closing Date to the same extent the Blockbuster
Group has such rights prior to the Closing. After the Closing, the PACE Group
shall promptly notify the Blockbuster Group in writing of the commencement of
any such tax audit, administrative or judicial proceeding or demand or claim
which relates, in whole or in part, to any period of time prior to the Closing.
Such notice shall contain factual information (to the extent known) describing
the asserted tax matter in reasonable detail and shall include copies of any
notice or other document received from any tax authority in respect of such tax
matter.
9. Indemnification.
9.1 Indemnification by the PACE Group.
(a) Subject to the provisions of this Section 9, the PACE Group
shall protect, indemnify and hold harmless the Blockbuster Group, in respect of
any losses, claims, damages, liabilities, deficiencies, delinquencies, defaults,
assessments, fees, penalties or related costs or expenses, including, but not
limited to, court costs and attorneys' and accountants' fees and disbursements,
and any federal, state and local income and/or franchise taxes payable in
respect of the receipt of cash or money in discharge of the foregoing
(collectively referred to herein as "Damages") to which the Blockbuster Group
may become subject if such Damages arise out of, relate to, or are based upon:
(i) the inaccuracy or breach of any of the representations, warranties,
covenants or agreements made by the PACE Group in this Agreement or in any
certificate, document, schedule or instrument delivered to the Blockbuster Group
pursuant hereto or in connection herewith; (ii) any Assumed Liability; (iii) any
Liabilities relating to the Pavilion Partnership to the extent such Liabilities
arise from and after the Closing; or (iv) any failure by the PACE Group to carry
out, perform and satisfy and discharge any of its covenants, agreements,
undertakings, liabilities or obligations under this Agreement or under any of
the documents and/or other instruments delivered by the PACE Group pursuant to
this Agreement.
(b) Notwithstanding any other provision to the contrary, the PACE
Group shall not be required to indemnify and hold harmless any Blockbuster Group
Indemnified Party pursuant to Section 9.1 unless the Blockbuster Group has
asserted a claim with respect to such matters within the applicable survival
period set forth in Section 4.3.
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<PAGE>
9.2 Indemnification by the Blockbuster Group.
(a) Subject to the provisions of this Section 9, the Blockbuster
Group shall protect, indemnify and hold harmless the PACE Group in respect of
any Damages to which the PACE Group may become subject if such Damages arise out
of, relate to, or are based upon (i) the breach of any of the representations,
warranties, covenants or agreements made by the Blockbuster Group in this
Agreement or any certificate, document, schedule or instrument delivered to the
PACE Group pursuant hereto or in connection herewith, (ii) any Retained
Liability, (iii) the failure of the Blockbuster Parent to deliver the original
of the Charlotte Note to the PACE Subsidiary at the Closing by reason of same
having been lost, or (iv) any failure by the Blockbuster Group to carry out,
perform and satisfy and discharge any of its covenants, agreements,
undertakings, liabilities or obligations under this Agreement or under any of
the documents and/or other instruments delivered by the Blockbuster Group
pursuant to this Agreement.
(b) Notwithstanding any other provision to the contrary, the
Blockbuster Group shall not be required to indemnify and hold harmless any PACE
Group Indemnified Party pursuant to Section 9.2 unless the PACE Group has
asserted a claim with respect to such matters within the applicable survival
period set forth in Section 4.3.
9.3 Matters Involving Third Parties.
(a) If any third party shall notify a party entitled to be
indemnified pursuant to Section 9.1 or 9.2 (the "Indemnified Party") with
respect to any matter which the Indemnified Party has determined may give rise
to a claim for indemnification against the PACE Group or the Blockbuster Group,
as the case may be (a "Third Party Claim") (the "Indemnifying Party"), then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced. Subject to the Indemnifying Party's right to defend
in good faith Third Party Claims as hereinafter provided, the Indemnifying Party
shall satisfy its obligations under this Section 9 within 30 days after the
receipt of written notice thereof from the Indemnified Party unless the
Indemnifying Party notifies the Indemnified Party that it disputes any such
obligations.
(b) If the Indemnified Party shall notify the Indemnifying Party of
any claim or demand pursuant to Section 9.3(a), and if such claim or demand
relates to a Third Party Claim or demand against the Indemnified Party which the
Indemnifying Party acknowledges is a claim or demand for which it must indemnify
or hold harmless the Indemnified Party under Section 9.1 or 9.2, the
Indemnifying Party will have the right to defend the Indemnified Party against
the Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (A) the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party has given notice of
the Third Party Claim that the Indemnifying Party will
23
<PAGE>
indemnify the Indemnified Party from and against the entirety of any Damages the
Indemnified Party may suffer resulting from, arising out of, relating to or
caused by the Third Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified Party
that the Indemnifying Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification obligations hereunder, (C)
the Third Party Claim involves only money damage and does not seek an injunction
or other equitable relief, (D) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not, in the good faith judgment of the
Indemnifying Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the Indemnified
Party, and (E) the Indemnifying Party conducts in good faith the defense of the
Third Party Claim actively and diligently. The Indemnified Party shall make
available to the Indemnifying Party or its agents all records and other material
in the Indemnified Party's possession reasonably required by it for use in
contesting the Third Party Claim. Whether or not the Indemnifying Party elects
to defend the Third Party Claim, the Indemnified Party shall have no obligation
to do so.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 9.3(b) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (B) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 9.3(b) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), and (B) the Indemnifying Party will
remain responsible for any damages the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim to the fullest extent provided in this Section 9.
10. Miscellaneous
10.1 Public Announcements. Prior to the Closing Date, no news release or
other public announcement pertaining in any way to the transactions contemplated
by this Agreement will be made by any party hereto except in accordance with the
terms of this Agreement or as otherwise required by Applicable Law.
10.2 Expenses. Except as otherwise specifically provided for herein, each
of the parties hereto shall pay the fees and expenses incurred by it in
connection with the negotiation,
24
<PAGE>
preparation, execution and performance of this Agreement, including, without
limitation, attorneys' fees and accountants' fees.
10.3 Remedy. The parties hereto recognize that any breach of the terms of
this Agreement may give rise to irreparable harm for which money damages would
not be an adequate remedy, and accordingly agree that, in addition to any other
remedies a non-breaching party may have available at law or in equity, any
non-breaching party shall be entitled to enforce the terms of this Agreement by
decree of specific performance without the necessity of proving the inadequacy
as a remedy of money damages.
10.4 Notices. All notices, offers, approvals, elections, consents,
acceptances, waivers, reports, requests and other communications required or
permitted to be given hereunder (all of the foregoing hereinafter collectively
referred to as "Communications") shall be in writing and shall be deemed to have
been given if delivered personally with receipt acknowledged or sent by
registered or certified mail or equivalent, if available, return receipt
requested, or by facsimile (with an appropriate answer back code), telex or
cablegram (which shall be confirmed by a writing sent by registered or certified
mail or equivalent on the same day that such facsimile, telex or cablegram is
sent), or by recognized overnight courier for next day delivery, addressed or
sent to the parties at the following addresses and facsimile numbers or to such
other or additional address or facsimile numbers or to such other additional
address or facsimile number as any party shall hereafter specify by
Communication to the other party:
Blockbuster Group: Blockbuster Entertainment Inc.
1201 Elm Street
Dallas, Texas 75270
Fax No. (214)854-3172
Attention: General Counsel
With a copy to: VIACOM Inc.
1515 Broadway
New York, New York 10036
Fax No. (212) 258-6099
Attention: General Counsel and
Deputy General Counsel
PACE Group: c/o SM/PACE, Inc.
515 Post Oak Boulevard, Suite 300
Houston, Texas 77027
Fax No. (713) 622-8461
Attention: Mr. Jeffry B. Lewis
25
<PAGE>
With a copy to: Mr. Michael F. Rogers
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002
Notice of change of address shall be deemed given when actually received; all
other Communications shall be deemed to have been given, received and dated on
the earlier of: (i) when actually received or upon refusal to accept delivery
thereof; or (ii) on the date when delivered personally, one (1) day after being
sent by facsimile, cable, telex or overnight courier and four (4) business days
after mailing, as aforesaid.
10.5 Delaware Law to Apply. This Agreement shall be construed under and in
accordance with the laws of the State of Delaware without giving effect to the
choice of law provisions thereof.
10.6 Headings. The headings used in this Agreement are used for
administrative purposes only and do not constitute substantive matters to be
considered in construing the terms of this Agreement.
10.7 Legal Construction. In case any one or more of the provisions
contained in this Agreement shall be invalid or unenforceable in any respect,
the validity and enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby and the parties will
attempt to agree upon a valid and enforceable provision which shall be a
reasonable substitute for such invalid and unenforceable provision in light of
the tenor of this Agreement and, upon so agreeing, shall incorporate such
substitute provision into this Agreement.
10.8 Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original.
10.9 Gender. Wherever the context shall so require, all words herein in
the male gender shall be deemed to include the female or neuter gender, all
singular words shall include the plural, and all plural words shall include the
singular.
10.10 Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective permitted
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective permitted successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
10.11 Assignability. This Agreement shall not be assignable by either
party without the prior written consent of the other party.
26
<PAGE>
10.12 Entire Agreement, Modification, Consents and Waivers. This Agreement
(including the Schedules and Exhibits hereto and the certificates to be
delivered in connection herewith) contains the entire agreement of the parties
with respect to the subject matter hereof and no interpretation, change,
termination or waiver of or extension of time for the performance under any
provisions of this Agreement shall be binding upon any party unless in writing
and signed by the party intended to be bound thereby. Receipt by any party of
money or other consideration due under this Agreement, or the Closing of the
transactions contemplated hereby, with or without knowledge of breach, shall not
constitute a waiver of such breach or any provision of this Agreement. Except as
otherwise provided in this Agreement, no waiver of or other failure to exercise
any right under, or default or extension of time for performance under, any
provision of this Agreement shall affect the right of any party to exercise any
subsequent right under this Agreement or otherwise enforce said provision or any
other provision hereof or to exercise any right or remedy in the event of any
other default, whether or not similar.
27
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
SM/PACE, INC.,
a Texas corporation
By: /s/ Scott Zeigel
-------------------------------
Name: SCOTT ZEIGEL
Title: VICE PRESIDENT
PACE ENTERTAINMENT CORPORATION,
a Texas corporation
By: /s/ Scott Zeigel
-------------------------------
Name: SCOTT ZEIGEL
Title: VICE PRESIDENT
PACE GROUP
CHARLOTTE AMPHITHEATER
CORPORATION, a Delaware corporation
By: /s/ Michael Fricklas
-------------------------------
Name: MICHAEL FRICKLAS
Title: SENIOR VICE PRESIDENT
THE WESTSIDE AMPHITHEATRE
CORPORATION, an Arizona corporation
By: /s/ Michael Fricklas
-------------------------------
Name: MICHAEL FRICKLAS
Title: SENIOR VICE PRESIDENT
VIACOM INC.,
a Delaware corporation
By: /s/ Michael Fricklas
-------------------------------
Name: MICHAEL FRICKLAS
Title: SENIOR VICE PRESIDENT
THE BLOCKBUSTER GROUP
27
<PAGE>
December 22, 1997
Pace Entertainment Corporation
515 Post Oak Blvd., Suite 300
Houston, TX 77027
Re: Pavilion Partners
Gentlemen:
Reference is made to (i) the Partnership Agreement for Pavilion Partners
("Pavilion") between SM/Pace, Inc. ("Pace") and Amphitheater Entertainment
Partnership ("AEP"), dated as of April 1, 1994 (the "Pavilion Partnership
Agreement"), and (ii) the Second Amended and Restated Partnership Agreement for
AEP, between Westside Amphitheater Corporation ("WAC"), San Bernardino
Amphitheater Corporation ("SBAC"), Charlotte Amphitheater Corporation ("CAC",
and, together with SBAC and WAC, "Blockbuster") and YM Corp. ("Sony"), dated as
of April 1, 1994 (the "AEP Partnership Agreement").
Pace has advised Sony that (i) Pace has entered into an agreement with SFX
Entertainment, Inc. ("SFX"), pursuant to which SFX agreed to acquire Pace's
parent corporation, Pace Entertainment corporation ("PEC"; SFX's acquisition of
PEC, the "Pace Acquisition") and (ii) Pace has entered into an agreement with
Blockbuster, pursuant to which Pace agreed to acquire Blockbuster's entire
partnership interest in AEP (the "Blockbuster Partnership Interest"; Pace's
acquisition of the Blockbuster Partnership Interest, the "Blockbuster
Acquisition"). Sony has agreed to consent to the Pace Acquisition (including a
waiver of the provisions of Section 12.1(b) of the Pavilion Partnership
Agreement) and the Blockbuster Acquisition, and Pace and Sony have agreed to the
acquisition by Pace of Sony's entire interest in AEP (the "Sony Partnership
Interest") substantially simultaneously with the closing of the Pace Acquisition
(the "Pace Closing") and the Blockbuster Acquisition (the "Blockbuster closing",
and with the Pace Closing, the "Closing") on the terms, and subject to the
conditions set forth herein and in the Term Sheet annexed hereto as Exhibit A.
<PAGE>
The consents granted and other agreements set forth herein and in the
annexed Term Sheet are subject to, and conditioned on, Blockbuster's consent to
the transfer of the Sony Partnership Interest as required by the AEP Partnership
Agreement unless the Blockbuster Closing has occurred prior to the Sony Closing
(as defined below).
The consents and waiver granted and other agreements set forth herein and
in the annexed Term Sheet are subject to, and conditioned on, (i) the parties
obtaining any required regulatory approvals for Pace's acquisition of the Sony
Partnership Interest (including under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended), and (ii) the occurrence of the Pace
Closing. The closing of Pace's acquisition of the Sony Partnership Interest (the
"Sony Closing") must occur no later than the first to occur of (i) 5 business
days following the Pace Closing, (ii) midnight on the same day as the
Blockbuster closing, or (iii) March 30, 1998 (the "Outside Date"); provided,
however, that Pace shall have the right to extend the Outside Date to a date
that is not later than May 31, 1999 if the Pace Closing or the Sony Closing
shall not occur on or prior to March 30, 1998, solely by reason of a request for
additional information by the Justice Department or the Federal Trade Commission
and related extension of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, in connection with any filings
made for the Pace Acquisition, Blockbuster Acquisition or Pace's acquisition of
the Sony Partnership Interest. If for any reason (other than a breach by the
terminating party), the Sony Closing has not occurred on or before the Outside
Date, either party shall have the right to terminate this Letter Agreement by
written notice to the other and upon such termination, the consents and waiver
granted herein shall be withdrawn and neither party shall have any liability or
obligation to the other hereunder, except for any breach hereof.
The parties intend to enter into a more formal Purchase Agreement,
reflecting the terms hereof. However, unless and until such more formal Purchase
Agreement is executed and delivered, this Letter Agreement and the annexed Term
Sheet shall constitute a binding agreement between the parties.
All publicity relating to the acquisition of the Sony Partnership Interest
shall be subject to the mutual approval of Sony and Pace and, except as
otherwise may be required by applicable law, no public announcement or
disclosure of Pace's acquisition of the Sony Partnership Interest shall be made
by any party or SFX (or any of their respective affiliates or representatives)
without the prior written consent of the other party. To the extent that any
party or SFX is required by applicable law to make any public announcement or
disclosure
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<PAGE>
relating to the acquisition of the Sony Partnership Interest, such party shall
use its reasonable efforts, within the applicable time constraints, to arrive at
a mutually agreeable form for such disclosure.
Subject to paragraph 6 of the annexed Term Sheet, each party shall bear
its own legal, accounting and other expenses relating to the transactions
contemplated hereby and by the Term Sheet, whether or not such transactions are
consummated.
Each party, by its signature below, confirms to the other that it has not
incurred and will not incur any liability for finder's, brokerage, agents,
advisory or similar fees or commissions in connection with transactions
contemplated hereby and by the annexed Term Sheet.
This Letter Agreement shall be construed in accordance with and governed
by the laws of the State of New York applicable to agreements wholly to be
performed therein and may not be amended or waived except in writing signed by
each of Sony, Pace and PEC. This Letter Agreement may be signed in counterparts.
If you are in agreement with the foregoing, please so indicate by signing
in the space indicated below, whereupon this Letter Agreement shall become a
binding agreement between us.
Very truly yours,
YM CORP.
By: /s/ [illegible]
______________________
AGREED TO:
PACE ENTERTAINMENT CORPORATION
By: /s/ [illegible]
_________________________
SM/PACE, INC.
By: /s/ [illegible]
_________________________
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<PAGE>
Exhibit A
Term Sheet
1. At the Sony Closing, Pace shall purchase the Sony Partnership Interest
for $27.5 million (the "Purchase Price"), payable at the Sony Closing by wire
transfer of immediately available funds to an account designated by Sony.
Subject to the provisions of the Letter Agreement to which this Term Sheet is
annexed, if the Sony Closing shall not have occurred on or before March 30,
1998, the Purchase Price shall bear interest from March 30, 1998 to the date of
the Sony Closing at the rate of 8% per annum, compounded monthly.
2. At the Sony Closing, Sony and its parents and affiliates shall be
released by the applicable banks and other third parties from all guarantees,
indemnification agreements, assurances, joinders, undertakings, covenants and
other obligations to banks and other third parties relating to Pavilion, its
amphitheaters or its business (other than obligations arising solely by reason
of Sony's status as a general partner of AEP, which shall be assumed by Pace
pursuant to Paragraph 3 below).
3. At the Sony Closing, Pace shall assume (and to the extent the obligee
is pavilion, Pace or any affiliate of Pace, Sony and its parents and affiliates
shall be released from) all of Sony's and its parents' and affiliates' (i)
contractual obligations and liabilities arising under the Pavilion Partnership
Agreement and AEP Partnership Agreement and any related executory contracts,
joinder agreements and guarantees (including, without limitation, any
obligations relating to the PNC expansion) and (ii) obligations and liabilities
(in contract, tort or otherwise), which in the past existed, now exist or may
exist in the future, whether known or unknown, asserted or unasserted, arising
out of Pavilion's or its predecessors' ownership or operation of any
amphitheater, or any contractual arrangement, business activities or other
actions or omissions of Pavilion (all of the foregoing, the "Assumed
Liabilities"); provided, however, that notwithstanding the foregoing, Pace shall
continue to comply with the provisions of Sections 13.5 and 13.6 of the Pavilion
Partnership Agreement from and after the Sony Closing with respect to all tax
years of Pavilion ending on or prior to the date of the Sony Closing. Without
limiting the generality of the foregoing, Pace hereby waives the provisions of
Section 13.9 of the Pavilion Partnership Agreement in connection with Pace's
acquisition of the Sony Partnership Interest and the Blockbuster Partnership
Interest. From and after the Sony Closing, Pace shall indemnity, defend and hold
harmless Sony and its parents, subsidiaries, affiliates, officers, directors,
employees and agents from and against any and all losses, claims,
-4-
<PAGE>
damages, liabilities, deficiencies, defaults, assessments, fees, penalties or
related costs or expenses, including but not limited to court costs and
attorneys' and accountants' fees and disbursements arising out of, relating to
or based upon (i) any of the Assumed Liabilities or (ii) the Pace Acquisition or
the Blockbuster Acquisition other than by reason of any actions taken or omitted
to be taken by Sony in connection therewith. At or prior to the Sony Closing,
Sony will deliver to Pace a true and correct copy of the AEP Partnership
Agreement.
4. At the Sony Closing, Pace will not assume any direct or indirect
duties, liabilities or obligations of Sony or its parents and affiliates of any
kind or nature other than the Assumed Liabilities. It is understood and agreed
that all liabilities of Sony and its parents and affiliates other than those
being assumed by Pace are retained by Sony and its parents and affiliates, and
Sony and its parents and affiliates shall be responsible for the payment and
discharge of all such retained liabilities including, without limitation, the
obligation to pay all income taxes imposed on Sony by reason of income allocated
by Pavilion and AEP to Sony for periods of operation (determined assuming that
the tax years of Pavilion and AEP respectively close on the date of the Sony
Closing) through and until the open of business on the day of the Sony Closing.
For purposes of this paragraph 4, AEP and Pavilion shall not be deemed to be
affiliates of Sony.
5. At the Sony Closing, (i) Pavilion shall distribute and return to Sony
"Sony/Block Note #l" (as defined in the Pavilion Partnership Agreement) and (ii)
AEP shall distribute and return to Sony the "Sony Note" (as defined in the AEP
Partnership Agreement).
6. Any taxes in the nature of sales or transfer taxes or similar taxes
(explicitly excluding taxes in the nature of income taxes imposed on net income)
payable by reason of the sale or transfer of the Sony Partnership Interest or
Blockbuster Partnership Interest shall be paid by Pace.
7. Between the date hereof and the Sony Closing or the Outside Date,
whichever is earlier, (i) Sony and its affiliates shall not be required to make
any additional contributions or provided additional funds, loans or guarantees
to Pavilion and (ii) there shall be no distributions made by Pavilion to its
partners or by AEP to its partners notwithstanding any provision or requirement
contained in the Pavilion Partnership Agreement or the AEP Partnership Agreement
to the contrary. Notwithstanding the foregoing provisions, if this Letter
Agreement should be terminated prior to the occurrence of the Sony Closing, then
Sony and its affiliates shall be required to promptly thereafter upon not less
than five business days' notice from Pavilion make such
-5-
<PAGE>
additional contributions or provide such additional funds, loans or guarantees
to Pavilion as would have otherwise been required had this Letter Agreement not
been executed during the period between the date hereof and the date of the
termination of this Letter Agreement.
8. Each party shall execute, deliver and make such assignments,
assumptions, releases, indemnifications, bills of sale, filings and other
instruments, consents and assurances and take or cause to be taken all such
actions as the other party may reasonably request and shall otherwise use their
reasonable best efforts in order to carry out the terms of this Agreement and to
enable the completion of the Sony Closing on the terms set forth herein,
including, without limitation, delivering any consents, mutual releases or other
customary and commercially reasonable documents or instruments (which do not
obligate Sony to assume any liability or pay any consideration) reasonably
necessary to enable completion of the Blockbuster Closing.
9. Pace may assign its right to purchase the Sony Partnership Interest
hereunder only to and/or may cause the Blockbuster Partnership Interest to be
purchased only by, a wholly owned subsidiary of PEC or SFX. PEC hereby
guarantees Pace's performance of its obligations hereunder and under the Letter
Agreement to which this Term Sheet is annexed and shall cause SFX to similarly
guarantee Pace's (and its permitted assignee's) obligations at the Sony Closing.
10. Sony represents and warrants as follows to Pace, which representations
and warranties shall be true and accurate as of the Sony Closing as if made on
that date:
(a) The execution, delivery and performance of this Letter Agreement
by Sony and the consummation by Sony of the transactions contemplated
hereby have been duly authorized by all requisite corporate action on
Sony's part. No other corporate, director, shareholder or partner action
or approval is necessary for the authorization, execution, delivery and
performance by Sony of this Letter Agreement and the consummation by Sony
of the transactions contemplated hereby (except for Blockbuster's consent
pursuant to the AEP Partnership Agreement). This Letter Agreement has been
duly executed and delivered by Sony and constitutes the legal, valid and
binding obligation of Sony, enforceable in accordance with its terms.
(b) Subject to obtaining the consents, releases and regulatory
approvals specified herein, the execution, delivery and performance of
this Letter Agreement by Sony and the consummation by Sony of the
transactions contemplated hereby (i) will not violate (with or without
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<PAGE>
the giving of notice or lapse of time, or both) or require any consent,
approval, filing or other notice under, any provision of any applicable
law and (ii) will not conflict with, or result in the breach or
termination of any provision of, or constitute a default under, or require
any consent or approval, or result in the acceleration of the performance
of the obligations of Sony under, or result in the creation of an
encumbrance upon Sony's partnership interest in AEP pursuant to, the
charter or bylaws of Sony, the Pavilion Partnership Agreement or the AEP
Partnership Agreement, or any indenture, mortgage, deed of trust, lease,
contract, instrument or other agreement to which Sony is a party or by
which Sony or any of its assets are bound or affected.
(c) Upon consummation of the transactions contemplated by this
Letter Agreement, Pace shall be vested with good and marketable title to
Sony's fifty percent partnership interest in AEP free and clear of all
encumbrances, other than those contained in or created by the AEP
Partnership Agreement or Pavilion Partnership Agreement. Upon consummation
of the transactions contemplated by this Letter Agreement, Sony will not
own any rights or interest, directly or indirectly, in Pavilion or AEP or
have any option, warrant or other right to acquire any such interests.
(d) To the best of Sony's knowledge, (i) AEP has no assets or
properties other than its partnership interest in Pavilion (which
partnership interest is owned free and clear of all encumbrances other
than those contained in or created by the Pavilion Partnership Agreement
or AEP Partnership Agreement) and conducts no business activities
unrelated to such ownership, (ii) AEP has no liabilities other than
liabilities as a general partner of Pavilion, (iii) AEP is not a party to
any contract or commitment other than those entered into with Pavilion or
Pace, and (iv) AEP does not have (and never has had) any employees.
From and after the Sony Closing, Sony shall indemnify, defend and hold harmless
Pace and its parents, subsidiaries, affiliates, officers, directors, employees
and agents against all claims and liabilities relating to or arising out of the
breach of any of the foregoing representations and warranties; provided that
Sony's liability in the aggregate under this Paragraph 10 shall not exceed the
Purchase Price.
11. Pace represents and warrants as follows to Sony, which representations
and warranties shall be true and accurate as of the Sony Closing as if made on
that date:
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(a) The execution, delivery and performance of this Letter Agreement
by Pace and the consummation by Pace of the transactions contemplated
hereby have been duly authorized by all requisite corporate action on
Pace's part. No other corporate, director, shareholder or partner action
or approval is necessary for the authorization, execution, delivery and
performance by Pace of this Letter Agreement and the consummation by Pace
of the transactions contemplated hereby. This Letter Agreement has been
duly executed and delivered by Pace and constitutes the legal, valid and
binding obligations of Pace, enforceable in accordance with its terms.
(b) Subject to obtaining the consents, releases and regulatory
approvals specified herein, the execution, delivery and performance of
this Letter Agreement by Pace and the consummation by Pace of the
transactions contemplated hereby (i) will not violate (with or without the
giving of notice or lapse of time, or both) or require any consent,
approval, filing or other notice under, any provision of any applicable
law and (ii) will not conflict with, or result in the breach or
termination of any provision of, or constitute a default under, or require
any consent or approval, or result in the acceleration of the performance
of the obligations of Pace under, the charter or bylaws of Pace, the
Pavilion Partnership Agreement, or any indenture, mortgage, deed of trust,
lease, contract, instrument or other agreement to which Pace is a party or
by which Pace or any of its assets are bound or affected.
(c) Blockbuster has (i) acknowledged the fact that Pace is
discussing a potential purchase of the Sony Partnership Interest with Sony
and that Pace need not advise Blockbuster of the terms thereof, and (ii)
agreed to exchange mutual releases with Sony at the Blockbuster Closing
with respect to any claims in connection with Pavilion, all as set forth
in Sections 4.4 and 2.5 of the Purchase Agreement between Pace and
Blockbuster, true and correct copies of which Sections have been provided
to Sony.
From and after the Sony closing; Pace shall indemnify, defend and hold harmless
Sony and its parents, subsidiaries, affiliates, officers, directors, employees
and agents against all claims and liabilities relating to or arising out of the
breach of any of the foregoing representations and warranties; provided that
Pace's liability in the aggregate under this Paragraph 11 shall not exceed the
Purchase Price.
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EXTENDED EVENTS MANAGEMENT AGREEMENT
FOR
THE CYNTHIA WOODS MITCHELL PAVILION
BY AND BETWEEN
PAVILION PARTNERS
AND
THE WOODLANDS CENTER FOR THE PERFORMING ARTS
d/b/a CYNTHIA WOODS MITCHELL CENTER
FOR THE PERFORMING ARTS
<PAGE>
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS ................................................... 1
Section 1.01 Affiliate ............................................... 1
Section l.02 Artist .................................................. 1
Section 1.03 Available Gross Ticket Revenue .......................... 1
Section 1.04 Barrier Amount .......................................... 2
Section 1.05 Beverage Sponsors ....................................... 2
Section 1.06 Board ................................................... 2
Section 1.07 Box Seats ............................................... 2
Section 1.08 Budgeted Box Seat Sales ................................. 2
Section 1.09 Budgeted Sponsorship Revenues ........................... 3
Section 1.10 Civic Events ............................................ 3
Section 1.11 Competitive Outdoor Facility ............................ 4
Section 1.12 Events .................................................. 4
Section 1.13 Expansion Plans ......................................... 4
Section 1.14 Excessive Sound Level ................................... 4
Section 1.15 Facility ................................................ 5
Section 1.16 Facility Fee ............................................ 5
Section 1.17 Gross Concession Revenues ............................... 5
Section 1.18 Gross Receipts .......................................... 5
Section 1.19 House Seats ............................................. 6
Section 1.20 Industry Standards ...................................... 6
Section 1.21 Minimum Pavilion Generated Receipts ..................... 6
Section 1.22 Net Concession Revenues ................................. 7
Section 1.23 Owner ................................................... 7
Section 1.24 Owner Default ........................................... 7
Section 1.25 Pace .................................................... 7
Section 1.26 Parking/Access Areas .................................... 7
Section 1.27 Pavilion ................................................ 7
Section 1.28 Pavilion Default ........................................ 8
Section 1.29 Pavilion's Expansion Contribution ....................... 8
Section 1.30 Pavilion Generated Receipts ............................. 8
Section 1.31 Permanent Sign Revenues ................................. 8
Section 1.32 Plans ................................................... 8
Section 1.33 Primary Date ............................................ 8
Section 1.34 Prior Management Agreement .............................. 8
Section 1.35 Property ................................................ 9
Section 1.36 Qualified Group of T & P Events ......................... 9
Section 1.37 Restricted Area ......................................... 9
Section 1.38 Season .................................................. 9
Section 1.39 Season Ticket Revenue ................................... 9
Section 1.40 Sponsors ................................................ 9
<PAGE>
Section 1.41 Sponsorship Revenue ..................................... 9
Section 1.42 Superior Facility ....................................... 10
Section 1.43 Term .................................................... 10
Section 1.44 T & P Events ............................................ 10
Section 1.45 Ticket Rebate Revenue ................................... 10
ARTICLE II - ENGAGEMENT AND RESPONSIBILITIES .............................. 11
Section 2.01 Retention of Pavilion ................................... 11
Section 2.02 Term .................................................... 11
Section 2.03 Duties and Responsibilities of Pavilion ................. 11
Section 2.04 Duties and Responsibilities of Owner .................... 14
Section 2.05 Sponsors ................................................ 16
Section 2.06 Pavilion's Monetary Obligations ......................... 17
Section 2.07 Events Related to Golf Tourney .......................... 19
ARTICLE II - FEES AND CHARGES ............................................. 19
Section 3.01 Facility Fee ............................................ 19
Section 3.02 Parking Charges and Fees ................................ 20
Section 3.03 Management Fee .......................................... 20
Section 3.04 Concession Fee Limitation ............................... 22
Section 3.05 Allocation of Season Ticket Revenue ..................... 22
ARTICLE IV - INSURANCE REQUIREMENTS ....................................... 22
Section 4.01 Owner's Obligation ...................................... 22
Section 4.02 Pavilion's Obligation ................................... 23
Section 4.03 Cooperation ............................................. 24
Section 4.04 Waiver of Subrogation Rights ............................ 24
Section 4.05 Types of Policies; Amounts of Coverage .................. 24
Section 4.06 Subcontractors' Policies of Insurance ................... 25
ARTICLE V - PROGRAMMING AND SCHEDULING .................................... 25
Section 5.01 Programming Quality and Control ......................... 25
Section 5.02 Scheduling .............................................. 27
Section 5.03 Board's Authority ....................................... 27
ARTICLE VI - DEFAULT AND REMEDY ........................................... 27
Section 6.01 Pavilion Default ........................................ 27
Section 6.02 Owner Default ........................................... 30
Section 6.03 Owner Remedies .......................................... 31
Section 6.04 Pavilion Remedies ....................................... 31
Section 6.05 Limitation on Certain Remedies .......................... 32
ARTICLE VII - MISCELLANEOUS AND GENERAL PROVISIONS ........................ 33
Section 7.01 Non-Compete Agreement ................................... 33
Section 7.02 Assignment .............................................. 34
Section 7.03 Destruction by casualty ................................. 35
<PAGE>
Section 7.04 Special Rights to Terminate ............................. 36
Section 7.05 Rights to Names ......................................... 39
Section 7.06 Right to Co-Produce ..................................... 39
Section 7.07 Signage ................................................. 39
Section 7.08 Advertising and Marketing ............................... 39
Section 7.09 Party to Transactions ................................... 40
Section 7.10 Accounting Matters ...................................... 40
Section 7.11 Owner's Representations, Warranties and Covenants ....... 40
Section 7.12 Pavilion's Representations and Warranties ............... 42
Section 7.13 Good Faith Negotiations ................................. 42
Section 7.14 Pavilion's Other Activities ............................. 43
Section 7.15 Indemnification ......................................... 43
Section 7.16 Relationship of Parties ................................. 43
Section 7.17 Headings ................................................ 44
Section 7.18 Applicable Law .......................................... 44
Section 7.19 Counterparts ............................................ 44
Section 7.20 Entire Agreement and Modification ....................... 44
Section 7.21 Notices ................................................. 44
Section 7.22 Severability ............................................ 45
Section 7.23 Attorney's Fees ......................................... 45
Section 7.24 House Seats and Complimentary Tickets ................... 45
Section 7.25 Ticket Bartering ........................................ 46
Section 7.26 No Waiver ............................................... 47
Section 7.27 Replacement of Prior Management Agreement ............... 47
<PAGE>
EXTENDED EVENTS MANAGEMENT AGREEMENT
[Cynthia Woods Mitchell Pavilion]
THIS EXTENDED EVENTS MANAGEMENT AGREEMENT (Agreement) is entered into this
21st day of November 1994 by and between THE WOODLANDS CENTER FOR THE PERFORMING
ARTS d/b/a CYNTHIA WOODS MITCHELL CENTER FOR THE PERFORMING ARTS ("Owner), a
Texas non-profit corporation, and PAVILION PARTNERS ("Pavilion), a Delaware
general partnership. For and in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
meanings indicated below:
Section 1.01 Affiliate. "Affiliate" shall mean, with respect to a
corporation, any person which, directly or indirectly, controls or is controlled
by or is under common control with such corporation. For purposes of this
definition, the terms "control," "controlled by" and "under common control
with," with respect to any person, shall mean possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise.
Section 1.02 Artist. "Artist" shall mean, (i) with respect to an Event
which primarily features a live presentation or other live entertainment, the
performer, entertainer or actor, or group of performers, entertainers or actors
which performs at such live entertainment Event or (ii) with respect to an Event
which features a sound recording, transmitted images from another location or
any other form of presentation or entertainment which does not primarily include
live entertainment, the owner of the rights to exhibit such sound recording,
transmitted images or other form of presentation or entertainment.
Section 1.03 Available Gross Ticket Revenue. "Available Gross Ticket
Revenue" shall mean, with respect to the sale of tickets for any T & P Event,
gross ticket revenue received from the sale of tickets to such T & P Event less
(i) all applicable sales and other taxes, if any, (ii) outside charges such as
credit card commissions and customer convenience charges which may be charged
and retained by the ticket selling agent pursuant to the terms of the Facility's
ticket sales agreement, (iii) revenue generated from the Facility Fee and (iv)
parking fees and charges, if any. A portion of the Season Ticket Revenue for
each Season shall be allocated to each Event during such Season in accordance
with the provisions of Section 3.05 hereof, and the portion of Season Ticket
Revenue so allocated to each T & P Event shall be included as a part of the
"Available Gross Ticket Revenue" for each such T & P Event. The term "Available
Gross Ticket
<PAGE>
Revenue" shall not include within its definition (x) revenue received from the
sale of tickets for Box Seats, (y) Ticket Rebate Revenue or (z) any portion of
Season Ticket Revenue which is not allocated to a T & P Event pursuant to the
provisions of Section 3.05 hereof.
Section 1.04 Barrier Amount. "Barrier Amount" shall mean, subject to the
adjustments provided for in the next succeeding sentence, $275,000.00. The
Barrier Amount shall be adjusted as of January 1, 1996 and each subsequent
January 1 thereafter during the term of this Agreement in the same proportionate
amount as any increase in the Consumer Price Index published by the Department
of Labor for the Houston Metropolitan Area for all wage earners (or equivalent
index chosen by Owner if such index is no longer published) during the
immediately preceding calendar year.
Section 1.05 Beverage Sponsors. "Beverage Sponsors" shall mean Sponsors
which are in the business of manufacturing and selling carbonated beverages,
soft drinks, malt beverages, wine or distilled spirits.
Section 1.06 Board. "Board" shall mean the Owner's Board of Directors.
Section 1.07 Box Seats. "Box Seats" shall mean the box seats included as a
part of the Facility, as may hereafter be modified or changed from time to time.
Prior to completion of the expansion of the Facility as described in Section
2.04(h) hereof, the Facility contains approximately 142 box seats in thirty-one
(31) four-seat boxes and three (3) six-seat boxes. Upon completion of expansion
of the Facility as described in Section 2.04(h) hereof, the Facility shall
contain approximately 166 box seats in thirty-seven (37) four-seat boxes and
three (3) six-seat boxes.
Section 1.08 Budgeted Box Seat Sales. "Budgeted Box Seat Sales" shall mean
the projected amount of revenue to be received from the sale of Box Seats during
a particular Season. For purposes of this Agreement the amount of the Budgeted
Box Seat Sales for each of the Seasons included in the Term is hereby stipulated
to be as follows:
Amount of Budgeted
Season Box Seat Sales
1995 $ 91,249.00
1996 $ 94,899.00
1997 $ 98,695.00
1998 $102,643.00
1999 $106,748.00
2000 $111,018.00
2001 $115,459.00
2002 $120,077.00
2003 $124,880.00
2004 $129,875.00
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<PAGE>
2005 $135,070.27
2006 $140,473.00
2007 $146,092.00
2008 $151,935.00
2009 $158,012.00
Section 1.09 Budgeted Sponsorship Revenues. "Budgeted Sponsorship
Revenues" shall mean the projected aggregate amount of Sponsorship Revenue to be
received during a particular Season. For purposes of this Agreement the amount
of Budgeted Sponsorship Revenue for each of the Seasons included in the Term is
hereby stipulated to be as follows:
Amount of Budgeted
Season Sponsorship Revenue
1995 $ 168,730.00
1996 $ 175,479.00
1997 $ 182,498.00
1998 $ 189,798.00
1999 $ 197,390.00
2000 $ 205,286.00
2001 $ 213,497.00
2002 $ 222,037.00
2003 $ 230,919.00
2004 $ 240,155.00
2005 $ 249,762.00
2006 $ 259,752.00
2007 $ 270,142.00
2008 $ 280,948.00
2009 $ 292,186.00
Section 1.10 Civic Events. "Civic Events" shall mean all Events held,
conducted or presented at the Facility which are not T & P Events. Civic Events
shall include, without limitation, the following types of Events:
(a) cultural and community Events including, but not limited to
graduation exercises, convention events, meeting award ceremonies and
beauty pageants;
(b) Events which feature non-national touring attractions;
(c) local and regional performing arts and classical Events (such
as, by way of illustration, the Houston Symphony, the Houston Ballet, the
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<PAGE>
Houston Grand Opera, Theatre Under the Stars and other similar types of
performances sponsored by local Living Arts Council); and
(d) Certain international, national or regional classical artists
and attractions which require the support of the local arts.
By way of illustration, and not by limitation, it is specifically agreed and
acknowledged that Events which feature classical artists such as guest
conductors (for example, John Williams), guest singers (for example, Rosemary
Clooney or Pavarotti), musicians (for example, Yani) and orchestras (for
example, Boston Pops) shall be included within the definition of "Civic Events."
Additionally, by way of illustration and not by limitation, it is agreed and
acknowledged that Events featuring contemporary artists (such as James Taylor,
Crosby, Stills and Nash, Jimmy Buffet and other contemporary artists) shall be
expressly excluded from the definition of "Civic Events."
Section 1.11 Competitive Outdoor Facility. "Competitive Outdoor Facility"
shall mean any permanent outdoor entertainment facility located in the
Restricted Area (excluding stadiums with a capacity of 40,000 or more), other
than the Facility, which is designed primarily to present touring and
professional Artists in concert to live audiences.
Section 1.12 Events. "Events" shall mean all cultural or entertainment
performances and presentations held, conducted or presented at the Facility
during which patrons are admitted into the Facility as spectators for such
entertainment or cultural presentation and performance, regardless of whether
the patrons are charged a cost of admission and regardless of whether the
presentation and performance features a live act or a prerecorded or simulcast
video or audio transmission or re-transmission. "Event" shall mean any one of
the Events. In order to avoid any uncertainty or ambiguity, it is hereby agreed
and acknowledged that, for purposes of determining the number of Events held
during any period of time at the Facility, separately ticketed performances
featuring the same Artist shall each be considered to be a separate and distinct
Event. For example, if an Artist were to appear at the Facility in five
separately ticketed performances on five consecutive nights, then those
performances shall be counted as five (5) Events for purposes of determining the
number of Events held or presented at the Facility.
Section 1.13 Expansion Plans. "Expansion Plans" shall mean the final
drawings, plans and specifications which have been prepared by Owner's architect
and general contractor in connection with the proposed expansion of the capacity
of the Facility to 13,000 persons, copies of which have been previously provided
to Pavilion by Owner.
Section 1.14 Excessive Sound Level. "Excessive Sound Level" shall mean
that sound level generated by an Artist In excess of 98 dBA (decibels on an
A-rated scale), with infrequent transient peaks not In excess of 102 dBA,
measured at the sound mixer of the Facility, or such other maximum sound level
as the Owner and Pavilion agree is reasonably prudent in order to conduct
performances at the Facility.
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Section 1.15 Facility. "Facility" shall mean the outdoor entertainment
facility owned by Owner known as the "Cynthia Woods Mitchell Pavilion" and which
is located on the Property. The Facility includes, among other things, a stage,
stage house, tent, mechanical and support systems for Events, back stage parking
and delivery areas, gates to limit access to ticketholders, restrooms,
concession stands, a lawn sound system, dressing rooms, medical and security
support facilities, 3,000 reserved seats and lawn seating for approximately
7,000 people. Notwithstanding anything to the contrary contained above, the
equipment included within the term "Facility" shall be the items listed on
Exhibit "C" attached hereto, and all other equipment which may be necessary to
conduct T & P Events shall be the responsibility of Pavilion to obtain. The
location and configuration of the Facility within the boundaries of the Property
are depicted and appropriately designated on the Site Plan attached hereto as
Exhibit "A." Subject to the provisions contained in the last sentence of Section
7.13 hereof, it is understood and agreed that the Facility may hereafter be
modified from time to time by the Owner.
Section 1.16 Facility Fee. "Facility Fee" shall mean a separate charge to
be collected with the sale of each ticket to all T & P Events, as more fully
described in Section 3.01 of this Agreement.
Section 1.17 Gross Concession Revenues. "Gross Concession Revenues shall
mean, with respect to a particular concession at the Facility, all gross
revenues generated from the sale or lease of such concession at the Facility
(net of applicable sales and other taxes); provided, however, the term "Gross
Concession Revenues" shall not include (i) revenues generated from the sale of
merchandise which exclusively carries Owner's identification or logo, (ii) the
value of any improvements placed at the Facility in kind by any concessionaire
and (iii) funds granted to Owner not in connection with T&P Events, such as
funds specifically for capital improvements or in support of Civic Events.
Section 1.18 Gross Receipts. "Gross Receipts" shall mean, for any Season,
all revenue generated, received or otherwise arising out of or in connection
with the T & P Events held, conducted or presented at the Facility during such
Season, except for (i) revenue generated from the Facility Fee, (ii) revenue
from the sale of Box Seats for such Season to the extent that such revenue (x)
arises out of the first $500.00 of proceeds from the sale of each four-seat or
six-seat box or (y) exceeds, in the aggregate, the Budgeted Box Seat Sales for
such Season, (iii) Sponsorship Revenue for such Season to the extent that such
Sponsorship Revenue exceeds the Budgeted Sponsorship Revenues for such Season,
(iv) Gross Concession Revenues for all concessions at the Facility, (v) revenues
derived from the operation of the Parking/Access Areas, if any, and (vi) Ticket
Rebate Revenue. Without limiting any of the foregoing, it is specifically agreed
and acknowledged that "Gross Receipts" shall include, without limitation, the
following:
(a) all Available Gross Ticket Revenues for T & P Events;
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(b) all (i) Sponsorship Revenue related to any T & P Event and (ii)
Permanent Sign Revenues up to, but not exceeding, the Budgeted Sponsorship
Amount for each Season;
(c) all revenue generated from the sale of Box Seats except for that
portion of such revenue which (x) arises out of the first $500.00 of
proceeds from the sale of each four-seat or six-seat box or (y) exceeds,
in the aggregate, the Budgeted Box Seat Sales for each Season; and
(d) sale revenues, licensing fees, royalty fees and similar revenues
received by Pavilion or Owner from the duplication, reproduction,
transmission or re-transmission of any T & P Event or series of T & P
Events in any form of media including, without limitation, sound
recordings, video tapes, closed circuit television and pay per view
television.
The term "Gross Receipts" shall be net of sales taxes and shall not include the
value of House Seats (except for any portion of the House Seats which may be
sold to the general public pursuant to Section 7.24(f) of this Agreement with
respect to any Event) or the value of any other complimentary tickets.
Section 1.19 House Seats. "House Seats" shall mean (a) with respect to
Pavilion, two four-seat boxes at the Facility and one six-seat box at the
Facility, (b) with respect to Owner, three four-seat boxes and one six-seat box,
(c) ten reserved seats at the Facility mutually designated by Owner and Pavilion
as the "house reserved seats" and (d) ten tickets for general admission lawn
seating.
Section 1.20 Industry Standards. When used herein, the term "industry
standards" shall mean and refer to the procedural practices used or followed at
above average permanent outdoor entertainment facilities which are similar in
size and purpose to the Facility.
Section 1.21 Minimum Pavilion Generated Receipts. "Minimum Pavilion
Generated Receipts" shall mean, for each Season, the minimum projected amount of
aggregate Pavilion Generated Receipts to be received during such Season. For
purposes of this Agreement, the amount of the Minimum Pavilion Generated
Receipts for each of the next fifteen (15) Seasons is hereby stipulated to be as
follows:
Minimum Pavilion
Season Generated Receipts
1995 $3,952,000.00
1996 $4,110,000.00
1997 $4,275,000.00
1998 $4,445,000.00
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1999 $4,623,000.00
2000 $4,808,000.00
2001 $5,000,000.00
2002 $5,200,000.00
2003 $5,408,000.00
2004 $5,625,000.00
2005 $5,850,000.00
2006 $6,084,000.00
2007 $6,327,000.00
2008 $6,580,000.00
2009 $6,844,000.00
Section 1.22 Net Concession Revenues. "Net Concession Revenues" shall
mean, with respect to a particular concession at the Facility, the Gross
Concession Revenues with respect to such concession net of any amounts payable
to, or retained by, the concessionaire responsible for the sale or lease of such
concession at the Facility.
Section 1.23 Owner. "Owner" shall mean The Woodlands Center for Performing
Arts, a Texas non-profit corporation (d/b/a Cynthia Woods Mitchell Center for
the Performing Arts).
Section 1.24 Owner Default. "Owner Default" shall mean the occurrence or
happening, at any time and from time to time, of any of the events listed in
Section 6.02 of this Agreement.
Section 1.25 Pace. "Pace" shall mean SM/PACE, Inc., a Texas corporation.
Section 1.26 Parking/Access Areas. "Parking/Access Areas" shall
collectively mean (i) the parking lots located on and off, in the vicinity of,
the Property (and used in connection with the Facility), (ii) the vehicular
driveways and accessways to, from, between and among the public roads serving
the Property, the parking lots on and off the Property and the Facility and
(iii) all pedestrian walkways and accessways to, from, between and among the
public roads serving the Property, the parking lots on and off the Property and
the Facility. The term "Parking/Access Areas" shall not include within its
definition the back stage parking and delivery areas Immediately adjacent to the
stage and stage house portions of the Facility, it being specifically agreed and
acknowledged that such back stage parking and delivery areas shall be included
as a part of the Facility. The location and configuration of the various
elements of the Parking/Access Areas are depicted and appropriately designated
on the Site Plans attached hereto as Exhibit "A."
Section 1.27 Pavilion. "Pavilion" shall mean Pavilion Partners, a Delaware
general partnership.
7
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Section 1.28 Pavilion Default. "Pavilion Default" shall mean the
occurrence or happening, at any time and from time to time, of any of the events
listed in Section 6.01(a) of this Agreement
Section 1.29 Pavilion's Expansion Contribution. "Pavilion's Expansion
Contribution" shall mean the $1,500,000 payment to be made by Pavilion to Owner
pursuant to the provisions of Section 2.06(a) hereof. For purposes of this
Agreement, references to the "unamortized portion of Pavilion's Expansion
Contribution" shall mean, as of any time, the unamortized portion of such
$1,500,000 payment at such time as if such payment were being amortized on a
straight-line basis from January 1, 1995 through December 31, 2009.
Section 1.30 Pavilion Generated Receipts. "Pavilion Generated Receipts"
shall mean, for each Season, all revenue generated during such Season from (a)
Gross Receipts, (b) the Facility Fee, (c) Sponsorship Revenue related to T&P
Events and from Permanent Sign Revenues to the extent such revenue exceeds the
Budgeted Sponsorship Amount for such Season, (d) revenue from the sale of Box
Seats to the extent such revenue exceeds the Budgeted Box Seat Sales for such
Season, (e) Gross Concession Revenues generated from the sale or lease of any
and all concessions at the Facility in conjunction with the T&P Events, (f)
Ticket Rebate Revenue which relates to T&P Events and (g) Season Ticket Revenue
which is allocated to T&P Events pursuant to the provisions of Section 3.05
hereof.
Section 1.31 Permanent Sign Revenues. "Permanent Sign Revenues" shall mean
all Sponsorship Revenues received in exchange for the right to maintain a
permanent or fixed sign at the Facility; provided, however, the term "Permanent
Sign Revenues" shall not include funds or proceeds received by Owner which are
attributable to the placement of a person's name on the Facility's "donor
board."
Section 1.32 Plans. "Plans" shall mean the final drawings, plans and
specifications which were used by Owners architect and general contractor in
connection with the construction of the Facility and the Parking/Access Areas.
Section 1.33 Primary Date. "Primary Date" shall mean, with respect to
either Owner or Pavilion, one of the forty (40) dates each Season which may be
selected pursuant to the provisions of Section 5.02 by such party as a date
which is primarily available to such selecting party at the Facility as
described in and governed by the provisions of Section 5.02 of this Agreement.
Section 1.34 Prior Management Agreement. "Prior Management Agreement"
shall mean that certain Events Management Agreement dated effective as of
February 14, 1990, and entered into by and between Owner and PACE Woodlands
Operating Company ("Pace"), a Texas corporation. All of Pace's rights, titles
and interests in, to and
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under the Prior Management Agreement were transferred and assigned to Pavilion
effective as of April 1,1994.
Section 1.35 Property. "Property" shall mean that certain tract or parcel
of land located in the Woodlands, Texas, depicted on the Site Plans attached
hereto as Exhibit "A" and on which the Facility and certain of the
Parking/Access Areas are located.
Section 1.36 Qualified Group of T & P Events. "Qualified Group of T & P
Events" shall mean any two or more T & P Events held, presented or conducted at
the Facility during the same Season which feature the same Artist.
Section 1.37 Restricted Area. "Restricted Area" shall mean the
geographical area encompassed by a circle with a sixty (60) mile radius and with
the City of Houston's City Hall as the center point.
Section 1.38 Season. "Season" shall mean the calendar year. The first
Season under this Agreement shall commence on January 1, 1995 and continue
through December 31, 1995. Subsequent Seasons shall commence and end on January
1 and December 31, respectively, in subsequent calendar years.
Section 1.39 Season Ticket Revenue. "Season Ticket Revenue" shall mean,
with respect to a particular Season, the gross revenue received from the sale of
season tickets for all Events at the Facility for such Season less (i) all
applicable sales and other taxes, if any, (ii) outside charges such as credit
cards commissions and customer convenience charges which may be charged and
retained by the ticket selling agent pursuant to the terms of the Facility's
ticket sales agreement, if any, (iii) revenue generated from the Facility Fee,
if any and (iv) parking fees and charges, if any.
Section 1.40 Sponsors. "Sponsors" shall mean any and all persons, firms
and corporations which agree to pay sums of money to Pavilion or Owner in
exchange for the right to have its name associated with the Facility or any
particular Event to be held, conducted or presented at the Facility. Without
limiting the generality of the foregoing, the term "Sponsors" shall specifically
include within its definition all of the Beverage Sponsors.
Section 1.41 Sponsorship Revenue. "Sponsorship Revenue" shall mean,
subject to the provisions of Section 2.05(d), any and all sums paid to Pavilion
or Owner by a Sponsor which is directly related to the Facility or an Event
held, conducted or presented at the Facility, regardless of whether such amount
is tied to the amount of revenues generated from the Facility or generated from
a particular Event held, conducted or presented at the Facility. Notwithstanding
the foregoing, the term "Sponsorship Revenue" shall not include (i) funds or
payments received by the Owner from a donor for which the donor receives nothing
other than his name on the Facility's "donor board" and his name
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in the Facility's arts program or (ii) the value of any improvements to the
Facility received in kind by Owner from a non-exclusive Sponsor.
Section 1.42 Superior Facility. "Superior Facility" shall mean any
Competitive Outdoor Facility with a capacity of 120% or more of the Facility's
capacity.
Section 1.43 Term. "Term" shall mean the term of this Agreement, as
described in Section 2.02 of this Agreement.
Section 1.44 T & P Events. "T & P Events" shall mean all Events held,
conducted or presented at the Facility which feature any national touring and
professional Artist. By way of illustration and not by limitation, Events
featuring the following types of entertainment and Artists shall be included
within the definition of "T & P Events":
(a) contemporary music, rock and roll music, pops music and jazz
music (for example, Rod Stewart, George Winston, Crosby, Stills and Nash);
(b) middle of the road performers (for example, Liza Minelli, Neil
Diamond, Frank Sinatra, Pavarotti);
(c) theatrical performances (for example, national Broadway tours);
(d) country music (for example, Willie Nelson, Lyle Lovett, George
Strait);
(e) rhythm and blues music (for example, B. B. King, George Benson,
Robert Cray);
(f) gospel music and contemporary Christian music; and
(g) comedy performers (for example, Steve Martin, Gallager).
Section 1.45 Ticket Rebate Revenue. "Ticket Rebate Revenue" shall mean any
and all rebates, refunds, volume discounts or other payments payable by the
Facility's ticket selling agent pursuant to the provisions of the Facility's
ticket sales agreement and which is payable on account of the sale of tickets to
Events at the Facility.
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ARTICLE II
ENGAGEMENT AND RESPONSIBILITIES
Section 2.01 Retention of Pavilion. On and subject to the terms hereof,
Owner hereby engages and retains Pavilion to provide during the Term on an
exclusive basis the services necessary for the booking, scheduling, production,
promotion and presentation of all T & P Events. Pavilion hereby accepts such
engagement and agrees to carry out and fulfill the specific duties and
obligations imposed upon it pursuant to the terms of this Agreement
Section 2.02 Term. Subject to the earlier termination of this Agreement
pursuant to the rights and privileges granted in Sections 6.03(a), 6.04(a),
7.03(a) and 7.04 of this Agreement, the Term of this Agreement shall commence
upon execution hereof and continue until December 31, 2009.
Section 2.03 Duties and Responsibilities of Pavilion. Pavilion hereby
agrees to work directly with the Board, or its authorized representatives, in
connection with the carrying out and conducting of all of the following duties
and responsibilities during the Term of this Agreement:
(a) Subject to the provisions of Article V of this Agreement,
Pavilion shall schedule all T & P Events to be produced and presented at
the Facility during each Season.
(b) Pavilion shall fulfill its monetary obligations set forth in
Section 2.06 of this Agreement.
(c) Subject to the provisions of Section 7.09 of this Agreement,
Pavilion shall be responsible for negotiation and execution of all
contracts necessary for the production and presentment of each T & P Event
including, without limitation, all contracts with the Artists to perform
at such T & P Events. With respect to all contracts with Artists
performing at T & P Events at the Facility, Pavilion shall include a
provision which requires that the Artist use its best efforts to conclude
its performance by no later than 11:00 p.m. and use its best efforts to
not generate Excessive Sound Levels at all times during such Artist's
performance. Pavilion shall also be responsible for setting ticket prices
for the T & P Events, subject to the provisions contained in the
applicable contracts with Artists.
(d) Subject to the right created in Section 7.02 of this Agreement,
Pavilion shall bear the entire financial risk associated with production
of each T & P Event.
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(e) Pavilion shall be responsible for the advertising, marketing and
promoting of each T & P Event. All such advertising, marketing and
promoting efforts shall be conducted by Pavilion, in its discretion, in
accordance with industry standards so as to promote maximum attendance at
each T & P Event. Subject to the provisions of Section 7.08 of this
Agreement, all advertising and promotions of T & P Events shall include
references to the name of the Facility and reflect that the Owner is
presenter of the T & P Events. Pavilion covenants and agrees that the
requirements of the immediately preceding sentence shall be fulfilled,
from time to time, in a manner as may be required or necessary to maintain
the tax exempt status of Owner.
(f) Pavilion shall be responsible for, and will pay or cause to be
paid, all costs directly related to the production, booking, staging,
promotion and presentation of all T & P Events during the Term of this
Agreement.
(g) With respect to food and beverage service to be offered at the
Facility for its patrons, Pavilion shall:
(i) advise Owner, upon request, in developing a detailed
request for proposal for Owner to present to various concessionaires
who are in the business of providing food and beverage services at
entertainment facilities for purposes of obtaining bids from such
concessionaires;
(ii) advise Owner, upon request, in the negotiation of each
food and beverage concessionaire's contract for all Events at the
Facility; and
(iii) work with each food and beverage concessionaire at each
T & P Event (and such Civic Events as Owner may request) in order to
coordinate the food and beverage menu at such Event, and the
staffing and implementation of sales all in a manner which will
compliment the specific performance at such Event.
(h) With respect to merchandise concessionaires at the Facility,
Pavilion shall:
(i) advise Owner, upon request, in developing a detailed
request for proposal for Owner to present to various concessionaires
who are in the business of providing services necessary for the sale
of merchandise at entertainment and cultural events;
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(ii) advise Owner, upon request, in negotiation of each
concessionaire's contract for all Events at the Facility; and
(iii) advise Owner, upon request, in its efforts pertaining to
the successful sales of merchandise during all Events.
(i) Pavilion shall be responsible for soliciting proposals for,
presenting the alternatives to Owner, and obtaining, subject to the
Board's approval thereof, a master ticketing agreement with a first-class
ticket selling agency for all Events to be held, conducted or presented at
the Facility. It is hereby specifically agreed and acknowledged that the
master ticketing agreement for the Facility cannot grant exclusive rights
for the sale of tickets to all Civic Events, since some Artists at Civic
Events may have other ticket selling outlet obligations.
(j) Pavilion shall be responsible for soliciting, obtaining and
contracting for all Sponsors for the T & P Events. Notwithstanding the
fact that Owner shall be responsible for soliciting, obtaining and
contracting for all Sponsors for Civic Events (as set forth in Section
2.04(g) of this Agreement), it is specifically agreed and acknowledged
that Pavilion shall have the exclusive right, authority and duty to obtain
all Beverage Sponsors for all Events to be conducted, held or presented at
the Facility during the Term, subject to Pavilion's agreement contained in
Section 2.05(c) of this Agreement.
(k) [Intentionally Deleted]
(l) Pavilion shall apply for and maintain all required licenses and
permits for the carrying on of the business required to be conducted by it
under this Agreement and shall conduct all of its activities under this
Agreement in accordance with all applicable federal, state and local laws,
rules and regulations as well as any rules and regulations imposed upon it
by Owner pursuant to the terms of this Agreement. Where legally
permissible, all such licenses and permits shall be made expressly
assignable to Owner.
(m) Pavilion, at its sole cost and expense, shall cause its staff
utilized in connection with carrying out its duties hereunder, to wear
uniforms as may be reasonably approved by Owner.
(n) [Intentionally Deleted]
(o) Pavilion shall be obligated to pay to Owner all of the
out-of-pocket costs actually incurred by Owner for technical assistance
and staff
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required for the operation of the sound reinforcement equipment located on
the lawn of the Facility with respect to the seventeenth (17th) T&P Event
of each Season and all of the T & P Events thereafter during such Season.
Section 2.04 Duties and Responsibilities of Owner. Owner hereby agrees and
covenants with Pavilion as follows:
(a) Owner shall be responsible for providing sufficient parking
facilities within reasonable walking distance of the Facility to
accommodate the capacity of the Facility in accordance with industry
standards. Owner shall cause the Parking/Access Areas to be adequately
lighted in accordance with industry standards and the Plans.
(b) Owner shall be responsible for or shall cause all traffic
control, security, cleanup and maintenance of the Parking/Access Areas
during all Events at all times.
(c) Owner shall be solely responsible, at its sole cost and expense,
for the upkeep and maintenance of the Facility to ensure that it remains a
first class permanent outdoor entertainment facility in accordance with
industry standards throughout the Term of this Agreement. The provisions
of the preceding sentence shall not negate the obligation of Pavilion to
reimburse Owner pursuant to Section 2.06(e) hereof for the reasonable
costs incurred by Owner in fulfilling the responsibilities set forth in
Section 2.04(k) hereof.
(d) Owner shall be solely responsible for the booking, scheduling,
production, presentment and promotion of all Civic Events.
(e) At Owner's option, Owner may utilize, at Civic Events, the same
staff used by Pavilion at the T & P Events.
(f) Owner shall be responsible for soliciting, obtaining and
contracting for all Sponsors at all Civic Events, except for the Beverage
Sponsors (subject to the provisions of Section 2.05(c)).
(g) Throughout the Term of this Agreement, Owner shall be obligated
to (x) maintain a sufficient number of lawn chairs to be held for rental
at the Facility and (y) maintain the lawn sound enhancement equipment
currently used at the Facility in good working order and provide
sufficient technical and staff assistance as may be necessary for the
operation of the lawn sound enhancement equipment at all Events at the
Facility.
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(h) Owner shall substantially complete, or cause to be completed,
expansion of the Facility to a seating capacity for 13,000 people in
accordance with the Expansion Plans on or before April 15, 1995 (Expansion
Deadline"). Owner hereby acknowledges that Pavilion shall, in reliance
upon Owner's obligations set forth in this Section 2.04(h), book Events at
the Facility to occur after the Expansion Deadline and that Owner shall be
responsible for indemnifying Pavilion for any loss or costs incurred by
Pavilion should it be required to cancel or move any such Event as a
result of Owner's failure to complete the expansion of the Facility in
accordance with the Expansion Plans on or before the Expansion Deadline.
In that regard, Pavilion hereby agrees that it will use its best efforts
to mitigate damages with respect to costs or losses which may be incurred
because of Owner's failure to cause the completion of the expansion of the
Facility on or before the Expansion Deadline by attempting to move any
such affected Events to other venues, if possible.
(i) Owner shall provide the technical assistance and staff required
for the operation of the sound reinforcement equipment located on the lawn
of the Facility for all T&P Events. For the first sixteen (16) T&P Events
of each Season, Owner shall provide such assistance and staff at no cost
to Pavilion. Owner shall be reimbursed pursuant to Section 2.03(o) for its
out-of-pocket costs related to the provision of such assistance and staff
with respect to the seventeenth T&P Event of each season and all T&P
Events thereafter during such Season.
(j) Owner shall provide all staff, labor and facilities necessary to
rent lawn chairs to patrons attending T&P Events.
(k) Subject to Section 2.06(e) hereof, at each T & P Event during
the Term, Owner shall:
(i) provide, or cause to be provided, such reasonable and
necessary security services as may be required in accordance with
industry standards for the type of Event being conducted;
(ii) provide, or cause to be provided, such necessary labor or
services as may be required in accordance with industry standards to
cause the Facility to be ready for such T&P Event (including
cleaning and staging services);
(iii) provide, or cause to be provided, such reasonable and
necessary services or labor in accordance with industry standards as
may be necessary to assist in the orderly access to the Facility by
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all patrons and the orderly seating of such patrons within the
Facility; and
(iv) provide, or cause to be provided, such reasonable and
necessary services or labor as may be required in accordance with
industry standards to clean the Facility after such T & P Event.
Section 2.05 Sponsors.
(a) Subject to the provisions of Sections 7.09 and 2.05(c) of this
Agreement, Pavilion shall have the right to negotiate terms of agreements
with Sponsors which will grant to Sponsors such media rights with respect
to those Events sponsored by them and rights to display signs at those
Events sponsored by them as is deemed reasonable and necessary by Pavilion
in accordance with industry standards; provided, however, that (i) the
right to place signs at the Facility shall be subject to the provisions of
Section 7.07 hereof and (ii) signs or other sponsorship arrangements that
include references to cigarettes or other tobacco products shall be
prohibited without Owner's consent.
(b) Owner agrees and acknowledges that in order to obtain Beverage
Sponsors for the Facility and the Events to be held, conducted or
presented at the Facility, Pavilion may be required to grant to such
Beverage Sponsors the following rights throughout the entirety of each
Season for which it is a Sponsor:
(i) with respect to non-alcoholic Beverage Sponsors only, the
exclusive right to sell its type of beverage at the Facility;
(ii) the right to maintain a sign at the Facility to the
exclusion of any other purveyor of its type of beverage, subject to
the provisions of Section 7.07 of this Agreement; and
(iii) the right to be prominently included in all advertising
and promotion efforts in connection with Events at the Facility to
the exclusion of competitive purveyors of its type of beverage.
(c) Notwithstanding the provisions of Sections 2.03(j) or 2.05(b),
Pavilion hereby agrees to use its best efforts, in connection with the
negotiation of the terms of agreements with Beverage Sponsors to exclude
from their exclusivity rights, certain sponsorship dates which would allow
a competitive Beverage Sponsor certain rights for particular Civic Events,
as may be requested by Owner.
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(d) If Pavilion is entitled to receive any national tour sponsorship
proceeds in its capacity as a producer of a national tour event for a
particular Artist, all such amounts shall be excluded from Sponsorship
Revenue and Owner shall have no right, title or interest in and to any
portion of such national tour sponsorship proceeds.
(e) Any cost associated with the purchase, erection or installation
of a Sponsor's sign at the Facility which is not paid by such Sponsor
shall be borne jointly by Owner and Pavilion in the same percentage and
proportion as Sponsorship Revenue is shared between Owner and Pavilion.
(f) Reference is made to the fact that Pavilion has previously
installed certain video screens and equipment ("video equipment") at the
Facility at Pavilion's sole cost and expense. Pavilion shall be
responsible for maintaining all such video equipment in good condition.
Ownership of such video equipment shall be exclusively retained by
Pavilion. Owner shall have the right to use such video equipment at all
Civic Events subject to reimbursement to Pavilion of direct costs, if any,
associated with the operation thereof. No advertising shall be permitted
on such video equipment. Any revenues that may be received or derived from
such video equipment shall be deemed to be, for all purposes hereof,
Sponsorship Revenue related to T&P Events.
(g) Owner shall be entitled to receive or retain all Sponsorship
Revenue (other than Permanent Sign Revenues) which is either directly
related to the presentation of a Civic Event or which is appropriately
allocated, on a pro rata basis, to a Civic Event.
(h) Subject to any restrictions in the sponsorship agreements for
T&P Events at the Facility, Owner shall have the right and option to
permit Sponsors of Civic Events (x) the right to maintain signs at the
Facility continuously and (y) a name and title sponsorship identification
in all print and electronic media for any such Civic Events.
Section 2.06 Pavilion's Monetary Obligations.
(a) In consideration for Owner's agreement to enlarge the Facility's
capacity pursuant to the provisions of Section 2.04(h) hereof, Pavilion
shall pay to Owner a lump sum amount of $1,500,000 to be applied by Owner
towards the costs of expanding the Facility's capacity. The amount to be
paid by Pavilion to Owner pursuant to the provisions of the immediately
preceding sentence shall be payable in two installments as follows:
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(i) $750,000 shall be payable within seven (7) days after
execution of this Agreement.
(ii) $750,000 shall be payable upon completion of all
construction work and activities related to the expansion of the
Facility in accordance with the Expansion Plans.
(b) In consideration for Owner's agreement to discontinue Pavilion's
obligation to produce Benefit Events (as such term is defined in the Prior
Management Agreement) as was required pursuant to the terms of the Prior
Management Agreement, Pavilion shall pay $100,000 to Owner for each Season
included in the Term. Each Season's payment pursuant to this Section
2.06(b) shall be paid in four equal installments of $25,000 each, payable
on April 15, June 15, August 15, and October 15 of such Season.
(c) As a charitable contribution to Owner, and in lieu of any other
obligation (express or implied) to make charitable contributions to Owner,
Pavilion shall, for each Season included in the Term, contribute to Owner
an amount equal to (i) $1.00 multiplied by (ii) the amount by which the
total number of tickets sold (excluding complimentary tickets) to T & P
Events during such Season exceeds 275,000.
(d) The following provisions shall apply with respect to the
potential of Sponsorship Revenues for failure to satisfy a Sponsor's
requirement to present a certain minimum number of T&P Events at the
Facility during a particular Season:
(i) If, for any Season, (i) an Approved Sponsor Show
Requirement (as hereinafter defined in clause (iii) of this Section
2.06(d)) is not satisfied, for any reason other than (x) the
occurrence of a Material Casualty (as such term is defined in
Section 7.03(b) hereof) or (y) programming and operating
restrictions imposed by Owner pursuant to the provisions of Section
5.01 hereof and (ii) the Owner is required to forfeit all or a
portion of the Sponsorship Revenues related to such Season as a
result thereof, then Pavilion shall be obligated and responsible to
pay and reimburse to Owner the amount of such forfeited Sponsorship
Revenues.
(ii) To avoid any uncertainty or ambiguity, it is specifically
agreed, stipulated and acknowledged that If a Sponsor should
exercise a right to terminate its sponsorship obligation with
respect to subsequent Seasons as a result of the failure to satisfy
an Approved Sponsor Show Requirement for a particular Season,
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Pavilion shall have no obligation, responsibility or liability to
Owner for the loss of such Sponsorship Revenues as they relate to
those subsequent Seasons.
(iii) As used herein, the term "Approved Sponsor Show
Requirement" shall mean any contractual requirement that a certain
number of T&P Events be presented at the Facility during a
particular Season which is imposed by a Sponsor and which is
specifically authorized and approved by Pavilion. For purposes
hereof, the requirement imposed by Miller Brewing Company to present
a certain number of T&P Events during the 1995 Season shall be
deemed to have been approved and authorized by Pavilion as an
Approved Sponsor Show Requirement for all purposes hereof.
(e) Within thirty (30) days of invoice from Owner, Pavilion shall
reimburse to Owner the reasonable costs of providing the services
described in Section 2.04(k) hereof (including the uniform costs for the
persons providing those services); provided, however, Pavilion's
obligation to so reimburse such costs shall not exceed the amount paid by
Pavilion for similar services at Pavilion's other first class outdoor
entertainment facilities which are comparable to the Facility.
Section 2.07 Events Related to Golf Tourney. Notwithstanding anything to
the contrary contained herein, the Shell Houston Open (or other name referring
to the annual PGA golf tournament held in The Woodlands, Texas) and all benefits
held in conjunction with it and the Darrell Royal Golf Tournament and Benefit,
or substitute event, held in conjunction therewith each year, shall be deemed to
be Civic Events for purposes of this Agreement. Pavilion shall not be entitled
to receive any revenues or fees from, nor shall Pavilion have any duties or
responsibilities with respect to, the promotion, production or presentment of
the Shell Houston Open, the related benefits or the Darrell Royal Golf
Tournament and Benefit, unless a separate written agreement is entered into
between Pavilion and the presenter of the Shell Houston Open.
ARTICLE III
FEES AND CHARGES
Section 3.01 Facility Fee. All tickets for T & P Events shall include a
separate charge, herein called a "Facility Fee" added to the regular cost of
such ticket. The amount of the Facility Fee shall be set, from time to time, by
Pavilion, in its sole discretion, subject to the reasonable approval of Owner.
The amount of the Facility Fee shall be no less than $2.50 per ticket.
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Section 3.02 Parking Charges and Fees. Owner shall have the right, at its
sole option and election, to charge for parking of patrons' automobiles at any
Event at the Facility, including, without limitation, any and all T & P Events,
and the proceeds of such parking charges shall be the sole property of Owner and
shall be excluded from the definition of "Gross Receipts" for purposes of this
Agreement. Pavilion shall be obligated to pay to Owner a fee of $425.84 for each
T & P Event during the Term as payment for Owner's services provided in
connection with management, security and cleanup of the Parking/Access Areas.
Such $425.84 fee shall be increased by four percent (4%) for each Season
following the 1995 Season.
Section 3.03 Management Fee. For and in consideration of Pavilion's
agreement to carry out and conduct the duties and responsibilities described in
this Agreement, Owner hereby agrees that Pavilion shall be paid each Season
during the Term a management fee for producing and managing T & P Events equal
to the aggregate of the following:
(a) eighty-seven and one-half percent (87-1/2%) of all Gross
Receipts; provided, however, if and to the extent that Available Gross
Ticket Revenue for any T & P Event or any Qualified Group of T & P Events
should exceed the Barrier Amount, then Pavilion shall receive ninety-three
and three-quarters percent (93.75%) of the portion of the Available Gross
Ticket Revenues for such T & P Event or such Qualified Group of T & P
Events which exceeds the Barrier Amount;
(b) (x) fifty percent (50%) of all amounts received pursuant to the
first $1.50 per ticket portion of the Facility Fee, (y) twenty-five
percent (25%) of the next $1.00 per ticket portion of the Facility Fee and
(z) fifty percent (50%) of all other amounts received pursuant to the
Facility Fee;
(c) fifty percent (50%) of all amounts received during any Season
from the sale of Box Seats to the extent that such amounts exceed, in the
aggregate, the Budgeted Box Seat Sales for such Season;
(d) fifty percent (50%) of all (i) Sponsorship Revenues related to
T & P Events and (ii) Permanent Sign Revenues received during any Season
to the extent that the combined amount of such revenues exceed, in the
aggregate, the Budgeted Sponsorship Revenues for such Season;
(e) fifty percent (50%) of any Season Ticket Revenue which is not
allocated to an Event pursuant to the provision of Section 3.05 hereof;
(f) eighty-seven and one-half percent (87-1/2%) of all Ticket Rebate
Revenue which is payable on account of T & P Events; and
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(g) a percentage of the revenues generated from the sale or rental
of concessions at the Facility in conjunction with T & P Events in
accordance with the following provisions:
(i) With respect to the sale of food and non-alcoholic
beverages (exclusive of candy) at T & P Events, the greater of (x)
sixty-two percent (62%) of the Net Concession Revenues received or
retained by Owner after payment of all fees to the concessionaire or
(y) twenty and five tenths percent (20.5%) of the Gross Concession
Revenues.
(ii) With respect to the sale of candy at T & P Events, the
greater of (x) sixty-two percent (62%) of the Net Concession
Revenues received or retained by Owner after payment of all fees to
the concessionaire or (y) nine and three-tenths percent (9.3%) of
the Gross Concession Revenues.
(iii) With respect to the sale of beer, wine and other
alcoholic beverages at T & P Events, the greater of (x) sixty-two
percent (62%) of the Net Concession Revenues received or retained by
Owner after payment of all fees to the concessionaire or (y) twenty
and five-tenths percent (20.5%) of the Gross Concession Revenues.
(iv) With respect to the sale of artist related merchandise at
T & P Events, fifty percent (50%) of all amounts remaining out of
the Gross Concession Revenues after payment of (x) royalties and
other fees due to Artists and (y) any commissions or other fees
payable to the concessionaire selling such artist related
merchandise.
(v) With respect to the rental of lawn chairs at T & P Events,
after Owner has recouped any then unreimbursed investment in lawn
chairs at the Facility, forty percent (40%) of the Gross Concession
Revenues arising out of or relating to the rental of lawn chairs at
T&P Events. Pavilion acknowledges that Owner may be required to
repair or replace the inventory of lawn chairs at the Facility from
time to time and, as a result, Owner's unreimbursed investment in
lawn chairs at the Facility may vary from time to time.
All amounts due and payable to Pavilion pursuant to this Section 3.03 shall be
payable by Owner upon receipt by Owner of the corresponding revenue or payment
giving rise to Pavilion's right to receive such amount. Amounts payable to
Pavilion pursuant to clauses (a) and (c) above, to the extent that such payments
relate to the revenue generated from the sale of Box Seats, shall be payable
each Season on the last of each
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month during that Season, commencing on January 31, out of the proceeds from the
sale of Box Seats received during such month.
Section 3.04 Concession Fee Limitation. Owner hereby covenants and agrees
with Pavilion that in no event shall (i) the fee to be paid to or, if
applicable, the amount of revenue to be retained by, the food and beverage
concessionaires at the Facility for the T & P Events exceed sixty-seven percent
(67%) of such concessionaires' respective gross sales (net of sales tax) and
(ii) the fee payable to or, if applicable, the amount of revenue to be retained
by, the merchandise concessionaires at the Facility for the T & P Events exceed
seventy-seven and one-half percent (77-1/2%) of such concessionaires' respective
gross sales (net of sales tax).
Section 3.05 Allocation of Season Ticket Revenue. With respect to each
Event held, presented or performed at the Facility during any Season, a portion
of the Season Ticket Revenue for such Season shall be allocated to such Event in
an amount equal to the product of (x) the number of season tickets sold for such
Season and (y) the face value of tickets for reserved seats to such Event.
ARTICLE IV
INSURANCE REQUIREMENTS
Section 4.01 Owner's Obligation. Owner shall, at its own expense, obtain
and maintain throughout the Term of this Agreement the following policies of
insurance:
(a) Fire and extended coverage insurance on the Facility including,
without limitation, all fixtures, equipment and personal property located
within the Facility for which Owner is legally responsible, in an amount
equal to one hundred percent (100%) of the replacement cost thereof (and
full builder's risk coverage prior to completion of the Facility).
(b) Business interruption insurance insuring against lost revenue
resulting from the Facility not being useable at any time as a result of
the occurrence of an insurable peril, which insurance shall specifically
include by its coverage the loss of revenue which would be suffered by
Pavilion should the Facility not be useable at any time as a result of the
occurrence of an insurable peril.
(c) Comprehensive general liability insurance insuring against
losses due to personal or bodily injury or death of any person and
property damage for occurrences on or in the Parking/Access Areas, which
shall apply as primary, and not contributing, coverage for any claim
relating to activities on the Parking/Access Areas; provided that Pavilion
acknowledges that Owner may require a third party contractor who is
responsible for the
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Parking/Access Areas to provide the insurance required pursuant to this
Section 4.01(c), but Owner shall remain responsible for causing such
insurance obtained by such third party contractor to remain in full force
and effect and to meet all of the requirements of this Article IV.
(d) Comprehensive general liability insurance insuring against loss
due to personal or bodily injury or death of any person and property
damage for occurrences on or in the Facility during the, conducting of all
Civic Events and at all other times during which a T & P Event is not
being conducted. Owner, at its option, may fulfill its obligation under
this Section 4.01(d), if possible, by participating in the blanket general
liability insurance policy of Pavilion upon the payment of a mutually
agreed upon premium to Pavilion. The policy of insurance required to be
obtained and maintained pursuant to this Section 4.01(d) shall apply as
primary, and not contributing, coverage for any claims relating to or
occurring on or in the Facility during the conducting of any Civic Event
and at all other times during which a T & P Event is not being conducted.
The business interruption insurance required to be obtained and maintained
pursuant to the provision of Section 4.01(b) of this Agreement shall name
Pavilion as a loss payee.
Section 4.02 Pavilion's Obligation. Pavilion shall, at its own expense,
obtain and maintain throughout the Term of this Agreement, the following
policies of insurance:
(a) Comprehensive general liability insurance insuring against loss
due to personal or bodily injury or death of any person and for property
damage for occurrences on or in the Facility during the conducting of all
T & P Events, which shall apply as primary, and not contributing, coverage
for any claims arising out of or relating to any activities on or in the
Facility during the conducting of any T & P Event.
(b) Worker's compensation insurance, if required by applicable law,
for all persons employed by, or subcontracting with, Pavilion for any
purpose at the Facility or in connection with the business conducted
pursuant to this Agreement, and Pavilion shall pay any and all
contributions, taxes and costs of such insurance and benefits payable
thereunder which are required to be withheld and/or paid by any employer
under the provisions of any applicable present or future law, ruling and
regulation.
Additionally, Pavilion shall coordinate in obtaining either for its own behalf
or for that of any concessionaire, fire and extended coverage insurance on
merchandise owned by Pavilion or such concessionaire and all other personal
property which Pavilion is legally responsible for and which is used in
connection with any T & P Event.
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Section 4.03 Cooperation. Pavilion and Owner shall each provide to the
other, copies of insurance binders (or certificates in lieu thereof) with
respect to each of the insurance policies to be maintained by each in compliance
with the provisions of this Article IV prior to the date on which such policies
are to be effective and copies or certificates of such policies as soon as
possible after the effective date of such policies. Each policy of insurance
required to be obtained and maintained by Pavilion pursuant to the provisions of
this Article IV shall name Owner as an additional insured except for worker's
compensation insurance provided pursuant to Section 4.02(b) of this Agreement.
With respect to each policy of insurance required to be obtained and maintained
by Owner pursuant to the provisions of this Article IV, Pavilion shall be named
as an additional insured except for the policy of insurance required by the
provisions of Section 4.01(a) of this Agreement. Each binder and policy required
to be obtained and maintained pursuant to this Article IV shall provide that it
may not be amended, modified or cancelled without thirty (30) days' notice to
both Owner and Pavilion. If either party hereto fails to provide insurance as
required hereby, the other party, upon ten (10) days' notice to such failing
party, may provide such insurance as such failing party's agent and in such
failing party's name, and until such time as such failing party so insures
(which for the purpose of this provision may only be on a subsequent renewal
date). The party who has failed to obtain a policy of insurance as required
hereby shall reimburse the other party who insures on its behalf for premiums
paid for same plus interest at the lesser of eighteen percent (18%) per annum or
the highest lawful rate from the date of payment until the date of repayment.
Section 4.04 Waiver of Subrogation Rights. Owner and Pavilion each waive
all rights of recovery, claim, action or cause of action against the other, its
agents, officers or employees for any loss or damage that may occur at the
Facility, on the Parking/Access Areas or otherwise on the Property which may
arise by reason of fire, the elements or any other cause which could be insured
against under the terms of standard fire and extended coverage insurance
policies or under comprehensive general liability coverage, regardless of cause
or origin, including negligence of the other party hereto, its licensees and
invitees, and covenants that no insurer shall hold any right of subrogation
against such party. Owner and Pavilion shall each cause the respective policies
of insurance required to be obtained and maintained pursuant to this Article IV
to include an endorsement which specifically provides that the insurer
thereunder has waived its rights of subrogation as referred to in this Section
4.04.
Section 4.05 Types of Policies: Amounts of Coverage. All policies of
insurance which either party hereto must provide pursuant to the provisions of
this Agreement shall be to the best of each party's ability issued by solvent
insurance carriers licensed to do business in the state of Texas or Lloyds
Underwriters and shall be in form mutually satisfactory to the parties hereto.
All such polices of insurance shall contain an endorsement whereby the carrier
agrees that its insurance is primary and not contributory with or in excess of
any coverage which the other party hereto may carry. Notwith-
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standing anything to the contrary contained in this Article IV, the amounts of
coverage to be provided under each of the policies of insurance required to be
obtained and maintained during the Term of this Agreement pursuant to the
provisions of this Article IV, shall be determined by mutual agreement between
Owner and Pavilion based on industry standards. Owner and Pavilion shall review
the amounts of coverage provided under each of the policies of insurance
required to be obtained and maintained pursuant to this Article IV annually and
they shall be increased to proper limits as circumstances warrant or as may be
required to remain consistent with industry standards.
Section 4.06 Subcontractors' Policies of Insurance. Pavilion and Owner
each hereby agree and covenant with the other, that prior to the engagement or
retention of any contractor or subcontractor who is to enter into the Property
or the Parking/Access Areas to conduct any kind of work, Pavilion or Owner, as
applicable, shall require such contractor or subcontractor (a) to obtain and
maintain comprehensive general liability insurance insuring against loss due to
personal or bodily injury or death of any person and for property damage for
occurrences relating to or arising out of the work conducted by such contractor
or subcontractor in an aggregate amount of no less than $1,000,000.00 and (b) to
provide evidence that such contractor or subcontractor has obtained worker's
compensation insurance for all of its employees. All policies of insurance
obtained and maintained by such contractor or subcontractor shall include an
endorsement pursuant to which the issuer thereof waives its right of subrogation
against Pavilion and against Owner.
ARTICLE V
PROGRAMMING AND SCHEDULING
Section 5.01 Programming Quality and Control. The following provisions
shall govern and control the programming quality and control of Events to be
held, conducted or presented at the Facility:
(a) Pavilion shall, throughout the Term of this Agreement, submit to
Owner, at the earliest possible date, but no later than February 15 of
each calendar year, a comprehensive list ("List") of potential Artists to
be featured at T & P Events for the upcoming Season. No later than fifteen
(15) days after submission of such List, the Board shall designate which,
if any, of such Artists listed thereon are unacceptable to Owner. If Owner
fails to provide notice to Pavilion within such fifteen (15) day period,
then all Artists on such List shall be deemed to be acceptable to Owner.
(b) Attached hereto as Exhibit "B" Is a list of potential Artists
which Pavilion and Owner hereby agree constitute mutually acceptable
Artists to perform at T & P Events.
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(c) For purposes of establishing a standard for the quality of
programming or selection of specific Artists which may appear at the
Facility, it is hereby agreed and acknowledged that the type of
programming used at both the Concord Amphitheater in Concord, California
and the Blossom Music Center in Cleveland, Ohio shall serve as an initial
standard and guideline for the quality of programming of Events to be
presented and produced at the Facility. However, in the event that
specific Artists which have actually performed at either the Concord
Amphitheater or the Blossom Music Center are disapproved by Owner, the
judgment of Owner shall be final, so long as such disapproval is not
arbitrary and capricious but can be tied to an objective and consistent
standard of quality control. It is understood and agreed by Pavilion that
Owner does not intend to allow any Artist to appear at the Facility which
would use, as a customary part of his performance, profane or immoral
language, dress or behavior or which would cause or create unruly behavior
by the patrons or in general not be consistent with the reputation of The
Woodlands community.
(d) If Pavilion so desires, it shall have the right to appeal any
decision of Owner to reject a particular Artist by presenting additional
information as it deems necessary to the Board for review. Upon any such
appeal, the Board must respond within five (5) business days after
receiving such information with its final decision. If Pavilion so
requests, Pavilion shall have the right to have a face to face meeting
with the Board as a part of such appeal with respect to any rejected
Artist.
(e) Pavilion shall have the right to submit the names of new Artists
at any time during a Season, and Owner must respond within five (5)
business days after having received a picture, recent recording and tour
schedule of such newly proposed Artist. Failure by Owner to respond within
such five (5) business day period shall mean that such Artist is deemed to
be approved by Owner.
(f) Owner recognizes and acknowledges that Pavilion has no control
whatsoever over the content to be included in the performance of any
Artist and that Pavilion does not and cannot make any representation or
warranty concerning the quality of content of any Artist's performance.
(g) Notwithstanding anything contained herein to the contrary, if an
Artist which is not on the original List submitted to Owner becomes
available for performance at the Facility, Pavilion will advise Owner in
writing of the availability of the Artist and make recommendations as to
the Artist's suitability for the Facility. Owner shall approve or
disapprove any such Artist within two (2) business days. If an Artist
which is on the original List becomes available for a performance, but
Pavilion considers the Artist to be
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unsuitable for performance at the Facility in accordance with the Owner's
standards for quality of programming, Pavilion shall first advise Owner in
writing of the availability of the Artist and make its recommendations as
to the Artist's suitability for performance at the Facility. Owner will
approve or disapprove any such Artist within two (2) business days
thereafter.
Section 5.02 Scheduling. On or before the second week in December of each
calendar year, Owner and Pavilion shall meet to agree on the allocation of dates
for the upcoming Season. At that time, Owner and Pavilion shall each agree on
forty (40) dates to be primarily available to Pavilion and forty (40) dates to
be primarily available to Owner. The remaining dates of each Season shall be
available on a first-come, first-serve basis based upon a committed booking from
an Artist. Primary Dates may be exchanged upon the parties' mutual agreement.
Additionally, each party hereto shall have the right to request an exchange of
any Primary Date at any time and from time to time. The party desiring an
exchange of a Primary Date must have both a committed booking for the other
party's Primary Date which is desired and must make the request no more than six
(6) weeks prior to such desired Primary Date. If the other party does not have a
committed booking on such desired Primary Date within two (2) business days
after it has received the request for an exchange of unexpired Primary Dates,
then such desired Primary Date shall automatically become the requesting party's
Primary Date and the non-requesting party shall then be entitled to select any
one (1) of the selecting party's Primary Dates to become such non-requesting
party's Primary Date, so long as such other Primary Date does not then have a
committed booking from an Artist. Pavilion hereby acknowledges that the Facility
has become the summer home of the Houston Symphony Orchestra ("HSO") and that
Owner may need to schedule dates for HSO at the Facility as much as two (2)
years in advance; provided, however, that it is specifically understood, agreed
and acknowledged that the scheduling of such dates by Owner for HSO shall count
against Owner's forty (40) Primary Dates for the Season in which they are
included.
Section 5.03 Board's Authority. The Board shall have final decision on
such matters as scheduling, programming, capital expenditures and operations of
the Facility within the guidelines of this Agreement.
ARTICLE VI
DEFAULT AND REMEDY
Section 6.01 Pavilion Default.
(a) Pavilion shall be deemed to be in default under this Agreement
upon the occurrence or happening, at any time and from time to time, of
any one or more of the following:
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(i) Any liquidated sum of money owed to Owner by Pavilion
pursuant to the terms of this Agreement is not paid by Pavilion in
full when the same shall become due and payable and such failure
continues for a period of five (5) days after Owner has given
Pavilion notice thereof.
(ii) Pavilion fails to perform and discharge, as and when
called for, any agreement or obligation imposed upon Pavilion
pursuant to the terms of this Agreement and (A) such failure,
refusal or neglect to perform and discharge such agreement or
obligation continues for a period of fifteen (15) days after
Pavilion has been given notice thereof or (B) if by reason of the
nature of such agreement or obligation the same cannot be remedied
within such fifteen (15) day period, (x) performance and discharge
of such agreement or obligation is not commenced within such fifteen
(15) day period, (y) the performance and discharge of such agreement
or obligation is not diligently and continuously prosecuted or (z)
such agreement or obligation is not fully performed or discharged
within forty-five (45) days after Pavilion has been given notice
thereof.
(iii) Any statement, representation or warranty made by
Pavilion under or pursuant to this Agreement shall be false or
misleading in any material respect.
(iv) For any two (2) consecutive Seasons during the Term, the
aggregate number of T & P Events actually held, conducted or
presented at the Facility during such two (2) consecutive Seasons is
less than sixty (60).
(v) For any two (2) Seasons during the Term, the aggregate
amount of Pavilion Generated Receipts actually received during each
such Season is less than the Minimum Pavilion Generated Receipts for
each such Season.
(vi) Pavilion shall (A) voluntarily be adjudicated a bankrupt
or insolvent, (B) procure, permit or suffer the voluntary
appointment of a receiver, trustee or liquidator for itself or for
all or any part of its property, (C) file any petition seeking a
discharge, rearrangement or reorganization of its debts pursuant to
the bankruptcy laws or any other debtor relief laws of the United
States or any state or any other competent jurisdiction, (D) make a
general assignment for the benefit of its creditors or (E) admit in
writing its inability to pay its debts as they mature.
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(vii) (A) Any petition is filed against Pavilion seeking to
rearrange, reorganize or extinguish its debts under the provisions
of any bankruptcy or any other debtor relief laws of the United
States or any state or any other competent jurisdiction and, if such
petition is an involuntary petition filed against Pavilion, such
petition is not discharged within a period of sixty (60) days or (B)
a court of competent jurisdiction enters an order, judgement or
decree appointing, without the consent of Pavilion, a receiver or
trustee for it, or for all or any part of its property.
(b) If Owner, after the payment of the management fee referred to in
Section 3.03 of this Agreement and the payment of all other fees payable
to Pavilion pursuant to this Agreement, receives during any two (2)
consecutive Seasons from the combination of T&P Events and any voluntary
payments made by Pavilion to Owner during such two (2) consecutive
Seasons, no less than the sum of the minimum amount shown listed in clause
(d) of this Section 6.01 for such two (2) consecutive Seasons, then,
notwithstanding anything to the contrary contained herein, for purposes of
Section 6.01 (a) (iv), the number of T&P Events actually held, conducted
or presented at the Facility during such two (2) consecutive Seasons shall
be deemed to equal or exceed sixty (60).
(c) If Owner, after the payment of the management fee referred to in
Section 3.03 of this Agreement and the payment of all other fees payable
to Pavilion pursuant to this Agreement, receives during any Season from
the combination of T&P Events and any voluntary payments made by Pavilion
to Owner during such Season, no less than the minimum amount shown listed
in clause (d) of this Section 6.01 for such Season, then, notwithstanding
anything to the contrary contained herein, for purposes of Section 6.01
(a) (v) hereof, the aggregate amount of Pavilion Generated Receipts
actually received during such Season shall be deemed to equal or exceed
the Minimum Pavilion Generated Receipts for such Season.
(d) The following are the minimum amounts for each of the next
fifteen (15) Seasons referred to in clauses (c) and (d) of this Section
6.01:
Season Minimum Amount
1995 $488,000.00
1996 $507,520.00
1997 $527,821.00
1998 $548,934.00
1999 $570,891.00
2000 $593,727.00
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2001 $617,476.00
2002 $642,175.00
2003 $667,862.00
2004 $694,576.00
2005 $722,359.00
2006 $751,254.00
2007 $781,304.00
2008 $812,556.00
2009 $845,058.00
Section 6.02 Owner Default. Owner shall be deemed to be in default under
this Agreement, upon the occurrence or happening, at any time and from time to
time, of any one or more of the following:
(a) Any liquidated sum of money owed to Pavilion pursuant to the
terms of this Agreement is not paid by Owner in full when the same shall
become due and payable and such failure continues for a period of five (5)
days after Pavilion has given Owner notice thereof.
(b) Owner fails to perform and discharge, as and when called for,
any other agreement or obligation imposed upon Owner pursuant to the terms
of this Agreement and (i) the failure, refusal or neglect to perform and
discharge such agreement or obligation continues for a period of fifteen
(15) days after Owner has been given notice thereof or (ii) if by reason
of the nature of such agreement or obligation the same cannot be remedied
within such fifteen (15) day period, (x) performance and discharge of such
agreement or obligation is not commenced within such fifteen (15) day
period, (y) the performance and discharge of such agreement or obligation
is not diligently and continuously prosecuted or (z) such agreement or
obligation is not fully performed or discharged within forty-five (45)
days after Owner has been given notice thereof.
(c) Any statement, representation or warranty made by Owner under or
pursuant to this Agreement shall be false or misleading in any material
respect.
(d) Owner shall (i) voluntarily be adjudicated a bankrupt or
insolvent, (ii) procure, permit or suffer the voluntary appointment of a
receiver, trustee or liquidator for itself or for all or any part of its
property, (iii) file any petition seeking a discharge, rearrangement or
reorganization of its debts pursuant to the bankruptcy laws or any other
debtor relief laws of the United States or any state or any other
competent jurisdiction, (iv)
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make a general assignment for the benefit of its creditors or (v) admit in
writing its inability to pay its debts as they mature.
(e) (i) Any petition is filed against Owner seeking to rearrange,
reorganize or extinguish its debts under the provisions of any bankruptcy
or any other debtor relief laws of the United States or any state or any
other competent jurisdiction and, if such petition is an involuntary
petition filed against Owner, such petition is not discharged within a
period of sixty (60) days, or (ii) a court of competent jurisdiction
enters an order, judgment or decree appointing, without the consent of
Owner, a receiver or trustee for it, or for all or any part of its
property.
Section 6.03 Owner Remedies. If a Pavilion Default shall occur, Owner may,
at Owner's sole option and election, exercise any or all of the following
rights, remedies and recourses:
(a) terminate this Agreement by giving written notice thereof to
Pavilion;
(b) subject to the limitations contained in Section 6.05 of this
Agreement, seek specific performance of the obligations of Pavilion under
this Agreement; and
(c) subject to the limitations contained in Section 6.05 of this
Agreement, seek recovery from Pavilion of all damages suffered by Owner
which are directly caused by the occurrence of such Pavilion Default.
Notwithstanding the foregoing, the sole remedy available to Owner upon the
occurrence of a Pavilion Default pursuant to Section 6.01(a)(iv) or (v) hereof
shall be to terminate this Agreement pursuant to Section 6.03(a) hereof. If
Owner properly exercises the right to terminate this Agreement pursuant to the
right created in clause (a) of this Section 6.03, then Owner shall not
thereafter be subject to any restrictions or limitations on the use or operation
of the Facility and Owner shall retain the then unamortized portion of
Pavilion's Expansion Contribution.
Section 6.04 Pavilion Remedies. If an Owner Default shall occur, Pavilion
may, at Pavilion's sole option and election, exercise any or all of the
following rights, remedies and recourses:
(a) terminate this Agreement by providing written notice thereof to
Owner;
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(b) subject to the limitations contained in Section 6.05 of this
Agreement, seek specific performance of the obligations of Owner under
this Agreement; and
(c) subject to the limitations contained in Section 6.05 of this
Agreement, seek recovery from Owner of all damages suffered by Pavilion
which are directly caused by the occurrence of such Owner Default.
If Pavilion terminates this Agreement pursuant to the right created in Section
6.04(a), then Owner shall (A) return to Pavilion the then unamortized portion of
Pavilion's Expansion Contribution and (B) thereafter be precluded from producing
more than four (4) T & P Events per Season, for the Season during which this
Agreement was so terminated and for the two (2) Seasons following such Season.
Notwithstanding the limitations contained in Section 6.05, the restriction
imposed upon Owner pursuant to clause (B) of the immediately preceding sentence
shall be (i) specifically enforceable by Pavilion for the two (2) Seasons
following the Season in which this Agreement is so terminated and (ii) subject
to Pavilion's right to recover damages hereunder for any violation thereof
occurring at any time during such two (2) Seasons following the Season in which
this Agreement is so terminated.
Section 6.05 Limitation on Certain Remedies. Except as may be otherwise
expressly provided herein, the rights and remedies of the parties hereto to seek
specific performance of the obligations of the other party hereunder or to
pursue an action for damages caused as a result of a default or other failure
hereunder shall be expressly limited by the following provisions:
(a) Any action for damages hereunder shall be limited to a right to
recover such damages which the aggrieved party may suffer during the
succeeding twelve (12) month period following the occurrence of the
applicable Pavilion Default or Owner Default, as appropriate, which gave
rise to the right to seek such recovery of damages, regardless of how much
time may remain on the Term of this Agreement.
(b) Any action to seek specific performance of the obligations of a
party to this Agreement shall be specifically limited to a right to
enforce specific performance of such obligations for a period of twelve
(12) months following the occurrence of the applicable Pavilion Default or
Owner Default, as appropriate, which gave rise to the right to seek
specific performance of the obligations of a party hereunder, regardless
of how much time may remain on the Term of this Agreement.
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ARTICLE VII
MISCELLANEOUS AND GENERAL PROVISIONS
Section 7.01 Non-Compete Agreement.
(a) Subject to the provisions of clause (b) of this Section 7.01, neither
Pavilion nor any Affiliate of Pavilion shall, directly or indirectly, during the
Term or any renewal, modification, amendment or extension of this Agreement and,
if this Agreement is terminated by Owner pursuant to the right created in
Section 6.03(a) as a result of a Pavilion Default, for a period of two (2) years
following such termination, become interested in, as an owner, manager,
operator, tenant, booking agent, consultant, producer, sponsor, or in any other
capacity, any Competitive Outdoor Facility. Notwithstanding the limitations
contained in Section 6.05, the restriction imposed upon Pavilion pursuant to the
immediately preceding sentence with respect to the two (2) years following the
year of termination of this Agreement by Owner pursuant to the right created in
Section 6.03(a) shall be (i) specifically enforceable by Owner for the two (2)
years referred to therein and (ii) subject to Owner's right to recover damages
hereunder for any violation thereof occurring at any time during such two (2)
years.
(b) If the construction and development of a Superior Facility is planned,
announced or proposed by any person other than Pavilion or an Affiliate of
Pavilion, then the following provisions shall apply:
(i) Pavilion may require that a meeting ("Competition Meeting") with
Owner be convened within five (5) business days of notice from Pavilion to
Owner that a Superior Facility is planned, announced or proposed. Owner
and Pavilion shall each send executive representatives to the Competition
Meeting with authority to discuss the advisability of expanding the
capacity of the Facility. Following the Competition Meeting, Owner and
Pavilion shall diligently and in good faith work together to evaluate the
fiscal and economic feasibility of, as well as the ability to finance, the
expansion of the capacity of the Facility.
(ii) If Owner has not made, within sixty (60) days after the
Competition Meeting and in a form reasonably acceptable to Pavilion, a
written commitment ("Expansion Commitment") to cause the Facility to be
expanded to at least 95% of the capacity of such Superior Facility on or
before such Superior Facility's opening date, then Pavilion shall have the
right and option to terminate the provisions of Section 7.01(a) hereof by
providing written notice thereof to Owner. Owner's obligation to expand
the capacity of the
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Facility pursuant to the Expansion Commitment may be conditioned upon the
occurrence of actual construction of such Superior Facility.
(iii) If (x) Pavilion elects to terminate the provisions of Section
7.01(a) hereof pursuant to the provisions of clause (ii) above and (y)
Pavilion or any Affiliate of Pavilion, should thereafter become interested
in, as an owner, manager, operator, tenant, booking agent, consultant,
producer, sponsor, or in any other capacity, any Competitive Outdoor
Facility, then Owner shall have the right and option to terminate this
Agreement by providing written notice thereof to Pavilion during the
calendar months of October or November of any year, in which case this
Agreement shall terminate as of December 31 of that same calendar year. If
Owner elects to terminate this Agreement pursuant to the provisions
contained in the immediately preceding sentence, then (1) Owner shall not
be subject to any subsequent operational restrictions in regard to the
Facility and (2) Owner shall retain the then unamortized portion of
Pavilion's Expansion Contribution.
Pavilion covenants and agrees with Owner that, at all times prior to the
termination of the provisions of Section 7.01(a) hereof pursuant to the
provisions of clause (ii) above, Pavilion will not take any action which
has as its intent the encouragement or assistance of any other person to
plan, announce or propose a Superior Facility.
(c) For purposes of clarification and to avoid any ambiguity or
uncertainty, it is hereby stipulated, agreed and acknowledged that, if a
specific performance featuring a specific Artist has been rejected for
presentation at the Facility by Owner pursuant to the provisions of
Section 5.01 hereof, then the booking, production, presentation and
promotion of that specific performance featuring that specific Artist at a
Competitive Outdoor Facility by Pavilion or any Affiliate of Pavilion
shall not be considered for purposes hereof to be the act of "becoming
interested in, in any capacity, such Competitive Outdoor Facility."
Section 7.02 Assignment. Pavilion shall have the right to assign up to
forty-nine percent (49%) of its economic rights, but not its obligations, under
all or any portion of this Agreement, so long as Pace or an Affiliate of Pace,
as the managing partner of Pavilion, continues to control and oversee all of the
management duties and responsibilities imposed upon Pavilion pursuant to the
terms of this Agreement. Pavilion may assign, without the prior written consent
of Owner, all of its right, title and interest in and to this Agreement to Pace
or any Affiliate of Pace.
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Section 7.03 Destruction by Casualty.
(a) If any act or occurrence of any kind or nature, ordinary or
extraordinary, foreseen or unforeseen (including any casualty for which
insurance was not obtained or obtainable), shall result in damage to or loss or
destruction of the Facility, to such an extent that it may not be continued to
be used for the purpose for which it was intended without significant capital
repairs and improvements, then Owner shall have the right to elect not to incur
the necessary obligations for such necessary capital repairs and improvements
and, as a result, terminate this Agreement, in which case neither party hereto
shall have any further rights, duties, liabilities or obligations hereunder.
Notwithstanding the foregoing, if Owner commences or otherwise undertakes to
commence the necessary construction and repairs to enable the Facility to again
be used for the purpose for which it was intended following any such damage to
or loss or destruction of the Facility within one (1) year following the act or
occurrence which gave rise to such damage and destruction, then Owner shall not
be entitled to terminate this Agreement and the Term of this Agreement shall be
extended by an amount of time equal to the passage of time between the act or
occurrence which gave rise to such damage or destruction of the Facility and the
date on which the Facility is fully, completely and finally restored and
repaired to the extent necessary to enable it to be used for the purpose for
which it was originally intended.
(b) Notwithstanding anything to the contrary contained in this Agreement,
if any act or occurrence of any kind or nature, ordinary or extraordinary,
foreseen or unforeseen, shall result in damage to or loss or destruction of the
Facility to such an extent that it may not be used for its intended purpose for
any period of time in excess of thirty (30) calendar days during any Season
(such an act or occurrence being herein called a "Material Casualty") and if, as
a result of such Material Casualty:
(i) Pavilion cannot reasonably cause the number of T & P Events
held, conducted or presented at the Facility during any two consecutive
Seasons to equal or exceed sixty (60), then the number of T & P Events
held, conducted or presented at the Facility during such two consecutive
Seasons shall be deemed for all purposes of this Agreement to be sixty
(60);
(ii) Pavilion cannot reasonably cause the aggregate amount of
Pavilion Generated Receipts received during any Season to equal or exceed
the Minimum Pavilion Generated Receipts for such Season, then the
aggregate amount of Pavilion Generated Receipts received during such
Season shall be deemed for all
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purposes of this Agreement to exceed the Minimum Pavilion Generated
Receipts for such Season.
(c) If a Material Casualty should occur, the parties agree as
follows with respect to the various contractual obligations and
liabilities which may arise as a result of the occurrence of such Material
Casualty:
(i) Pavilion shall be solely responsible for, and shall
indemnify and hold Owner harmless from and against, all liabilities
and losses arising from the cancellation of, or nonperformance
under, any agreements, commitments or contracts with Artists
relating to booked T & P Events at the Facility ("Pavilion
Contracts"); and
(ii) Owner shall be solely responsible for, and shall
indemnify and hold Pavilion harmless from and against, all
liabilities and losses arising from the cancellation of, or
nonperformance under, any and all agreements, commitments or
contracts which relate to or are ancillary to the ownership,
operation and maintenance of the Facility ("Owner Contracts"),
specifically, including, without limitation, all concessionaire
agreements, obligations and commitments to any hired facility
manager and agreements with support services relating to operation
and management of the Facility, but specifically excluding the
Pavilion Contracts and those agreements, commitments and contracts
described in clause (iii) below.
(iii) Owner and Pavilion agree to be severally responsible for
one-half (1/2) of all liabilities and losses arising from the
cancellation of, or nonperformance under, any and all agreements,
commitments and contracts, except Pavilion Contracts and Owner
Contracts, which benefit both parties including, but not limited to,
sponsorship agreements (such as carbonated and malt beverage
sponsorship agreements) and the ticketing service agreement.
Section 7.04 Special Rights to Terminate. Notwithstanding the other
provisions of this Agreement, it is hereby specifically agreed and acknowledged
by and between the parties hereto that each shall have the following special
rights to terminate this Agreement:
(a) Owner shall have, at its sole option, the right to terminate
this Agreement by providing written notice thereof to Pavilion during the
calendar month of January of any year, except for January, 1995, in which
case this Agreement shall terminate effective as of December 31 of that
36
<PAGE>
same calendar year in which such notice is given to Pavilion. If Owner elects to
terminate this Agreement pursuant to the right created in the immediately
preceding sentence, then Owner shall (1) pay to Pavilion, on the effective date
of termination, the then unamortized portion of Pavilion's Expansion
Contribution and (2) not permit more than four T & P Events to be held,
conducted or presented at the Facility during the two calendar years following
the effective date of such termination of this Agreement. Notwithstanding the
limitations contained in Section 6.05 of this Agreement, the restriction imposed
upon Owner pursuant to clause (2) of the immediately preceding sentence shall be
(i) specifically enforceable by Pavilion for the entire two calendar year period
referred to therein and (ii) subject to Pavilion's right to recover damages
hereunder for any violation thereof occurring at any time during such two
calendar year period.
(b) Pavilion shall have, at its sole option, the right to terminate this
Agreement by providing written notice thereof to Owner during the calendar month
of January of any year, except for January, 1995, in which case this Agreement
shall terminate effective as of December 31 of that same calendar year in which
such notice is given to Owner. If Pavilion elects to terminate this Agreement
pursuant to the right created in the immediately preceding sentence, then (i)
neither Pavilion nor any Affiliate of Pavilion shall, directly or indirectly,
produce, present or promote more than four live entertainment events featuring a
touring and professional performer at a Competitive Outdoor Facility for a
period of two years following the effective date of such termination of this
Agreement and (ii) Owner shall retain the unamortized portion of the Pavilion
Expansion Contribution. Notwithstanding the limitations contained in Section
6.05 of this Agreement, the restrictions imposed upon Pavilion and its
Affiliates pursuant to the immediately preceding sentence shall be (i)
specifically enforceable by Owner for the entire two calendar year period
referred to therein and (ii) subject to Owner's right to recover damages
hereunder for any violation thereof occurring at any time during such two
calendar year period.
(c) If Pavilion, in its sole and reasonable discretion, determines that it
has been prevented, as a result of programming and operating restrictions
imposed by Owner, from presenting a sufficient number of T&P Events for any
Season to avoid the occurrence of a Pavilion Default from occurring pursuant to
the provisions of Section 6.01 (a)(iv) or (v) hereof, then Pavilion shall have
the specific right to terminate this Agreement by providing written notice
thereof to Owner. If this Agreement is terminated by Pavilion pursuant to the
right created in the immediately preceding sentence, then Owner shall (1) pay to
Pavilion, on the effective date of termination, the then unamortized portion of
Pavilion's Expansion Contribution, (2) be precluded from presenting, or
permitting to be presented, at the
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Facility any of those Artists which it restricted Pavilion from presenting at
the Facility for four years following the effective date of such termination,
and (3) shall be precluded from liberalizing its programming and operating
restrictions for four years following such effective date of termination. Other
than the restrictions imposed in the immediately preceding sentence, any
termination by Pavilion pursuant to the this Section 7.04(c) shall terminate all
further duties, liabilities, obligations or rights which either party may have
hereunder. Notwithstanding the limitations contained in Section 6.05 of this
Agreement, the restriction imposed upon Owner in this Section 7.04(c) following
a termination of this Agreement by Pavilion pursuant to this Section 7.04(c)
shall be (i) specifically enforceable by Pavilion for the entire four years
referred to above and (ii) subject to Pavilion's right to recover damages
hereunder for any violation thereof occurring at any time during such four
years.
(d) If, at any time during the Term, (a) Owner has not obtained written
confirmation from the Internal Revenue Service that Owner is a tax-exempt
organization pursuant to the provisions of Section 501 (c)(3) of the Internal
Revenue Code of 1986, (b) Owner obtains notice that the Internal Revenue Service
has revoked or cancelled Owner's status as a tax-exempt organization pursuant to
the provisions of Section 501 (c)(3) of the Internal Revenue Code of 1986, (c)
the Comptroller of Public Accounts for the State of Texas, or other appropriate
governmental agency, gives notice to Owner that Owner's tax exempt status has
been terminated or revoked or (d) a change occurs in the applicable tax laws
such that revenue from the sale of tickets for Events at the Facility is no
longer exempt from state sales tax, then, at any time thereafter, Pavilion shall
have the right, so long as such event or condition continues, to provide written
notice to Owner that Pavilion desires to terminate this Agreement as a result
thereof unless appropriate modifications to the terms of this Agreement can be
mutually agreed to between Owner and Pavilion within sixty (60) days of such
notice. If Pavilion delivers to Owner the notice referred to in the immediately
preceding sentence, then Pavilion and Owner shall meet to discuss the
appropriate modifications to the terms of this Agreement which Pavilion believes
are necessary to remedy the existence of one of the above conditions, and if
Owner and Pavilion are unable to mutually agree to such modifications within
sixty (60) days after Pavilion delivers the initial notice, for any reason, then
Pavilion shall thereafter have the right, at any time, to terminate this
Agreement by providing notice thereof to Owner, in which event Owner shall pay
to Pavilion the then unamortized portion of Pavilion's Expansion Contribution.
(e) If Pace or an Affiliate of Pace should not be, at any time during the
Term of this Agreement, the person with the authority and responsibility
38
<PAGE>
on behalf of Pavilion to oversee and direct the activities of Pavilion
hereunder, then Owner shall have the special right to terminate this Agreement
by providing written notice thereof to Pavilion at any time thereafter.
Termination of this Agreement pursuant to the right created in the immediately
preceding sentence shall be effective on December 31 of the calendar year in
which Owner provides notice of such termination to Pavilion. If Owner properly
exercises the right to terminate this Agreement pursuant to the right created in
this Section 7.04(e), then Owner shall not thereafter be subject to any
restrictions or limitations on the use or operation of the Facility but Owner
shall return to Pavilion the then unamortized portion of Pavilion's Expansion
Contribution.
Section 7.05 Rights to Names. Any and all rights, titles and interests in
and to any names, tradenames, trademarks, servicemarks or other proprietary or
protectable interests in any name arising out of the production or presentment
of any Event at the Facility including, without limitation, any special series
of Events (such as jazz festivals, bluegrass festivals or any other type of
series of Events) shall be the sole and exclusive property of the party or
parties which produced such Event or series of Events.
Section 7.06 Right to Co-Produce. If Owner desires to co-produce any T & P
Event at the Facility with Pavilion, then Owner shall provide notice thereof to
Pavilion at least ten (10) business days prior to the scheduled date of
performance for such T & P Event. Pavilion, in its sole and absolute discretion
and with no obligation whatsoever, may elect to include Owner as a co-producer
of such Event after receipt of the written notice described in the immediately
preceding sentence, but if Pavilion does not respond within five (5) business
days after receipt of such notice from Owner, then Pavilion shall be deemed to
have elected not to include Owner as a co-producer of such T & P Event.
Section 7.07 Signage. Pavilion hereby acknowledges and agrees that any and
all signs, banners or other placards of any nature to be placed anywhere inside
or outside of the Facility must first be approved by Owner and be approved by
the Development Standards Committee of the Woodlands.
Section 7.08 Advertising and Marketing. The format and logo of the
Facility's name to be included in advertising for T &P Events must be, prior to
each Season, approved by Owner, such consent not to be unreasonably withheld.
Notwithstanding anything to the contrary contained herein, all advertising and
promotion of the Facility itself, not including the promotion of specific T & P
Events, shall be the exclusive right and responsibility of the Owner, subject to
Pavilion's opportunity to have input into the Owner's plan to market and promote
the Facility Itself.
Section 7.09 Party to Transactions. Except for contracts with Artists
relating to specific T & P Events, Owner shall have the right to review prior to
or after execution (or execute, if requested by Owner at Owner's option) any and
all contracts and agreements
39
<PAGE>
that would allow any person or entity to use or benefit from the Facility for
any purpose. Notwithstanding the foregoing, Owner reserves the right to review
and approve, in advance, all contracts with Artists for T&P Events which are to
be co-produced by Owner with Pavilion. With respect to contracts with Artists,
Owner shall have the right, from time to time, to request that Pavilion provide
copies of signed contracts with Artists or be provided specific information
regarding the Event, in lieu of the actual Artist contract itself, for specific
T & P Events which have recently occurred or which are soon to occur and shall
have the right to provide Pavilion with general comments concerning the terms of
any such contracts with Artists but no such comments shall be binding upon
Pavilion in any respect. Pavilion shall cooperate with Owner's requests and
comments made pursuant to the immediately preceding sentence unless Pavilion
believes that such requests and comments are being made in a manner which is
disruptive to Pavilion's ability to perform its obligations under this
Agreement.
Section 7.10 Accounting Matters. Each of the parties hereto will maintain
full and accurate books of account and other records in accordance with
generally accepted accounting principles reflecting all of the financial results
for such party which in any way relates to the subject matter of this Agreement
or otherwise relates to the management, operation or sponsorship of the Facility
and such books and records shall be kept at least twenty-four (24) months after
the Season covered by such records. Each party hereto shall, at all times, make
such books of account and other records available to the other party hereto at
any time upon such other party's request. Either party has the right to have its
designated auditors audit the other party's financial and accounting records
maintained pursuant to this Section 7.10, at the requesting party's expense. If
the audit reflects incorrect financial results, there shall be an adjustment and
one party shall pay to the other on demand such sum as may be necessary to
accurately adjust the amount that should have been paid. Pavilion and Owner
hereby agree that on January 15 of each calendar year throughout the Term of
this Agreement, a full and final settlement of all financial liabilities and
obligations under this Agreement between Pavilion and Owner for the Season just
ended will be completed.
Section 7.11 Owner's Representations. Warranties and Covenants. Owner
hereby unconditionally warrants, represents and covenants to Pavilion as
follows:
(a) Owner (i) is a Texas non-profit corporation duly organized,
validly existing and in good standing under the laws of the State of Texas
and has complied with all conditions prerequisite to its doing business in
the State of Texas and (ii) has all requisite power and all governmental
certificates of authority, licenses, permits, qualifications and
documentation to own, lease and operate its properties, including, without
limitation, the Facility, and to carry on its business as now being, and
as proposed to be, conducted.
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(b) The execution, delivery and performance by Owner of this
Agreement (i) is within Owner's powers and has been duly authorized by the
Board; (ii) has received all (if any) requisite prior governmental
approval in order to be legally binding and enforceable in accordance with
its terms; and (iii) will not violate, be in conflict with, result in a
breach of or constitute (without due notice or lapse of time, or both) a
default under, any legal requirement or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever
upon any of Owner's property or assets.
(c) To the best of Owner's knowledge, all information, reports,
papers and data given to Pavilion with respect to Owner or the Facility,
including, without limitation, the Plans, are accurate, complete and
correct in all material respects and do not omit any fact, the inclusion
of which is necessary to prevent the facts contained therein from being
materially misleading.
(d) Owner owns fee simple title to the Property and has not
previously granted or created in favor of any third party any lease rights
or other management rights with respect to the Property which would be in
violation of or otherwise in derogation of the exclusive rights created in
favor of Pavilion hereunder. Owner shall not sell, transfer or assign its
right, title and interest in and to the Property in a manner which would
be in violation of or otherwise in derogation of the exclusive rights
created in favor of Pavilion hereunder.
(e) The Internal Revenue Service has granted to Owner exempt status
pursuant to the provisions to Section 501 (c)(3) of the Internal Revenue
Code of 1986, as amended. Owner represents and warrants to Pavilion that,
under the law as it currently exists as of the date of the execution of
this Agreement, all revenues received from the sale of tickets to Events
at the Facility shall be exempt from state sales taxes, provided Pavilion
abides by the appropriate provisions of the Texas Tax Code, Section 3.298
of Chapter 34 of the Texas Administrative Code and Owner is clearly
identified as the presenter of the Events. Pavilion recognizes that Owner
cannot warrant that there will not be any change in the applicable tax
laws after the execution of this Agreement which may affect the accuracy
of the representation and warranty contained in this Section 7.11(e).
Section 7.12 Pavilion's Representations and Warranties. Pavilion hereby
unconditionally warrants and represents to Owner as follows:
(a) Pavilion (i) is a Delaware general partnership, duly organized
and validly existing and has complied with all conditions prerequisite to
its
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doing business in the State of Texas and (ii) has all requisite power and
all governmental certificates of authority, licenses, permits,
qualifications and documentation to own, lease and operate its properties
and to carry on its business as now being, and as proposed to be,
conducted.
(b) The execution, delivery and performance by Pavilion of this
Agreement (i) are within Pavilion's powers and have been duly authorized
by all of Pavilion's general partners, (ii) have received all (if any)
requisite prior governmental approval in order to be legally binding and
enforceable in accordance with its terms against Pavilion and (iii) will
not violate, be in conflict with, result in a breach of or constitute
(with due notice or lapse of time, or both) a default under, any legal
requirement or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of Pavilion's property or
assets.
(c) To the best Pavilion's knowledge, all information, reports,
papers and data given to Owner with respect to Pavilion are accurate,
complete and correct in all material respects and do not omit any fact,
the inclusion of which is necessary to prevent the facts contained therein
from being materially misleading.
(d) During the Term of this Agreement, from time to time, Pace as
the managing partner of Pavilion, shall make its chief financial officer
available for a meeting with representatives of Owner, at Owner's request,
in order that Owner may discuss and review financial information relating
to Pavilion.
Section 7.13 Good Faith Negotiations. It is the present intent of Pavilion
and Owner that this Agreement extend for the Term set forth herein under
conditions fair and reasonable to both parties; therefore, both Pavilion and
Owner hereby agree to review the terms and conditions contained in this
Agreement annually, and, in good faith, negotiate adjustments or modifications
to the terms hereof which may be brought about by conditions unforeseen at this
time. If Owner should further expand the Facility at any time during this
Agreement beyond that contemplated by the provisions of Section 2.04(h) hereof,
then Owner and Pavilion shall, in good faith, negotiate any additional or
differing terms which may be rendered necessary as a result of such expansion.
Owner covenants and agrees that no such expansion shall be made in a manner
which would interfere with the presentment of any T & P Event at the Facility to
which Pavilion has the right to present pursuant to the provisions and terms of
this Agreement.
Section 7.14 Pavilion's Other Activities. Owner hereby recognizes, agrees
and acknowledges that Pavilion and its Affiliates are in the business of
booking, producing, presenting and promoting entertainment events featuring
Artists of all types throughout the world, including, without limitation,
entertainment events in the Houston standard
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<PAGE>
metropolitan statistical area. Subject to the specific non-compete provisions
contained in Section 7.01 of this Agreement, relating to live entertainment
events at Competitive Outdoor Facilities, Owner hereby agrees and acknowledges
that Pavilion and its Affiliates shall be free to continue their respective
businesses of booking, producing, presenting and promoting live entertainment
events without violating any of its agreements or obligations contained herein,
even if carrying out the same may, from time to time, be in direct competition
with any particular T & P Event or Civic Event being held, conducted or
presented at the Facility.
Section 7.15 Indemnification. The following indemnification provisions
shall apply throughout the Term of this Agreement and shall survive the
termination of this Agreement as appropriate:
(a) Subject to the limitation contained in clause (c) below,
Pavilion hereby agrees to defend, indemnify and hold harmless Owner, from
and against any loss, cost or claim (including, without limitation,
reasonable attorneys' fees) which arises out of or is otherwise caused by
a violation by Pavilion of any obligation or covenant imposed upon it
pursuant to the terms of this Agreement.
(b) Subject to the limitation contained in clause (c) below, Owner
hereby agrees to defend, indemnify and hold harmless Pavilion, from and
against any loss, cost or claim (including, without limitation, reasonable
attorneys' fees) which arises out of or is otherwise caused by a violation
by Owner of any obligation or covenant imposed upon it pursuant to the
terms of this Agreement.
(c) Notwithstanding anything to the contrary contained above, the
foregoing indemnity provisions shall not apply with respect to any loss,
cost or claim which would be insured against under the terms of any
insurance policy required to be maintained by a party hereto during the
Term of this Agreement, unless the indemnifying party has failed In its
obligation to maintain such insurance policy as required by the provisions
of this Agreement. The provisions of this Section 7.15 are subject to the
limitations contained in Section 6.05 of this Agreement.
Section 7.16 Relationship of Parties. Pavilion shall perform its services
under this Agreement as an independent contractor. Pavilion shall not become or
otherwise be responsible for any real property ad valorem taxes with respect to
the Property or any other duties, liabilities or obligations of the owner of the
Property, except for the obligations specifically set forth in this Agreement.
Nothing contained in this Agreement is intended to, or shall be construed as,
creating to any extent or in any manner whatsoever, any partnership, joint
venture, or association between Owner and Pavilion.
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Section 7.17 Headings. The Article, Section and Subsection entitlements
hereof are inserted for convenience of reference only and shall in no way alter,
modify or define, or be used in construing, the text of such Articles, Sections
or Subsections.
Section 7.18 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas from time to time in
effect.
Section 7.19 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute but one instrument.
Section 7.20 Entire Agreement and Modification. This Agreement contains
the entire agreement between the parties relating to the subject matter hereof
and all prior agreements relative thereto which are not contained herein or
therein are terminated. This Agreement may not be amended, revised, waived,
discharged, released or terminated orally, but only by a written instrument or
instruments executed by the party against which enforcement of the amendment,
revision, waiver, discharge, release or termination is asserted. Any alleged
amendment, revision, waiver, discharge, release or termination which is not so
documented shall not be effective as to any party.
Section 7.21 Notices. Any notice or communication to either party hereto
required or permitted to be given under this Agreement shall be effectively
given only if in writing and when deposited in the United States registered or
certified mail, postage prepaid, return receipt requested, and addressed to the
party to be notified at the address set forth below:
If to Pavilion: Pavilion Partners
c/o SM/PACE, Inc.
515 Post Oak Boulevard, Suite 300
Houston, Texas 77027
Attention: Mr. Jeffry B. Lewis
with a copy to: Michael F. Rogers
Sewell & Riggs, a Professional Corporation
333 Clay Avenue, Suite 800
Houston, Texas 77002
44
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If to Owner: The Woodlands Center for the
Performing Arts
2005 Lake Robbins Drive
The Woodlands, Texas 77380
Attention: Dr. David Gottlieb
with a copy to: Mr. Thomas P. Battle
2002 Timberloch Place
The Woodlands, Texas 77380
Either party shall have the right to change its address for notice purposes
hereunder by giving written notice to the other party as aforesaid, but until
such written notice is given, the addresses set forth hereinabove for each party
shall be deemed to be the correct address for all purposes under this Agreement.
Section 7.22 Severability. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable legal
requirements. If any of the provisions of this Agreement or the application
thereof to any person or circumstance shall, for any reason and to any extent,
be invalid or unenforceable, then neither the remainder of this Agreement nor
the application of such provision to other persons or circumstances shall be
affected thereby, but rather shall be enforced to the greatest extent permitted
by law.
Section 7.23 Attorney's Fees. If either party to this Agreement brings any
court action alleging default by the other party hereunder, the party losing
such action shall pay to the prevailing party its reasonable attorney's fees and
expenses and the same may be included by the court in the judgment rendered.
Section 7.24 House Seats and Complimentary Tickets. With respect to the
House Seats and the provision of other complimentary tickets for the various
Events, Owner and Pavilion hereby agree as follows:
(a) During the Term, Owner shall have free right of access to and
use of its Box Seats included in the definition of House Seats during all
Events at the Facility, at no charge to Owner.
(b) During the Term, Pavilion shall have free right of access to and
use of its Box Seats included in the definition of House Seats during all
Events at the Facility, at no charge to Pavilion.
(c) During the Term, Owner shall have free right of access to and
use of the ten (10) house reserve seats and the ten (10) general admission
tickets which are included within the definition of House Seats, at no
charge to Owner, at all of the T & P Events.
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(d) During the Term, Pavilion shall have free right of access to and
use of the ten (10) house reserve seats and the ten (10) general admission
tickets which are included within the definition of House Seats, at no
charge to Pavilion, at all of the Civic Events.
(e) [Intentionally Blank]
(f) The party entitled to access to and use of the House Seats
pursuant to the foregoing provisions shall not be obligated, in any way,
to use all or any portion of the House Seats, but may, at its option,
return all or any portion of the House Seats for any particular Event for
sale to the general public or simply permit all or any portion of the
House Seats to go unused.
(g) The party entitled to access to and use of the House Seats for
any particular Event shall be prohibited from selling such House Seats to
any person, firm or corporation and shall be restricted to distributing
and using the House Seats as complimentary tickets.
(h) At all Events, the party which is financially responsible for
the production of such Event pursuant to the terms of this Agreement
shall, subject to the terms and provisions of the Artist contracts for
such Event, control all decisions related to designation and distribution
of complimentary tickets (other than the House Seats); provided, however,
that Pavilion shall make additional complimentary tickets available to
Owner for all T & P Events produced and presented at the Facility by
Pavilion, at Owner's written request, subject to Pavilion's determination,
in its sole and absolute discretion, that additional complimentary tickets
are available. In exercising its discretion to determine whether
complimentary tickets are available for any T & P Event produced and
presented by Pavilion at the Facility, Pavilion shall determine whether
such tickets can be issued in a manner which will not adversely impact
upon the financial results of the production of such T & P Event.
Section 7.25 Ticket Bartering. With respect to any T & P Event at the
Facility, Pavilion shall be required to include in the Available Gross Ticket
Revenue for such T & P Event the face value of all tickets which are traded or
bartered by Pavilion for any Non-Qualified Goods and Services (hereinafter
defined) to the extent that the aggregate face value of all such tickets so
traded or bartered for such T & P Event exceeds $100.00. As used in the
immediately preceding sentence, the term "Non-Qualified Goods and Services"
shall mean any goods or services received by Pavilion or any Affiliate of
Pavilion which are not either (i) used or utilized to reduce the operating costs
of operation of the Facility by Pavilion or (ii) advertising time or space used
in connection with the promotion of T & P Events at the Facility. Pavilion shall
provide to Owner a specific and reasonably
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detailed accounting of all barter transactions which occur with respect to each
T&P Event presented or produced at the Facility.
Section 7.26 No Waiver. It is hereby agreed that no waiver of any of the
covenants of this Agreement shall be construed as a waiver of any succeeding
breach of the same covenants or any other covenants.
Section 7.27 Replacement of Prior Management Agreement. This Agreement
shall, effective upon execution hereof, supersede and replace the terms,
provisions and conditions contained in the Prior Management Agreement with
respect to any Event held, conducted or presented at the Facility after
execution of this Agreement. The terms, provisions and conditions contained in
the Prior Management Agreement shall continue to apply with respect to any
dispute, conflict, difference or other Issue which may arise between Pavilion
and Owner in regard to any Event held, conducted or presented at the Facility
prior to the execution of this Agreement.
PAVILION PARTNERS, a Delaware general
partnership
By: SM/PACE, Inc., its managing
general partner
By: /s/ Brian E. Becker
---------------------------
Name: Brian E. Becker
---------------------
Title: Chief Executive Officer
-----------------------
"PAVILION"
THE WOODLANDS CENTER FOR THE
PERFORMING ARTS, a Texas non-profit
corporation
By: /s/ David Gottlieb
----------------------------
Name: David Gottlieb
----------------------
Title: President & Chief
Executive Officer
--------------------
"OWNER"
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EXHIBIT A
FACILITY
1 of 2
[GRAPHIC OMITTED]
Cynthia Woods Mitchell Pavilion
<PAGE>
EXHIBIT A
FACILITY AS EXPANDED
2 of 2
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT "B" LIST OF APPROVED ARTISTS
CYNTHIA WOODS MITCHELL PAVILION
APPROVED ARTIST LIST
10,000 MANIACS THE ARTIE SHAW ORCHESTRA
THE 5TH DIMENSION ARTIE TRAUM & THE CAYENNE BAND
A CELEBRATION OF SCOTTISH MUSIC ASHFORD & SIMPSON
A FLOCK OF SEAGULLS ASLEEP AT THE WHEEL
A-HA THE ASSOCIATION
A. WHITNEY BROWN ATLANTA RHYTHM SECTION
ACOUSTIC ALCHEMY ATLANTIC STAR
ADRIAN BELEW AUTOGRAPH
AEROSMITH THE B-52'S
AIR SUPPLY B.B. KING
AL B. SURE B.J. THOMAS
AL DI MEOLA BACHMAN-TURNER OVERDRIVE
AL GREEN BAD COMPANY
AL HIRT BAILLIE & THE BOYS
AL JARREAU BANANARAMA
AL STEWART BANDSTAND DANCE PARTY
ALABMA THE BANGLES
ALAN KING BAR-KAYS
ALAN JACKSON BARBARA EDEN
ALAN THICKE BARBARA MANDRELL
ALBERT COLLINS & THE ICEBREAKERS BARBARA STREISAND
ALBERT KING BARDEAUX
ALEXANDER O'NEAL BARRY MANILOW
ALISON MOYET BARRY SOBEL
ALLMAN BROTHERS BARRY WHITE
AMERICA BASH N' THE CODE
AMERICAN INDIAN DANCE THEATRE BASIA
AMERICAN LEGENDS OF ROCK-N-ROLL THE BEACH BOYS
AMY GRANT BEATNIK BEATCH
ANDERSON, BRUFORD, WAKEMAN, HOWE BEBE & CECE WINANS
ANDRAE CROUCH THE BEEGEES
ANDY GRIFFITH BELINDA CARLISLE
ANDY WILLIAMS BELLEMY BROTHERS
ANGELA BOFILL BEN SIDRAN
ANITA BAKER BEN VEREEN
ANNE MURRAY BERNADETTE PETERS
ANTHONY NEWLEY BETTE MIDLER
ARETHA FRANKLIN BIG AUDIO DYNAMITE
ARLO GUTHRIE BIG BAM BOO
ARS NOVA WIND QUARTET
ART OF NOISE BULLET BOYS
ARTEMUS BUNNYMEN
<PAGE>
BILL BRUFORD'S EARTHWORKS BURL IVES
BILL COSBY BURT BACHARACH
BILL DANA BUSTER POINDEXTER
BILL FRISELL THE CALL
BILL GAITHER TRIO CAMPER VAN BEETHOVEN
BILL MEDLEY THE CAPTAIN & TENNILLE
BILL MONROE CARMEN MCRAE
BILL WITHERS CAROL CHANNING
BILL CRASH CRADDOCK CAROL LAWRENCE
BILLY CRYSTAL CAROLE BAYER SAGER
BILLY J. KRAMER & THE DAKOTAS CAROLE KING
BILLY JOEL CHAKA KHAN
BILLY PAUL CHARLY PRIDE
BILLY PRESTON CHARLIE BYRD TRIO
BILLY SQUIER CHARLIE CALLAS
BLOOD, SWEAT, & TEARS CHARLIE DANIELS BAND
BLUEGRASS PALOR BAND CHARLIE MUSSEL WHITE
THE BLUES BUSTERS CHARLIE SEXTON
BLUES FESTIVAL CHARLY MCCLAIN
BO DIDDLEY CHARO
BOB DYLAN CHEAP TRICK
BOB GOLDTHWAITE CHERRELLE
BOB HOPE CHERYL "PEPSI" RILEY
BOB NEWHART CHEF ATKINS
BOB SEGER & THE SILVER BULLET BAND CHI-LITES
BOB UECKER CHICAGO
BOBBY BARE CHICK COREA & GARY BURTON
BOBBY BROWN CHRIS DEBURGH
BOBBY GOLDSBORO CHRIS ELLIOTT
BOBBY HART CHRIS ISAAK
BOBBY MCFERRIN CHRISTINE MCVIE
BOBBY RYDELL CHUBBY CHECKER & THE WILDCATS
BOBBY VEE CHUCK BERRY
BOBBY WOMACK CHUCK MANGIONE
BODEANS THE CHURCH
BON JOVI CINDERELLA
BONNI KOLOC CLARENCE (GATEMOUTH) BROWN
BONNIE RAITT CLARENCE CLEMONS
BOOK OF LOVE CLINT BLACK
BOOTS RANDOLPH CLUB NOUVEAU
BOSTON COCTEAU TWINS
BOXCAR WILLIE COMMODORES
BOZ SCAGGS CONCRETE BLONDE
BRANFORD MARSALIS CONNIE STEVENS
BREWER & SHIPLEY
BRUCE HORNSBY & THE RANGE COREY HART
BRUCE SPRINGSTEEN CORKY SIEGEL
BRYAN ADAMS COUNT BASEY ORCHESTRA
BRYAN FERRY COUNTRY JOE MCDONALD
BUCK PETS COVER GIRLS
BUCKWHEAT ZYDECO COWBOY JUNKIES
BUDDY HOLLY TRIBUTE SHOW CRACK THE SKY
CROSBY, STILLS, & NASH DONNA SUMMER
CROWDED HOUSE DONNY OSMOND
CRYSTAL GAYLE DONOVAN
<PAGE>
THE CURE DOOBIE BROTHERS
CURTIS MAYFIELD DOUBLE DARE
CINDI LAUPER DOUG E. FRESH
DAN FOGELBERG DURAN DURAN
DAN REED NETWORK DWIGHT TWILLY
DAN SEALS DWIGHT YOAKAM
DAN SIEGEL THE DINATONES
DANA CARVEY E.U.
DANNY THOMAS EARLE KLUGH
DARYL OATES EARL THOMAS
DAVE & SUGAR EARTH, WIND, & FIRE
THE DAVE BRUBECK QUARTET EARTHA KITT
DAVE DUDLEY ED BRUCE
DAVE EDMUNDS EDDIE FISHER
DAVID BOWIE EDDIE MONEY
DAVID BRENNER EDDY ARNOLD
DAVID BROBRGB EDGAR WINTEL
DAVID COPPERFIELD THE EDGE
DAVID CROSBY EDIE BRICKELL & THE NEW BOHEMIANS
DAVID GILLMOUR EL DE BARGE
DAVID LEE ROTH ELECTRIC LIGHT ORCHESTRA
DAVID LINDLEY & EL RAYO-X ELTON JOHN
DAVID SANBORN ELVIN BISHOP
DAVID SLATER ELVIS BROTHERS
DAVID STEINBERG ELVIS COSTELLO
DELA SOUL EMERSON, LAKE, & PALMER
DEAN MARTIN EMMY LOU HARRIS
DEBBIE GIBSON EMO PHILLIPS
DEBBIE REYNOLDS ENGELBERT HUMPERDINCK
DEBBY BOONE ERASURE
DEBORAH HARRY ERIC ANDERSEN
DEEP PURPLE ERIC BURDON
DEP LEPPARD ERIC CARMEN
DEL FUEGOS ERIC CLAPTON
DELBERT MCLINTON THE ESCAPE CLUB
DELLA REESE EUROPE
DENICE WILLIAMS EURYTHMICS
DENNIS MILLER EVELYN KING
DENNIS WOLFBERG THE EVERLY BROTHERS
DEPECHE MODE EXILE
THE DESERT ROSE BAND FABULOUS THUNDERBIRDS
DIAHANN CARROLL & VIC DEMONE FAIRPORT CONVENTION
DIANA ROSS FARON YOUNG
DICK CLARK'S GOOD `OL ROCK-N-ROLL FARRENHEIT
DICK GREOGORY FASTER PUSSYCATS
THE DICKY BETTS FAT BOYS
FATHER GUIDO SARDUCCI
DINO FATS DOMINO
DIONNE WARWICK FEARGAL SHARKEY
DIRE STRAITS THE FEELIES
DIZZY GILLESPIE FEMME FATALE
DOC SEVERINSEN FERLIN HUSKY
DOC WATSON FESTIVAL NEW ORLEANS
DOLLY PARTON FINE YOUNG CANNIBALS
DON HENLEY FIONA
DON WILLIAMS GRAHAM PARKER
DONNA FARGO THE GRASS ROOTS
FIRST CALL GROVER WASHINGTON, JR.
FISHBONE GUNSLINGERS TOUR
FLASH CADILLAC GUY LOMBARDO ORCHESTRA
<PAGE>
FLEETWOOD MAC HAROLD MELVIN & THE BLUE NOTES
FLESH FOR LULU HARRY BELAFONTE
FLIP WILSON HARRY BLACKSONTE, JR.
THE FLYING BURRITO BROTHERS HARRY CONNICK, JR.
THE FLYING KARAMAZOV BROTHERS HARVEST
FOGHAT HEART
FORCE MD'S HELEN CORNELIUS
FOREIGNER HELEN REDDY
THE FORESTER SISTERS HALLOWEEN'S HENRY YOUNGMAN
FOSTER & LLOYD HENRY LEE SUMMER
THE FOUR FRESHMEN HENRY MANCINI
THE FOUR LADS HERB ALPERT
FOUR TOPS HERBIE HANCOCK
FRAN SOLOMITA HERBIE MANN
FRANK MARINO & MAHOGANY RUSH HIGHWAY 101
FRANK SINATRA HIGHWAYMEN
FRANKIE AVALON HIROSHIMA
FRANKIE GOES TO HOLLYWOOD HOLLY DUNN
FRANKIE VALLI & THE FOUR SEASONS HOODOO GURUS
FREDDIE JACKSON HOOTERS
FREDDY FENDER HOTHOUSE FLOWERS
FRONT 242
GABE KAPLAN HUEY LEWIS & THE NEWS
GALLAGHER HUMAN LEAGUE
GAP BAND IAN HUNTER
GARRY SHANDLING INDIGO GIRLS
GARY MORRIS INFORMATION SOCIETY
GENE LOVES JEZEBEL THE INK SPOTS
GENE PITNEY INXS
GENESIS THE IRISH ROVERS
GEORGE BENSON THE ISLEY BROTHERS
GEORGE CARLIN J. D. SOUTHER
GEORGE CLINTON J. J. CALE
GEORGE DUKE J. J. FAD
GEORGE JONES JACK JONES
GEORGE SHEARING & DAVE BRUBECK JACK MACK & THE HEART ATTACK
GEORGE STRAIT JACKIE GAYLE
GEORGE WINSTON JACKIE MASON
GEORGIA SATELLITES JACKSON BROWNE
GIANT JAMES BROWN
GIRLSCHOOL JAMES COTTON BLUES BAND
GLASS TIGER JAMES INGRAM
GLEN CAMPBELL JAMES MONTGOMERY BAND
GLENN FREY JAMES TAYLOR
GLENN MILLER ORCHESTRA JAN & DEAN
GLEN YARBOUGH JANE WEIDLIN
GLORIA ESTEFAN & MIAMI SOUND MACHINE JANE'S ADDICTION
GLORIA GAYNOR JANET JACKSON
GORDON LIGHTFOOT JANIE FRICKE
GRACE JONES JANIS IAN
GRAHAM NASH JAY JOHNSON
JAY LENO JOHN PRINE
JEAN-LUC PONTY JOHN WAITE
JEANNE PRUETT JOHNNY CASH
JEANNIE C. RILEY JOHNNY CLEGG & SAVUKA
JEFF BECK JOHNNY CLYDE COPELAND
<PAGE>
THE JEFF HEALY BAND JOHNNY MATHIS
JEFF LORBER JOHNNY RIVERS
JEFFERSON AIRPLANE JOHNNY WINTER
JEFFREY OSBORNE JON BUTCHER
JENNIFER HALL JONATHAN BUTLER
JENNIFER WARNES JONATHAN EDWARDS
JERMAINE JACKSON JONI MITCHELL
JERRY BUTLER JOSE FELICIANO
JERRY CLOWER JOSE JOSE
JERRY JEFF WALKER THE JUDDS
JERRY LEE LEWIS JUDY TENUTA
JERRY LEWIS JUICE NEWTON
JERRY REED JULIAN LENNON
JESSE COLIN YOUNG JULIO IGLESIAS
JESSE WINCHESTER JUNE CARTER CASH
JETHRO TULL JUNIOR WALKER & THE ALLSTARS
THE JETS K. D. LANG & THE RECLINES
JIM NABORS K. T. OSLIN
JIMMY BARNES KARLA BONOFF
JIMMY BUFFETT KATE & ANN MCCARRIGLE
JIMMY PAGE KEITH RICHARDS
JOAN ARMATRADING KEITH SWEAT
JOAN BAEZ THE KENDALLS
JOAN JETT & THE BLACKHEARTS KENNY G.
JOAN RIVERS KENNY LOGGINS
JODY WATLEY KENNY RANKIN
JOE COCKER KENNY ROGERS
JOE ELY KEVIN NEALON
JOE JACKSON KID CREOLE & THE COCONUTS
JOE PISCAPO KID `N' PLAY
JOE SAMPLE KIM CARNES
JOE SATRIANI KING SUNNY ADE
JOE STAMPLEY KINGDOM COME
JOEL GREY THE KINGSMEN
JOHN ANDERSON THE KINGSTON TRIO
JOHN CAFFERTY & THE BEAVER BROWN BAND THE KINKS
JOHN CALE KIRK WHALUM
JOHN CANDY KITTY WELLS FAMILY SHOW
JOHN CONLEE KIX
JOHN COUGAR MELLENCAMP THE KNACK
JOHN DAVIDSON KOKO TAYLOR & HER BLUES MACHINE
JOHN DENVER KOOL & THE GANG
JOHN ENTWISTLE KRESKIN
JOHN FOGERTY KRIS KRISTOFFERSON
JOHN HAMMOND KURTIS BLOW
JOHN HARTFORD KWAME
JOHN HIATT LTRIMM
JOHN LEE HOOKER LACY J. DALTON
JOHN MAYALL & THE BLUESBREAKERS LADYSMITH BLACK MAMBAZO
LARRY "BUD" MELMAN MANHEIM STEAMROLLER
LARRY CARLTON MARCEL MARCEAU
LARRY CORYELL MARGO SMITH
LARRY GATLIN & THE GATLAN BROTHERS MARIA MULDAUR
LATOYA JACKSON MARIE OSMOND
<PAGE>
LAURA BRANIGAN MARILYN MCCOO
LAURA NYRO MARSHA WARFIELD
LAURIE ANDERSON MARSHALL CRENSHAW
LEE GREENWOOD MARTIKA
LEE RITENOUR MARTIN MULL
LENNY KRAVITZ MARTY BALIN
LEO KOTKE MARVIN HAMLISCH
LEON REDBONE MARY WELLS
LEONARD COHEN MASON RUFFNER
LEROY VAN DYKE MAYNARD FERGUSON
LES MCCANN MEL TILLIS
LESLEY GORE MEL TORME
LESLIE UGGAMS MELANIE
THE LETTERMAN MELBA MOORE
LEVEL 42 MELISSA ETHERIDGE
LEVERT MELISSA MANCHESTER
LILLIAN AXE MERLE HAGGARD
LINDA RONSTADT MICHAEL BOLTON
LIONEL CARTWRIGHT MICHAEL DAMIAN
LISA LISA & THE CULT JAM MICHAEL JACKSON
LITA FORD MICHAEL MARTIN MURPHEY
LITTLE FEAT MICHAEL MCDONALD
LITTLE RICHARD MICHAEL MORALES
LITTLE STEVEN MICHAEL W. SMITH
LIVING COLOUR MICHELLE SHOCKED
LIVINGSTON TAYLOR MICKEY GILLEY
LIZA MINELLI MIDNIGHT STAR
L.L. COOL J MIKE & THE MECHANICS
LOLA FALANA MILES DAVIS
LONNIE LISTON SMITH MILLI VANILLI
LONNIE MACK MILTON BERLE
LORETTA LYNN MILTON NASCIMENTO
LOU GRAMM MIMI FARINA
LOU RAWLS
LOU REED MINNIE PEARL
LOUDNESS MIRIAM MAKEBA
LOUDON WAINWRIGHT III MISS MOLLY & THE PASSIONS
LOUIE ANDERSON THE MISSION U. K.
LOVE AND ROCKETS MITZI GAYNOR
LOVERBOY MODERN JAZZ QUARTET
LUCIE ARNAZ MOE BANDY
LUTHER "GUITAR JR." JOHNSON THE MONKEES
LUTHER VANDROSS THE MOODY BLUES
LYLE LOVETT MORRIS DAY
LYNDA CARTER N.W.A.
LYNN ANDERSON NAJEE
M.C. HAMMER NANCY GRIFFITH
MAC DAVIS NANCY WILSON
MAC WISEMAN NARVEL FELTS
MADONNA NATALIE COLE
THE MANHATTAN TRANSFER PETE TOWNSHEND
NEIL DIAMOND PETER ALLEN
NEIL SADAKA PETER FRAMPTON
NEIL YOUNG PETER GABRIEL
NELL CARTER PETER, PAUL, & MARY
NELSON RIDDLE ORCHESTRA PETER WOLF
THE NEVILLE BROTHERS PETRA
<PAGE>
NEW GRASS REVIVAL PETULA CLARK
NEW KIDS ON THE BLOCK PHIL COLLINS
NEW ORDER PHOEBE SNOW
NEWPORT JAZZ FESTIVAL ALLSTARS PHYLIS DILLER
NICK LEWIN THE PIXIES
NICK LOWE POCO
NICKY HOPKINS THE POGUES
NICOLETTE LARSON THE POINTER SISTERS
NILS LOFGREN POISON
NITTY GRITTY DIRT BAND PROTER WAGONER
NRBQ POUSETTS-DART BAND
THE NYLONS PRETTY POISON
THE O'JAYS THE PROCLAIMERS
THE O'KANES PRISM
OAK RIDGE BOYS PSYCHEDELIC FURS
OINGO BOINGO QUEEN
OLIVIA NEWTON-JOHN QUEENSRYCHE
ORAN "JUICE" JONES QUINCY JONES
OSBORNE BROTHERS R.E.M.
OTIS DAY & THE KNIGHTS THE RAMONES
THE OUTFIELD RAMSEY LEWIS
OZARK MOUNTAIN DAREDEVILS RANDY TRAVIS
P.J. O'ROURKE RAPHAEL
PAT BENETAR RAY CHARLES
PAT BOONE RAY, GOODMAN, & BROWN
PAT METHENY GROUP RAY PARKER, JR.
PATTI LABELLE RAY PIERCE
PATTI SMITH RAY STEVENS
PATTY SMYTH RAZZY BAILEY
PAUL ANKA READY FOR THE WORLD
PAUL CARRACK REAL ROXANNE
PAUL MCCARTNEY REBA MCENTIRE
PAUL OVERSTREET REBBIE JACKSON
PAUL RODRIGUEZ REO SPEEDWAGON
PAUL SHAFFER THE REPLACEMENTS
PAUL SIMON RESTLESS HEART
PAUL YOUNG RETURN TO FOREVER
PAULA ABDUL RHYTHM CORPS
PAULA POUNDSTONE RIC OCASEK
PEABO BRYSON RICH HALL
PEARL BAILEY RICH LITTLE
PENN & TELLER RICHARD LEWIS
PERCY SLEDGE RICHARD MARX
PET SHOP BOYS RICHIE HAVENS
PETE BARBUTTI RICK DANKO
PETE FOUNTAIN RICK ROBERTS
PETE SEEGER RICK SPRINGFIELD
RICK WAKEMAN SMOKEY ROBINSON
RICKIE LEE JONES THE SMOTHERS BROTHERS
RICKY VAN SHELTON SOUTHERN PACIFIC
RIGHTOUS BROTHERS SOUTHSIDE JOHNNY
THE RIPPINGTONS/RUSS FREEMAN SPENCER DAVIS
RITA MORENO SPIN DOCTORS
THE ROBERT CRAY BAND SPYRO GYRA
<PAGE>
ROBERT GUILLAUME SQUEEZE
ROBERT PALMER STACEY Q
ROBERT PLANT STANLEY CLARK
ROBIN TROWER STANLEY JORDAN
ROBIN WILLIAMS STANLEY TURRENTINE
ROBYN HITCHCOCK & THE EGYPTIANS THE STAPLE SINGERS
THE ROCHES STARSHIP
ROD STEWART STARS OF THE LAWRENCE WELK
RODNEY DANGERFIELD SHOW
ROGER DALTREY STEEL PULSE
ROGER MCGUINN STEELY DAN
ROGER MILLER STELLA PARTON
ROGER WATERS STEPHANIE MILLS
ROGER WHITTAKER STEPHEN STILLS
RONEE BLAKELY STEVE ALLEN
RONNIE LAWS STEVE EARLE & THE DUKES
RONNIE MILSAP STEVE FORBERT
RONNIE SPECTOR STEVE LANDESBERG
RORY GALLAGHER STEVE LAWRENCE & EDYIE GORME
ROSANNE CASH STEVE MARTIN
ROSEANNE BARR STEVE MILLER
ROY CLARK THE STEVE MORSE BAND
ROYAL COURT OF CHINA STEVE WARNER
STEVE WINWOOD
RUSH STEVEN CURTIS CHAPMAN
RUSSELL HITCHCOCK STEVEN WRIGHT
SADE STEVIE NICKS
SALT `N' PEPA STEVIE RAY VAUGHN & DOUBLE TROUBLE
SAMANTHA FOX STEVIE WONDER
SAMMY DAVIS, JR. STEWART COPELAND
SANDI PATTI STING
SANDRA BERNHARD STONEWALL JACKSON
SANTANA STRAYCATS
SARAH VAUGHAN STRYPER
SERGIO MENDES SUPER ROCK OF THE 60'S
SHA NA NA SUPERTRAMP
SHADOWFAX SUZANNE VEGA
SHARI LEWIS SWEETHEARTS OF THE RODEO
SHEENA EASTON SWING OUT SISTER
SHEILA B. T-BONE BURNETT
SHIRLEY JONES & PETER NERO T. GRAHAM DROWN
SID CAESAR T.G. SHEPPARD
SIMPLE MINDS TAKE 6
SIMPLY RED TALK TALK
SIOUXSIE & THE BANSHEES TALKING HEADS
SIR MIX-A-LOT TAMMY WYNETTE
SKEETER TANGERINE DREAM
THE SMITHEREENS TANYA TUCKER
TEARS FOR FEARS TAVARES
TED NUGENT WAYNE NEWTON
THE TEMPTATIONS WEIRD AL YANKOVIC
TENNESSEE ERNIE FORD WENDY WALDMAN
TERENCE TRENT D'ARBY WIDTH HEART
TESLA WHITE LION
TEXAS WHITNEY HOUSTON
THAT PETROL EMOTION THE WHO
THEODORE BIKEL WHODINI
<PAGE>
THIRD WORLD WHOOPI GOLDBERG
THOMAS DOLBY WILLIAM LEE GOLDEN
THOMPSON TWINS WILLIE DIXON
THREE DOG NIGHT WILSON PHILLIPS
TIFFANY WYNONNA
TIMBUK 3 WYNTON MARSALIS
TIMOTHY B. SCHMITT XYMOX
TINA TURNER YAKOV SMIRNOFF
TODD RUNDGREN YANNI
TOM CHAPIN YELLOWJACKETS
TOM JONES YES
TOM PETTY & THE HEARTBREAKERS YNGWIE MALMSTEEN
TOM SCOTT ZIGGY MARLEY & THE MELODY MAKERS
TOM T. HALL Z.Z. TOP
TONE LOC
TONI BASIL
TONI CHILDS
TONI TENNILLE
TONY BENNETT
TONY ORLANDO & DAWN
TONY! TONI! TONE!
TOM WAITS
TOO SHORT
TOOTS & THE MAYTALS
TOTO
TOWER OF POWER
TOWNES VAN ZANDT
TRACY CHAPMAN
TRAVIS TRITT
TRIUMPH
THE TURTLES
U2
UB4O
UTFO
VAN HALEN
VAN MORRISON
VANITY
VASSAR CLEMENTS
VERN GOSDIN
VIKKI CARR
VILLAGE PEOPLE
VINCE GILL
WAGONEERS
WANG CHUNG
WARRANT
WARREN ZEVON
WAS (NOT WAS)
WAYLON JENNINGS
<PAGE>
PAVILION EQUIPMENT
1. DRESSING ROOMS 5 (ROOMS) WITH SHOWERS
A. BACKSTAGE RESTROOMS/MENS AND WOMANS WITH SHOWERS
2. KITCHEN & DINING AREA WITH RESTROOM
3. STAGE/SEATING AREA
A. ELECTRICAL -- LIGHTS: 1) 3 PHASE, 600 AMPS/PHASE, USL
2) 3 PHASE, 400 AMPS/PHASE, USL
3) 3 PHASE, 200 AMPS/PHASE, USL
SOUND: 4) 3 PHASE, 400 AMPS/PHASE, USL
5) 3 PHASE, 200 AMPS/PHASE, USL
SHORE POWER: 4 CONNECTIONS, EACH 208 V, 60
AMPS, SINGLE PHASE
B. CURTAINS
C. GRID SYSTEM
D. AC CHILLER
E. CEILING FANS
F. LOADING DOCK
G. LAWN SYSTEM
H. HANDICAP SEATING
I. RESERVED SEATING
J. BOX SEATING
K. MIX POSITION
4. PRODUCTION OFFICES
A. BAND
B. PROMOTER
5. OPERATIONS OFFICE
A. TWO-WAY RADIO SYSTEM
B. AUTO ATTEND PHONE SYSTEM
6. SECURITY BUILDING (4 OFFICES)
A. FIRST AID
7. CONCESSION BUILDINGS
A. NORTH
B. SOUTH
C. HILL STANDS
8. STORAGE BUILDING
9. TRASH COMPACTOR
10. PARTY TENT (60' X 100')
11. LAWN CHAIRS / WITH STORAGE BUILDING
EXHIBIT "C"
<PAGE>
12. TICKET OFFICE
13. PATHWAYS & PARKING LOTS
24. FENCING
25. ENTRY GATES
26. CATERING AREA
27. MEET & GREET AREA
28. RESTROOMS
A. MENS
B. WOMANS
<PAGE>
================================================================================
CITY CONTRACT NO. 49975
OPERATOR LEASE AGREEMENT
by and between
THE CITY OF PHOENIX,
a municipal corporation of the State of Arizona
as Lessor
and
THE WESTSIDE AMPHITHEATRE CORP.
an Arizona corporation,
(formerly known as The Amphitheatre at Reach 11 Corp.)
an Operator and Lessee
Amended and Restated
as of
September 26, 1989
================================================================================
<PAGE>
OPERATOR LEASE AGREEMENT
TABLE OF CONTENTS
(This Table of Contents is not a part of the Operator Lease
Agreement and is only for convenience of reference.)
Page
----
ARTICLE I
SUBJECT OF AGREEMENT
Section 1.1. The Site .................................................... 1
Section 1.2. The Facilities .............................................. 1
Section 1.3. The Premises ................................................ 2
Section 1.4. Parties to the Agreement .................................... 2
ARTICLE II
LEASE OF THE PREMISES
Section 2.1. Lease ....................................................... 3
Section 2.2. Term of the Agreement ....................................... 3
Section 2.3. Extension Following Initial Term ............................ 3
Section 2.4. Delivery of Use of Premise .................................. 3
Section 2.5. Representations ............................................. 3
Section 2.6. Security Lot Operator's Obligations Hereunder ............... 4
ARTICLE III
RENTAL PAYMENTS TO CITY
Section 3.1. Rental ...................................................... 6
Section 3.2. Computation and Payment of Additional Rent .................. 9
Section 3.3. Disputed Additional Rent .................................... 9
Section 3.4. Non-Subordination ........................................... 10
Section 3.5. Net Rent .................................................... 10
Section 3.6. No Rent Abatement ........................................... 10
Section 3.7. Delinquency In Rental Payment; Collection of Rent ........... 10
Section 3.8. Right to Inspection and Audit of Record ..................... 10
Section 3.9. Additional Rent Revenue Fund ................................ 11
Section 3.10. City Action ................................................. 12
ARTICLE IV
DEVELOPMENT OF THE SITE
Section 4.1. Development of the Site ..................................... 13
ARTICLE V
USE OF THE SITE AND THE FACILITIES
Section 5.1. Permitted Uses .............................................. 14
Section 5.2. Operation and Use Covenants ................................. 14
Section 5.3. City's Activities ........................................... 16
Section 5.4. Obligation to Refrain from Discrimination ................... 17
Section 5.5. Form of Nondiscrimination Clause ............................ 17
<PAGE>
Page
----
Section 5.6. Rights of Access--Public Improvements and Facilities ........ 17
Section 5.7. Nondisturbance .............................................. 18
ARTICLE VI
TAXES, ASSESSMENTS AND OTHER CHARGES
Section 6.1. Utilities ................................................... 19
Section 6.2. Payment of Impositions (Including Taxes and Assessments) .... 19
Section 6.3. Payment of Impositions in Installments ...................... 19
Section 6.4. Tax Receipts ................................................ 20
Section 6.5. Limits of Tax Liability ..................................... 20
Section 6.6. Permitted Contests .......................................... 20
Section 6.7. Liens--City Right to Cure ................................... 21
Section 6.8. Deposits for Impositions .................................... 21
ARTICLE VII
OWNERSHIP OF AND RESPONSIBILITY FOR FACILITIES
Section 7.1. Ownership of Facilities ..................................... 23
Section 7.2. Right to Remove Trade Fixtures .............................. 23
Section 7.3. Maintenance and Repair of Facilities ........................ 23
Section 7.4. Waste ....................................................... 24
Section 7.5. Alteration of Facilities .................................... 24
Section 7.6. Damage or Destruction ....................................... 25
Section 7.7. Faithful Performance and Labor and Material (Payment)
Bonds; Indemnification ................................... 27
ARTICLE VIII
ASSIGNMENT, SUBLEASE, TRANSFER
Section 8.1. Prohibition Against Changes in Ownership, Management
and Control of Operator .................................. 29
Section 8.2. Restrictions Regarding Transfer or Sublease ................. 30
Section 8.3. City's Right to Collect Subrent ............................. 31
Section 8.4. Operator Assignment of Sublease ............................. 31
Section 8.5. Attornment .................................................. 31
Section 8.6. Sublessee Compliance ........................................ 32
Section 8.7. Operator Obligation for Sublessee Act or Omission ........... 32
Section 8.8. Recognition of Sublessee by City ............................ 32
Section 8.9. Freedom from Lien ........................................... 33
ARTICLE IX
MORTGAGES
Section 9.1. Secured Financing .......................................... 34
Section 9.2. Rights and Obligations of Secured Creditors ................ 35
Section 9.3. City's Right to Cure Operator's Defaults on
Secured Interests ...................................... 36
Section 9.4. Non-Merger ................................................. 37
Section 9.5. Operator Certificate ....................................... 37
Section 9.6. City Certificate ........................................... 37
ii
<PAGE>
Page
----
ARTICLE X
INDEMNIFICATION AND INSURANCE
Section 10.1. Indemnification ............................................. 39
Section 10.2. Required Insurance .......................................... 40
Section 10.3. Definition of "Full Insurable Value" ........................ 42
Section 10.4. General Insurance Provision ................................. 42
Section 10.5. Failure to Maintain Insurance ............................... 43
Section 10.6. Disposition of Insurance Proceeds Resulting from
Loss or Damage to Improvements ........................... 43
ARTICLE XI
EMINENT DOMAIN
Section 11.1. Taking Which Renders Premises Untenantable .................. 45
Section 11.2. Taking Which Does Not Render Premises Untenantable .......... 45
ARTICLE XII
DEFAULTS, REMEDIES AND TERMINATION
Section 12.1. Defaults--General ........................................... 47
Section 12.2. Legal Action ................................................ 47
Section 12.3. Rights and Remedies are Cumulative .......................... 47
Section 12.4. Damages ..................................................... 46
Section 12.5. Specific Performance ........................................ 48
Section 12.6. Additional Remedies of City ................................. 48
Section 12.7. City's Remedies and Rights of Termination ................... 49
Section 12.8. Enforced Delay in Performance for Causes Beyond
Control of Party ......................................... 50
Section 12.9. Additional Remedies of Operator ............................. 51
Section 12.10. Limitation on City Remedies ................................. 51
ARTICLE XIII
GENERAL PROVISIONS
Section 13.1. Notices, Demand, and Communications between the Parties ..... 52
Section 13.2. Arbitration ................................................. 52
Section 13.3. Subordination ............................................... 54
Section 13.4. Time of Essence ............................................. 54
Section 13.5. Conflicts of Interest ....................................... 54
Section 13.6. Warranty Against Payment of Consideration ................... 54
Section 13.7. Nonliability of City Officials and Employees ................ 54
Section 13.8. Inspection of Books and Records ............................. 34
Section 13.9. No Partnership .............................................. 54
Section 13.10. Compliance with law ......................................... 55
Section 13.11. Applicable Law .............................................. 55
Section 13.12. Surrender of Property ....................................... 55
Section 13.13. Submission of Documents for Approval ........................ 55
Section 13.14. Severability ................................................ 55
Section 13.15. Binding Effect .............................................. 55
Section 13.16. Captions .................................................... 55
Section 13.17. Approval of Documents ....................................... 55
iii
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Page
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ARTICLE XIV
ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS
....................................................... 57
EXHIBITS
Attachment No. 1 - Site Map
Attachment No. 2 - Legal Description of the Site
Attachment No. 3 - Legal Description of the Substitute Site
Attachment No. 4 - Permitted Exceptions
Attachment No. 5 - Substitute Permitted Exceptions
Attachment No. 6 - Form of Primary Letter of Credit
Attachment No. 7 - Worm of Secondary Letter of Credit
Attachment No. 8 - Form of Trust Agreement
Attachment No. 9 - Base Figures
iv
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OPERATOR LEASE AGREEMENT
In consideration of the mutual agreements contained herein and for other
valuable consideration, this amended and restated Operator Lease Agreement (the
"Agreement," or "Lease Agreement") is hereby entered into by and between the
CITY OF PHOENIX, an Arizona municipal corporation (the "City") and THE WESTSIDE
AMPHITHEATRE CORP., formerly known as The Amphitheatre at Reach 11 Corp., an
Arizona corporation (the "Operator").
WHEREAS, the City and the Operator have entered into an Operator License
and Use Agreement, dated as of November 18, 1988, (the "License Agreement") to
provide for the operation and management of an outdoor amphitheatre; and
WHEREAS, the City and the Operator desire to provide for the management
and operation of such amphitheatre at a new site by amending and restating the
License Agreement in the form of this Lease Agreement; and
WHEREAS, it is the intent of the parties hereto that this Agreement shall
constitute an amendment and restatement of the License Agreement and that, as
such, except as may be otherwise provided herein, the provisions of the License
Agreement are hereby replaced by the provisions hereof and are, accordingly of
no further force and effect;
NOW THEREFORE, the City and the Operator hereby amend and restate the
License Agreement as follows:
ARTICLE I
SUBJECT OF AGREEMENT
Section 1.1. The Site. The "Site" is that certain real property shown on
the "Site Map" which is attached hereto am Attachment No. 1. The Site is legally
described in the "Legal Description of the Site" which is attached hereto as
Attachment No. 2. Pursuant to the terms of the Development Agreement, as
described below, the City and the Operator have agreed that the Site may be
replaced with another site, legally described on Attachment No. 3 attached
hereto (the "Substitute Site") by the City in its sole discretion. Upon exercise
by the City of its right to so substitute under the Development Agreement, the
Substitute Site shall be automatically substituted for the Site herein for
purposes of this Agreement without necessity for an amendment of this Agreement.
In that event the matters set forth on Attachment No. 5, (the "Substitute
Permitted Exceptions") shall be automatically substituted for the matters set
forth on Attachment No. 4, (the "Permitted Exceptions") as described in Section
2.5 hereof. Except as provided above, such Substitute Site shall be subject to
the terms and conditions of this Agreement in the same manner and degree as the
Site.
Section 1.2. The Facilities. The "Facilities" are those buildings,
structures and improvements constructed on the Site by the City pursuant to that
certain Development Agreement dated as of November 18, 1988, as amended and
restated as of September 26, 1989 (the "Development Agreement") between the City
and the Operator. The Facilities consist of an outdoor amphitheatre
<PAGE>
with integral concession facilities, and an ancillary food and concession area.
Section 1.3. The Premises. The "Premises" are, collectively, the
Facilities and the Site including the 42-acre parking area of the
Infrastructure, as defined in the Development Agreement (such 42 acres
specifically referred to herein as the "Parking Area").
Section 1.4. Parties to the Agreement.
(a) The City. The City is a municipal corporation of the State of Arizona,
a public body corporate.
The principal office of the City is located at 251 West Washington Street,
Phoenix, Arizona.
"City" as used in this Agreement, includes the City of Phoenix, the
Community and Economic Development Department and the Parks, Recreation and
Library Department of the City of Phoenix, and any assignee or delegatee of or
successor to their rights, powers and responsibilities hereunder.
The obligations, approvals and other actions by the City under this
Agreement constitute the exercise of municipal powers for the purpose of
achieving the objectives set forth in this Agreement, and are not agreements
made as a municipality exercising regulatory powers. The Operator hereunder must
comply with land use regulations, codes and laws affecting the use, improvement
and development of property. Nothing in this Agreement constitutes an exemption
or grant of a variance from applicable codes and laws.
(b) The Operator. The Operator is The Westside Amphitheatre Corp., an
Arizona corporation, formerly known as The Amphitheatre at Reach 11 Corp. Formal
notices, demands and communications to the Operator pursuant to this Agreement
shall be directed to Operator, as provided in Section 13.1 hereof.
Notwithstanding any other provision hereof, all of the terms, covenants,
and conditions of this Agreement shall be binding on and shall inure to the
benefit of the Operator and the permitted successors and assigns of the
Operator, including any Secured Creditor as defined herein, which acquires the
Operators interest under this Agreement. Wherever the term "Operator" is used
herein, such term shall include any such permitted successors and assigns as
herein provided.
(End of Article I)
2
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ARTICLE II
LEASE OF THE PREMISES
Section 2.1. Lease. For and in consideration of the rents, conditions,
covenants and agreements set forth herein, and upon acquisition of title to the
Site or the Substitute Site, the City hereby leases the Premises to the Operator
and the Operator hereby leases the Premises from the City, for the purpose of
operation and management of the Facilities and Parking Area.
Section 2.2. Term of the Agreement. The term of this Agreement (the
"Term") shall commence on the date upon which the City has delivered possession
of the Premises to the Operator, as evidenced by the delivery of a final
certificate of occupancy as to the Facilities as to which a certificate of
occupancy is required, with all improvements to the Site having been
substantially completed in accordance with the plans and specifications
described in the Development Agreement and approved by the Operator, and shall
expire on June 30 of the sixtieth Rental Year thereafter, as that term is
defined below.
The "Rental Commencement Date" shall be the date upon which the last of
the following conditions precedent has occurred:
(i) Ninety (90) days have elapsed after the Commencement of the
Term, or the Opening Date, as defined below, has occurred, whichever
occurs first;
(ii) The Infrastructure, as defined in the Development Agreement,
has been completed; and
(iii) All governmental approvals, consents, licenses, authorizations
and easements necessary or required for the development and construction
of the Facilities have been secured by the City.
The "Opening Date" shall be the date upon which the Operator holds the
first paid public performance at the Facilities.
Section 2.3. Extension Following Initial Term. Based upon the original
expertise brought to this project by the Operator and the expertise of the
Operator at the time of the expiration of this Agreement, the City shall give
reasonable consideration to an extension of the Term of this Agreement, but any
such extension shall be on such terms and conditions as may be deemed
appropriate by the Operator and the City.
Section 2.4. Delivery of Use of Premises. The City shall deliver use of
the Premises to the Operator on or before the date set forth in the Schedule of
Performance attached as Attachment No. 6 to the Development Agreement.
Section 2.5. Representations. The City represents to the Operator that:
(i) the City will enter into a purchase agreement for purposes of acquiring fee
simple title to the Site, which title the City shall at all times hold and keep
free and clear of all claims, liens, encumbrances, covenants, restrictions or
clouds on title other than the matters shown on
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Attachment No. 4 hereto, the "Permitted Exceptions" or, with respect to thee
Substitute Site, the matters shown on Attachment No. 5 hereto, the "Substitute
Permitted Exceptions"; further, the City shall, upon their completion, own the
Facilities and the City's title to such Facilities shall be free and clear of
all claims, liens, encumbrances, covenants, restrictions, defects, or clouds on
title other than the Permitted Exceptions; (ii) the Site is within the legal
boundaries and under the political jurisdiction of the City; (iii) the City has
the right, power, and authority to lease the Premises, upon acquisition, to the
Operator in the manner set forth in this Agreement; (iv) the City has full
municipal power and authority to enter into this Agreement, and the execution,
delivery and consummation of this Agreement by the City have been duly
authorized by all necessary municipal action; (v) the execution, delivery and
consummation of this Agreement by the City is not prohibited by and does not
conflict with any other agreements or instruments to which the City is a party
or is otherwise subject; (vi) the City has received no notice as of the date of
this Agreement asserting any noncompliance in any material respect by the City
with applicable statutes, rules and regulations of the United States of America,
the State of Arizona, Maricopa County, the City, 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 City 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 in and by this Agreement; and (vii)
all governmental approvals, consents, licenses, authorizations and easements
necessary or required for the development and construction of the Facilities
have been or will be secured by the City and (viii) the City has conducted an
environmental investigation of the Site, including a "Phase One" environmental
assessment in accordance with Sections 101(35) and 107(b)(3) of 42 U.S.C. ss.ss.
9601 et seq., and such investigation has shown the Site to be free from
conditions which would create liability under any environmental laws, statutes,
ordinances, or regulations.
Section 2.6. Security for Operator's Obligations Hereunder. The City shall
provide written notice to the Operator at least fifteen (15) days prior to the
scheduled date of award by the City Council of a contract for construction of
the Facilities. Within ten (10) days of the Operator's receipt of such notice,
the Operator shall deliver to the City, as security for the performance of its
obligations under this Agreement, an unconditional and irrevocable letter of
credit (the "Primary LOC") in the amount of Two Million Dollars ($2,000,000),
issued by a bank or financial institution reasonably acceptable to City and in
the form attached hereto as Attachment No. 6. In addition, the Operator shall
deliver to the City on or before the Opening Date a second unconditional and
irrevocable standby letter of credit (the "Secondary LOC") for the benefit of
the City in the amount of Seven Hundred Thousand Dollars ($700,000) or such
other amount as provided in Section 213 of the Development Agreement, issued by
a bank reasonably acceptable to the City, in the form attached hereto as
Attachment No. 7. Collectively, the Primary LOC and the Secondary LOC shall be
referred to herein as the "LOCs".
The City shall have the right to draw upon the LOCs under the following
circumstances and in the following amounts, but in each event only
4
<PAGE>
after the giving of notice and expiration of any applicable cure periods
hereunder.
(i) in the event of the Operator's failure to pay any amounts due to
the City pursuant to the terms of this Agreement, the City shall have the
right to draw the amount of the unpaid obligation; and
(ii) in the event of the Operator's voluntary filing of a petition
under any bankruptcy or insolvency act or law, or the Operator being
adjudicated a bankrupt or making a general assignment for the benefit of
its creditors, the City shall have the right to draw the full amount of
the LOCs.
In no event shall the City have the right to draw upon the Secondary LOC
until such time that the full amount of the Primary LOC has been drawn.
The LOCs shall remain in effect for seven (7) full Rental Years, as
defined in Section 3.1(b) hereof, and, if renewal is required within such
period, and the expiring LOCs are not renewed on or before the twentieth banking
day prior to their respective expirations, an amount equal to the entire undrawn
amount of such LOCs shall become an obligation of the Operator hereunder and
shall be immediately due and payable from the Operator to the City and the
Operator acknowledges that such obligation is an obligation included within the
meaning of clause (1) of the LOCs.
At the beginning of the eighth (8th) full Rental Year and continuing
through the tenth (10th) full Rental Year, the Operator shall use diligent, good
faith efforts to secure a "key-man" life insurance policy on Zev Bufman, or his
successor, assuming no payment has been made on such life insurance policy on
Zev Bufman as of any succession, in the amount of One Million Dollars
($1,000,000), payable into a special trust account at a bank or financial
institution reasonably acceptable to the City and the Operator. All interest
accruing on such account, net of income tax owed by Operator on such accrued
interest, if any, shall remain in said account to be used for the same purposes
as the other funds deposited therein. The City will have the right to draw upon
the account for the same reasons and for the same amounts as set forth above
relative to the LOCs, as provided by a trust agreement between the City and the
entity holding such account, substantially in the form of Attachment No. 8
attached hereto.
(End of Article II)
5
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ARTICLE III
RENTAL PAYMENTS TO CITY
Section 3.1. Rental.
(a) Operator covenants and agrees to pay to the City, at the City's
address set forth in Section 13.1 hereof or at such place or to such person as
the City may designate in writing to the Operator, in such coin or currency of
the United States as shall at the time of payment be legal tender for the
payment of all debts, public or private:
(i) The Basic Rent, which shall be based upon the following
schedule:
Year Basic Rent Year Basic Rent Year Basic Rent
---- ---------- ---- ---------- ---- ----------
1 $ 893,383 21 $1,135,956 41 $ 40,000
2 846,363 22 1,138,600 42 40,000
3 846,363 23 1,136,969 43 40,000
4 846,363 24 1,136,063 44 40,000
5 846,363 25 l,135,525 45 40,000
6 l,l4l,363 26 40,000 46 40,000
7 1,141,598 27 40,000 47 40,000
8 1,145,335 28 40,000 48 40,000
9 1,142,215 29 40,000 49 40,000
10 1,142,555 30 40,000 50 40,000
11 1,141,086 31 40,000 51 100
12 1,142,796 32 40,000 52 100
13 1,141,996 33 40,000 53 100
14 1,139,096 34 40,000 54 100
15 1,138,596 35 40,000 55 100
16 1,140,611 36 40,000 56 100
17 1,139,786 37 40,000 57 100
18 1,136,121 38 40,000 58 100
19 1,139,616 39 40,000 59 100
20 1,139,561 40 40,000 60 100
61 and thereafter
until the final
Rental Year
hereunder 100
For purposes of the schedule set forth above, Year 1 shall commence as a July 1,
1989, the "Rental Calculation Date"; however, the Operator's obligation to pay
Basic Rent shall not commence until the Rental Commencement Date, as described
in Section 2.2. Prior to that date, Basic Rent shall be waived by the City. Upon
the Rental Commencement Date, the City and the Operator shall determine the pro
rata amount of Basic Rent owed by the Operator for the remainder of that year in
accordance with the schedule set forth above. Such determined amount shall be
due from the Operator as Basic Rent for the Initial Rental Year; thereafter, the
Basic Rent amount shall be as set forth on the next succeeding entry of the
schedule set forth
6
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above. Basic Rent shall be payable semiannually on January 1 and July 1 of each
Rental Year;
(ii) The Additional Rent, which shall consist of the following:
1. The "Percentage Rent," which shall be based upon the following
schedule:
Rental Years 1-5 - One percent (1%) of Gross Revenues
Rental Years 6-10 - Two percent (2%) of Gross Revenues
Rental Years 11-25 - Three percent (3%) of Gross Revenues
Rental Years 26-27 - Four percent (4%) of Gross Revenues
Rental Years 28-60 - Three and one-half percent (3 1/2%) of
Gross Revenues
In the event the final cost of the construction of the Facilities,
including the reimbursements described in Section 213 of the Development
Agreement, exceeds Eleven Million Dollars ($11,000,000), as provided in
the Development Agreement, the Operator agrees that it shall reimburse the
City for any amount in excess of said $11,000,000 paid to it as a
reimbursement pursuant to Section 213 of the Development Agreement from a
revenue source which is mutually agreed upon by the parties at the time
that amounts in excess of $11,000,000 are advanced.
2. The "Fixed Special Rent," which shall consist of One Hundred
Twenty Thousand Dollars ($120,000) per year in Rental Years 11-25.
(iii) The "Supplemental Rent", which shall consist of the following
additional amounts based on Gross Revenue receipts:
Beginning with the sixth full Rental Year, cumulative Gross Revenues for
successive three year periods will be compared with corresponding amounts set
forth on Attachment No. 9 attached hereto (the "Base Figures") and, if in any
such three year period the actual cumulative Gross Revenues exceed the
corresponding cumulative Base Figures for such three year period by 25% or more,
Operator will make additional, payments in the amount of one-half of one percent
(1/2%) of the entire cumulative Gross Revenues for such three year period (the
"Supplemental Rent"). Supplemental Rent shall be applied as prepayments of Fixed
Special Rent and shall be credited against the next succeeding Fixed Special
Rent payment becoming due. The above-described calculation shall be made for the
following three year periods:
Rental Years: 6, 7, 8; 9, 10, 11; 12, 13, 14; 15, 16, 17;
18, 19, 20; 21, 22, 23; and 24, 25, 26;
7
<PAGE>
provided, however, that the obligation to make Supplemental Rent payments
shall terminate in the event of the full payment of the Fixed Special Rent
amount prior to Rental Year 26.
Absent earlier termination of this Supplemental Rent obligation,
within 90 days of the close of Rental Years 8, 11, 14, 17, 20, 23, and 26,
Operator shall submit a detailed statement of the cumulative Gross
Revenues for the previous three years and a computation of the
Supplemental Rent, together with a certificate from Operator's certified
public accountant stating that said accountant is familiar with this
Agreement and attesting to the accuracy of the Gross Revenues reported and
the computation of Supplemental Rent. Payments of Supplemental Rent shall
accompany such items.
(b) A "Rental Year" is the twelve-month period running from July 1 to June
30. The initial rental period shall run from the Rental Commencement Date to the
June 30 which succeeds the Rental Commencement Date by at least 12 calendar
months, and the final Rental Year under this Agreement shall end on June 30 of
the last full Rental Year within the Term.
(c) The term "Gross Revenues" shall mean the gross consideration received
by the Operator from the conduct of all activity relating to the operation of
the Facilities and the Parking Area for any Rental Year computed in accordance
with generally accepted accounting principles consistently applied, including,
if applicable: (i) the value proceeding or accruing from the sale of property,
the providing of service, or both; (ii) the total amount of any sale, lease,
license for use or rental at the time of such sale, rental, lease or license;
(iii) all receipts, cash, credits, barter, exchange, (except in connection with
the acquisition or disposition of any property comprising a portion of the
Facilities) reduction of or forgiveness of indebtedness, and property of every
kind or nature derived from a sale, lease, license for use, rental or other
activity related to the operation of the Facilities; and (iv) all other receipts
whether payment is advanced prior to, contemporaneous with or deferred in whole
or in part subsequent to the activity or transaction. No deduction shall be
allowed from "Gross Revenues" on account of the cost of the property sold, the
time value of money, expense of any kind or nature, losses, materials used,
labor or service performed, interest paid or credits granted, except that the
following items may be excluded from "Gross Revenues": (1) cash discounts,
refunds or rebates if the Operator demonstrates that the discount, refund or
rebate is in respect to the revenue which was or will be reported as Gross
Revenues; (2) the sale price of property returned by customers if the sale price
thereof is refunded either in cash or by credit; (3) taxes and assessments
collected and remitted, or to be remitted, to the appropriate taxing agency; (4)
credit card or other ticket commissions; (5) receipts or revenues of any type by
sublessees, concessionaires, permittees, licensees or others granted use rights
relative to the Premises by the Operator; and (6) proceeds from any financing
with respect to the development.
"Gross Revenues" shall not include the salvage value of personal property
and trade fixtures brought upon the Premises. To the extent such personal
property and trade fixtures are financed by the City, the salvage value thereof
shall be paid directly to the City; similarly, the salvage value
8
<PAGE>
of personal property and trade fixtures paid for by the Operator shall be paid
to and retained by the Operator.
(d) The Operator further covenants and agrees with the City that in Rental
Years 1-5, the City shall receive from all sources, including Additional Rent
and City sales taxes related to the Facilities including without limitation tax
on rents, concessions, novelty sales, ticket sales and parking charges, (the
"Sales Revenues") amounts sufficient to pay debt service on the Land Acquisition
Obligations.
During Rental Years 1-5, to the extent that Additional Rent and Sales Revenues
are not sufficient for that purpose, as certified by the City to the Operator,
the Operator shall pay the amount of such deficiency to the City (the
"Deficiency Payment") within thirty (30) days of the receipt of such
certification. The Operator shall not be liable for any Deficiency Payments
caused by early redemption of any obligation, including premium, except as
mutually agreed by the City and the Operator. Any dispute as to the need for
Deficiency Payments shall be resolved by arbitration pursuant to Section 13.2.
In any Rental Year following Rental Year 10 in which the sum of Additional
Rent paid by the Operator and applicable Sales Revenues exceed the amount
necessary for payment of debt service due on the Land Acquisition Obligations
for such year, the City shall reimburse the Operator for previous Deficiency
Payments made by the Operator pursuant to this subsection (d) from the Debt
Service Account pursuant to Section 3.9(2) hereof.
Section 3.2. Computation and Payment of Additional Rent. Additional Rent
shall be calculated as of October 1, January 2, April 1, and July 1 and payable
thirty (30) days thereafter, provided however, that the first payment of
Additional Rent shall be due on November 1st of the first (1st) full Rental Year
after the Rental Commencement Date and shall relate solely to Gross Revenues for
the period from July 1 to October 1 of that year. In the event that this
Agreement is terminated prior to the date of expiration for reasons other than
the default of Operator, the final payment of Additional Rent shall be made 30
days after the date of termination and shall relate to Gross Revenues collected
to such date of termination.
Within sixty (60) days after the close of each Rental Year, the Operator
shall submit to the City a detailed statement of annual Gross Revenues for the
entire Rental Year, and a computation of the Additional Rent due to the City for
such Rental Year, together with a certificate from the Operator's certified
public accountant addressed to the City, stating that said accountant is
familiar with the provisions of this Agreement, whether the examination
disclosed any default in any payments required to be made hereunder and
attesting to the accuracy of the Gross Revenues reported and the computations of
Additional Rent.
Section 3.3. Disputed Additional Rent. If any accounting items included in
or omitted from the computations of Gross Revenues included in the computation
of Additional Rent for any Rental Year are disapproved, partially disapproved or
disputed by the City, the City shall so state in writing specifying the
accounting items included or omitted and the parties shall attempt to mutually
agree on the resolution of the dispute. If the parties are unable to agree, then
the accounting items in dispute shall be submitted
9
<PAGE>
to and determined by arbitration conducted in accordance with Section 13.2
hereof.
Section 3.4. Non-Subordination. The City's interest in this Agreement, as
the same may be modified, amended or renewed, shall not be subject or
subordinate to any mortgage now or hereafter placed upon the Operator's interest
in this Agreement, or any other liens or encumbrances hereafter affecting the
Operator's interest in this Agreement.
Section 3.5. Net Rent. It is the purpose and intention of the City and the
Operator, and the parties hereto agree, that the Basic Rent and Additional Rent
shall be absolutely net to the City without any deduction, counterclaim, setoff
or offset whatsoever with respect to the Premises and/or the ownership, leasing,
operation, management, maintenance, restoration, use or occupancy thereof, or of
any part thereof, or with respect to any interest of the City therein so that
this Agreement shall yield, net, to the City, the Basic Rent and Additional Rent
in each year during the Term, and that all coats, expenses and charges of every
kind and nature relating to the Premises, including taxes, if any, which may
arise or become due or payable during or after (but attributable to a period
falling within) the Term, shall be paid by the Operator, and that the City shall
be indemnified by the Operator for, and held harmless by the Operator from, the
same.
Section 3.6. No Rent Abatement. No abatement, diminution or reduction of
rental or other fees and charges under this Agreement shall be claimed by or
allowed to the Operator, or any person claiming under it, under any
circumstances, whether for inconvenience, discomfort, interruption of business,
or otherwise, destruction of or damage to Facilities, the making of alterations,
changes, additions, improvements or repairs to any building or buildings now on
or which may hereafter be erected on the Site, or by virtue or because of any
present or future governmental laws, ordinances, requirements, orders,
directions, rules or regulations or for any other cause or reason, except as
specifically provided for in Sections 6.5 (limits of tax liability), 7.6 (damage
or destruction) and 11.1 (taking which renders the premises untenantable).
Section 3.7. Delinquency In Rental Payment; Collection of Rent. The
failure of the Operator to pay the applicable rental by the due date shall
constitute a default; provided, however, an inaccuracy in the estimate of
Additional Rent shall not be a default if the duty to pay said amount was being
contested in good faith by the Operator or becomes owing only after an audit
under Section 3.8. In the event the Operator fails to pay the applicable rental
within ten days after receipt of a written notice from the City that such amount
is overdue, then in addition to any other remedy provided by this Agreement, the
Operator shall pay to the City interest at the prime rate of interest charged at
the time and from time to time thereafter by The Valley National Bank of Arizona
plus two percent (2%) (the "Default Rate") accruing from the due date of the
rental to the date the rent is received by the City.
Section 3.8. Right to Inspection and Audit of Records. The Operator shall
keep full and accurate books and accounts, records, cash receipts, and other
pertinent data showing its financial operations relative to the Premises. Such
books of account, records, cash receipts, and other pertinent
10
<PAGE>
data shall be kept for a period of five (5) years after the end of the Rental
Year to which such items pertain. The City shall be entitled during such five
(5) years to inspect, examine and to copy at the City's expense the Operator's
books of account, records, cash receipts, and other pertinent data as necessary
or appropriate only to determine Gross Revenues. The Operator shall cooperate
fully with the City in permitting the inspection.
The City shall also be entitled at the City's expense, once during each
calendar year and once after expiration or termination of this Agreement, to an
independent audit of the Operator's books of account, records, cash receipts,
and other pertinent data, by a certified public accountant to be agreed upon by
the City and the Operator, solely for the purpose of determining Gross Revenues.
Any such audit shall be conducted during usual business hours. If the audit
shows that there is a deficiency in the payment of the Additional Rent after
adjustment (exclusive of minor accounting errors), the deficiency shall become
immediately due and payable to the City plus any interest payments due under
Section 3.7. If such deficiency exceeds the amount of five percent (5%) of the
actual Additional Rent due in any Rental Year in which there is a deficiency,
the Operator shall reimburse the City for the cost of the City's audit. If the
City has not audited the Operator hereunder with respect to a particular Rental
Year within the permitted five year period, or has not advised the Operator in
writing of any exceptions based on said audit within said five year period, then
the City shall be deemed to have waived its right to redetermine Additional Rent
for such Rental Year.
Section 3.9. Additional Rent Revenue Fund. In order to provide for payment
of debt service on the Land Acquisition Obligations all Additional Rent derived
from the Percentage Rent and the Fixed Special Rent shall be placed in a
separate fund (the "Additional Rent Revenue Fund") which will consist of the
following separate accounts:
(1) the Debt Service Account; and
(2) the Reserve Account.
Additional Rent shall be deposited by the City into the Debt Service
Account of the Additional Rent Revenue Fund and used for the following purposes
and in the following order of priority: (1) payment, when due, of the principal,
interest and any redemption premium on the Land Acquisition Obligations; (2)
after Rental Year 10, reimbursement to the Operator for any Deficiency Payments
made pursuant to Section 3.1(d) hereof, such reimbursement to be made within
seven (7) business days of each such semiannual debt service payment; (3)
transfer to the Reserve Fund within seven (7) business days of each semiannual
debt service payment, any remaining amounts (the "Available Funds") until an
aggregate principal amount of One Million Dollars ($1,000,000) has been
transferred (which amounts shall not be replenished after the expenditure
thereof); and (4) any other lawful municipal purposes.
The Reserve Account shall be held and invested by the City. An investment
made from moneys credited to the Reserve Account shall constitute part of that
account, and be used for the purposes of that account. The
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Reserve Account shall be used by the City for the following purposes and in the
following order of priority:
(1) as a reserve for payment by the City of debt service charges on the
Land Acquisition Obligations, the Construction Obligations, and any
other debt instrument of the City issued or executed and delivered
in connection with the construction and development of the
Facilities; and
(2) for use by the City for funding major repairs, replacements and
revenue-generating capital improvements for the Facilities.
Withdrawals from the Reserve Account for the purpose of paying City
obligations under the various debt instruments described above shall be at the
discretion of the City if timely payment thereof has not been made pursuant to
the terms and provisions of this Agreement. Withdrawals from the Reserve Account
for any other purpose shall be made only by mutual consent of the City and
Operator, not to be unreasonably withheld by either party. Any disputes with
respect thereto shall be settled by arbitration as described in Section 13.2
hereof.
Section 3.10. City Action. In the event that, during the term of the Lease
Agreement, the City takes any legislative or regulatory action, including
modification of the terms of or stipulations to the special permit for operation
of the Facilities, which specifically affect land use regulations applicable to
the Site or the operation of the Facilities, and such action has a material
adverse economic effect upon the operation of the Facilities, the Operator and
the City shall negotiate in good faith to adjust the economic obligations of the
Operator to fairly and equitably reflect the impact of such action. If the
Operator and the City are unable to agree upon an equitable adjustment, the
matter shall be submitted to arbitration pursuant to Section 13.2.
(End of Article III)
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ARTICLE IV
DEVELOPMENT OF THE SITE
Section 4.1. Development of the Site. The City shall develop the Site
pursuant to the Development Agreement between the City and the Operator.
(End of Article IV)
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ARTICLE V
USE OF THE SITE AND THE FACILITIES
Section 5.1. Permitted Uses. The Operator shall have the right and the
Operator covenants and agrees to use the Premises for the following purposes and
for no other:
Operation and management of an outdoor amphitheatre for recreational,
entertainment, artistic and cultural activities, with ancillary concession area
and parking related thereto.
Section 5.2. Operation and Use Covenants. The use of the Premises by the
Operator, its sublessees, operators, concessionaires and other occupants of the
Premises (collectively "Sublessees") shall be subject to the following terms and
restrictions:
1. The operational characteristics of events held at the facility
must conform to the following sound guidelines:
a. A concert sound monitoring and managing system shall be
installed and maintained and shall monitor sound decibel levels of
the performance at a location 2,500 feet from the exterior wall of
the Facilities during each performance and/or practice or rehearsal.
b. The concert sound monitoring and managing system shall be
installed and maintained so as to prevent tampering and to provide
access only to City officials for removal of records.
c. The sound monitoring equipment shall be checked quarterly
for accuracy and calibrated as necessary by an independent
consulting firm chosen by the City and paid for by the Operator.
d. Written records of sound measurements and sound decibel
levels shall be taken during every performance and/or practice or
rehearsals, collected after each performance/performance day by the
City and shall be kept on file by the City for a minimum period of
two years. All records in the custody of the City shall be available
to the general pubic.
e. Written records of sound decibel level violations and any
actions taken as a result of the violations for all events held at
the facility shall be kept on file with the City for a minimum
period of five years and be available to the general public.
f. The Operator will be accountable for violations of
permissible sound levels and subject to fines as herein defined.
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2. All entertainment at the amphitheater will operate so that
maximum sound pressure levels listed below are adhered to:
a. All performances at the Facilities shall be limited to a
sound pressure level of 65 dBA, measured as an Leq. reading over a
30-minute period at the monitoring locations described above.
Neighborhood ambient sound levels shall be measured at two-year
intervals during the Term at the Operator's expense by a sound
consultant chosen by the City. Changes in neighborhood ambient sound
levels shall be reflected in the sound level limitations of this
Agreement as mutually agreed to by the parties in writing, so that
the Operator will be accountable for all exceedances of sound levels
set at 10 dBA above such neighborhood ambient sound level.
b. It shall be a Violation of the foregoing sound pressure
levels, measured as an Leq reading over a 30-minute period at the
location indicated respectively, if such sound pressure level,
measured as an Leq over 30 minutes, is exceeded during any event
and/or practice rehearsal.
c. The Operator shall be fined $1,500 for each Violation
during each event and/or practice or rehearsal, not to exceed a
maximum fine of $15,000. In the event of 10 or more violations
during any 12-month period, the Operator shall, for a 12-month
penalty period thereafter, be fined $2,000 for each Violation during
an event and/or practice or rehearsal, not to exceed a maximum of
$15,000. If there are 5 or fewer Violations during such penalty
period, the fine shall revert to $1,500 per Violation, not to exceed
a maximum of $15,000.
3. A traffic management plan, previously approved in connection with
the obtaining of permits and approved by the City Development Coordination
Office, shall be implemented by the Operator to minimize congestion during
events and shall address the following:
a. Provision of sufficient personnel by the Operator within
parking areas to direct motorists to proper parking places.
b. Options for trip reduction and parking management for the
purpose of reducing vehicle trips to the Facilities and reduction of
on-site parking demand.
c. A contingency plan for overflow parking requirements, if
any.
4. No event scheduled at the Facilities shall continue after 11:30
p.m. on Sunday-Thursday evenings. Events scheduled on Friday, Saturday or
holiday evenings must conclude by 12:00 midnight.
5. The average ticket price of commercial musical events presented
at the facilities shall be maintained at a lower level than
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the average ticket prices for commercial musical events at the following
local performance facilities:
1. Celebrity Theater;
2. Symphony Hall;
3. Proposed America West Arena.
6. In connection with development approvals for the Facilities,
Operator agrees to participate in the operation of an Advisory Board to be
formed by the City, composed of representatives of the City, the Operator
and community organizations or groups. The Advisory Board shall review and
analyze operational aspects of the Facilities, with the intent of making
recommendations to the Parks, Recreation and Library Department in a
purely advisory capacity for the improvement and betterment of the
operation and functioning of the Facilities.
Section 5.3. City's Activities. The City shall have the right to utilize
the Facilities for City-sponsored events as set forth in this Section 5.3.
First, the City may use the Facilities up to ten times in any twelve-month
period, on dates which will be agreed upon by the City and the Operator on an
annual basis and thereafter confirmed and guaranteed for City use. In addition,
the City shall have the right to utilize the Facilities on forty (40) additional
dates in any twelve-month period. The City shall give the Operator written
notice of its desire to schedule any such event or events and the Operator will
notify the City not less than 45 calendar days in advance of the date or dates
requested of the availability of the date requested and any objection which it
has to the event to be scheduled. Finally, the City shall have the right to
utilize the Facilities on "dark days"; that is, on any date for which no other
event is scheduled at the Facilities. The City may not request any "dark day"
use more than thirty (30) days in advance of the date requested. City use of the
Facilities as described above shall be at no charge to the City other than
reimbursement to the Operator of the Operator's actual expenses for the
operation and management of the Premises for each such event, which expenses may
include the Operator's cost of liability insurance for such event. The City
shall pay such amounts to the Operator within ten (10) days of the Operator's
presentation of reimbursable amounts to the City, accompanied by reasonable
documentation. All requests for utilization of the Facilities by the City shall
include a description of the event, estimated attendance, and the date desired.
If the City and the Operator disagree upon the City's right to use the
Facilities as described in this Section, the matter shall be submitted to
binding arbitration by a single disinterested arbitrator selected by a
representative of the American Arbitration Association or as otherwise agreed
upon by the City and the Operator, and the costs of such arbitration shall be
paid by the party against whom the arbitration rules. Such City events shall not
conflict with events scheduled by the Operator and shall not be of a nature that
competes with the normal business of the Operator in operating the Facilities.
The City may charge an admission fee for an event only if the event is
noncommercial in nature, involving a nonprofit organization, and noncommercial
admission charges are charged. The Operator shall retain all concession revenue
and parking revenue generated by such City events and any
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such revenues received by the Operator shall be included in Gross Revenues
hereunder. Scheduling of all City sponsored events pursuant to this Section 5.3
shall be implemented by the City Manager of the City or his designee.
Section 5.4. Obligation to Refrain from Discrimination. 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 Premises and the Operator itself or any person claiming under
or through it shall not establish or permit any such practice or practices of
discrimination, or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, sublicensees, sublessees, or
vendees of the Premises or any portion thereof, and the City shall be the
beneficiary of this provision and entitled to enforce it.
Section 5.5. Form of Nondiscrimination Clause. The Operator for itself and
its successors and assigns, agrees that in the construction and operation of the
improvements provided for in this Agreement, the following clause will appear in
all contracts, leases or subleases concerning the Premises: "Any supplier,
contractor or lessee in performing under this contract, shall not discriminate
against any worker, employee or applicant, or any member of the public because
of race, creed, ancestry, color, religion, sex, marital status, or national
origin, nor otherwise commit an unfair employment practice. The supplier,
contractor or lessee will take affirmative action to ensure that applicants are
employed, and that employees are dealt with during employment without regard to
their race, creed, color, ancestry, religion, sex, marital status or national
origin. Such action shall include, but not be limited to the following:
employment, upgrading, demotion or transfer; recruitment or recruitment
advertising; layoff or termination; rates of pay or other forms of compensation;
and selection for training, including apprenticeship. The supplier, contractor
or lessee further agrees that this clause will be incorporated in all
subcontracts entered into with suppliers of materials or services, and all labor
organizations furnishing skilled, unskilled and union labor, or who may perform
any such labor or services in connection with this contract."
The clause required herein may be modified or deleted to conform to
changes in applicable laws, ordinances and regulations and deleted when no
longer required by applicable law.
Section 5.6. Rights of Access--Public Improvements and Facilities. The
City, at its sole risk and expense, reserves the right to enter the Premises or
any part thereof for the purposes of construction, reconstruction, maintenance,
repair or service of any publicly owned improvements or publicly owned
facilities located on the Premises. Such actions shall be taken in coordination
with the Operator after adequate written notice, at reasonable times not in
conflict with scheduled events of the normal operation of the Premises. The City
agrees to be responsible for any claims or liabilities pertaining to any entry
or work by the City. Any damage or injury to the Premises resulting from such
entry shall be promptly repaired at the sole expense of the public agency
responsible for the entry. The City shall not be liable to the Operator for any
damages resulting from inconvenience,
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annoyance, disturbance or loss of business caused by the performance of work
performed in accordance with this Section unless occasioned by the negligence of
the City or, by its respective agents. The City shall make all reasonable
efforts to keep any such inconvenience, annoyance, disturbance or loss of
business to a minimum.
Section 5.7. Nondisturbance. The City hereby covenants and agrees that the
Operator, by keeping and performing the covenants herein contained, shall at all
times during the Term have, hold and enjoy the Premises, without disturbance by
the City, its successors and assigns.
(End of Article V)
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ARTICLE VI
TAXES, ASSESSMENTS AND OTHER CHARGES
Section 6.1. Utilities. The Operator agrees to pay or cause to be paid, as
and when they become due and payable, all charges for water, gas, light, heat,
telephone, electricity and other utility and communication services rendered or
used on or about the Premises at all times during the term of this Agreement.
Section 6.2. Payment of Impositions (Including Taxes and Assessments).
Except as otherwise set forth herein, the Operator agrees to pay or cause to be
paid, 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, all real and personal property taxes,
assessments, franchises, excises, license and permit fees, and other
governmental levies and charges, general and special, ordinary and
extraordinary, unforeseen and foreseen, of any kind and nature whatsoever which
at any time during the term of this Agreement 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: (1) the Facilities or any part thereof or any
appurtenance thereto; (2) the fees and income received by the Operator from
Sublessees, guests or others for the use or occupation of the Facilities; or (3)
this transaction or any document to which the Operator is a party, creating or
transferring an interest or estate in the Premises.
All such taxes, franchises, excises, license and permit fees, and other
governmental levies and charges to be paid by the Operator shall hereinafter be
referred to as "Impositions," and any of the same shall hereinafter be referred
to as an "Imposition." Any Imposition relating to a fiscal period of the taxing
authority, a part of which period is included within the Term and a part of
which is included in a period of time before commencement or after the
expiration of the Term, shall (whether or not such Imposition shall be assessed,
levied, confirmed, imposed upon, become a lien upon the Premises, or shall
become payable, during the Term) be adjusted between the City and the Operator
as of the commencement or expiration of the Term as applicable, so that the
Operator shall pay that portion of such Imposition which that part of such
fiscal period included in the period of time before the expiration or
termination of the Term bears to such fiscal period, and the City shall pay the
remainder thereof; the Operator shall not be entitled to receive any
apportionment, if the Operator shall be in default in the performance of any of
the Operator's covenants and agreements as provided in this Agreement.
Section 6.3. Payment of Impositions in Installments. If, by law, any
Imposition may at the option of the payer be paid in installments (whether or
not interest shall accrue on the unpaid balance of such Imposition), the
Operator may exercise the option to pay the same (and any accrued interest on
the unpaid balance of such Imposition) in installments and, in such event, shall
pay such installments as may become due during the Term as the same respectively
become due and before any fine, penalty, further interest or cost may be added
thereto; provided, however, that the amount of all installments of any such
Imposition which will be the responsibility of the Operator pursuant to Section
6.2 hereinabove, and which are to become due and payable after the expiration of
the Term, shall be deposited with the City for such
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payment on the date which shall be one (1) year immediately prior to the date of
such expiration.
Section 6.4. Tax Receipts. The Operator shall furnish to the City, within
forty-five (45) days after the date when any Imposition would become delinquent,
official receipts of the appropriate taxing authority or other evidence
satisfactory to the City evidencing payment thereof.
Section 6.5. Limits of Tax Liability. The provisions of this Agreement
shall not be deemed to require the Operator to pay taxes assessed against the
City, or municipal, county, state or federal capital levy, estate, succession,
inheritance, gift, or transfer taxes of the City; except, however, that the
Operator shall pay all taxes assessed by any governmental authority by virtue of
any operation by the Operator conducted on or out of the Premises. In addition,
the parties hereto acknowledge and agree that the use of the Facilities is
intended to be for a recreational, entertainment, artistic, cultural, or
convention activity as that term is used in A.R.S. ss. 42-684.9 for the purpose
of exemption from possessory interest taxes pursuant to A.R.S., Title 47,
Chapter 3, Article 5. In the event that the City ever levies any municipal real
estate taxes or possessors interest taxes against the Facilities, any such
amounts paid by the Operator shall be an offset against Additional Rent due.
Section 6.6. Permitted Contests. The Operator shall have the right to
contest the validity or the amount in part or in full, of any Imposition which
it is obligated to pay under the provisions of this Agreement. The Operator
agrees that all such proceedings shall be begun without undue delay after any
contested item is imposed and shall be prosecuted to final adjudication with
reasonable dispatch.
The Operator shall give the City prompt notice in writing of any such
contest at least ten (10) days before any delinquency occurs. The Operator may
only exercise its right to contest an Imposition hereunder if the subject legal
proceedings shall operate to prevent the collection of the Imposition so
contested, or the sale of the Premises, or any part thereof, to satisfy the
same, and only if the Operator shall, prior to the date such Imposition is due
and payable, have given such reasonable security as may be required by the City
from time to time in order to insure the payment of such Imposition to prevent
any sale, foreclosure or forfeiture of the Premises or any part thereof, by
reason of such nonpayment. In the event of any such contest and the final
determination thereof adversely to the Operator, the Operator shall, before any
fine, interest, penalty or cost may be added thereto for nonpayment thereof, pay
fully and discharge the amounts involved in or affected by such contest,
together with any penalties, fines, interest, costs and expenses that may have
accrued thereon or that may result from any such contest by the Operator and,
after such payment and discharge by the Operator, the City will promptly return
to the Operator such security as the City shall have received in connection with
such contest.
The City shall cooperate reasonably in any such contest permitted by this
Section 6.6, and shall execute any documents or pleadings reasonably required
for such purpose. Any such proceedings to contest the validity or amount of an
Imposition or to recover back any Imposition paid by the Operator shall be
prosecuted by the Operator at the Operator's sole cost and expense;
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and the Operator shall indemnify and save harmless the City against any and all
loss, cost or expense of any kind, including, but not limited to, reasonable
attorneys' fees and expenses, which may be imposed upon or incurred by the City
in connection therewith.
Section 6.7. Liens--City Right to Cure. The Operator shall not, directly
or indirectly, create or permit to be created or to remain, and will promptly
discharge, at its expense, any mortgage, lien, encumbrance or charge on or
pledge of the Premises or fixtures and furnishings, or any part thereof, or the
Operator's interest therein, or the Basic Rent, Additional Rent or other sums
payable by the Operator under this Agreement, other than such secured financings
as are permitted pursuant to Section 9.1 and such liens as are being contested
by the Operator in accordance with Section 7.7, or any lien arising from or
created by the act or failure to act on the part of the City. The Operator shall
notify the City promptly of any lien or encumbrance which has been created on
or attached to the Premises, or to the Operator's leasehold estate or other
interest therein, whether by act of the Operator or otherwise.
If the Operator, in violation of the provisions of this Agreement, shall
fail to pay and to discharge any Imposition, mortgage, lien, encumbrance, charge
or pledge, the City may (but shall not be obligated to) pay or discharge it, and
the amount paid by the City and the amount of all costs, expenses, interest and
penalties connected therewith, including attorney fees, together with interest
at the Default Rate shall be deemed to be and shall be payable by the Operator
as additional fees and shall be reimbursed to the City by the Operator on
demand, provided that the Operator shall have failed to pay such Imposition
within five (5) days after written notice from the City of its intention to pay.
The existence of any mechanic's, laborer's, materialman's, supplier's or
vendor's lien, or any right in respect thereof, shall not constitute a violation
of this Section if payment is not yet due upon the contract or for the goods or
services in respect of which any such lien has arisen. Nothing in this Section
is intended to create any obligation or liability on the part of the Operator
for liens arising from or created by the City's act or failure to act.
Section 6.8. Deposits for Impositions. In order to assure the payment of
all Impositions and insurance premiums, the Operator agrees that, on demand made
by the City at any time after the occurrence of a default in the payment of any
Imposition hereunder which is not cured within any applicable cure period, and
if impounds for payment of such Impositions are not being made to the holder of
a first priority secured financing, it shall deposit with a bank, trust company,
insurance company (including a title insurance company) or savings bank selected
by the City (the "Depository") on the first day of each and every month during
the remaining term one-twelfth (1/12) of all Impositions and insurance premiums
for one (1) year then in effect as estimated by the City. The Operator shall
deposit, prior to the date which is thirty (30) days prior to the due date of
any Imposition or insurance premium, such additional amount as may be necessary
to provide Depository with sufficient funds in such deposit account to pay each
such charge at least thirty (30) days in advance of the due date thereof.
Depository shall hold the money so deposited in a special account for the
purpose of paying the charges for which such amounts have been deposited as they
become due, and Depository shall apply the aforesaid deposits for such
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purpose not later than the last day on which any such charges may be paid
without penalty or interest. If, at any time, the amount of any Imposition or
insurance premium is increased or the City receives information that such
Imposition or insurance premium will be increased, and if the monthly deposits
then being made by the Operator for this purpose (if continued) would not make
up a fund sufficient to pay such Imposition or insurance premium thirty (30)
days prior to the due date, said monthly deposits thereupon shall be increased
and the Operator immediately shall deposit with Depository, on demand,
sufficient moneys so that the moneys then on hand for the payment of said
Imposition or insurance premium, plus the increased one-twelfth (1/12) payments
and such additional sums demanded, shall be sufficient so that Depository shall
have received from the Operator adequate amounts to pay such Imposition or
insurance premium at least thirty (30) days before such Imposition or insurance
premium becomes due and payable. For the purpose of determining whether
Depository has on hand sufficient moneys to pay any particular Imposition or
insurance premium at least thirty (30) days prior to the due date therefor,
deposits for each category of Imposition or insurance premium shall be treated
separately, it being the intention that Depository shall not be obligated to use
moneys deposited for the payment of an item not yet due and payable to the
payment of an item that is due and payable. Notwithstanding the foregoing, it is
understood and agreed that (a) deposits provided for hereunder may be held by
Depository in a single bank account, and (b) Depository, at the City's option,
may, if the Operator fails to make any deposit required hereunder, use deposits
for one item for the payment of any rental. If this Agreement shall be
terminated by reason of any event of default, all deposits then held by
Depository shall be applied by the City on account of any and all sums due under
this Agreement and the Operator shall forthwith pay the resulting deficiency.
All interest, if any, paid on moneys deposited pursuant to the provisions of
this provision shall be applied against amounts thereafter becoming due and
payable by the Operator pursuant to the foregoing provisions. The Operator shall
pay all Depository costs and charges for service. The City shall attempt to
deposit funds in an interest bearing account, any interest to accrue for the
benefit of the Operator.
(End of Article VI)
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ARTICLE VII
OWNERSHIP OF AND RESPONSIBILITY FOR FACILITIES
Section 7.1. Ownership of Facilities. All structures and improvements,
which constitute or are a part of the Premises, exclusive of trade fixtures and
personal property of the Operator and Sublessees, are, and shall remain the
property of the City free and clear of all claims and encumbrances on such
structures and improvements by the Operator, and anyone claiming under or
through the Operator. The Operator agrees to and shall defend, indemnify and
hold the City harmless from and against all liability and loss which may arise
from the assertion of any such claims and any encumbrances on such structures
and improvements unless resulting from the City's acts or omissions.
Section 7.2. Right to Remove Trade Fixtures. The Operator and its
permitted Sublessees shall have the right to remove or replace all fixtures or
equipment paid for by the Operator or its permitted Sublessees from the Premises
at any time prior to expiration or sooner termination of the Term. At the
expiration or sooner termination of the Term (or any extension of such Term),
provided that the Operator is not then in default, the Operator shall have the
right to remove all fixtures or equipment paid for by the Operator or its
Sublessees from the Premises; provided, however, that any trade fixtures paid
for by the Operator or its Sublessees shall be removed within sixty (60)
calendar days after the date of expiration of the Term. If such trade fixtures
are not removed from the Premises within such sixty-day period, it is hereby
agreed that such trade fixtures shall (without the payment of compensation to
the Operator or others) become the property of the City and the Operator shall
defend, indemnify and hold the City harmless from and against all liability and
loss arising from any claims of any Sublessees relating to such trade fixtures
not removed from the Premises within such sixty-day period. In addition, if the
Operator is in default at the termination of the Agreement, then the Operator
may remove, within the foregoing time limits, any of its trade fixtures which
are not necessary or appropriate to compensate the City for any damages or sums
owing to the City as a result of such default. Operator's default under this
Agreement shall not impair the right of any Sublessees to remove and replace its
trade fixtures.
Section 7.3. Maintenance and Repair of Facilities. The Operator agrees to
assume full responsibility for the operation and maintenance of the Facilities
area, as outlined in boldface on the Site Map. Such responsibility includes
operation and maintenance of Facilities structures (including the interior and
exterior thereof) and all heat and air conditioning fixtures and furnishings
thereof or therein, and all sidewalks and all landscaping within the Facilities,
throughout the Term hereof without expense to the City unless otherwise
specified herein, and to perform all repairs and replacements necessary to
maintain and preserve the Facilities and their fixtures, furnishings and
landscaping in a decent, safe and sanitary condition and in compliance with all
applicable laws.
(a) The City agrees to assume full responsibility for costs of
repair or replacement of major structural elements of the Facilities, as
reasonably necessary, but such responsibility shall not include normal
maintenance or repair of building facades, roofs or tensile
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fabrics, nor replacement of roofs or tensile fabrics. Major structural
elements include only those portions of the Facilities deemed by the City
Engineer to be necessary to structurally support the Buildings. The City
further agrees to pursue any contractual remedies it may have against a
contractor responsible for construction work which results in structural
failure. If it is the Operator's assessment and recommendation that any
item requiring replacement or repair is a major structural element of the
Facilities, the Operator shall hand deliver to the City written notice of
such item requiring repair or replacement under this Section. The City
shall accept or reject financial responsibility for such repair or
replacement within ten (10) days of receipt. If notice of acceptance or
rejection is not given within said ten-day period, the character of the
replacement or repair shall be doomed to be in dispute. To the extent a
dispute develops between the City and the Operator as to the character of
a particular repair and the resultant financial responsibility therefor,
the Operator may proceed with the work which in its judgment is required
and the question of financial responsibility therefor shall be submitted
to binding arbitration as described in Section 13.2 hereof.
(b) The Operator agrees to assume full responsibility for the
clean-up of rubbish and other debris from the Parking Area within a
reasonable time not to exceed twenty-four (24) hours after an event takes
place in the Facilities. All other maintenance and repair of the Parking
Area, regular and extraordinary, including landscaping, shall be the
responsibility of the City. The City shall maintain the Parking Area in
high-quality condition, in conformance with all applicable governmental
rules and regulations, and shall not allow the Parking Area to become
uneven, rutted, or a source of dust.
Section 7.4. Waste. The Operator shall not commit or suffer to be
committed any waste or impairment of the Premises, or any part thereof.
The Operator agrees to keep the Premises clean and clear of refuse and
obstructions, and to dispose of all garbage, trash and rubbish in a manner
satisfactory to the City.
Section 7.5. Alteration of Facilities. The Operator shall not make or
permit to be made any alterations of, additions to, or changes in (for the
purposes of this paragraph, "Alterations") the Facilities without the City's
approval, other than the following permitted Alterations:
(a) Alterations involving routine maintenance, repairs, interior
decoration and minor exterior alterations;
(b) Alterations of structures in the ancillary concession area of
the Facilities;
(c) Alterations which expand or improve the quality of contemplated
recreational, entertainment and cultural events at the Facilities; or
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(d) Alterations which increase the capacity, ability or efficiency
of the existing Facilities to accommodate existing uses.
No City approval shall be required for such permitted Alterations;
provided, however, that City approval shall be required for any above permitted
Alterations, the estimated aggregate expenditures for which exceed One
Million Dollars ($1,000,000). The Operator shall provide, upon request of the
City, the estimated and/or actual budget relating to any Alterations made under
this Section.
The Operator shall bear the cost of all Alterations made pursuant to this
Section and shall bear full responsibility for the maintenance and repair
thereof.
In the event that the Operator wishes to undertake Alterations which would
require the City's approval, the Operator will give the City a written
preliminary description of any such proposed Alteration. The City shall have ten
(10) days from receipt of such preliminary description to give written notice of
its disapproval thereof. If the City approves the preliminary description, the
Operator, if it wishes to continue with such proposed Alteration, shall provide
the City with schematic drawings of the proposed Alteration. The City shall have
thirty (30) days from receipt of such drawings to give written notice of its
disapproval thereof. If the City approves such drawings, no further approval of
the City will be required (other than normal building safety and permit
requirements) unless the proposed Alteration materially changes from the
description and schematic drawings given to the City by the Operator. In each
case the City's approval shall not be unreasonably withheld, disapproval shall
be accompanied by a written explanation of the reasons therefor and, if
disapproval is not given within the described time periods, the City will have
deemed to have given its approval.
In the event that the Operator undertakes any Alteration which involves
additional structures to be placed on the Premises, the Operator shall be
responsible for all costs of repair or replacement of major structural elements
of such additional structures. Nothing in this Section shall operate to relieve
the Operator of its obligations described elsewhere in this Agreement to perform
all work on the Premises in accordance with applicable laws and regulations and
to keep the Premises free of any liens arising out of the work undertaken by the
Operator.
Notwithstanding the prohibition in this Section 7.5, the Operator may make
such changes, repairs, alterations, improvements, renewals or replacements to
the Facilities as are required by reason of any law, ordinance, regulation or
order of a competent government authority, or are otherwise required for the
continued safe and orderly operation of the Facilities. In addition, the
Operator may freely alter, remove and replace structures in the ancillary
concession area of the Facilities; provided that major structural changes shall
not be made without the prior written consent of the City, which shall not be
unreasonably withheld.
Section 7.6. Damage or Destruction. The Operator agrees to give notice to
the City of any fire, flood or other damage that may occur on the Premises
within three (3) days of such fire, flood or damage. If the
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Facilities shall be damaged or destroyed by any cause, the Operator agrees as
follows:
(a) The Operator shall have the right, at its option, to make or cause to
be made full repair of said damage and restore the Facilities to the condition
in which they existed prior to said damage, or clear and remove from the
Premises all debris resulting from said damage and rebuild the Facilities in
accordance with the original plans and specifications in order to replace in
kind and to the condition of such Facilities before the event giving the
Facilities the scope which existed prior to such damage. Such repair,
restoration or replacement of the Facilities shall be financed with proceeds of
the insurance required by Article X hereof and no City funds shall be used for
such repair or restoration by the Operator. The disposition of such insurance
proceeds shall be in accordance with Section 10.6 hereof. The quality of the
repaired or replaced Facilities shall be at least the quality of the Facilities
prior to the damage or destruction, and any major change to the plans and
specifications from the original Facilities shall be approved in writing by the
City. The Operator agrees that the election to perform repairs, restoration or
to rebuild the Facilities shall be made by the Operator within thirty (30) days
or such longer period as may be necessary to obtain performance under any
applicable insurance policy and the required repairs, restoration or replacement
shall be commenced and diligently completed within a reasonable time thereafter.
(b) If the Operator chooses not to repair, restore or rebuild as provided
in (a) above, then the City shall have the right, at its option, to effect such
repair, restoration or replacement of the Facilities, using proceeds of the
insurance required by Article X hereof. No City funds shall be used for such
repair or restoration by the City. The disposition of such insurance proceeds
shall be in accordance with Section 10.6 hereof. In the event that the City
exercises its option to so repair, restore or rebuild the Facilities, this
Agreement shall remain in full force and effect, subject to the provisions of
(d) below. The City agrees that the election to perform repairs, restoration or
to rebuild the Facilities shall be made by the City within thirty (30) days of
receipt of notice of Operator's election not to so rebuild or repair, or such
longer period as may be necessary to obtain performance under any applicable
insurance policy and the required repairs, restoration or replacement shall be
commenced and diligently completed within a reasonable time thereafter.
(c) If the City elects not to repair, restore or rebuild the Facilities
pursuant to its option in (b) above, then, upon five (5) days' written notice to
the Operator of such election, this Agreement shall terminate, all proceeds of
insurance shall be distributed to the City as provided in section 10.6 hereof
and the Operator shall deliver possession of the Premises to the City and
quitclaim all right, title and interest in the Premises.
(d) If the fire, flood or other damage to the Premises requiring repair or
restoration under this Section 7.6 is such that the Operator is prevented from
using and operating the Facilities in the manner contemplated by this Agreement,
then during the period of repair or restoration, 50% of the Basic Rent shall
abate from the date of such damage until the date that the Facilities and, if
applicable, the Parking Area are completely restored;
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provided, however, that if the Operator continues or earlier resumes the
operation of its business, the Basic Rent shall be equitably adjusted for the
period of repair or reconstruction. If such period of repair or restoration
exceeds one full calendar year, then 100% of the Basic Rent shall abate from the
beginning of the second calendar year until the date that the Facilities and, if
applicable, the Parking Area, are completely restored; provided, however, that
if the Operator continues or earlier resumes the operation of its business, the
Basic Rent shall be equitably adjusted for the period of repair or
reconstruction.
Section 7.7. Faithful Performance and Labor and Material (Payment) Bonds;
Indemnification.
(a) The Operator agrees to hold the City free and harmless, and to
indemnify the City against all claims, liabilities, costs and expenses, for
labor and materials in connection with all construction, repairs or alterations
on the Premises which are the Operator's responsibility and the cost of
defending against such claims, including reasonable attorney's fees.
(b) The Operator shall pay (or cause to be paid) all costs and expenses of
any construction, repairs, or alterations done by it or caused to be done by it
on the Premises. The Operator shall keep the Premises free and clear of all
mechanics', materialmens', contractors' or subcontractors' liens resulting or
arising from any such work done on the Premises. The Operator, however, shall
have the right to contest the validity or the correctness of any such lien or
any such asserted claim, during which time the lien may remain of record;
provided, however, that if the City reasonably determines that the continuation
of the lien will involve a substantial risk that the City's title to the
Facilities will be jeopardized, the Operator will, upon request of the City,
procure and record a lien release bond issued by a corporation authorized to
issue surety bonds in Arizona in an amount equal to the amount required by
statutes to release the lien. The bond shall meet the requirements of A.R.S. ss.
33-1004 or any successor statute or shall provide for the payment of any sum
that the claimant may recover on the claim together with the cost of suit, if
the claimant recovers on any action. If a lien release bond has not been
recorded and the final judgment has been rendered for the foreclosure of the
lien and if the Operator shall fail to stay the execution of such judgment or
pay such judgment, the City shall have the right to pay or otherwise discharge,
stay, or prevent the execution of any such judgment or lien or both. All sums
paid by the City under this paragraph, together with all reasonable attorneys'
fees and costs, shall be reimbursed by the Operator within ten (10) days
following the date on which the City gives notice in writing of the payment of
such sums, fees, and costs, along with reasonable documentation, and interest
shall accrue from the date of such notice at the Default Rate.
The Operator agrees to procure, or cause the procurement of, contractor's
bonds covering labor, materials and faithful performance for any construction or
reconstruction on the Premises. Each such bond shall be in the amount equal to
one hundred percent (100%) of the construction price in the contract entered
into by the Operator and its general contractor. Said bonds must first be
approved in writing as to content and form by the City. The City shall not
unreasonably withhold such approval and shall give notice of disapproval within
ten (10) days of receipt of the form thereof or shall be
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deemed to have given its approval. The Operator shall, prior to commencement of
construction, deliver to the City a certificate or certificates from the bonding
company(s) issuing the aforesaid bonds, naming the City as additional insured
under said bonds.
(c) The City shall keep the premises free from any liens, encumbrances or
claims arising out of any construction, repairs or alterations to the Premises
performed by the City under the terms of this Agreement. In the event that any
such matter does arise, the City shall have the right to contest same but in no
event shall the City allow any such lien, encumbrance, or claim to materially
adversely affect the Operator's rights under this Agreement or any of the
Operator's property.
The foregoing provisions of this Section shall be applicable to
construction, repairs or alterations to the Premises which are the Operator's
responsibility at all times during the Term.
The City shall have the right to post and maintain on the Premises any
notices of nonresponsibility provided for under applicable law.
(End of Article VII)
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ARTICLE VIII
ASSIGNMENT, SUBLEASE, TRANSFER
Section 8.1. Prohibition Against Changes in Ownership, Management and
Control of Operator.
(a) The Operator represents and agrees that its use of the Facilities and
its undertakings pursuant to this Agreement are, and will be, used for the
purpose of operation of the Facilities. The Operator further recognizes that, in
view of:
(1) the importance of the development of the Premises to the general
welfare of the community;
(2) the substantial financing and other public aids that have been
made available by law and by the government for the purpose of making such
development possible;
(3) the fact that a change in ownership or control of the Operator
or of a substantial part thereof, or any other act or transaction
involving or resulting in a significant change in ownership or with
respect to the identity of the parties in control of the Operator or the
degrees thereof, is for practical purposes a transfer or disposition of
the Premises; and
(4) the property is not to be used for speculation, but only for
operation by the Operator in accordance with this Agreement;
the qualifications and identity of the Operator, and its partners and
principals, are of particular concern to the City.
Prior to the issuance of a final certificate of occupancy for the
Facilities to be constructed on the Site, this Agreement may not be assigned by
the Operator, and none of the shareholders of the Operator shall make a transfer
of a significant interest in the Operator, other than the following permitted
transfers a
(i) a direct or indirect transfer by one or more of the shareholders
of all or a portion of their respective interests in the Operator to Zev
Bufman or an entity controlled by Zev Bufman, or to an existing
shareholder of the Operator provided that Zev Bufman or an entity
controlled by Zev Bufman retains majority voting control of the Operator;
(ii) a transfer of a shareholder's interest in the Operator (or of
any outstanding stock or other equity interest in such shareholder)
occasioned by the death, incapacity, or adjudication of bankruptcy of such
shareholder (or of a shareholder or other owner of an equity interest in
such shareholder).
Following such issuance, upon the City's prior written consent, which the
City agrees will not be unreasonably withheld or delayed, this Agreement shall
be assignable by the Operator, and the shareholders of the Operator may transfer
their interest in the Operator. The City's consent will not be
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required for permitted transfers as described above. Upon any such assignment or
transfer with consent of the City, and the assumption by the assignee or
transferee of all liabilities and obligations of the Operator under this
Agreement whether arising before or after the date of transfer (or, in the case
of a transfer of an interest in the Operator, all liabilities of the transferor
as a shareholder with respect to this Agreement whether arising before or after
the date of transfer), the person making such assignment or transfer shall be
released from any and all liabilities under this Agreement.
(b) The Operator agrees to and shall indemnify and hold the City harmless
from or against all claims, demands and obligations asserted by or from any
party claiming a right, interest or ownership to this Agreement, through or with
the Operator and its shareholders arising out of or in connection with
relationships the Operator or its shareholders have entered into with such other
party in violation of this Agreement.
Section 8.2. Restrictions Regarding Transfer or Sublease. The Operator
shall not, except as permitted by this Section and by Article 10 of this
Agreement, assign or attempt to assign this Agreement, or any right herein, nor
make any total or partial conveyance, assignment, sublease or transfer in any
other mode or form of the whole or any part of the Premises, or of its parking
rights under this Agreement, without prior written approval of the City. Such
approval shall only be given by the City if such conveyance, assignment,
sublease or transfer is deemed by the City to be in the best interests of the
City to carry out the purposes of this Agreement and if the proposed conveyee,
assignee, sublessee or transferee has, in the reasonable opinion of the City,
the financial capability and overall competence to operate the conveyed,
assigned, subleased or transferred obligations and premises. Approval by the
City of any conveyance, assignment, sublease or transfer shall be conditioned
upon such conveyee, assignee, sublessee or transferee agreeing in writing to
assume the rights and obligations thereby conveyed, assigned, subleased or
transferred and to keep and perform all covenants, conditions and provisions of
this Agreement which are applicable to the rights acquired.
In the event of a conveyance, assignment or transfer of the Agreement by
the Operator approved by the City, the Operator shall, effective on such
assignment or transfer, be released of any and all further liability with
respect to obligations arising or to be performed after the assignment or
transfer so long as the proposed conveyee, assignee or transferee has, in the
reasonable opinion of the City, the financial capability and overall competence
to operate the Premises and the conveyee, assignee or transferee assumes in
writing the rights and obligations of the Operator under this Agreement. Such
opinion by the City shall be in writing.
The Operator shall only convey, assign, sublease or transfer the Premises
and the Operator's rights as a whole and, except as described herein, is not
permitted to subdivide the Premises and its rights for the duration of the
Agreement without the prior approval of the City.
The limitations on transfer contained hereinabove shall not be deemed to
prevent the granting of easements or permits to facilitate the development of
the Premises, nor shall it prohibit granting any security interests expressly
described or permitted in this Agreement for financing the operation
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of the Premises, nor shall it prohibit subleasing space for occupancy consistent
with the uses and practices of facilities of the types permitted by Section 5.1
of this Agreement, subject to the terms, covenants and conditions of this
Agreement and the rights of the City as grantor.
Notwithstanding anything contained herein to the contrary, the Operator
shall have the right to freely grant concessions, use rights, leases, subleases,
and permits for the use of portions of the Premises for Facilities-related uses,
activities, and operations, specifically including (without limitation) the sale
of food and/or beverages, the organization and control of parking, and the sale
of novelties, merchandise, souvenirs, and programs. The term "Sublessee" as used
herein includes grantees of such rights.
Section 8.3. City's Right to Collect Subrent. The City, after default by
the Operator and expiration of any applicable cure period, may collect subrent
and all other sums due under all contracts, concession agreements, leases or
subleases concerning the Premises (the "Subleases"), and apply the net amount
collected to the Basic Rent and additional payments payable by the Operator
hereunder, but no such collection shall be, or be deemed to be, a waiver of any
agreement, term, covenant or condition of this Agreement or the acceptance by
the City of any Sublessees as the Operator hereunder, or a release of the
Operator from performance by the Operator of its obligations under this
Agreement. Any amount to which the City is entitled as payment for the Basic
Rent or additional payment pursuant to this Section 8.3 shall enjoy the
protection accorded by the provisions of Section 3.4 herein relating to
subordination of the Basic Rent.
Section 8.4. Operator Assignment of Subleases. To secure the prompt and
full payment by the Operator of the Basic Rent and the Additional Rent and the
faithful performance by the Operator of all the other terms and conditions
herein contained on its part to be kept and performed, the Operator hereby
assigns, transfers and sets over unto the City, subject to any secured financing
and the conditions hereinafter set forth, all of the Operator's right, title and
interest in and to all Subleases and hereby confers upon the City, its agents
and representatives, a right of entry in, and sufficient possession of, the
Premises to permit and insure the collection by the City of the rental and other
sum payable under the Subleases, and further agrees that the exercise of said
right of entry and qualified possession by the City shall not constitute an
eviction of the Operator from the Premises or any portion thereof and that
should said right of entry and possession be denied the City, its agent or
representative, the City, in the exercise of said right, may use all requisite
force to gain and enjoy the same without responsibility or liability to the
Operator, its servants, employees, guests or invitees, or any person whomsoever;
provided, however, that such assignment shall become operative and effective
only if (a) a default shall occur; (b) this Agreement and the Term shall be
cancelled or terminated pursuant to the terms, covenants and conditions hereof;
or (c) there occurs repossession under a dispossess warrant or other re-entry or
repossession by the City under the provisions hereof. From time to time upon
the City's demand, the Operator shall promptly deliver to the City a schedule of
all Subleases, setting forth the names of all Sublessees.
Section 8.5. Attornment. The Operator covenants and agrees that all
Sublessees affecting the Premises shall provide that (a) they are subject to
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this Agreement, (b) the Sublessees will not pay rent or other sums (other than a
security deposit and last month's rent) under the Subleases with the Operator
for more than one (1) month in advance, and (c) on the termination of this
Agreement pursuant to Article 12 hereof, the Subleases will attorn to, or enter
into a direct lease on identical terms with the City, subject to the terms of
Section 8.8 hereof, and shall furnish at the City request confirmation from any
Sublessee of the existence of such provisions.
Section 8.6. Sublessee Compliance. The Operator shall cause the Sublessees
to comply with their obligations under their Subleases and shall diligently
enforce all of the rights of the City in accordance with the terms thereof.
Section 8.7. Operator Obligation for Sublessee Act or Omission. The fact
that a violation or breach of any of the terms, provisions or conditions of this
Agreement results from or is caused by an act or omission by any of the
Sublessees shall not relieve the Operator of the Operator's obligation to cure
the same. The Operator shall take all necessary steps to prevent any such
violation or breach.
Section 8.8. Recognition of Sublessee by City. The City covenants and
agrees, for the benefit of any Sublessee, that the City shall recognize the
Sublessee as the direct tenant of the City upon the termination of this
Agreement; provided, however, that (i) the City has approved the terms of the
Sublessee's Sublease with the Operator prior to the execution of such Subleases,
(ii) at the time of the termination of this Agreement, no default exists under
the Sublessee's Sublease which at such time would then permit the City to
terminate the same or to exercise any dispossess remedy provided for therein,
and (iii) at the time of the termination of this Agreement, the Sublessee shall
deliver to the City an instrument confirming the agreement of such Sublessee to
attorn to the City and to recognize the City as the Sublessee's grantor under
its Sublease, which instrument shall provide that neither the City, nor anyone
claiming by, through or under the City shall be:
(1) liable for any act or omission of any prior landlord (including,
without limitation, the then defaulting landlord);
(2) subject to any offsets or defenses which the Sublessee may have
against any prior grantor (including, without limitation, the then
defaulting grantor);
(3) bound by any payment of fees which the Sublessee might have paid
for more than the current month to any prior grantor (including, without
limitation, the then defaulting grantor);
(4) bound by any covenant to undertake or complete any construction
of structures or any portion thereof demised by said Sublease;
(5) bound by any obligation to make any payment to the Sublease; or
(6) bound by any modification of the Sublease which reduces the
license fee, additional fees, supplemental fees or other charges
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payable under the Sublease, or shortens the term thereof, or otherwise
materially adversely affects the rights of the landlord thereunder, made
without the written consent of the City.
Upon such termination and recognition, all rentals accruing and payable
under the Sublease shall be paid by the Sublessee to the City, and any and all
of the benefits accruing thereafter to the Operator under the Sublease shall
belong to the City, and Sublessee and the City shall be bound to and attorn to
each other with the same force and effect as if they were the parties to the
Sublease.
Section 8.9. Freedom from Lien. The City agrees that personal property and
trade fixtures of Sublessees shall remain the property of Sublessees, free from
any lien rights of the City for debts or obligations under this Agreement,
provided that the Operator has previously informed the City in writing of the
specific items to be brought upon the Premises which are to remain the property
of the Sublessee in question. The City agrees to waive any lien or similar
rights to such property and to confirm such waiver in writing to any Sublessee
upon request.
(End of Article VIII)
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ARTICLE IX
MORTGAGES
Section 9.1. Secured Financing. Notwithstanding Article 8, at any time and
from time to time during the Term, the Operator shall have the right to
mortgage, pledge, deed in trust or otherwise encumber its rights under this
Agreement, in whole or in part, and to assign or pledge the same in whole or in
part, as security for any debt (the holder of any such mortgage, pledge or other
encumbrance, and the beneficiary of any such deed of trust being hereafter
referred to as a "Secured Creditor" and the mortgage, pledge, deed of trust or
other instrument hereafter referred to as a "Security Instrument"), upon and
subject to each and all of the following terms and conditions:
(i) The City's interests in the Site and the Facilities shall not be
subordinated to any Security Instrument.
(ii) No such Security Instrument shall be binding upon the City in
the enforcement of its rights and remedies herein and by law provided, nor
shall a holder of such a Security Instrument be deemed a Secured Creditor
under this Article, unless a copy of the original thereof and a certified
copy of the original note secured by such Security Instrument has been
delivered to the City together with written notice of the address of the
Secured Creditor to which notices may be sent; and in the event of an
assignment of any Security Instrument, such assignment shall not be
binding upon the City unless a copy thereof bearing the date and recording
or filing information, together with written notice of the address of the
assignee thereof to which notices may be sent, have been delivered to the
City. If a copy of the Security Instrument or assignment is delivered to
the City, such Security Instrument or assignment, as applicable, shall be
binding upon the City, to the extent provided in this Article 9, as of the
date of recordation or filing.
(iii) The provisions of this Agreement shall control the City's
rights to the disposition and application of the insurance proceeds and
condemnation awards.
Section 9.2. Rights and Obligations of Secured Creditors.
(a) Whenever the City shall deliver or make any notice or demand to the
Operator with respect to any breach or default by the Operator in its
obligations or covenants under this Agreement, the City shall at the same time
deliver to each Secured Creditor of which it has received notice pursuant to
Section 9.1(b) above, a copy of such notice or demand, and each such Secured
Creditor shall have the right, at its option, to cure or remedy such breach or
default and to add the cost thereof to the secured debt and the lien of its
Secured Interest. Failure by the City to give such notice shall not affect the
City's remedies against the Operator in the event of the Operator's default.
(b) The City agrees to accept performance and compliance by any Secured
Creditor with any monetary term, covenant, agreement, provision or limitation on
the Operator's part to be kept, observed or performed by the
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be deemed to be approved. Any disapproval shall be accompanied by a description
of the basis and reasons for such disapproval.
(e) This Agreement shall not be modified, amended, surrendered, canceled
or wholly or partially terminated by the Operator, nor shall any interpretive,
implementing or confirmatory agreements between the City and the Operator become
effective, nor shall any waiver of the Operator's rights hereunder or any
approval, consent or agreement of the Operator required hereunder be effective
without the written consent of each Secured Creditor whose name and address
shall have been furnished to the City.
(f) No Secured Creditor shall have any liability for the performance of
any of the covenants, conditions or obligations of the Operator under this
Agreement unless and until such time as such Secured Creditor either acquires
the interest created by this Agreement by assignment in lieu of foreclosure or
purchases the same at a sale in foreclosure of its Security Interest. In no
event shall any Secured Creditor have personal liability under this Agreement,
and the City shall look solely to such Secured Creditor's interest in this
Agreement in the event of a default by such Secured Creditor hereunder.
Section 9.3. City's Right to Cure Operator's Defaults on Secured
Interests. The Operator agrees to have any Security Instrument made pursuant to
this Agreement provide:
(a) That the Secured Creditor shall by registered or certified mail
and in writing give notice to the City of the occurrence of any event of
default;
(b) That the City shall be given at least thirty (30) days notice of
default in debt service payments before such Secured Creditor will
initiate any foreclosure action or other enforcement of its rights. If any
payments required to be made under the provisions of the Security
Instrument (or the debt it secures) shall not be performed which shall
constitute a default under the terms of the Security Interest, the City
may cure said default. The City shall endeavor to give the Operator notice
of its intent to cure such default, but failure to give notice shall not
impair the City's right to cure. If the City shall elect to cure such
default, the Operator shall pay the cost thereof to the City together with
interest thereon at the Default Rate as additional payment to the City,
unless the Operator shall cure such default within said ten-day period, or
(a) compliance requires more than ten (10) days and the Operator shall
have commenced compliance within a reasonable time after such notice and
shall have cured such default within thirty (30) days after commencing
compliance, or (b) the Operator shall obtain from Secured Creditor a
written extension of time granting the City a reasonable additional time
to cure said default if said default is not cured within said extended
time and copies thereof are delivered to the City. The Operator does
hereby authorize the City in the City's name without any obligation or
duty on the City to do so, to do any act or thing required of or permitted
to the Operator to prevent any default under said Security Instrument or
any acceleration thereof, or the taking of any foreclosure or other action
to enforce the collection of the indebtedness, and the Operator agrees to
indemnify and hold
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the City harmless and to reimburse the City upon demand for all reasonable
costs, charges and expenses incurred by the City in such connection. If
the Operator at any time shall request any Secured Creditor to grant a
moratorium on payment, to waive payment or to extend the time for payment,
the Operator shall give the City written notice thereof by registered or
certified mail concurrently with the making of said request and shall
further give the City written notice by registered or certified mail of
the granting or denial of said request.
Section 9.4. Non-Merger. There shall be no merger of this Agreement, or of
the right, interest or estate created thereby, with the fee estate in and to the
Site or the Facilities by reason of the fact that this Agreement, or the
interest created thereby, or any interest in either thereof, may be held
directly or indirectly by or for the account of any person who shall own the fee
estate in and to the Site or the Facilities, or any portion thereof, and no such
merger shall occur unless and until all persons at the time having any interest
in this Agreement or the interest estate, including the Secured Creditor, shall
join in a written instrument effecting such merger.
Section 9.5. Operator Certificate. The Operator shall, without charge, at
any time and from time to time, within ten (10) days after request by the City,
certify by written instrument, duly executed, acknowledged and delivered, to the
City, or any other person, firm or corporation specified by the City:
(i) That this Agreement is unmodified and in full force and effect,
or, if there have been any modifications, that the same is in full force
and effect as modified and stating the modifications;
(ii) Whether or not there are then existing any setoffs or defenses
against the enforcement of any of the agreements, terms, covenants or
conditions hereof and any modifications hereof upon the part of the
Operator to be performed or complied with, and, if so, specifying the
same;
(iii) The dates, if any, to which the Basic Rent and Additional Rent
and other charges hereunder have been paid in advance;
(iv) The date of expiration of the Term; and
(v) The Basic Rent and Additional Rent then payable under this
Agreement.
Section 9.6. City Certificate. The City shall, without charge, at any time
and from time to time within twenty (20) days after request by the Operator or
Secured Creditor certify by written instrument, duly executed, acknowledged and
delivered to the Operator or any other person, firm or corporation specified by
the Operator:
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(i) That this Agreement is unmodified and in full force and effect,
or, if there have been any modifications, that the same is in full force
and effect as modified and stating the modifications;
(ii) Whether or not there are then existing any setoffs or defenses
against the enforcement of any of the agreements, terms, covenants or
conditions hereof and any modifications hereof upon the part of the
Operator to be performed or complied with, and, if so, specifying the
same;
(iii) The dates, if any, to which the Basic Rent and Additional Rent
and other charges hereunder have been paid in advance;
(iv) The date of expiration of the Term;
(v) The Basic Rent and Additional Rent and other charges then
payable under this Agreement; and
(vi) Whether or not, to the best knowledge of the officer executing
such certificate on behalf of the City, the Operator is in default in
performance of any covenant, agreement, or condition contained in this
Agreement and, if so, specifying such default.
(End of Article IX)
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ARTICLE X
INDEMNIFICATION AND INSURANCE
Section 10.1. Indemnification.
(a) The Operator shall indemnify and save the City harmless from and
against any and all liabilities, suits, obligations, fines, damages, penalties,
claims, costs, charges and expenses, including property damage, personal injury
and wrongful death and further including, without limitation, architects' and
attorneys' fees and disbursements, which may be imposed upon or incurred by or
asserted against the City or the Premises by reason of any of the following
occurring during the Term unless caused by the active negligence of the City,
its agents or employees or a failure to act by the City, its agents or employees
when a duty to act is present:
(i) construction of the Facilities or any other work or thing done
in, on or about the Premises or any part thereof by the Operator or its
agents;
(ii) any use, non-use, possession, occupation, alteration, repair,
condition, operation, maintenance or management of the Premises or any
nuisance made or suffered thereon which is the Operator's responsibility
hereunder or any failure by the Operator to keep the Premises in a safe
condition or any part thereof;
(iii) any acts of the Operator or any Sublessee or any of its or
their respective agents, contractors, servants, employees, licensees or
invitees;
(iv) any fire, accident, injury (including death) or damage to any
person or property occurring in, on or about the Premises or any part
thereof;
(v) any encumbrance, lien or claim which may be alleged to have
arisen against or on the Premises or any part thereof or any of the assets
of, or funds appropriated to, the City or any liability which may be
asserted against the City with respect thereto to the extent arising, in
each such case, out of the acts of the Operator, its contractors, agents,
sublessees;
(vi) any failure on the part of the Operator to keep, observe,
comply with and perform any of the terms, covenants, agreements,
provisions, conditions or limitations contained in the Subleases or other
contracts and agreements affecting the Premises or any part thereof, on
the Operator's part to be kept, observed or performed;
(vii) any tax, including any tax attributable to the execution,
delivery or recording of this Agreement, with respect to events occurring
during the term of this Agreement, except as otherwise described in this
Agreement.
The provisions hereof shall survive the expiration or earlier termination
of this Agreement.
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(b) The Operator will hold all goods, materials, furniture, fixtures,
equipment, machinery and other property whatsoever on the premises at the sole
risk of the Operator and save the City harmless from any loss or damage thereto
by any cause unless caused by the active negligence of the City, its agents or
employees or a failure to act by the City, its agents or employees when a duty
to act is present.
(c) The obligations of the Operator under this Section shall not in any
way be affected by the absence in any case of covering insurance or by the
failure or refusal of any insurance carrier to perform any obligation on its
part to be performed under insurance policies affecting the Premises.
(d) If any claim, action or proceeding is made or brought against the City
by reason of any event for which the Operator is responsible under this Section,
then, upon demand by the City, the Operator, at its sole cost and expense,
shall resist or defend such claim, action or proceeding in the City's name, if
necessary, by the attorneys for the Operator's insurance carrier (if such claim,
action or proceeding is covered by insurance), otherwise by such attorneys as
the City shall approve, which approval shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, the City may engage its own attorneys to
defend it or to assist in its defense at the City's expense.
(e) Nothing in this Section 10.1 shall be deemed to create any liability
or obligation to indemnify on the part of the Operator for conditions existing
on or beneath the Site prior to the commencement of the Term, nor shall anything
is this Section 10.1 modify any obligation or duty of the City otherwise
provided for in this Agreement or the Development Agreement.
Section 10.2. Required Insurance. Beginning with the commencement of and
continuing throughout the Term, the Operator at its sole cost and expense shall:
(1) Keep or cause to be kept a policy or policies of insurance
against loss or damage to the Facilities resulting from fire, earthquake,
windstorm, hail, lightning, vandalism, malicious, mischief, riot and civil
commotion, and such other perils ordinarily included in extended coverage
fire insurance policies. Such insurance shall be maintained in an amount
not less than one hundred percent (100%) of the Full Insurable Value of
the Facilities as defined in Section 10.3 (such value to include amounts
spent for construction of the Facilities, architectural and engineering
fees, and inspection and supervision).
(2) Maintain or cause to be maintained use and occupancy or business
interruption or rental income insurance against the perils of fire,
earthquake, windstorm, hail, lightning, vandalism and malicious mischief,
riot and civil commotion, and such other perils ordinarily included in
extended coverage fire insurance policies, in an amount equal to not less
than twelve (12) months' rental under this Agreement.
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(3) Maintain or cause to be maintained public liability insurance,
to protect against loss from liability imposed by law for damages on
account of personal injury, including death therefrom, suffered or alleged
to be suffered by any person or persons whomsoever, resulting directly or
indirectly from any act or activities of the City or the Operator or under
their respective control or direction, and also to protect against loss
from liability imposed by law for damages to any property of any person
caused directly or indirectly by or from the acts or activities in
connection with the Premises, the City or the Operator or their respective
invitees and sublessees, or any person acting for the City or the
Operator, or under their respective control or direction. Such property
damage and personal injury insurance shall also provide for and protect
the City against incurring any legal cost in defending claims for alleged
loss. Such personal injury and property damage insurance shall be
maintained in full force and effect during the entire Term in the amount
of at least Five Million Dollars ($5,000,000.00) combined single limit,
naming the City, and its respective officers, employees and consultants,
as an additional insured; provided, however, in the event of any reduction
in the maximum liability to which the Operator may be subjected under
applicable law, then the Operator may request a reduction in the minimum
amount of such liability insurance, which request shall not be
unreasonably disapproved by the City. The Operator agrees that provisions
of this paragraph as to maintenance of insurance shall not be construed as
limiting 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, or activities of its invitees and
sublicensees or the activities of any other person or persons for which
the Operator is otherwise responsible.
(4) Maintain or cause to be maintained worker's compensation
insurance issued by a responsible carrier authorized under the laws of the
State of Arizona to insure all persons employed by the Operator in
connection with the Premises, and shall cover full liability for
compensation under any such act aforesaid, based upon death or bodily
injury claim made by, for or on behalf of any person incurring or
suffering injury or death in connection with the Premises, or the
Operation thereof by the Operator.
(5) Maintain or cause to be maintained, during construction,
restoration or alteration of on the Facilities, in addition to (but not in
duplication of) the other insurance coverages required under this Section
10.1, standard "all risk" builder's risk insurance (including coverage
against collapse), 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 specific improvements, as
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 construction.
(6) Maintain or cause to be maintained such other insurance
coverages and in such amounts as may from time to time be reasonably
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required by the City to insure against such other insurable hazards as
may, at the time of the City's request, be customarily insured against in
the case of similar premises situated in the same general areas as the
Premises.
In addition to the requirements in (1) through (6) of this Section, the
Operator shall maintain or cause to be maintained an additional policy or
policies of insurance against loss or damage to the Facilities resulting from
fire, earthquake, windstorm, hail, lightning, vandalism, malicious mischief,
riot and civil commotion and such other perils ordinarily included in extended
coverage fire insurance policies. Such insurance shall be maintained in the
amount by which the aggregate principal amount of the Construction Obligations
exceeds the amount of insurance carried pursuant to paragraph (1) of this
Section; such amount of insurance to decrease annually from the commencement of
the Term through the twenty-fifth full Rental Year. The cost of such policy or
policies of insurance shall be borne equally by the City and the Operator.
Section 10.3. Definition of "Full Insurable Value." The term "Full
Insurable Value" as used in Section 10.2 shall mean the actual replacement cost
(excluding the cost of excavation, foundation and footings below the ground
level but without deduction for depreciation) of the Facilities, and using the
items of value set forth above. To ascertain the amount of coverage required,
the Operator shall cause the Full Insurable Value to be determined from time to
time by appraisal by the insurer or by any appraiser mutually acceptable to the
City and the Operator, not less often than once every three years.
Section 10.4. General Insurance Provisions.
(i) All insurance provided under Section 10.2 of this Agreement shall be
for the benefit of the Operator and the City. Said insurance shall specifically
provide that it is primary coverage.
(ii) All insurance provided under Section 10.2 shall be periodically
reviewed by the parties from time to time, but at least every five (5) years,
for the purpose of mutually increasing or decreasing the minimum limits of such
insurance to amounts which may be reasonable and customary for similar
facilities of like size and operation.
(iii) All insurance herein provided for under Section 10.2 shall be
effected under policies issued by insurers of recognized responsibility licensed
or permitted to do business in the State of Arizona and approved by the City.
(iv) Any insurance required to be maintained by the Operator pursuant to
Section 10.2 may be taken out under a blanket insurance policy or policies
covering other premises or properties, and other insureds in addition to the
parties hereto; provided, however, that any such policy or policies of blanket
insurance shall specify therein, or supplemental written certification from the
insurers under such policies shall specify, the amount of insurance allocated to
the coverage to be provided under Section 10.2 and provided
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further, that in all other respects, any such blanket policy shall comply with
the other provisions of Section 10.2.
(v) All policies or certificates of insurance shall provide that such
policies or certificates shall not be cancelled or changed without at least
thirty (30) days prior written notice to the City.
(vi) As a condition precedent to the execution of this Agreement by the
City, the Operator shall deposit copies of such policies with the City together
with appropriate evidence of payment of the premiums therefor; and, at least
thirty (30) days prior to expiration of any such policy, copies of renewal
policies shall be so deposited.
Section 10.5. Failure to Maintain Insurance. If the Operator fails or
refuses to provide a copy of the renewal insurance policies, together with
evidence of payment of premiums therefor as required by Section 10.4 herein, or
otherwise fails or refuses to procure or maintain insurance as required by this
Agreement, such failure or refusal shall be a monetary default hereunder and the
City shall have the right, at the City's election, and without notice, to
procure and maintain such insurance. The premiums paid by the City shall be due
and payable to the City on the first day of the month following the date on
which the premiums were paid. The City shall give prompt notice of the payment
of such premiums, stating the amounts paid and the name of the insured(s).
Section 10.6. Disposition of Insurance Proceeds Resulting from Loss or
Damage to Improvements. All proceeds of insurance with respect to loss or damage
to the Facilities to be maintained and repaired by the Operator or the City
during the term of this Agreement shall be payable, under the provisions of the
policy of insurance, jointly to the Operator and the City, and deposited in a
special trust account held by a bank, trust company, insurance company or
savings bank. Said proceeds shall constitute a trust fund to be used for the
repair, restoration or reconstruction of the Facilities in accordance with plans
and specifications approved in writing by the City and the Operator. To the
event that such proceeds exceed the cost of such repair, restoration or
reconstruction, or if neither the Operator nor the City undertake such repair,
restoration or reconstruction, then such proceeds shall be distributed to the
City and applied for redemption of or for debt service on the obligations
described in Section 202 of the Development Agreement. The parties may adjust
the Basic Rent to reflect such application of the proceeds of insurance. If such
obligations have been fully discharged, or if any such funds remain after
discharge, the remainder will be payable fifty percent (50%) to Operator and
fifty percent (50%) to the City.
In the event this Agreement is terminated by mutual agreement of the City
and the Operator or pursuant to Section 7.6, and the Facilities are not
repaired, restored or reconstructed, the insurance proceeds shall be distributed
to the City and shall be applied first for redemption of or for debt service on
the obligations described in Section 202 of the Development Agreement to the
extent then outstanding, second to restore the Premises to a neat and clean
condition, and finally any excess shall be applied for any lawful municipal
purpose.
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The operator hereby waives any claim against the City for any loss covered
by insurance of the type specified in Section 10.2; and the Operator shall use
good faith diligent efforts to obtain from its insurance company or companies a
waiver of any right of subrogation that it may have against the City.
(End of Article X)
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ARTICLE XI
EMINENT DOMAIN
Section 11.1. Taking Which Renders Premises Untenantable. If all of the
Premises or any portion of the Premises or any portion of the Facilities whose
taking renders the Premises untenantable or not economically feasible to the
Operator is taken by right of eminent domain or by condemnation or is conveyed
in lieu of any such taking, then this Agreement may be terminated, at the
option of either the City or the Operator, exercised by given written notice to
the other within thirty (30) days after such taking or conveyance. In such
event, the Basic Rent and all other sums payable under this Agreement will be
duly apportioned of the date of such taking or conveyance and the Operator will
surrender the Premises and all interest under this Agreement to the City.
If any taking or conveyance described in this Section occurs, the City and
the Operator shall be paid those portions of the award or awards of damages on
account of such taking or conveyance as follows:
First: There shall be paid to the City an amount sufficient to
remove any improvements rendered unusable and not repaired and to return
the Premiums to a neat and clean condition.
Second: There shall be paid in full the outstanding principal and
interest on the taxable obligations described in Section 202 of the
Development Agreement.
Third: The balance, if any, shall be equally divided between the
City and the Operator.
Section 11.2. Taking Which Does Not Render Premises Untenantable. If any
portion of the Facilities which does not render the Premises untenantable or not
economically feasible to the Operator is taken or conveyed as described in
Section 11.1, then this Agreement and all the covenants, conditions and
provisions hereunder shall be and remain in full force and effect as to all of
the Premises not so taken or conveyed and without reduction or abatement of the
Basic Rent or Additional Rent or any other sum payable hereunder. The Operator
shall have the option to repair or rebuild the Facilities under this Section.
Should the Operator so choose, the Operator shall remodel, repair and restore
the remaining portions of the Premises as nearly as possible to their condition
and character immediately prior to the taking, except for any reduction in area
caused thereby; provided, however, that in the case of a temporary taking,
Operator shall not be required to effect such restoration until such taking is
terminated. If the Operator chooses not to repair or rebuild the Facilities
under this Section, this Agreement shall remain in full force and effect as to
the Premises not so taken.
If any taking or conveyance described in this Section 11.2 occurs, the
City and the Operator shall be paid those portions of the award or awards of
damages on account of such taking or conveyance as follows:
I. (a) If the Operator chooses to repair or rebuild the Facilities,
the award shall be paid jointly to the Operator and the
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City and deposited in a special trust account held by a bank, trust company,
insurance company or savings bank. Said award shall constitute a trust fund to
be held and applied to pay the costs of restoration of the Premises not subject
to the taking or conveyance.
(b) To the extent that such award exceeds the cost of restoration of the
Premises, then such award shall be distributed to the City and applied for the
redemption of or for debt service on the obligations described in Section 202 of
the Development Agreement.
(c) The balance, if any, shall be equally divided between the City and the
Operator.
II. (a) If the Operator chooses not to repair or rebuild the Facilities,
the award shall be distributed to the City and applied for the redemption or for
debt service on the obligations described in Section 202 of the Development
Agreement.
(b) The balance, if any, shall be equally divided between the City and the
Operator.
(End of Article XI)
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ARTICLE XII
DEFAULTS, REMEDIES AND TERMINATION
Section 12.1. Defaults--General. Subject to the extensions. of time set
forth in Section 12.8, failure or delay by either party to perform any term or
provision of this Agreement constitutes a default under this Agreement. The
party who fails or delays must immediately commence to cure, correct, or remedy
such failure or delay and, except as otherwise provided herein, shall complete
such cure, correction or remedy with reasonable diligence.
The injured party shall give written notice of default to the party in
default, specifying the default complained of by the injured party. Failure or
delay in giving such notice shall not constitute a waiver of any default, nor
shall it change the time of default. Except as otherwise expressly provided in
this Agreement, any failures or delays by either party in asserting any of its
rights and remedies as to any default shall not operate as a waiver of any
default or of any such rights or remedies. Delays by either party in asserting
any of its rights and remedies shall not deprive either party of its right to
institute and maintain any actions or proceedings which it may deem necessary
to protect, assert or enforce any such rights or remedies.
Section 12.2. Legal Actions.
(a) In addition to any other rights or remedies, either party may
institute legal action to cure, correct, or remedy any default, to recover
damages for any default or to obtain any other remedy consistent with the
purpose of this Agreement. Such legal actions must be instituted in the County
of Maricopa, State of Arizona, or in the Federal District Court in the District
of Arizona and the City and the Operator consent to the jurisdiction of such
courts.
(b) In the event that any legal action is commenced by the Operator
against the City, service of process on the City shall be made by personal
service upon the City Clerk of the City of Phoenix, or in such other manner as
may be provided by law. The Operator shall appoint and maintain a statutory
agent in Arizona for service of process. In the event that any legal action is
commenced by the City against the Operator, service of process on the Operator
shall be made by personal service upon said statutory agent of the Operator, or
in such manner as may be provided by law, and shall be valid whether made within
or without the State of Arizona.
(c) In the event that either the City or the Operator shall bring or
commence an action to enforce the terms and conditions of this Agreement or to
obtain damages against the other party arising from any default under or
violation of this Agreement, then the prevailing party shall be entitled to and
shall be paid reasonable attorneys' fees and court costs therefor.
Section 12.3. 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
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rights or remedies for the same default or any other default by the other party.
Section 12.4. Damages. If either party defaults with regard to any of the
provisions of this Agreement, the other party may serve written notice of such
default upon the defaulting party. If the default is not commenced to be cured
within thirty (30) days after service of the notice of default and is not cured
promptly in a continuous and diligent manner within a reasonable period of time
after commencement, the defaulting party shall be liable to the other party for
any damages caused by such default, and the other party may thereafter (but not
before) commence an action for damages against the defaulting party with respect
to such default.
Section 12.5. Specific Performance. If either party defaults with regard
to any of the provisions of this Agreement, the other party may serve written
notice of such default upon the defaulting party. If the default is not
commenced to be cured within thirty (30) days after service of the notice of
default and is not cured promptly in a continuous and diligent manner within a
reasonable period of time after commencement, the other party, at its option,
may thereafter (but not before) commence an action for specific performance of
the terms of this Agreement pertaining to such default.
Section 12.6. Additional Remedies of City. If the Operator defaults with
regard to any of the provisions of this Agreement, the City shall serve written
notice of such default upon the Operator. Except as otherwise provided herein,
with regard to nonmonetary obligations to the City, if the default is not
commenced to be cured within thirty (30) days after service of the notice of
default and is not cured promptly in a continuous and diligent manner within a
reasonable period of time after commencement, and, with regard to monetary
obligations to the City, if the default is not cured within fifteen (15) days
after service of the notice of default, the City, at its option, may thereafter
(but not before):
(i) Correct or cause to be corrected said default and charge the
costs therefor to the account of the Operator as additional rent;
(ii) Correct or cause to be corrected said default and pay the costs
thereof from the proceeds of any insurance; or in the event that the
Operator has obtained a faithful performance bond indemnifying the City,
the City may call upon the bonding agent to correct said default and pay
the cost thereof;
(iii) Continue this Agreement in effect and enforce its rights and
remedies under the Agreement, including the right to recover rental as it
becomes due;
(iv) Have a receiver appointed to take possession of the Operator's
interest in the Premises, with power in said receiver to administer the
Operator's interest therein, to collect all funds available to the
Operator in connection with its operation and maintenance thereof; and to
perform all other acts consistent with the Operator's obligations under
this Agreement as the court deems proper;
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(v) Maintain and operate the Premises without terminating the
Agreement.
The City reserves and shall have the right to all reasonable times to
enter the Premises for the purpose of viewing and ascertaining the condition of
the same, or to protect its interests in the Premises or to inspect the
operations conducted thereon. Any such entry shall be made only after reasonable
notice to the Operator and shall not interfere with the Operator's normal
business activities. In the event that such entry or inspection by the City
discloses that the Premises or any portion thereof which the Operator has an
obligation to maintain under this Agreement are not in a decent, safe, and
sanitary condition, are damaged, or in disrepair, the City shall have the right,
after thirty (30) days written notice to the Operator, to have any necessary
maintenance or repair work done for and at the expense of the Operator and the
Operator hereby agrees to pay promptly any and all costs incurred by the City in
having such necessary maintenance or repair work done in order to keep the
Premises in a decent, safe and sanitary condition, provided that such repairs
are the Operator's responsibility under this Agreement.
The rights reserved in this Section 12.6 shall not create any obligations
on the City or increase obligations imposed on the City elsewhere in this
Agreement, and shall not defeat, render invalid or limit the rights or interests
expressly provided in this Agreement for the protection Secured Creditors.
Section 12.7. City's Remedies and Rights of Termination. In the event that
at any time during the Term, and in violation of this Agreement, the Operator
shall:
(i) Use the Premises for any purpose not permitted under this
Agreement;
(ii) Fail or refuse to pay to the City when due the applicable
rental and other sums required by this Agreement to be paid by the
Operator;
(iii) Fail or refuse to pay when due any taxes, assessments or other
Impositions as required by this Agreement;
(iv) Make or suffer to be made any voluntary or involuntary
conveyance, assignment, sublease or other transfer of the interest in the
Facilities or other interest in the Premises, or any part thereof, or of
the rights of the Operator under this Agreement when such conveyance,
assignment, sublease or other transfer is prohibited by this Agreement;
(v) Commit or suffer to be committed waste of the Premises, or any
part thereof;
(vi) Materially alter the Facilities in any manner except as
expressly permitted by this Agreement;
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(vii) Fail to maintain insurance as required by this Agreement;
(viii) Fail to make full repair and restoration of the Premises in
the event of damage or destruction, as required of the Operator by this
Agreement;
(ix) Voluntarily file any petition under any bankruptcy or
insolvency act or law, or be adjudicated a bankrupt, or make a general
assignment for the benefit of creditors;
(x) Abandon or surrender possession of the Premises, or the
Operator's interest therein except as specifically permitted by this
Agreement or pursuant to a deed in lieu of foreclosure given to a Secured
Creditor who did not obtain such Security Interest in violation of this
Agreement;
and any such failure or violation, which is not a monetary obligation to the
City shall not be commenced to be cured within thirty (30) days and is not cured
promptly in a continuous and diligent manner within a reasonable period of time
after commencement, or a monetary obligation to the City shall not be cured
within fifteen (15) days, after the date the City serves written notice on the
Operator of such failure or violation pursuant to Section 12.6 herein (or, if it
is not practicable in the opinion of the City to cure or remedy such
non-monetary failure or violation within such thirty (30) day period, within
such longer period as may be specified by the City in such notice); then, in
such event, the City may, subject to any limitations specifically set forth in
this Agreement, at its option and in addition to any other remedy provided for
in this Agreement, terminate the Agreement and revest in the City the interests
theretofore transferred to the Operator, by written notice to the Operator of
its intention to do so.
No ejectment, re-entry or other act by or on behalf of the City shall
constitute a termination unless the City gives the Operator and any Secured
Creditor of which the City has notice pursuant to section 9.1 herein, notice of
termination in writing. Such termination shall not relieve or release the
Operator from any obligation incurred pursuant to this Agreement prior to the
date of such termination.
Termination of the Agreement under this Section 12.7 shall not relieve the
Operator from the obligation to pay any sum due to the City or from any claim
for damages against the Operator. Damages which the City may recover in the
event of default under this Agreement shall include, but are not limited to, the
worth at the time of award of the amount by which the unpaid fees of the balance
of the Term remaining after the time of award exceeds the amount of such loss
that the Operator proves could be reasonably avoided. The right of termination
provided by this Section 12.7 is not exclusive and shall be cumulative to all
other rights and remedies possessed by the City, and nothing contained herein
shall be construed so as to defeat any other rights or remedies to which the
City may be entitled.
Section 12.8. Enforced Delay in Performance for Causes Beyond Control of
Party. For the purposes of any of the provisions of this Agreement, except the
submission of construction plans and specifications, the payment of rent or any
other financial obligations, neither the City nor the
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Operator, as the case may be, nor any successor in interest, shall be considered
in breach of, or default in, its obligations under this Agreement as a result of
the enforced delay in the performance of such obligations due to unforeseeable
causes beyond its control and without its fault or negligence, including, but
not restricted to, acts of God, acts of public enemy, acts of the Federal
Government, acts of the other party, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargos, and unusually severe weather or delays
of subcontractors due to such causes; it being the purpose and intent of this
provision that in the event of the occurrence of any such enforced delay, the
time or times for performance of the obligations of the City or the Operator, as
the case may be, shall be extended for the period of the enforced delay as
determined by mutual agreement of the City and the Operator: provided, that the
party seeking the benefit of the provision of this Section shall, within thirty
(30) days after the beginning of any such enforced delay, have first notified
the other party thereof in writing, and of the cause or causes thereof, and
requested an extension for the period of the enforced delay. If the parties fail
to agree as to the period of the enforced delay, such dispute shall be submitted
to arbitration as provided in Section 13.3.
Section 12.9. Additional Remedies of Operator. If the City defaults with
regard to any of the provisions of this Agreement, the Operator may serve
written notice of such default upon the City. With regard to non-monetary
obligations, to the Operator, if the default is not commenced to be cured within
thirty (30) days after service of the notice of default and is not cured
promptly in a continuous and diligent manner within a reasonable period of time
after commencement, and with regard to monetary obligations to the Operator, if
the default is not cured within fifteen (15) days after service of the notice of
default, the Operator, to the fullest extent permitted by law, shall have, in
addition to any other remedies it may have in law or in equity (including, but
not limited to, specific performance) or elsewhere in this Agreement, the right
to pursue any or all of the following remedies:
(i) The right and option, to terminate this Agreement and all of its
obligations hereunder by giving notice of such election to the City,
whereupon this Agreement shall terminate as of the date of such notice and
the Operator shall quit and surrender the Premises to the City; or
(ii) to continue this Agreement in effect and enforce any remedies
hereunder, including the right to a writ of mandamus, injunction or other
similar relief, available to it under Arizona law, against the City
(including any or all of the members of its governing body, and its
officers, agents or representatives, but in the official capacities only).
Section 12.10. Limitation on City Remedies. In the event that Operator's
default consists of the failure to pay any Deficiency Payment as described in
Section 3.1(d), the City shall have all rights provided under Section 12.6;
however, Operator shall have 180 days to cure any such default prior to the City
exercising any other rights hereunder, including without limitation the right to
terminate this Agreement.
(End of Article XII)
51
<PAGE>
ARTICLE XIII
GENERAL PROVISIONS
Section 13.1. Notices, Demands and Communications between the Parties.
Formal notices, demands and communications between the City and the Operator
shall be sufficiently given if personally delivered or if dispatched by
registered or certified mail, postage prepaid, return receipt requested, to the
principal offices of the City and the Operator addressed to each party as
follows:
City: City of Phoenix
Community and Economic
Development Department
One North First Street, 7th Floor
Phoenix, Arizona 85004
Attn: Director
Operator: The Westside Amphitheatre Corp.
11811 North Tatum Boulevard
Suite P-186
Phoenix, Arizona 85028
Attn: Mr. Allen Flexer
The Zev Bufman Sports, Entertainment
& Facility Development Corp.
2980 McFarlane Road
Coconut Grove, Florida 33133
Attn: Joel Arnold, Esq.
Saell & Wilmer
1430 Valley Bank Center
Phoenix, Arizona 85073
Attn: Peter G. Santin, Esq.
The City agrees to give notice of any default by the Operator to National
Food Services, Inc. at the following address:
National Food Services, Inc.
P.O. box 3870
Miami, Florida 33269
Attn: Peter Moser, Esq.
Such written notices, demands and communications may be sent in the same
manner to such other addresses as either party may from time to time designate
by mail as provided in this Section. See Section 9.2(a) for provisions requiring
notice to Secured Creditors. For purposes of this Section, personal delivery
shall include actual receipt of a delivery by a commercial air courier or of a
telephone facsimile transmission.
Section 13.2. Arbitration.
(a) If any dispute shall arise between the parties which pursuant to any
express provision of this Agreement is to be resolved by arbitration, then any
party may serve upon the other party a written notice demanding that such
52
<PAGE>
dispute be resolved by arbitration pursuant to this Section. Within ten (10)
days after the giving of such notice, each of the City and the Operator shall
nominate and appoint an arbitrator and shall notify the other party in writing
of the name and address of the arbitrator, and such two arbitrators shall
forthwith, and within fifteen (15) days after the appointment of the second
arbitrator, and before exchanging views as to the question at issue, appoint a
third arbitrator and give written notice of such appointment to each of the
parties hereto. In the event that the two arbitrators shall fail to appoint or
agree upon such third arbitrator within said fifteen (15) day period, a third
arbitrator shall be selected by the City and the Operator if they so agree upon
such third arbitrator within a further period of ten (10) days. If any
arbitrator shall not be appointed or agreed upon within the time herein
provided, then either the City or the Operator on behalf of both may request
that such arbitrator be appointed by the president or chief administrative
officer or any other authorized representative of the American Arbitration
Association or any successor association or body of comparable standing if the
American Arbitration Association is not then in existence.
(b) The arbitrators shall be sworn faithfully and fairly to determine the
question at issue. The three arbitrators shall afford to the City and the
Operator a hearing and the right to submit evidence, with the privilege of
cross-examination on the question at issue, and shall, with all possible speed,
make their determination in writing and shall give notice to the parties hereto
of such determination. Prior to the commencement of the arbitration hearing the
City and the Operator shall each provide to the other a statement of its
position respecting the dispute in question and a list of any witnesses which
such party expects to testify at such hearing on its behalf. The concurring
determination of any two of said three arbitrators shall be binding upon the
parties hereto, or, in case no two of the arbitrators shall render a concurring
determination, the determination of the third arbitrator appointed shall be
binding upon the parties hereto. Except as otherwise provided herein, any such
arbitration shall be conducted under the commercial arbitration rules of the
American Arbitration Association. The City and the Operator shall each pay the
fees of the arbitrator appointed by it, and the fees of the third arbitrator
shall be divided equally between the City and the Operator. All other fees and
costs of any such arbitration proceeding will be paid as determined by the
arbitrators. Any arbitration proceeding conducted pursuant to this Section shall
take place in Phoenix, Arizona.
(c) Any arbitrator selected pursuant to this Section shall be independent
of any affiliation or interest with any of the parties and shall be experienced
in the development and operation of entertainment facility projects. If, despite
reasonable efforts, the parties are unable to engage persons possessing the
experience and qualifications described in the preceding sentence who are
willing and able to serve as arbitrators, the appointment of some other
qualified person or persons to serve in lieu thereof shall be made by the
president or chief administrative officer or any other authorized representative
of the American Arbitration Association or any successor association or body of
comparable standing if the American Arbitration Association is not then in
existence.
(d) In the event that any arbitrator appointed pursuant to this Article
shall thereafter die or become unable or unwilling to act, his
53
<PAGE>
successor shall be appointed in the manner provided in this Article for the
appointment of the arbitrator so dying or becoming unable or unwilling to act.
(a) In any proceeding conducted pursuant to this Section, the award of the
arbitrators shall be final and binding and enforceable in any court of competent
jurisdiction.
Section 13.3. Subordination. The City and the Operator agree that this
Agreement and the Operator's interests in the Premises created hereby are
subordinate in each and every respect to any agreement or agreements entered
into by the City for purposes of the issuance of the obligations described in
Section 202 of the Development Agreement. Such agreements shall be consistent
with the terms and provisions of this Agreement or the Development Agreement,
and shall in no way modify the City's duties and obligations hereunder. This
subordination agreement shall be self-operative and no further agreement
between the City and the Operator shall be necessary to effect same.
Section 13.4. Time of Essence. Time is of the essence with respect to the
performance of each of the covenants and agreements contained in this Agreement.
Section 13.5. Conflicts of Interest. No member, official or employee of
the City shall have any personal interest, direct or indirect, in this
Agreement, nor shall any such member, official or employee participate in any
decision relating to the Agreement which affects his personal interests or the
interests of any corporation, partnership or association in which he is directly
or indirectly interested. All parties hereto acknowledge that this Agreement is
subject to cancellation by the City pursuant to the provisions of Section
38-511, Arizona Revised Statutes.
Section 13.6. Warranty Against Payment of Consideration. The Operator
warrants that it has not paid or given, and will not pay or give, any third
party any money or other consideration for obtaining this Agreement.
Section 13.7. Nonliability of City Officials and Employees. No member,
official or employee of the City shall be personally liable to the Operator, or
any successor in interest, in the event of any default or breach by the City or
for any amount which may become due to the Operator or its successor or on any
obligations under the terms of this Agreement.
Section .13.8. Inspection of Books and Records. The City has the right at
all reasonable times to inspect the books and records of the Operator
pertaining to the Premises as pertinent to the purposes of this Agreement. The
Operator shall keep and maintain such books and records in the City of
Phoenix. The Operator also has the right at all reasonable times to inspect the
books and records of the City pertaining to the Premises as pertinent to the
purposes of this Agreement.
Section 13.9. No Partnership. Neither anything in this Agreement
contained, nor any acts of the City or the Operator shall be deemed or construed
by any person to create the relationship of principal and agent, or of
partnership, or of joint venture, or of any association between the City and the
Operator. Percentage payments of the Operator's Gross Revenues and any other
additional payments to the City pursuant to this Agreement shall be
54
<PAGE>
deemed consideration of the right to use the Premises only and shall in no way
be construed as creating the legal relationship of a partnership.
Section 13.10. Compliance with Law. The Operator agrees, at its sole cost
and expense, to comply and secure compliance with all the requirements now in
force, or which may hereafter be in force, of all municipal, county, State and
federal authorities, pertaining to the Premises, as well as operations conducted
thereon, and to faithfully observe and secure compliance with, in the use of the
Premises, all applicable county and municipal ordinances and state and federal
statutes now in force or which may hereafter be in force, including all laws
prohibiting discrimination or segregation in the use, sale, lease or occupancy
of the property. The judgment of any court of competent jurisdiction, or the
admission of the Operator or any sublessee or permittee in any action or
proceeding against them, or any of them, whether the City be a party thereto or
not, that the Operator, sublessee or permittee has violated any such ordinance
or statute in the use of the Premises shall be conclusive of that fact as
between the City and the Operator.
Section 13.11. Applicable Law. The laws of the State of Arizona shall
govern the interpretation and enforcement of this Agreement.
Section 13.12. Surrender of Property. Upon the expiration or termination
of this Agreement pursuant to the terms hereof, it shall be lawful for the City
to re-enter and repossess the Premises without process of law, and the
Operator, in such event, does hereby waive any demand for use thereof, and
agrees to surrender and deliver the Premises, peaceably to the City immediately
upon such expiration or termination in good order, condition and repair, except
for reasonable wear and tear. The Operator agrees that upon such termination,
title to the Facilities shall vest in the City.
Section 13.13. Submission of Documents for Approval. Whenever this
Agreement requires one party to submit plans, drawings or other documents to the
other party for approval, which shall be deemed approved if not acted on by the
receiving party within the time specified in the Agreement, said plans, drawings
or other documents shall be accompanied by a letter stating that they are being
submitted and will be deemed approved unless rejected within the stated time.
Section 13.14. 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.
Section 13.15. 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.
Section 13.16. Captions. The captions contained in this Agreement are
merely a reference and are not to be used to construe or limit the text.
Section 13.17. Approval of Documents. Whenever this Agreement requires the
City and/or the Operator to approve any contract, plan, proposal.
55
<PAGE>
specification, drawing or other matter, such approval shall not be unreasonably
withheld or delayed.
(End of Article XIII)
56
<PAGE>
ARTICLE XIV
ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS
This Agreement is executed in six (6) duplicate originals, each of which
is deemed to be an original. This Agreement consists of 58 pages of text,
together with signature verifications and the below named attachments,
incorporated herein by this reference, exhibits, which constitute the entire
understanding and agreement of the parties.
ATTACHMENTS
Attachment No. 1 - Site Map
Attachment No. 2 - Legal Description of the Site
Attachment No. 3 - Legal Description of the Substitute Site
Attachment No. 4 - Permitted Exceptions
Attachment No. 5 - Substitute Permitted Exceptions
Attachment No. 6 - Form of Primary Letter of Credit
Attachment No. 7 - Form of Secondary Letter of Credit
Attachment No. 8 - Form of Trust Agreement
Attachment No. 9 - Base Figures
None of the terms, covenants, agreements or conditions set forth in the
Development Agreement shall be deemed to be merged with this Agreement, and the
Development Agreement shall remain in full force and effect until after
recordation of a final certificate of occupancy for the Premises as provided in
the Development Agreement and this Agreement.
All waivers of the provisions of this Agreement must be in writing and
signed by the appropriate authorities of the City or the Operator and all
amendments hereto must be in writing and signed by the appropriate authorities
of the City and the Operator.
57
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives this 26th day of September, 1989.
LESSOR
CITY OF PHOENIX,
a municipal corporation
MARVIN A. ANDREWS, City Manager
By /s/ [Illegible]
----------------------------
Its /s/ [Illegible]
---------------------------
Attest:
/s/ [Illegible]
----------------------------
DEPUTY City Clerk
Approved As To Form:
/s/ [Illegible]
----------------------------
ACTING City Attorney
OPERATOR - THE WESTSIDE AMPHITHEATRE
CORP., an Arizona corporation
By /s/ [Illegible]
----------------------------
Its PRES.
---------------------------
58
<PAGE>
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this, the 26th day of September, 1989 before me, the undersigned Notary
Public, personally appeared [Illegible] who acknowledged himself to be the
Deputy City Manager of the CITY OF PHOENIX, a municipal corporation, and that he
as such officer, being authorized so to do, executed the foregoing instrument
for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Robin McCormick
-------------------
Notary Public
NEE: Robin [Illegible]
My Commission Expires:
7/31/91
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this, the 26th day September 1989, before me, the undersigned Notary
Public, personal1y appeared [Illegible] who acknowledged himself to be the
President of THE WESTSIDE AMPHITHEATRE CORP., an Arizona corporation and that he
as such President, being authorized so to do, executed the foregoing instrument
for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Robin McCormick
-------------------
Notary Public
NEE: Robin [Illegible]
My Commission Expires:
7/31/91
59
<PAGE>
ATTACHMENT NO. 1
SITE PLAN
83RD AVENUE
[GRAPHIC OMITTED]
Performing Arts Amphitheater
============================
Phoenix, Arizona
79th AVENUE
<PAGE>
ATTACHMENT NO. 2
LEGAL DESCRIPTION OF THE SITE
A portion of the North half of the Southwest quarter of Section 35, Township 2
North, Range 1 East of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona, and more particularly described as follows:
Beginning at the Northwest corner of said Southwest quarter; thence North
87(degrees) 47' 07" East along the North line of said Southwest quarter, 67.93
feet; thence South 2(degrees) 12' 53" East and perpendicular to said North line,
33 feet; thence North 87(degrees) 47' 07" East, parallel with and 33 feet South
of said North line, 405.58 feet to the TRUE POINT OF BEGINNING of the herein
described parcel; thence continuing North 87(degrees) 47' 07" East, parallel
with and 33 feet South of said North line, 2107.58 feet; thence South
46(degrees) 19' 02" East, 29.23 feet to a point 33 feet West of the East line of
said Southwest quarter; thence South 0(degrees) 25' l0" East, parallel with and
33 feet West of said East line, 1267.34 feet; thence South 87(degrees) 49' 59"
West, 2131.20 feet; thence North 0(degrees) 18', 00" West, parallel with the
West line of said Section 35, a distance of 588.54 feet; thence South
87(degrees) 47' 07" West, 419.58 feet to a point 55 feet East of the West line
of said Section 35; thence North 0(degrees) 18' 00" West, parallel with and 55
feet East of said West line, 110.06 feet; thence North 87(degrees) 47' 07" East,
parallel with said North line, 419.58 feet; thence North 0(degrees) 18' 00"
West, parallel with said West line, 588.54 feet to the TRUE POINT OF BEGINNING.
Said parcel, contains 2,787,821 square feet or 63.9996 acres, more or less.
[GRAPHIC OMITTED]
<PAGE>
ATTACHMENT NO. 3
LEGAL DESCRIPTION OF THE SUBSTITUTE SITE
Parcel No. 1: The Northwest quarter of the Southwest quarter of Section 1,
Township 1 North, Range 1 East of The Gila and Salt River
Base and Meridian, Maricopa County, Arizona.
Parcel No. 2: The East half of the Southwest quarter of Section One (1),
Township One (1) North, Range One (1) East Of the Gila and
Salt River Base and Meridian, Maricopa County. Arizona, more
particularly described as follows:
BEGINNING at the South quarter corner of said Section 1;
thence North 00 degrees 48 minutes 49 seconds East along the
East line of said Southwest quarter, 2571.11 feet, to the
Northeast corner of said East half; thence South 89 degrees
44 minutes 32 seconds West along the North line of said
Southwest quarter 1333.818 feet, to the Northwest corner of
said East half; thence South 01 degree 13 minutes 02 seconds
West along the West line of said East half of the Southwest
quarter, 2556.73 feet, to the Southwest corner of said East
half; thence South 89 degrees 37 minutes 52 seconds East
along the South line of said Southwest quarter, 1351.70 feet
to the POINT OF BEGINNING.
<PAGE>
ATTACHMENT NO. 4
PERMITTED EXCEPTIONS
1. Water rights, claims or title to water.
2. The provisions of Water Right Applications, if any, made for the
purpose of obtaining a water right under the reclamation laws of the
United States and the liabilities and obligations imposed upon the
premises by inclusion thereof within the boundaries of any such
reclamation project or within any irrigation district, or by
membership in the Salt River Valley Water Users' Association and the
assessments, dues, claims or liens, accrued or to accrue, made or
assessed against said premises by or under the authority of the
United States Reclamation Service, or the Salt River Valley Water
Users' Association or any Irrigation District or the effect or
operation of any rules, regulations, acts or contracts of any such
district, project or association.
3. Easement and rights incident thereto for irrigation pipeline over
said premises, as set forth in instrument recorded as Document No.
66-085204.
4. Easement and rights incident thereto for underground communication
cable over said premises, as set forth in instrument recorded as
Document No. 86-199921.
6. Easement and rights incident thereto for underground electrical
conduits over said premises, as set forth in instrument recorded as
Document No. 36-230091.
7. Certificate of Grandfathered Groundwater Right #58-1008912 recorded
August 31, 1983 as Document No. 83-350455.
<PAGE>
8. Certificate of Grandfathered Groundwater Right #58-100912.0002
recorded August 31, 1987 as Document No. 87-547839.
9. Easement and rights incident thereto for ingress and egress over the
South 15 feet of said Northwest quarter of the Southwest quarter of
said premises, as set forth in instrument recorded in Docket 4229,
page 559.
10. Easement and rights incident thereto for electrical transmission
lines over said premises, as set forth in instrument recorded Book
260 of Deeds, page 297.
11. Easement and rights incident thereto for electrical transmission
lines over said premises, as set forth in instrument recorded Book
83 of Miscellaneous, page 340.
12. Easement and rights incident thereto for electrical transmission
lines over said premises, as set forthin instrument recorded in
Docket 407, page 506.
13. Reservations contained in United States Patent recorded in Book 25
of Deeds, page 305, reading as follows: "Subject to any vested and
accrued water rights for mining, agricultural, manufacturing or
other purposes and rights to ditches and reservoirs used in
connection with such water rights as may be recognized and
acknowledged by local customs, laws and decisions of Courts", and
also, "Subject to the right of the proprietor of vein or lode to
extract and remove his ore therefrom should the same be found to
penetrate or intersect the premises hereby granted, as provided by
law".
4671R
<PAGE>
ATTACHMENT NO. 5
SUBSTITUTE PERMITTED EXCEPTIONS
As shown by title commitment issued by Lawyers Title of Arizona, as
requested by the City and the Operator.
<PAGE>
ATTACHMENT NO. 6
PRIMARY LETTER OF CREDIT
(Letterhead of Bank)
_____, 1989
The City of Phoenix, Arizona,
a municipal corporation of the
State of Arizona
231 West Washington, Suite 461
Phoenix, Arizona 89603
Attn: Finance Director
Gentlemen:
WE HEREBY AUTHORIZE YOU TO
DRAW ON US BY ORDER OF The Westside Amphitheatre Corp.
11411 North Tatum Boulevard
Phoenix, Arizona 89028
AND FOR THE ACCOUNT OF Same
UP TO AN AGGREGATE AMOUNT OF Two Million and 00/100 U.S. Dollars
AVAILABLE BY YOUR DRAFTS AT sight or by telecommunication on us
ACCOMPANIED BY
The sworn affidavit of the duly appointed City Manager of his designee and the
duly appointed City Attorney or his designee of the City of Phoenix, Arizona,
certifying that the amount being drawn is due and payable to the City of
Phoenix, Arizona and that all notices and conditions precedent to such payment
have been met in full, to wit: that either (1) the Operator has failed to pay
amounts due to the City pursuant to the terms of a certain Operator Lease
Agreement dated ______, 19___, between the City of Phoenix, Arizona and the
Westside Amphitheatre Corp., an Arizona corporation, as Operator or (2) the
Operator has voluntarily filed a petition under bankruptcy or insolvency acts or
laws, or Operator has been adjudicated a bankrupt or has made or is making a
general assignment for the benefit of its creditors; and that the City of
Phoenix, Arizona is entitled to all such funds, pursuant to Article ____,
Section ____ of the Operator Lease Agreement.
EACH DRAFT MUST STATE THAT IT IS "DRAWN UNDER LETTER OF CREDIT OF THE _____
BANK, NO. ____"
Multiple and Partial drawings are permitted under this Letter of Credit. In the
event of any partial drawings, we will endorse the amount of the partial drawing
on the original of this Letter of Credit and return the original Letter of
Credit to you. The expiration date of this Letter of Credit shall be
____________.
WE HEREBY AGREE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS CREDIT WILL BE DULY HONORED ON DELIVERY OF DOCUMENTS AS SPECIFIED
IF PRESENTED AT THIS OFFICE ON OR BEFORE
________, 1989.
Yours very truly.
------------------------------------
Authorized Signature
UNLESS OTHERWISE EXPRESSLY STATED, THIS
CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS
AND PRACTICE FOR DOCUMENTARY CREDITS
(1993 REVISION) INTERNATIONAL CHAMBER
OF COMMERCE PUBLICATION NO. [Illegible]
<PAGE>
ATTACHMENT NO. 7
SECONDARY LETTER OF CREDIT
(Letterhead of Bank)
_____, 1989
The City of Phoenix. Arizona,
a municipal corporation of the
State of Arizona
231 West Washington. Suite 461
Phoenix. Arizona 89603
Attn: Finance Director
Gentlemen:
WE HEREBY AUTHORIZE YOU TO
DRAW ON US BY ORDER OF The Westside Amphitheatre Corp.
11411 North Tatum Boulevard
Phoenix, Arizona 89028
AND FOR THE ACCOUNT OF Same
UP TO AN AGGREGATE AMOUNT OF ______________ and 00/100 U.S. Dollars
AVAILABLE BY YOUR DRAFTS AT sight or by telecommunication on us
ACCOMPANIED BY
The sworn affidavit of the duly appointed City Manager of his designee and the
duly appointed City Attorney or his designee of the City of Phoenix, Arizona,
certifying that the amount being drawn is due and payable to the City of
Phoenix, Arizona and that all notices and conditions precedent to such payment
have been met in full, to wit: that either (1) the Operator has failed to pay
amounts due to the City pursuant to the terms of a certain Operator Lease
Agreement dated ______, 19___, between the City of Phoenix, Arizona and the
Westside Amphitheatre Corp., an Arizona corporation, as Operator or (2) the
Operator has voluntarily filed a petition under bankruptcy or insolvency acts or
laws, or Operator has been adjudicated a bankrupt or has made or is making a
general assignment for the benefit of its creditors; and that the City of
Phoenix, Arizona is entitled to all such funds, pursuant to Article ____,
Section ____ of the Operator Lease Agreement and (3) that the City has drawn the
full amount of that certain Letter of Credit of the ________ Bank, No._____.
EACH DRAFT MUST STATE THAT IT IS "DRAWN UNDER LETTER OF CREDIT OF THE ________
BANK, NO._______"
Multiple and Partial drawings are permitted under this Letter of Credit. In the
event of any partial drawings, we will endorse the amount of the partial drawing
on the original of this Letter of Credit and return the original Letter of
Credit to you. The expiration date of this Letter of Credit shall be
____________.
WE HEREBY AGREE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS CREDIT WILL BE DULY HONORED ON DELIVERY OF DOCUMENTS AS
SPECIFIED IF PRESENTED AT THIS OFFICE ON OR BEFORE
__________, 1989.
Yours very truly.
------------------------------------
Authorized Signature
UNLESS OTHERWISE EXPRESSLY STATED, THIS
CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS
AND PRACTICE FOR DOCUMENTARY CREDITS
(1993 REVISION) INTERNATIONAL CHAMBER
OF COMMERCE PUBLICATION NO. [Illegible]
<PAGE>
D. In the event this agreement is void and unenforceable for any of the
reasons in paragraphs 6 A-C above, the COUNTY shall not be liable for any of
LICENSEE's costs, expenses, lost profits or any type of damages under this
agreement due to such occurrence.
7. A. CONCESSIONS: LICENSEE shall be responsible for all concession sales
within the Use Area. LICENSEE shall be responsible for and use reasonable care
to supervise all subconcession areas within the Use Area. LICENSEE may permit
subconcessions to operate in the Use Area; provided, however, that LICENSEE
provides an endorsement to its insurance policy covering COUNTY and LICENSEE for
any acts or omissions of LICENSEE's subconcessionaires. Nothing herein shall
require LICENSEE to obtain separate insurance from any subconcessionaire or to
name subconcessionaire on LICENSEE's insurance policy. LICENSEE shall provide
COUNTY with a list of names of each subconcessioner prior to the opening date of
the FAIRE, which list shall be confidential proprietary information of LICENSEE
and shall not be distributed to other parties by COUNTY except as provided by
paragraph 32, Release of Information.
B. REGIONAL PARKS DEPARTMENT CONCESSION/MERCHANDISE RIGHTS: LICENSEE
agrees to allow the Department to operate, at no charge, one combination
food/beverage booth, in a location of mutual consent which will be designed and
constructed by the LICENSEE. COUNTY shall provide LICENSEE with necessary
materials for the booth and will approve the booth design and size. COUNTY
agrees to coordinate the type of product sold with the LICENSEE and further
agrees that employees operating this booth will attend all orientation and
training classes scheduled by LICENSEE and follow all FAIRE concession operation
guidelines.
(1.) LICENSEE also agrees to allow the Department
14
<PAGE>
to operate, at no charge, an information/public relations booth for the public
along the main entrance roadway to the FAIRE. The exact location of the booth
will be as agreed upon by the LICENSEE's and COUNTY's On-Site Coordinators.
(2.) LICENSEE agrees that the Department may continue to operate, at
no charge to COUNTY and no fee to LICENSEE, the existing snack bar on the island
for FAIRE and PARK employees. COUNTY agrees not to allow the general public in
the island area.
8. ALCOHOL, MERCHANDISE AND SERVICES: LICENSEE and its subconcessions may
sell alcoholic beverages, merchandise and services at the FAIRE after obtaining
appropriate permits and approvals. LICENSEE and its subconcessioners agree to
sell merchandise and provide services that are of good quality and condition.
COUNTY's Director of Regional Parks has the right to approve the sale and/or
distribution of all items of merchandise and services offered at the FAIRE. Such
approval shall not be unreasonably withheld but LICENSEE agrees that COUNTY
retains the right to require LICENSEE and LICENSEE agrees to discontinue or
cause its subconcessioners to stop the sale or use of those items or services
COUNTY feels are not acceptable upon five (5) days written notice by COUNTY. In
the event COUNTY notifies LICENSEE and/or any of its subconcessioners to stop
the sale or use of any unacceptable items or services, and LICENSEE and/or any
of its subconcessioners obtains a final ruling from a court of competent
jurisdiction (which is upheld on any/all appeals by COUNTY) which prohibits
COUNTY from stopping such sale, use or service due to state or federal
constitutional limitations, COUNTY shall be liable for the cost of LICENSEE's
and/or its subconcessioner's legal fees in obtaining such a ruling.
9. PUBLIC HOURS OF OPERATIONS: LICENSEE shall be allowed to begin the
FAIRE no earlier than 9:00 a.m. and end no later than 7:00 p.m. LICENSEE may,
with written permission of COUNTY, offer
15
<PAGE>
evening programs to the public for a fee, but evening events must end no later
than 11:00 p.m.
10. UTILITIES: A. COUNTY agrees to make good faith efforts to provide
LICENSEE with water and electrical services, at no charge, but does not
guarantee that such utilities will be provided. Except as provided below, the
COUNTY shall not be liable for any costs, lost profits or any type of damages
for any failure to provide such utilities or any interruptions of such utilities
for any reason. LICENSEE may hook into the existing PARK water, septic and
electrical systems, but all such work must be coordinated with and approved by
COUNTY's On-Site Coordinator.
(1.) COUNTY agrees to provide or pay the cost of providing water
(but not the cost of water trucks, labor, etc.) to the FAIRE.
B. LICENSEE shall provide and pay all costs for all other utilities
needed for the FAIRE, but all work needed to install or connect such utilities
must be coordinated with and approved by COUNTY's On-Site Coordinator.
11. SANITATION: LICENSEE must provide a sufficient number of portable
toilets, per Health Department regulations, in good operable condition in the
Use Area at locations designated by the COUNTY'S and LICENSEE's On-Site
Coordinators, for use by the public at all times the FAIRE is open to the
public. LICENSEE shall provide a sufficient number of portable showers, per
Health Department regulations, for its employees and volunteers camping in PARK
on weekends.
12. A. USE AREA MAINTENANCE DURING TERMS OF FAIRE: LICENSEE will be
responsible for all janitorial and landscape maintenance of facilities and
grounds within the Use Area except the island snack bar and lake and waterway
surfaces. All
16
<PAGE>
maintenance practices shall comply with standards set forth by the COUNTY's
On-Site Coordinator and as identified in Exhibit Dl. A weekly inspection of the
Public Use Area, including all parking lots, shall be conducted every Tuesday
morning with the COUNTY's On-Site Coordinator and LICENSEE's On-Site Coordinator
at which time special needs/concerns will be addressed. Projects to be addressed
will be prioritized by the COUNTY's On-Site Coordinator and will be completed in
a timely manner as set by the COUNTY's on-Site Coordinator. COUNTY shall also
have the right to periodically inspect the remaining portion of the Use Area,
with or without notice to LICENSEE.
B. GROUNDS AND STRUCTURE RENOVATION: LICENSEE shall, at the
conclusion of each year's FAIRE, restore all grounds and structures in the Use
Area to the specifications and standards set forth in Exhibit D2. The irrigation
system will be reviewed in detail during the pre and after FAIRE walkthrough
inspections. COUNTY will prepare a materials and labor schedule of work that
must be done to restore the irrigation system to the same condition found during
the pre-FAIRE inspection. COUNTY shall allow LICENSEE, as well as other
qualified licensed contractors, to provide written quotes on work to be done.
COUNTY shall also be allowed to determine its costs to complete the work. The
final determination on who will complete the work will be based on low bid. If
LICENSEE submits the low bid, LICENSEE agrees that COUNTY shall provide an
On-Site Inspection Supervisor to coordinate and inspect the work to be
completed. LICENSEE agrees to pay all salary and benefit costs associated with
the time spent by COUNTY's On-Site Inspection Supervisor. If funds held for
this damage from the damage/clean-up deposit are insufficient to restore the
irrigation system, LICENSEE agrees, to reimburse COUNTY for any additional
charges.
13. USE OF COUNTY EQUIPMENT AND LABOR: A. Any COUNTY-owned equipment
requested by LICENSEE and approved by COUNTY's On-Site
17
<PAGE>
Coordinator for LICENSEE's use will be charged at an hourly rate based on the
prevailing commercial rental rates in San Bernardino County. Use of COUNTY
employees requested by LICENSEE to perform maintenance, repair, and/or
operation of equipment will be charged to LICENSEE on an hourly basis at the
employees current rate of pay and benefits.
(1.) Prior to any COUNTY-owned equipment being used or COUNTY
employees performing any services, COUNTY shall estimate the cost of such
equipment use and/or employee services and LICENSEE shall approve the estimates.
B. COUNTY shall provide and LICENSEE shall pay for one (1) COUNTY
employee to be stationed at the upper public entrance to the PARK as shown on
Exhibit B. LICENSEE shall also provide one of its personnel in parking lot
uniform (subject to COUNTY approval) to work the upper public entrance to the
park.
C. Prior to April 1, 1990, the parties shall agree upon the placement
(at LICENSEE's sole cost) of a trailer with air conditioning and toilet for a
temporary entry station at the upper public entrance to the PARK as shown on
Exhibit B.
14 INSURANCE AND INDEMNIFICATION CLAUSE: A. The LICENSEE agrees to
indemnify, defend, and hold harmless the COUNTY and its authorized agents,
officers, volunteers and employees against any and all claims whatsoever arising
from this agreement and for any costs or expenses incurred by the COUNTY,
LICENSEE or their authorized subconcessioners and agents, officers, volunteers
and employees on account of any claim therefore. However, nothing herein shall
require LICENSEE to indemnify or hold harmless the COUNTY or its authorized
agents, officers, volunteers and employees against any claims arising out of
COUNTY's negligent design or maintenance of any structure or artificial
condition of the Use Area or PARK. In the event any such claim is raised against
18
<PAGE>
COUNTY, LICENSEE shall provide a defense for COUNTY and in the event LICENSEE is
adjudged not to be responsible for claimant's damages because such damages were
caused wholly or in part by such COUNTY negligence, then COUNTY shall reimburse
LICENSEE for the defense costs incurred related thereto and shall indemnify
LICENSEE from all damages for which COUNTY is held liable.
(1.) Workers' Compensation -- A program of workers' compensation
insurance or a State-approved Self Insurance Program in an amount and form
to meet all applicable requirements of the Labor Code of the State of
California, including Employer's Liability with two hundred fifty thousand
($250,000) dollar limits, covering all persons providing services on
behalf of the LICENSEE and its subconcessions and all risks to such
persons under this agreement.
(2.) Comprehensive General and Automobile Liability Insurance --
This coverage to include contractual coverage and automobile liability
coverage for owned, and hired vehicles. The policy shall have combined
single limits for bodily injury and property damage of not less than two
million dollars ($2,000,000) including Liquor Liability.
B. This insurance may be available for purchase through the County's
Risk Management Department. LICENSEE shall furnish certificates of insurance and
certified copies of all policies and endorsements to the Department no later
than 5:00 p.m. Thursday, February 8, 1990; Thursday, February 7, 1991, Thursday,
February 6, 1992, Thursday, February 3, 1993, Thursday, February 3, 1994,
Thursday, February 2, 1995 and Thursday, February 1, 1996, evidencing the
insurance coverage above, which certificates shall provide that such insurance
shall not be terminated or expire except with thirty (30) days written notice to
the Department, and shall maintain such insurance from the time LICENSEE
commences performance of the use hereunder until the completion of such use
19
<PAGE>
including set up, take down time and renovation time.
C. LICENSEE shall require the carriers of all coverages to waive all
rights of subrogation against the COUNTY, its agents, officers, volunteers,
employees, contractors, and subcontractors.
D. All policies required above are to be primary and
non-contributing with any insurance or self-insurance programs carried or
administered by the COUNTY.
E. All policies, except for the Workers' Compensation insurance
coverage, shall contain additional endorsements naming the COUNTY, its
employees, agents, volunteers and officers as additional named insured with
respect to liabilities arising out of the use permitted hereunder.
F. The insurance requirements stated above shall be in effect for
the Initial Terms of this LICENSE. If LICENSEE exercise any option(s) for
additional term(s), COUNTY shall have the right to review and change the
insurance requirements of this LICENSE as to the amounts, types of insurance and
limits of coverage based on past claims to COUNTY, inflation, and any other item
reasonable related to the COUNTY's risk, at the first, third, and fifth years of
additional term(s), subject to the reasonable availability and cost of such
policies.
15. ADVERTISING: A. Any and all advertising, promotion and/or notice of
the FAIRE shall be subject to prior written approval by the Department's Chief
of Operations ("CHIEF"); and shall, except for 30 second or shorter radio and
television ads, bear/display the phrase, "In Cooperation with the San Bernardino
County Regional Parks Department", along with displaying the Regional Parks
Department logo. Response to requests for approval shall be within three (3)
COUNTY business days of receipt, or sooner if reasonably required. This
provision is limited to
20
<PAGE>
written and pictorial advertisements on television, radio, posters, flyers,
newspapers, and magazines.
B. ACCESS TO ADVERTISING MATERIALS: LICENSEE shall make available to
COUNTY, and COUNTY shall return to LICENSEE, all art, photographs, slides,
posters, brochures, videos and other similar advertising/promotional materials
which relate to the FAIRE at Glen Helen Regional Park. LICENSEE also agrees to
provide assistance and support to COUNTY in preparation of submittals for park
and recreation professional award programs regarding Glen Helen Regional Park
which are related to the FAIRE.
C. When reasonably feasible, as determined solely by COUNTY, COUNTY
will cooperate with LICENSEE to incorporate FAIRE advertising efforts in COUNTY
park publication.
16. PARK SIGNAGE: LICENSEE agrees to construct and provide COUNTY with all
necessary entrance/public information signs at the entrances to the Use Area, as
agreed upon by COUNTY's and LICENSEE's On-Site Coordinators, upon a minimum
three (3) day notice. Wording and style shall be coordinated and approved by
with the Department's Chief of Operations.
17. CONDUCT: LICENSEE shall be responsible for the conduct of its
employees, agents, volunteers, subconcessions and/or persons attending or
participating in the FAIRE at all times. LICENSEE shall also abide by the
FAIRE's conduct guidelines provided as Exhibit E. All employees, agents,
volunteers, subconcessions and/or persons attending or participating in the
FAIRE shall act and conduct themselves in a courteous and considerate manner
while at the PARK and abide by all PARK rules and regulations.
18. DAMAGE PROVISIONS: LICENSEE agrees to pay for the repair or
replacement of all damaged structures, equipment and facilities
21
<PAGE>
[GRAPHIC OMITTED]
County of San Bernardino
FAS
STANDARD CONTRACT
First Amendment
FOR COUNTY USE ONLY
- --------------------------------------------------------------------------------
E New Vendor Code Contract Number
M Change
X Cancel SC A 90-118A-1
- --------------------------------------------------------------------------------
County Department Dept. Orgn. Contractors License No.
Regional Parks
- --------------------------------------------------------------------------------
County Department Contract Representative Ph. Ext. Amount of Contract
Douglas R. Hawthorne 2594 Varies
- --------------------------------------------------------------------------------
Fund Dept. Organization Appr. Obj/Rev Source Activity GRC/PROJ/JOB Number
- --------------------------------------------------------------------------------
Commodity Code Estimated Payment Total by Fiscal Year
- -------------------------- FY Amount I/D FY Amount I/D
Project Name ---- Varies ------ ---- -------- -----
- -------------------------- ---- -------- ------ ---- -------- -----
- -------------------------- ---- -------- ------ ---- -------- -----
- -------------------------- ---- -------- ------ ---- -------- -----
- --------------------------------------------------------------------------------
THIS CONTRACT is entered into in the State of California by and between the
County of San Bernardino. hereinafter called the County. And
Name
The Living History Centre, a California hereinafter called LICENSEE
- --------------------------------------------
Address Not--For--Profit Corporation
P.O. BOX B
- -------------------------------------------- ---------------------------
Novato, CA 94948
- -------------------------------------------- ---------------------------
Phone Birth Date
415-892-0162
- ----------------------- --------------
Federal ID No. or Social Security No.
- --------------------------------------------
IT IS HEREBY AGREED AS FOLLOWS:
(Use space below and reverse side of form if needed. Set forth service to be
rendered, amount to be paid, manner of payment, time for performance or
completion, determination of satisfactory performance and cause for termination,
other terms and conditions, and attach plans, specifications, and addenda, if
any.)
WHEREAS, the County and Living History Centre have previously entered into
a license agreement, Contract No. #90-118, and:
WHEREAS, the Living History Centre has exercised its option, pursuant to
Paragraph 1.B of the license agreement to extend the term for one (1) additional
year.
NOW, THEREFORE, the parties agree that Contract No. #90-118 is extended
for one (1) additional term of eight (8) weekends and Memorial Day in 1992,
commencing on April 18 and 19, 1992 through and including Sunday June 7, 1992 on
all the terms and conditions of the license agreement.
Any provisions on the reverse side and referenced attachments hereof constitute
a part of this contract and are incorporated herein in full.
COUNTY OF SAN BERNARDINO
/s/ [Illegible] Living History Centre
- ---------------------------------- --------------------------------------
Chairman, Board of Supervisors (State if corporation, company, etc.)
Dated Sept 30, 1991 By /s/ [Illegible]
[Illegible] Dated
--------------------------------
[GRAPHIC OMITTED] Title
--------------------------------
ADDRESS
SIGNED AND CERTIFIED ------------------------------
THAT A COPY OF THIS
DOCUMENT HAS BEEN DELIVERED ------------------------------
TO THE CHAIRMAN OF THE
BOARD: Reviewed for Processing
Clerk of the Board of Superiors ------------------------------------
of the County of San Bernardino Agency Administrator/ CAO
By [Illegible] Date
-------------------------------- ------------------------------
Deputy
Approved as to Legal Form Reviewed as to Affirmative Action
[Illegible]
- ----------------------------------- --------------------------------------
County Counsel
Date
---------------------------------
<PAGE>
[GRAPHIC OMITTED]
County of San Bernardino
FAS
STANDARD CONTRACT
First Amendment
FOR COUNTY USE ONLY
- --------------------------------------------------------------------------------
E New Vendor Code Contract Number
M Change
X Cancel SC A 90-118A-2
- --------------------------------------------------------------------------------
County Department Dept. Orgn. Contractors License No.
Regional Parks
- --------------------------------------------------------------------------------
County Department Contract Representative Ph. Ext. Amount of Contract
Douglas R. Hawthorne 2594 Varies
- --------------------------------------------------------------------------------
Fund Dept. Organization Appr. Obj/Rev Source Activity GRC/PROJ/JOB Number
- --------------------------------------------------------------------------------
Commodity Code Estimated Payment Total by Fiscal Year
- -------------------------- FY Amount I/D FY Amount I/D
Project Name ---- Varies ------ ---- -------- -----
- -------------------------- ---- -------- ------ ---- -------- -----
- -------------------------- ---- -------- ------ ---- -------- -----
- -------------------------- ---- -------- ------ ---- -------- -----
- --------------------------------------------------------------------------------
THIS CONTRACT is entered into in the State of California by and between the
County of San Bernardino. hereinafter called the County. And
Name
The Living History Centre, a California hereinafter called LICENSEE
- --------------------------------------------
Address Not--For--Profit Corporation
P.O. BOX B
- -------------------------------------------- ---------------------------
Novato, CA 94948
- -------------------------------------------- ---------------------------
Phone Birth Date
415-892-0162
- ----------------------- --------------
Federal ID No. or Social Security No.
- --------------------------------------------
IT IS HEREBY AGREED AS FOLLOWS:
(Use space below and additional bond sheets. Set forth service to be rendered,
amount to be paid, manner of payment, time for performance or completion,
determination of satisfactory performance and cause for termination, other terms
and conditions, and attach plans, specifications, and addenda, if any.)
WHEREAS, the COUNTY entered into a license agreement ("LICENSE"), Contract
Number 90-118, wherein COUNTY is allowing the LICENSEE to hold a living
history celebration called the "Renaissance Pleasure Faire" ("FAIRE") at
Glen Helen Regional Park ("PARK"), and;
WHEREAS, the COUNTY and LICENSEE now desire to amend the LICENSE.
NOW, THEREFORE, in consideration of mutual covenants and conditions, the
parties hereto agree the LICENSE, Contract Number 90-118, is amended as
follows:
1. In paragraph 1, TERM OF LICENSE, subparagraph B, OPTION FOR
AdDITIONAL TERMS. DELETE the reference to April 18 and 19, 1992, as the
opening date of the FAIRE and June 7, 1992, as the closing date of the
FAIRE, and INSERT April 25 and 26, 1992, as the opening weekend of the
1992 FAIRE, and June 20 and 21, 1992, as the closing weekend of the 1992
FAIRE. ADD the following to this subparagraph: "The additional weekend
extension due to rain, vandalism, etc., is not applicable for the 1992
FAIRE."
8829.2 RAH
10/19/92 3:13 pm
02 12311-000 Rev. 11/91 Page 1 of 11
<PAGE>
in areas occupied or used by LICENSEE which is damaged through any act by
LICENSEE, its employees, agents, volunteers, subconcessions, and/or persons
attending or participating in the FAIRE. This provision applies to, but is not
limited to such items and areas as exterior fencing, structures, drinking
fountains, water spigots, irrigation equipment, trash cans, landscaping
including turf, trees, shrubs, and any other facilities or equipment at the
PARK.
19. FIRST AID: LICENSEE agrees to provide and staff a first aid station
on-site during all scheduled operating hours of the FAIRE. Any or all volunteers
shall have certified first aid and CPR cards.
20. COMPLIMENTARY TICKETS -- LICENSEE agrees to provide COUNTY with 1,000
complimentary tickets for any one day's use of the FAIRE and 100 invitations to
the FAIRE with VIP parking passes which will be good for admission to the FAIRE
every day the FAIRE is open to the public, and for all workshops and all other
events by LICENSEE during the FAIRE. COUNTY shall provide LICENSEE with a guest
list for the 100 invitations and VIP parking passes. All complimentary tickets
and invitation passes will be issued in accordance with COUNTY policy. Control
over the issuance of such tickets or passes shall be exercised entirely by the
COUNTY.
21. PRIVATE SECURITY: LICENSEE agrees to provide and pay for adequate
security consistent with the size of the crowd. All private security officers
will be required to wear a uniform identifying themselves as security officials,
unless otherwise designated by security agency or LICENSEE and approved by
COUNTY.
22. OFF SEASON STORAGE: A. LICENSEE shall be allowed use of an area near
the PARK maintenance building to store FAIRE equipment and supplies during the
off-season. The location shall be approved in advance by the COUNTY's On-Site
Coordinator. LICENSEE shall fence, and secure the storage area and shall secure
22
<PAGE>
and maintain all necessary insurance to cover items stored in this area. COUNTY
is not responsible for any loss or damage to any equipment and/or supplies
stored in this area.
B. LICENSEE shall be allowed to leave on-site permanent structures
including but not limited to ale stands, stages, poles, etc. during the
off-season. The approval of the structures to remain standing will rest with the
COUNTY's On-Site Coordinator. LICENSEE shall periodically inspect such
structures for any safety and repair issues. LICENSEE shall then be responsible
for all repair and upkeep of the structures to eliminate safety and aesthetic
concerns. LICENSEE shall maintain Comprehensive General Liability insurance in
an amount no less than one million dollars ($1,000,000) for these structures
provided however, that this insurance requirement shall be waived, in writing,
after each year's FAIRE if, after inspection by the COUNTY, the structures are
in acceptable condition to the COUNTY. LICENSEE agrees COUNTY may use these
structures for groups not exceeding 500 in number.
23. ASSIGNMENT AND TRANSFER: A. Except as provided below, LICENSEE is not
allowed to assign or transfer this LICENSE to any other person, group or
organization, but LICENSEE may allow certain businesses, groups and
organizations to operate booths, exhibits, and concessions as part of the FAIRE.
B. LICENSEE may assign or transfer this LICENSE to an affiliated
organization or to a reorganized organization so long As the assignee/transferee
organization is composed of primarily the LICENSEE's then existing officers and
directors. Prior COUNTY review and approval is required for any such assignment
or transfer.
24. COUNTY REPRESENTATION AT FAIRE STAFF MEETINGS: LICENSEE agrees that
COUNTY may be represented by the Director of Regional Parks or designee at all
LICENSEE'S FAIRE's staff meetings where LICENSEE anticipates issues of
significance relating to the southern FAIRE may be discussed. Reasonable travel
and per diem
23
<PAGE>
expenses related to this attendance shall be reimbursed to COUNTY by LICENSEE.
LICENSEE shall provide at least five (5) days notice to the Department of any
such meeting.
25. NONCOMPETITION AND SCHEDULING OF OTHER EVENTS: A. During the calendar
years of the initial terms of this LICENSE, COUNTY agrees that the FAIRE shall
be the sole theme event of its kind held at the PARK for gatherings over 500. If
LICENSEE exercises its option(s) for any additional term(s), this provision will
apply during the calendar years of the additional term(s). If LICENSEE exercises
all options for additional terms and is not in default at the completion of the
final additional term, this provision shall continue until December 31, 1997.
However, if LICENSEE does not exercise all options for additional terms, or is
in default at the completion of the final additional term, this provision shall
be null and void, and COUNTY may conduct or contract to conduct a similar theme
event at the PARK for gatherings of any size.
(1.) Notwithstanding the above (requiring the exercise of all
options in order to continue the prohibition against theme events similar to the
FAIRE) in the event LICENSEE is not in default at the time it notifies the
COUNTY (no later than October 15) of its intent not to exercise its next year's
option because the use fee for the year before the option year was only the
guaranteed minimum of $100,000, then the above prohibition shall apply during
the calendar year of the option not exercised.
(B) In the event LICENSEE does exercise all options for additional
terms and is not in default at the completion of the final additional term,
COUNTY shall not lease or license all or any part of the Use Area to anyone
without first giving the LICENSEE the first right of refusal to meet or beat
offers made by others. It is agreed that the phase "meet or beat offers made by
others" means the reasonably estimated revenues to the COUNTY from the LICENSEE
will be equal or greater than that reasonably estimated revenue generated by the
proposed operation. This provision shall
24
<PAGE>
be operable only when the COUNTY desires to lease or license all or any part of
the Use Area to groups of over 500 for more than three (3) days use. This
provision shall not be effective for any lease or license which commences use of
the Use Area on or after January 1, 1998.
26. MODIFICATION OF USE AREA: A. Except as otherwise provided below,
throughout the terms of this LICENSE, COUNTY shall not lease or license any part
or all of the Use Area to any third party.
(1.) Throughout the terms of this LICENSEE, COUNTY shall not
lease or license any part or all of the area designated on Exhibit B, page 2 of
3, as "Faire Parking" for use on days (weekends and Memorial Day) when the FAIRE
is open to the public ("Public Day(s)"). Provided, however, that COUNTY reserves
the right to license to third parties or use for its own purposes (on a
non-exclusive basis) the FAIRE Parking on other than Public Days. If COUNTY does
so license or use the Faire Parking, COUNTY shall (prior to 6:00 a.m. of the
Saturday Public Day) clean, repair and restore the Faire Parking area to the
condition it had prior to such use.
(2.) COUNTY reserves the right, upon six (6) month notice, to
remove from this LICENSE that portion of the Use Area designated on Exhibit B,
page 2 of 3, as "Amphitheater Area". In the event COUNTY removes the
Amphitheater Area from this LICENSE pursuant to this paragraph, COUNTY will
relocate LICENSEE on the PARK in comparable facilities with similar utilities.
All other terms and conditions of this LICENSE shall remain the same.
B. COUNTY reserves the right to develop physical structures, modify
the terrain, or, in any way, modify the physical appearance of the PARK and that
part of the Use Area not in the Public Use Area, provided however, that during
the terms, set up, take down and renovation times of this LICENSE, COUNTY shall
first coordinate such activities with LICENSEE.
25
<PAGE>
27. ATTORNEY'S FEES: In the event that any party herein commences any
legal or equitable action or other proceeding, including without limitation, an
action for declaratory relief or any other form of relief, or to enforce,
interpret, reform, rescind or in any other manner affect the provisions of this
LICENSE, the prevailing party shall be entitled to attorney's fees which may be
set by the Court in the same action, including any appellate action which may be
brought in connection with such action, or in a separate action brought for that
purpose, in addition to any other relief to which the party may be entitled.
28. TERMINATION:
A. DEFAULT: In the event that either party violates any of the terms
and conditions of this LICENSE, the aggrieved party shall give written notice of
specific violation and demand for correction.
B. TERMINATION FOR DEFAULT: If, within ten (10) days after written
notice and demand during the terms of this LICENSE, including set up, take down,
and renovation, and if, within thirty (30) days written notice and demand during
all other times of the year, the violating party has not commenced correction of
the noticed violation or shown acceptable cause therefor, the aggrieved party
has the right to immediately terminate or suspend, at its option, this LICENSE
and pursue any and all remedies provided by law.
(1.) Suspension of the LICENSE shall not prevent the COUNTY or
LICENSEE from thereafter terminating the LICENSE for the same violations by
giving three (3) days written notice of termination to the defaulting party.
C. If LICENSEE fails to meet the insurance requirements, payment of
the use fee, or damage deposit, as stated herein, LICENSEE agrees that COUNTY
may, after written notice
26
<PAGE>
immediately suspend this LICENSE, and further, LICENSEE agrees to immediately
cease operations at the FAIRE.
(1.) If LICENSEE fails to cure such a default within ten (10)
days of the written notice, LICENSEE agrees COUNTY may immediately terminate
this LICENSE.
D. If this LICENSE is terminated because LICENSEE is in breach of
this LICENSE, all fees paid to the COUNTY shall be retained by the COUNTY and
shall not be refunded to LICENSEE.
E. LIABILITY FOR BREACH: Termination for default shall not excuse
either party from any liability for breach of contract; such breach shall be
deemed total.
29. NOTICE: Any notice or other communication required or permitted to be
given under this LICENSE shall be given to the respective parties in writing, by
registered or certified mail, postage prepaid or otherwise personally delivered
as follows:
A. If to COUNTY:
(1.) Steven K. Messerli, Director,
EPWA Regional Parks Department,
825 E. Third Street
San Bernardino, CA 92415-0833
(2.) With a copy, sent by first class mail, postage prepaid
or otherwise personally delivered to Rex A. Hinesley,
Deputy County Counsel, 385 N. Arrowhead Avenue, 4th
Floor, San Bernardino, CA 92415-0140.
B. If to LICENSEE:
(1.) Phyllis Patterson
Living History Centre
P.O. Box B
Novato, CA 94948
27
<PAGE>
(2.) With a copy, sent by first class mail,
postage prepaid or otherwise personally
delivered to Jim Phillippi, 12650 Riverside
Drive, N. Hollywood, CA 91607-3492.
C. Or at such other address or to such other persons as
either of the parties may from time to time designate by
written notice given as herein provided.
30. DESIGNATION: COUNTY herein designates the Regional Parks Department
to administer and enforce this LICENSE on its behalf. Further, the County's
Regional Parks Chief of Park Operations is authorized to exercise all provisions
of this LICENSE on behalf of COUNTY, including the suspension but not the
termination provisions.
31. NO INTEREST OR ESTATE: LICENSEE agrees that it does not have and shall
not claim at any time any interest or estate of any kind or extent whatsoever in
the Use Area or PARK premises by virtue of this LICENSE or its occupancy or use
hereunder.
32. RELEASE OF INFORMATION:
A. Any information or other materials submitted in connection with
this LICENSE are for the exclusive use of the County of San Bernardino, but are
subject to disclosure under the provisions of the California Public Records Act,
Government Code Section 6250 et. seq. In the event a request for disclosure of
any part or all of any information or other material is made to the COUNTY, the
COUNTY shall make good faith efforts to notify the LICENSEE of the request and
shall thereafter disclose the requested information unless the LICENSEE requests
nondisclosure and agrees
28
<PAGE>
to indemnify, defend, and hold the COUNTY harmless in any/all actions brought to
require disclosure.
B. The failure of COUNTY to notify LICENSEE of such a request and/or
COUNTY's release of any such information or other material shall not be a basis
for any claim or lawsuit against the COUNTY .
33. LICENSE INTERPRETATION: The language of this LICENSE has been approved
by the respective counsel for each party to this LICENSE. The language contained
herein shall be construed as a whole according to its fair meaning, and neither
party hereto nor its respective counsel shall be deemed the drafter of this
LICENSE or any part hereof for the purposes of any litigation which may arise
hereafter between them.
34. CAPTIONS: The captions included in this LICENSE are only provided to
aid the readers hereof, and shall not in any way be interpreted as a limitation
upon or modification of any of the terms of this LICENSE.
35. PROVISIONS ARE COVENANTS AND CONDITIONS: All provisions, whether
covenants or conditions, on the part of either party shall be deemed to be both
covenants and conditions.
36. CONSENT: Whenever consent or approval of either party is required,
that party shall not unreasonably withhold such consent or approval.
37. EXHIBITS: All exhibits referred to are attached to this LICENSE and
incorporated by reference.
38. LAW: This LICENSE shall be construed and interpreted in accordance
with the laws of the State of California.
29
<PAGE>
39. DATE: This LICENSE shall be effective on the date written below as
signed by COUNTY, provided the COUNTY approves this LICENSE within thirty (30)
days of LICENSEE's execution.
In WITNESS whereof, the parties hereto have caused their respective names to be
hereunto subscribed by their respective proper officers thereunto duly
authorized.
COUNTY OF SAN BERNARDINO LIVING HISTORY CENTRE
By: /s/ [Illegible] By: /s/ [Illegible]
-------------------------- --------------------------
Chairman, Board of Supervisors
Date: JAN 22 1990 Date: JAN 22 1990
-------------------------- --------------------------
APPROVED AS TO LEGAL FORM APPROVED AS TO LEGAL FORM
ALAN K. MARKS, COUNTY COUNSEL AND CONTENT
SILVERTON, MILLER &
PHILLIPPI
By: /s/ Rex Hinesley By: /s/ James M. Phillippi
-------------------------- --------------------------
Rex Hinesley, Deputy James M. Phillippi
Date: 1-19-90 Date: 1-18-90
-------------------------- --------------------------
c: FAIRE. jan
(5.0 version)
Debi's desk SIGNED AND CERTIFIED THAT A COPY OF THIS
DOCUMENT HAS BEEN DELIVERED TO THE CHAIRMAN OF THE BOARD
[Illegible]
Clerk of the Board of Supervisors
of the County of San Bernadino
By /s/ [Illegible]
-------------------------------
Deputy
30
<PAGE>
EXHIBIT "A"
DESCRIPTION OF RENAISSANCE PLEASURE FAIRE
The Renaissance Pleasure Faire ("FAIRE"), a program of the Living History
Centre, a California not-for-profit corporation is a recreation of a 16th
Century English Country Faire. For eight weeks, the Use Area is transformed into
an Elizabethan era festival, complete with period music, costumed performers,
royal processions, jousting, authentic food, and vendors selling arts and
crafts. Physical structures such as horse arenas, stages, building facades,
maypoles, ale stands, ticket booths, and burlap screening set the tone and
ambience of the era.
The FAIRE is open to the public for a fee on weekends, plus Memorial Day.
During the week, the site is open for special group workshops and after hours
FAIRE workshops.
<PAGE>
RENAISSISSANCE PLEASURE FAIRE
USE AREA
[MAP OMITTED]
EXHIBIT B ///// USE AREA
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PAGE 1 of 3
<PAGE>
RENAISSANCE PLEASURE FAIRE
PUBLIC USE AREA AND
FAIRE PARKING
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EXHIBIT B
xxxxxx PUBLIC USE AREA
////// FAIRE PARKING
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----- AMPHITHEATER AREA
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<PAGE>
USE AREA
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EXHIBIT B
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PAGE 3
<PAGE>
CONFERENCE CENTER - FLOOR PLAN
[GRAPHIC OMITTED]
USE AREA
EXHIBIT C
<PAGE>
EXHIBIT "D1"
MAINTENANCE PRACTICES & STANDARDS
MAINTENANCE
LICENSEE will be responsible for all janitorial and landscape maintenance of
facilities and grounds within the Use Area except for lakes, waterways and
island snack bar. Janitorial/landscape maintenance practices shall comply with
standards set forth by the On-Site Coordinator and shall include, but not be
limited to the following:
Grounds and Restrooms
Daily Maintenance
-Trash and litter clean up of all grounds except lake edges used by
fisherman exclusively
-Disinfecting of permanent toilets
-Cleansing of permanent sinks
-Restocking of paper products
-Floors swept
-Portable toilets pumped, if needed
-Watering of all open grass areas through the use of hose bibs installed
by LICENSEE at locations as mutually agreed upon by COUNTY and LICENSEE
On-Site Coordinators
Weekly
-Moving and/or trimming of turf, lake edges and all open areas visible to
LICENSEE's customers as well as those areas behind the scenes visible to
PARK customers (i.e., along fence lines, around trees, fixtures,
structures, vendor booths, etc.)
CONFERENCE CENTER AND ADMINISTRATION BUILDING
Daily or As Needed
-Floors swept and/or vacuumed
Weekly or as Needed
-Plants watered
-Windows washed
-Kitchens sinks, counters, appliance cleaned
-Surrounding grounds maintained (i.e., water, mowed, trimmed, etc.)
<PAGE>
EXHIBIT D2
GROUNDS AND STRUCTURE RENOVATION STANDARDS
Prior to the set-up of each year's FAIRE, the LICENSEE and COUNTY will
conduct a joint pre-FAIRE inspection of the Use Area. The LICENSEE and
COUNTY On-Site Coordinators will review grounds and structures in the Use
Area and will agree to and record their condition at that time. LICENSEE
will restore all grounds and structures in the USE AREA at the conclusion
of the FAIRE to the conditions found during the pre-FAIRE inspection using
the following specifications (which are subject to LICENSEE's review and
input, but not approval):
TURF RENOVATION
- All rocks, rope, wood chips and all other debris will be removed from
the Use Area, except in storage areas agreed by COUNTY's and LICENSEE'S
On-Site Coordinators
- Alleviate compaction through aeration and verticut
- Level and smooth all turf areas so they do not pose a safety hazard
- All holes will be filled and compacted.
- Top dress with suitable fill material to be determined by COUNTY's
On-Site Coordinator.
- Fertilize and reseed designated areas with product and at rates
specified by COUNTY's On-Site Coordinator.
- Any renovated areas will be staked and flagged at COUNTY's On-Site
Coordinator's discretion by LICENSEE'S staff.
PLANT MATERIAL RENOVATION
- Replace all dead, dying or damaged plant material with a plant of
equivalent type, size and value. LICENSEE will tag all stressed plant
material before final inspection. If plant material dies or continues
showing stress before the next year's initial walkthrough inspection.
LICENSEE shall replace the plant material with a plant of equivalent type,
size and value.
- All plant materials to be approved by COUNTY's On-Site Coordinator.
COUNTY reserves right to refuse unacceptable plant Material.
- All plant material to be planted by specifications (fertilizer, compost
staking, etc) as set by COUNTY's On-Site Coordinator.
STRUCTURES
- All parking lots, roadways, walkways, curbing, restrooms, bridges, other
COUNTY structures, LICENSEE'S structures, etc., that are damaged during
the course of the FAIRE will be restored to their pre-FAIRE condition.
COUNTY'S On-Site Coordinator will determine which projects will be
repaired/replaced by qualified licensed contractor and those to be
completed by LICENSEE.
FIXTURES
- All BBQs, trash holders, picnic tables etc, removed by LICENSEE shall be
relocated in areas approved by COUNTY's On-Site Coordinator.
<PAGE>
EXHIBIT E
[COVER ART OMITTED]
1589
[GRAPHIC OMITTED]
THE LIVING HISTORY CENTRE
PRESENTS THE 23rd ANNUAL
RENAISSANCE
PLEASURE
FAIRE
1989
Pre-Faire
Workshops
for
Actors, Participants &
the General Public.
<PAGE>
================================================
--------------------------------------------
Once again we welcome thee,
to think on joy and revelry.
Harvest brings forth Market Day,
Where mongers bargain, Actors play.
Prepare! Prepare! The time be near,
Think on it now, each moment's dear.
Lord or Peasant? Know thy part!
'Ere Pleasure Faire again doth start.
Be you a stranger to our shire?
Know not our customs or our attire?
Apprentices we welcome ALL,
We here put forth a Workshop call.
--------------------------------------------
THE LIVING HISTORY CENTRE
PRESENTS THE 23rd ANNUAL
RENAISSANCE
PLEASURE
FAIRE
================================================
Index
Daily Schedule pg. 1
Important Dates pg. 2
Auditions pg. 1
Infant Co-op pg. 2
Costumes pg. 4
Guilds pg. 3
Camping Information pg. 5
Living History Centre Policies pg. 5
Workshop Classes pg. 2
How to find us pg. 6
<PAGE>
COLLEGE of
PERFORMING
ARTS
workshop facts
Welcome to the workshops for the Renaissance Pleasure Faire. As a
performer you are an integral part of our never-ending process of recreating the
sights, sounds and merry mayhem of Elizabethan England. Here, gentle reader, are
some important facts and helpful hints to make your workshop time not only
useful but fun.
WORKSHOPS:
WHAT ARE THEY?
Workshops are an eight day long process of educating our minds and bodies
out of the 20th century and into the 16th. Courses in language, movement, song
and dance are all available to transform yourself into historically authentic
and theatrically interesting Elizabethan characters. We ask that you take a
certain number of prescribed courses, get a costume OK'd by our staff and join a
guild - all in 8 days.
WORKSHOP
REQUIREMENTS:
There are four categories of participating as a performer: Apprentice;
never worked a fair before, Journeyman; worked 1-9 fairs, Master; worked more
than 10 faires, and Children; ages 5-12. Each category has a different amount of
required workshops. Apprentices must take 12, Journeyman 9, Masters 6, and
children 3. You have 18 opportunities to fulfill your requirements. NOTE: There
are no Performing Arts Workshops offered on Dress Rehearsal weekend, August 26th
& 27th.
PAPERWORK: WHAT DO I
NEED TO DO FIRST?
Take the Reckoning Card, which you will receive at pre-registration with
you to all your classes, to Costume OK and to Guild sign-ups. The workshop
leaders, Costume Staff and your Guildmaster will all sign their respective
spaces as you complete your studies and acceptance. After your Reckoning Card
has the necessary signatures, return it to the Container. Your application and
Reckoning Card will be matched in the office to produce your Gate Pass. If your
application and Reckoning Card are in order, your Gate Pass can be picked up at
the Container during Dress Rehearsal.
GUILDS: WHAT ARE THEY?
The Faire Performing Arts Department (known also as PAD) is divided into
approximately 16 guilds. These guilds range from the Peasants to the Nobles,
from the Mongers to the Military. Every Performing Arts Department participant
must join a guild.
COSTUMES:
WHAT SHOULD THEY
LOOK LIKE? HOW SHOULD
I GET ONE?
We are re-creating a 16th century Elizabethan Country Faire. At the
Costume Workshop, you will learn how to design and construct a correct costume.
However, the Costume Workshop does not replace having your costume OK'd. You
must do both. If the idea of making your own costume makes you quake, make
friends with one of the many talented seamsters and seamstresses attending
Workshops.
PROBLEMS AND
QUESTIONS?
Yes, of course there will be both. If you have any difficulty with the
requirements, ask the Performing Arts Staff what to do -- we are here to help
you! Pay close attention to announcements and don't be afraid to ask... We look
forward to working with you.
[GRAPHIC OMITTED]
Let us introduce you to the [Illegible] and structure of the Performing
Arts Department.
LESLIE RAY:
DIRECTOR
MAE WESTLAKE:
REGISTRAR
JAN TODD:
MANAGER OF STAGE OPERATIONS
JOANNE ASMAN:
EQUESTRIAN COORDINATOR
FRIEDA PARAS & TERY OLIPHAN:
COSTUME COORDINATORS
In order to participate in this year's event, you will need to fulfill
your workshop requirements. Workshops are the foundation upon which we build
[illegible] characters and performances. UNLESS YOU ARE A WORKSHOP LEADER YOU
MUST ATTEND YOUR REQUIRED WORKSHOPS. SINCE WE HAVE OVER 800 PERFORMERS ONLY
THOSE WHO COMPLETE THEIR REQUIREMENTS WILL BE ABLE TO PARTICIPATE.
DAILY SCHEDULE
Bring your talents, pencils and notebooks, lunches and softdrinks to
Innyard Stage on Saturday August 5th at PRECISELY 8:45 A.M. Remember to wear
sturdy walking shoes, a sun hat, and allow at least 20 minutes walking time from
the parking lot to the stage.
8:00-9:00
Pre-registration
8:45-9:30
Grand Assembly at Innyard Stage
9:45-11:00
Workshop I
11:15-12:30
Workshop II
12:30-1:00
Lunch!!
1:15-2:30
Workshop III
2:30-5:00
Guild sign-ups, auditions and rehearsals
AUDITIONS
Saturday and Sunday August 12th and 13th, from 2:00 - 5:00 p.m. at the
Innyard Stage.
Auditions for Musical pass-the-hat will be held August 19th and 20th from
1:00 - 5:00 p.m. at the Caravansary
PAD
1
<PAGE>
Stage. All pass-the-hat musicians must audition.
If you would like to audition, you just make an appointment. Please call the
Performing Arts Department at (415) 892-0937 to schedule your time.
REGISTRATION
Specific classes will be announced at the first workshop meeting on August
5th. Registration fees for the workshop series are $30.00 for Apprentices, $5.00
for Journeymen and Masters. This fee goes to pay for workshop leaders, printing
and other organizational expenses. Pre-registration is between 8:00 and 9:00 a.m
at the Performing Arts Department Container. YOU MUST FILL OUT PAPERWORK AND PAY
FOR WORKSHOP CLASSES BEFORE YOU RECEIVE YOUR RECKONING CARD. THERE WILL BE NO
REGISTRATION DURING MORNING MEETINGS.
INFANT CO-OP
Leslie Ray of PAD is looking for those of you with children under 5 who
are interested in a safe haven for them during the Faire. She would like to set
up a co-op situation where each parent would be available one hour per day to
assist one paid sitter in caring for the children. There will be a minimal fee
per day to pay for the sitter. The goal is to have at least two people there at
all times. If this sounds helpful please contact the PAD office ASAP so that we
can form a cohesive group and gather our resources (toys, diapers, etc.).
[GRAPHIC OMITTED]
IMPORTANT DATES
August 5th & 6th
First workshop weekend
August 12th & 13th
Second workshop weekend, show auditions and variety/pass-the-hat auditions
August 19th & 20th
Third workshop weekend, musical pass-the-hat auditions
August 26th
Scheduled rehearsals
August 27th
Full dress rehearsal
September 2nd, 3rd & 4th
OPENING WEEKEND (Labor Day)
September 9th & 10th
Second weekend
September 16th & 17th
Third weekend
September 23rd & 24th
Fourth weekend
September 30th & October 1st
Fifth weekend
October 7th & 8th
Closing weekend
FOR FURTHER INFORMATION,
CALL PAD AT: (415) 892-0937
The following are some of
the offered
WORKSHOPS
ORIENTATION I:
This class will tell you about the ins and outs of functioning as a Faire
performer, as well as giving you a good insight into the village of
Chipping-under-Oakwood and its varied inhabitants.
ORIENTATION II:
The purpose of this workshop is to provide newcomers with an overview of how
both the Faire and the Performing Arts Department work. Introduction of Who's
Who in both the Faire (staff members and guild masters) and in the Shire (theme
and other important characters) will be given. Participants will be taken on a
walking tour of the Faire site.
ELIZABETHAN LANGUAGE:
The basic sounds, grammar and vocabulary of Elizabethan English, the language of
our beloved shire.
CHARACTERIZATION:
Who am I? Why am I here? What is my purpose in life? These questions and more
will be answered in this beginning class. Learn the trade secrets that
enable you to build a complete character.
HISTORICAL
CHARACTERIZATION:
Who would you have been if you were born in the 1500's? This class is designed
to help you discover your character's position in the scheme of things.
LIFESTYLES:
Covers the basic knowledge of daily life political, religious, social customs
and though patterns of the period.
COUNTRY DANCE:
Learn the dynamics of English Country Dancing that will enable you to dance the
Faire in open street sets. Steps and patterns are easily learned and very
enjoyable. Feet required.
BAWDY SONG:
Favorite ditties of the period: bawdy and bold, wry and winsome. Come tickle
your fancy and your throat.
MEET & GREET:
Meet and learn to greet the audience with toasts and praises. Festive pageants
to celebrate harvest will be treated.
COSTUMES:
The costume staff will demonstrate costumes and costume making. Materials
outlines and Faire patterns will be available.
STAGE & STREET:
Simple techniques to build confidence portraying a character, whether on stage
or in an environmental area or in the street.
WEAPONS OF THE WORLD:
Weapons of the period, what they were, how they were made and by whom, how they
were used. Also etiquette and customs.
STAGE COMBAT:
How swords are wielded, what safety ideas to watch for, what the theories
of "illusion" are, what a fight "story Line" should include, etc.
CHILDREN'S
ELIZABETHAN LIFE:
A view of the unique lifestyle of Elizabethan children. Topics: Manners, Duties
& Songs.
CHILDREN'S GAMES &
PAGEANTS:
Come play with us! Learn games!
2
<PAGE>
THE GUILD
SAINT ALBAN'S CARTPULLERS
KATHLEEN BARTHOLOMEW
The Village Players: They run the local tavern and supply travellers and locals
alike with good brown ale. In keeping with the mystery of their craft (brewing)
they perform The Pageant of John Barleycorn, and pull the great wheeled pageant
wagon.
SAINT BRIGID/THE SCOTS
LIZ MITCHELL
This company is an historical, theatrical and social organization dedicated to
portraying the daily life of a 16th century Hibern-Scotish clan. Their rousing
dance show and colorful marches are done in the traditional style.
SAINT ANNE/HORSE TOURNAMENT
RICHARD SALEM
Join in the Joust! All Faire folk are invited to be a part of our thrice daily
jousts. In addition, paid positions are available for those that would be pages,
squires, abigales, grooms or riders (must own their own horse). Auditions for
new riders and for master or mistress of ceremonies will be held the second day
of workshops.
SAINT BLAISE/CRIERS
P.A.D. STAFF
Guild of "Bellmen" or town criers, leaders of the main Faire parades. Bellmen
are civic officials, middle class dignitaries who function by day as parade
leaders and by night are the watch men. During Faire, even in parades, bellmen
sing, caper, bellow and laugh.
SAINT BONIFACE/STAGE ACTORS
P.A.D. STAFF
This group is composed of the lively troopers who speak the speech with wit and
passion on the Main stages. Also residing in this guild are the notable
characters of the shire and the able stage managers.
SAINT CECELIA'S/MUSICIANS & DANCERS
DOUG JONES
The Guild of music makers and dance. If you sing, dance, flute, fiddle, harp or
lute whether to pass-the-hat or no, this is the Guild where you should go.
SAINT CHRISTOPHER'S FRIENDS OF FAIRE
MICKI SOLIS
These Friends of Faire members greet the travellers to our shire and encourage
them to give active support in their journeys through time (i.e. membership in
Friends of Faire). All classes are encouraged to participate in this guild.
SAINT CUTHBERT'S/PARADES & PAGEANTS
SUE HONOR
Saint Cuthbert's is the Parade Guild. They lead all major parades and add
pageantry to the streets and stages. Saint Cuthbert's is an excellent guild for
newcomers.
SAINT DISMAS'S/VARIETY ACTS
JAN TODD
The Guild for all jugglers, magicians, mimes and acrobats who entertain the
crowd and may PASS THE HAT for their skills.
SAINT ELECTUS
THE PURITANS
GERALD ZEPEDA/SHERMAN KAHN
Composed of the Holy Elected Puritans who, historically came to preach at
country faires, this Guild allows you, the actor, direct improvisational
interaction with the audience. By means of their ravings, the Puritans will give
the travellers a license to indulge his or her Falstaffian inclinations.
SAINT GEORGE'S/QUEEN'S COURT
RORY DOWNWARD
The noble ladies and gentlemen of Her Majesty's Court. They hold forth in the
Court Glade, with their attendants, grooms and servants. They will play with
all who step forward, be they shire folk or visitor. They walk with the Queen in
Royal Progress.
SAINT HELENA'S/STREET FOLK
ROBERT BUSACK
Saint Helena's consists of the fun-loving peasant class (farmers, herdsmen,
tradesmen, and such); the essential bottom-rung on the ladder of Elizabethan
society. All the Faire is our stage for many activities which include singing,
dancing, rustic games, and performing in the streets in celebration of
time-honored traditions. This guild is a perfect "introductory" guild for
apprentices.
SAINT IVES/MIDDLE CLASS
ROBIN PAVLOSKY
Representing the Merchant class in Chipping, this guild is the go-between the
peasants and the nobles. There is much audience interaction, they also
participate in the Lord Mayor's show.
SAINT MICHAEL'S/MILITARY
NICHOLAS WORTHINGTON
Accompanying the Queen on her progress, The Guard is composed of bodyguards -
the Landsknechts - and Her Majesty's own guard. They set up an exciting
military environment.
SAINT MINERVA/WASHERWOMEN
JULIE ST. GERMAIN
The shire washerwomen are of all ages, just "ordinary" women doing the family
wash. They are quick-witted, sharp-tongued, and perform their slice-of-life
improv to the rhythm of slapping wash. If you dare to be bold, enjoy good
ensemble work and like getting wet, meet them at the well!
SAINT PATRICK'S/THE IRISH
DON FERDINAND
A household made up of the entourage of the Earl of Tyrone, Hugh O'neil.
Including singers, dancers, musicians and statesmen performing the traditional
songs and dances of Ireland.
SAINT SWITHINS/TOWN MONGERS
RICHARD SHANNON
Saint Swithin's is the guild of the mongers. They traverse the streets of the
Faire hawking their wares, fish, vegetables and clothing. They also hawk
services: boot-blacking, questionable apothecaries' cures and tooth-pulling.
Mongers dispense justice at the local Pye Powder court. Any rumor about members
of this guild and cow's entrails are probably true.
SAINT GENESIUS/CHILDREN
ROBIN PRITCHARD
Children of all rank, ages 5-12 Join in pageants, parades, games and revelry.
3
<PAGE>
COSTUME
Our goal is to look like a 16th century English Country Faire and Market-place:
the following basic Costume guidelines will help you to create this illusion.
These guidelines have been based upon historical and theatrical decisions.
COLORS, FABRICS AND TRIM
Choose your character and then choose your colors, fabrics and trims
accordingly.
COLORS: Use earth-tones, browns, greens, golds, russets and variations
thereof. Avoid fluorescents, bright reds, true black, pastels and bright colors
of any kind. NO PURPLE ON ANYONE BUT THE QUEEN!!!
FABRICS: Use 100% natural fabrics or blends with small amounts of poly.
Best looks: woven cottons, textured natural fabrics, leather and linen. NO:
prints, velour, sheers or 100% polyester. Velvet, satin and brocades are ONLY
for the middle-upper classes, not peasants. Remember, less is more. Use trims
sparingly and if you are a peasant, use less than that. Ask us for specific
details.
Guidelines for Nobles, Irish, Scots, German Mercenaries, Middle Eastern
and specialized groups available upon request from the Costume Department.
MEN
HEAD & HAIR
Everyone must wear a hat! Hats need to be 16th century looking. See
illustrations. All 20th century haircuts and colors must be completely covered.
[GRAPHIC OMITTED]
BREECHES
Pants must be full - lots of volume to them, not form-fitting. Length can be
thigh-high, above the knee, or mid-calf but not ankle length like 20th century
pants. No visible zippers or visible pockets.
[GRAPHIC OMITTED]
SHIRTS
Everyone must wear a shirt or blouse. Shirts need to be long-sleeved and
full-bodied. Roll up the sleeves if need be. Drawstring, high-collared,
drop-collared, or no-collared shirts and smocks are acceptable. See
illustrations for appropriate doublets, jerkins, and tunics. The need for a
doublet or tunic is dependent upon your character.
[GRAPHIC OMITTED]
SHOES & LEGS
No bare feet or bare legs. Most kind of earth shoes, wallabies, high-top
moccasins without fringe, closed toe Birkenstocks and "Kung Fu" shoes are
acceptable. No: sandals, cowboy boots, or tennis shoes. Wear tights or knee
socks at all times. See illustrations for acceptable boots or ask us.
[GRAPHIC OMITTED]
ACCESSORIES
Make your character more visually interesting by using belts, pouches, drinking
tankards and occupational implements. Be creative and have fun! Very little
jewelry is acceptable - ask for specifics. ABSOLUTELY NO SLOGAN BUTTONS. Also,
no: sunglasses, watches, or cigarettes - don't destroy the illusion we have all
worked so hard to make.
WOMEN
HEAD & HAIR
Women must wear a hat at all times and have their hair pinned up under their
hats or braided. Hats need to be 16th century looking - see illustrations. All
obvious 20th century haircuts and colors must be completely covered.
[GRAPHIC OMITTED]
SKIRTS
Skirts must be full and just below the ankle in length. Wear two skirts the same
length and tuck the top one up for the correct silhouette. Or wear one skirt and
an apron. No: "party skirts" (different colored pastels), ruffles, or tiers.
[GRAPHIC OMITTED]
BLOUSES & BODICES
All women must wear an appropriate looking 16th century bodice. See
illustrations and ask us for help. Blouses must be worn under bodices. Blouses
must be long-sleeved and full-bodied. Push up the sleeves if necessary.
Drawstring, high-collared, drop-collared, or no-collared blouses are acceptable.
Blouses must be worn on the shoulders - no off the shoulder shifts.
4
<PAGE>
SHOES & LEGS
No bare feet or bare legs. Most kinds of earth shoes, wallabies, high-top
moccasins without the fringe, closed-toe Birkenstocks, "Mary-Janes" and
"Kung-Fu" shoes are acceptable. No: sandals, cowboy boots, tennis shoes, bobby
socks, anklets, or nylons. Wear tights or knee socks. See illustration for
acceptable boots or ask us.
[GRAPHIC OMITTED]
ACCESSORIES & MAKEUP
No obvious makeup allowed. No: eye-shadow, eyeliner, glitter, nailpolish,
opalescent makeup, metallic makeup or fluorescent makeup. ABSOLUTELY NO SLOGAN
BUTTONS! Aprons, market baskets, pouches, drinking tankards and occupational
implements will make your character more visually interesting. Be creative and
have fun! Very little jewelry is acceptable - ask for specifics. No: sunglasses,
watches, or cigarettes - please don't destroy the illusion we've all worked so
hard to create.
[GRAPHIC OMITTED]
CHILDREN
Children were dressed as adults: apply appropriate standards.
CAMPING
INFORMATION
Overnight camping is available to participants of the PAD during workshops
and Faire weekends (Friday and Saturday nights). In order to camp you must have
your Guildmaster's approval (those not yet in a guild must obtain the permission
of the PAD). You must be over the age of 18, or have a guardian's consent form
signed by your parents and a legal guardian present on the lot.
Camping passes are the property of the Living History Center and we
reserve the right to pull your pass at any time if the need arises. Remember
that camping on the site is a privilege and not a right.
Please be aware of the new camping rules and regulations and always carry
valid I.D. along with your passes.
LIVING HISTORY
CENTRE
POLICIES
Daytime admission is by valid hand stamp or Gate Pass only.
A Gate Pass is not valid for entry if the date is already crossed out.
All participants must carry their gate pass on their person at all times while
on the Living History Centre property.
A valid picture I.D. must be carried along with the gate pass.
Every gate pass must be signed, or it will be considered invalid.
Each person on a gate list must be in costume in order to gain entry to the
faire.
Anyone found with a forged or falsified pass, or a pass that is not their own
will be expelled, and will lose all future Living History Centre privileges.
A Camping Permit is required for entry after closing and must be shown along
with the bearer's Gate Pass.
No overnight gear is allowed at any time (including daytime) unless bearer has
valid Camping Permit.
Participants are not allowed to bring drugs inside the Faire site at any time.
No alchoholic beverages can be allowed to come in to, or go out of the Faire
during Faire hours.
Each vehicle must have a valid delivery sticker to be allowed entry onto the
Faire site.
In addition, each person inside the vehicle must have a valid gate pass or hand
stamp (and camping permit if after closing or if carrying any overnight
gear.)
Cars are allowed to drive onto the lot until 8:00 a.m. one hour before opening,
and will be asked to get their vehicles out at 8:30 at the VERY LATEST. LHC
VEHICLES HAVE THE RIGHT OF WAY AT ALL TIME.
No motorcycles are permitted inside at any time.
You must always have your passes in your possession at all times.
Remember, always be polite and if you have a problem with Security or Parking
always follow their directions first, then come and talk to The Performing Arts
Department Staff.
- --------------------------------------------------------------------------------
Costumes for Sale
All Manner of Peasant Costume and accessory will be for sale in various booths
during Workshops.
- --------------------------------------------------------------------------------
5
<PAGE>
================================================================================
[GRAPHIC OMITTED]
[RENAISSANCE PLEASURE FAIRE MAP]
================================================================================
How to find us
Black Point Forest, Novato
FROM SOUTHERN CALIFORNIA
Highway 5 North to 580 West to 80 North to 37 West, take the Blackpoint exit. Or
take 101 to 37 East to the Blackpoint Exit.
FROM THE EAST BAY
Interstate 80 to 37 West to the Blackpoint exit.
================================================================================
[LIVING HISTORY CENTER LOGO] BULK RATE
NON PROF ORG
U.S. POSTAGE PAID
PERMIT #196
NOVATO, CA
(415) 892-0937
Postal Box 'B'
Novato, CA 94948
================================================================================
<PAGE>
2. ADD the following as a new subparagraph 1 B (1.), to subparagraph 1 b,
OPTION FOR ADDITIONAL TERMS:
(1.) The COUNTY and LICENSEE agrees to enter into good faith
negotiations after the 1995 FAIRE with the intent of reaching
a new multi-year license agreement which will permit the FAIRE
to continue its operation at the PARK.
3. ADD the following to Subparagraph 1 C, SET UP as a new subparagraph 1 C
(1.):
(1.) The Director of the COUNTY's Regional Parks Department is
authorized to allow earlier entrance to all or a portion of
the Use Area for set up no earlier than February 1 of each
year. The Director is also authorized to allow earlier
entrance to the Administration Building and Conference Center
for prefaire activities no earlier than January 2 of each year
if available.
4. In paragraph 2, USE AREA subparagraph A, DELETE existing Exhibit B and
SUBSTITUTE the attached as a new Exhibit B identifying the Use Area, subject to
the provisions of this Amendment.
5. ADD the following statement to paragraph 2, USE AREA. subparagraph A:
"LICENSEE will also be allowed to use all access roads for buses and new
entrance for traffic entering the Decca Pre-School parking lot."
6. ADD the following as a new subparagraph B(3), to paragraph 2, USE AREA:
(3) LICENSEE is hereby allowed to use the Decca Pre-school Building
as a parking control center following the PRE-FAIRE inspection of
the PARK each year. LICENSEE agrees to accept the building as is and
will pay for any and all improvements desired by LICENSEE to this
building, after written approval by COUNTY is obtained.
7. ADD the following as a new subparagraph 2C to paragraph 2, USE AREA:
C. Bus Access Road and Parking Lot Entrance: LICENSEE is hereby
allowed to develop, maintain and pay for the construction of a one
(1) lane wide access road for buses adjacent to Devore and Glen
Helen Roads, designated as "NEW BUS LANE and "NEW BUS TURNAROUND
LANE" on the attached Exhibit B, provided that approval
2
<PAGE>
is obtained from County Transportation Department and Caltrans.
Furthermore LICENSEE is hereby allowed to develop, maintain and pay
for the construction of a new parking lot entrance roadway off
Devore Road, designated as "NEW FAIRE PARKING ENTRANCE" on the
attached Exhibit B, provided that approval is obtained from CAL-NEV.
LICENSEE shall apply a dust retardant to the bus lane and entrance
road prior to each year's FAIRE.
(1.) LICENSEE understands and agrees that as part of the
proposed PARK amphitheater improvements, the COUNTY may widen
to five (5) lanes that portion of Devore Road where the NEW
BUS LANE is located. In such case, the NEW BUS LANE will not
be needed and will not be replaced. COUNTY warrants that
LICENSEE shall have access to not less than one (1) traffic
lane in each direction and one (1) lane for exclusive bus use
during all relevant periods, and warrants that such road
widening will not restrict access to any existing points of
access to the Use Area.
8. ADD the following as a new subparagraph D, to paragraph 2, USE AREA:
D. EMPLOYEE CAMPING: For the 1992 FAIRE only, COUNTY allows LICENSEE
to use the Amphitheater Area, Decca Pre-School Area and FAIRE
maintenance yard to house full time FAIRE staff. LICENSEE shall
obtain all necessary permits from applicable agencies including
COUNTY Environmental Health Department, California Department of
Forestry, and California Housing Community Development (H.C.D.).
LICENSEE shall obtain written approvals in advance from COUNTY's
Regional Parks Department for maximum numbers of full time employee
sites allowed within the Decca Pre-school and FAIRE maintenance
yard. LICENSEE shall be responsible for trash and litter pickups
within FAIRE employee campgrounds. FAIRE employees shall abide by
all Park Rules and Regulations. Except as noted herein, the COUNTY
shall not be bound to allow any greater camping than is required
under the original unamended LICENSE.
9. In subparagraph 3F(2), USE FEE, METHOD AND TIME OF PAYMENT, ADDITIONAL
TERMS, DELETE the reference to December 1, 1993, as the due date in 1992 of the
remainder of balance of 3.25% of gross, and INSERT December 1, 1992, as the due
date in 1992 for the remainder of balance of 3.25% of gross.
3
<PAGE>
10. In subparagraph 53, WALK-THROUGH, PUBLIC USE AREA TRASH, LITTER,
EQUIPMENT REMOVAL INSPECTION: DELETE the reference to Tuesday, June 30, 1992, as
the date for the public use area trash, litter, equipment removal inspection and
INSERT Thursday, July 2, 1992, as the new date for this inspection.
11. In paragraph 6, PERMITS AND APPROVALS. ADD the following statement to
the end of subparagraph A: "LICENSEE shall send copies of all written permits,
licenses, and approvals required for public assembly to the County's Regional
Parks Department within 72 hours of LICENSEE's receipt, but not later than
Friday, 12 noon, prior to the opening weekend of the FAIRE. In the event any
such permit, license and/or approval is given to LICENSEE orally, LICENSEE shall
notify the COUNTY of all essential elements of such oral permit, license and/or
approval, and provide COUNTY a copy of the written permit, license, and/or
approval when and if a written copy becomes available."
12. ADD the following to Paragraph 6, PERMITS AND APPROVALS as a new
Subparagraph 6 B (1.):
(1.) In the event the construction of any improvements to the
PARK or the roads around the PARK for the amphitheater allow
the LICENSEE's attendance limitation to increase to over
20,000 persons at any time, LICENSEE agrees that it will limit
its attendance to 20,000 persons at any time on those dates
when there is a scheduled event at the PARK amphitheater.
13. DELETE existing Paragraph 9, PUBLIC HOURS OF OPERATIONS and SUBSTITUTE
the following as a new Paragraph 9, PUBLIC HOURS OF OPERATIONS:
9. PUBLIC HOURS OF OPERATIONS: LICENSEE shall be allowed to begin
the FAIRE no earlier than 9:00 a.m. and end no later than 6:00 p.m.
LICENSEE agrees to take reasonable steps to encourage its patrons to
vacate the Public Use Area as expeditiously as possible on those dates
when there is an event scheduled in the Park's amphitheater. LICENSEE
agrees that it will use its best efforts to keep any noise coming from any
non-public event it holds in the Use Area to a level which is inaudible in
the Amphitheater Area during, those times when there is an event in the
PARK's amphitheater.
4
<PAGE>
14. ADD the following statement to the end of subparagraph 12A, USE AREA
MAINTENANCE DURING TERMS OF FAIRE: "LICENSEE agrees to maintain and apply a dust
retardant water treatment to all parking lots and a dust retardant chemical
(calcium chloride or equivalent) treatment to bus lanes and entrances to parking
lots."
15. ADD the following as a new subparagraph 12C, FAIRE MAIN PARKING LOT,
PRIMARY AND SECONDARY FLOOD CONTROL LEVEE MAINTENANCE, RESTORATION AND REPAIR:
C. FAIRE MAIN PARKING LOT, PRIMARY AND SECONDARY FLOOD CONTROL LEVEE
MAINTENANCE, RESTORATION AND REPAIR:
(1.) LICENSEE shall be responsible for periodic maintenance,
repair of minor flood damage (not to exceed $10,000), dust
control, and trash pickup in the FAIRE main parking lot
necessary to operate the FAIRE and within the Use Area, but
excluding maintenance and repair of the Primary and Secondary
Flood Control levees.
(2.) In the event of minor flooding causing damages over
$10,000 but less than $20,000 in these areas, the COUNTY, in
coordination with LICENSEE, will promptly take whatever
measures it feels are reasonable to repair the damaged areas.
The COUNTY makes no guarantee that such damage will not occur.
(2.) In the event of major flooding causing damages over
$20,000 in these areas, the COUNTY may take whatever measures
it feels are reasonable to save these areas from further
damage. The COUNTY makes no guarantee that major damage will
not occur. If major damage occurs, COUNTY and LICENSEE agree
to negotiate the responsibility for future restoration costs,
on a case by case basis.
(A.) Notwithstanding how the parties have handled
current and/or prior flood damage issues, the parties
agree that neither party is to be responsible for
repairing major flood damage. In the event the parties
are unable to negotiate the responsibility for future
restoration costs for major flood damage, then LICENSEE
shall have the option to either operate the FAIRE in any
safe manner (as approved by the COUNTY) or terminate
this LICENSE by giving COUNTY seven
5
<PAGE>
(7) days notice of termination, provided, however, that
nothing herein shall release COUNTY from claims for
damages arising out of the alleged (and disputed)
non-disclosure by COUNTY that a portion of the Use Area
used as parking lots may lie within a flood plain.
16. DELETE existing paragraph 19, FIRST AID, and SUBSTITUTE therefore the
following as a new paragraph 19, FIRST AID AND INJURY NOTIFICATION:
(A). LICENSEE agrees to provide and staff a first aid station
on-site during all scheduled operating hours of the FAIRE. Any or
all persons staffing the station shall have certified first aid and
CPR cards. LICENSEE shall provide COUNTY's on-site coordinator with
written assurances that all such persons have current certified
first aid and CPR cards prior to each weekend worked.
(B). For any injury and/or accident to employees, volunteers and
visitors which is known to LICENSEE and for which LICENSEE has
prepared a report, LICENSEE agrees to provide COUNTY with a copy of
all such injury and/or accident reports . LICENSEE shall notify
COUNTY's On-Site Coordinator of any such injury and/or accident as
soon as possible, but not later than within one day of serious
physical injuries and within five days for physical injuries of a
routine nature and/or damage to Park facilities.
17. DELETE existing paragraph 20, COMPLIMENTARY TICKETS, and SUBSTITUTE
therefore the following as a new paragraph 20, COMPLIMENTARY TICKETS and the
attached as Exhibit F relating thereto:
20. COMPLIMENTARY TICKETS: LICENSEE agrees to provide COUNTY with
complimentary tickets in accordance with Exhibit F.
18. ADD the following to Paragraph 22, OFF SEASON STORAGE, as a new
subparagraphs 22 B (1.), (2.), (3.) and (4.):
(1.) At the end of each year's FAIRE, the ticket building
shall be disassembled and stored by COUNTY at COUNTY's expense
in a manner prescribed by LICENSEE so that it may be
reassembled by LICENSEE at LICENSEE's expense the following
year.
6
<PAGE>
(2.) At the end of each year's FAIRE, the main entrance
structure shall be disassembled and stored by COUNTY at
COUNTY's expense in a manner prescribed by LICENSEE so that it
may be reassembled by COUNTY at COUNTY's expense the following
year.
(3.) At the end of each year's FAIRE, ale stand No. 1 shall be
disassembled and stored by LICENSEE at LICENSEE's expense.
(4.) Except as noted above, LICENSEE shall be entitled to
maintain such other structures as presently exists on the Use
Area.
19. ADD the following to Paragraph 26, MODIFICATION OF USE AREA, as a new
subparagraphs 26 A (1.) (A) and (B):
(A) COUNTY represents and LICENSEE understands and agrees that the
operator of the proposed PARK amphitheater ("OPERATOR") shall be required
in its lease of the Amphitheater Area from the COUNTY (the "LEASE") to
prepare a Traffic Management Plan, setting forth the parking and traffic
plans to be used in the event that the amphitheater and LICENSEE hold
events on the same day. The OPERATOR shall coordinate these plans with and
obtain the approval of the FAIRE and COUNTY no later than January 1, 1994
or such later date (as determined by the FAIRE) which is in sufficient
time for the 1994 FAIRE schedule of operations. LICENSEE agrees that as
part of such plans, it will not park additional vehicles in the Main Faire
Parking lot after 3:00 p.m. on dates when there is a scheduled event at
the PARK amphitheater. LICENSEE also agrees not to unreasonably withhold,
condition or delay its approval of the plans. Provided, however, if
LICENSEE's costs of parking vehicles (which costs may include but are not
limited to additional busing, traffic control and parking personnel)
increase, if LICENSEE'S costs of closing the Main Faire Parking lot at
3:00 p.m. on dates when there is a scheduled event at the PARK
amphitheater increase, or if LICENSEE's costs in adjusting its current
parking operations increase as a result of the OPERATOR's Traffic
Management Plan, such cost increases shall be borne by COUNTY (or by
OPERATOR is so allocated in agreements between COUNTY and OPERATOR) and
the LICENSEE may deduct such cost increases from the final use fee payment
due to COUNTY under subparagraph 3F, METHOD AND TIME OF PAYMENT.
7
<PAGE>
(B) During the period of occupancy of the Use Area by LICENSEE, all
construction traffic and amphitheater concert traffic entering and exiting
the parking adjacent and to the west of the amphitheater shall be carried
by the upper road closest to the water slide area.
20. ADD the following to Paragraph 26, MODIFICATION OF USE AREA, as a new
subparagraph 26 A (2.) (A), and the attached as a new Exhibit "B", page 3 of 3,
relating thereto:
(A) The parties agree that the Amphitheater Area is removed from
this LICENSE upon the effective date of this amendment. The parties also
agree that the COUNTY will relocate LICENSEE's campers displaced from the
Amphitheater Area as follows:
(1.) For the 1993 FAIRE, (i) run of the FAIRE campers shall be
allowed to use, without cost, spaces in the COUNTY's Glen Helen Campground
(north of Devore Road and east of Glen Helen Road) during the months of March,
April, May, June and July, and; (ii) weekend campers shall be allowed to use,
without cost, the areas noted as "Scout Area", "Unimproved Temporary Parking
Area", and "Unimproved Parking (License Area)" on Exhibit B, page 3 of 3, and
the adjacent canyon.
(2.) For the 1994, 1995 and 1996 FAIRE, (i) weekend campers
shall be allowed to use, without cost, spaces in the COUNTY's Glen Helen
Campground (north of Devore Road and east of Glen Helen Road) on Friday,
Saturday, Sunday nights and Memorial Day night, and; (ii) run of the FAIRE
campers shall be allowed to use, without cost, the Sycamore Flats area of the
PARK. LICENSEE agrees to continue to provide, at the level it historically
provided in the Scout Area, support services (showers, toilets, etc.) for such
campers, and the COUNTY agrees to provide, at its cost, potable water and all
incremental costs above the LICENSEE's historic level of such support services.
COUNTY will provide site grading, a footpath to the FAIRE site and safe entrance
from Devore road to Sycamore Flats.
2l. ADD the following to Paragraph 26, MODIFICATION OF USE AREA, as a new
subparagraph 26 B (1.):
(1.) COUNTY agrees to use all means available to it and its
other licensees to reduce sound emanating from the
amphitheater construction so that such construction noises are
inaudible within the FAIRE's Use Area during the published
public hours of operation of the FAIRE and during the
published hours of the FAIRE's Workshop in the Woods.
8
<PAGE>
22. In paragraph 29, NOTICE, DELETE reference to Steven K. Messerli,
Director, as the COUNTY party to receive notices or communications and
SUBSTITUTE E. Jay Ellington, Director, as the COUNTY party to receive notices
and communications.
23. All other provisions and tens of this LICENSE agreement, Contract
Number 90-118, shall remain the same and are hereby incorporated by reference.
24. The parties agree that this LICENSE agreement, Contract Number
90-118, is extended for one (1) additional term of eight (8) weekends and
Memorial Day in 1993, commencing on April 17 and 18, 1993 through and including
Sunday June 6, 1993 on all the tens and conditions of this LICENSE as amended.
25. In addition to the above amendments to the terms of the LICENSE, the
parties wish to provide for sharing the $78,700.00 restoration costs due to the
major flood damage which occurred during the February 24, 1992, Presidential
declaration #FEMA-935-DR, on the following terms:
A. LICENSEE shall obtain a minimum of three (3) written quotes for the
restoration work and shall pay for the work to be done. LICENSEE shall
provide COUNTY copies of all paid invoices for the restoration work.
B. COUNTY shall apply for Federal Emergency Management Act and State of
California Natural Disaster Assistance Act funding to pay for part or all
of the restoration costs. Should the COUNTY receive Federal Emergency
Management Act (FEMA) and/or State of California Natural Disaster
Assistance Act (STATE) funding for such restoration, COUNTY shall use all
such funds to reimburse the LICENSEE for the restoration costs, up to
$78,700.00, under the following terms.
(1) In the event that COUNTY has received any amount of FEMA/STATE
funding by December 1, 1992, COUNTY shall forthwith pay LICENSEE the
amount received. For the purposes of example only: If the COUNTY were to
receive $45,000.00 of FEMA/STATE funding on November 13, 1992, the COUNTY
would pay all $45,000.00 to LICENSEE within thirty (30) days.
(a) If the amount received from FEMA/STATE and paid to
LICENSEE is less than $39,350.00, COUNTY shall first pay LICENSEE
all amounts received from FEMA/STATE and also reimburse LICENSEE for
the difference (up to a
9
<PAGE>
total of $39,350.00) between the amount received from FEMA/STATE and
paid to LICENSEE, through credits against the final payment of 3.25%
of gross revenue due to COUNTY on December 1, 1992, under
subparagraph 3F(2) of the LICENSE. For the purposes of example only:
If the COUNTY were to receive $20,000.00 of FEMA/STATE funding on
November 13, 1992, the COUNTY would pay all $20,000.00 to LICENSEE
as soon as practicable, and LICENSEE would then be allowed to take a
credit of $19,350.00 toward the final payment due under subparagraph
3F(2) of the LICENSE.
(b) In the event the final payment due under subparagraph
3F(2) of the LICENSE is less than the difference between the amount
received from FEMA/STATE and paid to LICENSEE and $39,350.00, the
LICENSEE shall first take a credit against the amount due and then
the COUNTY shall, no later than January 8, 1993, refund to LICENSEE
from prior use fee payments the difference between $39,350.00 and
the total of the FEMA/STATE money paid to LICENSEE and credits
taken. For the purposes of example only: If final payment due under
subparagraph 3F(2) of the LICENSE were $9,350.00 and the COUNTY were
to receive $20,000.00 of FEMA/STATE funding on November 13, 1992,
the COUNTY would pay all $20,000.00 to LICENSEE as soon as
practicable, and LICENSEE would then be allowed to take a credit of
$9,350.00 toward the final payment due under subparagraph 3F(2) of
the LICENSE and then the COUNTY would, no later than January 8,
1993, refund to LICENSEE from prior use fee payments the $10,000.00
difference between $39,350.00 and the total of the FEMA/STATE money
paid to LICENSEE and credits taken ($39,350.00 - [$20,000.00 +
$9,350.00] = $10,000.00).
(2) In the event that COUNTY is totally denied FEMA/STATE funding or
has not received any FEMA/STATE funding by December 1, 1992, COUNTY shall
reimburse LICENSEE for fifty percent (50%) (not to exceed $39,350.00) of
the restoration costs through credits against the final payment 3.25%
of gross revenue due to COUNTY on December 1, 1992, under subparagraph
3F(2) of the LICENSE. For the purposes of example only: If the COUNTY were
not to receive any FEMA/STATE funding prior to December 1, 1992, the
LICENSEE would be allowed to take a credit of $39,350.00 toward the final
payment due under subparagraph 3F(2).
(a) In the event the final payment due is less than
$39,350.00, the LICENSEE shall first take a credit against the
amount due and then the COUNTY shall, no later than January 8, 1993,
refund to LICENSEE from
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<PAGE>
prior use fee payments the difference between the credit taken and
$39,350.00. For the purposes of example only: If the amount due
under subparagraph 3F(2) were $35,000.00 and the COUNTY were not to
receive any FEMA/STATE funding prior to December 1, 1992, the
LICENSEE would be allowed to take a credit of $35,000.00 toward the
final payment due under subparagraph 3F(2) and then the COUNTY
would, no later than January 8, 1993, refund to LICENSEE from prior
use fee payments the $4,350.00 difference between the credit taken
and $39,350.00 ($39,350.00 - $35,000.00 = $4,350.00).
(3) Any FEMA/STATE funding received after LICENSEE takes any credits
and/or receives a refund as set forth in either subparagraphs (1) or (2)
above shall be retained by the COUNTY up to the total of the amount of
credit taken and/or refund paid, and any excess FEMA/STATE funding shall
be paid to LICENSEE. For the purposes of example only: If, using the
example of subparagraph (2)(a) above, the COUNTY received $50,000.00 of
FEMA/STATE funding after the LICENSEE had taken a credit of $35,000.00
toward the final payment due and the COUNTY had refunded to LICENSEE the
$4,350.00, the COUNTY would first retain $39,350.00 of the FEMA/STATE
funds ($35,000.00 + $4,350.00 = $39,350.00) and pay the excess $10,750.00
($50,000.00 - $39,350.00 = $10,750.00) to the LICENSEE.
26. This agreement shall be effective when executed by both parties.
APPROVED AS TO LEGAL FORM AND CONTENT
KNAPP, PETERSEN, & CLARKE
By /s/ James M. Phillippi
----------------------
James M. Phillippi
Date: October 19, 1992
COUNTY OF SAN BERNARDINO
/s/ Larry Walker Living History Centre, Inc.
- --------------------------------- --------------------------------
Chairman, Board of Supervisors (State if corporation,
company, etc.)
Dated: Oct 19 1992 #90-118-A-2 By [ILLEGIBLE]
------------------------------ -----------------------------
(Authorized Signature)
SIGNED AND CERTIFIED THAT A COPY OF Dated 11/13/1992
THIS DOCUMENT HAS BEEN DELIVERED TO THE --------------------------
CHAIRMAN OF THE BOARD Title Treasurer
--------------------------
Clerk of the Board of Supervisors of the
County of San Bernardino Address P.O. Box B
--------------------------
By [ILLEGIBLE] Novato, Ca. 94948
------------------------------------ --------------------------
[SEAL]
- --------------------------------------------------------------------------------
Approved as to Legal Reviewed as to Affirmative Reviewed for Processing
[ILLEGIBLE] Action
/s/ [ILLEGIBLE]
- ------------------- -------------------------- -----------------------
County [ILLEGIBLE] Agency Administrator CAO
Date Oct 19 1992 Date Date
-------------- --------------------- -------------------
Page 11 of 11
<PAGE>
[MAP OMITTED]
-----------------------------
RENAISSANCE PLEASURE FAIRE
-----------------------------
GLEN HELEN REGIONAL PARK
EXHIBIT B
FAIRE USE AREA
COUNTY USE AREA
Sheet 1 of 2
---------------------
<PAGE>
[MAP OMITTED]
-----------------------------
RENAISSANCE PLEASURE FAIRE
--------------------------
GLEN HELEN REGIONAL PARK
EXHIBIT B
GENERAL USE/FAIRE
ADMINISTRATION AREA
SHEET 2 OF 2
-----------------------------
<PAGE>
[MAP OMITTED]
CAMPING AREAS
EXHIBIT B - PAGE 3 OF 3
<PAGE>
Exhibit F
Complimentary Tickets
The following are general guidelines which will govern the use of complimentary
tickets to the Renaissance Pleasure Faire. The following are the types of
complimentary tickets which will be provided to COUNTY:
1. Unrestricted VIP Passes: LICENSEE agrees to provide COUNTY with
twenty-five (25) passes which will be used, but not limited to,
Board of Supervisor members, County Administrative Officer, County
Counsel, Public Works Group Assistant Administrative Officer,
Regional Parks Advisory Commission and five (5) Regional Parks
Department Administrators.
These passes will provide the bearer with unrestricted use
throughout the Public Use Area for the run of the Faire. Passes will
allow free admission to the bearer any day the Faire is open to the
public and as many guests as they wish; will allow bearer and guests
free admission to all workshops and other events staged by LICENSEE
and will provide bearer with two VIP Parking Passes.
2. Restricted VIP Passes: LICENSEE agrees to provide COUNTY with
approximately 150 passes for other County VIP's to be determined by
COUNTY. These passes will allow bearer and up to three (3) adults
free admittance any one (1) day the Faire is open to the public. The
bearer will receive a VIP Parking Pass and will be allowed access to
the Royal Pavilion.
3. Opening Weekend Complimentary Tickets: LICENSEE agrees to provide
COUNTY with 500 complimentary tickets for the opening weekend of
each year's Faire.
4. Memorial Day Complimentary Tickets: LICENSEE agrees to provide
COUNTY with 250 complimentary tickets which will be available for
use on Memorial Day Monday holiday only.
5. Other Complimentary Tickets: LICENSEE agrees to provide COUNTY with
1,000 complimentary tickets for any one (1) day's use of the Faire.
Provided, however, that LICENSEE may monitor the use of such tickets
(by serial numbers or otherwise) and reserves the right to deny
access to any person purchasing such tickets and further reserves
the right to prosecute sellers of such tickets under any applicable
law.
<PAGE>
All complimentary tickets and invitation passes will be issued in accordance
with COUNTY policy. Control over the issuance of such tickets or passes shall be
exercised entirely by the COUNTY.
<PAGE>
ADDENDUM
TO OPERATOR LEASE AGREEMENT
CITY CONTRACT NO. 49975
The City of Phoenix, Arizona (the "City") and Pavilion Partners, a
Delaware General Partnership (the "Operator"), parties to that certain Operator
Lease Agreement amended and restated as of September 26, 1989 (the "Agreement"),
hereby enter into this Addendum for the purposes of clarifying the terms of the
Agreement in light of circumstances unforeseen at the time the Agreement was
executed. Capitalized terms shall have the meanings set forth in the Agreement.
WHEREAS, The Westside Amphitheatre Corp. ("WS") has assigned the Agreement to
the Operator, and the City has consented to such assignment;
WHEREAS, as a result of such assignment, Zev Bufman would not have control of
the Operator as originally contemplated by the Agreement;
WHEREAS, with regard to calculation of Gross Revenues under the Agreement, it
has been the intent of the City, WS and the Operator that all ticket sales
revenue be included in Gross Revenues, regardless of whether the Operator acts
as an event promoter or contracts with or subleases to a third party promoter
except for certain events which may be excluded from time to time, on a
case-by-case basis, from that requirement with the City's consent; and
WHEREAS, the City and the Operator have agreed that payment of Basic Rent under
the Agreement shall be made in arrears; and
WHEREAS, the City and the Operator have agreed that the auditors certificate
required to be given pursuant to Section 3.2 of the Agreement within 60 days
after the close of each Rental Year may instead be given 60 days after the close
of Operator's fiscal year;
NOW THEREFORE, the City and the Operator hereby agree as follows:
1. That the requirement in Section 2.6 that the Operator provide key-man
life insurance on Zev Bufman or his successor during the eighth (8th) full
Rental Year and continuing through the tenth (10th) full Rental Year is
waived;
2. That the definition of Gross Revenues in Section 3.1(c) of the
Agreement shall not construed to exclude any ticket sales revenues or
receipts from Gross Revenues for purposes of calculating Percentage Rent
whether the ticket sales revenues were generated by the Operator or by a
third party promoter pursuant to contract or lease. However,
notwithstanding the foregoing, in order to allow Operator limited
flexibility to pursue a more diversified line-up of attractions the City
hereby agrees that it will not unreasonably withhold its consent to
exempting, on a case-by-case basis, not to exceed
1
<PAGE>
eight (8) events presented by third party operators in any Lease Year from
the requirement that such third party operators' ticket proceeds be
included in Gross Revenues. The City's Parks, Recreation and Library
Department shall exercise the authority of City in determining which
events may be exempted from the Gross Receipts requirement as to ticket
proceeds on a case-by-case basis. For each event which Operator desires to
exempt from the Gross Receipts requirement as to ticket proceeds, Operator
shall provide written notice thereof to the City's Parks, Recreation and
Library Department advising of the (i) date and time of the proposed
event, (ii) the name by which the proposed event will be known or
marketed, (iii) the name of the promotor of such event and (iv) a
statement that the Operator will have no interest, directly or indirectly,
in the ticket revenues attributable to such event. City agrees that it
will provide a response within 14 days for each requested exemption made
by the Operator pursuant to the foregoing provisions; and
3. That payment of Basic Rent under the Agreement shall be on an arrearage
basis, such that payments of Basic Rent shall be due on January 1 and July
1 of each Rental Year and shall relate to the preceding six month period.
4. The Certificate required to be given to City by the Operator's
certified public accountant pursuant to the provisions of Section 3.2 of
the Agreement, may at all times hereafter be delivered within sixty (60)
days after the close of Operator's fiscal year instead of within sixty
(60) days after the close of each Rental Year. PP's fiscal year currently
ends on September 30 of each year. The Certificate shall be supported by a
Review completed in accordance with the Statement on Standards for
Accounting and Review Services issued by the American Institute of
Certified Public Accountants.
This Addendum is intended not as an amendment of the Agreement but as an
interpretative statement by the parties regarding certain terms of the
Agreement. This Addendum is incorporated for all purposes into the Agreement as
if executed on September 26, 1989.
[The remainder of this page has been intentionally left blank.]
2
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Addendum to be executed
by their duly authorized representatives this 26th day of August, 1997.
CITY OF PHOENIX, a municipal
corporation
FRANK FAIRBANKS, City Manager
By: /s/ David Krietor
-----------------------------
Its COMMUNITY AND ECONOMIC
DEVELOPMENT DIRECTOR
----------------------------
Attest:
/s/ [Illegible]
- ----------------------
Acting City Clerk
Approved As To Form:
/s/ [Illegible]
- ----------------------
Acting City Attorney
PAVILION PARTNERS, a Delaware
General Partnership
By: SM/PACE, Inc., its managing
general partner
By /s/ [Illegible]
---------------------------
Its Vice President
--------------------------
3
<PAGE>
OFFICIAL RECORDS OF
MARICOPA COUNTY RECORDER
HELEN PURCELL
WHEN RECORDED, RETURN TO: 97-0734978 10/21/97 03:20
Robert L. Matia, Esq.
SQUIRE, SANDERS & DEMPSEY L.L.P.
40 N. Central Avenue, Ste. 2700
Phoenix, Arizona 85004
================================================================================
MEMORANDUM OF LEASE
Between
CITY OF PHOENIX,
a municipal corporation
of the State of Arizona
("Lessor")
and
PAVILION PARTNERS,
a Delaware general partnership
("Lessee")
<PAGE>
MEMORANDUM OF LEASE
This MEMORANDUM OF LEASE is made as of April 1,1994 between the CITY OF
PHOENIX, a municipal corporation of the State of Arizona ("Lessor"), and
PAVILION PARTNERS, a Delaware general partnership ("Lessee").
WITNESSETH:
1. Lessor leased to The Westside Amphitheatre Corp. ("WAC") and WAC leased
from Lessor, these certain premises ("Premises") situated in the City of
Phoenix, State of Arizona, more particularly described on Exhibit "A" attached
hereto, for the term, at the rental and upon all of the terms and conditions set
forth in that certain Operator Lease Agreement dated as of September 26, 1989,
which amended and restated that certain Operation License and Use Agreement
dated as of November 13, 1988, which Operator Lease Agreement is incorporated
herein by this reference ("Lease") and was assigned by WAC to Lessee pursuant to
that certain Assignment of Lease dated as of April 1, 1994, intended to be
recorded immediately prior to the recording of this instrument.
2. Should there be any inconsistency between the terms of this Instrument
and the Lease, the terms of the Lease shall prevail.
IN WITNESS WHEREOF, each of the parties hereto has executed this
instrument as of the date first above written.
Lessor
CITY OF PHOENIX, a municipal corporation
Frank Fairbanks, City Manager
ATTEST: By: /s/ David Krietor
------------------------------
Name: David Krietor
/s/ [Illegible]
- -------------------------- COMMUNITY AND ECONOMIC
Acting City Clerk DEVELOPMENT DIRECTOR
APPROVED AS TO FORM
/s/ [Illegible]
- -----------------------------
Acting City Attorney
<PAGE>
Lessee
PAVILION PARTNERS, a Delaware general
partnership
By: SM/PACE, Inc., a Texas corporation, as
managing partner of Pavilion Partners
By: /s/ Rodney L. Eckerman
---------------------------
Name: Rodney L. Eckerman
THE STATE OF ARIZONA
COUNTY OF MARICOPA
The foregoing instrument was acknowledged before me this 27th day of
August, 1997, by David Krietor, the Director of THE CITY OF PHOENIX, a
municipal corporation of the State of Arizona, on behalf of the corporation.
/s/ Bette Herrera
---------------------------
Notary Public
My Commission Expires: June 12, 2000
-2-
<PAGE>
THE STATE OF TEXAS
COUNTY OF HARRIS
The foregoing instrument was acknowledged before me this 25th day of
August, 1997, by Rodney L. Eckermon, Vice President of SM/PACE, INC., a Texas
corporation a general partner of PAVILION PARTNERS, a Delaware general
partnership, on behalf of said partnership.
/s/ Deborah A. Darby
---------------------------
Notary Public
[NOTARY STAMP]
My Commission Expires: 7-10-01
-3-
<PAGE>
EXHIBIT "A"
A portion of the North half of the Southwest quarter of Section 35, Township 2
North, Range 1 East of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona, more particularly described as follows:
BEGINNING at the Northwest corner of said southwest quarter; thence North 87
degrees 47 minutes 07 seconds East along the North line of said Southwest
quarter, 67.93 feet; thence south 2 degrees 12 minutes 53 seconds East and
perpendicular to said North line, 33 feet; thence North 87 degrees 47 minutes 07
seconds East, parallel with and 33 feet South of said North line, 405.58 feet to
the TRUE POINT OF BEGINNING of the herein described parcel; thence continuing
North 87 degrees 47 minutes 07 seconds East, parallel with and 33 feet South of
said North line, 2107.58 feet; thence south 46 degrees 19 minutes 02 seconds
East, 29.23 feet to a point 33 feet West of the East line of said Southwest
quarter; thence South 0 degrees 25 minutes 10 Seconds East, parallel with and 33
feet West of said East line, 1267.84 feet; thence South 87 degrees 49 minutes 59
seconds West, 2131.20 feet; thence North 0 degrees 18 minutes 00 seconds West,
parallel with the West line of said Section 35, a distance of 588.54 feet;
thence South 87 degrees 47 minutes 07 seconds West, 419.58 feet to a point 55
feet East of the West line of said Section 35; thence North 0 degrees 18 minutes
00 seconds West, parallel with and 55 feet East of said West line, 110.06 feet;
thence North 87 degrees 47 minutes 07 seconds East, parallel with said North
line, 419.58 feet; thence North 0 degrees 18 minutes 00 seconds West, parallel
with said West line, 588.54 feet to the TRUE POINT OF BEGINNING;
<PAGE>
LEASE AGREEMENT
BETWEEN
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY,
as Landlord
AND
SONY MUSIC/PACE PARTNERSHIP
as Tenant
Dated February 9, 1994
<PAGE>
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS, USAGE AND EXHIBITS ............................. 3
Section 101. Definitions .................................... 3
Section 102. Exhibits ....................................... 21
Section 103. Number and Gender; Captions; References ........ 22
Section 104. Financial Terms ................................ 23
ARTICLE II - REPRESENTATIONS, COVENANTS AND WARRANTIES;
DISCLAIMERS .................................................. 24
Section 201. Representations, Covenants and Warranties of
the Tenant .............................................. 24
Section 202. Representations, Covenants and Warranties of
Landlord ................................................ 27
Section 203. Disclaimer ..................................... 29
Section 204. Hazardous Substances ........................... 29
Section 205. Amendments relating to Initial Bonds ........... 32
ARTICLE III - RENT AND OTHER PAYMENTS ................................... 33
Section 301. Rent ........................................... 33
Section 302. Rental Payments to be Unconditional, No Abate-
ment or Set-off ......................................... 33
Section 303. Termination of Lease Term/Rental Payment
Obligation .............................................. 34
Section 304. Surcharge Revenue .............................. 34
Section 305. Basic Rent; Principal Portion .................. 35
Section 306. Basic Rent; Interest Portion ................... 35
Section 307. Basic Rent; Interest Calculation ............... 35
Section 308. Basic Rent; No Bonds Outstanding ............... 36
Section 309. Supplemental Rent .............................. 36
ARTICLE IV - LEASE OF PREMISES AND EASEMENTS; TERM OF
LEASE ........................................................ 37
Section 401. Premises Leased ................................ 37
Section 402. Easements ...................................... 38
Section 403. Lease Term ..................................... 42
Section 404. Conditions Precedent ........................... 43
Section 405. Landlord's Buy-Out Option ...................... 50
Section 406. Payment of Impositions ......................... 51
Section 407. SJPAC Lease .................................... 52
Section 408. Tax Contests ................................... 52
Section 409. Evidence Concerning Impositions ................ 53
Section 410. Separate Assessment and Rendition .............. 53
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Section 411. Right to Perform Obligations as to Impositions . 53
Section 412. Cooperation with Landlord ...................... 53
ARTICLE V - CONSTRUCTION OF PROJECT/CARE AND USE; DRAW
PROCEDURES ................................................... 55
Section 501. Design of Project .............................. 55
Section 502. Construction of Project ........................ 55
Section 503. Performance Bonds and Other Guaranty ........... 57
Section 504. Default in Contractors' Performance ............ 58
Section 505. Continuing Right of Tenant to Make Changes,
Alterations and Additions ............................... 58
Section 506. Maintenance and Use of the Project and the
Land; Landlord Access; Repairs Not to Create Liens ...... 59
Section 507. Possession and Enjoyment ....................... 60
Section 508. Tenant's Negligence ............................ 61
Section 509. Project Costs; Payment ......................... 61
Section 510. Submission of Draws; Procedures ................ 62
Section 511. [Intentionally Blank] .......................... 63
Section 512. Construction Period Insurance .................. 63
Section 513. Covenant Against Waste ......................... 63
Section 514. Title to Improvements .......................... 63
Section 515. Landlord's Development and Financing Respon-
sibilities .............................................. 63
Section 516. Compliance with Laws ........................... 65
Section 517. Government Grants .............................. 65
Section 518. Real Estate Matters ............................ 66
Section 519. Dockside Lease ................................. 67
ARTICLE VI - PERFORMING ARTS, CHARITY AND COMMUNITY EVENTS
AT THE AMPHITHEATER .......................................... 68
Section 601. Special Events ................................. 68
Section 602. Selection of Dates for Presentation of Special
Events .................................................. 70
Section 603. Selection of Performers or Artists to Appear at
SJPAC Events and Charity Events ......................... 70
ARTICLE VII - IMPOSITION OF RESTRICTIVE CONTRACTUAL COVE-
NANTS ON COMMERCIAL DEVELOPMENT TRACT ........................ 71
Section 701. Restrictive Covenants .......................... 71
Section 702. Ownership of Landlord Land ..................... 71
Section 703. Enforceability of Contractual Restrictive Cove-
nants ................................................... 72
Section 704. Concessions .................................... 72
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ARTICLE VIII - PROVISIONS CONCERNING PARKING FACILITIES ................. 74
Section 801. Parking Facilities ............................. 74
ARTICLE IX - INSURANCE; TITLE TO THE PROJECT AND OTHER
MATTERS ...................................................... 75
Section 901. General Provisions ............................. 75
Section 902. General Liability .............................. 77
Section 903. Auto Liability Insurance ....................... 77
Section 904. Builders' Risk Insurance ....................... 78
Section 905. Worker's Compensation and Employers
Liability ............................................... 78
Section 906. Property Insurance ............................. 78
Section 907. Insurance Provisions for Sublessee, Permittee
and Licensee ............................................ 79
Section 908. Indemnification ................................ 80
Section 909. Umbrella or Excess Liability ................... 80
Section 910. No Further Encumbrances; Exceptions ............ 80
Section 911. Trustee Indemnification ........................ 81
Section 912. Advances ....................................... 81
Section 913. Net Proceeds of Insurance; Form of Policies .... 81
ARTICLE X - PREPAYMENT OF RENT .......................................... 83
Section 1001. When Available ................................. 83
Section 1002. Exercise of Option ............................. 83
ARTICLE XI - DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF
NET PROCEEDS ................................................. 85
Section 1101. Damage and Destruction ......................... 85
Section 1102. Insufficiency of Net Proceeds .................. 85
Section 1103. Total and Partial Taking ....................... 86
Section 1104. Temporary Taking ............................... 87
Section 1105. Cooperation of Landlord ........................ 87
Section 1106. No Waiver ...................................... 88
ARTICLE XII - ASSIGNMENT, SUBLETTING AND ENCUMBERING BY
TENANT; MORTGAGEE MATTERS; GRANTING OF EASE-
MENTS ........................................................ 89
Section 1201. Assignment by Landlord ......................... 89
Section 1202. Lease Payments to Trustee ...................... 89
Section 1203. Assignment, Subletting and Encumbering by
Tenant .................................................. 89
Section 1204. Notice to Mortgagees ........................... 90
Section 1205. Mortgagee's Right to Perform Tenant's Obliga-
tions ................................................... 90
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Section 1206. Acquisition of Tenant's Interest in the Lease
hold Estate; New Lease .................................. 90
Section 1207. Further Assurances; Estoppel Certificate ....... 92
Section 1208. Granting of Easements .......................... 92
Section 1209. Remedies ....................................... 93
Section 1210. Mortgagee's Right to a New Lease ............... 93
Section 1211. Concurrent Exercise of Rights .................. 94
Section 1212. No Modification of Lease ....................... 94
ARTICLE XIII - EVENTS OF DEFAULT, REMEDIES .............................. 95
Section 1301. Tenant Events of Default ....................... 95
Section 1302. Landlord Remedies .............................. 95
Section 1303. Reinstatement .................................. 97
Section 1304. Failure to Perform Obligations other than to
Pay Rent ................................................ 98
Section 1305. Landlord Event of Default ...................... 98
Section 1306. Tenant's Remedies .............................. 99
Section 1307. Election of Remedies; No Waiver of Elected
Remedies ................................................ 100
Section 1308. No Additional Waiver Implied by One Waiver ..... 100
Section 1309. Agreement to Pay Attorneys' Fees and Ex-
penses .................................................. 100
Section 1310. Late Charges ................................... 101
Section 1311. Delay; Notice .................................. 101
Section 1312. Performance of Landlord's Obligations .......... 101
ARTICLE XIV - ADMINISTRATIVE PROVISIONS ................................. 103
Section 1401. Notices ........................................ 103
Section 1402. Severability ................................... 104
Section 1403. Amendments, Changes and Modifications .......... 104
Section 1404. Further Assurances and Corrective Instru-
ments ................................................... 104
Section 1405. Applicable Law ................................. 104
Section 1406. Landlord and Tenant Representatives ............ 104
Section 1407. Captions ....................................... 104
Section 1408. Lease is Original .............................. 104
Section 1409. Binding; Counterparts .......................... 105
Section 1410. Tenant's Rights with Respect to Initial Bonds .. 105
Section 1411. Modifications and Non-Waiver ................... 105
Section 1412. Time is of the Essence ......................... 105
Section 1413. No Personal Liability or Accountability ........ 105
Section 1414. Gender ......................................... 106
Section 1415. Receipt of Lease ............................... 106
Section 1416. Unavoidable Delay .............................. 106
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Section 1417. Surrender of Premises; Holding Over ............ 106
Section 1418. Relation of Parties ............................ 106
Section 1419. Non-Merger ..................................... 107
Section 1420. Entireties and Conflicts ....................... 107
Section 1421. Successors and Assigns ......................... 107
Section 1422. Memorandum of Lease ............................ 107
Section 1423. Arbitration .................................... 107
Section 1424. Brokerage Indemnity ............................ 108
Section 1425. Affirmative Action/Local Employment ............ 108
Section 1426. Name of Amphitheater ........................... 109
Section 1427. Security ....................................... 109
Section 1428. Commercial Development Tract ................... 109
Section 1429. Delaware River Rights Agreement ................ 109
V
<PAGE>
Exhibit A Various Details regarding any Project including a description of
the Land to be transferred
Exhibit B Form of Clinton Street Easement Agreement
Exhibit C Copy of the Colored Map of Subject Tracts and Easement Tracts
Exhibit D Form of opinion of counsel to the Tenant relating to the
organization, nature and powers of the Tenant; the validity,
execution and delivery of this Lease; the absence of litigation;
and related matters
Exhibit E-1 Hard Costs
Exhibit E-2 Soft Costs
Exhibit F List of Permitted Encumbrances
Exhibit G Form of Parking Agreement with the Camden Parking Authority
Exhibit H Surcharge Revenue
Exhibit I [Intentionally Deleted]
Exhibit J [Intentionally Deleted]
Exhibit K Form of Guaranty Agreement
Exhibit L-1 First Amendment to Lease [Open Air Facility]
Exhibit L-2 First Amendment to Lease [Modified Joint Facility]
Exhibit M Amounts of Certain Fees Related to Issuance of Initial Bonds
Exhibit N Form of Legal Opinion from Landlord's Counsel
Exhibit O The Landlord's Estimated Allowances and Budgeted Costs
vi
<PAGE>
LEASE AGREEMENT
This LEASE AGREEMENT, dated February 9, 1994 (this "Lease") by and
between NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (the "Landlord"), a public
body corporate and politic duly organized under the laws of the State of New
Jersey (the "State") and SONY MUSIC/PACE PARTNERSHIP (the "Tenant"), a New York
general partnership.
WITNESSETH:
WHEREAS, the New Jersey Economic Development Authority Act,
constituting Chapter 80 of the Pamphlet Laws of 1974 of the State of New Jersey,
approved August 7, 1974, as amended and supplemented (the "Act"), declares that
the Legislature has determined that Department of Commerce and Economic
Development statistics of recent years indicate a continuing decline in
employment within the State which is a contributing factor to the drastic
unemployment existing within the State, which far exceeds the national average,
thus adversely affecting the economy of the State and the prosperity, safety,
health and general welfare of its inhabitants and their standard of living; and
that the availability of financial assistance and suitable facilities are
important inducements to new and varied employment promoting enterprises to
locate in the State, and to existing enterprises to remain and expand in the
State; and
WHEREAS, the Landlord was created to aid in remedying the aforesaid
conditions and further to implement the purposes of the Act, and the Legislature
has determined and declared as a matter of express legislative determination
that the authority and powers conferred upon the Landlord under the Act and the
expenditure of moneys pursuant thereto constitutes a serving of a valid public
purpose and that the enactment of the provisions set forth in the Act is in the
public interest and for the public benefit and good; and
WHEREAS, the Landlord, to accomplish the purposes of the Act, is
empowered to extend credit or make loans to any person for the planning,
designing, acquiring, constructing, reconstructing, improving, equipping and
furnishing of a project for which credits or loans may be secured by loan
agreements, security agreements, mortgages, leases, contracts and any other
instruments, upon such terms and conditions as the Landlord shall deem
reasonable, and to require the inclusion in any loan agreement, security
agreement, mortgage, lease, contract, and any other instrument, such provisions
for the construction, use, operation and maintenance and financing of a project
as the Landlord may deem necessary or desirable and to enter into contracts with
respect to the planning, designing, financing, construction, reconstruction,
improvement, equipping, furnishing, operation and maintenance of a project, for
such consideration and upon such terms and conditions as the Landlord may
determine to be reasonable; and
<PAGE>
WHEREAS, in furtherance of the purposes of the Act and as an
inducement to the Tenant to finance a portion of the project consisting of the
construction of the Amphitheater (as hereinafter defined) in Camden City, Camden
County, New Jersey, the Landlord has by resolution adopted December 7, 1993 duly
authorized the execution and delivery of this Lease and anticipated authorizing
the issuance of certain of its Economic Development Bonds (the "Initial Bonds")
to provide funds to finance a portion of the Amphitheater; and
WHEREAS, the Initial Bonds shall be secured by an Indenture of Trust
(the "Indenture") by and between the Landlord and a trustee to be selected by
the Landlord; and
WHEREAS, as additional evidence of and security for all of its
payment obligations hereunder and as security for the Initial Bonds, the Tenant
anticipates causing to be executed and delivered to the Landlord, a guaranty of
payment (the "Guaranty") from Sony Music Entertainment Inc. to the Landlord; and
WHEREAS, the Initial Bonds shall be special, limited obligations of
the Landlord, payable solely from the revenues or other receipts, funds or
moneys to be derived by the Landlord under this Lease, the Guaranty or from the
liquidation of collateral pledged by the Tenant as security for its performance
hereunder; and
WHEREAS, the execution and delivery of this Lease have been duly
authorized by the Landlord, and all conditions, acts and things necessary and
required by the Constitution and statutes of the State or otherwise, to exist,
to have happened, or to have been performed precedent to and in the execution
and delivery of this Lease, do exist, have happened and have been performed in
regular form, time and manner;
NOW, THEREFORE, for and in consideration of the premises and of the
mutual representations, covenants and agreements herein set forth, the Landlord
and the Tenant, each binding itself, its successors and assigns, do mutually
promise, covenant and agree as follows provided that in the performance of the
agreements of the Landlord herein contained, any obligation it may incur for the
payment of money with respect to the Initial Bonds ("Bond Obligation") shall not
be an obligation, debt or liability of the State or any political subdivision
thereof and neither the State nor any such political subdivision shall be liable
on any Bond Obligation so incurred, but any such Bond Obligation shall be
payable solely out of the revenues or other receipts, funds or moneys to be
derived by the Landlord under this Lease, the Guaranty or from the liquidation
of collateral pledged by the Tenant as security for its performance hereunder.
2
<PAGE>
ARTICLE I
DEFINITIONS, USAGE AND EXHIBITS
Section 101. Definitions. Unless the context otherwise specifically
requires or indicates to the contrary, the following terms as used in this Lease
shall have the respective meanings set forth below.
"Acceptable Construction Commitment" shall mean a written commitment
in favor of the Tenant from an Acceptable Construction Company to enter into a
Construction Contract for construction of the Amphitheater as a Joint Facility
which Construction Contract (i) guarantees, pursuant to a "Guaranteed Maximum
Price," that the total amount of Hard Costs will not exceed the then applicable
Maximum Hard Cost Amount and (ii) is in a form reasonably acceptable to the
Tenant. For purposes of the immediately preceding sentence, a Construction
Contract in substantially the same form as the construction contract which the
Tenant entered into with its general contractor for the construction of the Star
Lake Amphitheater shall be deemed to be acceptable to the Tenant.
"Acceptable Construction Company" shall mean Turner Construction
Company or any other experienced and bondable construction contractor that is
acceptable to both the Tenant and the Landlord.
"Account" shall mean any account established in any of the Funds
established under the Indenture.
"Act" shall mean the New Jersey Economic Development Authority Act,
constituting Chapter 80 of the Laws of 1974 of the State of New Jersey, approved
August 7, 1974, and the acts amendatory thereof and supplemental thereto.
"Additional Bonds" shall mean any bonds of the Landlord authorized
and issued under the Indenture.
"Additional Project" shall mean the acquisition, construction,
renovation or installation of any project unrelated to the Initial Project by
the Landlord, through the issuance of Additional Bonds for use by the Tenant
pursuant to any supplement to this Lease or through the financing of such
project through the application of excess proceeds pursuant to the Indenture,
including without limitation, all real and personal property and rights therein
and any appurtenances which are necessary or useful and convenient therefor.
"Administrative Fee" shall mean the EDA Issuance Fee payable to the
Landlord as an administrative fee relating to the issuance of the Bonds and as
described in Exhibit "M" attached hereto.
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"Amphitheater" shall mean the entertainment facility designed
primarily for the presentation of live musical events which Tenant shall
construct on the Leasehold Tract.
"Annual Renewal Amount" shall mean, for any Lease Year, a fixed
amount determined as follows:
(a) for the first Lease Year of the first Renewal Term,
$1,200,000.00; and
(b) for each Lease Year thereafter, the Annual Renewal Amount shall
be increased from the immediately preceding Lease Year by the same percentage
increase in the CPI Index during such preceding Lease Year.
"Applicable" shall mean (i) with reference to any Fund or Account so
designated and established by the Indenture, the Fund or Account so designated
and established and (ii) with respect to any Series of Bonds, the Series of
Bonds issued for a particular purpose thereunder.
"Applicable Cash Flow Amount" shall mean the average of the Cash
Flow Amount for each of the last three (3) Lease Years prior to the Special
Termination Effective Date; provided, however, if any of the last three (3)
Lease Years prior to the Special Termination Effective Date are in the Initial
Term, then the Cash Flow Amount for each of such Lease Years shall be calculated
as if the amount of Rent payable under this Lease for each such Lease Year was
equal to the amount of Rent which would be payable under this Lease in the first
Lease Year following the completion of the Initial Term instead of the amount of
Rent which was actually payable during each such Lease Year.
"Architect" shall mean Abe Sustaita & Associates, the Tenant's
architect.
"Authorized Newspapers" shall mean one newspaper which is
customarily published in the Borough of Manhattan, City and State of New York,
at least once a day on at least five days (other than legal holidays) in each
calendar week, which newspaper is printed in the English language.
"Authorized Officer" or "Authorized Representative" shall mean, (1)
with respect to the Landlord: the Chairman, the Executive Director, the Deputy
Director or Assistant Deputy Director of the Landlord or such other person at
the time or from time to time designated by written certificate furnished to the
Tenant and the Trustee containing the specimen signatures of each such person
and signed on behalf of the Landlord by the Chairman, the Executive Director,
the Deputy Director or Assistant Deputy Director of the Landlord; (2) with
respect to the Tenant: such person at the time and from time to time designated
by written certificate furnished to the Landlord and the Trustee containing the
specimen signatures of such person and signed on behalf of the Tenant
4
<PAGE>
or by the general partner of the Tenant; and (3) with respect to the Trustee:
any officer of the Trustee authorized by the Trustee to act or execute documents
on behalf of the Trustee.
"Basic Rent" shall mean the rent required to be paid pursuant to the
provisions of Sections 305 and 306 hereof.
"Basic Rent Payment" shall mean the payments of Basic Rent,
including with respect to any portion of the Basic Rent, the (i) Interest
Portion thereof as set forth pursuant to Section 306 hereof and (ii) the
Principal Portion thereof as may be adjusted from time to time pursuant to
Section 305 hereof.
"Basic Rent Payment Date" shall mean (i) with respect to the
Interest Portion and Principal Portion of Basic Rent, two (2) Business Days
prior to any regularly scheduled Interest Payment Date or Principal Payment
Date, as the case may be, and (ii) with respect to a prepayment or acceleration,
shall be the date of payment of prepayment or acceleration, as the case may be.
"Bond" or "Bonds" shall mean any of the Bonds issued under the terms
of the Indenture, including the Initial Bonds and any Additional Bonds, or any
Bonds which are thereafter authenticated and delivered in lieu of or in
substitution for such Bonds pursuant to the Indenture.
"Bond Counsel" shall mean any attorney at law, or firm of attorneys,
of nationally recognized standing in matters pertaining to the legality of
issuance of bonds or other obligations issued by states and political
subdivisions, and duly admitted to practice law before the highest court of any
state.
"Bond Related Supplemental Rent Payments" shall mean those
Supplemental Rent Payments that directly relate to the Bonds, the Trustee or the
Indenture such as the Trustee's fee, fees for any letter of credit supporting
the Bonds, paying agent fees, tender agent fees, registrar fees, remarketing
agent fees and fees to other fiduciaries appointed under the Indenture.
"Bond Terms" shall mean all terms and conditions related to the
Initial Bonds including, without limitation, the following:
(a) the repayment terms of the Initial Bonds;
(b) the interest rate or rates accruing from time to time on amounts
outstanding under the Initial Bonds;
(c) the terms, conditions and provisions contained in the Indenture;
5
<PAGE>
(d) the provisions governing the (i) the determination of the
portion of the Proceeds of the Initial Bonds which will be placed in the
Construction Fund and (ii) the manner by which the Tenant will be entitled to
draw monies from the Construction Fund for payment or reimbursement of the Costs
of the Initial Project;
(e) the identity of the Trustee;
(f) the amount of the Costs of Issuance for the Initial Bonds; and
(g) the terms, conditions and provisions contained in the purchase
or underwriting agreement relating to the Initial Bonds.
"Boundary Survey" shall have the meaning assigned to such term in
Section 518(a) hereof.
"Budgeted Soft Cost Amount" shall mean, as of any time, the then
aggregate amount of Soft Costs (including previously expended amounts) which the
Tenant budgets for the completion and opening of the Amphitheater using
reasonable and proper budgeting techniques similar to the budgeting techniques
used prior to the execution of this Lease.
"Business Day" shall mean, with respect to the Bonds of any Series,
any day other than (i) a Saturday, Sunday or legal holiday or a day on which
banking institutions, in the city in which the Principal Office of the Landlord,
the Trustee or the Paying Agent is located, are closed, or (ii) a day on which
the New York Stock Exchange is closed.
"Capitalized Interest Account" shall mean the account within the
Debt Service Fund so designated and established by the Indenture.
"Cash Flow Amount" shall mean, in any Lease Year, (i) the amount of
all revenues, receipts and other funds received by the Tenant, on a cash basis,
from the operation, ownership or use of the Amphitheater during such Lease Year
minus (ii) the amount of (a) all expenditures paid by the Tenant, on a cash
basis, during such Lease Year for any expenses, costs or charges which are
related to the use, ownership, maintenance, management or operation of the
Amphitheater, (b) principal and interest payments paid, on a cash basis, by the
Tenant during such Lease Year on any loan owed by the Tenant, the initial
proceeds of which were used in connection with the construction, ownership,
maintenance or operation of the Amphitheater and (c) all Rent paid under this
Lease, on a cash basis, by the Tenant during such Lease Year.
"Certificate," "Order," "Request," "Requisition" and "Statement"
shall mean, respectively, a written certificate, order, request, requisition or
statement signed in the name of the Landlord or the Trustee. Any such instrument
and supporting opinions or
6
<PAGE>
representations, if any, may, but need not, be combined in a single instrument
with any other instrument, opinion or representation, and the instruments so
combined shall be read and construed as a single instrument.
"Charity Event" shall have the meaning assigned to such term
pursuant to Section 601 hereof.
"Clinton Street Easement Agreement" shall mean that certain Easement
Agreement entered into by and between South Jersey Port Corporation and the
Landlord, a copy of which is attached hereto as Exhibit B, pursuant to which,
among other things, certain easement rights in and to Easement Tract E were
created in favor of the Landlord.
"Code" shall mean the Internal Revenue Code of 1986, as amended, as
the same may from time to time be amended or supplemented, including any
regulations promulgated thereunder and any administrative or judicial
interpretations thereof.
"Commencement Date" shall mean the first to occur of (i) the date on
which the Initial Bonds are issued and delivered by the Landlord, (ii) ten (10)
Business Days after the Tenant has provided written notice to the Landlord
pursuant to the provisions of Section 404(a)(ii) hereof requiring that the
Initial Bonds not be issued by the Landlord or (iii) ten (10) Business Days
after the Tenant has provided notice to the Landlord pursuant to the provisions
of Section 515(d) hereof requiring that the Initial Bonds not be issued by the
Landlord.
"Commercial Development Tract" shall mean that certain tract of land
owned by the Landlord designated as "Commercial Property" and shown by red
cross-hatches on the map attached hereto as Exhibit C.
"Community Events" shall have the meaning assigned to such term
pursuant to Section 601 hereof.
"Competitive Event" shall mean any commercial concert which features
the live performance of a professional artist and which is a part of a tour
being presented in other facilities that are similar in size, design, use and
purpose to the Amphitheater. To avoid any ambiguity or uncertainty, the
following types of concerts are not "Competitive Events" for purposes hereof:
(a) a concert presented in a baseball, football or similar stadium
with a capacity of 50,000 or more if the Tenant reasonably expects, based upon
advance ticket sales, prior performances by the artist featured at such concert
or other objective criteria, that the attendance at such concert will exceed 80%
of such stadium's capacity;
(b) during the Open Air Season, a concert performed at an indoor
arena, auditorium, coliseum or other indoor venue if none of the performances
included within
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the tour of which such concert is a part have been or will be presented in
outdoor venues similar in size and design to the Amphitheater in other
locations;
(c) during the Enclosed Season, a concert presented in any stadium,
arena, auditorium, coliseum or other venue with a capacity of 15,000 or more if
the Tenant reasonably expects, based upon advance ticket sales, prior
performances by the artist featured at such concert or other objective criteria,
that the attendance at such concert will exceed 80% of such venue's capacity;
(d) a concert presented at a night club or other small venue with a
capacity of 3,500 or less; or
(e) up to four (4) non-recurring festivals or similar types of
events per calendar year presented at a venue along the Delaware River which may
hereafter be developed by the Delaware River Port Authority.
"Completion Project" shall mean any additions, enlargements,
improvements, expansions, repairs, restorations or reconstructions of the
Initial Project, any Additional Project or any Completion Project, through the
issuance of Additional Bonds for use by the Tenant pursuant to any supplement to
this Lease or through the financing of such project through the application of
excess proceeds pursuant to the Indenture, including without limitation, all
real and personal property and rights therein and any appurtenances which are
necessary or useful and convenient therefor.
"Construction Contract" for the Initial Project, any Additional
Project or any Completion Project, as applicable, shall mean any construction
contract in respect of the Initial Project, any Additional Project or any
Completion Project, as applicable, or any portion thereof by and between the
Tenant, and any Contractors, each such contract to specify a fixed price for the
construction to be performed and which may be a contract specifying a guaranteed
maximum price for the construction of the Initial Project, any Additional
Project, or any Completion Project as applicable, in accordance with applicable
State law.
"Construction Fund" shall mean the Fund so designated and
established by the Indenture.
"CPI Index" shall mean the Consumer Price Index published by the
Bureau of Labor Statistics of the United States Department of Labor, All Items,
Philadelphia-Southwest New Jersey, for Urban Wage Earners and Clerical Workers,
or any successor publication.
"Contractor" shall mean in connection with the Initial Project, any
Additional Project or any Completion Project, as applicable, any contractor
selected by the Tenant to acquire, construct, renovate and install the Initial
Project, any Additional Project or any
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Completion Project, as applicable, in accordance with applicable State law and
the Plans and Specifications and shall also mean a construction management firm
proceeding under a contract specifying a guaranteed maximum price for the
construction, acquisition, renovation and installation of the Initial Project,
any Additional Project or any Completion Project, as applicable.
"Costs or Costs of any Project" shall mean and shall be deemed to
include, together with any other proper item of cost which is not specifically
mentioned herein, whether incurred prior to or after the date of this Lease, (a)
costs and expenses of the Tenant or the Landlord which are incurred for labor
and materials and payments to Contractors, builders and materialmen in
connection with the acquisition, construction, renovation and installation of
any Project; (b) the cost of contract bonds and of insurance of any kind that
may be required or that may be necessary during the course of acquisition,
construction, renovation and installation of any Project which is not paid by
the Contractor or Contractors or which is otherwise provided for; (c) the costs
and expenses of the Landlord or the Tenant for test borings, surveys, estimates,
plans and specifications and preliminary investigations therefor, and for
supervising construction, as well as for the performance of all other duties
which are required by or which are consequent to the proper construction,
acquisition, renovation and installation of any Project; (d) compensation and
expenses of the Trustee, Paying Agent, Registrar, fiduciaries, financial
advisory, legal, accounting, financial and printing expenses, fees and all other
expenses which are incurred in connection with the issuance of the Bonds; (e)
all other costs which the Landlord or the Tenant shall be required to pay under
the terms of any Construction Contract or Contracts for the acquisition,
construction, renovation or installation of any Project; (f) any sums which are
required to reimburse the Tenant or the Landlord for any advances which are made
by either of them for any of the above items, or for any other costs which are
incurred and for work which has been done by either or both of them, provided
that same is properly chargeable to any Project; (g) deposits in the appropriate
Funds established by the Indenture for payment of interest on the Bonds and any
required deposits in the Debt Service Fund or any other Fund or Account under
the Indenture; and (h) such other expenses which are not specified in the
Indenture and which may be necessary or incidental to the construction,
acquisition, renovation and installation of any Project, the financing thereof
and the placing of the same in use and operation. "Costs or Costs of any
Project" shall also include the costs and expenses incurred by any agent of the
Landlord or the Tenant for any of the above-mentioned items. Costs of the
Initial Project shall not include any costs or expenses of the Landlord which
are incurred or paid in fulfilling any of the Landlord's obligations created by
the provisions of this Lease unless the Tenant has expressly agreed by the
provisions hereof to reimburse the Landlord for such cost or expense.
"Costs of Issuance" shall mean all items of expense directly or
indirectly payable by or reimbursable to the Landlord and related to the
authorization, execution, sale and delivery of the Bonds, including, but not
limited to, advertising and printing costs, costs of preparation and
reproduction of documents, filing and recording fees, initial fees
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and charges of the Trustee and the Landlord, the fees to be paid to the
underwriters of a particular Series of Bonds, legal fees of parties to the
transaction and initial charges and all other initial fees and disbursements
contemplated by this Lease and the Indenture.
"Counsel" shall mean an attorney at law or firm of attorneys at law
(who may be, without limitation, of counsel to, or an employee of the Trustee or
the Paying Agent) duly admitted to practice law before the highest court of any
state.
"CRA" shall mean the Camden Redevelopment Agency.
"CRA Tract" shall have the meaning assigned to such term pursuant to
the provisions of Section 404(e) hereof.
"DEPE" shall mean the New Jersey Department of Environmental
Protection and Energy.
"Debt Service Fund" means the Fund so designated and established by
the Indenture.
"Default" shall mean an event or condition the occurrence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"Dockside Lease" shall mean that certain currently existing lease
agreement covering a portion of the Leasehold Tract entered into by and between
Camden Municipal Port Authority, as lessor, and Dockside Refrigerated Warehouse,
Inc., as tenant.
"Draw Dates" shall mean those dates upon which the Tenant draws
funds from the Construction Fund for payment of all or a portion of the Initial
Project as specified in the Draw Papers.
"Draw Papers" shall mean Draw Papers as defined in Section 510(b) of
this Lease.
"Easement" shall mean the easements granted to the Tenant pursuant
to Section 402 hereof.
"Easement Tracts" shall mean Easement Tract A, Easement Tract B,
Easement Tract C, Easement Tract D and Easement Tract E collectively.
"Easement Tract A" shall mean that certain tract or parcel of land
designated as the "Service Drive Access Easement" and the "Amphitheater Property
Access Easement" and colored in kelly green on the map attached hereto as
Exhibit C.
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"Easement Tract B" shall mean that certain tract or parcel of land
designated as the "Slope Easement" and colored in blue on the map attached
hereto as Exhibit C.
"Easement Tract C" shall mean that certain tract or parcel of land
designated as the "Amphitheater Patron Access Easement" and colored in grey on
the map attached hereto as Exhibit C.
"Easement Tract D" shall mean that certain tract or parcel of land
designated as the "Structure/Building Area Easement" and colored in brown on the
map attached hereto as Exhibit C.
"Easement Tract E" shall mean that certain tract or parcel of land
designated as the "Access Area Easement" (former Clinton Street) and colored in
yellow on the map attached hereto as Exhibit C.
"Easement Tract F" shall mean that certain tract or parcel of land
designated as the "40' Wide Access Easement" and colored in blue on the map
attached hereto as Exhibit C.
"Election Deadline" shall mean, as of any time, the later to occur
of (i) five (5) years prior to the expiration of the then current Lease Term or
(ii) sixty (60) days after the Landlord has provided notice to the Tenant
referring to the provisions contained in Section 403 hereof which relate to the
Tenant's option to extend the Lease Term. To be validly given, the notice
referred to in clause (ii) of the immediately preceding sentence may not be
given earlier than six (6) years prior to the expiration of the then current
Lease Term.
"EMA" shall mean EMA Consulting Environmental Services located on
Professional Center, First and Chew Roads, Hammonton, New Jersey.
"Employee" shall mean any and all executive personnel of the Tenant
or a general partner of the Tenant and all employees, agents, contractors,
concessionaires and all other employees and personnel under the direction of the
Tenant, the Tenant's contractors or the Tenant's concessionaires who perform
duties or services related to the construction, use, operation or maintenance of
the Amphitheater.
"Engineered Design" shall have the meaning assigned to such term
pursuant to Section 402(b)(iii)(B) hereof.
"Enclosed Season" shall mean that period of time beginning on
October 1 of each year and ending on May 14 of the next succeeding year.
"Event of Default" shall have the meaning assigned to such term in
the Indenture.
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"Fiduciary" or "Fiduciaries" shall mean the Trustee or the Paying
Agent, or both of them, as may be appropriate.
"Fund" shall mean any of the funds established under the Indenture.
"Governmental Authority" shall mean any and all courts, boards,
agencies, commissions, offices or authorities of any nature whatsoever for any
government unit (federal, state, county, district, municipal, city or otherwise)
whether now or hereafter in existence.
"Grant Funds" shall have the meaning assigned to such term pursuant
to Section 517(a) hereof.
"Guaranty" shall mean that certain Guaranty Agreement to be executed
by Sony Music Entertainment Inc., substantially in the form of Exhibit "K"
attached hereto.
"Hard Costs" shall mean those types and categories of Costs related
to the construction of the Amphitheater which are listed and identified on
Exhibit "E-1" attached hereto.
"Hazardous Substances" shall mean any hazardous or toxic substance,
waste, pollutant or contaminated material, including without limitation, those
substances within the scope of any federal, state or local environmental laws,
regulations and ordinances, including the Resource Conservation and Recovery
Act, as amended, the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, the Superfund Amendment and Reauthorization Act of
1986, as amended, the Federal Water Pollution Control Act, as amended, the Clean
Air Act, as amended, and the Safe Drinking Water Act, as amended.
"Impositions" shall mean all real estate taxes, or payments in lieu
of real estate taxes, or land and improvement assessments of any kind and nature
whatsoever, which shall or may during the Term be assessed, levied, charged,
confirmed or imposed by any public authority on the Premises (together with any
interest and penalties thereon) including, without limitation, taxes which are
payable pursuant to the Long Term Tax Exemption Law, P.L. 1991, c. 431.
"Indenture" shall mean the Indenture of Trust to be entered into by
and between the Landlord and the Trustee, pursuant to which the Initial Bonds
are to be issued, including any indentures supplemental thereto as therein
permitted.
"Independent Counsel" shall mean an attorney or firm of attorneys
duly admitted to the practice of law before the highest court of the State who
is not a full-time employee of the Landlord, the Tenant or an assignee thereof.
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"Initial Bonds" shall mean "Economic Development Bonds (Camden
Amphitheater Project - Taxable Series 1994)" of the Landlord in the amounts,
bearing interest at the rates and maturing in the amounts and at the times set
forth in the Indenture.
"Initial Project" shall mean the construction of the Amphitheater,
the Costs of which are to be financed in whole or in part from the proceeds of
the Initial Bonds.
"Initial Rent" shall mean Rent payable by the Tenant during the
Initial Term, including Basic Rent and Supplemental Rent.
"Initial Term" shall mean the initial term of this Lease as
described in Section 403 hereof.
"Interest Account" shall mean the account within the Debt Service
Fund to be so designated and established by the Indenture.
"Interest Payment Date" shall mean the date on which interest on the
Bonds is required to be paid to the Holders thereof as set forth in the
Indenture.
"Interest Portion" shall mean with respect to each Basic Rent
Payment, the portion thereof which is interest as calculated and set forth
pursuant to Sections 306 and 307 hereof.
"Joint Facility" shall mean a design of the Amphitheater as
contemplated by the current version of the Plans and Specifications issued on
November 4, 1993, pursuant to which the Amphitheater will be constructed as a
facility which will (i) operate as an outdoor, open air venue during the Open
Air Season, (ii) operate as an indoor, enclosed venue during the Enclosed Season
and (iii) include therein the various design aspects and equipment which have
been specified and required for the uses and purposes of SJPAC.
"Land" shall mean the real property described in Exhibit A attached
hereto upon which the Initial Project, any Additional Project or any Completion
Project will be constructed.
"Landlord" shall mean the New Jersey Economic Development Authority,
an independent authority of the State located in but not part of the Department
of Commerce, and any successor body to the duties and functions of the Landlord.
"Landlord Event of Default" shall mean the happening or occurrence
of any event or circumstance described in Section 1305 hereof.
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"Lease" shall mean this Lease Agreement between the Landlord, as
lessor, and the Tenant, as lessee and any amendments or supplements hereto in
accordance with the terms hereof.
"Lease Revenues" shall mean the Basic Rent Payments, Supplemental
Rent Payments and all other amounts due and owing with respect to this Lease,
including, without limiting the generality of the foregoing, prepayments,
insurance proceeds and condemnation proceeds.
"Lease Rights" shall mean all of the right, title and interest of
the Landlord under this Lease (but none of the Landlord's obligations under this
Lease) including without limitation the right to receive Lease Revenues
hereunder, but excluding the Reserved Rights with respect hereto.
"Lease Term" or "Term" shall mean the period of time covered by the
Initial Term and all of the Renewal Terms.
"Lease Year" shall mean a 12 month period during the Term. The first
Lease Year shall begin on the Commencement Date and shall end on the date
preceding the first anniversary of the Commencement Date. Subsequent Lease Years
shall begin and end on the same dates as the first Lease Year but in succeeding
calendar years.
"Leasehold Tract" shall mean that certain tract or parcel of land
located in the City of Camden, New Jersey designated as the "Leasehold Property"
and outlined in red, without cross-hatches, on the map attached hereto as
Exhibit C.
"Legal Requirements" shall mean (i) any and all present and future
judicial decisions, statutes, rulings, rules, regulations, permits, certificates
or ordinances of any Governmental Authority in any way applicable to the
Premises, including the construction, ownership, use, occupancy, possession,
operation, maintenance, alteration, repair or reconstruction thereof and (ii)
any and all terms, provisions, agreements or restrictions created or imposed
pursuant to any lease, contract, instrument of restrictive covenants or other
document applicable to and enforceable against the Premises or the owner or
operator of the Premises.
"Marina Tract" shall mean that portion of the Commercial Development
Tract which is adjacent to the marina.
"Maximum Hard Cost Amount" shall mean, as of any time, (i)
$31,000,000 minus (ii) the then Budgeted Soft Cost Amount.
"Modified Joint Facility" shall mean a design of the Amphitheater
pursuant to which the Amphitheater will be constructed as a facility which will
operate as an outdoor, open air venue during the Open Air Season and as an
indoor, enclosed venue
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during the Enclosed Season but which will not include the various design aspects
and equipment included in the Joint Facility which are required or specified for
the uses and purposes of SJPAC.
"Mortgage" shall mean any deed of trust, mortgage, security
agreement, collateral assignment or other lien that the Tenant may hereafter
affix or impose, during the Term, under the terms and conditions set forth in
Article XII hereof.
"Mortgagee" shall mean the owner of any indebtedness secured by any
Mortgage.
"Net Proceeds" shall mean any insurance proceeds or condemnation
award paid with respect to the Initial Project, any Additional Project or any
Completion Project, remaining after payment therefrom of all expenses incurred
in the collection thereof.
"New Lease Notice" shall have the meaning assigned to such term
pursuant to Section 1210 hereof.
"Non-Bond Related Supplemental Rent Payments" shall mean those
Supplemental Rent Payments that are not Bond Related Supplemental Rent Payments.
"Non-Rent Event of Default" shall have the meaning assigned to such
term pursuant to Section 1304 hereof.
"Obligations" shall mean, when used with respect to a party hereto,
any and all of the covenants, warranties, representations and other obligations
(other than to pay Rent) made or undertaken by such party to the other party
hereto pursuant to the provisions hereof.
"Open Air Season" shall mean that period of time beginning May 15 of
each year and ending on October 1 that same calendar year.
"Ordinary Construction Debris" shall mean any materials, debris or
other items which may be encountered below grade on the Leasehold Tract which
can be removed in the ordinary course by the Tenant's Contractor as a part of
the construction of the Initial Project without any extraordinary or special
dismantling or the use of any extraordinary or special construction equipment.
"Outstanding" or "outstanding" shall mean, when used with reference
to Bonds of any Series, as of any particular date (subject to the provisions of
the Indenture), all Bonds of such Series theretofore, or thereupon being,
authenticated and delivered by the Trustee under the Indenture, except (i) Bonds
of such Series theretofore or thereupon canceled by the Trustee or surrendered
to the Trustee for cancellation; (ii) Bonds of such Series which have been
discharged in accordance with the Indenture; and (iii) Bonds of
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such Series in lieu of or in substitution for which other Bonds of such Series
shall have been authenticated and delivered by the Trustee pursuant to any
provision of the Indenture. At all times prior to the authentication and
delivery of any Bonds pursuant to the Indenture, the Bonds shall be deemed to be
not Outstanding for all purposes hereof.
"Overdue Rate" shall mean the then prime rate of the Trustee plus 2%
per annum.
"Owner," "Holder," "Bondholder," "Bond Holder," "Holder of Bonds,"
"holder" or "Registered Owner" of a Bond shall mean the registered owner of such
Bond as shown on the register kept by the Trustee pursuant to the Indenture.
"Patron" shall mean any person who attends as a spectator a
particular performance or show held or presented at the Amphitheater.
"Paying Agent" means the Paying Agent appointed pursuant to the
Indenture, and its successors.
"Performing Arts Grant" shall mean that certain $4,000,000 grant
previously made by the New Jersey State Council on the Arts to SJPAC and
specifically identified for use in the construction of the Amphitheater.
"Permitted Encumbrances" shall mean the outstanding liens,
easements, building lines, restrictions, security interests and other matters
(if any) as reflected on Exhibit F attached hereto.
"Permitted Rate" shall mean the lesser of (i) the prime rate of
interest charged from time to time by large United States money center banks
plus four percent (4%) per annum or (ii) the maximum non-usurious interest rate
permitted by applicable law from time to time in effect.
"PILOT" shall mean any payment contractually due from the Landlord
to the City of Camden in respect of a "payment in lieu of taxes" arrangement
entered into between the Landlord and the City of Camden relating to the
Amphitheater.
"Planning Board" shall mean the City of Camden Planning Board.
"Plans and Specifications" shall mean the architectural and
engineering drawings and specifications describing the Initial Project, any
Additional Project or any Completion Project.
"PRCP" shall have the meaning assigned to such term pursuant to the
provisions of Section 204(b) hereof.
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"Pre-Approved Mortgagee" shall mean any one or more of Sony Music
Entertainment Inc., Blockbuster Entertainment Corporation or any affiliate of
either such party.
"Pre-Approved Owner" shall mean any partnership that has as its only
partners two or more corporations which each control or are each controlled by,
directly or indirectly, one of PACE Entertainment Corporation, Blockbuster
Entertainment Corporation or Sony Music Entertainment Inc. (or their respective
corporate successors).
"Premises" shall mean the rights, properties and interests of the
Landlord being leased and demised hereby as more fully described in Section
401(a) hereof.
"Prepayment Date" shall have the meaning ascribed to such term in
Section 1002 hereof.
"Prepayment Price" shall mean, with respect to the balance of the
Basic Rent due hereunder that has not already been partially prepaid in
accordance with the provisions of Section 1001 hereof, (i) the amount that is
sufficient to cover the aggregate unpaid Principal Portion of all Basic Rent
Payments after taking into account any partial prepayment of the Principal
Portion of Basic Rent in accordance with Section 1001 hereof, plus (ii) the
Interest Portion of Basic Rent due on such Prepayment Date, plus (iii) the
redemption premium, if any, associated with the Bonds to be redeemed with the
funds provided by clause (i) of this definition.
"Principal Account" shall mean the Account within the Debt Service
Fund so designated and established by the Indenture.
"Principal Office" shall mean, when used with reference to the
Landlord, the Tenant, the Trustee, the Paying Agent or the Registrar, the
respective addresses of such parties as set forth in the Indenture, and any
further or different addresses as such parties may designate pursuant thereto.
"Principal Payment Date" shall mean, the dates on which the
principal or Sinking Fund Installments of the Bonds are required to be paid to
the Holders thereof as set forth in the Indenture.
"Principal Portion" shall mean with respect to the Basic Rent
Payments, the principal portion thereof, as amended and restated from time to
time in accordance with Section 305 hereof.
"Proceeds" shall mean the aggregate moneys paid by the initial
purchasers of the Initial Bonds or any series of Additional Bonds, to the
Trustee, including any accrued interest on the Initial Bonds or any series of
Additional Bonds, which may be net
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of any applicable underwriters discount or original issue discount with respect
to the Initial Bonds or any series of Additional Bonds.
"Project" shall mean collectively or individually, as the case may
be, the Initial Project, any Additional Project and any Completion Project.
"Quiet Lease Year" shall mean a Lease Year in which one or both of
the following conditions occur during the Open Air Season which ended during
such Lease Year:
(a) Less than 35 professional concerts, performances or events are
presented at the Amphitheater during such Open Air Season; or
(b) Less than 350,000 Patrons attend the professional concerts,
performances or events presented at the Amphitheater during such Open Air
Season.
"RAP" shall have the meaning assigned to such term pursuant to the
provisions of Section 204(a) hereof.
"Record Date" shall mean with respect to an Interest Payment Date
for a particular Series of Bonds, unless otherwise provided by the Indenture or
Supplemental Indenture authorizing such Series, the fifteenth (15th) day
(whether or not such day shall be a Business Day) of the month preceding such
Interest Payment Date.
"Redemption Account" shall mean the Account within the Debt Service
Fund so designated and established pursuant to the Indenture.
"Renewal Rent" shall mean Rent payable by the Tenant during the
Renewal Terms.
"Renewal Terms" shall mean each period for which the Tenant elects
to extend the Lease Term pursuant to Section 403 hereof.
"Rent" shall mean, collectively, Basic Rent and Supplemental Rent.
"Rent Payments" shall mean the payments of Rent.
"Repayable Grants shall mean (i) the UDAG Grant and (ii) the
$2,000,000 of Grant Funds obtained from the New Jersey Urban Development
Corporation.
"Reserved Rights" shall mean the Landlord's right to (i) receive
Supplemental Rent, including the Administrative Fee, (ii) receive notices
provided for in this Lease, (iii) appoint, replace or remove such parties as
shall be appointed, replaced or removed under this Lease and the Indenture at
the direction of the Landlord and (iv) the right to
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give or withhold consents permitted or required of the Landlord under this Lease
and the Indenture and to consent to or withhold consent to amendments to this
Lease and the Indenture to the extent that any such consent or amendment would
diminish the rights or enlarge the responsibilities or adversely affect the
ability of the Landlord to realize or perform same, respectively, or which would
increase the Landlord's potential liability or exposure to any party to such
documents or to any third party as a result thereof.
"Restricted Lease Year" shall mean a Lease Year which immediately
follows a Quiet Lease Year.
"Restricted Territory" shall mean the geographical area encompassed
by (i) the counties of Philadelphia, Montgomery and Bucks, Pennsylvania and (ii)
the counties of Burlington, Camden and Gloucester, New Jersey.
"Restrictive Contractual Covenants" shall mean the restrictive
contractual covenants imposed on the Commercial Development Tract pursuant to
the provisions of Article VII hereof.
"Revenues" shall mean all (i) Lease Revenues and (ii) any investment
income which is derived from the investment of any Funds which are held by the
Trustee pursuant to the terms of the Indenture and which are deposited in any
Funds and Accounts established thereunder, except as set forth in the Indenture.
"Series" shall mean all of the Bonds authenticated and delivered on
original issuance and identified pursuant to the Indenture or the Supplemental
Indenture authorizing such Bonds as a separate Series of Bonds, and any Bonds
thereafter authenticated and delivered in lieu of or in substitution for such
Bonds pursuant to the Indenture, regardless of variations in maturity, interest
rate, Sinking Fund Installments or other provisions.
"Show Hours" shall mean, on the days for which a performance or
event is scheduled to be held or presented at the Amphitheater, those hours of
the day beginning three (3) hours prior to the scheduled time for commencement
of such performance or event and ending one (1) hour after the scheduled time
for the conclusion of such performance or event.
"Sinking Fund Installments", with respect to any Series of Bonds,
shall have the meaning, if any, specified in either the Indenture or the
Applicable Supplemental Indenture.
"SJPAC" shall mean the South Jersey Performing Arts Center, Inc.
"SJPAC Events" shall have the meaning assigned to such term pursuant
to Section 601 hereof.
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"SJPAC Lease" shall mean that certain Lease to be entered into by
and between the Landlord, as lessor, and SJPAC, as lessee, pursuant to which,
among other things, (i) the Landlord shall lease, demise and rent the
Amphitheater to SJPAC for use during a portion of the Enclosed Season upon,
subject to, and in accordance with the terms, provisions and conditions to be
contained in the SJPAC Three Way Agreement and (ii) SJPAC shall be obligated to
pay and deliver upon execution thereof the sum of $3,940,000 to the Landlord.
"SJPAC Proceeds" shall mean the $3,940,000 which shall be paid by
SJPAC to the Landlord under, pursuant to and in accordance with the SJPAC Lease.
"SJPAC Three Way Agreement" shall mean an agreement to be entered
into by and among the Landlord, the Tenant and SJPAC after the date hereof which
will, among other things, set forth the terms and conditions upon which the use
of the Amphitheater will be shared during the Enclosed Season by SJPAC and the
Tenant.
"Soft Costs" shall mean those types and categories of Costs related
to the development and design of the Amphitheater which are listed and
identified on Exhibit "E-2" attached hereto.
"Special Events" shall mean the SJPAC Events, the Charity Events and
the Community Events collectively.
"Star Lake Amphitheater" shall mean the outdoor entertainment
musical facility located in Hanover Township, Pennsylvania, owned and operated
by the Tenant and commonly known as "Star Lake Amphitheater".
"State" shall mean the State of New Jersey.
"Subject Tracts" shall mean the Leasehold Tract and the Commercial
Development Tract collectively.
"Summer Facility" shall mean a design of the Amphitheater similar to
the Star Lake Amphitheater pursuant to which the Amphitheater will be
constructed as a facility that cannot be converted to an enclosed facility for
use during the Enclosed Season.
"Supplemental Rent" shall mean all amounts, other than Basic Rent,
due under this Lease and the Indenture, including but not limited to, Renewal
Rent, Surcharge Revenue and monetary obligations as to the insurance required to
be maintained by the Tenant pursuant to the provisions of this Lease.
Supplemental Rent is more fully described in Section 301 hereof and includes
both Bond Related Supplemental Rent Payments and Non-Bond Related Supplemental
Rent Payments.
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"Supplemental Indenture" shall mean any indenture or indentures of
the Landlord amending, modifying or supplementing the Indenture, authorizing the
issuance of a Series of Bonds, or any other Supplemental Indenture adopted by
the Landlord pursuant to the provisions of the Indenture.
"Surcharge Revenue" shall mean the revenue derived from the per
ticket surcharge to be charged and collected by the Tenant in the amounts and in
the years of the Lease Term as set forth on Exhibit H attached hereto.
"Tenant" shall mean Sony Music/PACE Partnership, a New York general
partnership, whose sole current general partners are SM/PACE, Inc., a Texas
corporation, and YM Corp., a Delaware corporation. The Landlord acknowledges
that the Tenant is currently a party to an agreement in which it is obligated,
among other things, to admit Amphitheater Entertainment Partnership, a Delaware
general partnership whose sole general partners are YM Corp. and two indirect
wholly-owned subsidiaries of Blockbuster Entertainment Corporation, as a new
general partner in the Tenant. Upon completion of the transaction referred to in
the immediately preceding sentence, (i) the sole general partners of the Tenant
shall be SM/PACE, Inc. and Amphitheater Entertainment Partnership and (ii)
Tenant's name will be changed to "Pavilion Partners."
"Tenant Event of Default" shall mean the happening or occurrence of
one of the events or circumstances described in Section 1301 hereof.
"Trustee" shall mean the trustee appointed pursuant to the
Indenture, and its successor or successors and any other corporation which may
at any time be substituted in its place pursuant to the Indenture.
"UDAG Grant" shall mean the $4,000,000 of Grant Funds obtained from
the United States Department of Housing and Urban Development as an Urban
Development Action Grant by the City of Camden for use in connection with the
development of the Amphitheater.
"User" shall mean the party undertaking to use the Amphitheater as
designated in Article VI hereof.
"Waterfront Tract" shall mean that portion of the Commercial
Development Tract situated between the public waterfront access along the
Delaware River and the Leasehold Tract.
Section 102. Exhibits. The following Exhibits are attached to and by
reference made a part of this Lease pursuant to which any Project is to be
leased by the Tenant:
Exhibit A: Various details regarding the Initial Project.
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Exhibit B: Copy of Executed Clinton Street Easement Agreement.
Exhibit C: Copy of the Colored Map of Subject Tracts and Easement
Tracts.
Exhibit D: Form of opinion of counsel to the Tenant relating to the
organization, nature and powers of the Tenant; the validity, execution and
delivery of this Lease; the absence of litigation; and related matters.
Exhibit E-1: List of Hard Costs.
Exhibit E-2: List of Soft Costs.
Exhibit F: List of Permitted Encumbrances.
Exhibit G: Form of Parking Agreement with the Camden Parking
Authority.
Exhibit H: Surcharge Revenue.
Exhibit I: [Intentionally Deleted].
Exhibit J: [Intentionally Deleted].
Exhibit K: Form of Guaranty Agreement.
Exhibit L-1: Form of First Amendment to Lease for Construction of an
Open Air Facility.
Exhibit L-2: Form of First Amendment to Lease for Construction of a
Modified Joint Facility.
Exhibit M: Amounts of Certain Fees Related to Issuance of Initial
Bonds.
Exhibit N: Form of Legal Opinion from Landlord's Counsel.
Exhibit O: The Landlord's Estimated Allowances and Budgeted Costs.
Section 103. Number and Gender; Captions; References. Pronouns,
wherever used herein, and of whatever gender, shall include natural persons,
corporations and associations of every kind and character, and the singular
shall include the plural wherever and as often as may be appropriate. Article
and section headings in this Lease are for convenience of reference only and
shall not affect the construction or interpretation of this Lease. Whenever the
terms "hereof", "hereby", "herein" or words of similar import are used in this
Lease, they shall be construed as referring to this Lease in its entirety rather
than to a particular section or provision, unless the context specifically
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indicates to the contrary. Any reference to a particular "Article" or "Section"
shall be construed as referring to the indicated article or section of this
Lease.
Section 104. Financial Terms. All financial or accounting terms used
in this Lease, which are not otherwise defined herein, shall have the meanings
assigned to such terms pursuant to generally accepted accounting principles in
effect as of the date hereof.
[END OF ARTICLE I]
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ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES; DISCLAIMERS
Section 201. Representations, Covenants and Warranties of the
Tenant. The Tenant represents, covenants and warrants as follows:
(a) Organization. The Tenant is a general partnership duly organized
under the laws of the State of New York, that it has full power and authority to
enter into this Lease and to engage in the transactions contemplated hereby, and
that the joinder, consent or approval of no other person or entity is required
to properly consummate the transactions herein contemplated.
(b) No Conflict. The execution and delivery by the Tenant of this
Lease and the compliance with the provisions hereof, will not conflict with or
constitute on the part of the Tenant a violation of, breach of or default under
its partnership agreement or any resolution, statute, indenture, mortgage, deed
of trust, note, agreement or other agreement or instrument to which the Tenant
is bound, or, to the knowledge of the Tenant, any Legal Requirement of any court
or Governmental Authority having jurisdiction over the Tenant or any of its
activities or properties.
(c) Binding Obligation. The partners of the Tenant executing this
Lease have been duly authorized to execute and deliver this Lease. Upon the
execution and delivery hereof, assuming the valid execution and delivery hereof
by the other parties hereto, this Lease shall be a valid and binding obligation
of the Tenant enforceable against the Tenant in accordance with its respective
terms.
(d) Compliance with Legal Requirements. The Tenant has complied with
all Legal Requirements applicable to this Lease.
(e) Transfers, Assignments, etc. Except as provided under the terms
of this Lease, the Tenant will not transfer, lease, assign, mortgage or encumber
the Project.
(f) No Litigation. There are no lawsuits or administrative or other
proceedings pending or to the best of the Tenant's knowledge threatened, which
contest the Tenant's authority for, its authorization or performance of, or its
expenditure of funds pursuant to this Lease. There is also no action, suit,
proceeding or investigation at law or in equity against the Tenant or to the
best of the Tenant's knowledge threatened against the Tenant by or before any
court or public agency, or, to the best of the knowledge of the Tenant, any
basis therefor, wherein an unfavorable decision, ruling or finding would
adversely affect the transactions contemplated hereby or by the Bonds or the
Indenture or which in any way would adversely affect the validity of said
documents, or any agreement or instrument to which the Tenant is a party and
which is used or contemplated for use in consummation of the transactions
contemplated hereby.
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(g) Financial Information. Information supplied and statements made
by the Tenant in any financial statement or current budget delivered prior to or
contemporaneously with this Lease present such information fairly and
accurately, in accordance with generally accepted accounting principles.
(h) Hazardous Substances. The Tenant shall not cause or permit, at
any time during the Term of this Lease, any Hazardous Substances to be disposed
of or otherwise released on, to or under the Subject Tracts. The Tenant agrees
to indemnify, defend and hold harmless the Landlord and each of its agents,
employees, officers, partners, attorneys, contractors, concessionaires,
subtenants and other persons claiming under the Landlord of and from all fines,
suits, claims, demands, losses and actions (including any and all attorneys'
fees) arising out of or otherwise relating to any condition or circumstance
which would not otherwise exist but for the failure of the Tenant to fulfill its
covenant contained in this subsection (h).
(i) Operation. With respect to its operation of the Initial Project:
(i) The Tenant shall conduct its operation in a first-class
manner by offering services and productions comparable or superior to similar
privately operated amphitheater operations.
(ii) The Tenant shall be responsible for cleaning up any
debris, trash, etc., left by Patrons on the Subject Tracts.
(iii) The parties agree that all State and local laws,
including by not limited to, laws and regulations related to the sale of
alcohol, shall be followed at the Project.
(iv) The Tenant shall use its reasonable efforts to address
all complaints with respect to the operation of the Amphitheater.
(j) Use of Amphitheater. The Tenant shall use and occupy the
Amphitheater pursuant to this Lease solely for the purposes listed in Section
507 hereof. The Amphitheater shall not be otherwise occupied without the prior
written consent of the Landlord. The Tenant shall not use or occupy the
Amphitheater or permit the same to be used or occupied in any manner which is
contrary to the general manner in which the Tenant's other amphitheaters are
being currently, or have been previously, used and occupied.
(k) Signs and Advertising. The location and size of any advertising
signs which are visible from any public right-of-way must receive the prior
review and comment of the Landlord; provided, that if the Landlord has provided
no comments to the Tenant within 30 days of receipt of any proposed plans
describing the location and size of any such signs, then it shall be deemed that
the Landlord has no comments with respect
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thereto. Notwithstanding anything to the contrary contained herein, it is hereby
specifically agreed and acknowledged that the location, design and size of all
signs located at the Amphitheater which are not visible from any public
right-of-way may be erected and maintained by the Tenant without the obtaining
of any prior review or comment of the Landlord.
(l) Handicapped Accessibility. The Tenant shall operate the
Amphitheater in such a manner as to assure that it complies fully with all
state, federal, and local standards for handicapped accessibility.
(m) Balanced Programming. Part of the consideration inherent in the
Landlord entering into this Lease is the fact that the Landlord considers the
Amphitheater a significant community asset, but only so long as programming at
the Amphitheater is balanced in substantially the manner hereinafter provided.
As a result, it is the stated goal of the parties hereto to each use their
reasonable best efforts to cause Amphitheater programming to be balanced so as
to ensure a reasonably proportioned blend of cultural experiences, recognizing
and accepting the fact that some (e.g., so called, "high arts") may not be as
profitable as other (e.g. "rock and roll"). For purposes of this Lease,
"balance" shall mean a reasonable assortment of varied tastes of the general
population including, without limitation, popular, rock and roll, blues, soul,
jazz, folk, classical, country and western music, comedy and theater. The
Landlord and the Tenant acknowledge that the examples contained in this
subsection, though applicable to 1994 tastes in entertainment, may not be
indicative of general tastes during the entire term of this Lease. It is the
intent of the parties throughout the Lease Term to appeal to the varied
entertainment tastes of the general public as such tastes may change over time.
The Landlord shall have the right to provide notice to the Tenant at any time
following the end of any Open Air Season of any specific suggestions which it
may have with respect to future programming in order to comply with the intent
and purpose of this subsection (m); provided, however, in no event shall the
provisions of this subsection (m) ever be made the basis for declaring the
Tenant to be in default under this Lease because of the inherently subjective
nature of these provisions.
(n) Traffic, Crowd Control and Cleanup.
(i) The Tenant at its expense, shall be responsible for, on
those days and nights on which the Tenant presents a performance or show at the
Amphitheater, cleanup of the Amphitheater and parking facilities, crowd control,
security and traffic control.
(ii) The Tenant shall provide adequate trash collection and
cleaning service to assure that the refuse of the Patrons of the Amphitheater
does not litter any adjoining property. The Tenant shall be responsible for
providing such temporary barriers and sufficient security personnel as are
reasonably necessary to
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prevent Patrons of the Amphitheater from parking on, walking on, or otherwise
trespassing upon adjoining properties.
(iii) The Tenant shall coordinate with the Camden City Police
Department for traffic control on public streets on the days and nights of
Amphitheater performances or shows.
(o) Scheduling. On or before April 1 of each calendar year, the
Tenant shall submit, for informational purposes, to the Landlord its proposed
schedule of events for the upcoming Open Air Season insofar as the schedule may
be known at that time. The submission required by this subsection (o) is in no
way intended to prohibit the booking by the Tenant of other events or shows
during the Open Air Season as dates and opportunities become available. The
Tenant agrees to make a good faith effort to respond to any of the Landlord's
concerns with respect to potential violence or drug use at concerts that may
arise as a result of the Landlord's review of such schedule.
(p) Nondiscrimination. The Tenant shall not discriminate in
employment or contracting or subcontracting in connection with construction of
any Project on the basis of race, color, religion, sex or national origin. The
Tenant shall comply with all applicable statutes, ordinances, rules and
regulations concerning affirmative action and shall require such compliance
therewith by all contractors and subcontractors.
(q) Noncompetition. The Tenant hereby covenants and agrees with the
Landlord that it will not, at any time during a Restricted Lease Year, engage in
the booking, promotion, production or presentation of any Competitive Events in
any building, arena or other performance venue located in the Restricted
Territory other than the Amphitheater. If the Landlord, the State or any
instrumentality or agency of the State should, at any time hereafter, become
involved in the development of an indoor arena along the Delaware River anywhere
in or near Camden, then the Landlord will, in good faith, negotiate with the
Tenant to provide such reasonable relief from the provisions of this clause (q)
as may be necessary to enable the Tenant to become involved in the management or
operation of such arena.
Section 202. Representations, Covenants and Warranties of Landlord.
The Landlord represents, covenants and warrants as follows:
(a) Organization. The Landlord (i) is a public body corporate and
politic duly organized, existing and in good standing under the Act and other
applicable laws of the State; (ii) has full and complete power to enter into
this Lease, to enter into and carry out the transactions contemplated hereby,
and to carry out its obligations under this Lease; (iii) is possessed with full
power to own and hold real and personal property and to lease the same subject
to the terms of the Act and any other applicable law, and (iv) has duly
authorized the execution and delivery of this Lease.
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(b) No Conflict. Neither the execution and delivery of this Lease
nor the fulfillment of or compliance with the terms and conditions hereof, nor
the consummation of the transactions contemplated hereby conflicts with or
results in a breach of the terms, conditions or provisions of any restriction,
any agreement or any instrument to which the Landlord is now a party or by which
the Landlord or its property are bound, or constitutes a default under any of
the foregoing, or results in the creation or imposition of any lien, charge or
encumbrance whatsoever upon any of the property or assets of the Landlord, or
upon the Project, except Permitted Encumbrances.
(c) Binding Obligation. Upon the execution and delivery hereof, and
assuming the valid execution and delivery hereof by the other parties hereto,
this Lease shall be a valid and binding obligation of the Landlord enforceable
against the Landlord in accordance with its respective terms.
(d) Mortgage of Fee Estate. The Landlord hereby represents and
warrants to the Tenant that there are no mortgages or liens, other than the
Permitted Encumbrances, affecting the Landlord's fee simple estate in and to the
Subject Tracts. The Landlord shall have the right to subsequently encumber its
fee simple estate in and to the Subject Tracts after the date hereof, so long as
the liens and security interests created thereby remain in all respects
subordinate to this Lease, the Easements and the Restrictive Contractual
Covenants.
(e) Non-Capitalized Lease. The Landlord acknowledges and recognizes
that it is a material consideration of the Tenant that it be able, for financial
accounting purposes, to treat this Lease as a "noncapitalized" lease.
Accordingly, the Landlord hereby agrees and covenants with the Tenant that it
will, from time to time hereafter until the Commencement Date, execute and enter
into any such amendments or restatements hereof as may be reasonably required by
the Tenant to more definitely create a "noncapitalized" lease for financial
accounting purposes, so long as any such amendment or restatement does not alter
any substantive right, privilege or protection contained in, or created by, this
Lease in favor of the Landlord.
(f) Other Representations. The Landlord hereby represents and
warrants to, and covenants with, the Tenant as follows:
(i) Except for (i) the threats of litigation which have been
made by Buchanan Ingersoll on behalf of Electric Factory Concerts, Inc. in
connection with allegations that the Landlord has failed to comply with certain
executive orders related to the execution of this Lease and (ii) the threats of
litigation which have been made by Pepper, Hamilton & Scheetz on behalf of
Camden Hotel Development Associates in connection with allegations that the
Landlord wrongfully terminated a certain option agreement in favor of Camden
Hotel Development Associates relating to a portion of the Subject Tracts, as of
the date hereof, no action, suit, proceeding (including any condemnation
proceeding), notice of violations or deficient condition are pending or, to
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the knowledge of the Landlord, threatened against the Landlord or the Leasehold
Tract which could have a material adverse effect on the Landlord's performance
of its obligations under this Lease.
(ii) Based solely upon certifications from a licensed and
qualified engineering firm, no portion of the Leasehold Tract is located within
any "wetlands" area as designated and defined by The Federal Manual for
Identifying and Delineating Jurisdiction Wetlands, any navigable water, any
"waters of the state" or any protected wetlands as defined and regulated by
either the federal government, the State, any of their respective regulatory
agencies or any other Governmental Authority including, without limitation, the
U.S. Army Corp of Engineers, the U.S. Fish and Wildlife Service and the
Environmental Protection Agency.
(iii) The Leasehold Tract is in compliance with all federal,
state and local laws, ordinances, regulations, rules and restrictions relating
to the ownership thereof.
(g) Opinion from Attorney General for the State of New Jersey. Upon
execution hereof, the Landlord shall, at its own cost and expense, deliver or
cause to be delivered to the Tenant an opinion from the Attorney General for the
State in favor of the Tenant in the form attached hereto as Exhibit N stating
that the Landlord has the full right and authority to enter into and execute
this Lease and that this Lease is enforceable against the Landlord in accordance
with its terms.
Section 203. Disclaimer. NEITHER THE LANDLORD, BY DELIVERY HEREOF,
NOR THE TRUSTEE, BY ITS ACCEPTANCE OF THE DUTIES OF TRUSTEE UNDER THE INDENTURE,
MAKES ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE
SUITABILITY OR FITNESS FOR THE PURPOSE OF THE TENANT CONTEMPLATED BY THE
PROJECT. The provisions of this Section 203 shall not affect, limit, modify,
negate or otherwise lessen the representations, warranties, covenants or other
provisions made by, or imposed upon, the Landlord pursuant to the contractual
provisions contained in this Lease.
Section 204. Hazardous Substances.
(a) Environmental Remediation. The Landlord shall be obligated
and required to perform or cause to be performed all environmental remediation
activities on or at the Leasehold Tract that are indicated as being necessary in
the draft Remedial Action Plan ("RAP") dated August 1993, as modified by the
Technical Specification Site Remediation dated August 19, 1993.
(b) Environmentally Related Construction Activities. The
Tenant shall conform all construction activities to the standard set forth in
the Post Remedial Construction Plan ("PRCP") to be hereafter issued by the DEPE.
Notwithstanding the fact that the PRCP may impose certain duties,
responsibilities or obligations upon the Tenant,
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as developer of the Amphitheater, it is specifically agreed and acknowledged, as
between the Tenant and the Landlord, that the costs incurred in fulfilling such
duties, responsibilities or obligations shall be allocated between and borne by
the Landlord and the Tenant consistent with the allocation between the Landlord
and the Tenant of those same duties, responsibilities or obligations pursuant to
the provisions of this Lease.
(c) Soil Remediation During Construction. The Landlord shall
be responsible during construction for costs of testing soil if off-site
disposal is required pursuant to the remediation standards set forth in the
Technical Specification Site Remediation dated August 19, 1993. To the extent
testing shows that the characteristics of the soil require off-site disposal,
the Landlord shall be responsible for the costs of such handling, transportation
and/or disposal pursuant to any applicable laws or regulations governing solid
or hazardous waste. The Tenant shall be responsible during construction for the
costs of testing soil if off-site disposal is not required.
(d) Debris/Waste Disposal During Construction. The Landlord
shall be responsible during construction for the costs of testing solid waste
uncovered or excavated if the waste must be disposed of as a hazardous waste
pursuant to the Solid Waste Management Act, N.J.S.A. 13:1E-1 et seq. To the
extent that testing shows that the waste is a hazardous waste, the Landlord
shall be responsible for the costs of such handling, transportation, and/or
disposal pursuant to any applicable laws or regulations governing such waste.
Subject to the specific responsibilities and obligations imposed upon the
Landlord pursuant to the provisions of Section 515(b) hereof, the Tenant shall
be responsible for the costs of testing, handling, transporting, and/or
disposing of nonhazardous solid waste pursuant to the Uniform Building Code,
N.J.S.A. 52:7D-190, and the regulations promulgated thereunder.
(e) Dewatering During Construction. During construction, the
Tenant shall be responsible for the costs of permitting, pumping,
containerization/decanting and testing dewatered groundwater for discharge into
the Camden County Municipal Utilities Authority ("CCMUA") collection system and
for the cost of discharging dewatered groundwater encountered during
construction into the CCMUA collection system. The Landlord shall be responsible
for the costs of handling, transporting and/or disposing of the solid residue
resulting from the containerization/decanting process.
(f) Tenant's Health and Safety Plan During Construction. The
Tenant shall be responsible for the costs of implementing any applicable health
and safety requirements during construction pursuant to federal or state law.
The Tenant shall provide the Landlord with copies of any and all environmental
data generated by the Tenant. The Landlord reserves the right to perform
environmental sampling of the Leasehold Tract.
(g) Groundwater Monitoring Program. The Landlord shall
implement and maintain any groundwater monitoring program that may be required
by
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the DEPE with respect to the Leasehold Tract. The Landlord shall also implement
any further studies, testing or monitoring that DEPE may require as a result of
or on the basis of the groundwatering program or any data developed during or as
a part of the groundwater monitoring program. The Landlord shall implement any
remedial or other measures that may be required by DEPE as a result of or on the
basis of the groundwater monitoring program.
(h) Environmental Responsibility Post-Construction. The Tenant
shall be responsible for complying with all applicable laws or regulations
concerning the Tenant's operation of the Amphitheater. The Tenant shall provide
the Landlord with copies of any and all environmental data generated by the
Tenant. After the issuance of the temporary certificate of occupancy, the
Landlord shall perform or cause to be performed any environmental remediation on
the Leasehold Tract required under any applicable environmental law or
regulation to address environmental conditions which predated the Tenant's
commencement of the construction to the extent any such condition being
remediated is not attributable to the actions of the Tenant or its invitees.
Under this clause (h), the Landlord shall be responsible for all costs of
remediation on the Leasehold Tract required under any applicable environmental
law or regulation to address environmental conditions which predated the
Tenant's commencement of construction except the proportion of such costs
attributable to the Tenant's exacerbation of such condition.
(i) Environmental Reservation of Rights. Notwithstanding
anything to the contrary contained in, or implied by, any other provision
contained in this Section 204:
(i) The parties agree that the Tenant shall not be
liable for (in any action between the parties) and the Tenant reserves all
rights with respect to conditions predating the Tenant's commencement of
construction to the extent such conditions were not exacerbated by the Tenant or
its invitees.
(ii) The Landlord shall make no claim against the Tenant
which arises from or relates to conditions predating the Tenant's commencement
of construction except that the Landlord reserves its right to make any claim
for remediation against the Tenant relating to conditions predating the Tenant's
commencement of construction to the extent such condition was exacerbated solely
by the Tenant, or its contractors, agents, employees or invitees, provided that
the amount of such claim shall be limited to the proportional amount of
remediation costs attributable to the Tenant's (or its invitees') exacerbation
of the condition predating the Tenant's commencement of construction.
(j) Monitoring and Remediation Access. The Tenant shall
provide sufficient access to the Leasehold Tract to enable the Landlord to
fulfill the obligations under this Section 204.
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Section 205. Amendments relating to Initial Bonds. The Landlord and
the Tenant each hereby agree and covenant with the other that it will, from time
to time hereafter, until the Commencement Date, execute and enter into any such
amendments or restatements hereof as may be reasonably required by the Trustee,
any credit enhancer or rating agency or the other party hereto to enable or more
effectively permit the issuance of the Initial Bonds, so long as any such
amendment or restatement does not alter any substantive right, privilege or
protection contained in, or created by this Lease in favor of such party.
[END OF ARTICLE II]
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ARTICLE III
RENT AND OTHER PAYMENTS
Section 301. Rent. (a) Throughout the Initial Term, the Tenant
agrees to pay to the Trustee in immediately available funds delivered to the
Principal Office of the Trustee for deposit in the Applicable Fund set forth in
the Indenture, as Rent for the Project, (i) Basic Rent as set forth below and in
Sections 305 and 306 hereof and (ii) from time to time as provided herein as
Supplemental Rent all other amounts, costs, liabilities and obligations which
the Tenant assumes or agrees to pay to the Landlord or to others hereunder,
including the Administrative Fee, and interest on any such overdue amounts at
the Overdue Rate. The Tenant shall at its option be entitled to a credit against
the Rent for unused moneys held in the Construction Fund after the date of
completion of any Project and for earnings on any other Funds held by the
Trustee or shall be entitled to make such other direction for disbursement of
such moneys, all at the times and in the amounts, and determined in accordance
with the provisions of the Indenture, such credits, if applicable, being first
applied to Basic Rent and then to Supplemental Rent due, if any.
(b) After the end of the Initial Term, the Tenant agrees to pay to
the Landlord in each Lease Year in any Renewal Term, an annual payment of
Renewal Rent in an amount equal to the greater of (i) the Annual Renewal Amount
for such Lease Year, (ii) three percent (3%) of the total amount of all
revenues, receipts and other funds (net of any sales taxes) received by the
Tenant, on a cash basis, from the operation, ownership or use of the
Amphitheater during the immediately preceding Lease Year or (iii) the total
amount of Impositions which are payable during such Lease Year. Such Renewal
Rent shall be payable in seven (7) equal monthly installments commencing on May
15 of such Lease Year and continuing on the 15th day of each calendar month
thereafter through and including November 15 of such Lease Year. To provide the
Landlord a mechanism for confirming the amount of revenues, receipts and other
funds (net of any sales taxes) received by the Tenant from the operation, use
and ownership of the Amphitheater during any Lease Year in the Renewal Term, the
Landlord shall have the right, at its sole cost and expense, to examine and
audit from time to time during the Renewal Term, but no more often than once in
any calendar year, the Tenant's books and records relating to its use and
operation of the Amphitheater.
Section 302. Rental Payments to be Unconditional, No Abatement or
Set-off. For so long s any of the Bonds are Outstanding, but not at other times,
the following provisions shall apply:
(a) The obligation of the Tenant to make Rent Payments when due with
respect to the Project or any other payments required hereunder shall be
absolute and unconditional in all events and the Tenant hereby acknowledges that
the terms of this
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Lease create a valid and binding obligation of the Tenant to make Rent Payments
and to pay all other amounts which are required to be paid under the terms of
this Lease.
(b) Notwithstanding any dispute between the Tenant and the
Landlord or any other person, the Tenant shall make all Rent Payments and other
payments required hereunder when due and shall not withhold any Rent Payment or
other payment pending final resolution of such dispute nor shall the Tenant
assert against the Landlord, the Trustee or any other person any right of
set-off, recoupment or counter-claim against its obligation to make such Rent
Payments or other payments required under this Lease whether or not the Project
is used or occupied by the Tenant or is available for use or occupancy by the
Tenant.
(c) The Tenant's obligation to make Rent Payments or other
payments during the Initial Term shall not be abated through accident or
unforeseen circumstances.
(d) However, nothing herein shall be construed to release the
Landlord from the performance of its obligations hereunder.
Section 303. Termination of Lease Term/Rental Payment Obligation.
For so long as any of the Bonds are Outstanding, but not at other times, the
Tenant will not terminate this Lease or be excused from its obligation for any
reason including, without limiting the generality of the foregoing, any acts or
circumstances that may constitute an eviction or constructive eviction, failure
of consideration, failure of title, or frustration of purpose, or any damage to
or destruction of the Project, or the taking by eminent domain of title or the
right of temporary use of all or any part of the Project, or the failure of the
Landlord to perform and observe any agreement or covenant, whether expressed or
implied, or any duty, liability or obligation which arises out of or which is
related to this Lease.
Section 304. Surcharge Revenue. (a) The Tenant shall charge and
collect the per ticket surcharge in the amounts and in the years set forth in
Exhibit H attached hereto and made a part hereof. The per ticket surcharge shall
not apply to (i) complimentary tickets or other unpaid passes for admission to
the Amphitheater, unless the Tenant receives in exchange for the distribution of
such complimentary tickets or other unpaid passes specific goods or services
other than advertising time or space; (ii) any and all tickets for Special
Events; (iii) any and all tickets for a performance or show for which the price
of admission is $5.00 or less (such amount to be increased each year
proportionately with increases in the CPI Index).
(b) The Tenants obligations to impose the per ticket surcharges set
forth on Exhibit H shall terminate upon the later to occur of (i) the end of the
Initial Term or (ii) full and final repayment of the Repayable Grants. The
Tenant shall designate the per ticket surcharge on the ticket and in notices to
the public concerning the surcharge, if
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any, as the "Special Project Charge." Nothing in this Section 304 or elsewhere
in this Lease shall be deemed to prohibit the Tenant from imposing, in its sole
discretion, any ticket surcharge other than the Surcharge Revenue specified on
Exhibit H and any such other ticket surcharges shall be retained and applied by
the Tenant in its sole discretion; however, the Tenant shall in no way indicate
or imply that such surcharge is imposed by any Governmental Authority and the
Tenant may not designate its surcharge as the "Special Project Charge."
(c) All Surcharge Revenue shall be paid by the Tenant to the
Landlord or the Landlord's assignee on the last day of each calendar month,
commencing with the first month in which the Surcharge Revenue is required to be
charged and collected by the Tenant as specified in Exhibit "H" attached hereto.
(d) The Landlord shall pay or apply all Surcharge Revenue in the
following order of priority:
(i) First, (x) to the payment of any then scheduled payments
of principal and interest on the Repayable Grants and (y) to the City of Camden
for application against any PILOT then due; and
(ii) Second, any remaining amounts to the Tenant.
Section 305. Basic Rent; Principal Portion. The Principal Portion of
the Basic Rent Payments shall be due on each Basic Rent Payment Date and in the
amount of principal due and payable on the Bonds on the immediately succeeding
Principal Payment Date or Sinking Fund Installment Date, as the case may be. The
Principal Portion of Basic Rent shall be restated upon (i) exercise of the
option to prepay Basic Rent and other additional amounts as provided in Article
X hereof or (ii) the issuance of Additional Bonds as provided for in the
Indenture.
Section 306. Basic Rent; Interest Portion. The Interest Portion of
Basic Rent shall be due on each Basic Rent Payment Date or Prepayment Date, as
the case may be, and in the amount of interest due and payable on the Bonds on
the immediately succeeding Interest Payment Date or redemption date, as the case
may be; provided however, that no Interest Portion of Basic Rent shall be
payable by the Tenant for any period to the extent interest payable on the Bonds
for such period shall have been previously provided to the Trustee for deposit
in the Capitalized Interest Account of the Debt Service Fund from proceeds
derived from the sale of the Bonds or to the extent of a balance available for
payment of interest on the Bonds in the Interest Account of the Debt Service
Fund.
Section 307. Basic Rent; Interest Calculation. The Interest Portion
of Basic Rent represented by the Bonds, shall be computed upon the basis of (i)
a 360-day year, consisting of twelve 30-day months with respect to the Bonds (or
a portion thereof) which
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are bearing interest at a fixed rate of interest and (ii) a 365- or 366-day year
for the actual number of days elapsed with respect to the Bonds (or a portion
thereof) which are bearing interest at a variable rate of interest.
Section 308. Basic Rent; No Bonds Outstanding. No Basic Rent
Payments shall be due or payable at any time during which no Bonds are
Outstanding.
Section 309. Supplemental Rent. During the Initial Term of this
Lease, amounts due and paid under this Lease as Supplemental Rent, including but
not limited to the Administrative Fee and amounts due to the Trustee, shall be
paid to the Trustee for deposit and application in accordance with the
Indenture.
[END OF ARTICLE III]
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ARTICLE IV
LEASE OF PREMISES AND EASEMENTS; TERM OF LEASE
Section 401. Premises Leased. (a) The Landlord hereby agrees to
demise, lease and rent to the Tenant and the Tenant hereby agrees to take and
lease from the Landlord, the following described property under the terms and
conditions set forth in this Lease:
(i) all of the Leasehold Tract;
(ii) all of the easement rights created under, pursuant to and
by the Clinton Street Easement Agreement;
(iii) all vertical and subterranean rights, presently existing
or hereafter arising, appurtenant to the Leasehold Tract, and all interests in
and to the streets and alleyways in or contiguous thereto owned or claimed by
the Landlord or in which the Landlord has any right, title or interest; and
(iv) the Amphitheater to be constructed by the Tenant,
together with all fixtures, improvements attached thereto and all appurtenances
thereto.
(b) Notwithstanding the fact that the easement rights created under,
pursuant to and by the Clinton Street Easement Agreement are being leased to the
Tenant pursuant to the provisions hereof, the Landlord, as owner of fee simple
title to the Commercial Development Tract, shall continue to have a concurrent
right to use and subsequently assign such easement rights in connection with the
ownership, use and occupancy of the Commercial Development Tract, subject to the
following provisions:
(i) Reference is made to the fact that South Jersey Port
Corporation ("Port"), the owner of fee simple title to the tract or parcel of
land upon which Easement Tract E is located has entered into a letter agreement
with the Tenant providing, in substance, that (x) if the Tenant's use of
Easement Tract E for any calendar year averages less than two vehicular round
trips per day, then the Port shall be solely responsible for all maintenance of
the improvements located on Easement Tract E during that year and (y) if the
Tenant's use of Easement Tract E for any calendar year averages more than two
vehicular round trips per day, then the cost of maintenance of any improvements
located on Easement Tract E shall be shared equally by the Port and the Tenant.
(ii) If the Tenant's use of Easement Tract E for any calendar
year averages less than two vehicular round trips per day, but the total use of
Easement Tract E by both the Tenant and the Landlord during such calendar year
averages more than two round trips per day, then, as between the Landlord and
the Tenant, the Landlord shall
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be obligated to pay to the Port the Tenant's one-half of the maintenance costs
related to the improvements located on Easement Tract E for that calendar year.
(iii) If the Tenant's use of Easement Tract E for any calendar
year averages more than two vehicular round trips per day, then, as between the
Landlord and the Tenant, the one-half of the maintenance costs related to
Easement Tract E for which the Tenant is liable shall be shared between the
Landlord and the Tenant in proportion to the actual amount of usage of Easement
Tract E by each of them during such calendar year.
(iv) For purposes of this Section 401(b), use of Easement
Tract E by any party to whom the Landlord has assigned or otherwise granted the
right to use Easement Tract E shall be deemed to be use of Easement Tract E by
the Landlord.
Section 402. Easements. The Landlord hereby grants and conveys unto
the Tenant an easement on, over and across the Easement Tracts on and subject to
the following terms and provisions, to have and to hold the Easements, together
with all rights and appurtenances thereto belonging, unto the Tenant and its
successors and assigns forever, subject only to the Permitted Encumbrances. The
Landlord does hereby bind itself and its successors and assigns to warrant and
forever defend, subject to the Permitted Encumbrances, all and singular, the
Easements unto Tenant and its successors and assigns, against every person
whomsoever lawfully claiming or to claim the same or any part thereof.
(a) Service Drive Access Easement. The Tenant shall have an easement
at all times during the Term of this Lease on, over and across Easement Tract A
for the purposes of (i) constructing and maintaining roadways, walkways,
driveways, sidewalks and related improvements thereon and (ii) providing
vehicular and pedestrian access for the Employees and the Patrons of the
Amphitheater to, from, between and among the Amphitheater, Easement Tract E and
the public rights-of-way and other public properties abutting or near the
Subject Tracts. The Landlord reserves the right to use the roadways, walkways,
driveways, sidewalks and related improvements placed on Easement Tract A by the
Tenant for the sole purpose of providing vehicular and pedestrian access to the
Commercial Development Tract, which reserved right may be assigned to the City
of Camden or the County of Camden for their respective official uses (but not
for the creation of a public right-of-way) and to all owners, tenants, lessees
and invitees on the Commercial Development Tract.
(b) Terminable Easements.
(i) The Tenant shall have an easement on, over and across
Easement Tract B for the purpose of placing and maintaining a berm thereon which
will serve as a backslope to the Amphitheater's hill ("Seating Hill") for lawn
seating of the Amphitheater's Patrons.
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(ii) The Tenant shall also have an easement on, over and
across Easement Tract C for the purposes of (A) placing a paved surface thereon
as a plaza or patio for Patrons of the Amphitheater to access an entrance into
the Amphitheater and (B) placing temporary tents or other similar removable
structures thereon in which private parties can be held in conjunction with
events presented at the Amphitheater.
(iii) If the Landlord, or its successors or assigns to the
Waterfront Tract, should ever obtain all necessary governmental approvals for
the development of the Waterfront Tract, then the Landlord, or its successors or
assigns to the Waterfront Tract, shall thereafter have the right to terminate
the easements on, over and across Easement Tract B and Easement Tract C by first
causing, at no cost to the Tenant, a retaining wall to be constructed in
replacement of the backslope berm on Easement Tract B as may be necessary to
provide sufficient load-bearing capacity for the Seating Hill in accordance with
all Legal Requirements. Construction of such retaining wall by the Landlord, or
its successors or assigns to the Waterfront Tract, shall be governed by the
following provisions:
(A) At least sixty (60) days advance prior notice shall
be provided to the Tenant before any construction work may begin on such
retaining wall. The scheduling of construction activities must be coordinated
with, and reasonably approved by, the Tenant so as to prevent any interruption
of planned events or performances in the Amphitheater.
(B) The retaining wall must be designed (the "Engineered
Design") by a qualified and licensed engineer who maintains errors and omissions
insurance in an aggregate amount equal to or greater than the total cost of
designing and constructing such retaining wall.
(C) The construction contract pursuant to which the
retaining wall will be constructed must contain an express warranty from the
contractor (with an adequate surety bond) for the express benefit of the Tenant
providing that the retaining wall will be constructed in accordance with the
Engineered Design and in a good and workmanlike manner free of defects.
(D) The contractor must be reasonably satisfactory to
the Tenant and must provide, to the reasonable satisfaction of the Tenant, (x) a
payment and Performance bond, (y) policies of liability insurance and (z) all
risk builder's insurance, all of which must name the Tenant as an additional
insured and be in form, content and amount reasonably acceptable to the Tenant.
(E) As a condition precedent to the construction of the
retaining wall, the then owner of the Waterfront Tract shall execute such
documents as may be required by the Tenant to evidence such owner's agreement to
indemnify and hold the Tenant harmless from and against any loss, cost, claim or
other damage
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(including attorneys' fees and other costs of defense) which the Tenant may
suffer or incur in connection with, or otherwise arising out of, the
construction of, or subsequent existence of, such retaining wall.
Upon completion of the retaining wall in compliance with all Legal
Requirements, the Tenant's easements on, over and across Easement Tract B and
Easement Tract C shall automatically terminate with no further action required
by any party hereto, and the Tenant shall execute such documents as the Landlord
may reasonably request to evidence the termination of such easement rights.
(c) Restroom Facility Easement. Subject to the provisions contained
in the next succeeding sentence, the Tenant shall have an easement on, over and
across Easement Tract D for the purpose of constructing, operating and
maintaining thereon public restroom facilities for the use of Patrons and
Employees of the Amphitheater. The easement on, over and across Easement Tract D
created pursuant to the provisions of the immediately preceding sentence shall
be subject to the following:
(i) The Landlord shall have the right to require that Easement
Tract D be relocated to another place within the boundaries of the Marina Tract
so long as (x) the Landlord bears the entire cost of relocating any restroom
facilities already located on Easement Tract D and (y) the Tenant reasonably
approves the new location and configuration of the relocated Easement Tract D as
being suitable for providing convenient and reasonable access to the public
restroom facilities located thereon by the Patrons and Employees of the
Amphitheater.
(ii) The Tenant shall be required and obligated to include
within the public restroom facilities located on Easement Tract D restroom
facilities to which access shall be available by the general public from outside
of the Amphitheater and which satisfy the following requirements:
(A) A men's restroom facility consisting of two urinals,
one water closet and two lavatories; and
(B) A women's restroom facility consisting of four water
closets and three lavatories.
(d) Construction Easement. Subject to such reasonable
restrictions which may be imposed from time to time by the Landlord as may be
necessary to enable the Landlord to fulfill its environmental remediation
obligations described in Section 204 or its other development obligations
described in Section 515 hereof, the Tenant shall have an easement between the
Commencement Date and the date on which construction of the Amphitheater is
substantially complete to enter into and go upon all or any portion of the
Commercial Development Tract for the purposes of constructing the Amphitheater
and all related improvements.
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(e) Retained Easement. The Landlord does hereby retain and reserve
an easement ("Retained Easement") for itself and its successors and assigns on,
over and across Easement Tract F on and subject to the following provisions:
(i) The purpose of the Retained Easement shall be limited to
providing (A) vehicular access from, between and to the Commercial Development
Tract and Delaware Avenue South for (x) commercial vehicles making deliveries or
service calls to the businesses operating on the Commercial Development Tract
and (y) emergency or official governmental vehicles for health or public safety
purposes and (B) pedestrian access from, between and to the Commercial
Development Tract and Delaware Avenue South for patrons of the businesses
operating on the Commercial Development Tract.
(ii) Reference is made to the fact that the current Plans and
Specifications contemplate that an administration building and certain other
improvements will be located on Easement Tract F as a part of the Initial
Project. Accordingly, the Tenant shall have the express right and authority to
construct such improvements on Easement Tract F.
(iii) Notwithstanding anything to the contrary contained
herein, the Landlord's right to construct roadway improvements on Easement Tract
F and to thereafter make use of the Retained Easement shall be subject to
satisfaction of all of the following conditions:
(A) The Landlord must provide written notice ("Easement
Use Notice") to the Tenant, prior to the commencement of any development
activities on the Commercial Development Tract, that (1) it has specific plans
for immediate development of all or any portion of the Commercial Development
Tract and (2) it has been unable to obtain suitable access to the Commercial
Development Tract over the land of others.
(B) Upon receipt of an Easement Use Notice, the Tenant,
using its reasonable discretion, shall cause that portion of the Initial Project
which is situated on Easement Tract F to be redesigned and reconfigured in such
a manner that the improvements located thereon will be moved from Easement Tract
F. The redesign and reconfiguration shall be reflected in a schematic diagram
("Redesign Schematic") with such detail thereon as may be reasonably requested
by the Landlord. It is hereby expressly acknowledged and agreed that, due to the
limited space within the Leasehold Tract, some or all of the improvements to be
located on Easement Tract F will be required to be relocated upon a portion of
the Commercial Development Tract. The cost of preparing the Redesign Schematic
shall be borne by the Landlord. If the Landlord believes that the Redesign
Schematic has been prepared in a manner which is not reasonable, then the
parties hereto agree that the Landlord may submit the matter to arbitration
pursuant to the provisions of Section 1423 hereof.
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(C) After the Tenant has delivered the Redesign
Schematic to the Landlord, the Landlord shall the have the right to remove the
improvements located on Easement Tract F and construct roadway improvements of a
design reasonably approved by the Tenant upon Easement Tract F on and subject to
the following provisions:
(1) The Landlord shall be obligated to relocate or
reconstruct the improvements located on Easement Tract F in accordance with, and
as contemplated by, the Redesign Schematic at its sole cost and expense;
(2) Prior to the Landlord commencing with the
removal, destruction or reconstruction of any improvements on Easement Tract F
("Work"), the Tenant must be satisfied, in its sole and absolute discretion,
that (i) the final engineering and design for the Work is consistent with the
Redesign Schematic and is otherwise reasonably satisfactory to the Tenant from
the standpoint of access, crowd control and aesthetics, (ii) the Tenant has been
adequately indemnified from any harm it may suffer from the construction or
removal of improvements contemplated by the Work, (iii) the schedule and timing
for the Work will not unreasonably interfere with the Tenant's use of the
Leasehold Tract or the Amphitheater and (iv) this Lease has been amended in a
manner acceptable to the Tenant so as to include as a part of the Leasehold
Tract the appropriate portion of the Commercial Development Tract onto which the
improvements from Easement Tract F are to be relocated.
(3) The Landlord shall (i) cause the Work to be
done and completed in accordance with, and as contemplated by, the final
engineering and design plans approved by the Tenant pursuant to Section
403(e)(iii)(C)(2)(i) hereof, (ii) not permit the Work to be done in such a
manner which would unreasonably interfere with the Tenant's use of the Leasehold
Tract or the Amphitheater and (iii) cause the Work to be done in accordance
with, and compliance of, all applicable governmental rules, laws or other
regulations.
(iv) Following construction of roadway improvements on
Easement Tract F by the Landlord, the Tenant shall have the express right and
authority to place temporary barricades blocking the entrance onto Easement
Tract F from Delaware Avenue South during Show Hours for the purpose of denying
vehicular access to Easement Tract F during Show Hours; provided, however, that
Tenant shall be obligated and required to immediately remove such temporary
barricades for access by emergency vehicles such as fire engines, police cars
and ambulances.
Section 403. Lease Term. This Lease shall be for an Initial Term
beginning on the Commencement Date and ending on the later of (i) the last day
of the thirty-first (31st) Lease Year or (ii) the last day of the Lease Year in
which there are no longer any Bonds Outstanding under the Indenture (the
"Initial Term"). The Tenant shall have two (2) successive options to renew and
extend this Lease, the first such option being for
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twenty (20) additional Lease Years and the second being for ten (10) additional
Lease Years. In order to validly exercise either of its two (2) successive
options to extend the Lease Term, pursuant to the foregoing provisions, the
Tenant must provide notice of its election before the then applicable Election
Deadline. The Tenant shall be deemed to have elected not to extend the Lease
Term pursuant to the option described herein if it fails to provide notice of
such election prior to the then applicable Election Deadline.
Section 404. Conditions Precedent.
(a) The Tenant's obligations under this Lease are conditioned upon
the Bond Terms being acceptable to the Tenant in its sole and absolute
discretion. If the Bond Terms are not acceptable to the Tenant in its sole and
absolute discretion, then the Tenant may, prior to the execution of the
Indenture, either (i) terminate this Lease by written notice to the Landlord in
which event this Lease shall be of no force and effect or (ii) require that the
Initial Bonds not be issued by the Landlord in which event all of the terms,
provisions and conditions contained in this Lease shall remain in full force and
effect except that (A) the Landlord shall not issue the Initial Bonds, (B) the
Landlord shall have no obligation to deposit the Proceeds of the sale of the
Initial Bonds with the Trustee and (C) the provisions of Sections 509, 510 and
511 hereof shall no longer be applicable.
(b) The obligation of the Landlord to issue the Initial Bonds shall
be expressly conditioned upon the Tenant causing (i) Sony Music Entertainment
Inc. to have executed and delivered to the Landlord or the Trustee the Guaranty,
(ii) Sony Music Entertainment Inc. to have delivered to the Landlord or the
Trustee certified copies of corporate resolutions and such other documents as
may be reasonably requested or required by the Landlord and the Trustee to
evidence Sony Music Entertainment Inc.'s authorization to execute the Guaranty
and its existence and good standing in the state of its incorporation and (iii)
a law firm reasonably acceptable to the Landlord and the Trustee issuing such
firm's opinion that, subject to standard exceptions, the Guaranty has been duly
authorized and executed by Sony Music Entertainment Inc. and is enforceable in
accordance with its terms against Sony Music Entertainment Inc.
(c) If the Tenant (i) has not obtained an Acceptable Construction
Commitment and (ii) has not exercised its right described in Section 502(g)(ii)
hereof to construct the Amphitheater as a Summer Facility or a Modified Joint
Facility, then, at anytime after February 28, 1994, the Tenant shall have the
right to terminate this Lease by providing notice thereof to the Landlord.
(d) if the Tenant's food and beverage concessionaire is unable to
obtain a liquor license from the applicable Governmental Authorities in a manner
which will permit the Tenant to enter into a concession agreement upon the terms
and conditions outlined in the currently existing letter agreement between the
Tenant and its food and beverage concessionaire on or before the Commencement
Date, then the Tenant may terminate
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Tract") and (y) a 0.4 acre portion of the Commercial Development Tract is
currently owned in fee simple title by Camden County Improvement Authority (such
portion of the Commercial Development Tract being herein called the "CCIA Fee
Tract"). The Landlord's obligations under this Lease are conditioned upon the
Landlord entering into an agreement with the Camden County Improvement Authority
in form and content reasonably acceptable to the Landlord which will provide,
among other things, that (A) the Landlord may create the easement contemplated
by Section 402(a) hereof across the CCIA Easement Tract and (B) the Camden
County Improvement Authority will convey to the Landlord fee simple title to the
CCIA Fee Tract. If the condition contained in this clause (e)(iii) is not
satisfied on or before the CCIA Deadline (herein defined), then the Landlord may
terminate this Lease at any time within five (5) days after the CCIA Deadline.
As used herein, the term "CCIA Deadline" shall mean February 28, 1994 or such
later date as may be hereafter specified by the Tenant as the CCIA Deadline in a
written notice to the Landlord on or before the then effective CCIA Deadline.
(f) The Landlord's obligations under this Lease are conditioned upon
the execution of an agreement by the Landlord with the City of Camden in a form
and content acceptable to the Landlord in its sole and absolute discretion
specifying the amount and terms of (i) payments in lieu of taxes related to the
Amphitheater and (ii) the repayment of the UDAG Grant. If the condition
contained in this clause (f) is not satisfied on or before the Repayment
Deadline (herein defined), then the Landlord may terminate this Lease at any
time within five (5) days after the Repayment Deadline. As used herein, the term
"Repayment Deadline" shall mean February 15, 1994 or such later date as may be
hereafter specified as the Repayment Deadline by the Tenant in a written notice
to the Landlord on or before the then effective Repayment Deadline.
(g) The following provisions related to the funding of the costs of
the Landlord's obligations hereunder shall apply:
(i) The Landlord's obligations under this Lease are
conditioned upon the United States Department of Housing and Urban Development
issuing a written commitment in a form reasonably satisfactory to the Landlord
authorizing the release of $4,000,000 in the form of the UDAG Grant for use in
connection with the construction and development of the Amphitheater. If the
condition contained in this clause (g)(i) is not satisfied on or before the UDAG
Deadline (herein defined), then the Landlord may terminate this Lease at any
time within five (5) days after the UDAG Deadline. As used herein, the term
"UDAG Deadline" shall mean 45 days after the date of this Lease or such later
date as may be hereafter specified as the UDAG Deadline by the Tenant in a
written notice to the Landlord on or before the then effective UDAG Deadline.
(ii) Attached hereto as Exhibit "O" is an outline of the
Landlord's budget of its costs to be incurred in fulfilling its obligations
hereunder which indicates that the estimated total amount of expenditures of the
Landlord shall be approximately $15,065,000. Reference is made to the fact that
the Landlord has only $12,000,000 of
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funds currently committed to it, subject to the condition contained in clause
(i) of this Section 404(g), to fund such costs. Accordingly, the Landlord's
obligations under this Lease are conditioned upon the Landlord obtaining at
least $3,000,000 of funding or other commitments, upon terms reasonably
acceptable to the Landlord, to fund such shortfall of the budgeted costs
outlined and described in Exhibit "O" attached hereto. If the condition
contained in this clause (g)(ii) is not satisfied on or before the General
Financing Deadline (herein defined), then the Landlord may terminate this Lease
at any time within five (5) days after the General Financing Deadline. As used
herein, the term "General Financing Deadline" shall mean February 28, 1994 or
such later date as may be hereafter specified as the General Financing Deadline
by the Tenant in a written notice to the Landlord on or before the then
effective General Financing Deadline. Notwithstanding anything to the contrary
contained herein, if the Landlord exercises its rights to terminate this Lease
pursuant to the right created in this clause (g)(ii), then the Tenant shall have
the right and option for a period of thirty (30) days thereafter to rescind such
termination and reinstate the Lease on and subject to all of the terms,
provisions and conditions contained herein by agreeing, in writing, to fund all
of the Landlord's $3,000,000 funding shortfall. If the Tenant elects to rescind
the termination of this Lease pursuant to the rights created in the immediately
preceding sentence, then the following provisions shall apply:
(A) Notwithstanding anything to the contrary contained in, or
implied by the provisions of this Agreement, the Tenant shall have the right to
construct the Amphitheater as a Summer Facility (in which event the provisions
of Section 502(g)(iii) hereof shall immediately become effective) or as a
Modified Joint Facility (in which case the provisions of Section 502(g)(iv)
shall immediately become effective).
(B) The Landlord shall be obligated to transfer, assign and
deliver all of its rights, titles and interests in and to the Commercial
Development Tract to the Tenant.
(h) The Tenant's obligations under this Lease are conditioned upon
(A) the issuance of a written commitment in favor of the Tenant and in form,
content and substance satisfactory to the Tenant in its sole and absolute
discretion pursuant to which the City of Camden commits, at its sole cost and
expense, to (i) provide utility availability for water (at 60 psi), sanitary
sewer, storm sewer, water and other required city utility services to the
boundary of the Leasehold Tract at Delaware Avenue with such capacity and in
such amounts as will be sufficient for the proper use and operation of the
Amphitheater, (ii) complete such necessary offsite roadway improvements to
permit the extension of Delaware Avenue South prior to the opening of the
Amphitheater which will satisfy all traffic requirements which must be satisfied
to permit the opening and use of the Amphitheater (including the construction of
Jersey Barriers) and (iii) relocate the existing sanitary sewer line currently
located under a portion of the Leasehold Tract to the extended Delaware Avenue
south right-of-way, (B) the issuance of a written commitment in favor of the
Tenant and in form, content and substance acceptable to the Tenant in its
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sole and absolute discretion pursuant to which Public Service Electric and Gas
Company commits, at its sole cost and expense, to remove and relocate off of the
Leasehold Tract all electrical lines and facilities currently located on the
Leasehold Tract which serve the street lights adjacent to the Marina Tract, (C)
the issuance of a written commitment to the Tenant from the South Jersey Port
Corporation in form, content and substance acceptable to the Tenant in its sole
and absolute discretion pursuant to which the South Jersey Port Corporation
grants to the Tenant the right to install and bury such pipes or other lines
under Clinton Street as may be necessary for the Tenant to tie into the existing
sanitary and storm sewer lines thereon, (D) the Tenant being satisfied, in its
sole and absolute discretion, that sufficient obligations have been undertaken
by the Landlord or others to ensure that the parking lot facilities for the
Amphitheater will be constructed to the specifications of the Tenant at no cost
or expense to the Tenant, (E) the Tenant being satisfied, in its sole and
absolute discretion, that the $200,000 amount budgeted by the Landlord for
expenditure on the improvements to be made on Easement Tract E, as contemplated
by the provisions of Section 515(b)(v) hereof, will be sufficient to cause all
such improvements to be completed, at no cost or expense to the Tenant, to the
Tenant's specifications, (F) the location of, and the terms and conditions
relating to, the easements or other restrictions or encumbrances to be hereafter
imposed upon any of the Subject Tracts pursuant to the proposed Contract for
Sale of Land for Private Redevelopment among the CRA, the Landlord and Cooper's
Ferry Development Association, Inc. being acceptable to the Tenant in its sole
and absolute discretion, (G) the issuance of a written commitment in favor of
the Tenant and in form, content and substance satisfactory to the Tenant in its
sole and absolute discretion pursuant to which the CRA agrees to vacate and
abandon the 35 foot easement along the most easterly portion of the Leasehold
Tract at such time as the existing sanitary sewer line located thereunder is
relocated onto the extension of Delaware Avenue South, (H) the Tenant being
satisfied, in its sole and absolute discretion, that 375,000 cubic yards (truck
measure) of fill material is sufficient in amount for the Tenant's construction
requirements or that any additional required fill material will be provided by
the Landlord or others at no cost or expense to the Tenant and (I) the Tenant
being satisfied, in its sole and absolute discretion, that the amount of
payments payable to the City of Camden under the "payment in lieu of taxes"
arrangement with the City of Camden is reasonable and appropriate. If the
conditions contained in this clause (h) are not all satisfied on or before
February 28, 1994, then the Tenant may terminate this Lease at any time
thereafter.
(i) The Landlord's obligations under this Lease are conditioned upon
the obtaining of a written agreement in form and content reasonably satisfactory
to the Landlord pursuant to which the tenant under the Dockside Lease agrees to
terminate the Dockside Lease. If the condition contained in this clause (i) is
not satisfied on or before the Dockside Deadline (herein defined), then the
Landlord may terminate this Lease at any time within five (5) days after the
Dockside Deadline. As used herein, the term "Dockside Deadline" shall mean
February 15,1994 or such later date as may be hereafter specified as the
Dockside Deadline by the Tenant in a written notice to the Landlord on or before
the then effective Dockside Deadline.
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(j) The Tenant's obligations under this Lease are conditioned upon
the (i) completion of the dismantling and removal of the freezer warehouse and
all other improvements located on the portion of the Leasehold Tract encumbered
by the Dockside Lease and (ii) final termination of the Dockside Lease and
vacation of the premises leased by the Dockside Lease by the tenant under the
Dockside Lease. If the condition contained in this clause (j) is not satisfied
on or before the date which is 120 days from the date of this Lease, then the
Tenant may terminate this Lease at any time thereafter.
(k) The Tenant's obligations under this Lease are conditioned upon
the PRCP and the deed restrictions to be imposed upon the Leasehold Tract by the
DEPE (herein collectively called the "Environmental Documents") being in form
and content acceptable to the Tenant in its sole and absolute discretion. The
Tenant may terminate this Lease (i) at any time within 30 days after a copy of
the final adopted version of both of the Environmental Documents have been
provided to the Tenant and its environmental legal counsel if either of the
Environmental Documents are not acceptable to the Tenant in its sole and
absolute discretion or (ii) at any time after February 28, 1994 if a copy of the
final adopted version of both of the Environmental Documents have not yet been
provided to the Tenant and its environmental legal counsel.
(l) The Tenant's obligations under this Lease are conditioned upon
the execution of a parking letter with the Camden Parking Authority in
substantially the same form as is attached hereto as Exhibit G. If the condition
contained in this clause (l) is not satisfied on or before the Parking Deadline
(herein defined), then the Tenant may terminate this Lease at any time within
five (5) days after the Parking Deadline. As used herein, the term "Parking
Deadline" shall mean February 28, 1994 or such later date as may be hereafter
specified as the Parking Deadline by the Landlord in a written notice to the
Tenant on or before the then effective Parking Deadline.
(m) The following conditions in regard to the SJPAC Three Way
Agreement shall also apply:
(i) The Tenant's obligations under this Lease are conditioned
upon the execution of the SJPAC Three Way Agreement by SJPAC and the Landlord in
a form and content acceptable to the Tenant in its sole and absolute discretion.
If the condition contained in this clause (m)(i) is not satisfied on or before
February 28, 1994, then the Tenant may terminate this Lease at any time
thereafter.
(ii) The Landlord's obligation to (x) deposit the SJPAC
Proceeds with the Trustee as required by the provisions of Section 509(a) hereof
and (y) enter into the SJPAC Lease pursuant to the provisions of Section 515(e)
hereof shall be conditioned upon the execution of the SJPAC Three Way Agreement
by SJPAC and the Tenant in a form and content acceptable to the Landlord in its
sole and absolute discretion.
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(n) The Tenant's obligations under this Lease are conditioned upon
the Landlord issuing a letter to the Tenant in a form and content acceptable to
the Tenant providing that the substance of the separate threats of litigation
which have been made on behalf of Electric Factory Concerts, Inc. and on behalf
of the Camden Hotel Development Associates have no legal merit and will not
restrict or impair the Landlord's performance of its obligations under this
Lease or the Tenant's construction, use or enjoyment of the Amphitheater. If the
condition contained in this clause (n) is not satisfied on or before February
28, 1994, then the Tenant may terminate this Lease at any time thereafter.
(o) The following provisions shall also apply:
(i) The Tenant's obligations under this Lease are conditioned
upon the Tenant's independent certified public accountants issuing a letter to
the Tenant in a form and content acceptable to the Tenant providing that this
Lease may be treated as a "noncapitalized" lease for financial accounting
purposes. If the condition contained in this clause (o)(i) is not satisfied on
or before February 15, 1994, then the Tenant may terminate this Lease at any
time between February 15, 1994 and February 28, 1994, inclusive.
(ii) The Tenant's obligations under this Lease are conditioned
upon the Tenant determining, in its sole and absolute discretion, that the
currently proposed arena to be developed on the Delaware River in or near the
City of Camden, New Jersey by the State will not be competitive with the
proposed operations of the Amphitheater during the Enclosed Season. If the
condition contained in this clause (o)(ii) is not satisfied on or before
February 15, 1994, then the Tenant may terminate this Lease by notice to the
Landlord within 5 business days thereafter.
(p) If, for whatever reason, (A) any of the conditions precedent
contained in this Section 404 have not been, on or before December 31, 1994,
either (i) fully satisfied or deemed satisfied or (ii) waived in writing by the
party that the condition benefits or (B) either party hereto continues to have a
right to terminate this Lease pursuant to the provisions of this Section 404 on
December 31,1994 and such right has not been waived in writing by such party,
then either party hereto may at any time thereafter terminate this Lease by
providing written notice thereof to the other party hereto.
(q) Notwithstanding anything to the contrary contained herein or
implied hereby, the Landlord shall not be obligated to issue the Initial Bonds
and the Commencement Date shall not occur until (A) each and all of the
conditions precedent contained in this Section 404 have been either (i) fully
satisfied or (ii) waived in writing by the party that the condition benefits and
(B) all of the rights to terminate this Lease pursuant to the provisions of this
Section 404 have either expired or been waived by the party to whom such right
belongs.
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(r) To validly exercise a right or option to terminate this Lease
pursuant to any of the provisions contained in this Section 404, the party
exercising such right or option must provide a written notice thereof to the
other party hereto within the time limits set forth in such provision. If a
party hereto should fail to exercise a right or option to terminate this Lease
pursuant to any of the provisions contained in this Section 404 within the time
limits set forth in such provision, then the condition to such party's
obligations hereunder which related to such right or option to terminate this
Lease shall be deemed, for all purposes hereof, to have been fully satisfied and
fulfilled. If either party should terminate this Lease pursuant to a right
specifically created by any of the provisions of this Section 404, then neither
party hereto shall have any further rights, privileges, duties, liabilities or
obligations hereunder after such termination.
Section 405. Landlord's Buy-Out Option. The Landlord shall have a
one-time right and option (the "Special Termination Option") to terminate this
Lease, effective as of the end of the Initial Term or as of the end of any Lease
Year thereafter, in accordance with and subject to the following terms,
provisions and conditions:
(a) In order to validly exercise the Special Termination Option, the
Landlord must provide written notice to the Tenant of its exercise of the
Special Termination Option at least five (5) years prior to the date on which
the termination of this Lease pursuant to the Special Termination Option shall
be effective (the "Special Termination Effective Date"); provided, however, if
the Special Termination Effective Date will be the last day of the Lease Year
immediately preceding the first Lease Year of a Renewal Term, then the Landlord
may validly exercise the Special Termination Option with respect thereto sixty
(60) days after the date upon which the Tenant provides notice to the Landlord
of its decision to extend the Term for such Renewal Term, even though this may
be later than five (5) years before such Special Termination Effective Date.
(b) The Special Termination Effective Date must be the last day of a
Lease Year. In no event shall the Special Termination Effective Date be prior to
the last day of the Initial Term.
(c) If the Landlord elects to terminate this Lease pursuant to the
Special Termination Option, then the Landlord shall be obligated to pay to the
Tenant, in immediately available funds, on the Special Termination Effective
Date, unless the parties otherwise agree to a different time schedule for
payment, an amount equal to the discounted present value, utilizing the then
yield on newly issued 10-year U.S. Treasury Bonds as the discount rate, as of
the Special Termination Effective Date of the Cash Flow Equivalent Annuity
(herein defined).
(d) As used above, the term "Cash Flow Equivalent Annuity" shall
mean a hypothetical right to receive equal annual lump sum payments in an amount
equal to the Applicable Cash Flow Amount on November 30 of each calendar year
commencing on the first November 30 following the Special Termination Effective
Date and continuing
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until November 30 of the calendar year that this Lease would have terminated had
the Tenant exercised all renewal options.
(e) If the Landlord has previously exercised the Special Termination
Option, then the Tenant shall thereafter (i) provide the Landlord, with respect
to each of the last five (5) Lease Years prior to the Special Termination
Effective Date, an annual financial statement for the operations of the
Amphitheater and (ii) permit the Landlord to examine its books and records
concerning or supporting the Tenant's calculation of the Cash Flow Amount for
each of the last five (5) Lease Years prior to the Special Termination Effective
Date.
(f) Commencing with the date which is six (6) years prior to the
date on which the Initial Term is scheduled to end pursuant to the terms of this
Lease and at any time thereafter, the Landlord shall have the right to provide a
notice ("Inquiry Notice") to the Tenant requesting a determination and
calculation of the Applicable Cash Flow Amount as if, for these purposes only,
the Special Termination Effective Date was the last day of the Lease Year which
most recently ended before the giving of the Inquiry Notice. Within sixty (60)
days after receipt of an Inquiry Notice from the Landlord, the Tenant shall
provide, based upon the Tenant's financial books and records, the Landlord with
a written estimate of the Applicable Cash Flow Amount as if, for these purposes
only, the Special Termination Effective Date was the last day of the Lease Year
which most recently ended before the giving of the Inquiry Notice. If requested
by the Landlord, the Tenant shall provide the Landlord reasonable access to the
books and records of the Tenant relating to the operation and use of the
Amphitheater as may be necessary for the Landlord to confirm the financial
information and procedures used by the Tenant in the calculation of the
Applicable Cash Flow Amount for these purposes.
(g) If the Landlord fails to pay to the Tenant as and when due the
amount determined in accordance with the above provisions, and such failure to
pay continues for a period of thirty (30) days after the Landlord has been given
notice thereof, then the Tenant shall have the right and option of either (x)
treating such failure as a Landlord Event of Default and exercising any and all
remedies provided for under or pursuant to the provisions of this Lease
following the occurrence of a Landlord Event of Default or (y) requiring that
this Lease remain and continue in full force and effect throughout the remaining
Term notwithstanding the prior exercise of the Special Termination Option by the
Landlord.
Section 406. Payment of Impositions. (a) Except as provided in
subsection (b), during the Initial Term and the Renewal Terms, the Landlord will
pay as and when the same shall become due all Impositions. Where any Imposition
may be paid pursuant to law in installments, the Landlord may pay such
Imposition in installments as and when such installments become due. The Tenant
shall furnish to the Landlord and the Trustee, promptly upon receipt thereof,
copies of all notices of Impositions. Upon the
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payment by the Landlord of any Impositions, the Landlord shall deliver to the
Tenant and the Trustee evidence of such payment.
(b) Notwithstanding the above, the Tenant shall pay a pro-rata share
of assessments for municipal improvements made off site or outside the Leasehold
Tract which are constructed primarily for the benefit of the Amphitheater after
the initial site preparation or after improvements required by regulatory
authorities exercising jurisdiction over the property as part or as a condition
of approvals for the use and occupancy of the Amphitheater. The Tenant's
pro-rata share of Impositions which are not the responsibility of the Landlord
shall be computed based upon the following ratio: the remaining term of this
Lease and any options which are exercised divided by the useful life of the
improvement. In other words, if the remaining term is ten (10) years and the
useful life is forty (40) years, then the Tenant will only be responsible for
twenty-five (25%) percent of such assessments in total. If payable in
installments, the Tenant is only obligated to pay under this example twenty-five
(25%) percent of each such installment and the Landlord will be obligated to pay
the balance.
Section 407. SJPAC Lease. The Tenant agrees and acknowledges that
its rights under this Lease are not exclusive during the Enclosed Season because
of SJPAC's right and interests in and to the Premises created by the SJPAC
Lease.
Section 408. Tax Contests. (a) The Landlord shall have the right, at
its own expense, to contest the amount or validity, in whole or in part, of any
Imposition by appropriate proceedings diligently conducted in good faith but
only after payment of such Imposition unless such payment, in the Landlord's
reasonable judgment, would operate as a bar to such contest or would adversely
affect the Landlord's chances for success in such contest, in which event,
payment of such Imposition shall be postponed if and only so long as neither the
Premises nor any part thereof would by reason of such postponement or deferment
be, in the reasonable judgment of the Tenant, in danger of being forfeited, lost
or materially affected. Upon the termination of any proceedings, it shall be the
obligation of the Landlord to pay the amount of such Imposition or part thereof
as finally determined in such proceedings, the payment of which may have been
deferred during the prosecution of such proceedings, together with any costs,
fees, interests, penalties or other liabilities in connection therewith. Nothing
herein contained, however, shall be so construed as to allow such Imposition to
remain unpaid for such length of time as shall permit the Premises, or any part
thereof, to be sold, taken or otherwise adversely affected by any Governmental
Authority for the non-payment of the same. The Landlord shall promptly furnish
the Tenant with copies of all proceedings and documents with regard to any such
contest, and the Tenant shall have the right, at its expense, to participate
therein.
(b) The Tenant will, at the request of the Landlord reasonably
cooperate in contesting the amount or validity, in whole or in part, of any
Imposition. In that connection, the Tenant shall execute, within fifteen (15)
days after receipt of written
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request therefor, any and all documents reasonably requested by the Landlord in
connection with the foregoing. The Landlord shall reimburse the Tenant for all
out-of-pocket expenses incurred by the Tenant (including reasonable attorney's
fees) in performing its obligations under this Section 408.
(c) The Tenant may contest charges payable by it if it complies with
the requirements set forth in Section 408(a). In such circumstance the Landlord
will, at the request of the Tenant, reasonably cooperate in the same manner and
procedure as set forth in Section 408(b). The Landlord reserves the right to
evaluate on a case by case basis the merit of the Tenant's contest about the
Imposition and reserves the right to refuse to cooperate in contesting said
Imposition if, in the sole determination of the Landlord, such contest would not
be in the public interest.
Section 409. Evidence Concerning Impositions. The certificate,
advice, bill, or statement issued or given by the appropriate officials
authorized by law to issue the same or to receive payment of any Imposition of
the existence, nonpayment, or amount of such Imposition shall be prima facie
evidence for all purposes of the existence, nonpayment, or amount of such
Imposition.
Section 410. Separate Assessment and Rendition. The Landlord will
use its best efforts to cause the Premises to be separately assessed from any
other tracts of land, including the Commercial Development Tract. As a condition
to selling all or any portion of the Commercial Development Tract, the Landlord
must first cause the Commercial Development Tract, or the portion thereof being
sold, to be separately assessed from the Leasehold Tract.
Section 411. Right to Perform Obligations as to Impositions. If
either party fails to timely pay any Imposition or charge for which it is
responsible hereunder and is not contesting the validity or amount of such
Imposition pursuant to the provisions of Section 408 hereof, then the other
party may, at its election (but without obligation), pay such Imposition with
any interest and penalties due thereon, and the amount so paid shall be
repayable by the other on demand, together with interest thereon at the
Permitted Rate from the date of such payment until repaid. Before either party
may pay any Imposition on behalf of the other, they shall give the other thirty
(30) days' prior written notice thereof.
Section 412. Cooperation with Landlord. The Tenant will, at the
request of the Landlord, reasonably cooperate in qualifying for consideration
under the Long Term Tax Exemption Law, P.L. 1991, c. 431. In that connection,
the Tenant shall execute,
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within fifteen (15) days after receipt of written request therefor, any and all
documents reasonably requested by the Landlord in connection with the foregoing.
[END OF ARTICLE IV]
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ARTICLE V
CONSTRUCTION OF PROJECT/CARE AND USE;
DRAW PROCEDURES
Section 501. Design of Project. The Tenant shall deliver to the
Landlord filed preliminary plans for the construction of the Amphitheater.
Preliminary plans shall include and illustrate preliminary grading and drainage
plans, soil test, utilities, sewers and service connections, locations of
ingress and egress to and from the Amphitheater, curbs, gutters, lighting,
design and locations for outdoor signs, storage areas, and landscaping, food
service and other improvements. Prior to commencement of construction of the
Amphitheater, the Tenant, at its own cost, shall prepare and deliver to the
Landlord a set of final Plans and Specifications and working drawings which are
consistent with the preliminary Plans and Specifications. The final Plans and
Specifications shall contain a certification from the Tenant's architect,
engineer or general contractor, if available without additional charge to the
Tenant, that such final Plans and Specifications comply with all applicable
governmental regulations.
Section 502. Construction of Project. (a) [Intentionally Blank]
(b) At least twenty (20) days prior to the commencement of
construction of the Initial Project, the Tenant shall notify the Landlord of its
intention to commence construction and deliver to the Landlord a true copy of
the contract with the general contractor and each subcontractor which contracts
shall give the Landlord the right but not the obligation to assume the Tenant's
obligations and rights under the contract if the Tenant should default.
Construction should be designed to avoid to the extent possible any material
impact on the ingress and egress of the South Jersey Port Corporation.
(c) Upon completion of construction of the Amphitheater the Tenant
shall at its cost, deliver to the Landlord (i) a detailed "as built" survey
which shows in detail the footprint of the Amphitheater and the related
improvements such as utilities, easements, landscaping, roads, location of
ingress and egress to and from the Amphitheater, curbs, gutters, lighting and
location of signs and (ii) copies of all warranties, service and maintenance
agreements and equipment manuals related to the Amphitheater that are in the
possession of the Tenant;
(d) The Tenant agrees to commit to an affirmative action policy with
respect to the construction of the Amphitheater i.e., a goal of 25% of Minority
Business Enterprise contracts and 25% of minority man-hours in the construction
trade;
(e) All construction work shall be done in a good and workmanlike
manner and in compliance with all applicable laws, ordinances, codes, rules,
regulations and requirements, and in accordance with the standard if any, of the
Board of Fire Under-
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writers, or other organizations exercising the functions of a Board of Fire
Underwriters whose jurisdiction include the Premises;
(f) All materials and workmanship shall be of good quality, and upon
completion of construction, the Initial Project will be structurally safe and
sound, and all parts thereof and all mechanical equipment therein and all
utilities serving the Initial Project will be in good and working order and will
have been properly installed, tested, and paid for, and in case of repairs,
restoration, changes, additions, alterations, or improvements, shall be at least
equal to the original;
(g) On or before the Commencement Date, the Tenant shall enter into
a Construction Contract with an Acceptable Construction Company for the
construction of the Amphitheater as a Joint Facility if an Acceptable
Construction Commitment is obtained, subject to the following provisions:
(i) After the date hereof, the Landlord and the Tenant shall
each work together to review the various cost elements of the construction
project and attempt to obtain, by a bid process or otherwise, an Acceptable
Construction Commitment. The Landlord shall have the right and license for these
purposes to utilize the Plans and Specifications of the Initial Project to
solicit bids from any other potential contractor.
(ii) If an Acceptable Construction Commitment has not been
obtained, notwithstanding the reasonable joint efforts of the Landlord and the
Tenant, by March 15, 1994, then the Tenant shall have the right, exercisable at
anytime thereafter, but in no event after the Commencement Date, by providing
notice thereof to the Landlord, to fulfill all of its construction obligations
contained herein by constructing the Amphitheater either as a Summer Facility or
as a Modified Joint Facility.
(iii) If the Tenant should exercise its option contained and
described in clause (ii) of this Section 502(g) to construct the Amphitheater as
a Summer Facility, then the parties hereto shall immediately thereafter (A) each
execute and deliver to the other a First Amendment to Lease in the form attached
hereto as Exhibit "L-1" and (B) each negotiate in good faith with the other to
revise the Surcharge Revenue amounts specified in Exhibit "H" attached hereto to
attempt to provide similar projected levels of revenues from the Surcharge
Revenue notwithstanding that fewer shows will be presented at the Amphitheater
as a result of there being no Enclosed Season; provided, however, that failure
to reach an agreement as to how the Surcharge Revenue amounts specified in
Exhibit "H" are to be so revised shall not, in any way, affect the continuing
effectiveness of this Lease, the continuing obligations of the parties hereunder
(including the Tenant's obligation to charge and collect the Surcharge Revenue
pursuant to the provisions of Section 304 hereof in the amounts and in the years
specified in Exhibit "H" attached hereto) or the effectiveness of the Tenant's
exercise of the option contained and described in clause (ii) of this Section
502(g).
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(iv) If the Tenant should exercise its option contained and
described in clause (ii) of this Section 502(g) to construct the Amphitheater as
a Modified Joint Facility, then the parties hereto shall immediately thereafter
each execute and deliver to the other a First Amendment to Lease in the form
attached hereto as Exhibit "L-2."
(h) Subject to the provisions contained in Section 1416 of this
Lease, the Tenant shall, at its sole cost and expense, subject to the Landlord's
obligations set forth in this Lease, (i) commence construction of the
Amphitheater on the Leasehold Tract within thirty (30) days after the later of
(x) the Commencement Date or (y) completion of the Landlord's obligations
described in clauses (a) and (b) of Section 515 hereof in accordance with the
completed design and construction drawings certified by the Architect as
provided to the Landlord on or before the Commencement Date and (ii) thereafter
diligently pursue construction of the Amphitheater. All construction work shall
be conducted subject to and in compliance with all applicable Legal
Requirements.
(i) On the Commencement Date, the Landlord shall be obligated to
take such actions as may be necessary to cause the Proceeds and the SJPAC
Proceeds to be delivered and paid to the Trustee for subsequent disbursement by
the Trustee in accordance with the terms of the Indenture and Section 510
hereof. If no Bonds are to be issued by the Landlord on the Commencement Date,
then the Landlord shall hold the SJPAC Proceeds and thereafter reimburse to the
Tenant out of the SJPAC Proceeds, from time to time upon written request by the
Tenant, for Costs of the Initial Project which are incurred by the Tenant upon
submission by the Tenant of an appropriate requisition, together with supporting
copies of invoices as to the Costs of the Initial Project, until full
disbursement of the SJPAC Proceeds to the Tenant.
(j) The Landlord makes no warranties or representations and accepts
no liabilities or responsibilities with respect to or for the adequacy,
sufficiency or suitability of or defects in or with respect to the design,
construction, renovation or installation of any Project.
(k) Notwithstanding any conflicting provision contained in this
Lease, if the SJPAC Proceeds have been delivered and paid to the Trustee or the
Landlord pursuant to the provisions of Section 502(i) hereof, then no
remodeling, additions, modifications or other changes may be made to the Plans
and Specifications or to the Project in such a manner which would result in the
Amphitheater being constructed in a manner which does not satisfy the design
requirements of SJPAC as specified in, and required by, the SJPAC Three-Way
Agreement.
Section 503. Performance Bonds and Other Guaranty. Any contracts
authorized to be entered into by the Tenant under the terms of this Lease in
connection with the design, acquisition, construction, renovation and
installation of the Project shall be let in accordance with applicable law. All
such contracts shall have the same general form and content as construction
contracts which are generally let by the Tenant. The
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Tenant shall obtain and deliver to the Landlord and the Trustee, not less than
ten (10) days prior to the anticipated commencement of construction of the
Amphitheater, a completion and payment bond issued by a surety meeting the
qualifications required by the Landlord and naming the Landlord, the Trustee and
SJPAC as additional insureds thereunder or as permitted assignees thereof.
Section 504. Default in Contractors' Performance. (a) In the event
of default of the Contractor or any subcontractor under any contract made in
connection with the Project, including, without limitation, the Construction
Contract, the Tenant will promptly proceed, either separately or in conjunction
with others, to exhaust the remedies of the Tenant, against the Contractor or
any subcontractor so in default and against each surety for the performance of
such Contractor or subcontractor. All such actions shall be construed to be
Costs of the Project for purposes of this Lease, inasmuch as the same shall be
necessary to enable the Project to be constructed, acquired, renovated or
installed in accordance with the terms of the Construction Contracts and hereof.
The Tenant agrees to advise the Landlord, in writing, of the steps it intends to
take in connection with any such default. If the Tenant shall so notify the
Landlord, the Tenant may, in good faith, in its own name or in the name of the
Landlord, with notice to the Landlord, prosecute or defend any action or
proceeding or take other action involving the Contractor or any subcontractor or
surety which the Tenant deems reasonably necessary, and in such event the
Landlord hereby agrees to cooperate fully with the Tenant, but at the sole
expense of the Tenant. Any amounts recovered by way of damages, refunds,
adjustments or otherwise in connection with the foregoing shall be paid into the
Construction Fund or the Revenue Fund, in accordance with the terms of the
Indenture.
(b) In the event that the Tenant is unable to comply with its
requirements under this Lease or if for any reason the acquisition,
construction, renovation and installation of any Project is delayed, there shall
be no diminution in or postponement of the amounts which are due and payable by
the Tenant to the Landlord under the terms of this Lease.
Section 505. Continuing Right of Tenant to Make Changes, Alterations
and Additions. The Landlord agrees that the Tenant shall at its own expense,
have the right to remodel the Project or to make such additions, modifications
and improvements thereto as in the Tenant's judgment are necessary or desirable,
provided that none of the foregoing shall in any way damage the Premises or any
Project or cause the Premises or any Project to be used for purposes other than
those authorized under the provisions of this Lease. Any item so added under the
provisions of this Section shall for all purposes of this Lease be deemed to be
and remain the property of the Tenant and shall not become part of any Project,
and may be removed, altered or changed by the Tenant, upon or before termination
of this Lease, provided that such removal, alteration or change shall not damage
any Project or that if any damage shall occur, the Tenant shall repair the same
at its sole cost and expense. The Tenant will consult with the Landlord if a
proposed addition, modification or improvement could cause the Landlord any
expenses
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for environmental remediation. The Tenant will cooperate with the Landlord to
construct the addition, modification or improvement by a method that will
minimize soil disturbance or contact with ground water; however, the Tenant
shall not be required to incur any additional costs or expenses as a result of
any construction changes requested by the Landlord as a result of such
cooperation.
Section 506. Maintenance and Use of the Project and the Land;
Landlord Access; Repairs Not to Create Liens. (a) The Tenant at its sole cost
and expense, shall take good care of the Project and the Premises and shall keep
the same in good order and condition, undertake all necessary maintenance and
make all necessary repairs and replacements and/or alterations thereto, interior
or exterior, structural and nonstructural, ordinary and extraordinary, in
conjunction with the operation of the Project, consistent with the operation of
a first-class amphitheater or as ordered by any Governmental Authority
exercising jurisdiction over the property to comply with law, including but not
limited to, repairs to the roof, exterior walls, foundations, floors, mechanical
systems including the heating, ventilation and air conditioning systems,
electrical systems, sprinkler systems, and plumbing facilities. In the event any
repairs, replacements and/or alterations are made, the Tenant shall be bound by
the representations and warranties set forth in Article II of this Lease and
upon expiration of this Lease or its early termination for any reason shall
deliver the Amphitheater to the Landlord in the same condition that the
Amphitheater was in, except for ordinary wear and tear, when it was first put
into operation. This provision does not obligate the Tenant as to environmental
conditions for which the Landlord is responsible as set forth in this Lease.
(b) The Tenant shall, at its sole cost and expense: (i) maintain and
repair the improvements upon or within the Premises including the lawns,
shrubbery, walks and backstage area; (ii) keep the Premises in a clean and
sanitary condition, free of rubbish, flammable or other objectionable materials
and free of ice and snow for those areas exclusively dedicated for the use of
the Tenant but not including Clinton Street which is a non-exclusive area or
right-of-way (subject to and limited by the terms as set forth in a separate
agreement to be negotiated between the parties regarding the affirmative
maintenance obligation including snow and ice removal for non-exclusive easement
areas, including Clinton Street and non-exclusive rights-of-way).
(c) In the event that the Tenant shall fail or neglect to make any
repairs or to take any action required under the terms of this Section 506 or
shall fail to commence the same within thirty (30) days after receipt of a
written notice from the Landlord specifying that such repairs or actions must be
undertaken, or shall fail thereafter with due diligence to complete the same,
then the Landlord or its agents may (but shall not be obligated to) enter upon
the Premises and, at the cost and expense of the Tenant, make such repairs or
take such actions as are the responsibility of the Tenant hereunder. In the
event of the Tenant's continued failure to pay the cost and expense incurred by
the Landlord, said actual and reasonable out of pocket costs and expenses shall
be deemed to be an item of Supplemental Rent and shall be paid by the Tenant
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within ten (10) days after receiving a bill from the Landlord. This provision is
in addition to any other rights the Landlord may have under this Lease.
(d) So long as the Landlord continues to own the Commercial
Development Tract, the Landlord shall maintain and keep the improvements, lawns
and shrubbery located thereon in accordance with all Legal Requirements.
(e) The Tenant agrees that the Landlord or the Trustee shall have
the right (but not the obligation) to enter upon the Leased Premises at all
times during usual business hours, other than Show Hours, for the purpose of
inspecting the Project. The Tenant further agrees that the Trustee or the
Landlord shall have such rights of access to the Project and the Leased Premises
as may be reasonably necessary to cause the proper maintenance, preservation and
keeping in good repair of the Project and the Leased Premises in the event of a
failure by the Tenant to perform its obligations hereunder, which rights of
access shall in no way imply any obligation on the part of the Landlord or the
Trustee.
(f) The Tenant shall have no right to obligate the Landlord or the
Landlord's fee simple interest in and to the Premises for the claims of any
contractor, subcontractor, laborer or person furnishing materials, supplies or
services in connection with any construction, demolition or repair by the Tenant
on the Premises. The Tenant shall indemnify and hold the Landlord harmless from
and against any and all liabilities, costs or expenses incurred by the Landlord
in connection with any such claims made by any such party (including reasonable
attorney's fees and court costs).
Section 507. Possession and Enjoyment. The Landlord hereby agrees
that, upon payment of Rent due under this Lease, and so long as the Tenant is
not in default hereunder, the Tenant shall peaceably and quietly have, hold,
occupy, use and enjoy, and shall have the use and enjoyment of, all of the
Premises during the entire Lease Term for the following activities:
(a) producing and presenting entertainment events or shows,
including, without limitation, commercial concerts of musical performers or
comedians, artistic performances of symphonic music, ballet or opera, theatrical
performances and cinemagraphic films, pre-recorded or simulcast video and audio
productions;
(b) holding or conducting of fairs, festivals and other events
related thereto;
(c) general use as a park, picnic area or location for recreational
and leisure sports;
(d) as a center or location for an educational conference or seminar
or other public gathering;
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(e) as a place for selling food, beverages (including alcoholic
beverages) and other merchandise in conjunction with the uses described in
clause (a) through (d) of this Section 507; and
(f) for any and all other lawful purposes which may be in any way
incidental or related to any of the foregoing uses and purposes.
The Trustee and the Landlord will, at the request of the Tenant and at the
Tenant's sole cost, join in any legal action in which the Tenant asserts its
right to such possession and enjoyment to the extent the Trustee and the
Landlord lawfully may do so, and in addition, the Tenant may in its discretion
and at its sole cost and expense bring any such action in the name of the
Landlord. The Landlord agrees and acknowledges that the Amphitheater may be used
for performing with loud amplified sound, popular and contemporary music, rock
and roll, pyrotechnics shows and other similar sound-intensive and light
intensive activities, subject to compliance with applicable law.
Section 508. Tenant's Negligence. The Tenant assumes all risks and
liabilities, whether or not covered by insurance, for loss or damage to the
Premises and the Project, or any portion thereof, and for injury to or death of
any person or damage to any property, whether such injury or death be with
respect to agents or employees of the Tenant or of third parties, and whether
such property damage be to the Tenant's property or the property of others,
which, in any such case, is proximately caused by the negligent conduct of the
Tenant, its officers, employees and agents. The Tenant hereby assumes
responsibility for and agrees to reimburse the Landlord and the Trustee for all
liabilities, obligations, losses, damages, penalties, claims, actions, costs and
expenses (including reasonable attorney's fees) of whatsoever kind and nature,
imposed on, incurred by or asserted against the Landlord or the Trustee that in
any way relate to or arise out of a claim, suit or proceeding to the extent such
liability, obligation, loss, damage, penalty, claim, action, cost or expense is
attributable to the negligent conduct of the Tenant, its officers, employees and
agents, to the maximum extent permitted by law.
Section 509. Project Costs; Payment. (a) To ensure that monies
sufficient to pay all of the Costs of the Initial Project shall be available
when required, upon the date of authentication, execution and delivery of the
Initial Bonds, the Landlord shall deposit or cause to be deposited with the
Trustee the Proceeds of the sale of the Initial Bonds and the SJPAC Proceeds in
accordance with the terms of the Indenture. Such moneys shall be deposited in
the Applicable Funds created pursuant to the Indenture in the amounts prescribed
in the Indenture; provided, however, it is hereby specified that all of the
SJPAC Proceeds shall be deposited in the Construction Fund. The Tenant shall
have the right to modify or add items to the Initial Project as originally set
forth in the Plans and Specifications therefor provided that, without the prior
approval of the Landlord, no such modification or addition shall increase the
amount of moneys required to be deposited
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by the Landlord pursuant to this Section 509, or alter the Rent or Prepayment
Price with respect to the Initial Project.
(b) The moneys on hand from time to time in the Construction Fund
held by the Trustee shall be made available for payment of the Project Costs in
the manner provided for in the Indenture and this Lease. If the moneys in the
Construction Fund are not sufficient to pay the entire Costs of the Initial
Project, neither the Landlord nor the Tenant shall be required to provide
additional moneys for such purpose, but if the Tenant does not provide the
additional moneys necessary to pay such Costs, it shall reduce the scope of the
Initial Project so that the moneys in the Construction Fund shall be sufficient
to pay the remaining Costs of the Initial Project as so reduced in scope, which
sufficiency shall be evidenced by a certificate of the Architect that such
remaining funds are sufficient for such purpose. No such Project scope reduction
shall alter the Rent or Prepayment Price.
(c) Nothing contained herein or implied hereby, including, without
limitation, the fact that the SJPAC Proceeds shall be included in the
Construction Fund, shall imply that the SJPAC Proceeds are a part of the
Proceeds of the Initial Bonds, that the SJPAC Proceeds are repayable by the
Tenant or that the SJPAC Proceeds are subject to the lien of the Indenture.
Section 510. Submission of Draws; Procedures. (a) As payments are
required for the Project under this Lease, the Tenant shall prepare and assemble
the Draw Papers and submit them to the Trustee in accordance with the provisions
of the Indenture. All draws from the Construction Fund shall be funded by the
Trustee out of the SJPAC Proceeds first, until the exhaustion thereof.
(b) The Tenant shall have the right to obtain draws from the
Construction Fund, but only after having provided to the Trustee (A) a
requisition from the Tenant stating with respect to each payment to be made: (1)
the requisition number, (2) the name and address of the person, corporation or
other entity to whom payment is due or, if for reimbursement to the Tenant, to
whom and when payment has previously been made, (3) the amount to be paid, (4)
the portion of the Project to which such payment is to be applied, (5) that such
payment obligation has been properly incurred, is an item of the Cost of such
Project, is a proper charge against the Construction Fund and has not been the
basis of any previous withdrawal, and (6) that attached thereto is a bill,
invoice, receipt or other evidence that payment on such Cost of the Project is
due and owing or has been paid by or on behalf of the Tenant and (B) a
certificate issued by the Architect certifying that, in the Architect's
opinion, after the making of the advance being requested, the amount of funds
remaining in the Construction Fund will be sufficient to pay the remaining Costs
of the Initial Project.
(c) If, upon the completion of the acquisition, construction,
renovation and installation of any Project any surplus funds shall remain on
deposit with the Trustee
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which are not required to provide for the payment of the Costs relating to any
Mutual Project, Additional Project or Completion Project, such funds shall be
deposited and applied as provided in the Indenture.
Section 511. [Intentionally Blank].
Section 512. Construction Period Insurance. The comprehensive
general liability insurance provided for in Article IX shall be extended by the
Tenant to apply to the work being done or the Tenant shall cause the contractor
or construction manager to provide the liability coverage provided for in
Article IX, including but not limited to, builder's risk insurance, and evidence
thereof shall be delivered to the Landlord prior to commencement of such work.
The Tenant shall carry or cause its contractors, if any, to carry workers'
compensation insurance required by law and such other types of insurance as are
required under Article IX in connection with such work, and evidence thereof
shall be delivered to the Landlord prior to commencement of such work. All such
policies of insurance shall show the Landlord, the Tenant, the Trustee and SJPAC
as named insureds, in such amounts as their interests may appear. Evidence of
such insurance shall be filed with the Trustee.
Section 513. Covenant Against Waste. The Tenant covenants not to do
or suffer or to permit to exist any waste, damage disfigurement or injury to,
the Premises.
Section 514. Title to Improvements. Any and all depreciation,
amortization and investment tax credits generated by or available in connection
with, the Amphitheater, shall belong to, and accrue to the benefit of the Tenant
during the Lease Term. All removable trade fixtures or equipment installed or
located at the Premises at the expense of the Tenant and all of the Tenant's
personal property which has been removed from the Premises on or before the
termination of this Lease, shall remain the property of the Tenant. Any property
not so removed shall, at the expiration of the Lease Term, be considered
abandoned property and the Landlord shall have the right, if it wishes, to claim
such property. Notwithstanding anything to the contrary contained herein or
implied hereby, the Tenant agrees that it will not remove any of the
Amphitheater's seats for Patrons, any portion or constituent part of the
Amphitheater's structural, electrical, mechanical or plumbing systems or any
equipment or fixtures which belong to, or were purchased for the use of, SJPAC.
If the removal of any items of trade fixtures, equipment or personal property
which are permitted to be removed by the Tenant pursuant to the provisions of
this Section 514 shall damage the Project, the Tenant shall repair the same at
its sole cost and expense.
Section 515. Landlord's Development and Financing Responsibilities.
If, and to the extent that, the Landlord has not, prior to the execution of this
Lease, fully and finally completed each and all of the following obligations,
then the Landlord shall, at its own cost and expense, as soon hereafter as may
be reasonably practicable and upon the request of the Tenant, do each and all of
the following:
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(a) Perform or cause to be performed any environmental requirements
or remediation activities on the Leasehold Tract as (i) contemplated in the
Contract for Site Remediation between the Landlord and
Corrado-American/EnviroCraft and (ii) provided in Section 204.
(b) (i) Demolish and remove all buildings, materials, equipment,
lumber, railroad tracks, pipes, wires, conduits and other improvements
("improvements") (except for storm drainage systems not connected to the
existing buildings or intended to be utilized to service the proposed buildings
and improvements to drain the site and service areas) located on the Subject
Tracts to grade, (ii) remove all improvements (other than Ordinary Construction
Debris) below grade where excavation will occur as set forth on the final
excavation plan for the structure and improvements to be constructed (provided,
however, that in no event shall the Landlord be required to expend more than
$250,000 in connection with the removal of any improvements from below grade),
(iii) remove and dispose of all asphalt located on the Subject Tracts unless the
Landlord elects to exercise the Asphalt Option described in the next succeeding
sentence, (iv) remove all transformers, transformer pads and associated electric
lines located on or above ground level anywhere within the Leasehold Tract other
than the transformers and electric lines located adjacent to the Marina Tract
and serving certain streetlights and (v) with respect to Easement Tract E, cause
the road surface, fencing and Jersey barriers improvements to be installed for a
cost not to exceed $200,000 as generally shown on drawings Nos. C-4 and C-5
prepared by Paulus, Sokolowski and Sartor. If DEPE advises in writing that the
asphalt located on the Subject Tracts can be used as a construction or fill
material in connection with the construction of the Amphitheater without
violating any environmental laws or requirements, then the Landlord shall have
the option ("Asphalt Option"), exercisable by notice to the Tenant, to leave the
asphalt on the Subject Tracts; provided, that, if any portion of such asphalt
must be moved, crushed, pulverized or otherwise worked to enable it to be used
as a part of the construction of the Amphitheater, then the Tenant shall notify
the Landlord as to the portion of such asphalt which must be so moved, crushed,
pulverized or otherwise worked and the Landlord shall have the right to either
(x) remove such portion of the asphalt, notwithstanding its prior exercise of
the Asphalt Option or (y) cause such portion of the asphalt to be moved,
crushed, pulverized or otherwise worked in accordance with the Tenant's
specifications. With respect to the removal of improvements which removal is the
responsibility of the Landlord, the Contractor shall remove such improvements
and the Landlord shall reimburse the Tenant for such additional costs incurred.
(c) Within twenty-one (21) days after the Commencement Date, the
Landlord shall commence, or cause to be commenced, the delivery to the Leasehold
Tract of 375,000 cubic yards (truck measure) of construction fill of a quality
and of a type to meet the specifications in a contract between the Landlord and
Paulus, Sokolowski & Sartor, Inc., dated July, 1993; provided, however, if the
Commencement Date is after May 30, 1994, then the Landlord shall have an
additional sixty (60) days before it is required to commence or cause to be
commenced such delivery of construction fill. In any event,
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the delivery of the construction fill contemplated by the immediately preceding
sentence must be completed within 160 days after the commencement of the
delivery thereof.
(d) Subject to the provision of clause (q) of Section 404 hereof,
the Landlord shall make available for sale the Initial Bonds in an aggregate
principal amount specified by the Tenant within ten (10) business days following
written request ("Issuance Request") by the Tenant to issue the Initial Bonds.
The Landlord agrees and covenants with the Tenant that the amount of the
Administrative Fee and the Landlord's Financial Advisor/Placement Fee related to
the Initial Bonds shall not exceed the amounts described and specified in
Exhibit "M" attached hereto. In addition to the Tenant's rights set forth in
Section 404(a) hereof, the Tenant shall have the sole and unfettered right,
exercisable by notice to the Landlord at any time prior to the date on which the
Issuance Request is provided by the Tenant to the Landlord, to require that the
Initial Bonds not be issued by the Landlord, in which event all of the terms,
provisions and conditions contained in this Lease shall remain in full force and
effect except that (i) the Landlord shall not issue the Initial Bonds, (ii) the
Landlord shall have no obligation to deposit the Proceeds of the sale of the
Initial Bonds with the Trustee and (iii) the provisions of Sections 509, 510 and
511 hereof shall no longer be applicable.
(e) On or before the Commencement Date, the Landlord shall enter
into the SJPAC Lease. It is anticipated that the $3,940,000 payable by SJPAC to
the Landlord under the SJPAC Lease shall be funded out of the Performing Arts
Grant.
Section 516. Compliance with Laws. The Tenant shall obey and comply
with all present and future laws, ordinances, rules and regulations of all
Governmental Authorities which, in any way, affect the Premises. The Tenant
shall have the right, at its sole cost and expense, to contest the validity of
any of the foregoing in good faith. If necessary, the Tenant agrees that the
Landlord may elect to join in any such protest or contest; provided, however,
that the cost thereof, including the Landlord's reasonable attorney's fees shall
be borne by the Tenant and the protest relates to the operation of the
Amphitheater in a commercially viable manner. Tax contests shall be governed by
Section 408 of this Lease.
Section 517. Government Grants. (a) The Landlord will obtain, prior
to the Commencement Date, grants from various public bodies (the "Grant Funds"),
including the UDAG Grant, the proceeds of which shall be used for funding the
costs listed on Exhibit "O" attached hereto. The parties to this Lease agree,
specify and acknowledge that, but for the UDAG Grant, the Amphitheater could not
be constructed.
(b) Within 30 days after completion of construction of the
Amphitheater, the Landlord shall provide to the Tenant a written accounting
detailing the actual expenditures which have been made, and the planned
expenditures which will be made, out of the Grant Funds by the Landlord (which
may include (i) no more than $250,000.00 for the Landlord's administrative and
overhead costs related to the Initial Project and (ii)
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no more than $500,000.00 to be held as a reserve against potential subsequent
liabilities pursuant to the provisions of Section 204 hereof) to fund the costs
listed on Exhibit "O" attached hereto (such expenditures being herein called the
"Spent Funds") with such reasonable breakdown and detail of such expenditures as
may be reasonably requested by the Tenant. At such time, the Landlord shall be
obligated, to the extent not prohibited by the terms of any grant, to deliver
and pay to the Tenant the amount by which the Grant Funds exceed the Spent Funds
for reimbursement of, or application against, the Tenant's project costs related
to the construction of the Amphitheater.
Section 518. Real Estate Matters. (a) No later than five days prior
to the Commencement Date, the Landlord shall deliver or cause to be delivered to
the Tenant a survey (the "Boundary Survey") prepared by Reutter Engineering (the
"Surveyor") or other surveyor acceptable to the Tenant consisting of a plat and
a metes and bounds description of the Leasehold Tract, the Commercial
Development Tract and each of the Easement Tracts (such tracts of land being
herein collectively called the "Applicable Tracts"). The Survey shall (i) be
prepared pursuant to a current on-the-ground staked survey reflecting the actual
dimensions of each of the Applicable Tracts, the total area of each of the
Applicable Tracts to the nearest square foot, the location of any easements,
rights-of-way, set-back lines, encroachments or overlaps thereon or thereover
and the outside boundary lines of any improvements located thereon, (ii)
identify any easements, set-back lines or other matters referred to in that
certain Title Insurance Commitment previously issued by Chicago Title Insurance
Company through Land Title Agency, Inc. under File No. 93-LT-0090 (and all
updates thereof and amendments thereto) and originally dated February 25,1993,
(iii) include the Surveyor's registered number and seal, the date of the Survey
and a certificate satisfactory to the Tenant, (iv) be sufficient to cause, to
the maximum extent allowable, the deletion of any survey exceptions which would
otherwise be contained in the Leasehold Policy (herein defined), (v) reflect any
area within the Applicable Tracts which lie within any "wetlands" area and (vi)
reflect any area within the Applicable Tracts which lies within the 100 Year
Flood Plain or any special flood hazard area or general hazard area.
(b) On the Commencement Date, the parties hereto shall do, or cause
to be done, the following:
(i) The Landlord shall deliver or cause to be delivered to the
Tenant a Leasehold Owner Policy of Title Insurance (the "Leasehold Policy")
issued by Chicago Title Insurance Company, in an amount designated by the
Tenant, with all standard endorsements as may be available and required by the
Tenant and insuring, subject only to the Permitted Encumbrances, that (i) the
Tenant is the owner of a valid and enforceable leasehold estate with respect to
the Premises on and subject to the terms of this Lease, (ii) the Tenant is the
owner of a valid and enforceable easement right with respect to each of the
Easement Tracts on and subject to the terms of this Lease and (iii) the
restrictive covenants imposed upon the Commercial Development Tract pursuant to
the provisions of this Lease are enforceable by the Tenant in accordance with
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their terms. The cost of the Leasehold Policy shall be paid from the proceeds of
the Initial Bonds. The Landlord agrees to obtain any and all discounts to the
premium for the issuance of the Leasehold Policy which may be available to it.
(ii) The Landlord and the Tenant shall each execute an
instrument amending this Lease as may be necessary to (A) specifically adopt the
metes and bounds descriptions of the Leasehold Tract, the Commercial Development
Tract and each of the Easement Tracts contained in the Boundary Survey as the
agreed upon legal descriptions for each of such tracts of land for purposes of
this Lease and (B) designate the exact Commencement Date.
(iii) The Landlord shall execute and deliver to the Tenant,
for recording in the Real Property Records of Camden County, New Jersey, a
memorandum of this Lease in such form and containing such provisions (not
inconsistent with the terms of this Lease) as the Tenant may specify. Such
memorandum shall include the legal descriptions prepared by the Surveyor as a
part of the Boundary Survey of the Leasehold Tract, the Commercial Development
Tract and each of the Easement Tracts and shall specifically provide that (A)
the Tenant has obtained a leasehold estate with respect to the Leasehold Tract
and Easement Tract E, (B) that certain easement rights have been created on each
of the Easement Tracts in favor of the Tenant and (C) that certain restrictive
covenants have been imposed upon the Commercial Development Tract for the
benefit of the Tenant. If requested by the Tenant, the Landlord shall enter into
a separate recordable Easement Agreement with the Tenant reflecting and
incorporating the provisions of Section 402 hereof.
(iv) If legal title to the fee simple estate in the CRA Tract
remains in CRA as of the Commencement Date, then the Landlord shall cause to be
delivered and executed by CRA a written instrument in recordable form acceptable
to the Tenant (i) confirming that the Landlord is the beneficial owner of fee
simple to the CRA Tract and (ii) expressly consenting to, and agreeing to
create, the leasehold estate and the Easements created hereby on the CRA Tract.
(v) The Landlord shall provide such documents or other
instruments as may be reasonably required by the Tenant or Chicago Title
Insurance Company to evidence the Landlord's due authorization to enter into
this Lease.
Section 519. Dockside Lease. Notwithstanding anything to the
contrary contained herein or implied hereby, it is specifically understood,
agreed and acknowledged that the Dockside Lease is not a Permitted Encumbrance
for purposes hereof.
[END OF ARTICLE V]
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ARTICLE VI
PERFORMING ARTS, CHARITY AND COMMUNITY EVENTS
AT THE AMPHITHEATER
Section 601. Special Events. As additional consideration for the
agreements contained herein in favor of the Tenant, the Tenant does hereby agree
that it shall make the Amphitheater available during the Open Air Season for use
during each Lease Year for (i) two (2) presentations, events or performances
(and, if approved by the Tenant in its sole discretion, a third (3rd) such
presentation, event or performance) to benefit the South Jersey Performing Arts
Center ("SJPAC Events"), and/or its successor, assignee or affiliate, (ii) one
(1) event, presentation or performance to benefit a local charity selected by
the Landlord and/or the Mayor of the City of Camden (the "Charity Event") and
(iii) a minimum of five (5) non-gated public events for local public
organizations or institutions such as high school graduation commencements
selected by the Landlord and/or the Mayor of the City of Camden ("Community
Events"), provided the Tenant can decline any additional dates based upon its
sole and absolute business judgment. The Tenant shall have the right to
reasonably approve or condition such Special Events. The Special Events may not
be in competition with the Tenant or its operations at the Amphitheater. For the
purpose of this Section non-gated shall mean events for which no fee is charged
to the attendees. The Special Events shall be governed by the following
provisions:
(a) At each of the Special Events, the Tenant shall provide the full
and complete use of the Amphitheater to the Landlord, including all utilities.
(b) At each of the Special Events, the Tenant shall make available
its production manager and general operational staff (which includes its
security manager, house staff supervisor, marketing director and an accountant)
to the extent necessary to produce the Special Events and operate the
Amphitheater during such Special Events, at no charge to the Landlord or the
User. The User shall be responsible for paying all costs of organizing,
promoting, producing and presenting the Special Events and shall reimburse to
the Tenant all of the Tenant's actual out-of-pocket costs incurred in connection
with the holding, presenting or performing of such Special Events at the
Amphitheater, including daily utility charges for event days which shall include
the whole day plus the days required for the preparation of the Amphitheater for
the Special Event. A partial day will be considered a whole day. For purposes of
the immediately preceding sentence, the "daily utility charge" shall equal
one-thirtieth (1/30th) of the utility bills for the Amphitheater in the month
immediately preceding the date upon which such Special Event is presented.
(c) The User shall secure and maintain in force during each Special
Event a comprehensive general liability insurance with limits of not less than
$3,000,000.00 with respect to bodily injury or death to any number of persons in
any one accident or
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occurrence and with respect to property damage in any one accident or
occurrence. All insurance maintained in accordance with the provisions of this
Section 601(c) shall be issued by companies reasonably satisfactory to the
Tenant, shall be carried in the name of the User, the Landlord, the Trustee, any
Mortgagee and the Tenant, as their respective interests may appear, and shall
contain a mortgagee clause acceptable to the Mortgagees. Such liability
insurance policy shall name the Tenant, the Trustee, any Mortgagee and the
Landlord as an additional named insureds and shall include contractual liability
endorsements. The User shall furnish the Tenant and the Trustee with duplicate
originals or copies of certificates of insurance certified as being true and
correct of the policy of insurance required pursuant to the provisions of this
Section 601(c), and shall furnish to, and maintain with, the Tenant and the
Trustee at all times as a condition to the holding, presenting or performance of
any Special Event, a certificate of the insurance carrier certifying that such
insurance shall not be canceled without at least fifteen (15) days' advance
written notice to the Tenant and the Trustee. The insurance described in this
Section 601(c) may be obtained by the User by endorsement or equivalent means
under any blanket insurance policies maintained by the User, provided that the
coverage and other terms of such insurance comply with the provisions of this
Section 601(c). The limits of insurance coverage provided for herein shall be
increased by the User from time to time at the request of the Tenant, but no
more frequently than once every five (5) years during the Lease Term to such
amounts as should be reasonably carried or provided for the insured perils being
covered so long as such increased amount of coverage can be obtained at a
commercially reasonable rate.
(d) At each of the Special Events, the Tenant and the Landlord shall
not be liable for any damage, loss or injury suffered by any person in or about
the Premises. The Landlord shall obtain a written agreement from each User, as a
condition to the holding, presenting or performance of each Special Event, in
which the User covenants and agrees to indemnify, defend, protect and save
harmless the Tenant, the Trustee and the Landlord from and against any and all
liabilities, penalties, damages, claims, costs, charges and expenses including,
without limitation, court costs and reasonable attorneys' fees, which may be
imposed upon, incurred by or asserted against the Tenant, the Trustee and the
Landlord or the Tenant's, the Trustee's and the Landlord's interest in the
Premises from any cause or in any manner whatsoever relating to or arising out
of the operation, possession or use of the Amphitheater in connection with any
Special Event.
(e) The User shall be entitled to receive and retain all ticket
revenues associated with the sale of tickets to the SJPAC Events and the Charity
Events, but the User shall not be permitted to use the corporate suites or boxes
in the Amphitheater.
(f) Subject to the provisions of the next succeeding sentence, the
Tenant shall maintain, during and in respect of the Special Events, the sole and
exclusive right (i) to operate all concession facilities and operations at the
Amphitheater including, without limitation, the sale of food, beverage, alcohol
and merchandise at the Amphitheater and (ii) to receive and retain all revenues
associated with the operation of such concession
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facilities and operations at the Amphitheater during the Special Events.
Notwithstanding the foregoing, the User shall have the right, during each of the
Special Events, to (x) utilize its own on-site caterer for private parties which
are held on the Premises in conjunction with any Special Event, (y) require that
the Tenant or its merchandise concessionaire offer for sale at the Special
Events any inventory of merchandise owned by the User and (z) to receive the
revenues from the sale of its own merchandise (conditioned upon reaching an
agreement with the vendor and the Tenant as to the percentage of gross revenues
payable to each of the vendor and the Tenant).
Section 602. Selection of Dates for Presentation of Special Events.
On or before May 30 of each Lease Year, the dates on which
(a) the SJPAC Events for such Lease Year are to be held or presented
at the Amphitheater shall be selected by SJPAC, in consultation with and subject
to the prior approval of the Tenant, which approval shall not be unreasonably
withheld or delayed; and
(b) the Charity Events and the Community Events for such Lease Year
are to be held or presented at the Amphitheater shall be selected by the Mayor
of the City of Camden, in consultation with and subject to the prior approval of
the Tenant, which approval shall not be unreasonably withheld or delayed.
Section 603. Selection of Performers or Artists to Appear at SJPAC
Events and Charity Events. (a) With respect to the SJPAC Events, the Tenant
shall supply to SJPAC a list of performers that it believes would enable the
SJPAC to produce three successful benefits. The SJPAC shall select three
performers therefrom, and the Tenant shall use its reasonable efforts to book
same for the SJPAC. In the event that the SJPAC would prefer performers not on
the Tenant's list, the SJPAC and the Tenant shall enter into a collaborative
process to select the performers and the Tenant shall use its reasonable efforts
to book said performers on SJPAC's behalf. The Special Events shall not include
a performer that would ordinarily be booked by the Tenant.
(b) All proposed Charity Events and Community Events must be
approved by the Mayor of the City of Camden. In considering an event requested
for a Special Event, the Mayor of the City of Camden shall be entitled to
consider, inter alia, the potential effect the event may have on the surrounding
community, including noise, traffic, public safety, and the overall impact the
event may have as to the whole or any portion of the community.
[END OF ARTICLE VI]
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ARTICLE VII
IMPOSITION OF RESTRICTIVE CONTRACTUAL
COVENANTS ON COMMERCIAL DEVELOPMENT TRACT
Section 701. Restrictive Covenants. The Landlord does hereby
declare, establish and adopt the following restrictive contractual covenants
(the "Restrictive Contractual Covenants") on all of the Commercial Development
Tract (herein called the "Landlord Land") to be effective during the entirety of
the Term of this Lease including the term of any Renewal Options:
(a) No portion of the Landlord Land may be used to engage in any
activities, at any time, which are similar to, or competitive with, the types of
activities which are normally and customarily carried out in connection with
(i) presentment, promotion and production of live entertainment events, for an
audience greater than 3,000 people, (ii) operation, management and use of
commercial concert amphitheater and arena facilities, (iii) organization,
presentment and operation of fairs, festivals, and events related thereto for an
audience greater than 3,000 people or (iv) operation and use of an educational
center or conference center the primary focus of which is music or music related
events.
(b) No person shall engage in any conduct on any portion of the
Landlord Land which materially interferes with the Tenant's conduct of its
business or the Tenant's use of, enjoyment of, or operations on, the Premises.
(c) No portion of the Landlord Land will be developed or utilized in
such a manner as would cause the Tenant's activities on the Premises to be in
violation of any law, ordinance, regulation or other land use restriction,
including without limitation, any sound emission restriction or ordinance.
(d) The rights of the Landlord, its successors and assigns in and to
the Landlord Land shall at all times be subject to the rights of the Tenant
under this Lease.
(e) The Landlord recognizes that it is of the utmost importance that
the Tenant be free from any competitive activities upon the Landlord Land and
from any interference with the Tenant's activities. Accordingly, all
prohibitions contained in this Section 701 shall be construed to prohibit all
activities upon the Landlord Land which are competitive with, or interfere with,
the Tenant's activities on the Premises. The prohibitions do not include
restaurants or presentations of entertainment at nightclubs or clubs or a
riverboat casino limited to gaming with a restaurant with dinner music
entertainment with a single performer.
Section 702. Ownership of Landlord Land. The Landlord hereby
represents and warrants to the Tenant that (a) it will be, prior to the
Commencement Date, the owner
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of fee simple title in and to the Commercial Development Tract subject to no
prior liens or other encumbrances except for Permitted Encumbrances and (b) the
Landlord has the full right, power and authority to create the Restrictive
Contractual Covenants without the obtaining of any consent or approval from any
third party. Additionally, the Landlord hereby covenants and agrees with the
Tenant that it will not, at any time after the date hereof, create, or permit to
be created, any liens or other encumbrances affecting the Landlord Land without
same being subordinate to this Lease, the Easements and the Restrictive
Contractual Covenants.
Section 703. Enforceability of Contractual Restrictive Covenants.
The Restrictive Contractual Covenants adopted and established by the Landlord by
the provisions of this Article VII shall (a) bind the Landlord, and all who
succeed to its rights and responsibilities, (b) be binding upon and enforceable
against each purchaser, tenant, grantee and owner of the Landlord Land or any
portion thereof, and the respective heirs, legal representatives, successors and
assigns of each such purchaser, tenant, grantee and owner and (c) inure to the
benefit of and be enforceable by each purchaser, tenant, grantee and owner of
the Premises. The Contractual Restrictive Covenants shall end upon the
expiration of the Term of this Lease including any options to renew as exercised
by the Tenant.
Section 704. Concessions. (a) Reference is made to the fact that an
important source of revenue from the Tenant's intended use of the Premises shall
be the sale of licensed merchandise relating to the performers and artists which
will appear at the Amphitheater. The Tenant intends to license concessionaires
to sell such licensed merchandise at the Premises during Show Hours. The
Landlord hereby covenants and agrees to not license directly and to implement
reasonable policing procedures to prevent and discourage the sale of unlicensed
merchandise anywhere on the Landlord Land or on any other land located near or
adjacent to the Leasehold Tract which is owned or controlled by the Landlord
immediately before, during and after performances and shows at the Amphitheater.
(b) Another important source of revenue from the Tenant's intended
use of the Premises, is the sale of food and beverages to the Patrons of the
Amphitheater. In that connection, the Landlord hereby covenants and agrees with
the Tenant that it will not permit any food and beverage concessions to be sold
on the Commercial Development Tract or on any other land located near or
adjacent to the Leasehold Tract which is owned by the Landlord or controlled by
the Landlord generally calculated to be sold to Patrons of the Amphitheater
during Show Hours. By way of example, a violation of the foregoing provisions
would be the building of a new food or beverage vending stand on the Commercial
Development Tract near the entrance of the Amphitheater. However, enclosed
restaurant facilities operating on a year round basis with permanent indoor
seating and vendors and pushcarts on a non-event days are not prohibited by this
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provision. Operating on a year round basis shall mean operations of at least
nine (9) months out of every twelve (12) month calendar year time period.
[END OF ARTICLE VII]
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ARTICLE VIII
PROVISIONS CONCERNING PARKING FACILITIES
Section 801. Parking Facilities. The Landlord will cooperate to
assure that the Tenant has available to it sufficient parking spaces for use by
the patrons of the Amphitheater, to meet the Tenant's minimum parking facility
requirements. The minimum parking facility requirement shall consist of those
parking facilities and parking spaces to be provided to the Tenant by the City
of Camden Parking Authority (the "Parking Authority") in accordance with a
letter agreement to be hereafter entered into by and between the Tenant and the
Parking Authority in the form attached hereto as Exhibit "G" (the "Parking
Agreement"), or replacement parking facilities to meet the Tenant's minimum
parking facility requirements as defined in the Parking Agreement. The Landlord
will expend, or otherwise make available, prior to the opening of the
Amphitheater, $485,000 for the improvement of the land covered by the Parking
Agreement to the specifications which have been agreed upon between the Tenant
and the Landlord to enable such land to be utilized as the Amphitheater's
parking facilities.
[END OF ARTICLE VIII]
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ARTICLE IX
INSURANCE; TITLE TO THE PROJECT AND
OTHER MATTERS
Section 901. General Provisions. (a) The Tenant shall, at its sole
cost and expense, carry the insurance coverages set forth in this Article on the
Amphitheater, the Premises, the Easement Tracts and all personal property.
Copies of certificates evidencing such coverages shall be delivered to the
Landlord and the Trustee and shall provide that any proceeds payable thereunder
shall be payable to the Trustee. Any Net Proceeds in excess of the Prepayment
Price for all of the Initial Bonds Outstanding at such time with respect to the
Initial Project under this Lease shall be remitted to the Tenant.
(b) In the event that the Tenant fails or refuses to renew any of
its insurance policies to the extent required by this Lease or any policy is
canceled, terminated or modified so that the insurance does not meet the
original requirements of this Lease, the Tenant shall be considered in default
of this Lease and the Landlord and the Trustee shall have available to it all
remedies for Non-Rent Events of Default.
(c) The Tenant expressly understands and agrees that any insurance
protection required by this Lease shall in no way limit the Tenant's obligations
assumed under this Lease, and shall not be construed to relieve the Tenant from
liability with respect to the deductible and/or self retention provisions which
may be contained therein and which may be applicable to any claim or loss for
which insurance is provided, nor from any other liability in excess of such
coverage, nor shall it preclude the Landlord or the Trustee from taking such
other actions as are available to it under any provisions of this Lease or
otherwise in law.
(d) All insurance provided for in this Lease shall be effected under
valid and enforceable policies, in such forms and, from time to time after the
Commencement Date, issued by financially sound and responsible insurance
companies authorized to do business in the State of New Jersey which have been
approved by the Landlord (which approval shall not be unreasonably withheld
provided such companies have a Best policyholder rating of not less than B + and
a Best financial size rating of not less than XII). At least 10 days before the
Commencement Date, and thereafter not less than 15 days prior to the expiration
dates of the policies theretofore furnished pursuant to this Article, originals
of the policies (or, certificates of the insurers in form reasonably
satisfactory to the Landlord), accompanied by evidence satisfactory to the
Landlord and the Trustee of payment of the first installment of the premiums,
shall be delivered by the Tenant to the Landlord and the Trustee; provided,
however, that if the originals of any such policies are required under the terms
of a Leasehold Mortgage to be delivered to the holder thereof, the Tenant shall
cause the same to be done and shall in such case deliver to the Landlord and the
Trustee a copy of each such policy so delivered, together
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with an insurance company certificate or memorandum of such policy, in form
reasonably satisfactory to the Landlord and the Trustee.
(e) The parties will review every two years the amounts of coverage
provided taking into account all material facts including inflation and the full
insurable value and the Landlord shall not unreasonably require additional
amounts of coverage.
(f) All policies of insurance provided for or contemplated by this
Article shall name the Landlord, the Trustee and the Tenant as the insured or
additional insured, as their respective interests may appear. To the extent
required by a Leasehold Mortgage, such policies shall also name the holder of
such Leasehold Mortgage as an additional insured.
(g) All policies of insurance provided for in this Article shall, to
the extent obtainable, contain clauses of endorsements to the effect that:
(i) No act of negligence of the Tenant, or anyone acting for
the Tenant, or of any space tenant which might otherwise result in a forfeiture
of such insurance or any part thereof shall in any way affect the validity or
enforceability of such insurance insofar as the Landlord or the Trustee is
concerned; and
(ii) Such policies shall not be changed or canceled without at
least 60 days' Notice to the Landlord and the Trustee; and
(iii) The Landlord and the Trustee shall not be liable for any
premiums thereon or subject to any assessments thereunder.
(h) The Tenant shall not carry separate or additional insurance,
concurrent in form or contributing in the event of any loss with any insurance
required to be maintained by the Tenant under this Lease, unless such separate
or additional insurance shall comply with and conform to all the provisions and
conditions of this Article IX and the Landlord and the Trustee consents in
writing to such separate additional or concurrent insurance. The Tenant shall
promptly give notice to the Landlord and the Trustee of such separate or
additional insurance and shall promptly deliver to the Landlord and the Trustee
an original of such policy.
(i) In respect of any real, personal or other property located in,
at or upon the Amphitheater, the Premises and the Easement Tracts, and in
respect of the Amphitheater and the Premises itself, the Tenant hereby releases
the Landlord arid the Trustee from any and all liability or responsibility to
the Tenant or anyone claiming by, through or under the Tenant, by way of
subrogation or otherwise, for any loss or damage caused by fire or any other
casualty whether or not such fire or other casualty shall have been caused by
the fault of negligence of the Landlord, the Trustee or anyone for whom the
Landlord or the Trustee may be responsible. The Tenant shall require its
insurance
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carriers to include in the Tenant's policies a clause or endorsement, if
obtainable, whereby the Tenant shall be permitted to release other persons
without invalidating the insurance, or, if not obtainable, the Tenant shall
cause the Landlord and the Trustee to be named as insureds under such policies.
Section 902. General Liability. (a) The Tenant shall, at its own
cost and expense, provide comprehensive General Liability Insurance written on a
commercial liability occurrence form against any liability of the Tenant, the
Trustee and the Landlord with respect to the Amphitheater and the Premises and
arising from the maintenance, use, ownership and occupancy of the Amphitheater,
the Premises and the Easement Tracts. Said insurance shall not be circumscribed
by any endorsement limiting the breadth of coverage. The insurance shall include
the following coverages: (i) Premises/Operations Liability; (ii) Contractor's
Protective Liability/Products; (iii) Products/Completed Operations Liability;
(iv) Broad Form Contractual Liability applicable to the indemnity requirements
of this Lease; (v) Extended Bodily Injury Liability; (vi) Broad Form Property
Damage Liability; (vii) Personal Injury Liability; and (viii) Liquor Liability.
(b) The general liability policy shall include the Landlord and the
Trustee as additional insureds. The Tenant also shall require all vendors or
other providers of liquor to provide an insurance policy covering liquor
liability with the Landlord and the Trustee named as additional insureds. Said
policy or policies shall provide for indemnification of said parties against
direct or contingent loss or liability for damages for bodily and personal
injury, death or property damage occasioned by the operation or ownership of the
Amphitheater and the Premises. The Tenant's general liability policy or policies
shall provide coverage in the minimum liability limits of (i) $50,000,000 for
each occurrence of bodily injury liability; (ii) $50,000,000 for each occurrence
for property damage liability; and (iii) an annual aggregate of $50,000,000;
provided, however, if such minimum liability limits are not obtainable by the
Tenant for commercially reasonably rates, then the minimum liability limits
shall be reduced to the greater of (i) $30,000,000 or (ii) the maximum liability
limit which may be obtained by the Tenant at commercially reasonable rates. The
forgoing limits may be obtained through the General Liability Policy or a
combination of General Liability and Excess or Umbrella Liability. The Net
Proceeds of such liability insurance shall be applied toward extinguishment or
satisfaction of the liability with respect to which the Net Proceeds of such
insurance shall have been paid.
Section 903. Auto Liability Insurance. The Tenant shall, at its sole
cost and expense, keep Business Automobile Liability insurance covering all
owned, non-owned and hired vehicles in protection of the Tenant, the Landlord
and the Trustee. Said policy or policies shall be written in a comprehensive
form and shall comply with N.J.S.A. 39:6b-1 et seq., and all local regulations
and case law with regard to the scope and effect of the New Jersey Compulsory
Motor Vehicle Insurance Statute and shall provide for indemnification of said
parties against direct or contingent loss or liability for damages for bodily
and personal injury, death or property damage arising from the maintenance, use
or operation of any owned or non-owned vehicle used, in or in connection with,
the Initial
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Project. Said policy or policies shall provide coverage in the minimum liability
limits of $1,000,000 for personal injury or death of each person and in a
minimum amount of $500,000 for damage to property. Such auto liability insurance
may be maintained as part of or in conjunction with any other liability
insurance coverage carried or required to be carried by the Tenant. The Net
Proceeds of such liability insurance shall be applied toward extinguishment or
satisfaction of the liability with respect to which the net proceeds of such
insurance shall have been paid.
Section 904. Builders' Risk Insurance. During construction of the
Amphitheater, the Tenant shall, at its sole cost and expense, keep, or cause to
be kept, Builders' Risk Insurance (standard "all risk") written on a completed
value (nonreporting) basis. Coverage will include collapse and insure against
the peril of fire with extended coverage including vandalism and malicious
mischief. In addition, if commercially available at a reasonable cost, such
policy of insurance shall cover perils caused by earthquake and flood and shall
be endorsed to cover materials in transit. The policy shall name the Tenant as
the insured and the Landlord, the Trustee, the General Contractor and/or the
construction manager, if any, and all subcontractors employed by the Tenant as
additional insureds as their interest may appear. Such insurance policy: (a)
shall contain a written acknowledgment (annexed to the policy) by the insurance
company that its rights of subrogation have been waived with respect to all of
the insureds and any mortgagees in such policy, and an endorsement stating that
"permission is granted to complete and occupy"; and (b) if any off-site storage
location is used, shall cover, for their insurable value, all materials and
equipment at any off-site storage location used with respect to the Amphitheater
and the Premises and such locations shall be identified.
Section 905. Worker's Compensation and Employers Liability. (a) The
Tenant shall, at its own cost and expense, provide Workers' Compensation
insurance covering all employees on, in, near or about the Project in accordance
with applicable laws of the State of New Jersey, to be endorsed to include
coverage for any Federal or other State laws that may be found to have legal
jurisdiction.
(b) The Tenant shall, at its own cost and expense, also provide
Employers Liability insurance to include the following minimum limits: (i)
$100,000.00 each accident; (ii) $100,000.00 disease for each employee; and (iii)
$500,000.00 disease - aggregate limit.
Section 906. Property Insurance. (a) The Tenant shall, at its sole
cost and expense keep and maintain in force Comprehensive All Risk Property
Insurance on the improvements and equipment situated at the Premises and the
Easement Tracts, including coverage against loss or damage by fire, collapse,
lightning, water damage, windstorm, tornado, hail, flood, vandalism and
malicious mischief, sprinkler breakage, earthquake, subsidence, debris removal,
demolition and against loss of damage by such other, further and additional
risks as now are or hereafter may be embraced by the standard all risk coverage
forms of endorsements, in each case: (a) in an amount equal
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to the greater of (i) 100% of their "Full Insurable Value," which for purposes
of this Lease shall mean actual replacement value or (ii) an amount at least
equal the Principal Portion of Basic Rent then remaining unpaid; (b) containing
an agreed amount endorsement with respect to the improvements and equipment
waiving all co-insurance provisions; (c) containing an endorsement that all
covered losses will be paid on a replacement costs basis; and providing that the
Tenant shall be responsible to the Landlord or the Trustee for any and all
deductibles as though there were no deductible.
(b) The Full Insurable Value shall be ascertained upon the full
completion of the improvements and from time to time (but not more frequently
than once in any 48 calendar months) at the request of the Landlord or the
Trustee by an appraiser, architect, engineer or contractor designated and paid
by the Tenant and approved by the Landlord, which approval shall not be
unreasonably withheld, or by an engineer or appraiser in the regular employ of
the insurer. After the first such appraisal, additional appraisals may be based
on construction cost indices customarily employed in the trade. No omission on
the part of the Landlord or the Trustee to request any such ascertainment shall
relieve the Tenant of any of its obligations under this Article.
(c) Any insurance required to be provided by the Tenant under this
Section 906 may be provided by blanket insurance covering both the Premises and
other properties or locations of the Tenant, provided that (i) such blanket
insurance complies with all of the other requirements of this Lease, (ii) the
amounts payable to the Landlord and the Trustee under such blanket insurance,
whether or not the Tenant, as an additional insured, may be otherwise entitled
to any proceeds of the policy and (iii) the insurance protection to be provided
hereunder for the Landlord and the Trustee is not impaired or diminished by such
blanket insurance or inclusion of the Tenant as an insured thereunder.
(d) The Tenant shall also, at its sole cost and expense, keep boiler
and machinery insurance on an extended comprehensive basis with a joint
agreement if there are two separate policies.
Section 907. Insurance Provisions for Sublessee, Permittee and
Licensee. The Tenant shall not permit any sublessee, permittee or licensee of
the Amphitheater access to the Amphitheater without first having a certificate
of insurance delivered to the Tenant for Comprehensive General Liability
Insurance with a limit of at least $1,000,000.00 combined single limit bodily
injury and property damage liability, personal injury liability, and coverage
for all acts and omissions of any agents or performers and any contractors or
subcontractors retained by such sublessee, permittee or licensee. The Tenant
shall require that each such sublessee, permittee, and/or licensee provide
evidence to the Tenant, the Trustee and the Landlord of Workers Compensation
Insurance for any obligations with respect to the statutory obligation of the
New Jersey Workers Compensation and Occupational Disease Laws. Coverage under
one policy naming the Landlord, the Trustee and the Tenant as named insureds or
separate policies may be provided.
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Such certificate of insurance shall note that such coverage shall not be
canceled or any change in coverage be implemented without at least 30 days prior
written notice given to the Landlord and the Trustee.
Section 908. Indemnification. The Tenant covenants and agrees to
indemnify, defend, protect and save harmless the Landlord and its agents,
employees, officers and directors from and against any and all liabilities,
penalties, damages, claims, costs, charges and expenses, including without
limitation, court costs and reasonable attorney's fees, which may be imposed
upon, incurred by or asserted against the Landlord or the Landlord's interest in
the Premises and the Easement Tracts from construction, operation and use of the
Amphitheater except for those liabilities, penalties, damages, claims, costs,
charges and expenses (i) caused in whole or in part by the Landlord or the
Landlord's agents or employees, (ii) arising out of or related to the operation,
possession or use of the Amphitheater in connection with the presentation of any
Special Events to the extent not caused solely by the Tenant's employees, agents
or concessionaires, (iii) with respect to liability or obligations assumed or
undertaken by the Landlord in this Lease, (iv) arising out of or relating to the
presence of any Hazardous Substances on, under or at the Subject Tracts which
were present on or before the Commencement Date or (v) caused by SJPAC, its
agents, employees or invitees in connection with the use of the Amphitheater by
SJPAC pursuant to the SJPAC Lease or this Lease. The provisions of this Section
908 and of any other indemnity provisions elsewhere contained in this Lease
shall survive the expiration or earlier termination of this Lease with respect
to acts, occurrences or omissions occurring prior to the expiration or earlier
termination of this Lease. All amounts which become due from the Tenant under
this Section 908, shall be credited with any amounts received by the Landlord
from insurance provided by the Tenant and shall be payable by the Tenant within
thirty (30) days following demand therefor by the Landlord (which demand cannot
be made prior to the Tenant's receipt thereof).
Section 909. Umbrella or Excess Liability. A standard clause must be
attached advising that the self insured retention will "drop down" and be
considered primary in the event the aggregate primary limits become impaired.
Section 910. No Further Encumbrances; Exceptions. (a) The Tenant
shall not, directly or indirectly, create, incur, assume or suffer to exist any
mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the
Amphitheater or the Premises, other than pursuant to the respective rights of
the Landlord and the Tenant as herein provided and the Permitted Encumbrances.
Except as expressly provided in this Article, the Tenant shall promptly, at its
own expense, take such action as may be necessary to discharge or remove any
such mortgage, pledge, lien, charge, encumbrance, or claim if the same shall
arise at any time. The Tenant shall reimburse the Landlord and/or the Trustee
for any expense incurred by it in order to discharge or remove any such
mortgage, pledge, lien, charge, encumbrance or claim.
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(b) The Tenant may, at the Tenant's sole expense and in the Tenant's
name, in good faith contest any taxes, assessments, utility and other charges
and, in the event of any such contest, may permit the taxes, assessments or
other charges so contested to remain unpaid during the period of such contest
and any appeal therefrom unless the Landlord shall notify the Tenant that in the
opinion of Independent Counsel, by nonpayment of any such items the interest of
the Landlord in the Amphitheater and the Premises or any part thereof will be
subject to loss or forfeiture, in which event the Tenant shall promptly pay such
taxes, assessments or charges or provide the Landlord with full security against
any loss which may result from nonpayment, in form satisfactory to the Landlord.
Section 911. Trustee Indemnification. To the extent and subject to
limits permitted by applicable laws of the State as in effect from time to time
during the Term of this Lease, the Tenant shall (a) indemnify and save harmless
the Trustee and its agents, employees, officers and directors from and against
any and all liabilities including without limitation all claims, demands,
damages, losses, costs, penalties, charges and expenses (including but not
limited to reasonable attorneys' fees) in any way relating to or arising from
(i) the ownership, possession, operation, condition, sale, rental or subrental
of the Amphitheater and the Premises; (ii) the Indenture or this Lease, or any
other agreement related to the Amphitheater and the Premises; or the enforcement
thereof; and (b) reimburse the Trustee for all losses, costs, charges, and
expenses (including reasonable attorneys' fees) that the Trustee may incur or be
subject to as a consequence, directly or indirectly, of involvement in any legal
proceeding or action relating to the foregoing; provided, however, that no
indemnification or reimbursement shall be due to the extent that the Trustee has
acted with gross negligence or willful misconduct in connection with the
liabilities for which the Trustee is seeking indemnification or reimbursement.
All amounts which become due from the Tenant under this Section 911, shall be
credited with any amounts received by the Trustee from insurance provided by the
Tenant and shall be payable by the Tenant within thirty (30) days following
demand therefor by the Trustee and shall survive the termination or expiration
of this Lease.
Section 912. Advances. If the Tenant shall fail to perform any of
its obligations under this Lease, the Landlord may, but shall not be obligated
to, take such action as may be necessary to cure such failure, including the
advancement of money, and the Tenant shall be obligated to repay all such
advances on demand as Supplemental Rent to the Landlord with interest at the
Overdue Rate from the date of the advance to the date of repayment.
Section 913. Net Proceeds of Insurance; Form of Policies. Each
policy of insurance obtained pursuant to or required by this Article IX shall
provide that all proceeds thereunder shall be payable to the Trustee for the
benefit of the Bond Holders. The Tenant shall pay or cause to be paid when due
the premiums for all insurance policies required by this Lease, and shall
promptly furnish or cause to be furnished to the
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Trustee evidence of such payments. All such policies shall provide that the
Trustee and the Landlord shall be given not less than thirty (30) days' notice
of each expiration, any intended cancellation and any intended reduction of the
coverage provided thereby. The Trustee shall not be responsible for the
sufficiency of any insurance herein required and shall be fully protected in
accepting payment on account of such insurance or any adjustment, compromise or
settlement of any loss agreed to by the Trustee. The Tenant shall cause to be
delivered to the Trustee and the Landlord on each anniversary of the issuance of
the Initial Bonds a certificate of the Authorized Representative of the Tenant
satisfactory to the Trustee and the Landlord that the insurance policies
required by this Lease are in full force and effect. The Trustee and the
Landlord may rely on said certificate in making such determination unless they
have actual notice to the contrary.
[END OF ARTICLE IX]
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ARTICLE X
PREPAYMENT OF RENT
Section 1001. When Available. The Tenant shall have the option to
prepay in full or in part Basic Rent in whole or in part as follows:
(a) In whole or in part at any time and from time to time, upon
notice as provided in Section 1002 hereof, from any funds lawfully available to
the Tenant, including Revenues as provided in the Indenture.
(b) At any time, pursuant to Sections 1101 (ii)(B) or 1102(ii)
hereof, after the occurrence of a casualty loss to or exercise of the power of
eminent domain against the Project and the determination of the Tenant not to
repair, reconstruct or restore the Project or any part thereof affected by such
loss or taking as provided in Sections 1101(ii)(A) or 1102(i) hereof. Any
prepayment of Rent in whole or in part shall be made first from Net Proceeds,
and secondly if needed, from any other funds lawfully available to the Tenant
for such purpose.
(c) The Trustee shall apply any prepayments authorized under
subsections (a) or (b) hereof in such manner as is consistent with the
provisions of the Indenture as may be specified in writing by an Authorized
Representative of the Tenant.
Section 1002. Exercise of Option. (a) The Tenant shall give written
notice to the Landlord and the Trustee of its intention to exercise its
prepayment option for a portion or the entirety, as the case may be, of the Rent
not less than (i) forty-five (45) days prior to the date on which the option is
to be exercised in the case of Bonds (or a portion thereof) which bear interest
at a fixed rate of interest or (ii) thirty (30) days prior to the date on which
the option is to be exercised in the case of Bonds (or a portion thereof) which
bear interest at a variable rate of interest (each, the "Prepayment Date"), by
setting forth in the Tenant's intent to prepay, the Prepayment Date, the
Tenant's intent to redeem or defease all or a portion of the Bonds, as the case
may be, the redemption date or defeasance date on which all or a portion of the
Bonds are to be redeemed or defeased, any other items required in the notice set
forth in the Indenture, as the case may be, at the then applicable Prepayment
Price. The Tenant shall thereafter deposit with the Trustee in immediately
available funds on the Prepayment Date from any applicable Net Proceeds and
other funds lawfully available to the Tenant for such purpose, the Prepayment
Price and any other amounts then due or past due hereunder.
(b) With regard to any prepayment of Rent in whole by the Tenant,
the Tenant shall pay to the Trustee on the Prepayment Date the Prepayment Price
for deposit in the Redemption Account of the Debt Service Fund to redeem the
balance of all Outstanding Bonds on the redemption date.
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(c) With regard to any prepayment of Rent in part by the Tenant, the
Tenant shall pay to the Trustee on the Prepayment Date the Prepayment Price for
deposit in the Redemption Account of the Debt Service Fund for redemption of the
proportionate amount of Bonds represented by such deposit. To the extent the
amount of prepaid Rent is not divisible by $1,000, such amount shall be paid by
the Tenant on the Prepayment Date to the Trustee for deposit in the Interest
Account of the Debt Service Fund and shall be applied as a credit to the
Interest Portion of the Basic Rent due and owing by the Tenant on the Interest
Portion Basic Rent Payment Date next succeeding such Prepayment Date.
[END OF ARTICLE X]
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ARTICLE XI
DAMAGE, DESTRUCTION AND CONDEMNATION;
USE OF NET PROCEEDS
Section 1101. Damage and Destruction. If the Amphitheater or any
portion thereof is destroyed or is damaged by fire or other casualty the Tenant
shall have the right to (A) apply any Net Proceeds, which Net Proceeds shall be
paid to the Trustee for deposit in the Construction Fund to be disbursed in the
same manner as other Costs of the Project in accordance with the terms hereof,
to the prompt repair, restoration, modification or improvement of the
Amphitheater by the Tenant, but the Tenant shall be obligated to continue to pay
the Rent due with respect to the Leased Premises; or (B) exercise its prepayment
option by paying all or a portion, as applicable, of the then applicable
Prepayment Price, and shall apply any Net Proceeds thereto. Clauses (A) and (B)
above shall not be mutually exclusive, and the Tenant shall have the right to
partially restore the Leased Premises and partially pay down the Prepayment
Price from any such Net Proceeds.
Section 1102. Insufficiency of Net Proceeds. If the Net Proceeds are
insufficient to pay in full the cost of any repair, restoration, modification or
improvement of the Amphitheater the Tenant shall either: (i) complete the work
and pay any cost in excess of the amount of the Net Proceeds, and if by reason
of any such insufficiency of the Net Proceeds, the Tenant shall make any
payments pursuant to the provisions of this Section 1102(i), the Tenant shall
not be entitled to any reimbursement therefor from the Landlord nor shall the
Tenant be entitled to any diminution of the Rent Payments due with respect to
the Leased Premises; or (ii) the Tenant shall exercise its option in whole or in
part, in accordance with Article X hereof, in which event the Net Proceeds shall
be used toward this purpose. Clauses (i) and (ii) above shall not be mutually
exclusive, and the Tenant shall have the right to partially restore the
Amphitheater and partially pay down the Prepayment Price from any such Net
Proceeds.
In the event that the Tenant exercises its prepayment option, any
surplus proceeds from any of the insurance policies may be applied by the
Mortgagee or Mortgagees to repayment of indebtedness secured by Leasehold
Mortgages which would result in the amount of insurance proceeds available to
the Tenant for repairing, replacing, restoring and reconstructing the
Amphitheater being less than all of the proceeds from any of such insurance
policies. If, after mandatory repayments of any indebtedness secured by
Mortgages, the remaining proceeds from any of such insurance policies are
insufficient to permit the Tenant to repair, replace, restore and reconstruct
the Amphitheater in substantially the same form in which it existed prior to
such casualty, and if the Tenant elects, as a result, not to repair, replace and
reconstruct the Amphitheater out of the Tenant's own funds, then the following
provisions shall apply:
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(a) The remaining proceeds from any of such insurance policies shall
be divided between the Landlord and the Tenant in accordance with the following
provisions:
(i) If such casualty occurs during the Initial Term, then such
surplus proceeds shall be divided ninety percent (90%) to the Tenant and ten
percent (10%) to the Landlord.
(ii) if such casualty occurs during the first Renewal Term,
then such surplus proceeds shall be divided eighty percent (80%) to the Tenant
and twenty percent (20%) to the Landlord.
(iii) If such casualty occurs during the second Renewal Term,
then such surplus proceeds shall be divided seventy percent (70%) to the Tenant
and thirty percent (30%) to the Landlord.
(b) Following notice from the Tenant to the Landlord that the Tenant
does not have sufficient insurance proceeds to repair, replace, restore and
reconstruct the Amphitheater in the form in which it existed prior to such
casualty following mandatory repayments of indebtedness secured by Mortgages and
that the Tenant does not intend to repair, replace, restore and reconstruct the
Amphitheater out of its own funds, then (i) this Lease shall be terminated
effective upon final allocation and division of any surplus proceeds from any
such insurance policies; (ii) no Rent shall be payable by the Tenant pursuant to
this Lease at any time following the occurrence of such casualty; and (iii) at
the Landlord's election the Tenant shall be obligated to demolish the structure
if the Tenant decides not to reconstruct.
(c) The Mortgagee shall agree that (i) the proceeds of any casualty
insurance or condemnation award be applied to restore the Premises except in the
case of a total condemnation of the Premises; (ii) the Leasehold Mortgage does
not secure any other obligation of the Leasehold Mortgagor to the Leasehold
Mortgagee, or contain any cross default provision.
Section 1103. Total and Partial Taking. If at any time during the
Lease Term, the whole or substantially all of the Premises shall be taken for or
under threat of public or quasi-public purposes by any lawful power or authority
by the exercise or the threatened exercise of the right of condemnation or
eminent domain, or if a portion of the Premises shall be so taken so as to
render, in the Tenant's reasonable opinion, the continued operation of the
remaining part or parts of the Premises for the purposes for which the Premises
were used immediately prior to such taking uneconomical, then this Lease shall
terminate on the date of such taking and all Rent which the Tenant shall have
paid or become obligated to pay pursuant to the terms hereof shall be prorated
and apportioned as of and paid to the date of such taking. In the event of such
a taking of only a portion of the Premises which, in the Tenant's reasonable
opinion, does not render uneconomical the continued operation of the remaining
portion of the Premises for the
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purpose for which same were used immediately prior to such taking or for any
other purpose desired by the Tenant, then this Lease shall terminate on the date
of such taking only as to the portion of such Premises so taken, and shall
continue as to the part of the Premises not so taken; and the Rent provided for
herein payable by the Tenant to the Landlord shall not be reduced as a result of
such taking. Neither the Landlord nor the Tenant shall instigate or encourage
any condemnation or similar proceeding affecting the Premises.
All awards resulting from any taking as set forth in this Section
1103 shall be distributed in the following order of priority: (i) first, to the
prepayment of the Bonds Outstanding under the Indenture; (ii) second, to the
satisfaction of indebtedness of any Mortgagees; (iii) third, to pay to the
Landlord, an amount of money equal to the product of the total award resulting
from such taking times the Landlord Fraction relating to, and determined as of
the date of, such taking; and (iv) fourth, the balance shall be distributed as
follows: (A) if the date of such taking is during the Initial Term, then one
hundred percent (100%) of such balance shall be distributed to the Tenant; (B)
if the date of such taking is during the first Renewal Term, then eighty percent
(80%) of such balance shall be distributed to the Tenant and twenty percent
(20%) thereof to the Landlord; or (C) if the date of such taking is during the
second Renewal Term, then seventy percent (70%) of such balance shall be
distributed to the Tenant and thirty percent (30%) thereof to the Landlord.
The terms and provisions of this Section 1103 shall survive the
termination of this Lease.
Section 1104. Temporary Taking. If the whole or any portion of the
Premises shall be taken for temporary use or occupancy, the Lease Term shall not
be reduced or affected and the Tenant shall continue to pay the Rent in full.
Except to the extent the Tenant is prevented from so doing pursuant to the terms
of the order of the condemning authority, the Tenant shall continue to perform
and observe all of the other covenants, agreements, terms, and provisions of
this Lease. In the event of any temporary taking, the Tenant shall be entitled
to receive the entire amount of any award therefor unless the period of
temporary use or occupancy shall extend beyond the expiration of the Lease Term,
in which case such award, after payment to the Landlord therefrom for the
estimated cost of restoration of the Premises to the extent that any such award
is intended to compensate for damage to the Premises, shall be apportioned
between the Tenant and the Landlord as of the day of expiration of the Lease
Term in the same ratio that the part of the entire period for such compensation
is made falling before the day of expiration and that part falling after, bear
to such entire period.
Section 1105. Cooperation of Landlord. The Landlord shall cooperate
fully with the Tenant at the sole expense of the Tenant in filing any proof of
loss with respect to any insurance policy covering the casualties described in
Section 1301 hereof and in the prosecution or defense of any prospective or
pending condemnation proceeding with
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respect to the Premises or any part thereof and will, to the extent it may
lawfully do so, permit the Tenant to litigate in any proceeding resulting
therefrom in the name of and on behalf of the Landlord. In no event will the
Landlord voluntarily settle, or consent to the settlement of, any proceeding
arising out of any insurance claim or any prospective or pending condemnation
proceeding with respect to the Premises, or the Amphitheater or any part thereof
without the prior written consent of the Tenant.
Section 1106. No Waiver. Nothing contained herein shall be construed
as a waiver by the Tenant of any claim which it may have against the condemnor
for taking all or any part of the Premises, and the Tenant, to the extent
permitted by New Jersey law, shall have the right to appear and file its claim
for damages in any such condemnation proceedings, to participate in any and all
hearings, trials and appeals thereon, to be represented by counsel of its choice
therein, and to receive the share of any such awards so adjudicated to be due
it.
[END OF ARTICLE XI]
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ARTICLE XII
ASSIGNMENT, SUBLETTING AND ENCUMBERING
BY TENANT; MORTGAGEE MATTERS; GRANTING OF EASEMENTS
Section 1201. Assignment by Landlord. Except as provided below, the
Landlord shall not assign its obligations under this Lease, and no purported
assignment thereof shall be effective. All of the Landlord's right, title and
interest in and to this Lease, the Rent and other amounts due to it hereunder
and the Project and the Premises shall be assigned by the Landlord to the
Trustee pursuant to the Indenture, upon execution thereof.
Section 1202. Lease Payments to Trustee. The Landlord and the Tenant
hereby agree that from and after the execution of the Indenture and this Lease,
so long as the same shall remain in effect, payment by the Tenant to the Trustee
or, if applicable, to the successor thereof of any moneys or sums due hereunder
from the Tenant to the Landlord shall satisfy the obligation of the Tenant to
pay such money or sums.
Section 1203. Assignment. Subletting and Encumbering by Tenant. (a)
The Tenant shall have the right, without the consent of the Landlord, at any
time and from time to time during the Lease Term, to (i) sublease the
Amphitheater to other promoters or operators in the ordinary course of business
(i.e., on a daily or weekly basis but not for a material portion of the then
remaining Lease Term), (ii) grant concession rights to vendors or other
concessionaires for the sale of food, candy, cigarettes, beverages, merchandise
or similar items, (iii) fix a mechanic's or materialman's lien upon its
leasehold estate in the Premises or (iv) make similar transfers; provided,
however, any exercise of any such right shall be made subject to all of the
provisions of this Lease and shall not discharge the Tenant of its obligation
hereunder.
(b) The Tenant shall also have the right to (x) mortgage its
leasehold estate created hereby to a Pre-Approved Mortgagee and/or (y) assign
its leasehold estate created hereby to a Pro-Approved Owner. Any other
mortgaging, assignment or sale, is subject to the consent of the Landlord and
the Trustee which may not be unreasonably withheld, conditioned or delayed with
such review limited to credit worthiness and the debarred list. Any purported
sale, assignment or other transfer (other than as permitted herein and above) of
all or substantially all of the Tenant's interest in this Lease and the
leasehold estate in the Premises created hereby shall not be effective unless
and until: (i) all Rent then owing by the Tenant has been paid, (ii) the
Landlord has been delivered a fully executed and acknowledged counterpart of the
instrument evidencing such acquisition which contains an express assumption by
the transferee or the assignee of this Lease and of all the obligations
hereunder on the part of the Tenant to be kept, observed or performed after the
effective date of such acquisition and which sets forth the mailing address of
such assignee or transferee for purposes of this Lease and (iii) any rating on
the Bonds Is not reduced or withdrawn as a result of any such sale, assignment
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or other transfer. Upon an effective transfer as defined above of all of the
Tenant's interest in this Lease and the leasehold estate in the Premises created
hereby, the Tenant, with respect to the payment or performance of any obligation
hereunder (including the obligation to pay Rent) which accrues after the date
any such sale, assignment or transfer shall be effective, shall be released of
liability therefor, and the purchaser, assignee or transferee of this Lease
shall at all times thereafter be deemed to be the "Tenant" for purposes of this
Lease.
Section 1204. Notice to Mortgagees. Should any Mortgagee desire to
receive copies of any and all notices the Landlord may give to the Tenant
hereunder, any such Mortgagee may give the Landlord written notice thereof,
which notice shall include the Mortgagee's address for notice. Thereafter, the
Landlord shall, concurrently with the giving of any notice to the Tenant, give
like notice or a copy thereof to any such Mortgagee. Any notice given to the
Tenant shall not be effective or considered given for purposes of this Lease
until it or a copy thereof is also given to each such Mortgagee who has
requested the Landlord to give it copies of notices the Landlord gives to the
Tenant. Any Mortgagee who has given the Landlord written notice pursuant to the
foregoing provisions of this Section 1204 may designate a different address for
purposes of notice hereunder by giving the Landlord written notice thereof. Any
such notice shall be effective ten (10) days after receipt thereof by the
Landlord.
Section 1205. Mortgagee's Right to Perform Tenant's Obligations.
Each Pre-Approved Mortgagee or any other entity or person acquiring an interest
approved by the Landlord and the Trustee in accordance with Section 1203 hereof,
shall have the right to perform any obligation of the Tenant hereunder,
including without limitation, the obligation of the Tenant to pay Rent, and the
Landlord shall accept performance of any such obligation by such Pre-Approved
Mortgagee or other such entity or person. Any performance by a Pre-Approved
Mortgagee or any other entity or person acquiring an interest approved by the
Landlord and the Trustee in accordance with Section 1203 hereof of any
obligation of the Tenant hereunder shall have the same effect as and shall
constitute performance of such obligation by the Tenant.
Section 1206. Acquisition of Tenant's Interest in the Leasehold
Estate; New Lease. Upon the acquisition of any ownership interest in and to the
leasehold estate in the Premises created by this Lease by a Pre-Approved
Mortgagee, a Pre-Approved Owner or any other entity or person acquiring an
interest approved by the Landlord and the Trustee in accordance with Section
1203, the Pre-Approved Mortgagee, Pre-Approved Owner or any other person or
entity (any such Pre-Approved Mortgagee, Pre-Approved Owner or other person or
entity who acquires such interest herein being called a "New Tenant", it being
understood that a New Tenant is also a Tenant for all purposes hereunder),
regardless of how such acquisition occurs, whether through foreclosure of liens
created by a Mortgage or assignment of such interest in such leasehold estate in
lieu of foreclosure, or otherwise, shall succeed to the rights of the Tenant
with respect to such interest in such leasehold estate of the Premises acquired
by it, with the same force
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and effect as if this Lease had, with respect to such interest in such leasehold
estate, been originally entered into between the Landlord, as landlord, and such
Mortgagee or such person or entity, as tenant, and this Lease shall remain in
full force and effect. Notwithstanding the foregoing, the acquisition of any
such ownership interest in and to the leasehold estate in the Premises created
by this Lease by the New Tenant shall not be effective unless and until: (i) all
Rent then owing by the Tenant has been paid, (ii) the Landlord has been
delivered a fully executed and acknowledged counterpart of the instrument
evidencing such acquisition which contains an express assumption by the New
Tenant of this Lease and of all the obligations hereunder on the part of the
Tenant to be kept, observed or performed after the effective date of such
acquisition and which sets forth the mailing address of the New Tenant for
purposes of this Lease and (iii) any rating on the Bonds is not reduced or
withdrawn as a result of any acquisition. If, within thirty (30) days after New
Tenant acquires the Tenant's interest in this Lease, the New Tenant requests, by
giving written notice to the Landlord, that the Landlord enter into a new lease
with the New Tenant, then the Landlord, within thirty (30) days after such
notice is given, shall execute a new lease with the New Tenant for the unexpired
balance of the Lease Term and on the same terms and conditions set forth in this
Lease; provided, however, the Landlord shall not have any obligation to execute
such new lease with the New Tenant unless and until the Trustee approves the
execution of such new lease and such New Tenant satisfies each of the following
conditions:
(a) any uncured Event of Tenant Default is cured;
(b) the New Tenant delivers evidence reasonably satisfactory to the
Landlord that such person or entity claiming to be a New Tenant is, in fact, a
New Tenant and is entitled to obtain a new lease from the Landlord pursuant to
the provisions of this Section 1206; and
(c) the New Tenant (i) represents and warrants to the Landlord that
it is entitled to obtain a new lease from the Landlord pursuant to the
provisions of this Section 1206 and (ii) agrees to indemnity and hold the
Landlord and the Trustee harmless from any claim, loss, cost, damage or expense
(including court costs and reasonable attorney's fees) arising out of any
failure of such person or entity actually being a New Tenant hereunder or any
failure of such New Tenant actually being entitled to obtain a new lease from
the Landlord.
The New Tenant shall reimburse the Landlord and the Trustee for all
out-of-pocket expenses incurred by the Landlord and the Trustee (including
reasonable attorney's fees) in entering into or approving a new lease with the
New Tenant pursuant to the provisions of this Section 1206. Should the Landlord
fail to perform its obligations under this Section 1206 as herein provided, the
Tenant shall have the rights set forth in Section 1209 hereof.
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Section 1207. Further Assurances; Estoppel Certificate. The Landlord
shall execute any further documents which may be reasonably required by the
Tenant, any New Tenant or any Mortgagee at any time and from time to time to
effectuate the intent and purposes of this Article XII. In that connection, the
Landlord shall execute and deliver to the Trustee, the Tenant or any person or
entity designated by the Tenant, including without limitation a Mortgagee, from
time to time, but not more often than four (4) times a year, and at such time or
times as the Tenant may request in writing, within thirty (30) days after
receipt of such written request, an estoppel certificate stating:
(a) whether or not this Lease is in full force and effect;
(b) whether or not this Lease has been modified or amended in any
respect, and submitting copies of such modifications or amendments, if any;
(c) to best knowledge and belief of the Landlord, whether or not
there are any existing Tenant Events of Default under this Lease and specifying
the nature of such defaults, if any;
(d) to best knowledge and belief of the Landlord, whether or not any
particular provision of this Lease has been complied with by the Tenant;
(e) the Landlord's current address for the purpose of giving notice
to the Landlord; and
(f) such other information that may be reasonably requested.
Should Landlord fail to perform its obligations under this Section
1207 as herein provided, the Tenant shall have the rights set forth in Section
1209 hereof. The Tenant shall reimburse the Landlord for all out-of-pocket
expenses incurred by the Landlord (including reasonable attorney's fees) in
performing its obligations under this Section 1207.
Section 1208. Granting of Easements. The Landlord acknowledges that
easements over, along and across the Premises will be required from time to time
in connection with the Tenant's use and occupancy of the Premises. The Landlord
shall join with the Tenant in the granting of any such easements for the
purposes of furnishing utilities or providing for ingress and egress to the
Premises and any improvements or parts thereof located thereon as the Tenant may
desire and are prudent and consistent with the reasonable ownership, development
and operation of the Premises taking into account the Landlord's reversionary
interest in the Premises. The Tenant shall reimburse the Landlord for all
out-of-pocket expenses incurred by the Landlord (including reasonable attorney's
fees) in performing its obligations under this Section 1208. Any controversy
between the Landlord and the Tenant arising out of the provisions of this
Section 1208 shall be resolved by the dispute resolution provisions contained in
Section 1423 hereof.
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Section 1209. Remedies. If the Landlord fails to timely execute any
document or instrument required to be executed by the Landlord pursuant to any
of the provisions of this Article XII, and such failure continues for sixty (60)
days after the Tenant or the Mortgagee entitled to a new lease pursuant to the
provisions of Section 1206, whichever is applicable, gives the Landlord written
notice thereof, then the Tenant or such Mortgagee, whichever is applicable, in
addition to all other rights and remedies available to it at law or in equity,
may recover any and all damages resulting from such failure.
Section 1210. Mortgagee's Right to a New Lease. Upon termination of
the Tenant's right to possession of the Premises or upon termination of this
Lease pursuant to an exercise of the Landlord's remedies following the
occurrence of a Tenant Event of Default or upon termination of this Lease for
any other reason, any Mortgagee who was holding a Mortgage immediately prior to
any such termination shall have the right to receive from the Landlord a new
lease of the Premises for the unexpired balance of the Lease Term (for purposes
of this Section 1210 the Landlord and the Mortgagee agree that as to the
Mortgagee this Lease has not been terminated and the Tenant's right to
possession has not been terminated) on the same terms and conditions set forth
in this Lease by giving the Landlord written notice (the "New Lease Notice")
thereof within thirty (30) days after the date of any such termination;
provided, however, the Landlord shall not have any obligation to execute such
new lease with the Mortgagee unless such Mortgagee satisfies each of the
following conditions within thirty (30) days after the Mortgagee gives the
Landlord the New Lease Notice:
(a) Any uncured Tenant Event of Default which can be cured by the
payment of money is cured. All income collected or received by or for the
account of the Landlord from the Premises subsequent to the date of termination
of this Lease or termination of the Tenant's right to possession of the
Premises, less all reasonable expenses incurred by the Landlord in managing and
operating the Premises, shall be applied against Rent which would at the time of
the execution and delivery of such new lease be due under this Lease but for
such termination of this Lease or termination of the Tenant's right to
possession of the Premises.
(b) Such Mortgagee delivers evidence reasonably satisfactory to the
Landlord and the Trustee that such person or entity claiming to be a Mortgagee
is, in fact, a Mortgagee and is entitled to obtain a new lease of the Premises
from the Landlord pursuant to the provisions of this Section 1210.
(c) Such Mortgagee (i) represents and warrants to the Landlord that
it is a Mortgagee and is entitled to obtain a new lease of the Premises from the
Landlord pursuant to the provisions of this Section 1210 and (ii) agrees to
indemnify and hold the Landlord and the Trustee harmless from any claim, loss,
cost, damage or expense (including court costs and reasonable attorney's fees)
arising out of any failure of such person or entity actually being a Mortgagee
hereunder or any failure of such Mortgagee actually being entitled to obtain a
new lease of the Premises from the Landlord.
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The Landlord shall enter into such new lease of the Premises with
such Mortgagee within sixty (60) days after Mortgagee gives the Landlord the New
Lease Notice. If the Landlord enters into such new lease with such Mortgagee as
a result of the Tenant's right to possession of the Premises being terminated,
then upon the execution and delivery of such new lease, this Lease shall
terminate and be of no further force and effect. If more than one Mortgagee
makes written request upon the Landlord in accordance with the provisions of
this Section 1210, such new lease shall be delivered pursuant to the request of
the Mortgagee whose Mortgage is prior in lien. The Mortgagee who obtains the new
lease shall reimburse the Landlord and the Trustee for all out-of-pocket
expenses incurred by the Landlord and the Trustee (including reasonable
attorney's fees) in performing their obligations under this Section 1210. Should
the Landlord fail to perform its obligations under this Section 1210 as herein
provided, the Mortgagee shall have the rights set forth in Section 1209 hereof.
Any new lease of the Premises created pursuant to the rights contained in this
Section 1210 shall be of equal priority to this Lease and shall in all events be
prior and superior to any lease, lien or other encumbrance created after the
date hereof. The provisions of this Section 1210 shall survive the termination
of this Lease.
Section 1211. Concurrent Exercise of Rights. The Tenant, each
Mortgagee and each New Tenant may exercise any and all of its rights under this
Article XII concurrently (including the affixation of two (2) or more Mortgages
concurrently), at any time or times, and from time to time during the Lease
Term, so often and as many times as they may desire.
Section 1212. No Modification of Lease. The Landlord and the Tenant
covenant and agree (for the benefit of any and all Mortgagees which are entitled
to copies of notices pursuant to Section 1204 hereof) that this Lease will not
be modified, altered or amended in any way, nor will the Landlord accept a
voluntary surrender of the Premises, without the prior written consent of any
such Mortgagees.
[END OF ARTICLE XII]
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ARTICLE XIII
EVENTS OF DEFAULT, REMEDIES
Section 1301. Tenant Events of Default. A Tenant Event of Default
hereunder means the occurrence of any one or more of the following events:
(a) The Tenant fails to (i) make any Basic Rent Payment as it
becomes due, (ii) make any Bond Related Supplemental Rent Payment as it becomes
due and such failure continues for ten (10) days, (iii) make any Non-Bond
Related Supplemental Rent Payment as it becomes due and such failure continues
for ten (10) days after notice thereof from the Landlord to the Tenant or (iv)
maintain any insurance requirement set forth hereunder and such failure
continues for ten (10) days after notice thereof from the Landlord to the
Tenant.
(b) The Tenant becomes insolvent or admits in writing its inability
to pay its debts as they mature or applies for, consents to, or acquiesces in
the appointment of a trustee, receiver or custodian for the Tenant or a
substantial part of its property; or in the absence of such application, consent
or acquiescence, a trustee, receiver or custodian is appointed for the Tenant or
a substantial part of its property and is not discharged within sixty (60) days;
or any bankruptcy, reorganization, debt arrangement, moratorium or any
proceeding under bankruptcy or insolvency law, or any dissolution or liquidation
proceeding, is instituted by or, if permitted by law, against the Tenant and, if
instituted against the Tenant, is consented to or acquiesced in by the Tenant or
is not dismissed within sixty (60) days.
(c) The entering of an order or decree appointing a receiver for the
Project or for any part thereof or for the revenues thereof with the consent or
acquiescence of the Tenant or the entering of such order or decree without the
acquiescence or consent of the Tenant and such order or decree shall not be
vacated, discharged or stayed within ninety (90) days after the date of such
entry.
Upon the occurrence of an Event of Default hereunder or under the Indenture, all
obligations of the Tenant under this Lease shall remain in full force and
effect.
Section 1302. Landlord Remedies. (a) Upon the occurrence and
continuation of any Tenant Event of Default as described in Section 1301 hereof,
the Landlord shall have the right, without any further demand or notice, to take
one or any combination of the remedial steps below:
(i) With or without terminating this Lease, re-enter and take
possession of the Project and the Premises and exclude the Tenant from using it;
provided, however, that if this Lease has not been terminated, the Landlord
shall return possession of the Leased Premises to the Tenant when the Tenant
Event of Default is
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cured; and provided further that the Tenant shall continue to be responsible for
the Rent Payments due during the remainder of the Lease Term; or
(ii) With or without terminating this Lease, re-enter and take
possession of the Project and the Premises and sell or lease its interest in the
Premises or any part of it; or
(iii) With or without terminating this Lease, declare all
Basic Rent Payments due or to become due to be immediately due and payable by
the Tenant, whereupon the Prepayment Price shall be immediately due and payable;
provided, however, that the remedy provided for in this clause (iii) may only be
exercised if the Bonds have been previously, or are simultaneously being,
declared immediately due and payable; or
(iv) Take whatever action at law or in equity may appear
necessary or desirable to collect the Rent Payments then due and thereafter to
become due with respect to the Project, or enforce performance and observance of
any obligation, agreement or covenant of the Tenant under this Lease.
(b) If a Tenant Event of Default should occur at any time that no
Bonds are Outstanding, then the Landlord's rights and remedies described in
clause (a) of this Section 1302 shall be limited by the following provisions:
(i) If the Landlord elects to terminate this Lease as a result
of the occurrence of such Tenant Event of Default, then the Tenant shall be
liable to the Landlord for damages incurred by the Landlord resulting from the
occurrence of such Tenant Event of Default, but such damages shall not exceed
the sum of (x) the cost of recovering, reletting, repairing, restoring and
remodeling the Premises, (y) all unpaid and accrued Rent and other amounts
earned or due through the date of the termination of this Lease and (z) the
present value of all Rent Payments during the remainder of the then current
Term. The provisions contained in the immediately preceding sentence shall be
subject to the following provisions:
(1) If, prior to the determination and award of damages
pursuant to the foregoing provisions of this Section 1302(b)(i), the Landlord
has entered into agreement with another party to use, occupy or operate the
Premises, then the award of damages shall be reduced, but not below $0.00, by an
amount equal to the present value of all rental or other payments for the right
to use and occupy the Premises which are Payable to the Landlord under such
agreement over the lesser of the term of such agreement or the remainder of the
Term in effect at the time of the termination of this Lease.
(2) If, after determination and award of damages
pursuant to the foregoing provisions of this Section 1302(b)(i), the Landlord
enters into an
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agreement (including the renewal or extension of any agreement previously made
the subject of the provisions of clause (1) or this clause (2)) with another
party to use, occupy or operate the Premises, then the Landlord shall pay to the
Tenant an amount equal to the present value of all rental or other payments for
the right to use and occupy the Premises which are payable to the Landlord under
such agreement from the commencement of the term of such agreement until the
earlier of the scheduled expiration of the term of such agreement or the
scheduled expiration of the Term in effect at the time of the termination of
this Lease; provided, however, that the aggregate amount payable to the Tenant
pursuant to this clause (2) shall never exceed the aggregate amount of damages
awarded pursuant to clause (1) hereof and the Landlord may offset against its
payment obligations pursuant to this clause (2) any uncollected award of damages
made in its favor against the Tenant. The calculation of present values required
by the foregoing provisions shall be based on a six percent (6%) per year
discount rate.
(ii) If the Landlord elects to re-enter and take possession of
the Premises without terminating this Lease, then the Landlord shall be
obligated to exercise reasonable efforts to lease or relet the Premises to
another tenant, lessee or operator for purposes of mitigating the damages
resulting from the occurrence of such Tenant Event of Default.
Section 1303. Reinstatement. Notwithstanding any termination of this
Lease which shall be made in accordance with the provisions of Section 1302
hereof, unless the Landlord shall have entered into a firm bilateral agreement
providing for the reletting of the Project for a period of at least one year,
if, after the maturity of the Outstanding Bonds shall have been accelerated by
the Trustee (upon the occurrence of a Tenant Event of Default) under the terms
of the Indenture, (i) there shall have been paid: (w) all arrears of interest on
such Outstanding Bonds, (x) interest on (1) overdue installments of principal,
(2) the redemption premium, if any, and (3) (to the extent permitted by law)
interest on such Bonds, at a rate per annum which is equal to the highest rate
per annum borne by any of the Bonds, (y) the principal and redemption premium,
if any, on all Bonds which are then Outstanding which have become due and
payable by otherwise than an acceleration, and (z) all other sums which are
payable under the terms of the Indenture except the principal of and the
interest on such Bonds which by such acceleration shall have become due and
payable, (ii) all other things shall have been performed in respect of which
there was a Tenant Event of Default, (iii) there shall have been paid the
reasonable fees and expenses of the Landlord, the Trustee and the Holders of the
Bonds (including reasonable attorneys' fees paid or incurred) and (iv) such
acceleration under the terms of the Indenture is rescinded, then the Tenant
Event of Default hereunder shall be deemed waived without further action by the
Trustee or by the Landlord. Upon such payment, this Lease shall be fully
reinstated, as if it had never been terminated, and the Tenant shall be restored
to the use, occupancy and possession of the Project.
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Section 1304. Failure to Perform Obligations other than to Pay Rent.
If (A) any material statement, representation or warranty made by the Tenant in
this Lease, or in any writing delivered by the Tenant pursuant hereto or in
connection herewith is false, misleading or erroneous in any material respect or
(B) any Obligations of the Tenant are not performed and discharged as and when
called for, and (a) the failure, refusal or neglect to perform and discharge
such Obligation continues for a period of thirty (30) days after the Tenant has
been given notice thereof or (b) if by reason of the nature of such Obligation
the same cannot be remedied within thirty (30) days, (i) performance and
discharge of such Obligation is not commenced within such thirty (30) day
period, (ii) the performance and discharge of such Obligation is not diligently
and continuously prosecuted or (iii) such Obligation is not fully performed and
discharged within ninety (90) days after the Tenant has been given notice
thereof, then a "Non-Rent Event of Default" shall be deemed to have occurred for
all purposes of this Lease. Upon the occurrence of a Non-Rent Event of Default,
the Landlord shall have, as its sole and exclusive remedy, the right to do any
one or more of the following and the Landlord may exercise its rights
concurrently and consecutively at the Landlord's option:
(a) File such lawsuits against the Tenant as may be necessary to
pursue the Landlord's rights and remedies provided by law or in equity against
the Tenant.
(b) Perform the Obligations of the Tenant which gave rise to the
existence of such Non-Rent Event of Default, in which event the Tenant shall be
obligated to reimburse to the Landlord all expenses incurred by the Landlord as
the result of the Landlord's performance of the Obligations of the Tenant
together with interest thereon at the Permitted Rate from the date of
expenditure; and
(c) Enforce the Obligations of the Tenant under this Lease by an
action for specific performance;
provided, however, in no event shall the Landlord have, and the Landlord hereby
specifically waives, the right to terminate or seek termination of this Lease
and the right to terminate or seek termination of the Tenant's right to
possession of the Premises upon the occurrence of a Non-Rent Event of Default.
It being specifically agreed and acknowledged that the Landlord may only
terminate this Lease pursuant to the right created in Section 1302 following the
occurrence of a Tenant Event of Default; provided, further, that nothing
contained herein shall imply that the Landlord may not foreclose in accordance
with law upon any judgment lien which it may obtain against the Tenant
Section 1305. Landlord Event of Default. If any of the Obligations
of the Landlord is not performed and discharged as and when called for and (a)
the failure, refusal or neglect to perform and discharge such Obligation
continues for a period of thirty (30) days after the Landlord has been given
notice thereof or (b) if by reason of the nature of such Obligation the same
cannot be remedied within thirty (30) days, (i) performance and discharge of
such Obligation is not commenced within such thirty (30)
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day period, (ii) the performance and discharge of such Obligation is not
diligently and continuously prosecuted or (iii) such Obligation is not fully
performed and discharged within ninety (90) days after the Landlord has been
given notice thereof, then a "Landlord Event of Default" shall be deemed to have
occurred for all purposes of this Lease.
Section 1306. Tenant's Remedies. (a) If a Landlord Event of Default
occurs, then the Tenant, at any time thereafter prior to the curing thereof
shall have, as its sole and exclusive remedy, the right to do any one or more of
the following:
(i) terminate this Lease by providing written notice thereof
to the Landlord, in which event the Tenant shall surrender possession of the
Premises to the Landlord and all of the Tenant's obligations under this Lease,
including the obligation to pay Rent, shall immediately terminate;
(ii) file such lawsuits against the Landlord as may be
necessary to pursue the Tenant's rights and remedies provided by law or in
equity against the Landlord;
(iii) perform the Obligations of the Landlord which gave rise
to the existence of such Landlord Event of Default, in which event the Landlord
shall be obligated to reimburse to the Tenant all expenses incurred by the
Tenant as the result of the Tenant's performance of the Obligations of the
Landlord together with interest thereon at the Permitted Rate from the date of
expenditure;
(iv) enforce the Obligations of the Landlord under this Lease
by an action for specific performance; and
(v) offset against future Rent due to the Landlord for
recovery of any amounts (y) expended by the Tenant pursuant to clause (iii)
above or (z) awarded to the Tenant pursuant to a final nonappealable judgment
obtained in any lawsuit filed pursuant to clause (ii) above.
(b) The Tenant's remedies listed and described in Section 1306(a)
hereof shall be subject to the following provisions:
(i) All of the Tenant's rights and remedies listed in clause
(a) of this Section 1306 may be exercised concurrently or consecutively at the
Tenant's option; the rights described in clauses (i) and (v) shall not be
available at any time any of the Bonds are Outstanding.
(ii) Subject to the provisions contained in clauses (A) and
(B) below, the Landlord's liability to the Tenant for any breach of the
Landlord's express contractual obligations created in this Lease shall be
limited to (i) the entry of an order of specific performance and (ii) recovery
of the actual costs incurred by the Tenant in
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performing, or causing to be performed, the Landlord's contractual obligations
created hereunder. Subject to the provisions contained in clauses (A) and (B)
below, the Landlord shall not be liable to the Tenant for any consequential
damage or damages due to any delay in the performance of the Landlord's
contractual obligations created in this Lease. Notwithstanding anything to the
contrary contained in, or implied by, the provisions of this Section
1306(b)(ii), the liabilities, responsibilities or other obligations which may be
imposed upon, or otherwise applicable to, the Landlord by any laws, statutes,
ordinances, regulations or rules (including, without limitation, those relating
to Hazardous Substances), or by any order, decree, decision or opinion of any
Governmental Authority, as opposed to the contractual obligations created in
this Lease, shall not be limited, lessened or otherwise affected by the
provisions of this Section 1306(b)(ii). Notwithstanding the foregoing, the
limitation on the Landlord's liability to the Tenant as set forth in this
Section 1306(b)(ii) shall not apply or be effective with respect to the
following:
(A) any affirmative action taken by the Landlord or any
of its employees, officers, directors or other agents which has the effect of
breaching the covenant of quiet enjoyment contained in the first sentence of
Section 507 of this Lease if such affirmative action, or the effect of such
affirmative action, continues for five (5) days after notice thereof to the
Landlord; and
(B) any action taken by the Landlord, its employees,
officers, directors or other agents which violates the Restrictive Contractual
Covenants and for which an injunctive remedy is not available to the Tenant
despite the expenditure of the Tenant's reasonable and proper efforts to so
obtain such an injunctive remedy.
Section 1307. Election of Remedies; No Waiver of Elected Remedies.
No failure on the part of either party to exercise, and no delay in exercising
any right or remedy so provided for herein, shall operate as a waiver thereof,
nor shall any single or partial exercise by either party of any right or remedy
so provided hereunder preclude any other or further exercise of any other right
or remedy provided hereunder.
Section 1308. No Additional Waiver Implied by One Waiver. In the
event any agreement contained in this Lease should be breached by either party
and thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder, and shall not be construed to be an implied term hereof or a course
of dealing between the parties hereto.
Section 1309. Agreement to Pay Attorneys' Fees and Expenses. In the
event either party to this Lease should default under any of the provisions
hereof and the nondefaulting party should employ attorneys or incur other
expenses for the collection of moneys or the enforcement or performance or
observance of any obligation or agreement on the part of the defaulting party
herein contained, the defaulting party agrees that it will
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on demand therefor pay to the nondefaulting party the reasonable fee of such
attorneys and such other expenses so incurred by the nondefaulting party.
Section 1310. Late Charges. Whenever any payment of Rent is not made
when due, the Tenant promises to pay the Landlord, in addition to the amount
due, interest thereon at the Overdue Rate; provided, however, that this Section
1310 shall not be applicable if or to the extent that the application thereof
would affect the validity of this Lease.
Section 1311. Delay: Notice. No delay or omission to exercise any
right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right or power may be
exercised from time to time and as often as may be deemed expedient, and any one
exercise thereof shall not be deemed an exclusive exercise. To entitle any party
to exercise any remedy reserved to it in this Lease, it shall not be necessary
to give any notice other than as may be specifically required in this Lease.
Section 1312. Performance of Landlord's Obligations. The Landlord
hereby agrees that it will fulfill and perform all of its Obligations contained
in this Lease in a reasonably prompt and efficient manner. In furtherance of the
foregoing, in light of the limitation of the Landlord's liability for its breach
of express contractual obligations created in this Lease as specified in Section
1306(b)(ii) hereof, the Landlord agrees as follows:
(a) If the Tenant's ability to use or operate the Amphitheater on or
after the scheduled date for opening of the Amphitheater may be delayed or
hindered by reason of any failure by the Landlord to fulfill or discharge any of
its Obligations in a timely manner, then the Tenant may provide written notice
("Delay Notice") to the Landlord specifying the Obligation which has not been
performed in a timely manner and the reason that such failure will have the
effect of delaying or hindering the use of the Amphitheater by the Tenant.
(b) If the Obligation specified in the Delay Notice has not been
fully performed and discharged within ten (10) days after the date of delivery
of such Delay Notice or, if by reason of the nature of such Obligation the same
cannot be performed and discharged within such ten (10) day period, (x) the
performance and discharge of such Obligation is not diligently and continuously
prosecuted after delivery of the Delay Notice or (y) such Obligation is not
fully performed and discharged within forty-five (45) days after the delivery of
the Delay Notice, then the Tenant may perform the Obligation of the Landlord
referred to in such Delay Notice in which event the Landlord shall be obligated
to reimburse to the Tenant, on demand, all expenses incurred by the Tenant as a
result of the Tenant's performance of such Obligation of the Landlord together
with interest thereon at the Permitted Rate from the date of the expenditure. If
an Obligation of the Landlord which is the subject of a Delay Notice requires
that a legal action, lawsuit or other proceeding be filed against a third party
to fulfill such Obligation, then, if the
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Tenant (A) has the right to perform and discharge such Obligation pursuant to
the foregoing provisions of this clause (b) and (B) does not have the legal
standing to file such legal action, lawsuit or other proceeding against such
third party in its own name, the Tenant shall have the right to file and pursue
such legal action, lawsuit or other proceeding in the name of the Landlord.
The rights created in favor of the Tenant pursuant to the provisions of this
Section 1312 shall be in addition to the rights and remedies contained in
Section 1306 hereof.
[END OF ARTICLE XIII]
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ARTICLE XIV
ADMINISTRATIVE PROVISIONS
Section 1401. Notices. All notices, offers, approvals, elections,
consents, acceptances, waivers, reports, requests and other communications
required or permitted to be given hereunder (all of the foregoing hereinafter
collectively referred as "Communications") shall be in writing and shall be
deemed to have been duly given if delivered personally with receipt acknowledged
or sent by registered or certified mail or equivalent, if available, return
receipt requested, or by facsimile, telex or cablegram (which shall be confirmed
by a writing sent by registered or certified mail or equivalent on the same date
that such facsimile, telex or cablegram is sent), or by recognized overnight
courier for next day delivery, addressed or sent to the parties at the following
addresses and facsimile numbers or to such other additional address or facsimile
number as any party shall hereafter specify by Communication to the other
parties:
If to the Landlord: New Jersey Economic
Development Authority
Capital Place One - CN 990
200 South Warren Street
Trenton, New Jersey 08625
ATTN: Executive Director
Facsimile: (609) 292-5722
with a copy to: New Jersey Economic
Development Authority
Capital Place One - CN 990
200 South Warren Street
Trenton, New Jersey 08625
ATTN: Director of Real Estate
Facsimile: (609) 292-5722
If to the Tenant: Sony Music/Pace Partnership
515 Post Oak Boulevard
Suite 300
Houston, Texas 77027
ATTN: Mr. Brian E. Becker
FACSIMILE: (713) 963-0617
with a copy to: Michael F. Rogers
Sewell & Riggs
333 Clay Avenue, Suite 800
Houston, Texas 77002
FACSIMILE: (713) 652-8808
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and Martin S. Ettin
Katz, Ettin, Levine &
Kurzweil, PA.
905 North Kings Highway
Cherry Hill, New Jersey 08034
FACSIMILE: (609) 667-1866
Section 1402. Severability. In the event any provision of this Lease
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof.
Section 1403. Amendments, Changes and Modifications. This Lease may
be amended by the Landlord and the Tenant with regard to the Term, recomputation
of the Rent, the execution of the Indenture and the authorization of any series
of Bonds pursuant to the provisions of the Indenture. Other than as provided in
the preceding sentence, this Lease may be amended or any of its terms modified
only by written amendment authorized and executed by the Tenant, the Landlord
and the Trustee.
Section 1404. Further Assurances and Corrective Instruments. The
Landlord and the Tenant agree that they will, if necessary, execute, acknowledge
and deliver, such supplements hereto and such further instruments as may
reasonably be required for correcting any inadequate or incorrect description of
the Premises hereby leased or intended so to be or for carrying out the
expressed intention of this Lease.
Section 1405. Applicable Law. This Lease shall be governed by and
construed in accordance with the laws of the State.
Section 1406. Landlord and Tenant Representatives. Whenever under
the provisions of this Lease the approval of the Landlord or the Tenant is
required or the Landlord or the Tenant is required to take some action at the
request of the other, such approval of such request shall be given for the
Landlord by an Authorized Representative of the Landlord and for the Tenant by
an Authorized Representative of the Tenant, and any party hereto shall be
authorized to rely upon any such approval or request.
Section 1407. Captions. The captions or headings in this Lease are
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or sections of this Lease.
Section 1408. Lease is Original. For all purposes of filing,
perfection or any other matter requiring identification or possession of the
"original" copy of a lease, the executed original hereof identified as the
"original" shall be the "original" to evidence this Lease.
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Section 1409. Binding; Counterparts. This Lease shall be binding
upon the parties hereto only when duly executed on behalf of both the Tenant and
the Landlord together; provided, however, that each set of counterparts taken
together shall constitute an original.
Section 1410. Tenant's Rights with Respect to Initial Bonds. (a) The
Landlord covenants and agrees with the Tenant that the Tenant shall have the
right to direct the following matters with respect to the Initial Bonds: (i) The
conversion of Initial Bonds from one interest rate period to another; (ii) The
redemption and/or the prepayment of the Initial Bonds provided, however, that
the Tenant's directions with respect to the foregoing shall be given in
accordance with the Indenture.
(b) The Landlord covenants and agrees with the Tenant that the
Landlord shall cause the Indenture to contain provisions recognizing the rights
granted the Tenant in this Section 1410 and that the Landlord shall not enter
into the Indenture or consent to any amendment of the Indenture without the
Tenant's prior written consent.
Section 1411. Modifications and Non-Waiver. No variations,
modifications, or changes herein or hereof shall be binding upon any party
hereto unless set forth in a writing executed by it or by a duly authorized
officer or agent. No waiver by either party of any breach or default of any
term, condition, or provision hereof, including without limitation the
acceptance by the Landlord of any Rent at any time or in any manner other than
as herein provided, shall be deemed a waiver of any other or subsequent breaches
or defaults of any kind, character, or description under any circumstance. No
waiver of any breach or default of any term, condition, or provision hereof
shall be implied from any action of any party, and any such waiver, to be
effective, shall be set out in a written instrument signed by the waiving party.
Section 1412. Time is of the Essence. Time is of the essence with
respect to this Lease and no covenant or obligation hereunder to be performed by
the Tenant may be waived except by the written consent of the Landlord and the
Trustee and waiver of any such covenant or obligation or a forbearance to invoke
any remedy on any occasion shall not constitute or be treated as a waiver of
such covenant or obligation or any other covenant or obligation as to any other
occasion and shall not preclude the Landlord from invoking such remedy at any
later time prior to the Tenant's cure of the condition giving rise to such
remedy. Each of the Landlord's rights hereunder are cumulative to its other
rights hereunder and not alternative thereto.
Section 1413. No Personal Liability or Accountability. No covenant
or agreement contained in this Lease shall be deemed to be the covenant or
agreement of any present, past or future officer, agent or employee of the
Tenant, the Landlord or the State, in his or her individual capacity, and
neither the officers, agents or employees of the Tenant, the Landlord or the
State nor any official executing this Lease shall be liable
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personally on this Lease or be subject to any personal liability or
accountability by reason of any transaction or activity relating to this Lease.
Section 1414. Gender. Use of the masculine, feminine or neuter
gender herein is for purposes of convenience only and shall be deemed to mean
and include the other genders whenever and wherever appropriate.
Section 1415. Receipt of Lease. The parties hereto each acknowledge
receipt of a signed, true and exact copy of this Lease.
Section 1416. Unavoidable Delay. If either party to this Lease shall
be delayed or prevented from the performance of any act required by this Lease
by reason of acts of God, strikes, lockouts, labor troubles, inability to
procure materials, or where the Tenant is barred or prevented, directly or
indirectly, from proceeding with the development otherwise permitted by a legal
action instituted by any State agency, political subdivision or other party to
protect the public health and welfare or by a directive or Order issued by any
State agency, political subdivision or Court of competent jurisdiction to
protect the public health or welfare, acts of war or other cause, without fault
and beyond the reasonable control of the party obligated, performance of such
act shall be excused for the period of the delay, and the period for the
performance of any such act shall be extended for a period equivalent to the
period of such delay; provided, however, nothing in this Section 1416 shall
excuse the Tenant from the prompt payment of any Rent payable pursuant to the
provisions of this Lease.
Section 1417. Surrender of Premises; Holding Over. Upon termination
or the expiration of this Lease, the Tenant shall peaceably quit, deliver up,
and surrender the Premises to the Landlord free of all claims and encumbrances
other than the Permitted Encumbrances. Upon such termination or expiration, the
Landlord may, without further notice, enter upon, reenter, possess, and
repossess itself of the Premises by force, summary proceedings, ejectment, or
otherwise, and may dispossess and remove the Tenant from the Premises and may
have, hold, and enjoy the Premises and all rental and other income therefrom,
free of any claim by the Tenant with respect thereto. If the Tenant does not
surrender possession of the Premises at the end of the Lease Term, such action
shall not extend the Lease Term, the Tenant shall be a tenant at sufferance, and
during such time of occupancy the Tenant shall pay to the Landlord, as damages,
an amount equal to one hundred fifty percent (150%) of the amount of Rent that
was being paid immediately prior to the end of the Lease Term. The Landlord
shall not be deemed to have accepted a surrender of the Premises by the Tenant,
or to have extended the Lease Term, other than by execution of a written
agreement specifically so stating.
Section 1418. Relation of Parties. It is the intention of the
parties to hereby create the relationship of landlord and tenant, and no other
relationship whatsoever is hereby created. Nothing in this Lease shall be
construed to make the parties hereto
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partners or joint venturers or to render either party hereto liable for any
obligation of the other.
Section 1419. Non-Merger. Notwithstanding the fact that fee title in
the tracts or parcels of land described in Exhibit A hereto and the leasehold
estate hereby created may, at any time, be held by the same party, there shall
be no merger of the leasehold estate hereby created unless the owner thereof
executes and files for record in the Office of the County Clerk of Camden
County, New Jersey a document expressly providing for the merger of such
estates.
Section 1420. Entireties and Conflicts. This Lease constitutes the
entire agreement of the parties hereto with respect to its subject matter, and
all prior agreements with respect thereto are merged herein. If any conflict or
inconsistency exists between any term or provision contained in the body of this
Lease and any term or provision contained in any Exhibit attached hereto, then
the term or provision contained in the body of this Lease shall control and
prevail in all respects.
Section 1421. Successors and Assigns. This Lease shall constitute a
real right and covenant running with the Premises, and shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. Whenever a reference is made herein to
either party, such reference shall include the party's heirs, legal
representatives, successors and assigns.
Section 1422. Memorandum of Lease. If for any reason the Tenant's
rights and obligations under this Lease are terminated, then the Tenant shall
execute such documents (including recordable documents) as may be reasonably
requested by the Landlord for purposes of establishing that this Lease is no
longer of any force or effect.
Section 1423. Arbitration. This Section 1423 shall only apply where
express provision is made in this Lease for resolution of a dispute pursuant to
this Section 1423. If a party desires to submit a dispute or matter to
arbitration, such party shall so notify the other party and in such notice shall
designate the first arbitrator. Within ten (10) days after the giving of such
notice, the other party shall designate, in a written notice, the second
arbitrator. If the party entitled to do so fails to timely designate the second
arbitrator, then the first arbitrator shall proceed to determine the matter or
dispute. If a second arbitrator is designated the arbitrators shall meet within
ten (10) days after the designation of the second arbitrator, and if within
thirty (30) days thereafter they have not agreed upon the matter in issue, they
shall appoint a third arbitrator; if the two arbitrators are unable to agree
upon a third arbitrator within ten (10) days after the expiration of the
aforesaid thirty (30) day time period, a third arbitrator shall be selected by
the Landlord and the Tenant if they can agree thereon within a further period of
fifteen (15) days. If the parties do not so agree, then either party on behalf
of both may request such appointment by the United States District Judge for the
District of New Jersey, acting in his individual capacity, who is then senior in
service. A decision of the arbitrators so chosen
107
<PAGE>
shall be given within a period of thirty (30) days after the appointment of the
third arbitrator. A decision in which any two arbitrators shall have concurred
shall be binding and conclusive on the parties hereto, or if no two arbitrators
concur, then the average of the two closest mathematical determinations shall
constitute the decision of all three arbitrators and shall be similarly binding
and conclusive, as to matters which are subject to mathematical resolution. If
any arbitrator shall fail, refuse, or become unable to act, a new arbitrator
shall be appointed in his place following the same method as was originally
followed with respect to the arbitrator to be replaced. The Landlord and the
Tenant shall pay the fees and expenses of the arbitrator appointed by them, and
the fees and expenses of the third arbitrator and all other expenses of
arbitration shall be borne equally by the parties. All hearings and proceedings
held and all investigations and actions taken by the arbitrators shall take
place in Trenton, New Jersey. Any arbitrator designated to serve in accordance
with the provision of this Section 1423 shall be a land planning consultant,
architect, engineer, real estate attorney or real estate appraiser.
Section 1424. Brokerage Indemnity. Each party represents to the
other that, except as has been previously disclosed in writing to the other
party hereto, neither has utilized the services of a broker or other person and
is not obligated with respect to any claims for brokerage, commission, finder's
or other fees relative to this Lease and the transaction set forth herein based
in any way on agreements, arrangements or understandings made by such party with
any other party or parties.
Section 1425. Affirmative Action/Local Employment. (a) The Tenant
agrees not to discriminate in any manner on the basis of race, color, creed,
national original, sex, age, handicap, or sexual orientation with reference to
the persons to be employed in connection with the use, operation or maintenance
of the Amphitheater.
(b) With respect to the permanent staff to be employed at the
Amphitheater after completion of construction, the Tenant agrees to use
reasonable efforts and work toward a goal of having at least sixty percent (60%)
of such permanent positions filled by residents of Camden, New Jersey.
Additionally, the Tenant agrees to use reasonable efforts and work toward a goal
of having all of its summer seasonal employee positions filled by residents of
Camden, New Jersey.
(c) With respect to the year-round jobs at the Amphitheater, the
Tenant also agrees to use its reasonable best efforts to include in this number
skilled positions, such as the manager of concessions and security. The Tenant
agrees to provide a training program for summer seasonal employees. The Tenant
also agrees to make a good faith effort to use Camden businesses for operating
supplies (e.g., food, beverage, fabrication of souvenirs, etc.)
(d) The Tenant shall provide a mutually agreeable job fair plan to
the Landlord prior to execution of this Lease.
108
<PAGE>
Section 1426. Name of Amphitheater. The name of the Amphitheater
will be selected by a committee of four persons, two of whom shall be selected
by the Landlord and two of whom shall be selected by the Tenant.
Section 1427. Security. The Landlord has no responsibility for
security. The Tenant agrees to provide security to secure the Amphitheater and
all necessary security in its business judgment to secure the Amphitheater and
the Leasehold Tract for event days. This obligation will not extend beyond the
Leasehold Tract to public streets, rights-of-way or easement areas. The Tenant
agrees to pay for any additional security required to secure the ingress and
egress of Patrons to the Amphitheater on Landlord event days. Prior to
commencement of operations at the Amphitheater, the plan for providing security
measures shall be subject to the review and approval of local law enforcement
officials in order to determine its adequacy based on similar security
operations in the State of New Jersey. The Landlord shall cause the Amphitheater
to be incorporated into the local law enforcement plan. The Landlord shall
assist the Tenant in working with the Camden City Police Department to arrange
for uniformed police officers to provide traffic control on public streets on
the days and nights of Amphitheater performances or shows.
Section 1428. Commercial Development Tract. With respect to the
Commercial Development Tract, the parties hereto agree that they shall each
negotiate with the other in good faith to enter into a Development Agreement
within twelve (12) months from execution of this Lease in which the Tenant shall
be granted a right and option to lease and develop the Commercial Development
Tract, subject to the restrictive covenants contained in and created by the
provisions of this Lease. This option may be exercised by the Tenant any time
within a period of five (5) years from the date of execution of this Lease. No
additional consideration shall be required to be paid by the Tenant for the
grant of such option. The Tenant shall have the option of developing the
Commercial Development Tract within this five (5) year period for year-round
facilities and subject to further conditions to be set forth in a separate
Development Agreement between the parties covering such issues as site
remediation and rental obligation. Upon exercise of the option, the Tenant shall
pay to the Landlord additional rent in an amount to be negotiated between the
parties. The Tenant's right to exercise this option applies independently to the
Marina Tract and the Waterfront Tract. In other words, the Tenant may exercise
its option to develop either tract or both tracts. If, for whatever reason, the
Landlord and the Tenant are unable to agree upon the terms and conditions to be
contained in such Development Agreement, then the remainder of this Lease shall
remain in full force and effect and shall not be affected in any way by the
failure of the parties to reach agreement concerning the Development Agreement.
Section 1429. Delaware River Rights Agreement. The parties hereto
agree that each shall negotiate with the other in good faith to enter into a
River Rights Agreement sometime after the date hereof in which the Tenant shall
be granted certain river rights relating to the Waterfront Tract. If, for
whatever reason, the Landlord and the
109
<PAGE>
Tenant are unable to agree upon the terms and conditions to be contained in such
River Rights Agreement, then the remainder of this Lease shall remain in full
force and effect and shall not be affected in any way by the failure of the
parties to reach an agreement concerning the River Rights Agreement.
[END OF ARTICLE XIV]
110
<PAGE>
IN WITNESS WHEREOF, the Landlord has caused this Lease to be
executed in its name by its duly authorized officer; and Tenant has caused this
Lease to be executed in its name by its duly authorized officer, as of the date
first above written.
ATTEST: NEW JERSEY ECONOMIC DEVELOPMENT
[SEAL] AUTHORITY, the Landlord
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
- -------------------------------- --------------------------------
Assistant Director Executive Director
WITNESS: SONY MUSIC/PACE PARTNERSHIP, a New
York general partnership, the Tenant
By: SM/PACE, Inc., its general partner
/s/ [ILLEGIBLE] By: /s/ B.E. Becker
- -------------------------------- --------------------------------
Secretary Name: B.E. Becker
Title: President
111
<PAGE>
EXHIBIT A
Camden Amphitheater Project Description
12-1-93
The project known as the "Camden Amphitheater" is located along the Delaware
River in Camden, New Jersey. The exact site is bounded on the north by Wiggins
Park, on the west by the Delaware River, on the east by Delaware Avenue and on
the south by Clinton Street (extended).
The project will be a convertible indoor/outdoor entertainment facility for the
presentation of musical and theatrical events consisting of a covered stage,
covered seats, as well as lawn seats, administration facilities, food and
beverage facilities, permanent restroom facilities and enclosed lobbies. A
segmented door system will be used to enclosed the facility. The stage house,
seating areas and other facilities cover approximately 13 acres.
Specifically, the stage house consists of a main stage area with a removable
stage to accommodate stadium shows along with an orchestra pit. The major roof
component of the project consists of approximately 44,000 square feet covering
7,000 fixed seats on the main floor. Approximately 1,500 of the center main
floor seats will be cushioned to provide theater quality. In the enclosed
configuration, the 1,500 theatrical seats can be segmented from the remaining
5,500 seats by moveable wall petitions. The lawn seating area will accommodate
18,000 people. Dressing rooms for the performers will be located adjacent to the
stage house. The plaza areas comprise approximately 125,000 square feet and will
consist of restroom facilities, food and beverage areas, a first aid and
security office, production offices, a box office and administration buildings.
Food and beverage kiosks will be located on either side of the lawn seating
area. A large party tent will also be erected within the East plaza with a view
of the Delaware River. A dock facility will be located at the rear of the stage
house area at a height sufficient to unload equipment. Sufficient parking area
for both buses and trucks will be provided along with service drives to
facilitate ingress and egress to the back of the stage house area. The parking
lots will be provided by an agreement with the local parking authority.
<PAGE>
Exhibit "B"
EASEMENT AGREEMENT
THIS EASEMENT AGREEMENT ("Agreement"), dated as of the 10th day of
August , 1993, by and between South Jersey Port Corporation ("the Port"), a
public body corporate and politic established by NJSA 12:11A-1 of the Laws of
New Jersey, having an address at 2nd and Beckett Streets, Camden, New Jersey
08103 and New Jersey Economic Development Authority ("NJEDA") a public body
corporate and politic established by NJSA 34:1B-1 with officers at 200 S. Warren
Street, Trenton, New Jersey 08625 recites:
RECITALS:
A. The Port is the fee simple owner of certain real estate situated
in Camden City, Camden County, New Jersey, as more particularly described in
Exhibit A attached hereto a Survey of Property For New Jersey Economic
Development Authority, Reutter Engineering dated 05-04-1993. "Clinton Street
Access Area Easement"
B. NJEDA is the fee simple owner of certain real estate situated in
Camden City, Camden County, New Jersey, as more particularly described in
Exhibit A attached hereto, a Survey of Property For New Jersey Economic
Development authority, Reutter Engineering dated 05-04-1993 "Amphitheater
Property Easement"
C. The undersigned desire and intend hereby to establish certain
easements and agreements relating to the above properties.
D. Whereas said parties in consideration of the sum of ONE DOLLAR
($1.00) in hand paid each to the other, have agreed to grant and convey to each
other permanent easements for the purpose described below upon the terms and
conditions hereinafter set forth.
AGREEMENT:
NOW THEREFORE, the undersigned hereby agree as follows:
(1) Grants of Easements
A. The Port does hereby grant and convey to the New Jersey Economic
Development Authority, its successors and assigns, a permanent and perpetual
access easement onto the Port property in the "Clinton Street Access Area
Easement" as more fully described
<PAGE>
in Exhibit A attached hereto (the "Access Area"). The Port, its successors, and
or assigns reserve access for (a) health, safety and emergency purposes, (b) the
use of the Access Area as a main vehicular entrance to the Port for limited
periods of time if no other entrance is available or safe for use, and (c) at
all times for the operation of the rail line in Clinton Street including the
efficient loading and unloading of railroad cars. The parties shall regularly
communicate with each other regarding each's need to use the easement so that
the use of the easement can be coordinated. Whenever, possible the Port shall
provide 48 hours notice to the NJEDA of the Port's use of the property for the
loading or unloading of railroad cars. The NJEDA shall provide the Port 48 hours
notice of any use of the easement which would block ingress or egress. Whenever
there is a conflict the reasonable needs of the Port to use the Access Area for
loading and unloading of railroad cars use shall prevail.
B. Said easement to NJEDA shall provide for restricted access. The
access shall be restricted to emergency vehicles and service vehicles for future
commercial uses, employees or agents of the parties, successors and/or assigns
and marina vehicular access. The access shall exclude public pedestrian traffic.
Said easement shall only be used for public pedestrian traffic after the Port,
NJEDA, and their successors or assigns have agreed on reasonable regulations for
its use.
C. NJEDA hereby grants the Port, its successors and assigns, a
permanent and perpetual access easement onto a portion of the Camden
Amphitheater property ("Amphitheater Property") as shown on Exhibit A attached
hereto, for the purpose of docking, loading and unloading of ships, trucks and
railroad cars, as well as, to perform necessary maintenance within said
easement.
2. Improvements
A. The former Clinton Street use areas shall be controlled by a curb
barrier, fencing and other improvements as shown in Exhibit A. No other
improvements shall be made by NJEDA, its` successors or assigns in the right
of way without the written consent of the Port. Said consent shall be at the
Port's sole discretion and shall not be unreasonably denied or delayed by the
Port.
B. The Amphitheater Property shall be gated and fenced to separate
the access area from the remainder of the Amphitheater Property. The Port shall
purchase and install a locked swing gate and at least 6 foot fencing surrounding
the restricted area. In addition, the eastern most end of Clinton Street, at the
Delaware Ave. Extension/Front Street intersection shall be gated and fenced to
control access into the "restricted" access area at the Port's expense.
C. NJEDA shall, at its sole cost and expense, make application for
and pursue with reasonable diligence such
<PAGE>
governmental approval as may be required to permit the curbing and fencing off
of the Access Area. NJEDA and the Port each covenant and agree to cooperate with
the other in connection with any such application. The costs associated with
such curbing and fencing shall be borne solely by NJEDA.
3. Repairs Maintenance
During the life of this easement NJEDA and the South Jersey Port
Corporation shall share equally in the cost to perform all normal and necessary
items of maintenance for normal wear and tear, snow, removal, of the Access
Area. The Port and NJEDA shall annually agree on a budget for repairs and
maintenance of the Access Area. Any expense not contained in the budget, either
alone or in the aggregate in any given calendar year, exceeding $5,000 shall
require prior written approval of the NJEDA. Other than in an emergency, prior
to any expenditure, the Port shall provide prior written notice to NJEDA of the
expenditure and the purpose of the repair and maintenance expense.
The Port solely shall be responsible for the normal maintenance and
repair of the Amphitheater Property and shall properly perform all items of
maintenance and repair required or reasonably requested by the NJEDA. At all
times the maintenance and repair shall maintain reasonable standards of order
and cleanliness. NJEDA reserves the right to object to any use by the Port which
creates an eyesore or potentially dangerous or hazardous condition on any of the
Amphitheater Property.
In the event the Port does not maintain or repair the Amphitheater
Property to NJEDA's satisfaction, and if after thirty (30) days of receiving
notice from NJEDA, the Port has not repaired the Property or provided a plan to
NJEDA to do such, then NJEDA shall be permitted to make the repairs and be
reimbursed by the Port for any and all such expense, cost and fees.
4. Indemnification
A. The Port shall defend and indemnify NJEDA and hold the NJEDA
harmless from and against any losses, damages, costs, expenses, claim, injury or
liability of any kind whatsoever including but not limited to attorney's fees
and cost (whether arising by such indemnified event or by litigation under this
paragraph), (hereinafter "Claims") that NJEDA may sustain or be subject to
arising from the Port's access to the Clinton Streets Access Area and the
Amphitheater Property including the following:
(i) The Port's breach of its obligations hereunder, for any reason
whatsoever; (ii) any injury or damage to persons or property (including without
limitation any and all damages or injury to the environment and/or natural
resources) incident to the exercise or performance by the Port or its agents or
the Port's rights or obligations hereunder for any reason whatsoever; (iii) any
claims by third parties for any goods or services sold or
<PAGE>
claimed by third parties for any goods or services sold or claimed to be sold to
the Port and (iv) the negligence, gross negligence, willful misconduct or other
acts or omissions of the Port or any of its agents or contractors in any way
related to the subject matter of this Agreement.
The Port and all of its agents and assignees, shall maintain
adequate insurance in order to protect the interest of the NJEDA. Such insurance
shall be in such amounts as the NJEDA may reasonably require. Nothing however,
shall be deemed to limit the liability of the Port by the maintenance of
insurance.
B. In the event that NJEDA leases or assigns its interest, NJEDA
agrees to provide in its agreement the following: The lessees and/or assigns of
NJEDA shall defend and indemnify the Port and hold the Port harmless from and
against any losses, damages, costs, expenses, claim, injury or liability of any
kind whatsoever including but not limited to attorney's fees and cost (whether
arising by such indemnified event or by litigation under this paragraph),
(hereinafter "Claims") that the Port may sustain or be subject to arising from
the lessees and/or assigns of NJEDA's access to the Clinton Street Access Area
and the Amphitheater Property including the following:
(i) The lessees and/or assigns of the NJEDA's breach of its
obligation hereunder, for any reason whatsoever; (ii) any injury or damage to
persons or property (including without limitation any and all damages or injury
to the environment and/or natural resources) incident to the exercise or
performance by the successors and/or assigns or its agents or the successors
and/or assigns' rights or obligation hereunder for any reason whatsoever; (iii)
any claims by third parties for any goods or services sold or claimed by third
parties for any goods or services sold or claimed to be sold to the lessees
and/or assigns and (iv) the negligence, gross negligence, willful misconduct or
other acts or omissions of the lessees and/or assigns or any of its agents or
contractors in any way related to the subject matter of this Agreement.
The lessees and/or assigns and all of its agents and assignees,
shall maintain adequate insurance in order to protect the interest of the Port.
Such insurance shall be in such amounts as the Port may reasonably require.
Nothing however, shall be deemed to limit the liability of the lessees and/or
assigns by the maintenance of insurance.
5. Compliance with all Laws.
The Port agrees that the Port in connection with its exercise of the
rights herein granted, the Port and its agents or contractors will fully and
completely comply with all applicable laws, rules and regulations of any State,
local or federal governmental agency.
<PAGE>
6. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey.
7. Entire Agreement.
This Agreement contains the entire agreement between the parties
concerning its subject matter, and supersedes and replaces all prior agreements
and understandings with respect to the Parties access to the Access Area and the
Amphitheater Area.
8. Amendment.
No agent, employee, or other representative or either party is
empowered to alter or amend any of the terms of this Agreement, unless such
alteration and/or amendment is in writing and has been signed by an authorized
representative of each of the parties. This provision cannot be orally waived.
9. Successors, Assigns, etc.
Anything to the contrary notwithstanding, the terms and conditions
of this Agreement and the rights and obligations created as a result thereof
shall be binding upon and/or inure to the benefit of the parties hereto, their
officers, directors, agents, employees, respective successors, permitted
assigns, designees and contractors.
The Port shall not assign, transfer or otherwise hypothecate this
Agreement, or any rights hereunder except to the Delaware River Port Authority
or its port subsidiary without the prior written consent of the NJEDA.
10. Notice.
Any and all notices permitted or required to be given pursuant to
this Agreement shall be given in writing by a recognized overnight mail courier
for the NJEDA to the attention of Executive Director, Vito Nardelle at the
address set forth on page 1, with a copy to Office of the Attorney General,
Justice Complex, Trenton, New Jersey and for the S.J.P.C. at the address set
forth on page 1 to the attention of Joseph Balzano, Executive Director, with a
copy to Harvey C. Johnson, Esquire, 228 Cooper Street, Camden, New Jersey 08101.
11. Survival.
The language set forth in Paragraph 4 shall survive the expiration
or sooner termination of this Agreement.
<PAGE>
In WITNESS whereof, the undersigned has executed this Agreement on
even date.
(Corporate Seal) South Jersey Port Corporation
ATTEST:
/s/ [ILLEGIBLE] By: /s/ Joseph A. Balzano
- ------------------------- ----------------------------
Joseph Balzano
Title: Chief Executive Officer
New Jersey Economic Development Authority
By: /s/ Vito R. Nardelli
----------------------------
Vito R. Nardelli
Title: Executive Director
<PAGE>
EXHIBIT C
COPY OF THE COLORED MAP OF SUBJECT
TRACTS AND EASEMENT TRACTS
<PAGE>
[GRAPHIC OMITTED]
CAMDEN AMPHITHEATRE
<PAGE>
EXHIBIT "D"
[Letterhead of Sewell & Riggs]
January ___, 1994
New Jersey Economic Development Authority
Capital Place One - CN 990
200 South Warren Street
Trenton, New Jersey 08625
Re: Lease Agreement ("Lease") dated January __, 1994 by and between New
Jersey Economic Development Authority ("Landlord") and Sony
Music/PACE Partnership ("Tenant"), a New York general partnership
whose only partners are SM/PACE, Inc. ("Pace"), a Texas corporation,
and YM Corp., a Delaware corporation
Gentlemen:
We have acted as counsel for Tenant in connection with the Lease. This
opinion is being delivered to you pursuant to the Lease. We advise you that
while we represent Tenant in connection with a number of matters, there are
other matters about which we have not been consulted and concerning which we
have no knowledge.
In connection with the opinions herein expressed, we have examined the
following documents:
(a) The Lease.
(b) The Partnership Agreement of Tenant, as amended ("Partnership
Agreement"), and other partnership documents and records of Tenant,
including records of partnership proceedings.
(c) Articles of Incorporation and Bylaws, each as amended, of Pace
and other corporate documents and records of Pace, including records of
corporate proceedings.
(d) Opinion ("Backup Opinion") of Warshaw, Burstein, Cohen,
Schlesinger & Kuh regarding certain matters pertaining to New York law.
<PAGE>
EXHIBIT "D"
New Jersey Economic Development Authority
January __, 1994
Page 2
(e) Such other documents, records and certificates of public
officials, Tenant, officers and other representatives of Tenant and its
partners and other persons and entities as we have deemed necessary or
appropriate for the opinions expressed herein.
By accepting this opinion, you are agreeing that in rendering this opinion
we may assume (i) the genuineness of all signatures (except for the signature of
Tenant and Pace), (ii) the authenticity of all documents submitted to us as
originals and the conformity to original documents of all documents submitted to
us as certified or photostatic copies, and (iii) the correctness of all
statements set forth in certificates or written documents of governmental
officials and certificates or written documents of Tenant, its partners and
representatives and representatives of its partners as to corporate and
partnership proceedings, incumbency of officers and other partnership and
corporate matters.
Based upon the foregoing and subject to the assumptions, limitations,
qualifications and exceptions set forth herein, we are of the opinion that:
1. Tenant is a general partnership validly existing under the laws
of New York.
2. Tenant has the partnership power and authority to execute and
deliver the Lease and to perform its obligations thereunder.
3. The Lease has been duly authorized, executed and delivered by
Tenant.
4. There are, to our knowledge, no actions, suits or proceedings
pending or threatened against Tenant before any court or arbitrator or by
or before any administrative agency or governmental authority in which
there is a reasonable possibility of an adverse decision which could
reasonably be expected to have a material and adverse effect on the
ability of Tenant to perform its obligations under the Lease.
The foregoing opinions are subject to and qualified in all respects by the
following:
(i) As to the various questions of fact material to our
opinions, such as the identities of the current partners of Tenant and
officers of such partners and the opinions set forth in Paragraph 4
regarding outstanding actions, suits or proceedings, we have relied upon
representa-
<PAGE>
EXHIBIT "D"
New Jersey Economic Development Authority
January ___, 1994
Page 3
tions and warranties set forth in various certificates we have reviewed.
In rendering this opinion, we have not made any independent investigation
as to the accuracy or completeness of any factual representation,
warranty, data or other information, whether written or oral, that may
have been made by or on behalf of the parties to the Lease. We advise you
that no special investigation of the relevant facts or circumstances has
been made. In that connection, we have made no general review of the files
of Tenant (whether in our possession, the possession of Tenant, or the
possession of any other party). Additionally, we have made no
investigation or review of any agreements, instruments, judgments,
decrees, franchises, permits or the like, and have made no independent
search through the records of any judicial authority or governmental
agency as to the existence of any actions, suits, investigations or
proceedings, if any, pending or threatened against Tenant.
(ii) Our knowledge as to any factual matter in connection with
this opinion is limited to the current consciousness of Michael F. Rogers,
the lawyer in our firm who has participated in the negotiation and
preparation of the Lease, and does not include constructive inquiry or
imputed knowledge.
(iii) To the extent that New York law applies to opinions (1),
(2) and (3), we have relied on the Backup Opinion.
No opinion is expressed herein other than in respect of the current law in
Texas, the current law in New York subject to the qualification set forth in
subpart (iii) above and the current federal laws of the United States of
America. We express no opinion as to any agreement other than the Lease. We have
no obligation to update this opinion for events occurring after the date hereof.
This opinion is given solely for your benefit, and may not be relied upon by any
other party.
Very truly yours,
SEWELL & RIGGS, a Professional
Corporation
By:
------------------------------
Michael F. Rogers
<PAGE>
EXHIBIT "D"
New Jersey Economic Development Authority
January __, 1994
Page 4
<PAGE>
EXHIBIT E-1: COST INCLUDED IN TCCO GMP
====================================== =============== ===== ============
Unit 7,000/25K
Cost Item Quantity Rate No Balcony
w/SJPAC
====================================== =============== ===== ============
CONSTRUCTION HARD COST 20,315,000
======================================
General Construction 20,315,000
EQUIPMENT-To be installed by TCCO
======================================
REQUIRED BY SJPAC: 725,000
Rigging (Jules Fisher Budget)
Fire Curtain-two part 175,000 DB
Portal Legs & mot. cwt. rig. 100,000 DB-NEW
Portal Hdr. & mot. cwt. rig. 30,000 DB-NEW
House Curtain & rigging 30,000 DB-NEW
Manual cwt. rig. (full comp) 300,000 EST
Spotline rigging 15,000 DB
Cable p/u rigging 15,000 DB-NEW
Draperies 60,000 DB
Subtotal 725,000
Basic Intercom System DB 16,000
Basic Paging System DB 22,000
Electrical (Jules Fisher Budget) 288,000
Stage Light. Control Systems
Stage Lt. Outlet Devices 48,000 DB
Lighting Control System 240,000 DB
Subtotal 288,000
Speaker System-House 200,000
SUBTOTAL CONST. TCCO CONTROL 1,251,000
- -------------------------------------- --------------- ----- ------------
================================================================================
SUBTOTAL ALL TCCO COST 21,566,000
================================================================================
SALES TAX CREDIT -1.00% (215,660)
GENERAL CONDITIONS 6.50% 1,401,790
INSURANCE 1.20% 258,792
- --------------------------------------------------------------------------------
SUBTOTAL 23,010,922
CONTINGENCY 3.00% 690,328
- --------------------------------------------------------------------------------
SUBTOTAL 23,701,250
TCCO FEE 2.10% 497,726
================================================================================
GRAND TOTAL TCCO INSTALLED COST (GMP) 24,198,976
================================================================================
<PAGE>
EXHIBIT E-2: COST OUTSIDE THE GMP
====================================== =============== ===== ============
Unit 7,000/25K
Cost Item Quantity Rate No Balcony
w/SJPAC
====================================== =============== ===== ============
EQUIPMENT-PACE REQUIREMENT
======================================
Audio 50,000
Rigging-PACE 20,000
Spotlights 6 7000 42,000
Video 73,500
Cleaning & Maintenance 28,000
Communication-other 20,000
Computers 25,000
Concessionaire 1,000,000
Drop Boxes 3,500
Electronic Architecture 600,000
Furniture & Equipment-Dressing 10,000
Furniture & Equipment-Office 20,000
Graphic Lighting-Exterior 100,000
Guard House 0
Orchestra Shell 80,000
Patio Tables & Chairs 25,000
Signage-facility 60,000
Seating:
Standard R&R Seating 5,500 66.70 366,850
Box Seat Equipment 40,000
Theat. Upgrade-1,500 seats 1,500 104 156,000
Aisle Lighting Fixtures 100 24.00 2,400
TOTAL SEATING COST 565,250
Stage Lighting Fixtures 160,000
Stage System/Orch. Pit 200,000
Telephone 30,000
Tents (1-40'x40';1-50'x120') 38,000
--------------- ----- ------------
Equipment Subtotal 3,150,250
OVERHEAD
======================================
Architectural Design (fixed fee) 370,500
Civil Engineering (fixed fee) 75,000
M.E.P. Engineering (fixed fee) 65,000
Structural Engineering (fixed fee) 58,500
Duplicate Design Fees: 192,000
<PAGE>
EXHIBIT E-2: COST OUTSIDE THE GMP
====================================== =============== ===== ============
Unit 7,000/25K
Cost Item Quantity Rate No Balcony
w/SJPAC
====================================== =============== ===== ============
Arch/MEP/Struct. 72,000
Civil Engineering 100,000
Other (Arch Outside) 20,000
Acoustical Engineering 10,000
Landscape Design 8,000
Construction Staking (20K.buy w/job;GC) 0
Construction Testing (by Owner) 100,000
Environmental Audits (2) 0
Permit Expenses 245,500
CCMUA-Review 1,000 0
CCMUA-Connection Fee 70,000 0
CCMUA-User Fee 50,000 0
CC Plan Review-RV 15,000 0
Construction Permit 25,000 0
Construction Consultant 59,500
Misc Permits 10,000 0
Schuster 15,000 0
Subtotal 245,500 0
Geotechnical Engineering 30,000
Project Manager 50,000
Rezoning/TMP 0
Survey (M & B, Topo) 39,274
Theatrical Consultants: 195,000
Jaffee 100,000 0
Brown 23,000 0
Saylor 15,000 0
Other 55,000 0
Subtotal 195,000 0
Other Consultants-Fuller 45,000
A & E Contingency 50,000
- -------------------------------------- --------------- ----- ------------
Overhead Subtotal 1,533,774
START-UP COSTS
======================================
Consultants (Real Estate) 400,000
Electrical Connections 20,000
Liquor License 20,000
G & A, Marketing 477,000
<PAGE>
EXHIBIT E-2: COST OUTSIDE THE GMP
====================================== =============== ===== ============
Unit 7,000/25K
Cost Item Quantity Rate No Balcony
w/SJPAC
====================================== =============== ===== ============
Legal 240,000
Market Study 5,000
Misc. 0
Relocation-GM & key execs. 35,000
Renderings & Models 0
Title Insurance 0
Project Travel Expense 100,000
- -------------------------------------- --------------- ----- ------------
Start-up Subtotal 1,297,000
OFFSITE/OTHER COSTS
====================================== =============== ===== ============
Street Improvements 0
Parking Lots 0
SM/PACE Contingency 470,000
Expenditures To Date 200,000
Interim Interest 150,000
- -------------------------------------- --------------- ----- ------------
Subtotal Offsite/Other 820,000
================================================================================
Total Sony Music/Pace Project Costs 6,801,024
================================================================================
<PAGE>
EXHIBIT F
LIST OF PERMITTED ENCUMBRANCES
1. Rights of Camden Municipal Port Authority, as tenant, under lease
agreement covering a portion of the Leasehold Tract and rights of Dockside
Refrigerated Warehouse, Inc., as sublessee, under sublease agreement
covering same portion of Leasehold Tract; provided, however, that these
rights of Camden Municipal Port Authority and Dockside Refrigerated
Warehouse, Inc. shall not be Permitted Encumbrances after the Commencement
Date and must be terminated by the Landlord prior to that time. Nothing
contained herein shall be deemed to be a waiver or release of the
condition in favor of the Tenant contained in Section 404(j) of this
Lease.
2. 35 foot wide utility easement along the easterly boundary of the Leasehold
Tract adjacent to Delaware Avenue South as reserved by the Housing
Authority of Camden County and the location of which is defined in
instrument recorded in Deed Book 3725, Page 638 of the Camden County Real
Property Records. Nothing contained herein shall be deemed to be a waiver
or release of the condition in favor of the Tenant contained in Section
404(h)(G) of this Lease.
3. Utility easement in favor of Public Service Electric and Gas Company
created by instrument recorded in Deed Book 3697, Page 840 of Camden
County Real Property Records; provided, however, that the rights of Public
Service Electric and Gas Company under this easement shall not be a
Permitted Encumbrance after the Commencement Date and must be terminated
by the Landlord prior to that time.
4. The easement rights reserved by South Jersey Port Corporation in clause C
of Section 1 of that certain Easement Agreement which is attached to this
Lease as Exhibit "B" and which easement is located wholly upon the most
southerly portion of the Commercial Development Tract and is designated as
the "Amphitheatre Property Access Easement" in green cross-hatch on the
map attached to this Lease as Exhibit "C".
5. Those conditions and restrictions as may be imposed prior to the
Commencement Date on that portion of the Subject Tracts currently owned by
CRA pursuant to proposed Contracts for Sale of Land for Private
Redevelopment among the CRA, as seller, and the Landlord and Cooper's
Ferry Development Association, Inc., as purchasers; provided, however,
that (i) the Landlord will consult with the Tenant as to the types and
locations of any such proposed conditions and restrictions and consider
the Tenant's reasonable suggestions in regard to same and (ii) the
Tenant's obligations under this Lease are conditioned upon the Tenant's
approval of the location and type of such proposed restrictions and
conditions pursuant to the provisions of Section 404(h)(F) hereof.
<PAGE>
EXHIBIT "F-1"
1. Subject to the rights of the United States Government and the State of New
Jersey arising by reason of the United States Government's control of
navigable waters and the interest of the State of New Jersey in the land
and water of such character, together with the rights of the public in and
to use of the waters of such character.
2. Title to so much of the premises as may lie below the high water line of
the Delaware River is not insured.
3. The high water line of the Delaware River is not insured.
4. Subject to the rights of others in and to the waters of the Delaware
River.
5. Subject to terms and conditions of Legislative Grant to Conrail (formerly
Camden and Amboy Railroad and Transportation Company and others) approved
March 31, 1869, Chapter 386, page 1026 of the Laws of New Jersey and as
set forth on the Tax Map.
6. Subject to terms and conditions of Confirmatory and Extension Grant dated
May 12, 1961 from the State of New Jersey as set forth in the records of
the Clerk of Camden County at Deed Book 2449, page 190.
<PAGE>
EXHIBIT G
_____________, 1994
City of Camden Parking Authority
c/o Cooper's Ferry Development Association
800 Hudson Square, Suite 102
Camden, New Jersey 08102
Re: Parking Facilities ("Parking Facilities") for use in
connection with the proposed entertainment facility to be
constructed in Camden, New Jersey ("Proposed Entertainment
Facility") by Sony Music/PACE Partnership ("SMP")
Gentlemen:
Please confirm our agreement in regard to the following matters
related to the Parking Facilities:
(i) Parking Facilities. The City of Camden Parking Authority
("Parking Authority") shall be responsible for obtaining the
ownership or use of a sufficient amount of land ("Parking Lot Land")
within 2,500 feet or less of the entrance of the Proposed
Entertainment Facility to provide a number of parking spaces to be
included as a part of the Parking Facilities equal to or greater
than (i) 6,500 plus (ii) (x) the amount by which the maximum
capacity of the Proposed Entertainment Facility exceeds 20,000
divided by (y) three and one-tenth (3.1). The location and
configuration of the tract or tracts of land which are currently
intended to be used as the Parking Lot Land are appropriately
designated on the plat attached hereto as Exhibit "A."
(ii) Operation of Parking Facilities. The Parking Authority
shall be responsible, at its sole cost and expense, to cause the
Parking Facilities to be (a) made available to SMP, its employees,
invitees and patrons, on an exclusive basis, during all Show Hours
(herein defined) and (b) operated in a first class, professional
manner in accordance with certain performance criteria to be
established and agreed upon between the Parking Authority and SMP.
The obligation of operating the Parking Faculties shall include,
without limitation, (i) providing sufficient staff at the Parking
Facilities during
<PAGE>
City of Camden Parking Authority
__________, 1994
Page 2
all Show Hours to collect parking fees and supervise the efficient
ingress, parking and egress of vehicles, (ii) providing adequate
security services during all Show Hours to prevent vandalism or
theft, (iii) furnishing all necessary clean-up of trash, litter and
other debris in the Parking Facilities after the conclusion of each
performance or event presented at the Proposed Entertainment
Facility, (iv) providing such signage as may be mutually agreed upon
in the definitive agreement to be subsequently executed by the
parties hereto and (v) providing such equipment as may be reasonably
required by SMP to efficiently operate and maintain the Parking
Facilities. As used herein, the term "Show Hours" shall mean, on the
days for which a performance or event is scheduled to be held or
presented at the Proposed Entertainment Facility, those hours of the
day beginning at the earlier of (x) three hours prior to the
scheduled time for commencement of such performance or event or (y)
two hours before the scheduled time of opening the gates of the
Proposed Entertainment Facility to the public for such performance
or event and ending three hours after the scheduled time for the
conclusion of such performance or event.
(iii) Revenues from Operating of Parking Facilities. SMP shall
be entitled to receive a portion of the revenues generated from the
use of the Parking Facilities in conjunction with the promotion and
presentation of all events at the Proposed Entertainment Facility in
accordance with the following provisions:
(a) Except as provided in clause (b), SMP shall receive
58.883% of such revenues generated from the use of the Parking
Facilities.
(b) With respect to events presented by the South Jersey
Performing Arts Council during the winter/indoor season of the
Proposed Entertainment Facility, SMP shall receive 25% of such
revenues generated from the use of the Parking Facilities.
The amount of revenues generated from the use of the Parking
Faculties in conjunction with any performance or event presented at
the Proposed Entertainment Facility shall be deemed to be equal to
(A) (i) the total attendance at such event divided by 3.1 minus (ii)
the number of VIP
Exhibit G (cont.)
<PAGE>
City of Camden Parking Authority
___________, 1994
Page 3
parking spaces multiplied by (B) the per vehicle charge then
collected from persons using the Parking Facility. The per vehicle
charge shall initially be $6.00 and shall thereafter be changed only
upon the mutual agreement of SMP and the Parking Authority. The
amounts payable from the Parking Authority to SMP in accordance with
the provisions of this Paragraph 3 shall be due and payable for each
seven (7) day period ending on Mondays by no later than the
following Friday. Payments shall be made along with a complete and
accurate accounting of the parking charges for the applicable seven
(7) day period prepared by the Parking Authority.
(iv) VIP Parking. SMP shall have the right to designate (i) up
to 400 parking spaces as "VIP parking spaces" during the
outdoor/summer season of the Proposed Entertainment Facility and
(ii) up to 200 spaces as "VIP parking spaces" during the
winter/indoor season of the Proposed Entertainment Facility. The VIP
parking spaces may be used or utilized by SMP for any purpose which
it may choose including, without limitation, the parking of employee
vehicles or the parking of preferred patrons or season
ticketholders. SMP shall be entitled to receive and retain 100% of
all revenues generated from the use of the VIP parking spaces. The
Parking Authority shall be responsible for providing the same
services for the VIP Parking Spaces as it provides with respect to
the rest of the Parking Facilities; provided, however, that SMP
shall be obligated to reimburse to the Parking Authority any direct
staffing costs incurred in connection with the operation of the VIP
parking spaces.
(v) Employee Parking. Employees of the Proposed Entertainment
Facility may park in those areas within the Parking Facilities that
are reasonably designated by the Parking Authority for employee use,
subject to SMP's payment of the following amounts to the Parking
Authority:
(a) SMP shall pay $30.00 per month to the Parking
Authority for each permanent, non-seasonal employee who uses
the Parking Facilities on a daily basis.
(b) SMP shall pay $3.00 per day to the Parking Authority
for each seasonal/temporary employee who uses the Parking
Facilities
Exhibit G (cont.)
<PAGE>
City of Camden Parking Authority
_____________, 1994
Page 4
from time to time upon the days that events are presented in
the Proposed Entertainment Facility.
The monthly and daily amounts specified above may be changed from
time to time, but no more frequently than once every three years, in
proportion with changes in the Consumer Price Index; provided that
such charges may never exceed those amounts charged by the Parking
Authority to similarly situated employees at nearby surface lots.
(vi) Replacement of Parking Facilities. The Parking Authority
will have the right, from time to time, to replace the Parking
Facilities with substitute parking facilities so long as at least
the same number of parking spaces are available within the same
approximate distance from the entrance to the Proposed Entertainment
Facility.
(vii) Insurance and Indemnity. The Parking Authority shall be
required to secure and maintain in full force and effect during all
Show Hours a comprehensive general liability insurance policy with
limits of not less than $1,000,000 per occurrence and $5,000,000
aggregate with respect to bodily injury or death and with respect to
property damage for incidents occurring on or about the Parking
Facilities. The Parking Authority shall also be required to
indemnify, defend, protect and save harmless SMP from and against
any and all liabilities, penalties, damages, claims, costs, charges
and expenses which may be imposed upon, incurred by or asserted
against SMP from any cause or any manner whatsoever relating to, or
arising out of, the operation or use of the Parking Facilities. The
definitive agreement to be entered into by and between SMP and the
Parking Authority shall more fully define and describe the parties'
respective obligations and rights in regard to the insurance and
indemnity provisions referred to in the immediately preceding
sentence.
(viii) Term of Agreement. The term of the agreement to be
entered into by and between SMP and the Parking Authority in regard
to the Parking Facilities shall have a term running concurrent with
SMP's leasehold or management rights at the Proposed Entertainment
Facility.
Exhibit G (cont.)
<PAGE>
City of Camden Parking Authority
_________________, 1994
Page 5
(ix) Condition. The obligations of each of the parties hereto
are conditioned upon the occurrence of the Proposed Entertainment
Facility being constructed by SM/P.
We intend this letter to be a binding agreement in regard to the
acquisition, use and operation of the Parking Facilities in conjunction with the
Proposed Entertainment Facility. Each party hereto will work reasonably with the
other to hereafter execute a more detailed agreement which contains all of the
substantive provisions set forth herein. If this letter accurately sets forth
our agreement to the matters set forth herein, please execute in the space
provided below.
Sincerely,
SONY MUSIC/PACE PARTNERSHIP
By: SM/PACE, Inc.
By:
-------------------
Name:
-----------------
Title:
----------------
AGREED AND ACCEPTED:
CITY OF CAMDEN PARKING AUTHORITY
By:
----------------------------------
Name:
-------------------------
Title:
--------------------------
Exhibit G (cont.)
<PAGE>
SonyPace Subordinated Debt: UDC, Camden and Combined Debt Service Schedules
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Surcharges Necessary to Retire Subordinated Debt in 21 Years. For Years 2-6,
Surcharge would apply only to non-SonyPace performances.
- -----------------------------------------------------------------------------------------
Estimated Estimated Estimated Projected Projected
Attendence Attendence Total Surcharge Surcharge
Period Outdoors Indoors Attendence Per Ticket Income
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year 1 Construction Construction Construction $0.00 $0.00
Year 2 55,000 55,000 0.50 27,500
Year 3 60,000 60,000 0.50 30,000
Year 4 67,500 67,500 0.50 33,750
Year 5 75,000 75,000 0.50 37,500
Year 6 75,000 75,000 0.50 37,500
Year 7 75,000 75,000 0.50 37,500
Year 8 75,000 75,000 0.50 37,500
Year 9 453,375 296,625 750,000 0.50 375,000
Year 10 453,375 296,625 750,000 1.00 750,000
Year 11 453,375 296,625 750,000 1.00 750,000
Year 12 453,375 296,625 750,000 1.00 750,000
Year 13 453,375 296,625 750,000 1.00 750,000
Year 14 453,375 296,625 750,000 1.00 750,000
Year 15 453,375 296,625 750,000 1.50 1,125,000
Year 16 453,375 296,625 750,000 1.50 1,125,000
Year 17 453,375 296,625 750,000 1.50 1,125,000
Year 18 453,375 296,625 750,000 1.50 1,125,000
Year 19 453,375 296,625 750,000 1.50 1,125,000
Year 20 453,375 296,625 750,000 2.00 1,500,000
Year 21 453,375 296,625 750,000 2.00 1,500,000
Year 22 453,375 296,625 750,000 2.00 1,500,000
Year 23 453,375 296,625 750,000 2.00 1,500,000
Year 24 453,375 296,625 750,000 2.00 1,500,000
Year 25 453,375 296,625 750,000 2.50 1,875,000
Year 26 453,375 296,625 750,000 2.50 1,875,000
Year 27 453,375 296,625 750,000 2.50 1,875,000
Year 28 453,375 296,625 750,000 2.50 1,875,000
Year 29 453,375 296,625 750,000 2.50 1,875,000
Year 30 453,375 296,625 750,000 2.50 1,875,000
Year 31 453,375 296,625 750,000 2.50 1,875,000
- -----------------------------------------------------------------------------------------
Totals 10,427,625 7,304,875 17,732,500 $30,616,250
- -----------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UDC Loan, $2,000,000, Yrs 1-10, O PGI; Yrs 11-21, 5% Interest plus full
amortization of principal balance
- --------------------------------------------------------------------------------
Total Debt Service Principal
----------------------------------------------------------------
Period Interest Principal Total Balance
- --------------------------------------------------------------------------------
$2,000,000
Year 1 $0 $0 $0 2,000,000
Year 2 0 0 0 2,000,000
Year 3 0 0 0 2,000,000
Year 4 0 0 0 2,000,000
Year 5 0 0 0 2,000,000
Year 6 0 0 0 2,000,000
Year 7 0 0 0 2,000,000
Year 8 0 0 0 2,000,000
Year 9 0 0 0 2,000,000
Year 10 0 0 0 2,000,000
Year 11 100,000 0 100,000 2,000,000
Year 12 100,000 0 100,000 2,000,000
Year 13 100,000 0 100,000 2,000,000
Year 14 100,000 0 100,000 2,000,000
Year 15 100,000 0 100,000 2,000,000
Year 16 100,000 0 100,000 2,000,000
Year 17 100,000 0 100,000 2,000,000
Year 18 100,000 0 100,000 2,000,000
Year 19 100,000 455,000 555,000 1,545,000
Year 20 77,250 1,125,000 1,202,250 420,000
Year 21 21,000 420,000 441,000 0
Year 22
Year 23
Year 24
Year 25
Year 26
Year 27
Year 28
Year 29
Year 30
Year 31
- --------------------------------------------------------------------------------
Totals $996,250 $2,000,000 $2,996,250
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
City of Camden UDAG, $4,000,000, Yrs 1-10, O PGI, Yrs 11-19, Interest at a rate
of 15% so as to yield MPV of $4,070,781 (discounted at 4%) over life of loan
- --------------------------------------------------------------------------------
Total Debt Service Principal
-----------------------------------------------------------------
Period Interest Principal Total Balance
- --------------------------------------------------------------------------------
$4,000,000
Year 1 $0 $0 $0 4,000,000
Year 2 0 0 0 4,000,000
Year 3 0 0 0 4,000,000
Year 4 0 0 0 4,000,000
Year 5 0 0 0 4,000,000
Year 6 0 0 0 4,000,000
Year 7 0 0 0 4,000,000
Year 8 0 0 0 4,000,000
Year 9 0 0 0 4,000,000
Year 10 0 0 0 4,000,000
Year 11 600,000 970,000 1,570,000 3,030,000
Year 12 454,500 45,000 499,500 2,985,000
Year 13 447,750 125,000 572,750 2,860,000
Year 14 429,000 220,000 649,000 2,640,000
Year 15 396,000 330,000 726,000 2,310,000
Year 16 346,500 455,000 801,500 1,855,000
Year 17 278,250 600,000 878,250 1,255,000
Year 18 188,250 760,000 948,250 495,000
Year 19 74,250 495,000 569,250 0
Year 20
Year 21
Year 22
Year 23
Year 24
Year 25
Year 26
Year 27
Year 28
Year 29
Year 30
Year 31
- --------------------------------------------------------------------------------
Totals $3,214,500 $4,000,000 $7,214,500
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Combined Debt Service, Subordinated Loans
- --------------------------------------------------------------------------- Excess of Surcharge
Total Debt Service Income over
--------------------------------------------- Principal Cost of Combined
Period Interest Principal Total Balance Subordinated Debt
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$6,000,000 0
Year 1 $0 $0 $0 6,000,000 0
Year 2 0 0 0 6,000,000 27,500
Year 3 0 0 0 6,000,000 30,000
Year 4 0 0 0 6,000,000 33,750
Year 5 0 0 0 6,000,000 37,500
Year 6 0 0 0 6,000,000 37,500
Year 7 0 0 0 6,000,000 37,500
Year 8 0 0 0 6,000,000 37,500
Year 9 0 0 0 6,000,000 375,000
Year 10 0 0 0 6,000,000 750,000
Year 11 700,000 970,000 1,670,000 5,030,000 (920,000)
Year 12 554,500 45,000 599,500 4,985,000 150,500
Year 13 547,750 125,000 672,750 4,860,000 77,250
Year 14 529,000 220,000 749,000 4,640,000 1,000
Year 15 496,000 330,000 826,000 4,310,000 299,000
Year 16 446,500 455,000 901,500 3,855,000 223,500
Year 17 378,250 600,000 978,250 3,255,000 146,750
Year 18 288,250 760,000 1,048,250 2,495,000 76,750
Year 19 174,250 950,000 1,124,250 1,545,000 750
Year 20 77,250 1,125,000 1,202,250 420,000 297,750
Year 21 21,000 420,000 441,000 0 1,059,000
Year 22 1,500,000
Year 23 1,500,000
Year 24 1,500,000
Year 25 1,875,000
Year 26 1,875,000
Year 27 1,875,000
Year 28 1,875,000
Year 29 1,875,000
Year 30 1,875,000
Year 31 1,875,000
- ---------------------------------------------------------------------------------------------------
Totals $4,212,750 $6,000,000 $10,212,750 $20,403,500
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT H
SURCHARGE REVENUE
Period Surcharge Per Ticket
Year 1 0.00
Year 2 0.00
Year 3 0.00
Year 4 0.00
Year 5 0.00
Year 6 0.00
Year 7 0.00
Year 8 0.00
Year 9 0.50
Year 10 1.00
Year 11 1.00
Year 12 1.00
Year 13 1.00
Year 14 1.00
Year 15 1.50
Year 16 1.50
Year 17 1.50
Year 18 1.50
Year 19 1.50
Year 20 2.00
Year 21 2.00
Year 22 2.00
Year 23 2.00
Year 24 2.00
Year 25 2.50
Year 26 2.50
Year 27 2.50
Year 28 2.50
Year 29 2.50
Year 30 2.50
Year 31 2.50
<PAGE>
EXHIBIT I
[INTENTIONALLY DELETED]
<PAGE>
EXHIBIT J
[INTENTIONALLY DELETED]
<PAGE>
Exhibit "K"
GUARANTEE OF RENTAL OBLIGATIONS
Newark, New Jersey
, 1994
The following terms used in this Guarantee of Rental Obligations shall have the
following meanings:
Lease Agreement: Lease Agreement dated __________, 1994 by and
between Landlord and Tenant.
Landlord: New Jersey Economic Development Authority, a
public body corporate and politic of the
State of New Jersey, having its principal
office at 200 South Warren, Street, CN 990,
Trenton, New Jersey 08625.
Tenant: Sony Music/PACE Partnership, a New York
general partnership whose sole general
partners are SM/PACE, Inc., a Texas
corporation and YM Corp., a Delaware
corporation, having its principal office at
515 Post Oak Boulevard, Suite 300, Houston,
Texas 77027.
Guarantor: Sony Music Entertainment Inc., a Delaware
corporation, having its principal office at
550 Madison Avenue, New York, New York 10022.
All capitalized terms shall have the meaning given to them in the
Lease Agreement unless otherwise defined herein.
WHEREAS:
A. Pursuant to the Lease Agreement, Landlord has agreed to lease to
Tenant the Leasehold Tract and Tenant has agreed to let the Leasehold Tract and
construct thereon an open-air and enclosed entertainment musical facility,
together with all buildings, fixtures, personal property and other improvements
which are constructed or placed on the Leasehold Tract as part of or related to
such entertainment musical facility, all located at Beckett Street, Camden, New
Jersey (the "Amphitheater") and the acquisition of the rights to use certain
separate parking facilities located at Clinton Street, Camden, New Jersey (the
"Parking Facilities") (the Amphitheater and the Parking Facilities are,
together, the "Project").
B. Pursuant to the Lease Agreement, Landlord has leased the Project
to Tenant for an Initial Term of thirty-one (31) years and, pursuant to that
certain lease agreement to be entered into between Landlord and South Jersey
Performing Arts Center, Inc., a New Jersey not-for-profit corporation
("SJPAC"), Landlord has leased the Project to SJPAC for a specified number of
<PAGE>
days per calendar year for an initial term of thirty-one (31) years.
C. Guarantor has agreed to guarantee the obligations of Tenant
pursuant to Article III of the Lease Agreement to pay Basic Rent Payments and
Bond Related Supplemental Rent Payments, and Guarantor has agreed to guarantee
all the insurance and indemnity obligations of Tenant pursuant to Article IX of
the Lease Agreement (collectively, the "Rental Obligations").
D. Landlord has declined to issue the Initial Bonds under the Lease
Agreement unless this Guarantee of Rental Obligations is executed by Guarantor
and delivered to Landlord.
E. To induce Landlord to issue the Initial Bonds under the Lease
Agreement, Guarantor has agreed to execute and deliver this Guarantee of Rental
Obligations.
NOW, THEREFORE, in consideration of the premises and as part of the
consideration for the issuance of the Initial Bonds under the Lease Agreement
and to induce the Landlord to issue the Initial Bonds under the Lease Agreement,
Guarantor unconditionally and irrevocably agrees as follows:
1. Guarantor unconditionally and irrevocably guarantees to Landlord
or Landlord's assignee the Rental Obligations.
2. Upon the failure of the Tenant to pay any Rental Obligations,
Guarantor shall pay to Landlord or Landlord's assignee, upon demand, the unpaid
Rental Obligations. Landlord or Landlord's assignee shall have the right to
proceed directly and immediately under this Guarantee of Rental Obligations
without first proceeding against the Tenant or pursuing any other remedy
available to Landlord under the Lease Agreement, including exercising its
remedies against the Tenant.
3. It is expressly understood and agreed that this is a continuing
guarantee and that the obligations of Guarantor are and shall be absolute under
any and all circumstances, irrespective of the validity, regularity or
enforceability of any of the Lease Agreement or any other instruments or
guarantees executed in connection therewith, a true copy of each of said Lease
Agreement, the other instruments and guarantees Guarantor hereby acknowledges
having received, reviewed and approved.
4. Landlord may without notice to or the consent of the Guarantor at
any time and from time to time, either before or after a Tenant Event of Default
under the Lease Agreement or the other documents executed in connection
therewith: (a) amend any
-2-
<PAGE>
provision of the Lease Agreement or any of the other documents executed in
connection therewith, including any change in the Base Rent provided for therein
or any change in the time or manner of payment thereunder; (b) make any
agreement for the extension, payment, compounding, compromise, discharge or
release of any provision of the Lease Agreement or for any modification of the
terms thereof; and (c) without limiting the generality of the foregoing,
Landlord is expressly authorized to surrender, or to modify the form of, any
security which Landlord may at any time hold to secure the performance of any
obligation hereby guaranteed, and this Guarantee of Rental Obligations shall not
be impaired or affected by any of the foregoing.
5. All notices, demands, requests and consents required under this
Guarantee of Rental Obligations shall be in writing. All such notices, demands,
requests and consents shall be deemed to have been properly given if sent by
United States registered or certified mail, return receipt requested, postage
prepaid, or hand delivered by a courier service requiring a signed delivery
receipt addressed to Landlord at New Jersey Economic Development Authority,
Capital Place One - CN 990, 200 South Warren Street, Trenton, New Jersey 08625,
Attention: Executive Director, with a copy to McCarter & English, Four Gateway
Center, 100 Mulberry Street, Newark, New Jersey 07102-4096, Attention: Carol C.
Stern, Esq., addressed to Tenant at 515 Post Oak Boulevard, Suite 300, Houston,
Texas 77027, Attention: Brian E. Becker, and addressed to Guarantor at 550
Madison Avenue, New York, New York 10022, Attention: General Counsel, with a
copy under separate cover to Sony Music Entertainment Inc., 550 Madison Avenue,
New York, New York 10022, Attention: Al Smith and a copy under separate cover to
Sony Capital Corporation, 9 West 57th Street, New York, New York 10019,
Attention: Thomas Jackson. Notices, demands and requests which are served upon
Guarantor, Tenant or Landlord, in the manner aforesaid, shall be deemed
sufficiently served or given for all purposes hereunder upon personal delivery
or upon three (3) days after the time such notice, demand or request shall be
mailed by United States registered or certified mail, return receipt requested,
as aforesaid as evidenced by a receipt stamped by any Post Office or Branch Post
Office regularly maintained by the United States Government or upon receipt, if
hand-delivered by a courier service.
6. This Guarantee of Rental obligations is, and shall be deemed to
be, a contract entered into under and pursuant to the laws of the State of New
Jersey and shall be in all respects governed, construed, applied and enforced in
accordance with the laws of said State; and no defense given or allowed by the
laws of any other state or county shall be interposed in any action or
proceeding hereon unless such defense is also given or allowed by the laws of
the State of New Jersey.
-3-
<PAGE>
7. Each reference herein to Landlord shall be deemed to include its
successors and assigns, in whose favor the provisions of this Guarantee of
Rental Obligations shall also inure. Each reference herein to Guarantor shall be
deemed to include successors and assigns of Guarantor, all of whom shall be
bound by the provisions of this Guarantee of Rental Obligations. In furtherance
of the foregoing, Landlord, Tenant and Guarantor acknowledge and agree that
Landlord shall, contemporaneously herewith, assign all of its right, title and
interest pursuant to this Guarantee of Rental Obligations to the trustee
appointed pursuant to an indenture (the "Trustee") for the bondholders of that
certain series of economic development bonds known as "New Jersey Economic
Development Authority Economic Development Bonds (Camden Amphitheater Project -
Taxable Series 1994)" (the "Bonds"). Guarantor shall make all payments required
by the terms of this Guarantee of Rental Obligations directly to the Trustee (or
as may otherwise be directed in writing by the Landlord).
8. No delay on the part of Landlord in exercising any rights
hereunder or failure to exercise the same shall operate as a waiver of such
rights; no notice to or demand on Guarantor shall be deemed to be a waiver of
the obligation of Guarantor or of the right of Landlord to take further action
without notice or demand as provided herein; nor in any event shall any
modification or waiver of the provisions of this Guarantee of Rental Obligations
be effective unless in writing nor shall any such waiver be applicable except in
the specific instance for which given.
9. Any and all requirements (whether legal or equitable) that
Landlord, as a condition precedent to bringing any action against Guarantor upon
this Guarantee of Rental Obligations, shall institute any action or proceeding
at law or in equity against the Tenant or anyone else are hereby waived by
Guarantor. All remedies afforded to Landlord by reason of this Guarantee of
Rental obligations are separate and cumulative remedies, and no one of such
remedies, whether or not exercised by Landlord, shall be deemed to exclude the
exercise of any other remedy or remedies available to Landlord, and the exercise
or non-exercise thereof shall in no way limit or prejudice any other legal or
equitable remedies which Landlord may have. Landlord shall not be required to
resort to any collateral, through foreclosure or otherwise, prior to the
commencement of any action against Guarantor or against Tenant for performance
or observance of any covenants or agreements herein mentioned or the performance
of which is hereby guaranteed.
10. It is understood and agreed that until each and every term,
covenant and condition of this Guarantee of Rental Obligations is fully
performed, Guarantor shall not be released by any act or thing which might, but
for this provision of this instrument, be deemed a legal or equitable discharge
of a surety or a guarantor, or by reason of any waiver, extension,
-4-
<PAGE>
modification, forbearance or delay or other act or omission of Landlord or its
failure to proceed promptly or otherwise, or by reason of any action taken or
omitted or circumstance which may or might vary the risk or affect the rights or
remedies of Guarantor or by reason of any further dealings between Tenant and
Landlord, whether relating to the Lease Agreement, or otherwise, and Guarantor
hereby expressly waives and surrenders any defense to its liabilities hereunder
based upon any of the foregoing acts, omissions, things, agreements, waivers or
any of them and hereby expressly waives and relinquishes all other rights and
remedies accorded by applicable law to guarantors and sureties, it being the
purpose and intent of this Guarantee of Rental Obligations that the obligations
of Guarantor hereunder are absolute, irrevocable and unconditional on the terms
and conditions herein set forth. Guarantor hereby irrevocably and
unconditionally waives and relinquishes any and all statutory, contractual,
common law, equitable or other claims and rights to be subrogated to the
Landlord's rights under the Lease Agreement upon Guarantor's performance under
this Guarantee of Rental Obligations.
11. Guarantor hereby waives notice of acceptance of this Guarantee
of Rental Obligations, diligence, presentment, filing of claims with a court in
the event of insolvency or bankruptcy of Tenant, protest, notice of protest,
notice of dishonor and all demands whatsoever, except any demands that Landlord
is expressly required to give to Guarantor under the provisions of this
Guarantee of Rental Obligations. Guarantor covenants that this Guarantee of
Rental Obligations will not be limited or discharged except upon full repayment
of the Rental Obligations. Settlement of any claim by the Landlord against the
Tenant, whether in any proceeding or not, and whether voluntary or involuntary,
shall not reduce the amount due under the terms of this Guarantee of Rental
Obligations except to the extent of the amount paid by the Tenant in connection
with the settlement.
12. If any action, suit or proceeding which either directly or
indirectly involves this Guarantee of Rental Obligations is commenced, Guarantor
and Landlord each waive its rights to any jury trial in connection therewith.
13. If any of the provisions of this Guarantee of Rental
Obligations, or the application thereof to any person or circumstance, shall, to
any extent, be invalid or unenforceable, the remainder of this Guarantee of
Rental obligations, or the application of such provision or provisions to
persons or circumstances other than those as to whom or which it is held invalid
or unenforceable, shall not be affected thereby, and every provision of this
Guarantee of Rental Obligations shall be valid and enforceable to the fullest
extent permitted by law.
14. Guarantor hereby agrees to indemnify Landlord against any
reasonable costs or expenses including, without
-5-
<PAGE>
limitation, reasonable attorneys' fees and disbursements, incurred by Landlord
with respect to any action or proceeding to enforce any of the obligations of
Guarantor hereunder, together with interest at the rate equal to the Overdue
Rate from the date of the payment of such cost or expense to the date of
repayment. In any action to enforce this Guarantee of Rental Obligations, the
provisions of this Section 14 shall, to the extent permitted by law, prevail
notwithstanding any provision of applicable law respecting the recovery of
costs, disbursements and allowances to the contrary.
15. Neither Guarantor's obligation to pay in accordance with the
terms of this Guarantee of Rental Obligations nor any remedy for the enforcement
thereof shall be impaired, modified, changed, stayed, released or limited in any
manner whatsoever by any impairment, modification, change, release, limitation
or stay of the liability of Tenant or its estate in bankruptcy or any remedy for
the enforcement thereof, resulting from the operation of any present or future
provision of the Bankruptcy Code of the United States or other statute, State or
Federal, or from the decision of any court interpreting any of the same, and
Guarantor shall be obligated under this Guarantee of Rental Obligations as if no
such impairment, stay, modification, change, release or limitation had occurred.
16. This Guarantee of Rental Obligations is an absolute,
unconditional, present and continuing guaranty of payment and not of collection
of the payments contemplated hereby. No set-off, counterclaim, reduction or
diminution of an obligation, or any defense of any kind or nature (other than
payment of the obligations guaranteed hereunder) which Guarantor has or may have
with respect to a claim under this Guarantee of Rental Obligations, shall be
available hereunder to Guarantor against Landlord or the Trustee. Each and every
default in any payment of any obligations of Guarantor contained in this
Guarantee of Rental Obligations shall give rise to a separate cause of action
hereunder, and separate suits may be brought hereunder against Guarantor as each
cause of action arises. All payments by Guarantor to Landlord or Landlord's
assignee under or by virtue of this Guarantee of Rental Obligations shall be
made in lawful money of the United States of America and in immediately
available funds, to Trustee at such place as Trustee may hereafter designate in
writing or, if directed by Landlord, to the Landlord at such place as the
Landlord may hereafter designate in writing.
17. This Guarantee of Rental Obligations may not be modified or
amended except by an agreement in writing signed by Landlord and Guarantor.
18. Guarantor warrants and represents to Landlord as follows:
-6-
<PAGE>
(a) Upon execution and delivery of this Guarantee of Rental
Obligations by Guarantor, this Guarantee of Rental Obligations will
have been duly executed and delivered and will constitute a legal,
valid and binding obligation of Guarantor enforceable against it in
accordance with its terms (subject, as to enforcement of remedies,
to usual equitable principles and to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect).
(b) The execution, delivery and performance of this Guarantee
of Rental Obligations by Guarantor does not and will not conflict
with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) or require consent under,
or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of Guarantor pursuant to the
terms of, any agreement, mortgage, deed of trust, lease, indenture,
franchise, license, permit or other instrument to which Guarantor is
a party or by which Guarantor or any of Guarantor's properties or
assets may be bound.
(c) All consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses or permits of or
with any court or any public, governmental or regulatory agency or
body having jurisdiction over Guarantor, that are required for the
execution, delivery and performance of this Guarantee of Rental
Obligations have been obtained.
19. This Guarantee of Rental Obligations sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, whether oral or written,
relating thereto.
20. This Guarantee of Rental Obligations is separate, distinct and
in addition to any liability and/or obligations that Guarantor may have under
any other guarantee executed in connection with the Lease Agreement or any other
agreement between Guarantor and Tenant and no other agreement or guaranty
executed in connection with the Lease Agreement shall act to reduce or set-off
Guarantor's liability hereunder.
21. Guarantor expressly agrees and understands that the remedy at
law for any breach of the provisions of this Guarantee of Rental Obligations may
be inadequate and that Landlord, at Landlord's election, shall be entitled to
injunctive and/or other equitable relief including, without limitation, specific
-7-
<PAGE>
performance of any of the provisions of this Guarantee of Rental Obligations.
22. In accordance with Section 1206 of the Lease Agreement, upon
Guarantor acquiring any ownership interest in and to the leasehold estate and
becoming a "New Tenant" (as such term is defined in Section 1206 of the Lease
Agreement), payment of the Rental Obligations shall be guaranteed by Sony
Capital Corporation, a Delaware corporation, having its principal office at 9
West 57th Street, New York, New York 10019; provided, however, such guarantee
shall be limited to a maximum amount of the aggregate principal amount of the
Bonds outstanding plus interest and in effect only so long as any of the Bonds
are outstanding. No further instrument or acknowledgment shall be required to
evidence the obligations of Sony Capital Corporation under this Guarantee of
Rental Obligations.
IN WITNESS WHEREOF, the undersigned has duly executed this Guarantee
of Rental Obligations as of the day and year first above written.
[SEAL] SONY MUSIC ENTERTAINMENT INC.,
ATTEST: a Delaware corporation
By:
- ---------------------------- ---------------------------
Assistant Secretary Vice President
Sony Capital Corporation executes this Guarantee of Rental
Obligations to evidence its acknowledgment and consent to the provisions of
Section 22 of this Guarantee of Rental Obligations.
[SEAL] SONY CAPITAL CORPORATION,
ATTEST: a Delaware corporation
By:
- ---------------------------- ---------------------------
Assistant Secretary Vice President
-8-
<PAGE>
EXHIBIT L-1
FIRST AMENDMENT TO LEASE
[Open Air Facility]
THIS FIRST AMENDMENT TO LEASE ("Amendment") is entered into
effective as of the ____ day of ______, 19__, by and between NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY ("Landlord"), a public body corporate and politic
constituted as an instrumentality of the State of New Jersey, and SONY
MUSIC/PACE PARTNERSHIP ("Tenant"), a New York general partnership.
RECITALS:
(a) Under effective date of ________, 1994, Landlord and Tenant
entered into that certain Lease Agreement ("Lease") pursuant to which, among
other things, Landlord agreed to demise, lease and rent to Tenant that certain
tract or parcel of land more particularly described on Exhibit "A attached
hereto.
(b) At the time of the execution of the Lease, Landlord and Tenant
contemplated that Tenant would construct an indoor-outdoor facility ("Year-Round
Facility") pursuant to the provisions of Section 502 of the Lease.
(c) Pursuant to the provisions of Section 502(g)(ii) of the Lease,
Tenant has exercised its option to construct an outdoor facility ("Outdoor
Facility") which will not be convertible into an enclosed configuration for use
during the winter months.
(d) Accordingly, Landlord and Tenant desire to amend the provisions
of the Lease solely to the extent necessary to reflect that the Amphitheater
will be the Outdoor Facility and not the Year-Round Facility.
AMENDMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
Exhibit L-1
Page 1 of 4
<PAGE>
the provisions of Article VI of this Lease. Landlord shall not
enter into any other agreement with SJPAC creating or granting
any leasehold estate or other possessory rights in favor of
SJPAC or any other party.
6. Outdoor Facility. A new sentence is hereby added at the end of
Section 502(h) of the Lease to read as follows:
Landlord hereby agrees, recognizes and acknowledges that the
Amphitheater will be constructed as a Summer Facility, similar
in design and purpose to the Star Lake Amphitheater and will
not be capable of being converted into an enclosed facility
for use during the winter months.
7. SJPAC Proceeds. The phrase "and the SJPAC Proceeds" appearing in
the second line of Section 502(i) and in the fifth line of Section 509(a) of the
Lease are hereby deleted in their entirety. The second sentence of Section
502(i) of the Lease is hereby deleted in its entirety. The phrase which begins
with "provided, however" and ends with "in the Construction Fund" at the end of
the second sentence of Section 509(a) of the Lease is hereby deleted in its
entirety. Section 509(c) of the Lease is hereby deleted in its entirety. The
last sentence of Section 510(a) of the Lease is hereby deleted in its entirety.
8. Additional Insured. Notwithstanding the provisions of Sections
503 and 512 of the Lease, the Tenant shall not be required to name SJPAC as an
additional insured or approved assignee of any policy of insurance or payment,
completion or performance bond required to be obtained pursuant to the
provisions of the Lease.
9. Design Changes Affecting SJPAC. The provisions of Section 502(k)
of the Lease are hereby deleted in their entirety.
10. SJPAC Lease. Section 515(e) of the Lease is hereby deleted in
its entirety. The phrase "the SJPAC Lease or appearing in clause (v) of Section
908 of the Lease is hereby deleted.
11. Ratification and Confirmation. Except as expressly amended
hereby, the Lease shall remain in full force and effect and each of the parties
hereto do hereby ratify, confirm and reaffirm all of the terms, provisions,
representations, warranties and covenants contained therein.
Exhibit L-1
Page 3 of 4
<PAGE>
WITNESS the execution hereof effective as of the ______ day of
___________, 19__.
NEW JERSEY ECONOMIC DEVELOP-
MENT AUTHORITY
By:
---------------------------
Name:
----------------------
Title:
---------------------
"LANDLORD"
SONY MUSIC/PACE PARTNERSHIP, a
New York general partnership
By: SM/PACE, Inc., its general partner
By:
---------------------------
Name:
----------------------
Title:
---------------------
"TENANT"
Exhibit L-1
Page 4 of 4
<PAGE>
EXHIBIT L-2
FIRST AMENDMENT TO LEASE
[Modified Joint Facility]
THIS FIRST AMENDMENT TO LEASE ("Amendment") is entered into
effective as of the _____ day of ____,19__, by and between NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY ("Landlord"), a public body corporate and politic
constituted as an instrumentality of the State of New Jersey, and SONY
MUSIC/PACE PARTNERSHIP ("Tenant"), a New York general partnership.
RECITALS:
A. Under effective date of ___________,1994, Landlord and Tenant
entered into that certain Lease Agreement ("Lease") pursuant to which, among
other things, Landlord agreed to demise, lease and rent to Tenant that certain
tract or parcel of land more particularly described on Exhibit "A" attached
hereto.
B. At the time of the execution of the Lease, Landlord and Tenant
contemplated that Tenant would construct, pursuant to the provisions of Section
502 of the Lease, an indoor-outdoor facility which would include certain
theater-quality design aspects for the uses and purposes of South Jersey
Performing Arts Center, Inc. ("SJPAC") (such design being herein called the
"Theater Design").
C. Pursuant to the provisions of Section 502(g)(ii) of the Lease,
Tenant has exercised its option to construct a modified design of the
Amphitheater which will not be suitable for, or satisfy the requirements of,
SJPAC but which will nevertheless be capable of being enclosed for the
presentation of indoor events during the Enclosed Season (such design being
called the "Rock & Roll Design").
D. Accordingly, Landlord and Tenant desire to amend the provisions
of the Lease solely to the extent necessary to reflect that the Amphitheater
will be constructed pursuant to the Rock & Roll Design instead of the Theater
Design.
AMENDMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
<PAGE>
1. Definitions. All capitalized terms used in this Amendment which
are [ILLEGIBLE] defined herein shall have the respective meanings indicated
pursuant to [ILLEGIBLE] of the Lease.
2. Defined Terms. The following defined terms appearing in Section
101 Lease are hereby deleted in their entirety:
(a) "Performing Arts Grant";
(b) "SJPAC Lease";
(c) "SJPAC Proceeds"; and
(d) "SJPAC Three Way Agreement."
3. Permitted Encumbrances. Reference to the SJPAC Lease appearing
[ILLEGIBLE] Exhibit "F" attached to the Lease is hereby deleted, it being
understood and agreed that Landlord will not grant any leasehold or possessory
rights in favor of SJPAC at the amphitheater.
4. Removal of Condition. Section 404(m) of the Lease is hereby
deleted entirety and replaced with the following:
(m) The obligations of the parties hereto shall not be
conditioned upon the execution of any agreement with
SJPAC by either party hereto.
5. SJPAC's Use of the Amphitheater. Section 407 of the Lease is
[ILLEGIBLE] deleted in its entirety and replaced with the following:
Section 407. SJPAC's Use of the Amphitheater. SJPAC's rights
to use the Amphitheater shall be limited solely and exclusively to
those rights created under and pursuant to the provisions of Article
VI of this Lease. Landlord shall not enter into any other agreement
with SJPAC creating or granting any leasehold estate or other
possessory rights in favor of SJPAC or any other party.
6. Modified Joint Facility. A new sentence is hereby added at the
end of Section 5O2(h) of the Lease to read as follows:
Exhibit L-2
Page 2 of 4
<PAGE>
Landlord hereby agrees, recognizes and acknowledges that the Amphitheater will
be constructed as a Modified Joint Facility, without providing for any of the
design requirements, equipment or rigging required for theatrical or other "high
arts" performances.
7. SJPAC Proceeds. The phrase "and the SJPAC Proceeds" appearing in
the second line of Section 502(i) and in the fifth line of Section 502(a) of the
Lease are hereby deleted in their entirety. The second sentence of Section
502(i) of the Lease is hereby deleted in its entirety. The phrase which begins
with "provided, however" and ends with "in the Construction Fund" at the end of
the second sentence of Section 509(a) of the Lease is hereby deleted in its
entirety. Section 509(c) of the Lease is hereby deleted in its entirety. The
last sentence of Section 510(a) of the Lease is hereby deleted in its entirety.
8. Additional Insured. Notwithstanding the provisions of Sections
503 and 512 of the Lease, the Tenant shall not be required to name SJPAC as an
additional insured or approved assignee of any policy of insurance or payment,
completion or performance bond required to be obtained pursuant to the
provisions of the Lease.
9. Design Changes Affecting SJPAC. The provisions of Section 502(k)
of the Lease are hereby deleted in their entirety.
10. SJPAC Lease. Section 515(e) of the Lease is hereby deleted in
its entirety. The phrase "the SJPAC Lease or" appearing in clause (v) of Section
908 of the Lease is hereby deleted.
11. Ratification and Confirmation. Except as expressly amended
hereby, the Lease shall remain in full force and effect and each of the parties
hereto do hereby ratify, confirm and reaffirm all of the terms, provisions,
representations, warranties and covenants contained therein.
Exhibit L-2
Page 3 of 4
<PAGE>
WITNESS the execution hereof effective as of the _______day of
__________, 19__.
NEW JERSEY ECONOMIC DEVELOPMENT
AUTHORITY
By:
----------------------------
Name:
-----------------------
Title:
----------------------
"LANDLORD"
SONY MUSIC/PACE PARTNERSHIP, a New
York general partnership
By: SM/PACE, Inc., its general partner
By:
----------------------------
Name:
-----------------------
Title:
----------------------
"TENANT"
Exhibit L-2
Page 4 of 4
<PAGE>
EXHIBIT M
Amounts of Certain Fees Related to Issuance of Initial Bonds
Item Amount
EDA Issuance Fee 0.5% of the first $10,000,000 of principal
amount and 0.25% of the principal amount in
excess of $10,000,000
Financial Advisor/Placement Fee 1.5% of the principal balance of the Initial
Bonds
<PAGE>
Exhibit "N"
LETTERHEAD OF ATTORNEY GENERAL
(609) 292-6655
January 14, 1993
Caren Franzini, Executive Director
New Jersey Economic Development Authority
200 South Warren Street
Trenton, New Jersey 08625-0990
Re: Lease Agreement dated January 14, 1994 between the New Jersey
Economic Development Authority as Landlord and Sony Music/PACE
Partnership as Tenant
Dear Ms. Franzini:
The undersigned Deputy Attorney General for the State of New Jersey
renders the following opinion in connection with the execution and delivery by
the New Jersey Economic Development Authority (the "Authority") of a Lease
Agreement by and between the Authority and Sony Music/PACE Partnership, dated
January 14, 1994 (the "Lease Agreement"). The Authority, by resolution dated
December 7, 1993 authorized the execution of the Lease Agreement (the
"Resolution").
Based upon our review of the New Jersey Economic Development Authority
Act, L. 1974, c. 80, as amended and supplemented (the "Act"), the Resolution,
the Lease Agreement and such other documents, instruments, records of the
Authority as I deemed appropriate, I am of the opinion that:
1. The Authority is an instrumentality of the State of New Jersey and a
public body corporate and politic, duly organized and validly
existing under the Constitution and laws of the State of New Jersey.
2. The Authority has full power and authority under the Act to enter
into the Lease Agreement and the Authority has taken all actions and
obtained all approvals required by the Act and any other applicable
laws or regulations in connection with the execution of the Lease
Agreement.
<PAGE>
January 12, 1994
Page 2
3. The Authority has duly adopted the Resolution and has duly
authorized the execution and delivery of the Lease Agreement and the
consummation of the transactions contemplated in the Lease Agreement
by the Authority will not conflict with, violate, or result in a
breach of or constitute a default under the rules or regulations of
the Authority or any indenture, agreement or other instruments by
which the Authority or any of its properties may be bound or any
constitutional or statutory provisions or order, rule, regulation,
decree, or ordinance of any court, government, or governmental body
having jurisdiction over the Authority or any of its property. It
will be necessary for the Authority to adopt a resolution
authorizing the issuance of the Bonds, (as such term is defined in
the Lease Agreement) which resolution is subject to the approval of
the Governor of the State of New Jersey.
4. The Lease Agreement, has been duly executed and delivered by the
Authority and constitutes a legal, valid, and binding obligation of
the Authority enforceable in accordance with its terms, except as
enforcement of remedies may be limited by applicable bankruptcy,
insolvency, moratorium, or other similar laws relating to the
enforcement of creditors' rights generally from time to time in
effect.
5. The undersigned is duly appointed, qualified and acting Deputy
Attorney General of the State of New Jersey with authorization to
sign and deliver this opinion on behalf of the Attorney General of
New Jersey.
Very truly yours,
FRED DeVESA
ATTORNEY GENERAL OF NEW JERSEY
By:
---------------------------
Sherrie L. Gibble
Deputy Attorney General
<PAGE>
EXHIBIT "O"
Landlord's Estimated Allowances and Budgeted Costs
Item Amount
Architectural/Engineering Feasibility $ 1,500,000
Boat Launch 200,000
Clinton Street 200,000
Purchase and Delivery of Fill Material 2,300,000
Freezer Warehouse Removal 4,200,000
Promenade Relocation and Construction 1,100,000
Site Remediation 2,500,000
Stabilization of Shoreline 500,000
Site Preparation and Demolition 500,000
Parking (off-site) 485,000
Marina Parking Relocation 230,000
Post-Remediation Clean-up Contingency 500,000
Post-Site Preparation Demolition 250,000
Contingency 600,000
TOTAL $15,065,000
===========
<PAGE>
FIRST AMENDMENT TO LEASE AGREEMENT
[Camden Amphitheater]
THIS FIRST AMENDMENT TO LEASE AGREEMENT ("Amendment") is executed and
entered into effective as of this 11th day of March, 1994, by and between NEW
JERSEY ECONOMIC DEVELOPMENT AUTHORITY ("Landlord"), a public body corporate and
politic duly organized under the laws of the State of New Jersey, and SONY
MUSIC/PACE PARTNERSHIP ("Tenant"), a New York general partnership.
R E C I T A L S:
A. Landlord and Tenant have executed and entered into that certain Lease
Agreement ("Lease") dated February 9, 1994, pursuant to which Landlord agreed to
demise, lease and rent to the Tenant, upon the terms, conditions and provisions
contained therein, a certain tract of land located in Camden, New Jersey end
bounded on the north by Wiggins Park, on the west by the Delaware River, on the
east by Delaware Avenue, and on the south by Clinton Street (extended).
B. Landlord and Tenant desire to amend certain provisions contained in the
Lease as more fully set forth below:
AMENDMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties hereto do hereby agree as follows:
Section 1. Defined Terms. All capitalized terms used herein which are not
specifically defined pursuant to the provisions hereof shall have the respective
meanings assigned pursuant to the provisions of the Lease.
Section 2. Changes Relating to the Surcharge Revenue. In order to clarify
the obligations of the Tenant in respect of the Surcharge Revenue, the following
revisions to the Lease are hereby made:
2.1 Clause (a) of Section 304 of the Lease is hereby deleted in
its entirety and replaced with the following:
(a) The Tenant shall charge and collect the per ticket
surcharge in the amounts and in the years indicated in
the column headed "Projected Surcharge Per Ticket" in
Exhibit H attached hereto and made a part hereof;
provided, however, that the Tenant shall not be required
or obligated to charge or collect any per ticket
surcharge until the ninth (9th) Lease Year. The per
ticket surcharge shall not apply to (i) complimentary
<PAGE>
tickets or other unpaid passes for admission to the
Amphitheater, unless the Tenant receives in exchange for
the distribution of such complimentary tickets or other
unpaid passes specific goods or services other than
advertising time or space; (ii) any and all tickets for
Special Events; (iii) any and all tickets for a
performance or show for which the price of admission is
$5.00 or less (such amount to be increased each year
proportionately with increases in the CPI Index). To
avoid any uncertainty or ambiguity, it is hereby
acknowledged and agreed that the information contained
in Exhibit "H," other than the column headed "Projected
Surcharge Revenue Per Ticket," is based upon projected
attendance levels at the Amphitheater and no
representation, warranty or covenant shall be deemed to
have been made by any party hereto that such projections
will be fulfilled.
2.2 Clause (iii) of Section 502(g) of the Lease is hereby deleted
in its entirety and replaced with the following:
(iii) If the Tenant should exercise its option contained and
described in clause (ii) of this Section 502(g) to
construct the Amphitheater as a Summer Facility, then
the parties hereto shall immediately thereafter (A) each
execute and deliver to the other a First Amendment to
Lease in the form attached hereto as Exhibit "L-1" and
(B) each negotiate in good faith with the other to
revise the per ticket surcharge amounts specified in
Exhibit "H" attached hereto to attempt to provide
similar projected levels of revenues from the Surcharge
Revenue notwithstanding that fewer shows will be
presented at the Amphitheater as a result of there being
no Enclosed Season; provided, however, that failure to
reach an agreement as to how the per ticket surcharge
amounts specified in Exhibit "H" are to be so revised
shall not, in any way, effect the continuing
effectiveness of this Lease, the continuing obligations
of the parties hereunder (including the Tenant's
obligation to charge and collect the per ticket
surcharge pursuant to the provisions of Section 304
hereof in the amounts and in the years specified in the
column headed "Projected Surcharge Per Ticket" in
Exhibit "H" attached hereto) or the effectiveness of the
Tenant's exercise of the option contained and described
in clause (ii) of this Section 502(g).
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<PAGE>
Section 3. Effective Date of Lease. Notwithstanding anything to the
contrary contained in the Lease, it is hereby specifically agreed, acknowledged
and stipulated by and between the Landlord and the Tenant that, for all purposes
of the Lease (including, without limitation, the provisions of Section 404(g)(i)
and Section 404(i) of the Lease), "the date of the Lease" shall be deemed to be
March 11, 1994.
Section 4. Changes Related to Deadlines for the Conditions Precedent.
Section 404 of the Lease is hereby revised as follows:
4.1 The reference to "February 28, 1994" appearing in Section
404(c) of the Lease is hereby deleted and replaced with a
reference "March 31, 1994."
4.2 The reference to "February 28, 1994" appearing in Section
404(e)(i) of the Lease is hereby deleted and replaced with a
reference to "March 31, 1994."
4.3 The reference to "March 30, 1994" appearing in Section
404(e)(ii) of the Lease is hereby deleted and replaced with a
reference to "April 15, 1994."
4.4 The reference to "February 28, 1994" appearing in Section
404(a)(iii) of the Lease is hereby deleted and replaced with a
reference to "March 31, 1994."
4.5 The reference to "February 15, 1994" appearing in Section
404(f) of the Lease is hereby deleted and replaced with a
reference to "March 31, 1994."
4.6 The reference to "February 28, 1994" appearing in Section
404(g)(ii) of the Lease is hereby deleted and replaced with a
reference to "March 31, 1994."
4.7 The reference to "February 28, 1994" appearing in Section
404(h) of the Lease is hereby deleted and replaced with a
reference to "March 31, 1994."
4.8 The reference to "February 15, 1994" appearing in Section
404(i) of the Lease is hereby deleted and replaced with a
reference to "March 31, 1994."
4.9 The reference to "February 28, 1994" appearing in Section
404(k) of the Lease is hereby deleted and replaced with a
reference to "March 31, 1994."
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<PAGE>
4.10 The reference to "February 28, 1994" appearing in Section
404(i) of the Lease is hereby deleted and replaced with a
reference to "March 31, 1994."
4.11 The reference to "February 28, 1994" appearing in Section
404(m)(i) of the Lease is hereby deleted and replaced with a
reference to "March 31, 1994."
4.12 The reference to "February 28, 1994" appearing in Section
404(n) of the Lease is hereby deleted and replaced with a
reference to "March 31, 1994."
4.13 The last sentence of Section 404(o)(i) of the Lease is hereby
deleted and replaced with the following:
"If the condition contained in this clause (o)(i) is not
satisfied on or before March 31, 1994, then the Tenant
may terminate this Lease at any time between April
1, 1994 and April 15, 1994, inclusive."
4.14 The reference to "February 15, 1994" appearing in Section
404(o)(ii) of the Lease is hereby deleted and replaced to a
reference to "March 31, 1994."
Section 5. Changes to Certain Insurance Provisions. Article IX of the
Lease is hereby amended as follows:
5.1 The reference to "a Best financial size rating of not less
than XII" appearing at the end of the first sentence in
Section 901(d) of the Lease is hereby deleted and replaced
with a reference to "a Best financial size rating of not less
than X."
5.2 Section 902(b) of the Lease is hereby deleted in its entirety
and replaced with the following:
(b) The general liability policy shall include the Landlord
and the Trustee as additional insureds. The Tenant also
shall require all vendors or other providers of liquor
to provide an insurance policy covering liquor liability
with the Landlord and the Trustee named as additional
insureds. Said policy or policies shall provide for
indemnification of said parties against liability for
damages for bodily and personal injury, death or
property damage occasioned by the operation or ownership
of the Amphitheater and the Premises. The Tenant's
general liability
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<PAGE>
policy or policies shall provide coverage for minimum
combined liability limits of $50,000,000 for bodily
injury liability and for property damage liability;
provided, however, if such minimum liability limits are
not obtainable by the Tenant for commercially reasonably
rates, than the minimum liability limits shall be
reduced to the greater of (i) $30,000,000 or (ii) the
maximum liability limit which may be obtained by the
Tenant at commercially reasonable rates. The forgoing
limits may be obtained through the General Liability
Policy or a combination of General Liability and Excess
or Umbrella Liability. The Net Proceeds of such
liability insurance shall be applied toward
extinguishment or satisfaction of the liability with
respect to which the Net Proceeds of such insurance
shall have been paid.
5.3 The phrase "direct or contingent loss or" appearing in the
second sentence of Section 903 of the Lease is hereby deleted.
5.4 The phrase "and all subcontractors employed by the Tenant"
appearing in the fourth sentence of Section 904 of the Lease
is hereby deleted.
5.5 The phrase "of its own" is hereby inserted in the first
sentence of Section 905(a) of the Lease following the words
"insurance covering all" and prior to the words "employees on,
in, near or about the Project."
5.6 Clause (ii) of Section 906(c) of the Lease is hereby deleted.
5.7 The phrase "joint agreement" appearing in Section 906(d) is
hereby deleted and replaced with the clause "joint loss
adjustment clause."
5.8 Section 907 of the Lease is hereby deleted in its entirety and
replaced with the following:
Insurance Provisions for Sublessee, Permitee and Licensee. The
Tenant shall not permit any sublessee, permittee or licensee
of the Amphitheater access to the Amphitheater without first
having a certificate of insurance delivered to the Tenant for
Commercial General Liability Insurance with a limit of at
least $1,000,000.00 combined single limit bodily injury and
property damage liability, personal injury liability, and
coverage for all acts and omissions of any agents or
performers and any contractors or subcontractors retained by
such sublessee, permittee or licensee. The policies shall
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<PAGE>
name the Landlord, the Trustee and the Tenant as additional
insureds. The Tenant shall require that each such sublessee,
permittee, and/or licensee provide evidence to the Tenant, the
Trustee and the Landlord of Workers Compensation Insurance for
any obligations with respect to the statutory obligation of
the New Jersey Workers Compensation and Occupational Disease
Laws.
5.9 The phrase "self-insured retention" appearing in Section 909
is hereby deleted and replaced with the word "policy."
5.10 The word "reasonably" is hereby inserted in the penultimate
sentence of Section 913 of the Lease after the words
"Authorized Representative of the Tenant" and prior to the
words "satisfactory to the Trustee and the Landlord."
6. Effectiveness of Tenant's Joinder in the Lease. Notwithstanding
anything to the contrary contained in the Lease, by execution of this Amendment
simultaneously with the execution of the Lease, Tenant hereby advises Landlord
that its execution and delivery of the Lease shall not be or become effective or
binding upon Tenant unless and until Landlord has executed and delivered to
Tenant an original counterpart of this Amendment.
WITNESS the execution hereof effective as of the date and year first above
written.
ATTEST: NEW JERSEY ECONOMIC DEVELOPMENT
[SEAL] AUTHORITY, the Landlord
By:
- -------------------------------- ------------------------------------
Secretary Executive Director
WITNESS: SONY MUSIC/PACE PARTNERSHIP, a New
York general partnership, the Tenant
By: SM/PACE, Inc., its general partner
/s/ [ILLEGIBLE] By: /s/ B.E. Decker
- -------------------------------- -------------------------------
Secretary Name: B.E. Decker
Title: President
6
<PAGE>
SECOND AMENDMENT TO LEASE AGREEMENT
[Joint Facility Agreement]
THIS SECOND AMENDMENT TO LEASE AGREEMENT ("Amendment") is executed and
entered into effective as of this 7th day of June, 1994, by and between NEW
JERSEY ECONOMIC DEVELOPMENT AUTHORITY ("Landlord"), a public body corporate and
politic duly organized under the laws of the State of New Jersey, and PAVILION
PARTNERS (f/k/a Sony Music/PACE Partnership) ("Tenant"), a Delaware general
partnership.
R E C I T A L S:
A. Landlord and Tenant have executed and entered into that certain Lease
Agreement ("Original Lease") dated February 9, 1994, pursuant to which Landlord
agreed to demise, lease and rent to the Tenant, upon the terms, conditions and
provisions contained therein, a certain tract of land located in Camden, New
Jersey and bounded on the north by Wiggins Park, on the west by the Delaware
River, on the east by Delaware Avenue, and on the south by Clinton Street
(extended).
B. Landlord and Tenant have previously amended the Original Lease pursuant
to (i) that certain First Amendment to Lease dated March 11, 1994 and (ii) those
certain letters provided by Tenant to Landlord and dated, respectively, March
31, 1994, April 15, 1994, April 22, 1994 and April 29,1994 (collectively, the
"Prior Amendments") (as so amended, the Original Lease is herein called the
"Lease").
C. Landlord and Tenant desire to further amend certain provisions
contained in the Lease as more fully set forth below.
AMENDMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties hereto do hereby agree as follows:
Section 1. Defined Terms.
1.1 All capitalized terms used herein which are not specifically
defined pursuant to the provisions hereof shall have the respective
meanings assigned pursuant to the provisions of the Lease.
1.2 The term "Budgeted Soft Cost Amount" appearing in Section 101 of
the Lease is hereby amended to read as follows:
"Budgeted Soft Cost Amount" shall mean $5,500,000, the
aggregate amount of Soft Costs (including previously expended
amounts) which the Tenant budgets for the completion and opening of
the Amphitheater.
1.3 The term "Commencement Date" appearing in Section 101 of the
Lease is hereby amended by adding a new clause (iv) to read as follows:
or (iv) September 15, 1994.
1.4 The term "Hard Costs" appearing in Section 101 of the Lease is
hereby amended in its entirety to read as follows:
<PAGE>
"Hard Costs" shall mean all the Costs of the Initial Project
other than Soft Costs. Hard Costs shall include, without limitation,
those types and categories of costs related to the construction of
the Amphitheater which are listed and identified on Exhibit "E=1"
attached hereto.
1.5 The term "SJPAC Proceeds" appearing in Section 101 of the Lease
is hereby amended in its entirety to read as follows:
"SJPAC Proceeds" shall mean the amount, if any, paid by SJPAC
to the Landlord under, pursuant to and in accordance with the SJPAC
Lease. It is anticipated that the SJPAC Proceeds will be $3,940,000.
Section 2. Conditions Precedent. The provisions contained in Section 404
of the Lease are hereby amended as follows:
Section 2.1 The Landlord hereby agrees that its obligations under
the Lease are no longer conditioned upon any of the matters contained in
clauses (e), (f), (g) and (i) of Section 404 of the Lease. Accordingly,
clauses (e), (f), (g) and (i) of Section 404 of the Lease are hereby
deleted in their entirety.
Section 2.2 The Tenant hereby agrees that its obligations under the
Lease are no longer conditioned upon any of the matters contained in
clauses (c) and (o) of Section 404 of the Lease. Accordingly, clauses (c)
and (o) of Section 404 of the Lease are hereby deleted in their entirety.
At such time as the Lease is amended in a manner acceptable to the
Tenant's environmental counsel which delineates the obligations and
responsibilities of the Landlord and the Tenant with respect to any
subsequent environmental remediation which may be required at the Premises
as a result of an amendment to the Environmental Documents hereafter
adopted by DEPE, the Tenant agrees that it will execute with the Landlord
a further amendment to the Lease which will reflect that the condition
contained in clause (k) of Section 404 is deleted.
Section 2.3 The phrase "February 28, 1994" appearing in clause (t)
of Section 404 is hereby amended to be a reference to "June 30, 1994".
Section 2.4 The phrase "in a form and content acceptable to the
Landlord in its sole and absolute discretion" appearing at the end of
Section 404(m)(ii) of the Lease is hereby deleted and replaced with the
following:
in a form and content which contains substantially the same
provisions that affect the Landlord's rights or obligations
thereunder as are contained in the most recent draft of the
SJPAC Three Way Agreement which has been previously provided
to the Landlord.
Section 2.5 A new clause (s) is hereby added at the end of Section
404 of the Lease to read as follows:
(s) The Landlord hereby agrees that it will exercise its
reasonable best efforts to cause each of the conditions precedent
contained in clauses (A), (B), (C), (D), (F), (G) and (I) of Section
404(h) hereof to be satisfied as soon hereafter as is reasonably
practicable.
Section 2.6 Section 404(a)(ii) of the Lease is hereby amended by (x)
inserting the word "and" at the end of clause (A) and before clause (B)
and (y) deleting all of clause (C).
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<PAGE>
Section 3. Construction of the Amphitheater. The Landlord has guaranteed
to the Tenant that the Initial Project will be constructed and completed on time
and on budget. In furtherance of this agreement, the provisions of Article V of
the Lease are hereby amended as follows:
Section 3.1 Sections 501 and 502 of the Lease are hereby amended in
their entirety to read as follows:
Section 501. Design of the Project. The Landlord and the
Tenant hereby agree that the current design ("Base Design") of the
Initial Project is described in the November Plans and
Specifications (as such term is defined in Section 511 hereof), with
the additions and deletions thereto indicated in Exhibit "P"
attached hereto. To avoid any ambiguity or uncertainty, it is
recognized and acknowledged that the Base Design (i) includes in it
all of the Rejected Recommended Deletion Items (herein defined) and
(ii) excludes all of the Rejected Recommended Addition Items (herein
defined). The Tenant has advised the Landlord that the Tenant will
be effecting certain design changes ("Pre-GMP Design Changes") to
the Base Design prior to the determination of the Final GMP Amount.
On or before July 8, 1994 ("70% Plan Delivery Deadline"), the Tenant
shall cause the Architect to prepare and deliver a set of 70% Plans
(as such term is defined in Section 511 hereof) which are consistent
with the Agreed Plans. As used herein, the following terms shall
have the meanings indicated:
(a) "Agreed Plans" shall mean the November Plans and
Specifications, as modified by (i) the additions and deletions
in Exhibit "P" and (ii) the Pre-GMP Design Changes.
(b) "Pre-GMP Design Change Cost Amount" shall mean the
amount (if any), as determined in good faith by the Acceptable
Construction Company that enters into the Master Construction
Contract with the Tenant, by which the Final GMP Amount
exceeds what the Final GMP Amount would have been without the
Pre-GMP Design Changes, taking into account all additional
costs and all cost savings related to, arising out of or
effected by the Pre-GMP Design Changes. The Pre-GMP Design
Change Cost Amount shall be deemed to equal $0.00 for all
purposes hereof if the Final GMP Amount is equal to or less
than what the Final GMP Amount would have been without the
Pre-GMP Design Changes.
(c) "Pre-GMP Design Change Savings Amount" shall mean
the amount (if any), as determined in good faith by the
Acceptable Construction Company that enters into the Master
Construction Contract with the Tenant, by which the Final GMP
Amount is less than what the Final GMP Amount would have been
without the Pre-GMP Design Changes, taking into account all
additional costs and all cost savings related to, arising out
of or effected by the Pre-GMP Design Changes. The Pre-GMP
Design Change Savings Amount shall be deemed to be $0.00 for
all purposes hereof if the Final GMP Amount is equal to or
more than what the Final GMP Amount would have been without
the Pre-GMP Design Changes.
(d) "Non-Special Savings Amount" shall mean that portion
of the Pre-GMP Design Change Savings Amount that is allocable
or attributable to the Pre-GMP Design Changes that do not
relate to the Special Extra Cost Items.
(e) "Rejected Recommended Deletion Items" shall mean
those design elements of the Initial Project contained in the
November Plans and Specifications which (i) were recommended
to be deleted from the design of the Initial Project in
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<PAGE>
the Suggested Cost Reductions ("SCR's") or Budget Control
Report #3 ("BCR's") and (ii) are not included in the list of
items to be deleted from the design of the Initial Project in
Exhibit "P" attached hereto. The "Rejected Recommended
Deletion Items" shall include, without limitation, the Special
Extra Cost Items.
(f) "Rejected Recommended Addition Items" shall mean
those design elements that (i) were recommended to be added to
the design of the Initial Project in the SCR's or the BCR's
and (ii) are not included in the list of items to be added to
the design of the Initial Project in Exhibit "P" attached
hereto.
Section 502. Construction of the Project.
(a) Guaranteed Maximum Price Contract. The Landlord and
the Tenant shall hereafter work together and cooperate in a
concerted effort to cause an Acceptable Construction Company
to enter into, as soon after the date hereof as is reasonably
practicable, a Guaranteed Maximum Price Construction Contract
(herein called the "Master Construction Contract") with the
Tenant in a form reasonably acceptable to the Tenant pursuant
to which such Acceptable Construction Company shall (a) be
obligated to construct and complete the Initial Project in
accordance with the set of 70% Plans prepared and delivered
pursuant to the provisions of Section 501 hereof by the
Architect and (b) guarantee that the total sum of all Hard
Costs will not exceed a specified amount (such amount being
herein called the "guaranteed maximum price" or "GMP"). In
furtherance of the foregoing, the Landlord shall have the
right to participate in negotiations with such Acceptable
Construction Company with respect to (i) the amount of the GMP
to be included in the Master Construction Contract, (ii) the
payment by such Acceptable Construction Company of liquidated
damages to the Tenant in the event that Substantial Completion
does not occur on or before the Completion Deadline and (iii)
such other provisions, to the extent reasonably acceptable to
the Tenant, which may be necessary to provide reasonable
checks and protections to the Landlord in relation to the
risks undertaken by it pursuant to the contractual provisions
of Section 520 hereof. It is hereby understood, recognized and
acknowledged that such Acceptable Construction Contractor has
the ultimate right to propose the amount of the GMP in its
sole discretion and neither the Landlord nor the Tenant can
control the amount so proposed. Amounts may be included in the
GMP by such Acceptable Construction Company, in its
discretion, for (i) substitution of scarce or otherwise
difficult to obtain materials or (ii) acceleration of the work
schedule to meet the completion deadline. Any such amounts so
included as a part of the GMP shall not be treated as being
caused by any Pre-GMP Design Changes, unless, and only to the
extent that, such amounts are directly attributable to the
existence of a design element added by the Pre-GMP Design
Changes. The GMP ultimately contained in the Master
Construction Contract shall be herein referred to as the
"Final GMP Amount." The Master Construction Contract shall
give the Landlord the right, but not the obligation, to assume
the Tenant's obligations and rights thereunder if the Tenant
should default. Construction should be designed to avoid to
the extent possible any material impact on the ingress and
egress of the South Jersey Port Corporation.
(b) Consultation with the Landlord. The Tenant hereby
grants to the Landlord the right and authority to consult with
the Tenant in connection with all construction decisions and
processes. In that connection, the following provisions shall
apply,
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<PAGE>
(1) The Tenant will, at the Landlord's request,
provided at any time or from time to time during the
construction phase of the Initial Project, accelerate
the construction process by ordering the general
contractor to place additional personnel at the
construction site, to add additional construction shifts
or to work overtime. If the Landlord requests that the
Tenant cause the general contractor to accelerate its
work schedule, then the Landlord shall be required to
deposit in the Construction Fund an amount of funds
equal to the general contractor's agreed upon additional
price for such accelerated work schedule.
(2) No change order which (i) would cause the
Final GMP Amount to increase or (ii) would cause the
general contractor's completion deadline provided for in
the Master Construction Contract ("Contractor's
Deadline") to be extended shall be approved or
authorized by the Tenant without the prior approval of
the Landlord. Notwithstanding the foregoing, the Tenant
may unilaterally authorize and approve any change order
otherwise prohibited pursuant to the provisions hereof
so long as the Tenant (x) deposits into the Construction
Fund an amount of money equal to the increase in the
Final GMP Amount which is attributable to such change
order at such time as that amount is determined and (y)
agrees, in writing, for the benefit of the Landlord that
the Completion Deadline is extended by the amount of
time, if any, that the Contractor's deadline is
extended.
(3) The Landlord shall have the right to
participate and consult with the Tenant in connection
with the submission of draw requests made pursuant to
the provisions of Section 510 hereof.
(4) Pursuant to the critical path schedule for
construction of the Amphitheater which has been, or soon
hereafter will be, finalized, certain construction
materials must be ordered and purchased before the
Commencement Date. The Landlord and the Tenant shall
each pay one-half of all costs and expenses related to
such construction material purchases which become due
and payable prior to the Commencement Date.
(c) As Built Plans and Warranties. Upon completion of
construction of the Amphitheater the Tenant shall deliver to
the Landlord (i) a detailed "as built" survey which shows in
detail the footprint of the Amphitheater and the related
improvements such as utilities, easements, landscaping, roads,
location of ingress and egress to and from the Amphitheater,
curbs, gutters, lighting and location of signs and (ii) copies
of all warranties, service and maintenance agreements and
equipment manuals related to the Amphitheater.
(d) Affirmative Action. The Tenant agrees to commit to
an affirmative action policy with respect to the construction
of the Amphitheater i.e., a goal of 25% of Minority Business
Enterprise contracts and 25% of minority man-hours in the
construction trade.
(e) Construction Services. All construction work shall
be done in a good and workmanlike manner and in compliance
with all applicable laws, ordinances, codes, rules,
regulations and requirements, and in accordance with the
standard if any, of the Board of Fire Underwriters, or other
organizations exercising
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the functions of a Board of Fire Underwriters whose
jurisdiction include the Premises.
(f) Construction Quality. All materials and workmanship
shall be of good quality, and upon completion of construction,
the Initial Project will be structurally safe and sound, and
all parts thereof and all mechanical equipment therein and all
utilities serving the Initial Project will be in good and
working order and will have been properly installed, tested,
and paid for, and in case of repairs, restoration, changes,
additions, alterations, or improvements, shall be at least
equal to the original.
(g) [Intentionally left blank]
(h) Commencement of Construction.
(1) The Tenant shall forthwith commence
construction of the Amphitheater on the Leasehold Tract
in accordance with the requirements of the critical path
schedule for construction of the Amphitheater which has
been, or soon hereafter will be, finalized. All
construction work shall be conducted subject to and in
compliance with all applicable Legal Requirements.
(2) The Landlord and the Tenant shall each pay
one-half of the Hard Costs payable on account of
construction activities performed prior to the
Commencement Date as such Hard Costs become due.
(i) Construction Funds.
(1) If Bonds are to be issued by the Landlord on
the Commencement Date, then, on the Commencement Date,
(i) the Landlord shall deliver, pay and deposit the
Proceeds, the SJPAC Proceeds and an amount of money
equal to the Landlord Construction Cost Amount (as such
term is defined in Section 511 hereof) to the Trustee
for subsequent disbursement by the Trustee in accordance
with the terms of the Indenture and Section 510 hereof
and (ii) the Tenant shall deliver, pay and deposit an
amount of money equal to the Tenant Construction Cost
Amount (as such term is defined in Section 511 hereof)
to the Trustee for subsequent disbursement by the
Trustee in accordance with the terms of the indenture
and Section 510 hereof. If the Tenant Construction Cost
Amount is less than $0.00, then the following provisions
shall apply:
(i) The Tenant shall have no obligation to
deliver, pay or deposit any amount of money to the
Trustee on the Commencement Date pursuant to the
provisions of clause (ii) of this Section
502(i)(1).
(ii) The Trustee shall disburse to the
Tenant on the Commencement Date, out of the
Construction Fund, a sum equal to the amount by
which the Tenant Construction Cost Amount is less
than $0.00.
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(2) If no Bonds are to be issued by the Landlord
on the Commencement Date, then, on the Commencement
Date, (i) the Landlord and the Tenant shall either (A)
select a mutually acceptable financial institution to
act as an escrow agent ("Escrow Agent") to fulfill the
responsibilities and duties of the Trustee specified in
Section 510 hereof with respect to the Construction Fund
or (B) open a joint account ("Escrow Account") at a
mutually acceptable financial institution into which all
funds required to be deposited into the Construction
Fund pursuant to the provisions hereof shall be
deposited (the Escrow Agent or the Escrow Account, as
applicable, shall be herein called the "Escrow
Arrangement"), (ii) the Landlord shall, subject to the
provisions contained in clause (3) of this Section
502(i), deliver, pay and deposit the SJPAC Proceeds and
an amount of money equal to the Landlord Construction
Cost Amount to the Escrow Arrangement for subsequent
disbursement in accordance with the terms of Section 510
hereof and (iii) the Tenant shall, subject to the
provisions contained in clause (4) of this Section
502(i), deliver, pay and deposit an amount of money
equal to the Tenant Construction Cost Amount to the
Escrow Arrangement for subsequent disbursement in
accordance with the terms of Section 510 hereof.
(3) If no Bonds are to be issued by the Landlord
on the Commencement Date, then the Landlord shall have
the right and option, exercisable in its sole
discretion, to fulfill the obligation ("Landlord
Contribution Obligation") to deliver, pay and deposit an
amount of money equal to the Landlord Construction Cost
Amount to the Escrow Arrangement pursuant to clause (ii)
of Section 502(i)(2) hereof in installment payments as
follows:
(I) On the date of each draw request made
pursuant to Section 510 hereof after the time that
the SJPAC Proceeds have been disbursed in full
from the Construction Fund the Landlord shall
deliver, pay and deposit, as an installment
against the Landlord Contribution Obligation, an
amount equal to 25% of the amount of such draw
request.
(II) Subject to the provisions of Section
509(c) hereof, the Landlord shall not be obligated
to deliver, pay or deposit, pursuant to the
Landlord Contribution Obligation, an installment
in amount greater than an amount which would cause
the aggregate amount of installments delivered,
paid and deposited pursuant to the Landlord
Contribution Obligation to exceed the Landlord
Construction Cost Amount.
(III) The Landlord shall pay, deliver and
deposit the entire unfunded portion, if any, of
the Landlord Contribution Obligation upon Final
Payment (as such term is defined in Section
1510(c) of this Lease).
If the Initial Bonds are issued after the Commencement
Date, then the Landlord shall deposit, or cause to be
deposited, into the Construction Fund on the date of
such issuance an amount equal to the then unfunded
amount of the Landlord Contribution Obligation.
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(4) If no Bonds are to be issued by the Landlord
on the Commencement Date, then the Tenant shall have the
right and option, exercisable in its sole discretion, to
fulfill the obligation ("Tenant Contribution
Obligation") described in clause (iii) of Section
502(i)(2) hereof in installment payments as follows:
(I) Before making any draw requests pursuant
to Section 510 hereof, the Tenant shall deliver,
pay and deposit, as an Installment against the
Tenant Contribution Obligation, an amount equal to
75% of the amount of such draw request.
(II) Subject to the provisions of Section
509(c) hereof, in no event shall the Tenant be
obligated to deliver, pay or deposit, pursuant to
the Tenant Contribution Obligation, an installment
in amount greater than an amount which would cause
the aggregate amount of installments delivered,
paid and deposited pursuant to the Tenant
Contribution Obligation to exceed the Tenant
Construction Cost Amount.
(III) The Tenant shall deliver, pay and
deposit the entire unfunded portion, if any, of
the Tenant Contribution Obligation upon Final
Payment (as such term is defined in Section 510(c)
of this Lease).
If the Initial Bonds are issued after the Commencement
Date, then the Proceeds, net of capitalized interest (if
any) and the Costs of Issuance, shall be (i) first, to
the extent of the unfunded amount of the Tenant
Contribution Obligation, added to the Construction Fund,
as an offset against the Tenant Contribution Obligation
and (ii) second, disbursed to the Tenant.
(j) No Representations. Except as may be expressly set
forth herein, the Landlord makes no warranties or
representations and accepts no liabilities or responsibilities
with respect to or for the adequacy, sufficiency or
suitability of or defects in or with respect to the design,
construction, renovation or installation of any Project.
(k) SJPAC's Design Requirements. Notwithstanding any
conflicting provision contained in this Lease, if the SJPAC
Proceeds have been delivered and paid to the Trustee or the
Escrow Agent pursuant to the provisions of Section 502(i)
hereof, then no remodeling, additions, modifications or other
changes may be made to the Plans and Specifications or to the
Project in such a manner which would result in the
Amphitheater being constructed in a manner which does not
satisfy the design requirements of SJPAC as specified in, and
required by, the SJPAC Three-Way Agreement.
Section 3.2 Section 509 of the Lease is hereby amended in its
entirety to read as follows:
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Section 509. Project Costs: Payment.
(a) To ensure that monies sufficient to pay all of the
Hard Costs shall be available when required, upon the date of
authentication, execution and delivery of the Initial Bonds,
the Landlord shall deposit or cause to be deposited with the
Trustee the Proceeds of the sale of the Initial Bonds in
accordance with the terms of the Indenture. Such moneys shall
be deposited in the Applicable Funds created pursuant to the
Indenture in the amounts prescribed in the Indenture. In
addition, all of the SJPAC Proceeds and the amount of money
equal to the Landlord Construction Cost Amount and the Tenant
Construction Cost Amount which are each required to be
deposited pursuant to the provisions of Section 502(i) hereof
shall be deposited in the Construction Fund.
(b) The moneys on hand from time to time in the
Construction Fund held by the Trustee, or as a part of the
Escrow Arrangement, shall be made available for payment of the
Hard Costs in the manner provided for in the Indenture (if
any) and this Lease. To avoid any ambiguity or uncertainty, it
is hereby specifically agreed and acknowledged that all fees
and other payments payable to the general contractor under the
Master Construction Contract, including any payment related to
actual cost savings realized below the Final GMP Amount, shall
be Hard Costs which shall be paid out of the Construction
Fund.
(c) If a construction cost overrun ("Cost Overrun")
occurs which results in the amount of moneys in the
Construction Fund not being sufficient to pay any of the Hard
Costs as they become due, then, as between the Landlord and
the Tenant, the obligation ("Cost Overrun Funding Obligation")
to pay, deliver and deposit additional moneys into the
Construction Fund at such times and in such amounts as may be
necessary to provide sufficient moneys in the Construction
Fund to pay all of the Hard Costs as and when they become due
shall be determined in accordance with the following
provisions:
(1) To the extent that such Cost Overrun arises
out of, relates to or is otherwise attributable to those
matters described in Section 4.3.6 of AIA Document A201
- General Conditions of the Contract for Construction
which will be a part of the Master Construction Contract
(i.e. subsurface or otherwise concealed physical
conditions related to the Subject Tracts or any other
unknown physical conditions of an unusual nature), then
the Cost Overrun Funding Obligation shall be the sole
responsibility of the Landlord.
(2) To the extent that such Cost Overrun arises
out of, relates to or is otherwise attributable to (i)
the failure of the Tenant to timely fulfill any of its
obligations under this Lease or (ii) the fault of the
Architect, then the Cost Overrun Funding Obligation
shall be the sole responsibility of the Tenant.
(3) To the extent that such Cost Overrun arises
out of, relates to or is otherwise attributable to the
failure of the Landlord to timely fulfill any of its
obligations under this Lease, then the Cost Overrun
Funding Obligation shall be the sole responsibility of
the Landlord.
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Nothing contained in this Section 509(c) shall be read
to imply that the Tenant or the Landlord has released,
or is required to release, any claim or cause of action
which either may have under any other contractual
relationship, including the Master Construction Contract
and any contract with the Architect, for reimbursement
or recovery of all or any portion of any amounts paid
into the Construction Fund pursuant to a Cost Overrun
Funding Obligation. To the extent that either party may
own any such claim or cause of action with respect to a
Cost Overrun which was funded, in whole or in part, by
the other party hereto, it will assign to the other
party the appropriate portion of such claim or cause of
action and thereafter reasonably cooperate in the
pursuit of such claim or cause of action. The Landlord
shall not commence litigation or other proceedings (or
otherwise assert any such claim or cause of action)
against the Contractor prior to Final Payment (as such
term is defined in Section 510(c) of this Lease).
(d) Nothing contained herein or implied hereby,
including, without limitation, the fact that the
Non-Bond Funds shall be included in the Construction
Fund, shall imply that any of the Non-Bond Funds are a
part of the Proceeds of the Initial Bonds, that the
Non-Bond Funds are repayable by the Tenant or that the
Non-Bond Funds are subject to the lien of the Indenture.
(e) Notwithstanding the other provisions hereof,
(i) the Tenant is solely responsible for the payment of
any and all Regular Soft Costs, (ii) the Tenant will not
be entitled to receive reimbursement or payment from the
Construction Fund pursuant to the provisions hereof with
respect to any of the Regular Soft Costs and (iii) the
Landlord shall be obligated to pay, when due, any and
all Special Soft Costs with no right of reimbursement
from the Construction Fund. At the request of the
Landlord, the Tenant will provide to the Landlord an
accounting of any and all Regular Soft Costs which have
been paid by the Tenant through the date of such request
with such reasonable detail and back-up as may be
specified in such request.
Section 3.3 Clause (c) of Section 510 of the Lease is hereby deleted
and replaced with the following:
(c) If, upon the full and final payment ("Final Payment") to
the general contractor under the Master Construction Contract any
surplus funds shall remain in the Construction Fund which are not
required to provide for the payment of any of the Hard Costs, such
funds shall be disbursed to the Landlord.
Section 3.4 Section 511 of the Lease is hereby amended in its
entirety to read as follows:
Section 511. Certain Definitions. As used in this Lease, the
following terms shall have the respective meanings indicated below:
(a) "Tenant Construction Cost Amount" shall mean a
pecuniary amount determined in accordance with the following
provisions:
(1) If the Initial Bonds are being issued on the
Commencement Date, then the "Tenant Construction Cost
Amount" shall mean a pecuniary amount equal to (A) the
sum of $31,000,000, the Special Extra Cost Amount and
the Pre-GMP Design Change Cost Amount minus (B) the
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amount of the Net Bond Proceeds minus (C) the Budgeted
Soft Cost Amount minus (D) the certified amount of all
Hard Costs actually paid by the Tenant at any time on or
before the Commencement Date minus (E) the Bond Related
Cost Amount.
(2) If the Initial Bonds are not being issued on
the Commencement Date, then the "Tenant Construction
Cost Amount" shall mean a pecuniary amount equal to (A)
the sum of $31,000,000, the Special Extra Cost Amount
and the Pre-GMP Design Change Cost Amount minus (B) the
Bond Related Cost Amount minus (C) the Budgeted Soft
Cost Amount minus (D) the certified amount of all Hard
Costs actually paid by the Tenant at any time on or
before the Commencement Date.
As used herein, the term "Net Bond Proceeds" shall mean a
pecuniary amount equal to (i) the amount of the Proceeds minus
(ii) the portion of the Proceeds which are actually applied
towards the Costs of Issuance or capitalized interest. The
examples contained in Exhibit "Q" attached hereto are intended
to illustrate the practical application of the definition of
the term "Tenant's Construction Cost Amount" based upon
certain assumptions set forth therein. The amounts and
assumptions set forth in Exhibit "Q" are for illustrative
purposes only and shall have no substantive bearing on this
Lease other than to illustrate the mechanics of making the
mathematical determination of the Tenant Construction Cost
Amount.
(b) "Landlord Construction Cost Amount" shall mean a
pecuniary amount equal to (A) the sum of the Final GMP Amount,
the Budgeted Soft Cost Amount and the Bond Related Cost Amount
minus (B) the amount of the SJPAC Proceeds minus (C) the
certified amount of all Hard Costs actually paid by the
Landlord at any time on or before the Commencement Date
pursuant to the provisions of clauses (b)(4) or (h)(2) of
Section 502 hereof (to the extent not paid out of the SJPAC
Proceeds) minus (D) the sum of $31,000,000, the Special Extra
Cost Amount and the Pre-GMP Design Change Cost Amount. The
examples contained in Exhibit "Q" attached hereto are intended
to illustrate the practical application of the definition of
the term "Landlord Construction Cost Amount" based upon
certain assumptions set forth therein. The amounts and
assumptions set forth in Exhibit "Q" are for illustrative
purposes only and shall have no substantive bearing on this
Lease other than to illustrate the mechanics of making the
mathematical determination of the Landlord Construction Cost
Amount.
(c) "Non-Bond Funds" shall collectively refer to (i) the
SJPAC Proceeds, (ii) the funds deposited into the Construction
Fund by the Landlord in the amount of the Landlord
Construction Cost Amount and (iii) the funds deposited into
the Construction Fund by the Tenant in the amount of the
Tenant Construction Cost Amount.
(d) "Substantial Completion" shall mean the occurrence
of a certificate of occupancy, whether temporary or permanent,
having been issued which permits the Tenant to lawfully use
and operate the Amphitheater for its intended purpose of
presenting live entertainment events to paying patrons in its
"outdoor configuration"; provided, however, if "Substantial
Completion" should occur due to the issuance of a temporary
certificate of occupancy and thereafter the Amphitheater may
not be lawfully used and operated for its intended purpose of
presenting live entertainment events to paying patrons in its
"outdoor configuration" due to the
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expiration of such temporary certificate of occupancy, or
otherwise, then Substantial Completion shall be deemed to have
not occurred at such time.
(e) "Completion Deadline" shall mean (i) May 15, 1995 or
(ii) if the set of 70% Plans which are required to be
delivered pursuant to Section 501 hereof are not delivered on
or before the 70% Plan Delivery Deadline, the date which is
the same number of days after May 15, 1995 as the date on
which such set of 70% Plans are actually delivered is after
the 70% Plan Delivery Deadline.
(f) "Bond Related Cost Amount" shall mean a pecuniary
amount equal to $3,000,000.
(g) "70% Plans" shall mean a set of plans and drawings
for the Amphitheater which meets the requirements described in
Exhibit "R" attached hereto.
(h) "Special Extra Cost Amount" shall mean a pecuniary
amount equal to the sum of (i) 50% of the amount, if any, by
which the line item costs designated in the GMP budget for the
Special Extra Cost Items (to the extent that any one or more,
or any portion, of the Special Extra Cost Items are
incorporated into the design of the Amphitheater) exceeds the
Special Threshold Amount up to the Special Ceiling Amount and
(ii) and 100% of the amount, if any, by which the line item
costs designated in the GMP budget for the Special Extra Cost
Items exceeds the Special Ceiling Amount.
(i) "Special Extra Cost Items" shall mean the
construction and design elements of the Amphitheater
identified below which were recommended to be removed from the
design and construction of the Amphitheater in the Suggested
Cost Reductions ("SCR") dated December 1, 1993 and prepared by
Turner Construction Company:
(1) SCR #73, #93 and #131 (relating to the
redesign of the size of the lobbies).
(2) SCR #84 and #85 (relating to use of block
instead of brick on lobbies and site buildings).
(3) SCR #60 (relating to the reduction of the size
of the backstage area).
(4) SCR #31 and #32 (relating to the redesign of
the restrooms and plumbing).
(j) "Regular Soft Costs" shall mean all Soft Costs other
than Special Soft Costs.
(k) "Special Soft Costs" shall mean any Soft Costs, or
any portion thereof, which are incurred at the special
instance or request of the Landlord and which would not have
been incurred if not for such special instance and request of
the Landlord.
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(l) "Special Threshold Amount" shall mean a pecuniary
amount equal to the sum of $500,000 and the Non-Special
Savings Amount.
(m) "Special Ceiling Amount" shall mean a pecuniary
amount equal to the sum of $2,000,000 and the Non-Special
Savings Amount.
(n) "November Plans and Specifications" shall
collectively refer to each and all of the following plans and
drawings relating to the Amphitheater:
(1) Civil engineering plans and drawings issued by
Paulus, Sokolowski and Sartor and dated November 12,
1993.
(2) Architectural plans and drawings issued by the
Architect and dated November 6, 1993.
(3) Structural plans and drawings issued by
Shepard Crane Associates (SCA) and dated November 8,
1993.
(4) Theatrical plans and drawings issued by Dall
Brown and dated November 6, 1993.
(5) Mechanical, electrical and plumbing plans and
drawings issued by Day, Brown and Rice and dated
November 6, 1993.
Section 3.5 The Landlord hereby agrees that (i) it will forthwith
commence such actions as may be necessary to fulfill its obligations
described in Section 515(b) of the Lease and (ii) it will thereafter
diligently pursue the completion of such obligations in accordance with
the critical path schedule for construction of the Amphitheater which has
been, or soon hereafter will be, finalized. Notwithstanding anything to
the contrary contained in the Lease, the obligation of the Landlord
contained in Section 515(b) of the Lease is a current and binding
obligation of the Landlord and is not subject to the fulfillment of any
prior condition.
Section 3.6 Section 515(c) of the Lease is hereby deleted in its
entirety and replaced with the following:
(c) The Landlord shall forthwith commence, or cause to
be commenced, the delivery to the Leasehold Tract of 375,000
cubic yards (truck measure) of construction fill of a quality
and of a type to meet the specifications in a contract between
the Landlord and Paulus, Sokolowski & Sartor, Inc., dated
July, 1993 and thereafter diligently pursue the completion of
such obligation in accordance with the critical path schedule
for construction of the Amphitheater which has been, or soon
hereafter will be, finalized. Notwithstanding anything to the
contrary contained in this Lease, the obligation of the
Landlord contained in this Section 515(c) is a current and
binding obligation of the Landlord and is not subject to the
fulfillment of any prior condition.
Section 3.7 Section 515(d) of the Lease is hereby amended by (x)
inserting the word "and" at the end of clause (i) and before clause (ii)
and (y) deleting all of clause (iii). Additionally, Section 515(d) of the
Lease is hereby amended by adding at the end of the first sentence thereof
the following:
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provided, however, in no event shall the Initial Bonds be in
an amount which would cause the Tenant Construction Cost
Amount to be less than $0.00 by more than the certified amount
of all Costs of the Initial Project (including both Hard Costs
and Soft Costs) actually paid by the Tenant at any time on or
before the Commencement Date.
Section 3.8 Clause (b) of Section 517 of the Lease is hereby deleted
in its entirety.
Section 3.9 At the end of Article V of the Lease, a new Section 520
is hereby added to read as follows:
Section 520. Landlord's Construction Guaranties.
(a) Completion Guaranty. The Landlord guarantees
("Completion Guaranty") to the Tenant that Substantial
Completion will occur on or before the Completion Deadline.
Notwithstanding anything to the contrary contained herein, if
the set of 70% Plans which are required to be delivered
pursuant to Section 501 hereof are not delivered on or before
August 8, 1994, then (i) the Landlord's guarantee contained in
the immediately preceding sentence shall be of no further
force or effect and (ii) the Landlord shall not be liable or
responsible for any liquidated damages hereunder. In
furtherance of the foregoing, the following provisions shall
apply:
(1) The Landlord acknowledges that the Tenant will
be substantially and significantly damaged in amounts
that will be difficult to ascertain and quantify if
Substantial Completion has not occurred on or before the
Completion Deadline. The Landlord agrees that it will
pay to the Tenant on the earlier to occur of Substantial
Completion or August 15, 1995, as liquidated damages and
not as a penalty, the sum determined in accordance with
the following provisions:
(I) if Substantial Completion occurs the
Threshold Number of Days or less after the
Completion Deadline, then the total amount of
liquidated damages payable pursuant to this
provision shall be $0.00.
(II) If Substantial Completion occurs less
than the Back End Number of Days, but more than
the Threshold Number of Days, after the Completion
Deadline, then the total amount of liquidated
damages payable pursuant to this provision shall
be equal to the product of $38,000 multiplied by
the number of days between the date which is the
Threshold Number of Days after the Completion
Deadline and the date on which Substantial
Completion occurs.
(III) If Substantial Completion is the Back
End Number of Days or more after the Completion
Deadline, then the total amount of liquidated
damages payable pursuant to this provision shall
be $950,000, reduced by the amount (if any) of
funds contributed to the Construction Fund by the
Landlord pursuant to clause (3) of this Section
520(a).
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(2) Subject to the adjustments set forth in the
next succeeding sentence, (i) the term "Threshold Number
of Days" shall mean 50 days and (ii) the term "Back End
Number of Days" shall mean 75 days. The Threshold Number
of Days and the Back End Number of Days shall be
adjusted in accordance with the following provisions:
(I) If Substantial Completion is delayed
beyond the Completion Deadline due to the
occurrence or existence of any one or more
Landlord Controlled Events (herein defined), then
the Threshold Number of Days and the Back End
Number of Days shall each be reduced by the number
of days of delay which are attributable to the
existence or occurrence of such Landlord
Controlled Events. As used in the immediately
preceding sentence, the term "Landlord Controlled
Event" shall mean (i) the failure of the Landlord
to timely fulfill any of its obligations under
this Lease or (ii) those matters described in
Section 4.3.6 of AIA Document A201 - General
Conditions of the Contract for Construction (i.e.
subsurface or otherwise concealed physical
conditions related to the Subject Tracts or any
other unknown physical conditions of an unusual
nature).
(II) If Substantial Completion is delayed
beyond the Completion Deadline by 30 days or more
due to weather conditions, then the Threshold
Number of Days and the Back End Number of Days
shall each be reduced by nineteen (19) days.
(III) If the Landlord is required to
contribute to the Construction Fund any amounts
pursuant to the provisions of clause (3) of this
Section 520(a), then the Back End Number of Days
shall be reduced by a number of days equal to (x)
the amount so contributed to the Construction Fund
by Landlord divided by (y) $38,000, rounded to the
nearest integer.
(3) To the extent that construction of the
Amphitheater should, at any time, be behind schedule,
for any reason other than (x) the failure of Tenant to
timely fulfill any of its obligations under this Lease
or (y) the fault of the Architect, then the Tenant may,
at its option and discretion, accelerate the
construction process in such a manner as may be
necessary to bring the construction of the Amphitheater
back on schedule. If the Tenant so elects to accelerate
the construction process, then (i) the Landlord shall be
required to deposit into the Construction Fund the first
$250,000 of the additional costs attributable to such
accelerated work schedule and (ii) the Tenant shall be
required to deposit into the Construction Fund the
balance, if any, of such additional costs. In order to
reduce the total amount of liquidated damages payable by
the Landlord to the Tenant pursuant to the provisions of
Section 520(a)(1) hereof by an amount equal to any sums
contributed to the Construction Fund by the Landlord
pursuant to the requirements of the immediately
preceding sentence, the Back End Number of Days shall be
reduced by the amount specified in clause (III) of
Section 520(a)(2) hereof.
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The rights and remedies afforded the Tenant pursuant to
clauses (1), (2) and (3) of this Section 520(a) shall be (i)
the sole and exclusive remedies for any breach of the
Completion Guaranty by the Landlord and (ii) exercisable by,
and available to, the Tenant upon a breach of the Completion
Guaranty, on and subject to the provisions of this Section
520(a), without the requirement of providing any notice or
opportunity to cure pursuant to the provisions of Section 1305
of this Lease or otherwise satisfying any conditions precedent
to the occurrence of a "Landlord Event of Default" under this
Lease. The exclusivity of the Tenant's rights and remedies
with respect to a breach by the Landlord of the Completion
Guaranty shall not be construed as a waiver or release by the
Tenant of any other rights or remedies which it may have under
this Lease with respect to any other breach or failure of the
Landlord to fulfill any of its other obligations hereunder.
(b) Contractor's Completion Guaranty. The Tenant's
obligations under this Lease are conditioned upon the Tenant
obtaining an agreement from the general contractor under the
Master Construction Contract, in form, content and substance
acceptable to the Tenant, pursuant to which such general
contractor agrees to pay an amount of liquidated damages
determined as follows:
(1) If Substantial Completion occurs 12 days or
less after the Completion Deadline, then a total amount
of liquidated damages of $0.00.
(2) If Substantial Completion occurs 30 days or
less but more than 12 days after the Completion
Deadline, then a total amount of liquidated damages of
$500,000.
(3) If Substantial Completion occurs 50 days or
less but more than 30 days after the Completion
Deadline, then a total amount of liquidated damages
equal to the sum of (i) $500,000 and (ii) $25,000
multiplied by the number of days that Substantial
Completion occurs beyond the 30th day following the
Completion Deadline.
(4) If Substantial Completion occurs more than 50
days after the Completion Deadline, then a total amount
of liquidated damages of $1,000,000.
If the condition to the Tenant's obligations hereunder
contained in this Section 520(b) is not satisfied to the full
and complete satisfaction of the Tenant on or before May 31,
1994, then, at any time before execution of the Master
Construction Contract, the Tenant may, subject to the
provisions of clause (e) of this Section 520, terminate this
Lease by providing notice thereof to the Landlord.
(c) Indoor Buildout. To assist in causing Substantial
Completion to occur on or before the Completion Deadline, it
is agreed that the Landlord and the Tenant shall each have the
right and authority to require that the "indoor buildout"
requirements of SJPAC not be completed until after the end of
the 1995 Open Air Season; provided, however, that the Tenant
may not exercise such right unless it determines that
completion of the "indoor buildout" requirements of SJPAC will
delay or hinder its use, enjoyment or operation of the
Amphitheater during the 1995 Open Air Season. If either the
Landlord or the Tenant should exercise such right contained in
the immediately preceding sentence, then (i) the Landlord
shall be required to cause the "indoor buildout" requirements
of SJPAC to be completed on
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or before March 31, 1996 and (ii) the Landlord shall be
required to pay all of Tenant's overhead and carrying costs
related to the use and operation of the Amphitheater in its
indoor configuration (including any and all Rent hereunder)
which accrue during the portion of the 1995-96 Enclosed Season
for which the Amphitheater is not available for use by the
Tenant; provided, however, that the Landlord shall not be
obligated to make any payment to the Tenant pursuant to the
provisions of clause (ii) of this Section 520(c) if both of
the following conditions are satisfied:
(1) The Amphitheater may be lawfully and properly
used by the Tenant for its purposes in the indoor
configuration during the 1995-96 Enclosed Season even
though the "indoor buildout" requirements for SJPAC have
not been completed; and
(2) Either (A) SJPAC agrees that, notwithstanding
the provisions of the SJPAC Three Way Agreement, (i) the
Tenant may use the Amphitheater exclusively for the
first 110 days of the 1995-96 Enclosed Season and (ii)
the completion of the "indoor buildout" requirements for
SJPAC may be done during the second 110 days of such
Enclosed Season in lieu of SJPAC's possessory rights in
and to the Amphitheater under the terms of the SJPAC
Lease for the 1995-96 Enclosed Season or (B) the
Landlord presents a plan for completing the "indoor
buildout" requirements for SJPAC over the entire 1995-96
Enclosed Season which (i) will not interfere, delay or
impair the Tenant's use of the Amphitheater during the
1995-96 Enclosed Season and (ii) the Tenant approves, in
its sole discretion.
(d) Landlord's Special Termination Option. If the
Landlord and the Tenant have been unable to obtain, prior to
August 31, 1994, a Master Construction Contract with an
Acceptable Construction Company containing a Final GMP Amount
equal to or less than the Maximum Permitted Amount (herein
defined), then the Landlord shall have the right to terminate,
subject to the provisions of clause (e) of this Section 520,
this Lease by written notice to the Tenant at any time after
August 31, 1994 but before September 30, 1994. As used in the
immediately preceding sentence, the term "Maximum Permitted
Amount" shall mean a pecuniary amount equal to the lesser of
(i) $34,500,000 or (ii) the sum of (x) $33,000,000 and (y) two
times the Special Extra Cost Amount.
(e) Outdoor Option. If (i) the Landlord should exercise
the right and option contained in clause (d) of this Section
520 to terminate this Lease or (ii) the Tenant should exercise
the right and option contained in clause (b) of this Section
520 to terminate this Lease, then the Tenant shall have the
right, exercisable at anytime within 30 days after such
termination, by providing notice thereof to the Landlord, to
fulfill all of its construction obligations contained herein
by constructing the Amphitheater as a Summer Facility. If the
Tenant should timely exercise such right to construct the
Amphitheater as a Summer Facility, then (i) the termination of
this Lease shall be deemed to have never occurred or been
effective and (ii) the parties hereto shall immediately
thereafter (A) each execute and deliver to the other a First
Amendment to Lease in the form attached hereto as Exhibit
"L-1" and (B) each negotiate in good faith with the other to
revise the per ticket surcharge amounts specified in Exhibit
"H" attached hereto to attempt to provide similar projected
levels of revenues from the Surcharge Revenue notwithstanding
that
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fewer shows will be presented at the Amphitheater as a result
of there being no Enclosed Season; provided, however, that
failure to reach an agreement as to how the per ticket
surcharge amounts specified in Exhibit "H" are to be so
revised shall not, in any way, affect the continuing
effectiveness of this Lease, the continuing obligations of the
parties hereunder (including the Tenant's obligation to charge
and collect the per ticket surcharge pursuant to the
provisions of Section 304 hereof in the amounts and in the
years specified in the column headed "Projected Surcharge Per
Ticket" in Exhibit "H" attached hereto) or the effectiveness
of the Tenant's exercise of the option to construct the
Amphitheater as a Summer Facility.
Section 4. Modification of Exhibits. Exhibit "E-1" and Exhibit "E-2"
currently attached to the Lease are hereby amended in their entirety to read as
the exhibits attached to this Amendment marked as Exhibit "E-1" and Exhibit
"E-2", respectively. The Exhibits attached to this Amendment marked as Exhibit
"P", as Exhibit "Q" and as Exhibit "R", respectively, are hereby deemed to be
attached to the Lease as Exhibit "P", as Exhibit "Q" and as Exhibit "R",
respectively.
Section 5. Modification of Exhibit "L-1". Exhibit "L-1" attached to the
Lease is amended as follows:
5.1 Such provisions are hereby added to Exhibit "L-1" as may be
necessary to reflect that it is a complete amendment and restatement of
this Amendment and that it supersedes, replaces and nullifies all of the
provisions contained in this Amendment other than the provisions of
Sections 2, 5 and 6 of this Amendment. In that connection, all references
in Exhibit "L-1" to a "First Amendment to Lease" shall be changed to
references to an "Amended and Restated Second Amendment to Lease".
5.2 Such provisions are hereby added to Exhibit "L-1" as may be
necessary to reflect that the Amphitheater to be constructed by the Tenant
pursuant to the Original Lease, as amended by the Prior Amendments and the
provisions of Exhibit "L-1" shall not be completed until the 1996 Open Air
Season, including, without limitation, a provision that all of the
applicable dates contained in the Original Lease (as amended by the Prior
Amendments) which relate to the conditions benefitting the Tenant and the
deadlines for satisfying those conditions shall be extended by one year
each.
Section 6. Modification of "Proceeds". The phrase "to the Trustee"
appearing in the second line of the defined term "Proceeds" in Section 101 of
the Lease is hereby replaced with the phrase "to the Landlord".
Section 7. Ratification and Confirmation. Except as expressly amended
hereby, the Lease is hereby ratified, confirmed and carried forward in all
respects.
WITNESS the execution hereof effective as of the date and year first above
written.
ATTEST: NEW JERSEY ECONOMIC DEVELOPMENT
[SEAL] AUTHORITY, the Landlord
/s/ Richard L. Timmons By: /s/ Caren S. Franzini
- ---------------------------------- ----------------------------------
Assistant Deputy Director Executive Director
Richard L. Timmons Caren S. Franzini
18
<PAGE>
WITNESS:
PAVILION PARTNERS, a Delaware general
partnership, the Tenant
By: SM/PACE, Inc., its general partner
/s/ [ILLEGIBLE] By: /s/ Brian E. Becker
- ---------------------------------- ------------------------------
Name: Brian E. Becker
Title: Chief Executive Officer
19
<PAGE>
EXHIBIT E-1: COSTS TO BE INCLUDED IN TURNER GMP
1. All items included in the Turner Construction Company budget dated
November 22, 1993 consisting of ninety pages.
2. SJPAC Facilities including administration office, classrooms and black box
(exclusive of furniture, fixtures and equipment).
3. Electronic Architecture
4. Graphic Lighting - Exterior
5. Orchestra Shell
6. Seating:
a. Standard
b. Theatrical upgrade
c. Aisle Lighting
7. Stage Lighting Fixtures
8. Stage System (Wenger)
9. Orchestra Pit
10. Stage Showdeck
11. Sales Tax Exemption
12. General Conditions
13. General Liability Insurance
14. Builder's Risk Insurance
15. General Contractor's Fees
16. Pre-Construction Costs
17. Direct and Indirect Cost Associated with Acceleration of Project Schedule
<PAGE>
EXHIBIT E-2: COSTS OUTSIDE THE GMP
Cost Item
1. TENANT'S EQUIPMENT REQUIREMENTS:
Audio Equipment
Rigging
Spotlights
Video
Communication - other
Computers
Concessionaire Equipment
Drop boxes
Furniture & Equipment - Dressing Rooms
Furniture & Equipment - Office
Patio Tables and Chairs
Signage - facility
Seating: Box Seating Equipment
Telephone System
Tents
2. OVERHEAD FEES AND COSTS INCURRED OR PAID BY TENANT FOR THE FOLLOWING TYPES
OF SERVICES AND ITEMS:
Architectural Design
Civil Engineering
M.E.P. Engineering
Structural Engineering
Acoustical Engineering
Landscape Design
Construction Testing
Permit Expenses
CCMUA - Review
CCMUA - Connection Fee
CCMUA - User Fee
CC Plan Review - RV
Construction Permit
Miscellaneous Permits
Schuster
Geotechnical Engineering (Partial-shared with Landlord)
Construction Consultant
Project Manager
Survey (Onsite)
Theatrical Consultants:
Jaffe
Brown
Other Consultants - Fuller
A & E Contingency
<PAGE>
3. START-UP COSTS INCURRED OR PAID BY TENANT FOR THE FOLLOWING TYPES OF
SERVICES AND ITEMS:
Consultants (Real Estate)
Electrical Connections
Liquor License
G & A, Marketing
Legal
Market Study
Relocation - GM & key executives
Project Travel Expense
4. OFFSITE/OTHER COSTS INCURRED OR PAID BY TENANT FOR THE FOLLOWING ITEMS:
Tenant's Contingency
Expenditures to Date by Tenant
Interim Interest
NOTE: Soft Costs do not include any equipment, overhead, design services,
start-up costs or other expenditures required to meet the specifications
of SJPAC. All such costs shall be the sole and exclusive cost of SJPAC.
EXHIBIT E-2
Page 2 of 2
<PAGE>
Exhibit "P"
DESCRIPTION OF MODIFICATIONS TO THE
FACILITY DESIGN
The reference to SCR in this Exhibit "P" shall refer to the Suggested Cost
Reductions dated December 1, 1993 and prepared by Turner Construction Company
which sets forth a list of various design and construction changes and additions
to the November Plans and Specifications. The following is the list of agreed
upon changes and deletions by reference to the item numbers out of the SCR:
A. Deletions
SCR Item No. Description
2 Reduce number of test piles
3 Change concrete paving to asphalt
5 Reduce interior movable partition allowance
13 Eliminate GWB on interior faces of pavilion
14 Delete parapet wall at loading dock
15 Reduce wick allowance to $30,000
16 Reduce HVAC tonnage to 650 based on enclosed
October-March
20 Delete double footings at interior walls
22 Revise emergency power distribution
limit to pavilion building only
27 Change automatic gates to manual
29 Change plaza retaining walls to Hilfiker system
30 Change pavilion walls to precast and delete lateral
beam support
34 Reduce boiler room one-third
36 Delete sheet piling
50 Delete screen wail theatrical allowance
51 Reduce kiosks
52 Reduce lawn seating 40 feet north
53 Reduce Clinton retaining wall height
63 Removable rear wall - change to fixed panels
<PAGE>
64 Reduce rear of pavilion structure by 10'
65 Incorporate EIFS facia at the rear wall
67 Delete all incandescent light fixtures double
quantity of FA fixtures
72 Delete brick piers on site fencing
74 Delete piles under backstage area
79 Delete dimmer room
86 Delete insulation on concession buildings
99 Reconfigure lawn seating stairs to mid-lawn
102 Reduce square footage of administration building
107 Incorporate effects of building volume reduction
in HVAC-AHU's, chillers, duct work, piping
120 Redesign HVAC system for gas fired rooftop units
121 No C/Score on CMU
123 Change concrete foundation walls to CMU
124 Specify cheaper light fixtures
126 Delete remaining two-thirds of boiler room
128 Delete aluminum soffit on restrooms
129 Delete heat way piping
130 Delete Hilfiker wall on Clinton Street and plazas
B. Additions
SCR Item No. Description
119 Add pumping station and equipment
132 Add showdeck stage
133 Increase sound system allowance
134 Add sound trap curtain
EXHIBIT "P"
Page 2 of 3
<PAGE>
135 Catwalk dimmer rooms
136 Add doghouse on lobby roof
137 Add bench seating
138 Add asphalt paving under bench seating
139 Add retaining wall at cross aisle
140 Electronic architecture
141 Graphic lighting exteriors
142 Orchestra shell
143 Seating
144 Theatrical upgraded seating
145 Seat mounted aisle lights
146 Stage system
EXHIBIT "P"
Page 3 of 3
<PAGE>
Exhibit "Q"
EXAMPLE ONE: Bonds Issued with capitalized interest included
A. Assumptions
1. Proceeds = $26,100,000
2. Net Bond Proceeds = $23,100,000 [assume: $500,000 of Costs of
Issuance and $2,500,000 capitalized interest]
3. Final GMP Amount = $31,500,000
4. Tenant's Hard Costs before Commencement Date = $750,000
5. Landlord's Hard Costs before Commencement Date = $750,000
6. Projected interest for 730 days exceeds capitalized interest = $0.00
7. Special Extra Cost Amount = $0.00
8. Pre-GMP Design Change Cost Amount = $0.00
9. SJPAC Proceeds = $3,940,000
B. Calculation of Tenant Construction Cost Amount ("TCCA") per Section 511
(a)(1)
TCCA = (A) $31,000,OO0 + $0.00 + $0.00; minus
(B) $23,100,000; minus
(C) $5,500,000; minus
(D) $750,000; minus
(E) $3,000,000.
TCCA = ($1,350,000). Thus, $1,350,000 will be disbursed to
Tenant on the Commencement Date from the Construction
Fund pursuant to Section 502(i)(1)(II).
C. Calculation of Landlord Construction Cost Amount ("LCCA") per Section
511(b)
LCCA = (A) $31,500,000 + $5,500,000 + $3,000,000; minus
(B) $3,940,000; minus
(C) $750,000; minus
(D) $31,000,000 + $0.00 + $0.00.
LCCA = $4,310,000
==========
<PAGE>
D. Sources and Uses Summary
Sources Uses
- ------- ----
$26,100,000 - Bond Proceeds $31,500,000 - Final GMP
$ 3,940,000 - SJPAC Proceeds $ 3,000,000 - Costs of Issuance and
Capitalized interest
$ 4,310,000 - LCCA $ 1,350,000 - Negative TCCA
$ 750,000 - Tenant Pre-Commencement
Date Contribution.
$ 750,000 - Landlord Pre-Commencement
Date Contribution
$35,850,000 - TOTAL SOURCES $35,850,000 - TOTAL USES
=========== ===========
EXAMPLE TWO: Bonds issued without capitalized interest included
A. Assumptions
1. Proceeds = $23,600,000
2. Net Bond Proceeds = $23,150,000 [assume: $450,000 of Costs of
Issuance and $0.00 of capitalized interest]
3. Final GMP Amount = $31,500,000
4. Tenant's Hard Costs before Commencement Date = $750,000
5. Landlord's Hard Costs before Commencement Date = $750,000
6. Special Extra Cost Amount = $0.00
7. Pre-GMP Design Change Cost Amount = $0.00
8. SJPAC Proceeds = $3,940,000
B. Calculation of Tenant Construction Cost Amount ("TCCA") per Section
511(a)(1)
TCCA = (A) $31,000,000 + $0.00 + $0.00; minus
(B) $23,150,000; minus
(C) $5,500,000; minus
(D) $750,000; minus
(E) $3,000,000.
Exhibit "Q"
Page 2 of 5
<PAGE>
TCCA = ($1,400,000). Thus, $1,400,000 will be disbursed to the
Tenant on the Commencement Date from the Construction Fund
pursuant to Section 502(i)(1)(II).
C. Calculation of Landlord Construction Cost Amount ("LCCA") per Section
511(b)
LCCA = (A) $31,500,000 + $5,500,000 + $3,000,000; minus
(B) $3,940,000; minus
(C) $750,000; minus
(D) $31,000,000 + $0.00 + $0.00
LCCA = $4,310,000
==========
D. Sources and Uses Summary
Sources Uses
- ------- ----
$23,600,000 - Bond Proceeds $31,500,000 - Final GMP
$ 3,940,000 - SJPAC Proceeds $ 450,000 - Costs of Issuance
[Note: capitalized interest is now "off
budget"]
$ 4,310,000 - LCCA $1,400,000 - Negative TCCA
$ 750,000 - Tenant Pre-Commencement
Date Contribution
$ 750,000 - Landlord Pre-Commencement
Date Contribution
$33,350,000 - TOTAL SOURCES $33,350,000 - TOTAL USES
=========== ===========
Exhibit "Q"
Page 3 of 5
<PAGE>
EXAMPLE THREE: No Bonds issued
A. Assumptions
1. Proceeds = $0.00
2. Final GMP Amount = $31,500,000
3. Tenant's Hard Costs before Commencement Date = $750,000
4. Landlord's Hard Costs before Commencement Date = $750,000
5. Special Extra Cost Amount = $0.00
6. Pre-GMP Design Change Cost Amount = $0.00
7. SJPAC Proceeds = $3,940,000
B. Calculation of Tenant Construction Cost Amount ("TCCA") per Section
511(a)(2)
TCCA = (A) $31,000,000 + $0.00 + $0.00; minus
(B) $3,000,000; minus
(C) $5,500,000; minus
(D) $750,000.
TCCA = 21,750,000
==========
C. Calculation of Landlord Construction Cost Amount ("LCCA") per Section
511(b)
LCCA = (A) $31,500,000 + $5,500,000 + $3,000,000; minus
(B) $3,940,000; minus
(C) $750,000; minus
(D) $31,000,000 + $0.00 + $0.00.
LCCA = $4,310,000
==========
Exhibit "Q"
Page 4 of 5
<PAGE>
D. Sources and Uses Summary
Sources Uses
- ------- ----
$21,750,000 - TCCA $31,500,000 - Final GMP
$ 3,940,000 - SJPAC Proceeds $ 0.00 - Bond Costs [Note: all
financing costs are "off
budget" in this example]
$ 4,310,000 - LCCA
$ 750,000 - Tenant Pre-Commencement
Date Contribution
$ 750,000 - Landlord Pre-Commencement
Date Contribution
$31,500,000 - TOTAL SOURCES $31,500,000 - TOTAL USES
=========== ===========
Exhibit "Q"
Page 5 of 5
<PAGE>
Camden Amphitheater
EXHIBIT "R"
DEFINITION OF 70% PLANS
- --------------------------------------------------------------------------------
The following descriptions outline the minimum requirements for documentation at
each level. Where this is less than the requirements of the AIA Building Design
Section 2.5 (Document B141), the AIA requirements shall take precedence. In
general, all 70% documents should contain enough information and coordination to
solicit lump sum bids from trade contractors.
All items contained in the project are assumed to be non proprietary and we will
be able to solicit at least three manufacturers' bids for each item.
1. Surcharge Documents - 70%/100%
Civil drawings showing location and scope of surcharge. Specification for
soil placement/compaction with all necessary monitoring/measuring
equipment referenced.
2. Civil Documents - 70%
All civil documents showing sufficient information for bidding the bulk
fill, excavation and wicks. This should include rough site grades and
elevations. The scope of the wicks should be fully designed and shown. All
specifications for these items should be included. Any slope
stabilization/reinforcing should be fully designed and specified. Utility
sizes and locations should be shown, along with preliminary landscaping
and irrigation. All relevant specifications should be included.
3. Structural - 70%
All piles should be shown and detailed with top and bottom elevations
listed. Reinforcing and other details should also be shown. The test piles
should be fully designed and specifications included. All pile caps and
grade beams/spread footings should be shown, sized and details referenced.
Anchor bolts footing elevations should be shown and located. All
structural plans/elevations should be included showing member sizes and
weights with noted lengths and dimensions. Horizontal and vertical
sections through each element should be included. Specifications for steel
grade, finishes, connections information, etc. should be included. The
plans should contain a column schedule and show all member
forces/reactions. Spray-on fireproofing requirements and specifications
should be indicated and included. Plan drawings showing all slab on grade
and subgrade requirements should be included. These should reference
details and specifications. All reinforcement, vapor
barrier/waterproofing, finishes and thicknesses should be shown.
Page 1 of 5 5/4/94
<PAGE>
Camden Amphitheater
Exhibit "R"
Definition of 70% Plans - Continued
- --------------------------------------------------------------------------------
4. Architectural Precast - 70%/100%
Plans, elevations and sections of precast concrete walls showing all
details, connections and interfaces should be included. Fully coordinated
specifications should also be included designating all required finishes,
thicknesses, surface treatments and perimeter treatments.
5. Architectural Drawings - 70%
The architectural plans should at minimum show and locate all buildings,
kiosks, gazebo's, sheds and other structures including reference to
established x-y grid system and finished floor heights. All specifications
should be project specific.
1. Floor plans, 1/8" scale minimum, showing layouts of all partitions
(types clearly marked on the drawing), locations of all doors with
all doors and rooms numbered to a system.
2. Partition schedule, heights, and specifications including fire/sound
rating
3. Door, frame, and hardware schedule with specifications
4. Finish schedule/specifications for flooring, walls, base, and
ceilings referenced to the room numbering. Ceiling heights also to
be defined
5. Reflected ceiling plan showing all bulkheads, soffits, and coffers
6. Sections for each type of wall partition
7. Exterior wall elevations, minimum 1/8" scale, and window schedule
showing size and type of window. Elevations to show any window
operation
8. Sections through building showing floor heights, ceiling heights,
and any special conditions
9. Sections and details for each type of exterior wall system including
details at window hand/jamb/sill. All connection details to
structural frame should be shown
10. Details of all special items
11. Roof layout including size and location of all equipment and
skylights
12. Sections, details, and specifications at each type of roof and all
curbs, copings, parapets
13. Description, specification, and extent of all dampproofing and
waterproofing
14. Locations, sizes, and specifications of all special doors
15. Specifications and sufficient information to establish the scope and
quality of items such as:
a. Lockers
b. Shelving
c. Cabinets
d. Draperies and blinds
e. Grilles, screens, and enclosures
f. Casework
g. Toilet room partitions and accessories
h. Directories
i. Graphics and signage
j. Wall and corner guards
k. All other fit-out items
Page 2 of 5 5/4/94
<PAGE>
Camden Amphitheater
Exhibit "R"
Definition of 70% Plans - Continued
- --------------------------------------------------------------------------------
5. Architectural Drawings - 70% - Continued
16. Details, elevations and specifications for the Pavilion rear
removable wall system including all finishes, seals, insulation and
substructure.
17. Details, elevations and specifications for the interior moveable
wall system including all finishes, ancillary equipment, doors,
hardware and track.
18. All storefront and masonry elevations should be included and
detailed (minimum size 1" = 8') showing all interfaces, corners,
heads, jambs, and sills.
19. The site sound wall should be shown and fully detailed including
elevations and specifications. All finishes, surface treatments and
structure should be fully designed.
20. All site stairs and paving should be shown and detailed including
enlarged plans and structural plans/details to show grades,
thicknesses, materials and specifications.
6. Mechanical - 70%
Equipment schedule listing number and capacity of all fans, pumps,
compressors, diffusers, etc. including manufacturers names, model numbers
and electrical/gas/water feeds.
Size, location, make and model of gas-fired roof top units including ATC
piping, controls, utility requirements, valving and connections in
accordance with TCCo Cost Reduction narrative. Coordination with lobby
structure curb to roof details and vibration isolation and sound
attenuation is also required.
Plan showing all duct/pipe sizes and locations including dampers, louvers,
diffusers, valves and insulation. Plan location and layouts for all
equipment.
Specification of all devices, requirements and sequence of operation for
ATC and/or BMS systems.
All details, connections, specifications and valving arrangement for
piping, ductwork and equipment.
All piping, valves, sizes and locations required for all kitchen equipment
including concession equipment by Ogden Services.
7. Plumbing - 70%
Single line layout showing all sizes and locations for stacks, risers,
water lines and sanitary drainage, including valving & insulation.
Plumbing fixture type, including manufacturer name and model number,
specifications, quantity and location for all buildings.
Page 3 of 5 5/4/94
<PAGE>
Camden Amphitheater
Exhibit "R"
Definition of 70% Plans - Continued
- --------------------------------------------------------------------------------
7. Plumbing - 70% - Continued
Hot water heating systems for all buildings, showing all sizes and
locations for hot water heaters, piping, valving and insulation.
Drawings and specifications for the water pumping station including all
sizes and location for equipment, piping, tie-in valving, vibration
isolation and insulation.
Valve sizes and locations required for all kitchen equipment including
concession equipment by Ogden Services.
8. Fire Protection - 70%
Single line layout showing all sizes and locations for risers, branches
and connections to domestic water system including all valving or plan
layout of each system and coverage required.
Specifications on head type(s) and locations including acceptable
manufacturers.
Make and model of fire pump including pipe sizes and electrical feed
requirements.
Valve sizes and locations required for all kitchen equipment (hoods)
including concession equipment by Ogden Services.
9. Electrical - 70%
All lighting, power and control systems should be designed and specified
including, but not limited to, the following:
1. Single line diagrams and layout showing incoming service, location
and size of switchgear, main feeders, meters, and panels
2. Equipment schedule including all panel sizes, feeders, etc.
3. Sizes and locations of all switches, breakers, etc.
4. Detailed power and lighting layout showing all circuit references
5. Description, extent and layout for all special systems including
a. Fire alarm showing the site loop layout
b. Telephone
c. Control system requirements (computer)
d. Security system
6. Specification and size of emergency generator
Page 4 of 5 5/4/94
<PAGE>
Camden Amphitheater
Exhibit "R"
Definition of 70% Plans - Continued
- --------------------------------------------------------------------------------
10. Equipment - 70%
All required equipment should be shown on the plans and specified. The
site benches, if required, should reference a type, model number and total
LF of bench required.
11. Theatrical - 70%
All theatrical equipment, furnishings and interfaces should be designed,
coordinated and specified. This should include but not be limited to:
o Stage
o Showdeck stage
o Sound system/speaker system
o Curtains
o Dimmer equipment
o Lighting
o ERES
o Orchestra shell
o Seating
o Portal legs
o Rigging, counterweights and line sets
o Draperies
o Intercom/Paging system
o Outlet devices
Page 5 of 5 5/4/94
<PAGE>
THIRD AMENDMENT TO LEASE AGREEMENT
[Camden Amphitheater]
THIS THIRD AMENDMENT TO LEASE AGREEMENT ("3rd Amendment") is executed and
entered into effective as of the 15th day of March, 1995, by and between the NEW
JERSEY ECONOMIC DEVELOPMENT AUTHORITY ("Landlord"), a public body corporate and
politic duly organized under the laws of the State of New Jersey, and PAVILION
PARTNERS (f/k/a Sony Music/PACE Partnership) ("Tenant"), a Delaware general
partnership.
RECITALS
A. Landlord and Tenant have executed and entered into that certain Lease
Agreement ("Original Lease") dated February 9, 1994, pursuant to which Landlord
agreed to demise, lease and rent to the Tenant, upon the terms, conditions and
provisions contained therein, a certain tract of land located in Camden, New
Jersey and bounded on the north by Wiggins Park, on the west by the Delaware
River, on the east by Delaware Avenue, and on the south by Clinton Street
(extended).
B. Landlord and Tenant have previously amended the Original Lease pursuant
to (i) that certain First Amendment to Lease dated March 11, 1994 ("First
Amendment"), (ii) those certain letters provided by Tenant to Landlord and
dated, respectively, March 31, 1994, April 15, 1994, April 22, 1994 and April
29, 1994 ("Amending Letters") and (iii) that certain Second Amendment to Lease
Agreement dated June 7, 1994 ("Second Amendment").
C. Landlord and Tenant desire to further amend certain provisions
contained in the Lease as more fully set forth below.
<PAGE>
AMENDMENT
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:
Section 1. Second Amendment Void.
The Second Amendment to Lease Agreement dated May 7, 1994 is (a)
hereby superseded by this 3rd Amendment, (b) null and void and (c) of no effect
as amending the Lease. All references to the Lease herein are to the Original
Lease, as amended by the First Amendment and the Amending Letters only.
Section 2. Defined Terms
2.1 All capitalized terms used herein which are not specifically
defined pursuant to the provisions hereof shall have the respective meanings
assigned pursuant to the provisions of the Lease.
2.2 The term "Acceptable Construction Commitment" appearing in
Section 101 of the Lease is amended in its entirety to read as follows:
"Acceptable Construction Commitment" shall mean the written
commitment in favor of the Tenant from Turner Construction Company which
guarantees a "Guaranteed Maximum Price" of $33,980,000 for construction of
the Amphitheater as a Joint Facility (such Guaranteed Maximum Price being
herein sometimes called the "GMP").
2.3 The term "Commencement Date" appearing in Section 101 of the
Lease is hereby amended in its entirety to read as follows:
"Commencement Date" shall mean September 30, 1994.
2.4 The term "Hard Costs" appearing in Section 101 of the Lease is
hereby amended in its entirety to read as follows:
"Hard Costs" shall mean all the Costs of the Initial Project other
than Soft Costs. Hard Costs shall include, without limitation, those types
and
2
<PAGE>
categories of costs related to the construction of the Amphitheater which
are included in Turner Construction Company's GMP.
2.5 The phrase "to the Trustee" appearing in the second line of the
defined term "Proceeds" in Section 101 of the Lease is hereby replaced with the
phrase "to the Landlord."
2.6 The term "SJPAC" appearing in Section 101 of the Lease is hereby
amended in its entirety to read as follows:
"SJPAC" shall mean South Jersey Performing Arts Center, Inc.
or any other non-profit, tax exempt organization reasonably
acceptable to Tenant.
Section 3. Representations, Covenants and Warranties; Disclaimers
3.1 Section 204(b) of the Lease is amended to read as follows:
(b) Environmentally Related Construction Activities. The Tenant
shall conform all construction activities to the standard set forth in the
Post Remedial Construction Plan ("PRCP"), a copy of which both parties
hereto have previously received. The parties hereto have each also
received a conformed copy of the deed restrictions to be imposed upon the
Leasehold Tract ("Deed Restrictions"). Notwithstanding the fact that the
PRCP and the Deed Restrictions, including any amendments to either or
both, may impose certain duties, responsibilities or obligations upon the
Tenant as developer of the Amphitheater, it is specifically agreed and
acknowledged, as between Tenant and the Landlord, that the costs incurred
in fulfilling such duties, responsibilities or obligations shall be
allocated between and borne by the Landlord and the Tenant consistent with
the allocation between the Tenant and the Landlord of those same duties,
responsibilities or obligations pursuant to the provisions of this Lease.
3.2 Section 205 of the Lease is amended to change the words
"Commencement Date" to the words "the earlier of December 31, 1994 or the date
upon which the Initial Bonds are issued by the Landlord in accordance with the
provisions hereof."
3
<PAGE>
3.3 Section 309 of the Lease is amended as follows:
3.3.1 The word "paid" appearing in the second line of Section
309 of the Lease is hereby changed to be the word
"unpaid."
3.3.2 A new sentence is hereby added at the end of Section 309
to read as follows:
If the initial Bonds are never issued then,
notwithstanding anything to the contrary contained
herein, (i) no Administrative Fee shall be payable by
the Tenant to the Landlord, (ii) no Bond Related
Supplemental Rent Payments shall be payable hereunder by
the Tenant and (iii) all Non-Bond Supplemental Rent
Payments shall be payable in the manner otherwise
provided herein and not to the Trustee.
Section 4. Conditions Precedent
4.1 Section 404 of the Lease is hereby deleted in its entirety and
replaced with the following:
Section 404. Remaining Clean-Up Items. The Landlord agrees that it
will reasonably cooperate with Tenant in connection with causing, and
exercise its reasonable best efforts to cause, each of the following to be
satisfied as soon hereafter as is reasonably practicable:
(a) Issuance of a commitment from the City of Camden in favor
of the Tenant pursuant to which the City of Camden commits, at its
sole cost and expense, to (i) provide utility availability for water
(at 60 psi), sanitary sewer, storm sewer, water and other required
city utility services to the boundary of the Leasehold Tract at
Delaware Avenue with such capacity and in such amounts as will be
sufficient for the proper use and operation of the Amphitheater,
(ii) complete such necessary offsite roadway improvements to permit
the extension of Delaware Avenue South prior to the opening of the
Amphitheater which will satisfy all traffic requirements which must
be satisfied to permit the opening and use of the Amphitheater
(including the construction of Jersey Barriers) and (iii) relocate
the existing sanitary sewer line currently
4
<PAGE>
located under a portion of the Leasehold Tract to the extended
Delaware Avenue South right-of-way.
(b) Issuance of a written commitment from South Jersey Port
Corporation in favor of the Tenant pursuant to which the South
Jersey Port Corporation grants to the Tenant the right to install
and bury such pipes or other lines under Clinton Street as may be
necessary for the Tenant to tie into the existing sanitary and storm
sewer lines thereon.
(c) Finalization of the location of, and the terms and
conditions relating to, the easements or other restrictions or
encumbrances to be imposed upon any of the Subject Tracts pursuant
to the proposed Contract for Sale of Land for Private Redevelopment
among the CRA, the Landlord and Cooper's Ferry Development
Association, Inc. in a manner reasonably acceptable to the Tenant.
(d) Issuance of a written commitment from the CRA in favor of
the Tenant pursuant to which the CRA agrees to vacate and abandon
the 35 foot easement along the most easterly portion of the
Leasehold Tract at such time as the existing sanitary sewer line
located thereunder is relocated onto the extension of Delaware
Avenue South.
(e) Execution by the City of Camden of an amendment to the
"payment in lieu of taxes" arrangement with the City of Camden which
results in the amount and timing of payments due thereunder being
satisfactory to the Tenant.
4.2 A new sentence is hereby added at the end of Section 407 of the
Lease to read as follows:
Notwithstanding anything to the contrary contained herein, the
Landlord shall not execute or enter into the SJPAC Lease until the
SJPAC Three Way Agreement has been executed by SJPAC and the
Landlord in a form reasonably acceptable to the Tenant.
4.3 Notwithstanding anything to the contrary contained in the Lease,
the Landlord shall be under no obligation to issue the Initial Bonds.
Accordingly, the provisions of clause (d) of Section 515 of the Lease are hereby
deleted in their entirety.
5
<PAGE>
Section 5. Construction or Project/Landlord's Contribution/Parking
Facilities
5.1 Section 502 of the Lease shall be amended as follows:
5.1.1 Clauses (a) through (f) of Section 502 of the Lease
shall not change.
5.1.2 Clauses (g), (h) and (i) of Section 502 of the Lease are
hereby amended in their entirety to read as follows:
(g) The Tenant shall enter into a construction contract with
an Acceptable Construction Company for the construction of the
Amphitheater in accordance with the Plans and Specifications and
thereafter diligently pursue the construction of the Amphitheater.
The construction work shall be conducted subject to and in
compliance with all applicable Legal Requirements.
(h) Subject to the provisions contained in Section 1416 of
this Lease, Tenant shall, at its sole cost and expense, subject to
the Landlord's obligations set forth in this Lease, construct the
Amphitheater in accordance with the Plans and Specifications.
(i) [Intentionally blank.]
5.1.3 Clause (j) of Section 502 of the Lease shall not change.
5.1.4 Clause (k) of Section 502 of the Lease is hereby amended
in its entirety as follows:
(k) Notwithstanding any conflicting provision contained in
this Lease, no remodeling, additions, modifications or other changes
may be made to the Plans and specifications or to the Project in
such a manner which would result in the Amphitheater being
constructed in a manner which does not satisfy the design
requirements of SJPAC as specified in, and required by, the SJPAC
Three-Way Agreement.
5.2 [Intentionally Deleted]
6
<PAGE>
5.3 Section 509 of the Lease shall be amended as follows:
5.3.1 The phrase "and the SJPAC Proceeds" appearing in the
fifth line of Section 509(a) of the Lease is hereby deleted.
5.3.2 The phrase "provided, however, it is hereby specified
that all of the SJPAC Proceeds shall be deposited in the Construction
Fund" appearing in the seventh and eighth lines of Section 509(a) of the
Lease is hereby deleted.
5.3.3 Clause (c) of Section 509 of the Lease is hereby deleted
in its entirety and replaced with the following:
(c) Nothing contained herein or implied hereby,
including, without limitation, the fact that the
Landlord's Contributed Funds shall be included in the
Construction Fund, shall imply that the Landlord's
Contributed Funds are a part of the Proceeds of the
Initial Bonds, that the Landlord's Contributed Funds are
repayable by the Tenant or that the Landlord's
Contributed Funds are subject to the lien of the
Indenture. As used in the immediately preceding
sentence, the term "Landlord's Contributed Funds" shall
mean and refer to the amounts contributed to the
Construction Fund by the Landlord pursuant to the
provisions of Section 511(b)(ii) hereof.
5.3.4 A new clause (d) is hereby added at the end of Section
509 of the Lease to read as follows:
(d) Notwithstanding anything to the contrary
contained herein, the provisions of this Section 509
shall not apply or be effective if the Initial Bonds are
not issued.
5.4 Section 510 of the Lease shall be amended as follows:
7
<PAGE>
5.4.1 The last sentence of Section 510(a) is hereby deleted in
its entirety.
5.4.2 A new clause (d) is hereby added at the end of Section
510 of the Lease to read as follows:
(d) Notwithstanding anything to the contrary
contained herein, the provisions of this Section 510
shall not apply or be effective if the Initial Bonds are
not issued.
5.5 Section 511 of the Lease is hereby amended to read as follows:
Section 511. Landlord's Contribution. (a) Subject to the provisions
of this Section 511, the Landlord agrees to contribute to the payment of
Hard Costs the sum of $10.5 million ("Landlord's Contribution").
Notwithstanding anything to the contrary contained herein, the Landlord
shall have no separate or additional obligation to contribute the SJPAC
Proceeds to the payment of Hard Costs, it being agreed that the SJPAC
Proceeds shall be the sole and exclusive property of the Landlord to be
used by the Landlord for any purpose it may choose. All amounts paid for
Hard Costs by Landlord pursuant to the Second Amendment shall be credited
as part of the Landlord's Contribution. If the GMP is less than $33
million, then the Landlord's Contribution shall be reduced one dollar for
each dollar the GMP is less than $33 million.
(b) The Landlord's Contribution shall be payable in accordance with
the following provisions:
(i) So long as the Initial Bonds have not been issued, the
Landlord's Contribution shall be payable in installments as follows:
(1) The Tenant shall require its general contractor to
issue all invoices for Hard Costs on AIA Document G702,
Application and Certificate for Payment. After the Tenant and
the Architect have reviewed and approved each such invoice,
Tenant shall provide a copy to Landlord. Within 30 days after
receipt by Landlord of a copy of any invoice for Hard Costs
issued by Tenant's general contractor, Landlord
8
<PAGE>
shall pay directly to Tenant's general contractor an amount
which will make the total sum of all payments made by the
Landlord for Hard Costs through the date of said payment,
including said payment, equal the Landlord Percentage (herein
defined) of the total amount of all Hard Costs invoiced by
Tenant's general contractor through the date of such invoice.
(2) As used above, the term "Landlord Percentage" shall
mean (i) prior to establishment of the GMP, thirty percent
(30%) and (ii) after the establishment of the GMP, a fraction,
stated as a percentage, the numerator of which is the amount
of the Landlord's Contribution (after any adjustment required
by the last sentence of Section 511(a) hereof) and the
denominator of which is the GMP.
(3) The Tenant shall provide to the Landlord, upon the
Landlord's request, copies of any and all documents,
instruments, reports, certificates or other supporting data or
information in the Tenant's possession and relating to any
invoice for Hard Costs issued by the Tenant's general
contractor.
(ii) Upon issuance of the Initial Bonds, if at all, the
Landlord shall pay, deliver and deposit the balance of the
Landlord's Contribution which is unpaid as of the date of issuance
of the Initial Bonds to the Trustee to be held as a part of the
Construction Fund and subsequently disbursed in accordance with the
terms of the Indenture and Section 510 hereof.
(c) Upon completion of construction of the Amphitheater and final
payment of all amounts due to the Tenant's general contractor under the
construction contract for the Project ("Settlement Date"), a settlement
shall be made between the Landlord and the Tenant in accordance with the
following provisions:
(i) if the total sum of all Hard Costs actually paid and
incurred ("Total Actual Cost") is less than the GMP, then
9
<PAGE>
the amount of the Landlord's Contribution shall be reduced by the
sum of the amounts specified in clause (1) and (2) below:
(1) One-third of the amount (if any) by which the amount
specified in clause (A) below exceeds the amount specified in
clause (B) below:
(A) The lesser of the GMP or $33.7 million.
(B) The greater of the Total Actual Cost or $33
million.
(2) The amount (if any) by which the amount specified in
clause (A) below exceeds the amount specified in clause (B)
below:
(A) The lesser of the GMP or $33.0 million.
(B) The Total Actual Cost.
(ii) If the total amount of funds paid by the Landlord for
Hard Costs pursuant to the provisions hereof exceed the amount of
the Landlord's Contribution (as adjusted pursuant to clause (i) of
this Section 511(c)), then the Tenant shall pay the amount of such
excess to the Landlord within 30 days after the Settlement Date.
(iii) If the total amount of funds paid by the Landlord for
Hard Costs pursuant to the provisions hereof is less than the amount
of the Landlord's Contribution (as adjusted pursuant to clause (i)
of this Section 511(c)), then the Landlord shall pay to the Tenant
the amount by which such total amount is less than the amount of the
Landlord's Contribution within 30 days after the Settlement Date.
5.6 Section 515(d) of the Lease is hereby amended by (1) inserting
the word "and" at the end of clause (i) and before clause (ii) and (2) deleting
all of clause (iii).
5.7 Section 515(e) is deleted and the following substituted:
10
<PAGE>
(e) Within 30 days after the Tenant accepts the Acceptable
Construction Commitment, Landlord shall pay to Tenant, as Landlord's
contribution for the purchase of additional fill material for the Project,
an amount equal to (i) $600,000 minus (ii) one-third of the amount (if
any) by which the greater of the GMP or $33.0 million is less than $33.7
million. The Landlord shall receive a dollar-for-dollar credit against its
obligation created by the immediately preceding sentence for the amounts
expended in connection with the delivery of such additional fill material
as set forth on Exhibit "R" attached hereto.
5.8 Section 517(b) of the Lease is amended to read as follows:
(b) Within 30 days of the Commencement Date, the Landlord shall
provide to the Tenant a written accounting detailing the actual
expenditures which have been made, and the planned expenditures which will
be made out of the Grant Funds. This accounting shall be periodically
updated as the Tenant shall reasonably request.
5.9 Section 518 of the Lease is amended to substitute the words
"February 15, 1995" for the words "Commencement Date" wherever those words
appear in Section 518.
5.10 The following is added to Article V as new Section 520.
Section 520. Records and Accounting. Tenant shall keep or shall
cause the Acceptable Construction Contractor to keep full and detailed
accounts and exercise such controls as may be necessary for the proper
financial management of the Project. The Landlord shall be afforded
reasonable access to the records, books, correspondence, instructions,
drawings, receipts, subcontracts, purchase orders, vouchers, memoranda and
other data relating to the Project to verify any credits due to the
Landlord or the accuracy of any invoices submitted to Landlord.
5.11 Notwithstanding the provisions of Article VIII of the Lease
Agreement, Landlord hereby agrees with the Tenant as follows in regard to the
parking facilities associated with the Amphitheater:
11
<PAGE>
5.11.1 Upon execution of this 3rd Amendment, Landlord shall
issue a "Notice to Proceed" to R.T. Wingzinger, Inc. to commence
construction of the Amphitheater's parking facilities.
5.11.2 Landlord shall thereafter, at Landlord's cost,
diligently pursue construction of such parking facilities in accordance
with the specifications that have been agreed upon between the Tenant and
the Landlord in order to cause completion of such construction activities
as soon hereafter as is reasonably practicable.
Section 6. Condemnation Awards. A new Section 1107 is hereby added at the
end of Article XI of the Lease to read in its entirety as follows:
Section 1107. Definitions of Landlord Fraction. As used herein, the
"Landlord Fraction" shall mean 44.64%.
Section 7. Modification of Exhibits. Exhibit "E-2" currently attached to
the Lease is hereby amended in its entirety to read as the exhibit attached to
this 3rd Amendment marked as Exhibit "E-2." The Exhibit attached to this 3rd
Amendment marked as Exhibit "R" is hereby deemed attached to the Lease as
Exhibit "R."
Section 8. Ratification
Except as expressly amended hereby, the Lease is hereby ratified,
confirmed and carried forward in all respects.
Section 9. Amendment and Restatement
The parties hereto shall hereafter work together reasonably to prepare and
execute, as soon thereafter as is reasonably practicable, an amended and
restated version of the Lease (a) incorporating the terms of all amendments
thereto, (b) eliminating
12
<PAGE>
all references to the conditions precedent of Section 404, (c) eliminating all
references to the Initial Bonds and provisions related to the Initial Bonds and
(d) eliminating any other provisions in the Lease which have expired or are then
not applicable by their own terms.
ATTEST: NEW JERSEY ECONOMIC DEVELOPMENT
AUTHORITY, the Landlord
(Seal)
/s/ [ILLEGIBLE] /s/ Caren S. Franzini
- --------------------------------- -------------------------------------
Caren S. Franzini
Executive Director
WITNESS: PAVILION PARTNERS, a Delaware general
partnership, the Tenant
By: SM/PACE, Inc., its general partner
/s/ [ILLEGIBLE] /s/ Brian E. Becker
- --------------------------------- -------------------------------------
Brian E. Becker
Chief Executive Officer
13
<PAGE>
EXHIBIT R
ADDITIONAL FILL EXPENDITURES
CAMDEN AMPHITHEATER
1. Winzinger - Fill Transport $495,444
2. Consulting - PS&S $ 47,119
3. NJDEP - Fill Purchase $ 26,250
4. Palmyra - Fill Purchase $ 15,750
5. Administrative/Management Fee $ 12,000
6. Palmyra Inspections $ 3,000
Total $599,563
<PAGE>
FOURTH AMENDMENT TO LEASE AGREEMENT
(Camden Amphitheater)
THIS FOURTH AMENDMENT TO LEASE AGREEMENT ("4th Amendment") is executed and
entered into effective as of the 11th day of March, 1997, by and between the NEW
JERSEY ECONOMIC DEVELOPMENT AUTHORITY ("Landlord"), a public body corporate and
politic duly organized under the laws of the State of New Jersey, and PAVILION
PARTNERS (f/k/a Sony Music/PACE Partnership) ("Tenant"), a Delaware general
partnership.
1. Reference is made to that certain Lease Agreement (as previously
amended, herein called the "Lease Agreement") dated February 9, 1994 and entered
into by and between Landlord and Tenant relating to the lease of certain real
property located in Camden, County, New Jersey ("Leasehold Tract") as more fully
described therein for purposes of the construction and subsequent operation of
an outdoor entertainment facility ("Amphitheater") thereon. Pursuant to Section
502 of the Lease Agreement, Tenant was obligated to execute and enter into a
construction contract for purposes of constructing the Amphitheater on the
Leasehold Tract in the manner provided for therein (the "Construction Contract
Obligation"). As a result of a failure to reach agreement on certain provisions
to be included in the construction contract with its general contractor, Turner
Construction Company ("Turner"), Tenant never executed or entered into a
construction contract with Turner for construction of the Amphitheater. Landlord
does hereby release Tenant from the requirement to enter into the agreement;
however, Tenant
<PAGE>
does hereby agree to defend, indemnify and hold harmless Landlord from and
against any costs, expenses, losses or damages (including reasonable attorneys'
fees and costs of defense) arising out of claims asserted against Landlord by
third parties (including Turner and Turner's subcontractors) which (i) exist by
reason or Tenant's failure to satisfy and fulfill the Construction Contract
Obligation or (ii) Landlord would have been indemnified for or released from had
Tenant satisfied and fulfilled the Construction Contract Obligation, including
releases for any liability that Landlord would have received if the attached
releases had been delivered to Landlord by Turner.
2. Except for the possibility that Landlord may have claims asserted
against it with respect to certain damage to the monitoring wells located on the
Leasehold Tract, which claims could potentially be covered by the
indemnification provisions set forth in Paragraph 1 of this Fourth Amendment to
Lease Agreement, Landlord is not aware, to the best of its current knowledge, of
any fact, circumstance or event which could give rise to a right to
indemnification pursuant to the provisions set forth in Paragraph 1 hereof.
3. Reference is made to the fact that Section 503 of the Lease obligated
Tenant to obtain a completion and payment bond in connection with the original
construction of the Amphitheater (the "Surety Obligation"). Tenant acknowledges
that it failed to comply with the Surety Obligation. Landlord does hereby
release Tenant from fulfilling and performing the Surety Obligation; however,
Tenant agrees that it will indemnify and hold Landlord harmless from and against
any and all liabilities, penalties,
- 2 -
<PAGE>
damages, claims costs, charges and expenses, including, without limitation,
court costs and reasonable attorneys' fees which may be imposed upon, incurred
by or asserted against Landlord arising out of or relating to Tenant's failure
to comply with the Surety Obligation.
4. Tenant shall provide an affidavit executed by an Authorized Officer of
Tenant stating the amount of the Hard Cost of the Project. The affidavit will be
accompanied by such documentation as may be necessary to demonstrate such Hard
Cost.
5. a. Within 90 days of the close of each operating year, Tenant shall:
(i) deliver a statement to the Landlord from an independent
Certified Public Accountant or other independent third party
acceptable to the Landlord certifying with respect to the
preceding operating year gross receipts received from Ticket
Sales and the number of complimentary tickets distributed and
used;
(ii) submit a statement notifying the Landlord of any syndication
of partnership interests in Tenant that occurred during the
preceding operating year or, if no syndication has occurred, a
statement to that effect;
- 3 -
<PAGE>
(iii) cause one of Tenant's in-house certified public accountants to
provide a statement stating whether the Amphitheater is a
going concern as operated;
(b) After the tenth Lease Year, the statement referenced in
paragraph 5(a)(i) shall also include the following:
(i) the number of tickets subject to the imposition of the Ticket
Surcharge;
(ii) the amount of Ticket Surcharge applied to each eligible ticket
during the preceding operating year;
(iii) aggregate amount of Ticket Surcharge collected and remitted to
Landlord attributable to the preceding operating year;
(c) Landlord will reimburse Tenant for any reasonable out-of-pocket
costs or expenses incurred or paid by it in satisfying the obligations set forth
in paragraph 5(a)(i) hereof (as modified by paragraph 5(b) hereof.).
ATTEST: NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY,
(Seal) the Landlord
/s/ [ILLEGIBLE] /s/ Caren S. Franzini
- ------------------------------ ------------------------------
Caren S. Franzini
Executive Director
- 4 -
<PAGE>
WITNESS: PAVILION PARTNERS, a Delaware
general partnership, the Tenant
By: SM/PACE, Inc., its general partner
/s/ [ILLEGIBLE] /s/ Brian E. Becker
- ------------------------------ ------------------------------
Brian E. Becker
Chief Executive Officer
- 5 -
<PAGE>
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY LETTERHEAD
April 28, 1995
Pavilion Partners
c/o SM/PACE, Inc.
515 Post Oak Boulevard
Suite 300
Houston, TX 77027
South Jersey Performing Arts Center, Inc.
800 Hudson Square
Suite 102
Camden, NJ 08102
Gentlemen:
This letter sets forth the agreement among the New Jersey Economic
Development Authority ("Landlord"), Pavilion Partners (f/k/a Sony Music/PACE
Partnership) ("Pavilion") and South Jersey Performing Arts Center, Inc.
("SJPAC") with respect to the joint use and operation by Pavilion and SJPAC of
that certain entertainment musical facility ("Amphitheater") currently being
constructed by Pavilion on that certain tract or parcel of land located in the
City of Camden, County of Camden, New Jersey, containing approximately 13.445
acres and being designated as Lot 11.01, Block 139 on that certain Preliminary
and Final Resubdivision Plan dated September 21, 1994, a copy of which was filed
with the City of Camden Planning Board, approved on November 22, 1994 and
memorialized by resolution of the Board on December 13, 1994. The rights and
obligations of the Landlord and Pavilion in regard to the Amphitheater are set
forth in a certain Lease Agreement ("Original Lease") dated February 9, 1994, by
and between the Landlord and Pavilion, as such Lease Agreement has been amended
by (i) that certain First Amendment to Lease Agreement dated March 11, 1994 (ii)
that certain Third Amendment to Lease Agreement dated effective as of September
___, 1994 and (iii) that certain Three Way Agreement Regarding Amphitheater
Waterfront Development and Use Including Amendments to Camden Amphitheater Lease
dated effective as of February 23, 1995 (as amended, the Original Lease is
herein called the "Pavilion Lease"). SJPAC and the Landlord have executed of
even date herewith a Lease Agreement ("SJPAC Lease") pursuant to which SJPAC
shall be granted a right to use and occupy the Amphitheater during a portion of
the Enclosed Season (herein defined) upon terms and conditions which are
consistent with the provisions contained in this letter. This letter, among
other things, sets forth certain agreements which will govern the competing
rights of use and occupancy of the Amphitheater by Pavilion pursuant to the
Pavilion Lease and SJPAC pursuant to the SJPAC Lease.
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 2
1. Construction of Amphitheater. Pursuant to the provisions of the
Pavilion Lease, Pavilion is obligated to construct and thereafter operate the
Amphitheater. No remodeling, additions, modifications or other changes may be
made to the current Plans and Specifications (as such term is defined in the
Pavilion Lease) in such a manner which would result in the Amphitheater being
constructed in a manner which does not satisfy the design requirements of SJPAC
as specified in this letter.
2. Description of the Amphitheater.
(a) Upon completion of construction, the Amphitheater will be
operational as both an open air outdoor facility and an enclosed indoor
facility. The Amphitheater will also include, as part of the
Administration Building, facilities which will function as offices for
SJPAC, classrooms and a 90-seat "black box" theater (such offices,
classrooms and "black box" theaters being herein called the "SJPAC Special
Facilities"). The SJPAC Special Facilities (i) will be for the exclusive
use of SJPAC and (ii) may not be used by SJPAC (x) at such times or in
such a manner which would interfere with the production or set-up of
Pavilion's scheduled events at the Amphitheater or (y) during the
performance of any event presented by, through or under Pavilion at the
Amphitheater. Notwithstanding the provisions of the immediately preceding
sentence, (i) SJPAC's office staff shall be allowed access to SJPAC's
offices during normal business hours (8:00 a.m. to 6:00 p.m. on Monday
through Friday and 8:00 a.m. to 2:00 p.m. on Saturday) even during the
performance of an event presented at the Amphitheater by, through or under
Pavilion and (ii) SJPAC's executive director shall be allowed access to
SJPAC's offices at any time even during the performance of an event
presented at the Amphitheater by, through or under Pavilion; provided,
however, that any use of SJPAC's offices by SJPAC's staff or executive
director during the performance of an event presented at the Amphitheater
by, through or under Pavilion must be conducted in such a manner as will
not interfere with the production, set-up or performance of such event. It
is anticipated that the Amphitheater will consist of an open area seating
configuration for up to 25,000 people, which will be convertible to an
enclosed facility seating configuration for up to 7,000 people.
(b) For purposes of this letter, the SJPAC Lease and the Pavilion
Lease, (i) the "Enclosed Season" is defined as that period of time
beginning at 12:01 a.m. on October 6 of each year and ending at 11:59 p.m.
on May 9 of the next succeeding year and (ii) the "Open Air Season" is
defined as that period of time in any year not included in any Enclosed
Season.
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 3
(c) Pavilion shall determine when conversion of the Amphitheater
between its two configurations will take place at the beginning and end of
each Enclosed Season; provided, however, conversion of the Amphitheater
(i) from its indoor to its outdoor configuration at the end of any
Enclosed Season shall not begin on or before the last SJPAC Reserved Day
(as such term is defined in Section 9 hereof) in that Enclosed Season and
(ii) from its outdoor to its indoor configuration at the beginning of any
Enclosed Season must be completed before the first SJPAC Reserved Day in
that Enclosed Season.
3. SJPAC Use of the Amphitheater During the Enclosed Season. Except for
SJPAC's use of the SJPAC Special Facilities (which is governed by the provisions
of Section 2(a) hereof), SJPAC may only use, occupy and enjoy the Amphitheater,
pursuant to the SJPAC Lease, on the days allocated to it during each Enclosed
Season pursuant to the provisions of Section 9 hereof. The number of days so
allocated to SJPAC during any Enclosed Season shall not exceed one hundred ten
(110). As used herein, the term "Pavilion's Base Number of Days" shall mean,
with respect to any Enclosed Season, a number of days equal to (i) the actual
number of days that the Amphitheater is in its enclosed configuration during
such Enclosed Season minus (ii) one hundred ten (110) days. Except for SJPAC's
use of the SJPAC Special Facilities (which is governed by the provisions of
Section 2(a) hereof), SJPAC shall have no right to use, occupy or enjoy the
Amphitheater pursuant to the SJPAC Lease during any Open Air Season.
4. [Intentionally Blank].
5. Pavilion Lease. The provisions contained in this letter are subject to
any and all provisions contained in the Pavilion Lease. SJPAC represents and
acknowledges that it has received and reviewed a copy of the Pavilion Lease. The
term of this letter shall be concurrent with the term of the Pavilion Lease. The
initial term of the Pavilion Lease is thirty-one (31) years, with two (2)
successive options for Pavilion to renew and extend the Pavilion Lease, the
first such option being for twenty (20) additional years and the second being
for an additional ten (10) years.
6. Design Consultation. SJPAC's architect has had the opportunity to
consult with Pavilion's architect in the design of the Amphitheater and
particularly in the design of the staging area, back stage, theater rigging,
lighting and other aspects of the Amphitheater of particular concern to SJPAC
and regional arts groups. As a result of this consultation, an approximately
1500 seat configuration ("Arts Configuration") for the Amphitheater has been
included in the design of the Amphitheater for SJPAC's needs.
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 4
7. Operation of Amphitheater. Pavilion will be responsible for the day to
day operating expenses associated with the management and maintenance of the
Amphitheater except as set forth herein and agreed to by the parties. Pavilion
further agrees in its reasonable discretion to indicate, in appropriate fashion,
that the Amphitheater is the home of SJPAC.
8. SJPAC's Use of Amphitheater. The Amphitheater may be used by SJPAC
during those days in each Enclosed Season that are allocated to it pursuant to
the provisions of Section 9 hereof for use by various regional performing arts
groups subject to the following provisions:
(a) Without the prior consent of Pavilion, SJPAC may not use the
Amphitheater in any configuration other than the Arts Configuration.
(b) SJPAC shall not book a performer that would ordinarily be booked
by Pavilion without the prior written consent of Pavilion (which consent
may be withheld in Pavilion's sole, uncontrolled and absolute discretion).
(c) Notwithstanding clause (b), SJPAC may book any performer or
groups of performers who perform "serious music," such as classical music,
opera or religious music.
9. Allocation of Dates Within Each Enclosed Season. Pavilion and SJPAC
hereby agree that the days included within each Enclosed Season shall be
allocated for use between Pavilion and SJPAC in accordance with the following
terms, provisions and conditions:
(a) SJPAC's Reserved Days. SJPAC may reserve dates during each
Enclosed Season for its use ("SJPAC Reserved Days") in accordance with the
following provisions:
(i) Two Separate 2-1/2 Week Blocks. For each Enclosed Season,
SJPAC may reserve two separate blocks of SJPAC Reserved Days in
accordance with the following provisions:
(A) Each such block of SJPAC Reserved Days can be for no
longer than 17 days.
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 5
(B) Each such block of SJPAC Reserved Days must begin on
a Monday and end on a Wednesday.
(C) Without Pavilion's prior consent, (i) "load-in" of
the event to be presented by SJPAC during either of such
blocks of SJPAC Reserved Days may not begin before the Monday
morning of such block of SJPAC Reserved Days and (ii)
"load-out" must be completed before 12:00 noon on the day
following the final performance on the last Wednesday of such
block of SJPAC Reserved Days.
(D) One of such blocks must be wholly within the month
of January of such Enclosed Season and the other of such
blocks must be wholly within one or both of the months of
February and March.
Neither such block of SJPAC Reserved Days may be reserved by SJPAC
prior to the date which is one year before the first day of the
Enclosed Season in which such block of days will be included.
(ii) Ten Single Dates, One Year Out. SJPAC may reserve up to
ten (10) SJPAC Reserved Days during each Enclosed Season in
accordance with the following provisions:
(A) No more than two of any of the days reserved by
SJPAC pursuant to this Section 9(a)(ii) may be included in any
single week.
(B) If any week includes two of the days reserved by
SJPAC pursuant to this Section 9(a)(ii), then only one of such
days may be on a Friday, Saturday or Sunday.
No date may be reserved by SJPAC pursuant to this Section 9(a)(ii)
before the date which is one year before the first day of the
Enclosed Season in which such date will be included.
(iii) Ten Single Dates, Four Months Out. SJPAC may reserve up
to ten (10) SJPAC Reserved Days during each Enclosed Season in
accordance with the following provisions:
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 6
(A) No more than two of any of the days reserved by
SJPAC pursuant to Section 9(a)(ii) hereof and this Section
9(a)(iii) may be included in any single week.
(B) If any week includes two of the days reserved by
SJPAC pursuant to Section 9(a)(ii) hereof and this Section
9(a)(iii), then only one of such days may be on a Friday,
Saturday or Sunday.
No date may be reserved by SJPAC pursuant to this Section 9(a)(iii)
before the date which is four months before the first day of the
Enclosed Season in which such date will be included.
(iv) Remaining SJPAC Reserved Days. SJPAC may reserve any of
its remaining available days during each Enclosed Season at any time
after the date which is four months before the date being reserved.
In no event may SJPAC designate a number of SJPAC Reserved Days
pursuant to this clause (iv) for any Enclosed Season which would
cause the total number of SJPAC Reserved Days in such Enclosed
Season (regardless of whether such SJPAC Reserved Days are actually
used by SJPAC), inclusive of the SJPAC Reserved Days designated
pursuant to clauses (i), (ii) and (iii) of this Section 9(a), to
exceed one hundred ten (110) in amount.
(v) General Provisions and Procedures. SJPAC may only reserve
days for its use (x) which have not been previously reserved for use
by Pavilion and (y) for which it has a valid prospect for booking
and presenting an event. In order to reserve a day for its use,
SJPAC must provide written notice to Pavilion setting forth (i) the
day or days to be reserved, (ii) the subsection of this Section 9(a)
pursuant to which such reservation is being made and (iii) the event
planned to be presented by SJPAC on the date or dates so being
reserved.
(b) Pavilion's Reserved Dates. Pavilion may reserve any dates during
each Enclosed Season for its own use ("Pavilion Reserved Days") which have
not been previously reserved by SJPAC pursuant to Section 9(a) hereof by
recording them on the Scheduling Calendar (as such term is defined in
Section 10 hereof). Pavilion may not, pursuant to this Section 9(b),
reserve (i) a date before the date which is one (1) year prior to the date
being reserved or (ii) more than Pavilion's Base Number of Days for any
Enclosed Season.
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 7
(c) Challenge of SJPAC Reserved Days. Commencing with the date which
is four months before the beginning of each Enclosed Season, Pavilion may
"challenge" any SJPAC Reserved Days as follows:
(i) If Pavilion has a valid prospect for booking and
presenting a performance or event on any SJPAC Reserved Day, then
Pavilion may provide written notice ("Challenge Notice") requesting
written proof that SJPAC has a firm booking on the SJPAC Reserved
Day specified in such notice.
(ii) If, within five business days after receipt of the
Challenge Notice, SJPAC is unable to deliver written evidence of a
firm booking on the SJPAC Reserved Day designated in the Challenge
Notice, then such day shall thereafter be a Pavilion Reserved Day
for all purposes hereof.
(d) Pavilion's Use of Unreserved Days. If Pavilion has designated a
number of Pavilion Reserved Days pursuant to Section 9(b) hereof with
respect to any Enclosed Season equal to Pavilion's Base Number of Days for
such Enclosed Season, then Pavilion may designate additional Pavilion
Reserved Days for such Enclosed Season in accordance with the following
provisions:
(i) Only dates which have not been previously designated as
SJPAC Reserved Days pursuant to Section 9(a) hereof may be
designated as Pavilion Reserved Days pursuant to this Section 9(d).
(ii) No date may be designated as a Pavilion Reserved Day
pursuant to this Section 9(d) prior to the date which is four months
prior to such date.
(e) Scheduling Meeting. Pavilion and SJPAC each agree with the other
that they will meet ("Scheduling Meeting"), within 90 days after the end
of the third complete Enclosed Season, to discuss and consider any
amendments to the provisions of this Section 9 which may then be advisable
in the light of operating history; provided, however, it is specifically
understood and agreed that neither party shall be under any obligation,
express or implied, to agree to any type of amendment to the provisions
hereof and either party may withhold its consent and agreement to any
amendment which may be proposed at the Scheduling Meeting for any reason
whatsoever, including arbitrary or subjective reasons. Notwithstanding
anything to the contrary contained herein, the provisions of this Section
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 8
9 may be amended or waived by written instrument signed by authorized
representatives of Pavilion and SJPAC without the requirement of obtaining
the joinder or consent of Landlord.
10. Scheduling Procedure. The Amphitheater's general manager shall
maintain a master scheduling calendar ("Scheduling Calendar") for each Enclosed
Season on which all Pavilion Reserved Days and all SJPAC Reserved Days for such
Enclosed Season shall be appropriately recorded and designated. SJPAC shall have
access to the Scheduling Calendar during all normal business hours for its
review. Scheduling disputes between Pavilion and SJPAC shall be resolved by the
Amphitheater's general manager in accordance with the general manager's
reasonable interpretation of the provisions of Section 9 hereof.
11. Rent. Pavilion will be responsible for lease payments to the Landlord
in the amount specified in the Pavilion Lease. SJPAC will be responsible for
lease payments to the Landlord in the amount specified in the SJPAC Lease.
12. Day-to-Day Operation.
(a) Pavilion will operate the Amphitheater, during the Enclosed
Season, with a general manager and staff. All organizations utilizing the
Amphitheater during the Enclosed Season by, through or under SJPAC (the
performances or events so presented in the Amphitheater during the
Enclosed Season being herein called the "SJPAC Events") shall be required
to reimburse Pavilion for all of its actual out-of-pocket costs in
connection with the holding, presenting or performing of such SJPAC Events
subject to the best available prevailing published rate structures for the
use of the day of the show, including but not limited to front office
house, box office, back of the house (stage hands), security, ticket
sellers, ticket takers, ushers, security and police retained for the
purpose of the event and other show related personnel ("Day of Event
Costs"). Pavilion will be responsible to work with SJPAC users to
facilitate production of rental events. Pavilion will prepare operating
policies to be an addendum to all license or use agreements.
(b) Pavilion will work with SJPAC to facilitate production of SJPAC
Events. In this regard it is anticipated that Pavilion and SJPAC will
enter into an Operating Agreement (the "Operating Agreement") pursuant to
which Pavilion shall make available its production manager, general
operations manager, security manager, housestaff supervisor and an
accountant without additional cost or charge to SJPAC.
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 9
13. Ticket Revenue. Except for the ticket surcharge required to be
collected by Pavilion and remitted to the Landlord in accordance with the
provisions of Section 304 of the Pavilion Lease, Pavilion shall be entitled to
receive and retain all ticket revenues associated with the sale of tickets for
Pavilion Events. Except for the ticket surcharge required to be collected by
SJPAC and remitted to the Landlord pursuant to the provisions of Section 104 of
the SJPAC Lease, SJPAC shall be entitled to receive and retain all ticket
revenues associated with the sale of tickets to SJPAC Events.
14. Concessions, etc. Pavilion will have the right to maintain, during
SJPAC Events, the sole and exclusive right (i) to operate all concession
facilities and operations at the Amphitheater including, without limitation, the
sale of food, beverage, alcohol, merchandise and parking at the Amphitheater and
(ii) to receive and retain all revenues associated with the operation of such
concession facilities and operations at the Amphitheater during SJPAC Events.
SJPAC will have the right to (i) utilize its own caterer for private parties
which are held on a portion of the Amphitheater premises segregated from the
public portion thereof in conjunction with any SJPAC Event (provided that no
liquor shall be sold by SJPAC at such parties), (ii) require that Pavilion or
its merchandise concessionaire offer for sale at SJPAC Events any inventory of
merchandise owned by SJPAC and (iii) receive a portion of the revenues
attributable to the sale of its own merchandise (conditioned upon reaching an
agreement with the vendor and Pavilion as to the percentage of gross revenues
payable to each of the vendor and Pavilion). SJPAC hereby agrees that the
provisions of this Section 14 shall also apply to the events to be presented by
SJPAC at the Amphitheater during the Open Air Season pursuant to the provisions
of Article VI of the Pavilion Lease.
15. Signage. Except for the commercial name and title and annual
commercial facility sponsors, Pavilion agrees to remove and/or to cover, at
SJPAC's prior request, any commercial advertising in the lobby areas and
enclosed theaters during SJPAC Events. This shall not include removal of
advertisement related to coming events of either Pavilion or SJPAC.
16. Responsible Person. SJPAC must provide written advice to Pavilion as
to the specific individual who may act on behalf of SJPAC with respect to
scheduling and other performing arts center management functions.
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 10
17. Termination.
(a) If the Pavilion Lease or the SJPAC Lease is terminated by the
Landlord, then SJPAC shall look solely to the Landlord for any
compensation and Pavilion shall have no responsibility to compensate
SJPAC.
(b) If the Amphitheater is acquired or condemned by eminent domain
for public or quasi-public use or purpose, wholly or partially, then the
condemnation proceeds shall be split between the Landlord and Pavilion in
accordance with the provisions of Section 1103 of the Pavilion Lease. The
Landlord's share of such condemnation proceeds shall then be split between
the Landlord and SJPAC in accordance with the provisions of Section 306 of
the SJPAC Lease.
(c) If (i) the Amphitheater, in its enclosed configuration, or any
portion thereof, is destroyed or damaged by fire or other casualty and
(ii) Pavilion elects to repair and restore the Amphitheater pursuant to
Pavilion's right contained in the Pavilion Lease, then SJPAC shall have
the right to require Pavilion to restore the Amphitheater to include all
of SJPAC's design requirements which were incorporated into the
construction of the Amphitheater prior to such casualty, including,
without limitation, all of the SJPAC Special Facilities and the Arts
Configuration, if, but only if, SJPAC pays to Pavilion before commencement
of such repair and restoration work a cash sum equal to the amount of
additional costs which Pavilion's architect and contractor reasonably
determine will be incurred on account of the repair and restoration of
SJPAC's design requirements.
18. Insurance/Indemnity Provisions.
(a) Pavilion and SJPAC hereby waive all claims, rights of recovery
and causes of action which either has or may have or which may arise
hereafter against the other whether caused by negligence, intentional
misconduct or otherwise, for any damage to the Amphitheater or business
within or about the Amphitheater caused by any of the perils covered by
Pavilion's or SJPAC's fire insurance with extended coverage and with
vandalism and malicious mischief endorsements, building and contents and
business interruption insurance, or for which either party may be
reimbursed as a result of insurance coverage relating to any loss suffered
by it; provided, however, that the foregoing waiver shall apply only to
the extent of any recovery made by the parties hereto under any policy of
insurance now or hereafter issued or which would have been issued if such
party were fully in compliance with the requirements imposed upon it
pursuant to this letter, the SJPAC Lease or the Pavilion Lease and
provided further that the
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 11
foregoing waivers do not invalidate any policy of insurance of the parties
hereto, now or hereafter issued, and it being stipulated by the parties
hereto that the waiver shall not apply in any case in which the
application thereof would result in the invalidation of any such policy of
insurance. Any additional premium caused by this waiver of subrogation
shall be paid by the party benefitted thereby.
(b) Public Liability Insurance: SJPAC and Pavilion shall each keep
in full force and effect Comprehensive General Liability Insurance, naming
the Landlord, Pavilion and SJPAC as insureds, with minimum limits equal to
the Applicable Minimum Amount (hereinafter defined) on account of bodily
injuries to or death of one or more persons as the result of any one
accident or disaster, and such additional amount sufficient to insure its
own property, on account of damage to property, which shall include Fire
Legal Liability, and shall present copies of certificates thereof to the
other parties hereto. As used herein, the term "Applicable Minimum Amount"
shall mean (A) with respect to the Comprehensive General Liability
Insurance required to be maintained by SJPAC pursuant to the provisions of
this Section 18(b), the greater of (i) $3,000,000 or (ii) the minimum
limits of Comprehensive General Liability Insurance required to be
obtained and maintained from time to time by SJPAC pursuant to the terms
of the SJPAC Lease and (B) with respect to the Comprehensive General
Liability Insurance required to be obtained and maintained by Pavilion
pursuant to the provisions of this Section 18(b), the greater of (i)
$3,000,000 or (ii) the minimum limits of Comprehensive General Liability
Insurance required to be obtained and maintained from time to time by
Pavilion pursuant to the terms of the Pavilion Lease.
(c) In the event SJPAC fails to perform any one or more of the
obligations imposed upon SJPAC pursuant to the SJPAC Lease, Pavilion, at
its option after twenty (20) days notice to SJPAC and SJPAC's failure to
cure or to commence to cure, may perform such obligations at the
reasonable cost and expense of SJPAC, and SJPAC shall reimburse Pavilion
for the reasonable and certifiable cost so incurred within thirty (30)
days of demand therefor.
(d) Liability Insurance - Indemnification: SJPAC and Pavilion shall
indemnify and save harmless each other from and against any and all claims
and demands, whether for injuries to persons or loss of life or damage to
property, arising out of the use or occupancy of the Amphitheater by such
party, excepting, however, such claims and demands, whether for injuries
to persons or loss of life or damage to property, caused solely and
exclusively by acts or omissions of the other party, its agents, employees
or contractors.
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 12
19. Mechanic's Lien.
(a) SJPAC shall not permit any Mechanic's or Materialman's or other
Lien to exist, be placed or filed against the Amphitheater for any labor
or material furnished to SJPAC and/or in connection with work of any
character performed at the Amphitheater by or at the direction of SJPAC,
or as a result of any act or failure to act by SJPAC, or for any other
reason whatsoever.
(b) SJPAC shall indemnify and save harmless the Landlord and
Pavilion, as their interests may appear, against all loss, liability,
costs or damages as a result of any such Mechanic's Lien or other Lien,
and SJPAC shall within twenty (20) days of the filing of such Lien,
remove, pay or cancel or commence to remove, pay or cancel said Lien or
secure the payment of any such Lien or Liens by Bond or other acceptable
security.
(c) The Landlord and Pavilion shall have the right at all times and
at its own expense to contest and defend on behalf of SJPAC, any action
involving the collection, validity or removal of such Lien, or Liens upon
posting of a bond in a sufficient sum to discharge the Lien.
(d) Nothing herein contained shall be construed as a consent to
anyone on the part of the Landlord or Pavilion, either express or implied,
to subject the fee or Pavilion's leasehold estate to any Mechanic's Lien
or liability under the Mechanic's Lien Law of New Jersey.
20. Assignment and Subletting. SJPAC, SJPAC's legal representatives or
successors-in-interest to any part or the whole of the Amphitheater shall not
mortgage, pledge, encumber, assign or in any manner transfer its rights under
the SJPAC Lease voluntarily or involuntarily, by operation of law or otherwise,
nor shall SJPAC permit the Amphitheater or any part thereof to be licensed,
sublet, used or occupied for the conduct of any business by a third person or
corporation, (other than in the ordinary course of SJPAC's business) or for any
purpose other than therein authorized without the prior written consent of both
the Landlord and Pavilion, which consent may be withheld, conditioned, or
delayed in the Landlord's and Pavilion's sole discretion. Any consent by the
Landlord and Pavilion to any assignment or sublicense or other operation by a
concessionaire, or licensee, shall not constitute a waiver of the necessity for
such consent under any subsequent assignment or subletting or operation by a
concessionaire or licensee.
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 13
21. No Alterations.
(a) SJPAC may not make any changes or additions to the Amphitheater
without the written consent of the Landlord and Pavilion. Any changes or
additions made by SJPAC without Pavilion's and Landlord's written consent
shall be removed by SJPAC on demand.
(b) All changes or additions made with the written consent of the
Landlord and Pavilion shall become the property of the Landlord when
completed and paid for by SJPAC, except that any special acoustic or
lighting equipment installed by SJPAC for use at its events shall be
maintained by SJPAC and may be removed by SJPAC at the conclusion of the
SJPAC Lease or at such time as the use of said special equipment is no
longer required by SJPAC. The parties to this letter agree that any such
special equipment will be designated special equipment by SJPAC, and that
SJPAC will secure the prior approval of the Landlord and Pavilion for its
removal once its use is no longer required. SJPAC shall be responsible for
repairs or restoration of the building and structure as a result of the
removal of any such equipment including any costs for the repairing of all
damage caused by SJPAC's act or neglect.
22. Defaults and Remedies. If any party ("defaulting party") hereto should
fail, refuse or neglect to fulfill or perform any obligation contained herein or
otherwise violate or breach any requirement or restriction imposed upon it
pursuant to the provisions of this letter, then any other party ("non-defaulting
party") hereto shall have the right to take any combination of the remedial
steps listed below:
(a) file such lawsuits against the defaulting party as may be
necessary to pursue the non-defaulting party's rights and remedies
provided by law or equity against the defaulting party;
(b) perform the obligations of the defaulting party, in which event
the defaulting party shall be obligated to reimburse to the non-defaulting
party all expenses incurred by the non-defaulting party as a result of the
non-defaulting party's performance of such obligations of the defaulting
party, together with interest thereon at 18% per annum from the date of
expenditure; and
(c) enforce the obligation of the defaulting party under this letter
by an action for specific performance.
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 14
This letter may not be terminated by any party hereto prior to the expiration of
the term of the Pavilion Lease.
23. Notices. All notices given under this letter, the Pavilion Lease and
the SJPAC Lease must be in writing. Each party must accept and claim the notices
given by the other. Unless otherwise provided by law, notices shall be given
hereunder by (a) personal delivery, or (b) certified mail, return receipt
requested. Notices shall be addressed to Pavilion at 515 Post Oak Boulevard,
Suite 300, Houston, Texas Attention: Jeffry B. Lewis, Senior Vice President -
Business Affairs, with a copy to Sewell & Riggs, P.C., 333 Clay Avenue, Suite
800, Houston, Texas 77002, Attention: Mr. Michael F. Rogers, and as to SJPAC
shall be addressed to 800 Hudson Square-Suite 102, Camden, New Jersey 08102 to
the attention of Charles W. Heuisler, Esquire, with a copy to Patricia Kane
Williams, Archer & Greiner, One Centennial Square, P.O. Box 3000, Haddonfield,
New Jersey 08033; and as to the Landlord shall be addressed to Capital Place
One, CN 990, Trenton, New Jersey 08625. Each party shall have the right to
designate a new address upon providing written notice to the other party.
24. No Waiver. Failure by any party hereto to enforce another party's
obligations under this letter, under the Pavilion Lease or under the SJPAC Lease
shall not prevent such party from enforcing such obligation or any other
obligation for any violations occurring at a later time.
25. [Intentionally Blank]
26. Each Party to Bear Own Expenses. The Landlord, Pavilion and SJPAC will
each bear their own respective expenses incurred in connection with the
negotiation, preparation and consummation of the contemplated transaction.
27. Yearly Operations Fee.
(a) SJPAC shall pay to Pavilion a yearly operations fee ("Yearly
Operations Fee") in accordance with the following provisions:
(i) For each of the Enclosed Seasons which begin on October 6,
1995 and on October 6, 1996, respectively, SJPAC shall pay to
Pavilion a Yearly Operations Fee in an amount equal to (A) $2,000
multiplied by (B) the number of days on which SJPAC Events are
actually presented during each such Enclosed Season.
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 15
(ii) For all subsequent Enclosed Seasons during the term
hereof, SJPAC shall pay to Pavilion a Yearly Operations Fee in an
amount equal to (A) the then Applicable Daily Amount (herein
defined) multiplied by (B) the greater of (i) the number of SJPAC
Reserved Days during such Enclosed Season (regardless of whether
such SJPAC Reserved Days are actually used by SJPAC) which are not
thereafter classified as Pavilion Reserved Days pursuant to the
provisions of Section 9(c) hereof and (ii) the number of days on
which SJPAC Events are actually presented during such Enclosed
Season.
As used herein, the term "Applicable Daily Amount" shall mean, in each of
the first three Enclosed Seasons during the term of this letter, $2,000
and in each Enclosed Season thereafter, the Applicable Daily Amount shall
be increased from $2,000 on each third year thereafter by the same
percentage change in the U.S. Bureau of Labor Statistics Consumer Price
Index for the Philadelphia metropolitan area ("CPI") since the
commencement of the term of this letter. The Yearly Operations Fee shall
be payable monthly in arrears during each Enclosed Season.
(b) SJPAC shall be entitled to a yearly credit of FORTY THOUSAND
($40,000.00) DOLLARS ("yearly credit") for each Enclosed Season which can
be applied against the Yearly Operations Fee. However, such credit is not
cumulative and may not be carried forward from one Enclosed Season to the
next. If, for whatever reason, the Yearly Operations Fee should ever be
less than the yearly credit, then no payment will be required from
Pavilion to SJPAC. The yearly credit shall be adjusted and increased every
three (3) years based upon the cumulative percentage change in the CPI.
28. SJPAC's Summertime Use of the Amphitheater. Nothing contained in this
letter or in the SJPAC Lease shall limit, lessen or otherwise affect the rights
created in favor of SJPAC pursuant to the provisions of Article VI of the
Pavilion Lease by which SJPAC is entitled to present certain events and
performances at the Amphitheater during the Open Air Season on and subject to
the terms thereof.
29. [Intentionally Blank]
30. First Enclosed Season. Although Pavilion currently intends to complete
the build-out of the Arts Configuration on or before May 31, 1995, Pavilion
shall have the option to defer completion of the build-out of the Arts
Configuration until after commencement of the Enclosed Season which begins
October 6, 1995. If Pavilion exercises the
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 16
option to defer completion of the build-out of the Arts Configuration pursuant
to the provisions of the immediately preceding sentence, then the first Enclosed
Season that SJPAC shall have the right to use the Amphitheater pursuant to the
SJPAC Lease shall be the Enclosed Season beginning on October 6, 1996. SJPAC
acknowledges that the provisions of this Section 30 shall apply and be effective
even though Pavilion may put the Amphitheater to use for Pavilion's purposes
pursuant to the Pavilion Lease during all or any portion of the Enclosed Season
which begins on October 6, 1995.
31. Provisions Regarding Parking. Pavilion agrees that SJPAC shall have
the right to use the Amphitheater Parking Facilities (herein defined) on and
subject to the following terms and conditions throughout the term of this
letter:
(a) Pavilion shall make the Amphitheater Parking Facilities
available for use by SJPAC's patrons on the days of any scheduled SJPAC
Events on the same basis that the Amphitheater Parking Facilities are made
available to Pavilion's patrons on dates that events being presented by,
through or under Pavilion are presented. Pavilion, or its designated
agents or assigns, shall have the right to collect fees from SJPAC's
patrons for the parking of vehicles in such amount as may be determined by
Pavilion, but at no time in an amount greater than the amount of the fees
then collected from Pavilion's patrons.
(b) On the night of the presentation of SJPAC Events at the
Amphitheater, Pavilion shall make up to twenty (20) parking spaces
available at no charge to selected "VIP's" designated by SJPAC in advance.
(c) On a day-to-day basis throughout each year during the term
hereof, three (3) of the parking spaces which are available to Pavilion's
employees will be allowed for use to SJPAC's employees.
As used herein the term "Amphitheater Parking Facilities" shall mean those
parking facilities which are used by Pavilion's employees and patrons on the
dates that presentations, events or performances are held at the Amphitheater
by, through or under Pavilion.
<PAGE>
Pavilion Partners
South Jersey Performing Arts Center, Inc.
April 28, 1995
Page 17
If you are in agreement with the foregoing, please indicate by signing and
returning the enclosed copy of this letter.
Very truly yours,
NEW JERSEY ECONOMIC DEVELOPMENT
AUTHORITY
By: /s/ Caren S. Franzini
------------------------------------
Name: Caren S. Franzini
Title: Executive Director
SOUTH JERSEY PERFORMING ARTS
CENTER, INC.
By: /s/ Charles W. Heuisler
------------------------------------
Name: Charles W. Heuisler
Title: Chairman
PAVILION PARTNERS
By: SM/PACE, INC., its managing general
partner
By: /s/ Brian E. Becker
--------------------------------
Name: Brian E. Becker
Title: Chief Executive Officer
<PAGE>
LEASE AGREEMENT
Between
CROSSROADS PROPERTIES, INCORPORATED
Landlord
and
PACE ENTERTAINMENT GROUP, INC.
Tenant
<PAGE>
TABLE OF CONTENTS
Page
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Section 1. GRANT AND TERM 1
A. Property 1
B. Easements 1
C. Initial Term 2
D. Permitted Encumbrances 3
E. Renewal Option 5
F. Quiet Enjoyment 5
G. Right of Special Termination 5
Section 2. USE, RESTRICTIONS ON LANDLORD, LANDLORD COOPERATION 8
A. Tenant's Use of Property 8
B. Tenant's Exclusive Use 8
C. Restrictions on Landlord 8
D. Landlord Cooperation 8
Section 3. RENT 9
A. Minimum Rent 9
B. Percentage Rent 10
C. Tenant's Duty to Keep Records 12
D. Additional Rental 12
E. Fixed Rental 13
F. Payment of Rental 13
Section 4. TENANT IMPROVEMENTS 13
A. Amphitheater and Parking Area 13
B. Tenant to Complete Construction 13
C. Improvements 13
D. Alterations and New Construction 14
E. Protection of Property 14
F. Bond 14
G. Liens 14
H. Removal of Property 15
I. Government Grants 15
Section 5. LANDLORD'S WORK 15
A. Landlord's Obligation 15
B. Plans 16
C. Excess Costs 16
Section 6. PARKING 16
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Section 7. TAXES AND OTHER IMPOSITIONS 16
A. Taxes Based Upon the Property 16
B. Taxes Arising with Respect to Business 17
C. Tax Contest 17
Section 8. GENERAL REQUIREMENTS UPON TENANT 17
A. Compliance with Laws 17
B. Repair 17
C. Utilities 17
D. Costs and Expenses 18
E. Corporate Box 18
Section 9. INSURANCE AND INDEMNIFICATION 18
A. Liability Insurance 18
B. Property Insurance 19
C. Builder's Risk Insurance 19
D. Other Insurance 19
E. Policies 20
F. Named Insured; Adjustment of Losses 20
G. Indemnity of Landlord 21
Section 10. CASUALTY AND CONDEMNATION 21
A. Casualty 21
B. Insurance Proceeds 22
C. Condemnation 23
Section 11. MORTGAGES 24
A. Tenant's Right to Encumber 24
B. Mortgage Protection 25
C. No Merger 28
D. Limitation on Personal Liability of
Mortgagee Parties 28
E. Waiver of Landlord's Lien 28
F. Mortgagee Benefitted 29
Section 12. DEFAULT 29
A. Interest Conditional 29
B. Events of Default by Tenant 29
C. Remedies of Landlord 31
D. Events of Default by Landlord 31
E. Remedies of Tenant 33
Section 13. TENANT FIRST REFUSAL AND CONSULTATION RIGHTS 34
A. Tenant's Right 34
B. Procedure 34
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Section 14. TENANT CONCESSIONS, SUBLETTING AND ASSIGNMENT 36
A. Concessions, Subletting and Assignments 36
B. Other Assignments by Tenant 36
Section 15. LANDLORD'S REPRESENTATIONS, WARRANTIES AND COVENANTS 37
A. Organization 37
B. Warranty of Title 37
C. Binding Obligation 37
D. Landlord's Work 37
E. Hazardous Wastes 37
Section 16. TENANT'S REPRESENTATIONS, WARRANTIES AND COVENANTS 39
A. Organization 39
B. Binding Obligation 39
C. Pittsburgh Symphony 39
D. Tenant's Improvements 39
E. Taxes and Assessments 39
F. Repairs 39
G. Waste and Nuisance 39
H. Zoning 40
I. Hazardous Material 40
Section 17. CESSATION OF OPERATIONS 40
Section 18. MISCELLANEOUS 40
A. Waiver 40
B. No Benefits to Others 40
C. Entire Agreement 40
D. Force Majeure 40
E. Notices; Approvals and Consents 41
F. Captions and Section Numbers 42
G. Construction of Language 42
H. Broker's Commission. 42
I. Interest 43
J. Persons Indemnified 43
K. Governing Law 43
L. Venue. 43
M. Rights Are Cumulative 43
N. Saving Clause 43
0. Attorney's Fees 43
P. Injunctive Relief 43
Q. "Affiliate" Defined 44
R. Estoppel Certificate 44
S. Confidentiality 44
T. Lease Intended 44
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Section 19. NON-DISCRIMINATION. 45
Section 20. SUCCESSORS AND ASSIGNS 45
Section 21. RECORDING OF LEASE 45
Section 22. MULTIPLE COUNTERPARTS 45
Section 23. LETTER OF CREDIT OR GUARANTY 45
A. Letter of Credit 45
B. Guaranty 46
C. Delivery of Letter of Credit or Guaranty 46
EXHIBIT "A" -- Description of _______ Acre Tract
EXHIBIT "B" -- Description of Leased Easements
EXHIBIT "C" -- Description of Landlord's Lands
EXHIBIT "D" -- Description of Easement Areas
EXHIBIT "E" -- Permitted Encumbrances
EXHIBIT "F" -- Rates for Landlord's Work
EXHIBIT "G" -- Form of Memorandum of Lease
EXHIBIT "H" -- Form of Letter of Credit
EXHIBIT "I" -- Form of Landlord's Certification for Letter of Credit
EXHIBIT "J" -- Form of Guaranty Agreement
<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is executed as of _____________, 1989 (the
"Effective Date") between CROSSROADS PROPERTIES, INCORPORATED ("Landlord") and
PACE ENTERTAINMENT GROUP, INC. ("Tenant")
In consideration of the mutual covenants and agreements herein contained
and with the intent to be legally bound hereby, the parties hereto agree as
follows:
Section 1. GRANT AND TERM
A. Property. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, subject to the terms and conditions set forth herein, all of
Landlord's right, title and interest in and to (i) that certain tract of land
("______ Acre Tract") consisting of approximately three hundred (_______) acres,
located at the southwest intersection of U.S. Route 22 and Pennsylvania Route 18
in Hanover Township, Washington County, Pennsylvania, the _______ Acre Tract
being described in Exhibit "A" attached hereto and made a part hereof for all
purposes, (ii) those certain tracts of land ("Leased Easements") consisting of
approximately _______________ (___) acres in the aggregate, being described in
Exhibit "B" attached hereto and made a part hereof for all purposes, and (iii)
any and all improvements currently located on the _______ Acre Tract and Leased
Easements ("Existing Improvements"), the _______ Acre Tract and the Leased
Easements being sometimes hereinafter referred to as the "Land", the Land,
Existing Improvements and Improvements (defined in Subsection 4.C below) being
sometimes hereinafter collectively referred to as the "Property", the Land being
out of tracts of land owned by Landlord and described in Exhibit "C" attached
hereto and made a part hereof for all purposes, and containing approximately
_____ acres ("Landlord's Lands").
B. Easements.
(i) Upon and subject to the terms and conditions contained in this
Lease, Landlord agrees to grant unto Bell of Pennsylvania, and/or Peoples
Natural Gas Company, and/or West Penn Power Company, and/or Pennsylvania
American Water Company, their successors and assigns, the easements ("Third
Party Easements") over and across portions of Landlord's Lands ("Easement
Areas"), the Easement Areas being more particularly described in Exhibit "D"
attached hereto and made a part hereof for all purposes, for the benefit of Bell
of Pennsylvania, and/or Peoples Natural Gas Company, and/or West Penn Power
Company, and/or Pennsylvania American Water Company, and/or Tenant, their
respective successors and assigns, and/or for the benefit of all sublessees,
licensees, invitees, guests and occupants of the Property or any portion or
portions thereof, including any and all persons or entities
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providing utility services to the Property, in, over, through, beneath and
across Landlord's Lands, for the following purposes, and any of them, to-wit:
(a) To establish, install, construct, lay, operate, maintain, repair,
remove, demolish and reconstruct all such pipes, wires, conduits, equipment,
apparatus and facilities as shall be necessary or appropriate for the provision
of utility services to the Property or any portion thereof, including, but not
limited to, water, electricity, steam, natural gas, telephone, sanitary sewer,
storm sewer and oil;
(b) For vehicular and pedestrian ingress and egress to and from the
Property from one or more of the public rights-of-way abutting the Landlord's
Lands, together with the right to grade, level, fill, drain, pave, construct,
maintain, repair, expand (but only within the Easement Areas), rebuild and
replace such roads, ramps, drives, stairways, bridges and passages as shall be
necessary or appropriate to provide such ingress and egress; and
(c) For the purpose of entry thereon, passage there-over, deposit of
materials and equipment thereon, erection of structures therein or thereon, and
for all such other purposes and uses as are directly related to and made
necessary by the construction, demolition, reconstruction, repair, replacement
or alteration of any improvements now or hereafter erected in, over, through or
upon the Property or any portions thereof.
(ii) The Third Party Easements shall be non-exclusive and shall
benefit and be appurtenant to the Property and shall be binding upon, burden,
and run with Landlord's Lands in perpetuity, or on such terms or for such period
of time as requested by the grantee of said Third Party Easement. Landlord
agrees to execute appropriate instruments evidencing the grant of said Third
Party Easements to Bell of Pennsylvania, and/or Peoples Natural Gas Company,
and/or West Penn Power Company, and/or Pennsylvania American Water Company, as
Tenant and Bell of Pennsylvania, and/or Peoples Natural Gas Company, and/or West
Penn Power Company, and/or Pennsylvania American Water Company, may reasonably
request, (joined in by Tenant, if requested by Landlord), and Tenant may at
Tenant's sole expense, file same of record in the appropriate public records of
Washington County, Pennsylvania. During the Lease Term, Landlord shall not
permit any utilization of the Landlord's Lands which would interfere with the
proper exercise of Tenant's rights in and to the Property and Easement Areas. If
one or more Leased Easements, or any portion thereof, is taken pursuant to
condemnation proceedings, and if Landlord owns property adjoining the Land or
otherwise is in a position to grant Tenant additional easements, Landlord will
cooperate with Tenant in a good faith effort to replace any such Leased
Easements so taken upon the conditions and under the terms set forth in Section
10.
C. Initial Term. The initial term of this Lease ("Initial Term") shall be
for a period of forty-five (45) years, plus the Stub Period (hereinafter
defined) commencing at 12:01 a.m. (Eastern Standard Time) on __________________
("Commencement Date"), and
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terminating at 11:59 p.m. (Eastern Standard Time) on December 31 of the Lease
Year which is forty-five (45) years plus the Stub Period from that date, unless
terminated prior thereto by either party pursuant to the provisions of this
Lease. The term "Lease Year" shall mean any full calendar year during the Lease
Term. The period of time between the Commencement Date and December 31 of that
calendar year is the "Stub Period". The first Lease Year shall commence on the
first day of the calendar year following the Stub Period. Each successive twelve
(12) month period following the first Lease Year shall be a separate and
successively numbered Lease Year.
D. Permitted Encumbrances.
(i) The Property is subject to the encumbrances set forth in Exhibit
"E" attached hereto and made a part hereof for all purposes.
(ii) Landlord certifies to Tenant that, as to Landlord's Lands,
Landlord has the surface estate and has not granted any waiver of surface
support or waiver of surface damages. Landlord and Tenant agree that, during the
entire Lease Term, as to Landlord's Lands, Landlord shall not grant any waiver
of surface support or waiver of surface damages without Tenant's express written
consent thereto which such express written consent shall not be unreasonably
withheld. Landlord and Tenant further agree that, if any person or entity who
has or who may succeed to or otherwise acquire or derive right, title and
interest in and to any rights excepted and reserved, by and to Starvaggi
Industries, Incorporated and Starvaggi Charities, Inc., in Deeds to Landlord,
both Deeds being dated June 19, 1989 and recorded in the Office of the Recorder
of Deeds of Washington County at Deed Book Volume 2371, page 220 and Deed Book
Volume 2371, page 225, respectively, (all of such parties, persons or entities
being hereinafter collectively referred to as "Operator") conducts any digging,
mining, coking, draining, ventilating or carrying away coal in and underlying
Landlord's Lands ("Mining Activities") in such manner as to cause, in whole or
in part, any effect upon or injury or damage to and at Tenant's Property, then
Tenant shall pursue its remedies there for, in law and/or in equity, first
against the Operator, if, at that time, investigation by Tenant indicates that
such Operator has, and shall continue to have, the financial resources and
ability to fully and to completely satisfy and to pay any judgment, if entered
against Operator, for any effect upon or injury or damage to and at Tenant's
Property.
(iii) Landlord and Tenant further agree that if (a) such
investigation by Tenant indicates that such Operator does not have, or shall not
continue to have, such financial resources and ability, or (b) a Court of
competent jurisdiction: (1) determines that Tenant has no cause of action and/or
no remedy, in law and/or in equity, against such Operator for such effect,
injury or damage, or (2) determines that Tenant has no right of recovery, in law
and/or in equity, against such Operator for such effect, injury or
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damage, or (3) awards and enters a judgment against such Operator for such
effect, injury or damage caused, in whole or in part, by Mining Activities, but
Tenant is thereafter unable to satisfy and to collect upon any such judgment;
then, in any such event, Landlord shall pay Tenant, within thirty (30) days of
notice from Tenant of any one of the foregoing, the amount of the actual damages
sustained or incurred by Tenant caused, in whole or in part, by Mining
Activities, or the amount of the judgment awarded to and entered in favor of
Tenant, as the case may be. If Landlord shall not have paid Tenant within such
thirty (30) day period, Landlord's failure to do so shall be an Event of Default
(as such term is defined in Subsection 12.D below) by Landlord, and,
notwithstanding the provisions of Subsection 12.D(i), if Landlord so fails to
pay Tenant, Tenant shall notify Landlord of such failure, but for purposes of
this Subsection 1.D, Landlord shall have only ten (10) days within which to cure
such Event of Default prior to Tenant having the right to exercise its remedies
under this Lease. Landlord and Tenant agree that it is the intent of the parties
hereto that Tenant be compensated for any injury or damage to Tenant's Property,
caused, in whole or in part, by Mining Activities, regardless of whether the
Operator was negligent in causing such injury or damage, and that Landlord's
obligation under this Subsection 1.D is limited to such injury or damage.
(iv) Landlord agrees to notify Tenant, within ten (10) days of any
notice whatsoever to Landlord, whether required by statute or otherwise, that
any Operator has applied to the Department of Environmental Resources of the
Commonwealth of Pennsylvania for a permit to mine under Landlord's Lands or is,
in fact, conducting any Mining Activities under Landlord's Lands and Tenant, on
its part, agrees to notify Landlord, within ten (10) days of any notice
whatsoever to Tenant, whether required by statute or otherwise, that any
Operator has applied to the Department of Environmental Resources of the
Commonwealth of Pennsylvania for a permit to mine under Landlord's Lands or is,
in fact, conducting any Mining Activities under Landlord's Lands. In either
event and (a) as to any coal or mining rights under Landlord's Lands as held by
or as vested in Landlord as of the Commencement Date hereof, Landlord agrees
that, if Landlord itself intends to or is, in fact, conducting any Mining
Activities under Landlord's Lands with respect to any such rights, Landlord
shall leave and/or cause to be left in place, under Landlord's Lands and without
any compensation to be paid to it by Tenant or by Tenant's successors or
assigns, adequate coal such as to prevent any subsidence damage to the Property;
(b) as to any coal or mining rights under Landlord's Lands as held by or as
vested in Starvaggi Industries, Incorporated or in Starvaggi Charities, Inc. as
of the Commencement Date hereof, Landlord agrees that, if Starvaggi Industries,
Incorporated or Starvaggi, Charities, Inc. intends to or is, in fact, conducting
any Mining Activities under Landlord's Lands with respect to any such rights,
and if Landlord has not previously acquired the complete right of surface
support, Landlord shall timely cause to be paid, to Starvaggi Industries,
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Incorporated or to Starvaggi Charities, Inc., as the case may be, such
compensation as agreed or determined to be just and necessary so that adequate
coal shall be left in place to prevent any subsidence damage to the Property; or
(c) as to any coal or mining rights under Landlord's Lands as held by or as
vested in any other person or entity as of the Commencement Date hereof or as to
any such rights under Landlord's Lands as acquired, in any manner and subsequent
to the Commencement Date hereof, by Landlord, by Starvaggi Industries,
Incorporated or by Starvaggi Charities, Inc., Landlord agrees to timely notify
the owners of the economic interests in such coal or the operator of any such
mine, in writing, of Tenant's possible desire to acquire protection for surface
structures upon the land overlying the coal and, further, to timely take any and
all actions necessary to provide Tenant with the opportunity to timely purchase
and/or cause to be paid, to the owners of the economic interests in any such
coal or mining rights or to the operator of any such mine, any compensation as
agreed or determined to be just and necessary so that adequate coal shall be
left in place to prevent any subsidence damage to the Property.
E. Renewal Option. Provided that Tenant is not in default under any of the
terms and conditions of this Lease, Tenant shall have the right to renew this
Lease ("Renewal Option") for one twenty-five (25) year term ("Renewal Term"),
with the Renewal Term commencing upon the expiration of the Initial Term, such
that, if Tenant exercises the Renewal Option, this Lease shall expire at 11:59
p.m. (Eastern Standard Time) on December 31 of the Lease Year which is seventy
(70) years plus the Stub Period after the Commencement Date hereof. The total
term of this Lease, consisting of the Initial Term plus the Renewal Term, unless
terminated prior to the expiration of the Initial Term or the Renewal Term
pursuant to the terms hereof, shall hereinafter be sometimes referred to as the
"Lease Term". Should Tenant wish to exercise the Renewal Option, Tenant must
deliver written notice to Landlord of the exercise of the option on or before
December 31 of Lease Year forty-three (43).
F. Quiet Enjoyment. Landlord covenants to secure and maintain for the
benefit of Tenant the quiet and peaceful possession and enjoyment of the
Property for the full Lease Term, without hindrance, claim or molestation by
Landlord or any other person acting by, through or under Landlord.
G. Right of Special Termination.
(i) Conditions Justifying Exercise of Right. Tenant shall be
permitted to exercise a Right of Special Termination when any one or more of the
following situations shall exist:
(a) The Commonwealth of Pennsylvania, Department of Transportation shall
fail to provide the necessary highway funds in the amount of TWO
MILLION DOLLARS
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($2,000,000.00), or such lesser amount as is required, to complete
the highway improvements necessary to provide proper ingress and
egress to the Amphitheater Project; and/or
(b) The Pennsylvania Department of Environmental Resources, the United
States Environmental Protection Agency, and/or any other federal,
state, county or local government and/or their respective agencies,
shall fail to grant or to approve all necessary permits or approvals
for completion of the Amphitheater Project, provided that Tenant has
timely and in good faith applied for, complied with and processed
all permit and approval applications and conditions; and/or
(c) Tenant and/or any federal, state, county or local government and/or
their respective agencies, has identified on Landlord's Land the
presence of any Hazardous Waste(s), as such term is defined in
Section 15.E. of this Lease, and Tenant has given Landlord immediate
notice as provided in Section 18.E. of this Lease, of such Hazardous
Waste(s), and Landlord is unwilling and/or unable to cure said
condition within sixty (60) days of notice thereof, or is unable to
propose a cure which will be timely, effective and acceptable for
Tenant's use of the Property within the same sixty (60) day period;
and/or
(d) Landlord shall not commence within thirty (30) days of execution of
this Lease an action to quiet title to Landlord's land in the Court
of Common Pleas of Washington County to remove the encumbrance on
the title created by the Lawrence-Meyer Agreement of Sale dated
October 11, 1939 and/or Landlord is unable to and/or fails to remove
said encumbrance within one (1) year of execution of this Lease;
and/or
(e) Any deep mine subsidence causes damage or injury to the surface of
the Property, Leased Easements and/or other Easement Areas, or to
any building or improvement now or hereafter constructed thereon,
and, within sixty (60) days of notice thereof from Tenant, as
provided in Section 18.E. of this Lease, Landlord is unable and/or
unwilling to remedy the subsidence and/or to repair or otherwise
remedy any and all damage caused thereby; and/or
(f) Tenant shall determine that, because of cost overruns, the
construction budget shall exceed $8.3 Million plus any road funding
from the Commonwealth.
(ii) Tenant's Exercise of the Right. If Tenant shall
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choose to exercise the Right of Special Termination after expiration of any cure
period provided in Section 1.G.(i) of this Lease, Tenant shall provide notice
thereof to Landlord in the manner set forth in section 18.E. hereof. Tenant's
exercise of the Right of Special Termination shall be effective upon receipt of
said notice by Landlord.
(iii) Liability Upon Exercise of Right. In the event that Tenant
shall exercise the Right of Special Termination, Tenant shall be responsible
for:
(a) Reimbursing Landlord for all reasonable sums expended by Landlord in
preparation of the Land and Leased Easements for the Amphitheater
Project, including the costs of Landlord's Work, as defined in this
Lease. Landlord shall provide, upon Tenant's request, verification
of all expenditures for which reimbursement is sought; and
(b) Returning the Land and Leased Easements, as nearly as possible, to
their pre-Lease condition; and
(c) In the event of exercise of the Right of Special Termination for
either or all of the reasons provided in Sections 1.G(i)(a)(b) or
(f), reimbursing Landlord for any transfer taxes incurred in
obtaining title to Landlord's land, and for any tax liability
ultimately incurred by Landlord as a result of the loss of "Clean
and Green" status for the Property, said liability to include
payment of back taxes as required under the "Clean and Green"
statute and future taxes; provided, however, that Landlord shall: 1)
immediately notify the Board of Assessment that the proposed use for
the Property is abandoned; 2) immediately take any and all steps
necessary, in good faith, to return the Property to "Clean and
Green" status; and 3) take no action inconsistent with "Clean and
Green" status for the Property. It is specifically understood and
agreed to by the parties hereto that the tax liability of Tenant as
provided herein shall be limited to no more than $50,000.00.
(iv) Other Liabilities Released. In the event Tenant shall exercise
the Special Right of Termination, Tenant and Landlord hereby agree that, with
the exception of the responsibilities outlined in Section 1.G.(iii)(a-c), Tenant
and Landlord hereby fully release and discharge the other from all rights,
claims, actions, causes of action, demands, damages, costs, loss of services,
expenses, compensation, and all consequential damages each now has, has had or
may in the future have against the other arising out of or in connection with
the Amphitheater Project and/or this Lease.
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(v) Term of Right. Tenant's Right of Special Termination shall
expire eighteen (18) months after the effective date of this Lease.
Section 2. USE, RESTRICTIONS ON LANDLORD, LANDLORD COOPERATION
A. Tenant's Use of Property. Tenant shall have the right to use the
Property for live entertainment; for commercial concert, amphitheater and arena
activities; for fairs, festivals and events related thereto; for picnic areas;
for recreational and leisure sports; as an educational center or conference
center; including, without limitation, for the vending of food, of beverages
(including alcoholic beverages) and of merchandise in connection with any of the
foregoing; for roads, parking and utility purposes and for uses related to all
of the foregoing.
B. Tenant's Exclusive Use. Tenant shall have the sole and exclusive right
to use, occupy, and enjoy the Property.
C. Restrictions on Landlord. During the entire Lease Term, without the
prior written consent of Tenant, which consent may be withheld by Tenant in its
sole and absolute discretion, neither Landlord nor any person deriving rights
from Landlord shall use any portion of Landlord's Lands to engage in any
activities, at any time, which are similar to, or competitive with, the types of
activities which, at the particular time, are normal and customary for live
entertainment, for commercial concert, amphitheater and arena facilities, for
fairs, festivals, and events related thereto, for recreational and leisure
sports, or as an educational center or conference center. In addition, neither
Landlord nor any person deriving rights from Landlord shall engage in any
conduct on any portion of the Landlord's Lands which materially interferes with
Tenant's conduct of business or Tenant's use of, enjoyment of, or operations on,
the Property. No portion of Landlord's Lands will be developed or utilized in
such a manner as would cause the Tenant's activities on the Property to be in
violation of any law, ordinance, regulation or other land-use restriction,
including, without limitation, any sound emission restriction or ordinance. The
rights of Landlord, its successors and assigns in and to the Landlord's Lands
shall at all times be subject to the rights of Tenant under this Lease. Landlord
recognizes that it is of the utmost importance that Tenant be free from any
competitive activities upon the Landlord's Lands and from any interference with
Tenant's activities. Accordingly, all prohibitions contained in this Subsection
2.C shall be construed to prohibit all activities upon the Landlord's Lands
which are competitive with, or interfere with, Tenant's activities on the
Property. The provisions of this Section 2.C shall be included in the Memorandum
of Lease described in Section 21 hereof.
D. Landlord Cooperation. If and to the extent that Tenant has not
previously done so, Tenant shall be entitled to apply for
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all zoning approvals, changes or variances, including, without limitation, for
zoning certificates, building permits and zoning occupancy permits, and for
variances, for special exceptions and for non-conforming use, all for such
purposes as, without limitation, utilities, off-site road improvements and other
state and local governmental participation and/or approvals, as are necessary,
in the exercise of Tenant's sole judgment and discretion, for the utilization of
the Property for the purposes intended by Tenant. Without derogating from the
generality of Landlord's other obligations hereunder, Landlord hereby agrees to
cooperate and assist Tenant with the development of the Land for Tenant's
intended purposes, including causing Landlord's personnel, if necessary, to give
assistance in obtaining such zoning approvals, changes or variances, including,
without limitation, zoning certificates, building permits, zoning occupancy
permits, or variances, special exceptions and non-conforming use for such
purposes as, without limitation, utilities, off-site road improvements and other
state and local governmental participation and/or approvals, for the Property as
may be necessary for the operation of the Amphitheater, by taking such
reasonable actions as reasonably requested by Tenant, including, without
limitation, by signing properly prepared applications, by appearing at regularly
scheduled meetings held by government authorities regarding the applications,
certificates and permits, and by processing the applications, certificates and
permits in Landlord's name, if required. Any and all applications for zoning
approvals, changes or variances, as set forth above, may be filed by either
Landlord (if requested by Tenant) or by Tenant, as appropriate, and any and all
applications for zoning occupancy permits shall be filed by Tenant. Landlord's
agreement to so cooperate with and assist Tenant shall not require Landlord to
hire additional personnel solely for such purpose, and all costs incurred in
acquiring any zoning approvals, changes or variances shall be paid by Tenant,
including Landlord's expenses paid to third parties and Landlord's
out-of-pocket expenses (but Tenant shall not reimburse or otherwise compensate
Landlord for the time or services of Landlord's employees).
Section 3. RENT
A. Minimum Rent. Unless prepaid pursuant to Subsection 3.B below, on or
before the fifteenth (15th) day of the first month following the Commencement
Date, and on or before the fifteenth (15th) day of each succeeding month
thereafter until the expiration of the Lease Term, Tenant shall pay to Landlord
one-twelfth (1/12) of the Minimum Rent ("Monthly Minimum Rent Payment"), which
Monthly Minimum Rent Payment will be for that month. During Lease Years one
through eight, the Minimum Rent shall be Sixty Thousand ($60,000.00) Dollars per
annum. During the balance of the Initial Term, the Minimum Rent shall be One
Hundred Thousand ($100,000.00) Dollars per annum. During the Renewal Term, the
Minimum Rent shall be One Hundred Twenty Thousand ($120,000.00) Dollars per
annum.
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If there is a Stub Period, the Minimum Rent for such Stub period will be an
amount equal to $60,000.00 times a fraction, the numerator of which is the
number of months in the Stub Period and the denominator of which is 12, payable
in equal monthly installments for the number of months in the Stub Period.
B. Percentage Rent.
(i) On a cumulative annual basis (meaning the accumulation commences
with the beginning of the Stub Period, terminates at the end of the Stub Period
and each Lease Year, and the accumulation again commences at the beginning of
each subsequent Lease Year) Tenant also shall pay rent ("Percentage Rent") to
Landlord equal to a percentage (stipulated herein) of the Gross Receipts
(defined below) in excess of the Minimum Rent for the Stub Period or Lease Year,
as applicable, payable as described below.
(ii) Commencing with the Stub Period and continuing until the
commencement of Lease Year Nine, the Percentage Rent shall be one percent (1%)
of Gross Receipts; during the balance of the Initial Term, the Percentage Rent
shall be one and one-half percent (1-1/2%) of Gross Receipts; and during the
Renewal Term, the Percentage Rent shall be two and one-quarter percent (2-1/4%)
percent of Gross Receipts.
(iii) The term "Gross Receipts" shall refer to all gross operating
revenue from any operations in any manner conducted on the Property during a
particular period of the Lease Term, whether such operations are conducted by
Tenant or any other entity; provided, however, that the following shall not be
included in Gross Receipts:
(a) Up to three percent (3%) of the total tickets available for each event
and used by Tenant for promotional, artist contracts or sponsorship purposes;
(b) Taxes paid to governmental authorities which are based upon or
measured by gross receipts or other activities or are added to the price of a
ticket, entry fee, food, beverage, merchandise, sales price, or parking in
connection with Tenant's business activities, including sales, excise, seat,
entertainment or similar taxes, but not net income taxes;
(c) Sums paid to Tenant by concessionaires, subtenants or licensees, if
the gross revenues received by such concessionaires, subtenants or licensees are
included within Gross Receipts;
(d) Funds received by Tenant which are not operating revenue from
operations associated with the Property, such as condemnation awards, casualty
proceeds, refinancing of loans, capital expenditures on the Property, or sales
of fixtures, furniture or equipment;
(e) Revenue attributable to ticket sales or other revenue for events
conducted at the Property by third party charitable or non-profit organizations,
so long as Tenant has agreed that Tenant will not receive compensation relative
to such ticket sales or other revenue (it being agreed that Landlord shall be
entitled to
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its applicable Percentage Rent with respect to any compensation paid to Tenant
in connection with such events, such as rental fees or revenue derived from
concessionaires).
(iv) For the first and second months of the Stub Period and for the
first and second months of every Lease Year thereafter, Tenant shall make the
applicable Monthly Minimum Rent Payment on the 15th of such month, as provided
above in Subsection 3.A. Commencing with the last day of the second month of the
Stub Period and of every Lease Year thereafter, for each month during which
there shall be operations on the Property which generate Gross Receipts, Tenant
shall pay to Landlord, no later than the last day of the following month, the
applicable Percentage Rent, if and to the extent, on a cumulative basis, there
shall be such Percentage Rent in excess of previously paid Minimum Rent due and
owing to Landlord. During any month in which there are activities on the
Property which generate Gross Receipts, Tenant shall furnish to Landlord
financial information relative to such Gross Receipts, even if the Percentage
Rent, on such a cumulative basis, is less than the Minimum Rent previously paid
for such Lease Year. All payments of Percentage Rent (being sums in excess of
Minimum Rent) which are paid pursuant to Subsection 3.B shall entitle Tenant to
a credit towards the next Monthly Minimum Rent Payment(s) due, so that, in the
event that Tenant has paid to Landlord, prior to the last month of such Lease
Year, rents (in Percentage Rent payments or a combination of Percentage Rent
payments and Monthly Minimum Rent Payments) in an aggregate amount equal to the
applicable annual Minimum Rent for a Lease Year, no further Monthly Minimum Rent
Payments shall be due from Tenant for such Lease Year.
(v) Within sixty (60) days following the end of any Lease Year
(including the Stub Period), or of any partial Lease Year if this Lease is
terminated in accordance with the terms hereof prior to the end of a Lease Year,
during which Tenant received or should have received any Gross Receipts, Tenant
shall provide financial reports to Landlord prepared in accordance with
generally accepted accounting principles (provided, however, that the financial
information furnished to Tenant by concessionaires or other third parties may
not be so prepared) and certified by an officer or other authorized
representative of Tenant as having been so prepared (delivery of any financial
reports to Landlord being a certification as to the accuracy of the reports by
Tenant), including, but not limited to, statements showing the amount of actual
annual Gross Receipts and actual annual Percentage Rent ("Actual Percentage
Rent") due with respect to the particular period being reported. To the extent
that the Actual Percentage Rent due under this Lease exceeds Percentage Rent
paid to Landlord during any Lease Year or any partial Lease Year, as the case
may be, the amount by which the Actual Percentage Rent exceeds the Percentage
Rent already paid under the Lease ("Under Payment") shall be paid by Tenant to
Landlord at the same time the certified financial statement is delivered to
Landlord, but in no event later than sixty (60) days following the end of the
applicable Lease Year or partial Lease Year, together with interest at the
Penalty Rate
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(hereinafter defined) on the Under Payment, accruing from the date such Under
Payment should have been paid and until paid to Landlord. Notwithstanding the
foregoing, if the Under Payment is without fault by Tenant, such interest shall
accrue only as of the date the Tenant knew of the Under Payment. For example, if
a concessionaire incorrectly reports the amount of its Gross Receipts to Tenant
and that incorrect report is the cause of the Under Payment, then interest shall
not accrue until the Tenant knows of the Under Payment and the amount thereof.
To the extent that the Percentage Rent paid to Landlord during any Lease Year,
or any partial Lease Year, as the case may be, exceeds the Actual Percentage
Rent found to be due under this Lease, that amount shall be paid by Landlord to
Tenant, without interest, within thirty (30) days following receipt of the
financial statement by Landlord.
C. Tenant's Duty to Keep Records. Tenant shall maintain complete and
accurate records with respect to all matters relevant to the computation of
Percentage Rent, including cash records and receipts for Tenant and for all
concessionaires or subtenants operating at the Property, and shall keep such
records for at least five (5) years from the end of the Lease Year to which such
records relate. Landlord shall have the right to make inquiries or informal
inspections of Tenant's books and records relative to the Property and the
operations conducted thereon ("Tenant's Records") at any time during normal
business hours, but under no circumstances may Landlord use this right to
disrupt Tenant's business in any manner. During the period from April 1 to
November 1 of each Lease Year, Landlord may, not more than two (2) times,
inspect Tenant's Records, provided that Landlord shall give Tenant two (2)
working days' prior notice and shall not, under any circumstances, use this
right to disrupt Tenant's business in any manner. On no more than two (2)
occasions in any one (1) Lease Year and only during the period from November 1
of one Lease Year to April 1 of the following Lease Year, at Landlord's expense,
Landlord may have an independent auditor ("Landlord's Auditor") audit Tenant's
Records, provided that Landlord shall give Tenant two (2) working days' prior
notice and shall not, under any circumstances, use this right to disrupt
Tenant's business in any manner. Upon Landlord's exercise of such right, Tenant
shall make all such books, records, compilations or other information or forms
of information, including notes and compilations of accountants, sales tax
records and all such other information relating to Tenant's operations at the
Property or, if in Tenant's possession, any subtenant's operations at the
Property, as reasonably requested by Landlord's Auditor, available to Landlord
at a location designated by Tenant within Washington County, Commonwealth of
Pennsylvania.
D. Additional Rent. As additional rent ("Additional Rent"), Tenant agrees
to:
(i) Pay those taxes, assessments or other governmental charges
levied or assessed against the Property and described in
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Subsection 7.A below; and
(ii) Obtain the insurance policies described in Section 9 below.
E. Fixed Rent. In addition to all other Rent set forth in this Lease,
Tenant shall pay to Landlord, as Fixed Rent ("Fixed Rent"), one-eighth (1/8) of
the total amount of Landlord's Work, as defined and described in Section 5
below, beginning on the earlier to occur of (a) thirty (30) days from the
completion of Landlord's Work, or (b) the date on which Tenant opens the
Amphitheater to the public, and a like amount on the same day of every year
thereafter for the next seven (7) years; provided, however, that if Landlord has
not completed Landlord's Work by one (1) year from the commencement thereof by
Landlord, then Tenant shall commence payment of Fixed Rent beginning one (1)
year from the commencement of the work by Landlord, by payment to Landlord of an
amount equal to one-eighth (1/8) of the cost of the work performed to such date,
and, upon completion of Landlord's Work, the additional amount owing
(representing work performed from the period beginning one (1) year from the
commencement date of such work and ending on the date on which such work is
completed) shall be divided by the number of remaining payments and shall be
added to each such payment; and provided further, however, that if Landlord has
not completed Landlord's Work on or before one (1) year from the date of the
first payment of Fixed Rent, there will be annual adjustments of the amount of
Fixed Rent until Landlord's Work is completed. Such additional sums will also
constitute Fixed Rent. Fixed Rent and Additional Rent shall not reduce or in any
way be applied toward reduction or diminishment of Percentage Rent.
F. Payment of Rent. All rent amounts shall be paid to Landlord at 401
Pennsylvania Avenue, Weirton, West Virginia 26062, without demand and without
any set-off or deduction by Tenant except as (i) specifically set out in
Subsection 3.B(iv) concerning Minimum Rent, or (ii) may be expressly provided by
orders, regulations or other directives of any governmental agencies.
Section 4. TENANT IMPROVEMENTS
A. Amphitheater and Parking Area. Tenant intends to construct a first
class outdoor performance amphitheater, related facilities and a parking area on
the Land sufficient for the needs of Tenant's use of the Property. The term
"Amphitheater" refers to the aforementioned amphitheater and related facilities
as constructed on the Property. The term "Parking Area" refers to the
aforementioned parking area as constructed on the Land.
B. Tenant to Complete Construction. Tenant will construct the
Amphitheater, commencing no later than November 1, 1990 and complete all
construction no later than June 15, 1991.
C. Improvements. The term "Improvements" shall mean all
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improvements, betterments, facilities and the like which now exist or are at any
time constructed or placed upon the Land, whether by Landlord or Tenant. Title
to all Improvements, and any and all depreciation and investment tax credits
generated thereby or available in connection therewith, shall belong to, and
accrue to the benefit of, Tenant during the Lease Term. Upon the expiration or
termination of this Lease, title to all Improvements shall automatically vest in
the Landlord at such time as the Property is surrendered to Landlord, provided,
however, that all removable trade fixtures or equipment installed in or located
at the Property at the expense of Tenant, and all of Tenant's personal property
which has been removed from the Property on or before the termination of the
Lease, shall remain the property of Tenant. Any property not so removed shall,
at the expiration of the Lease Term, be considered abandoned property and
Landlord shall have the right, if it wishes, to claim such property, provided,
however, that if this Lease terminates for any reason other than the expiration
of the Initial Term or the Renewal Term, Tenant shall have thirty (30) days from
the date of the termination of this Lease within which to remove such trade
fixtures, equipment or other personal property.
D. Alterations and New Construction. Tenant shall have the right, from
time to time, to alter or modify the Existing Improvements, to construct new
Improvements and to demolish any Improvements if such actions are necessary or
appropriate, in Tenant's business judgment, exercised in good faith.
E. Protection of Property. While any excavation, demolition or
construction is being performed on the Land or any portion thereof, Tenant shall
protect all the Land, any portion of Landlord's Lands which may be thereby
affected and any other land owned by Landlord, Starvaggi Industries,
Incorporated or Starvaggi Charities, Inc. which may be thereby affected from all
adverse effects of such excavation, demolition or construction.
F. Bond. Tenant shall provide for Landlord's benefit, prior to any site
work, except site work to be performed solely by Landlord or its subcontractors,
a Bond in the amount of $150,000.00 to secure Tenant's completion of all work
relative to the initial construction of the Amphitheater, which bond shall be
released upon thirty (30) days' prior notice following completion of such
construction work.
G. Liens. With respect to all contracts entered into by Tenant for labor
or materials furnished for construction, alteration or repair of Improvements on
the Land, for work to be performed or materials to be furnished in amounts in
excess of $10,000.00, where non-payment for same could result in a lien being
filed against Landlord's interest in the Land, Tenant shall take all reasonably
necessary steps to ensure such liens are not so filed, such procedures presently
including execution of no lien
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contracts, to be filed in the Office of the Prothonotary of Washington County,
Pennsylvania, prior to the commencement of construction or delivery of any
material to the Land.
H. Removal of Property. Tenant and other persons claiming under Tenant
shall have the right to remove from the Property all or any of the items which,
pursuant to Subsection 4.C above, are specified as being subject to Tenant's
retained ownership and Tenant's right to remove. The removal of such items, to
the extent that Tenant elects to do so, may be accomplished at any time and from
time to time but only during the Lease Term, except as set forth in Subsection
4.C above.
I. Government Grants. Landlord hereby agrees to cooperate in obtaining,
whenever possible, governmental grants providing funds for the construction of
the Amphitheater, other Improvements and off-site improvements designed to
improve access to or otherwise enhance the value of the Property by taking such
reasonable actions as reasonably requested by Tenant including, without
limitation, by signing properly prepared applications and by processing said
applications. Any funds obtained through governmental grants, including any
construction reimbursements, shall, whenever possible, be obtained in Tenant's
name and not in Landlord's name and shall be for use of, or for reimbursement
to, Tenant for the cost of construction of the Improvements and, thereafter, for
the cost of off-site improvements designed to improve access to the Land, or to
otherwise enhance the value of the Property, including, without limitation, for
the construction of traffic controls, highways, access roads and ramps relative
to such access, and water and sewer lines and any extension thereof to the
Property. In the event that any governmental grant shall require payment to
Landlord, the parties hereto expressly agree that such funds shall be
transferred to Tenant for Tenant's use, or, at Tenant's option, in the
alternative, shall be expended by Landlord on behalf of Tenant pursuant to this
Subsection 4.I. Tenant hereby indemnifies Landlord for any and all liability of
Landlord or its Affiliates resulting from (i) any representations made by
Landlord at Tenant's request (to the extent based upon information furnished by
Tenant), (ii) taxes upon the funds received, provided such taxes constitute a
one-time charge, such as excise or income taxes, and (iii) reasonable attorney's
fees, accounting costs and engineering fees paid to third parties if incurred by
Landlord at the request of Tenant.
Section 5. LANDLORD'S WORK
A. Landlord's Obligation. Upon the request of Tenant, Landlord shall
provide or cause to be provided concrete, slag and equipment in an aggregate
amount or value of not more than $800,000.00 for the purpose of making
Improvements to the Property in accordance with the plans and specifications
prepared by Tenant ("Landlord's Work"). It is the intention of Landlord and
Tenant
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that Landlord shall provide such materials and services at the rates and in
accordance with the terms set forth on Exhibit "F" to this Lease. Prior to the
commencement of any work by Landlord, but subsequent to the execution of this
Lease, Landlord and Tenant shall enter into a contract ("Contract"), on the
standard 1987 AIA Fixed Price Contract form, and the terms of such Contract
shall govern the relationship of Landlord, as "Contractor", and Tenant, as
"Owner", for purposes of such work to be performed by Landlord, including a
normal construction timetable, and Landlord shall enter into a subcontract with
Starvaggi Industries, Incorporated ("Starvaggi") wherein Starvaggi agrees (i) to
perform, through its employees or its subcontractors, the work Landlord is
obligated to perform under the Contract, and (ii) that Tenant shall be a third
party beneficiary of any such subcontracts.
B. Plans. Tenant shall prepare such site plans, designs, plans and
specifications ("Plans") as deemed necessary and appropriate by Tenant for the
construction of the Improvements and furnish a copy of same to Landlord, in
accordance with the terms of the Contract.
C. Excess Costs. In the event that the costs of Landlord's Work exceed
$800,000.00, the difference shall be paid to Landlord by Tenant in accordance
with the terms of the Contract.
Section 6. PARKING
Tenant shall have exclusive use and occupancy of the Parking Area during
the entire Lease Term. The gross income realized by Tenant or by anyone claiming
through Tenant from the Parking Area will be included in the computation of
Percentage Rent.
Section 7. TAXES AND OTHER IMPOSITIONS
A. Taxes Based Upon the Property. To the extent that Tenant is permitted
by the appropriate authorities to do so, Tenant agrees that Tenant will cause
the Property to be separately assessed. Landlord hereby agrees to sign, to file
and to process such subdivision documents with the appropriate authorities
and/or in the appropriate records for Washington County, Pennsylvania, all as
may be reasonably requested by Tenant to obtain such separate assessment of the
Property and, further, to cooperate with Tenant in satisfying any additional
requirements relative thereto. Tenant shall pay all taxes and assessments
imposed by any governmental entity to the extent the foregoing are measured by
or based upon the Land or by any Improvements and any transfer taxes caused by
(i) the execution of this Lease, (ii) a transfer of Tenant's interest therein,
(iii) grant of the Third Party Easements or any other easement granted by
Landlord to a third party at Tenant's request, or (iv) construction of any
improvements on the Land. Tenant shall also pay all taxes, assessments, license
fees, excises, imposts, and fees and charges of any other kind imposed
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by any governmental entity upon Tenant's personal property of any kind,
including sound equipment, lighting equipment, stage equipment, kitchen and
commissary equipment, seating and benches, concessionaires kiosks and similar
installations, and all Tenant's trade fixtures located on the Property. Any tax
or other imposition upon the Land or Improvements which is payable with respect
to a period of time which falls partly within and partly outside the Lease Term
shall be pro-rated between Landlord and Tenant.
B. Taxes Arising with Respect to Business. Tenant shall pay, before
delinquency, any sales tax, gross receipts tax, other tax, license fee, excise,
impost or fee or charge of any other kind which is based upon the business or
activities of Tenant or of any person or entity deriving rights from Tenant
during the Lease Term.
C. Tax Contest. Tenant may, at no cost or expense to Landlord, dispute and
contest any particular tax, assessment or other charge and, in such case, such
item need only be paid if and to the extent that the laws or regulations
governing such contest do not permit postponement of payment; provided, however,
that if the non-payment thereof places Landlord or its property at any risk,
Landlord may require Tenant to post such reasonable security as Landlord may
require. If Landlord must nevertheless join in any protest or contest, Landlord
shall do so, provided that all cost and expense of the protest or contest,
including Landlord's reasonable attorney's fees, are borne by Tenant and the
joinder does not place Landlord or its property at any risk for which reasonable
security has not been furnished to Landlord.
Section 8. GENERAL REQUIREMENTS UPON TENANT
A. Compliance with Laws. Subject to the provisions of Subsection 15.E
below, during the Lease Term, Tenant shall obey and comply with all present and
future laws, ordinances, rules and regulations of all governmental entities
which, in any way, affect the Property. Tenant shall have the right, at its sole
cost and expense, to contest the validity of any of the foregoing in good faith.
If necessary, Landlord agrees to join in any such protest or contest; provided,
however, that the cost thereof, including the Landlord's reasonable attorney's
fees, shall be borne by Tenant. Tenant hereby agrees to indemnify Landlord from
all loss or damage whatsoever, including Landlord's reasonable attorney's fees,
from Tenant's failure to abide by any such laws, ordinances, rules and
regulations.
B. Repair. Tenant shall, during the Lease Term and at Tenant's sole cost
and expense, keep and maintain the Amphitheater and all other Improvements in
good and sanitary order, condition and repair, ordinary wear and tear excepted.
C. Utilities. Tenant shall, during the Lease Term, pay for
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all utilities to the extent used in and on the Property, and Landlord, in its
capacity as Landlord under this Lease (and not in its capacity as a third
party), shall have no responsibility for any interruptions in the supply of such
utilities.
D. Costs and Expenses. Except as otherwise provided in this Lease, Tenant
shall, during the Lease Term, bear all costs and expenses pertaining to the
Property, including, without limitation, the costs and expenses arising out of
the activities of Tenant and of any concessionaires and sublessees of Tenant.
E. Corporate Box. At no expense to Landlord, during the Lease Term,
Landlord shall be entitled to a corporate box of six seats and to all tickets
for such box for each event, together with all amenities associated with
ownership of a box, as set forth in Tenant's standard boxholder contract in
effect from time to time.
Section 9. INSURANCE AND INDEMNIFICATION
A. Liability Insurance. Tenant shall obtain public liability insurance in
an amount not less than $3,000,000.00, but Tenant shall, with due diligence,
attempt to obtain such additional dollar limits as will adequately cover the
insured perils, with responsible insurance companies legally authorized to
transact business in the Commonwealth of Pennsylvania. The liability insurance
obtained by Tenant shall name Landlord as a named insured to cover Landlord
against liability to third parties for bodily injury or property damage
occurring at the Property resulting from Landlord's negligence or, at Tenant's
option, Tenant may obtain a separate policy in the form described herein naming
Landlord as the insured thereunder. Landlord agrees that it shall not cancel or
request, from the issuing insurance company, any changes to any insurance policy
obtained by Tenant hereunder. Tenant shall not conduct or allow to be conducted
upon the Property any activity which is expressly excluded from the coverage
under the insurance policy described above, unless Tenant shall obtain
additional insurance covering such activity; provided, however, that if Landlord
believes that Tenant has failed to comply with the provisions of this Subsection
9.A with respect to an activity which previously has been conducted at the
Property, such that same would constitute an Event of Default (hereinafter
defined) which cannot be cured (because said activity was conducted without such
additional insurance coverage), Landlord shall not be entitled to declare same
an-Event of Default or exercise any of Landlord's remedies unless Tenant's
failure to obtain such additional insurance coverage was an intentional
violation of this Lease; and provided further, that if Landlord in good faith
believes that Tenant intends to conduct an activity on the Property which is not
insured, Landlord shall be entitled to send Tenant written notice at least five
(5) days prior to the occurrence of such activity, specifying such activity and
the insurance which Landlord believes Tenant is required to obtain pursuant to
this Lease, and, if Tenant
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fails to acquire such insurance after such notice from Landlord, such failure
shall be deemed to be "intentional" for purposes of this Subsection 9.A.
B. Property Insurance. At all times during the Lease Term, Tenant shall at
its expense keep all Improvements on the Property insured against loss or damage
from all such risks and in such amounts as Tenant, in the exercise of Tenant's
reasonable judgment and discretion, shall deem appropriate, but not less than
the replacement cost of the Improvements, with responsible insurance companies
legally authorized to transact business in the Commonwealth of Pennsylvania;
provided, however, that during the last ten (10) years of the Initial Term or,
if Tenant exercises the Renewal Option, during the last ten (10) years of the
Renewal Term, Tenant may, at its option, keep the Improvements insured for their
actual cash value. The Landlord shall be named therein as an additional insured
as its interest may appear. If any property insurance policy contains a
co-insurance clause, Tenant will obtain, if available and if the cost is not
excessive, an agreed amount endorsement or any other provision, endorsement or
coverage available and cost efficient, or take such other actions as are
reasonable and cost efficient, which are intended to provide assurance to
Tenant, as the insured, that Tenant will not become a co-insured on such policy.
C. Builder's Risk Insurance. During any period of construction on the
Property, Tenant shall maintain, or cause to be maintained, Builder's Risk
Insurance in an amount not less than the total amount of the insurable
Improvements being constructed, with responsible insurance companies legally
authorized to transact business in the Commonwealth of Pennsylvania.
D. Other Insurance.
(i) Tenant shall maintain worker's compensation and automobile and
vehicular liability insurance as required by the laws of the Commonwealth of
Pennsylvania.
(ii) If Tenant requires any concessionaire or other party conducting
activities on the Property to name Tenant in its liability insurance policy,
Tenant will also require such party to name Landlord as an additional insured
thereunder. If any performer or artist participating in any events at the
Property names Tenant as an additional insured under its liability insurance
policy, Tenant will use all reasonable efforts to cause such performer or artist
also to name Landlord as an additional insured thereunder.
(iii) Notwithstanding the provisions hereof regarding the types and
limits of insurance required to be carried by Tenant, if Tenant believes that it
is economically impossible or infeasible to obtain a particular type of
insurance, or the required amount of insurance, Tenant shall be entitled to so
notify Landlord, requesting Landlord's approval of Tenant's failure to obtain a
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particular policy or of Tenant's ability to obtain a particular policy in a
lesser amount, and Landlord agrees not to unreasonably withhold its consent to
such actions, in the exercise of its reasonable business discretion; provided,
however, that if, pursuant to Subsection 9.F below, Tenant attempts to cause a
Registered Mortgagee to be named as an insured under any of the insurance
policies required to be obtained by Tenant under this Lease, and the insurer
levies an additional charge to do so, Tenant agrees that, to the extent that
Tenant believes such extra charge causes it to be economically impossible or
infeasible to obtain such insurance, Tenant nevertheless shall not be entitled
to request that Landlord waive obtaining such insurance pursuant to this
Subsection 9.D(iii).
(iv) If, in the course of planning for future events, Tenant
determines that Tenant will be unable to obtain any insurance coverage required
by this Lease, Tenant will so notify Landlord.
E. Policies. Tenant's coverage under all insurance policies shall commence
as of the Effective Date of this Lease. All insurance policies shall provide for
at least ten (10) days' written notice to the Landlord before cancellation and
copies or certificates of policies of insurance shall be delivered to the
Landlord upon commencement of each policy. If any blanket general insurance
policy insuring Tenant otherwise complies with all of the terms of the
provisions of this Section 9, the (i) naming of the Landlord therein as a named
insured, (ii) specification of the Land as a scheduled location, and (iii)
specification that the full policy amount is available for losses incurred at
the Land regardless of the amount of losses incurred at other locations, shall
be deemed compliance with the requirements for the insurance coverage.
F. Named Insured; Adjustment of Losses. At the request of Tenant, any
Registered Mortgagee (hereinafter defined) may be named as an insured under any
of the said insurance policies required under this Section 9, as its interest
may appear. If any loss under any such insurance policy required hereunder is
less than $100,000.00 (as adjusted, as hereinafter provided) or more, it may be
adjusted with, approved by and paid to Tenant and a Registered Mortgagee, if
any, or, if there is no Registered Mortgagee, then it may be adjusted with,
approved by and paid to (a) Tenant in absence of any default hereunder or (b)
Tenant and Landlord in the case of the existence of an Event of Default or with
respect to a loss occurring during the last sixty (60) days of the Lease Term.
Subject to the provisions of Subsection 10.B, losses in the amount of
$100,000.00 or more (as adjusted, as hereinafter provided) shall be paid to
Tenant and all named or additional insureds as their interests may appear, and
Landlord's interest in the proceeds shall be assigned to Tenant upon proof that
the destroyed Improvements have been repaired, replaced or rebuilt. The
$100,000.00 limitation set forth herein shall be adjusted upwards or downwards
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for each year of the Lease Term by a percentage equal to any increase or
decrease from the Effective Date hereof in the CPI, "CPI" being defined as the
Consumer Price Index for All Urban Consumers, U.S. City Average, All Items
(1982-84=100), or if said Index ceases to exist in substantially its current
form, a reasonably comparable substitute index.
G. Indemnity of Landlord. During the Lease Term and except as arising out
of or occurring in connection with (i) the provisions of Subsection 15.E below,
or (ii) the use and occupancy of the Property or Easement Areas by the Landlord
or its employees, agents, contractors, or visitors, the Landlord shall not be
liable to Tenant or Tenant's employees, agents, sub-tenants, contractors or
visitors, or any other person whatsoever, and Tenant will indemnify, defend and
hold harmless the Landlord of and from all fines, suits, claims, demands, losses
and actions (including any and all attorney's fees) for any injury to persons or
damage to or loss of property arising out of Tenant's use of the Property or
Easement Areas.
Section 10. CASUALTY AND CONDEMNATION
A. Casualty. With respect to any loss or damage to the Amphitheater or to
any other Improvements on the Property as a result of fire or other casualty,
and:
(i) such loss occurs during the last ten (10) years of the Initial
Term, or occurs after Tenant has exercised its Renewal Option, but during the
last ten (10) years of the Renewal Term:
(a) if such loss is a Substantial Loss (hereinafter defined),
whether or not such loss is an Insured Loss, Tenant shall have the
right to terminate the Lease;
(b) if such loss is not a Substantial Loss and is an Insured
Loss (hereinafter defined), Tenant shall be obligated to rebuild or
repair the Improvements;
(c) if such loss is neither a Substantial Loss nor an Insured
Loss, and the cost to rebuild or repair the damaged Improvements
will be equal to or greater than the Repair Amount (hereinafter
defined), Tenant shall have the right to terminate the Lease;
(d) if such loss is neither a Substantial Loss nor an Insured
Loss, and the cost to rebuild or repair the damaged Improvements
will be less than the Repair Amount, Tenant shall be obligated to
rebuild or repair the Improvements;
(ii) such loss occurs prior to the last ten (10) years of the
Initial Term, or occurs after Tenant has exercised its Renewal Option, but prior
to the last ten (10) years of the Renewal Term:
(a) if such loss is an Insured Loss, whether or nor
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such loss is a Substantial Loss, Tenant shall be obligated to
rebuild or repair the Improvements;
(b) if such loss is not an Insured Loss, and the cost to
rebuild or repair the damaged Improvements will be less than the
Repair Amount, Tenant shall be obligated to rebuild or repair the
Improvements;
(c) if such loss is not an Insured Loss, and the cost to
rebuild or repair the damaged Improvements will be equal to or
greater than the Repair Amount, Tenant may, but shall not be
obligated to, rebuild or repair the Improvements, and, if Tenant
elects not to rebuild or repair the Improvements, Tenant shall
continue to be obligated to pay the Minimum Rent and Additional
Rent; if, after five (5) years following the loss, the Improvements
have not been rebuilt or repaired, Landlord shall have the right to
notify Tenant of Landlord's intention to terminate the Lease, and
Tenant shall have a period of six (6) months to elect to rebuild or
repair the Improvements, and, if Tenant commences such rebuilding or
repairs within said six (6) month period, the Lease shall not be
terminated.
B. Insurance Proceeds.
(i) If, under any of the circumstances described above, Tenant
elects to rebuild or repair the Improvements, Tenant shall be entitled to the
insurance proceeds for use in such rebuilding or repair, unless Tenant is
obligated pursuant to a Mortgage to pay any such proceeds over to a Mortgagee.
(ii) If the Lease is terminated by Tenant following a casualty loss,
Tenant shall be obligated to remove any and all debris from the Land.
(iii) If Tenant terminates the Lease and does not rebuild or repair
the Improvements, the insurance proceeds shall be allocated between Landlord and
Tenant as follows:
(a) First, an amount necessary to remove any and all debris from the
Land shall be paid to Tenant for such purpose;
(b) The remainder of the insurance proceeds shall be divided between
Landlord and Tenant as follows:
(1) In the event that the Lease is terminated during the
Initial Term and prior to the exercise by Tenant of the Renewal
Option, Tenant shall receive a portion of the insurance proceeds
equal to the total insurance proceeds times a fraction, the
numerator of which is the number of years or partial years which
remains on the Lease Term, and the denominator of which is 45, with
the balance of the insurance proceeds to be paid to Landlord, being
the total insurance proceeds times a fraction, the numerator of
which is the number of years which have expired on the Initial Lease
Term,
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and the denominator of which is 45;
(2) In the event that the Lease is terminated during the
Renewal Term (or during the Initial Term, but subsequent to the
exercise by Tenant of the Renewal Option), Tenant shall receive a
portion of the insurance proceeds equal to the total insurance
proceeds times a fraction, the numerator of which is the number of
years or partial years which remains on the Lease Term, and the
denominator of which is 70, with the balance of the insurance
proceeds to be paid to Landlord, being the total insurance proceeds
times a fraction, the numerator of which is the number of years
which have expired on the Lease Term, and the denominator of which
is 70.
(iv) For purposes of this Section 10:
(a) "Substantial Loss" shall mean a loss where the Improvements are
damaged to the extent that it would cost more than $2,000,000.00 to repair
or replace same;
(b) "Insured Loss" shall mean any casualty loss which is covered by
an insurance policy either obtained by Tenant or required to be obtained
by Tenant pursuant to the terms of this Lease; and
(c) "Repair Amount" shall mean, for the Stub Period and the First
Lease Year, the sum of $200,000.00 and, for every Lease Year thereafter,
the Repair Amount for the prior Lease Year, increased by one and one-half
percent (1-1/2%).
C. Condemnation.
(i) If, at any time during the Lease Term, the entire Property
and/or Amphitheater is condemned or taken by any body having the power of
eminent domain, then the Lease shall automatically terminate on the date that
the condemning authority takes possession.
(ii) If there is a condemnation or taking of a portion of the
Property which does not result in an automatic termination of this Lease
pursuant to Subsection 10.C(i), and such condemnation or taking will result in a
substantial impairment of Tenant's use and enjoyment of the Property, at any
time up to the date upon which the condemning authority takes possession and for
one hundred eighty (180) days thereafter, Tenant shall have the right to
terminate the Lease by notice to Landlord; provided, however, that upon Tenant's
notice to Landlord of Tenant's intention to terminate the Lease, Landlord shall
have a period of sixty (60) days in which to propose to Tenant that Tenant and
Landlord amend the Lease to substitute other land for all or a portion of the
Land condemned, and to make such other amendments to the Lease as are necessary
or appropriate. If Landlord and Tenant agree to such amendments, all expenses of
same, including, without limitation, survey costs, transfer taxes, engineering
fees, and title insurance premiums, shall be borne equally by Landlord and
Tenant, and Landlord and Tenant shall each pay its own attorneys' fees. Further,
if one or
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more of the Leased Easements is taken and Tenant does not terminate the Lease,
Landlord agrees that, if Landlord owns property adjoining the Land or otherwise
is in a position to grant to or obtain for Tenant additional easements, Landlord
will cooperate with Tenant in a good faith effort to replace any of the Leased
Easements so taken, provided that (a) Tenant pays all expenses of same,
including, without limitation, survey costs, transfer taxes, engineering fees,
title insurance premiums and Landlord's attorney's fees, and (b) notwithstanding
any provision to the contrary in Subsection 10.C(iii) below, Landlord shall be
entitled to that portion of the total condemnation award allocable to the land
taken, and Tenant shall receive that portion of the total condemnation award
allocable to any Improvements thereon, including, without limitation, paving in
the case of a Leased Easement used as a road and utility lines in the case of a
Leased Easement used as a utility easement, as well as Tenant's leasehold
interest therein, and Tenant shall be entitled to expend all or such portion of
said award for the rebuilding of said road or the replacing of said utility
lines, with any remaining funds to be paid to Landlord.
(iii) If, following a condemnation or taking, the Lease Term is not
terminated, Tenant shall be entitled to any separate award for any loss of
Tenant's leasehold interest, and any consequential or severance damages suffered
by it. Subject to the foregoing, and whether or not the Lease is terminated, the
amount of any awards for any condemnation or taking of the Improvements shall be
divided between Landlord and Tenant using the formula set forth in Subsection
10.B(iii) above, and any awards for any condemnation or taking of the Land and
Tenant's leasehold estate therein shall be made separately to Landlord and
Tenant to provide each with just and adequate compensation for each of their
respective interests therein and such awards shall be made with reference to and
consideration of the termination of Tenant's interest in this Lease.
Section 11. MORTGAGES
A. Tenant's Right to Encumber. Tenant shall have the right from time to
time to encumber by Mortgage or Mortgages all or any portion of Tenant's rights
and interests hereunder including, without limitation, all or any portion of
Tenant's rights and interests in and to the Property. In all respects, however,
any Mortgagee's interests shall be subordinate, inferior, and junior to
Landlord's right, title, privileges, liens and interests as provided in this
Lease.
(i) The term "Mortgage" means any deed to secure debt, deed of
trust, mortgage, security agreement or other instrument in the nature thereof at
any time from time to time constituting a lien upon Tenant's interest in this
Lease and/or Property or Improvements and/or any portion of any of the foregoing
and/or any other rights of Tenant and which is recorded and appropriately
included in the Office of the Recorder of Deeds of Washington
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County, Pennsylvania.
(ii) "Mortgagee" means a holder of record or, collectively, the
holders of record of a Mortgage or Mortgages.
B. Mortgage Protection. Upon execution and recordation in the Office of
the Recorder of Deeds of Washington County, Pennsylvania, of any Mortgage,
notwithstanding anything to the contrary contained in this Lease, so long as
such recorded Mortgage is a lien on the interest of the Tenant created by this
Lease, Landlord and Tenant agree as follows:
(i) A "Registered Mortgagee" shall be defined as any Mortgagee which
(a) delivers or causes to be delivered to Landlord a notice setting forth the
address for notice purposes of such Mortgagee, (b) causes to be recorded, with
reference to its recorded Mortgage, a recorded Addendum, Notice or statement of
the Mortgagee, such information for notices being contained therein, (c) holds a
recorded Mortgage which is not satisfied, (d) consents in writing to Subsection
11.B(xi) hereof, and (e) has made a loan secured by the Mortgage in an amount
equal to $750,000.00 or more, unless said Mortgagee is a person or entity, other
than MCA Inc. or an Affiliate of MCA Inc., which owns more than fifty percent
(50%) of the voting or decision making power of Tenant, in which event such loan
must be in an amount equal to $2,000,000.00 or more. Any Registered Mortgagee
may change its address by notice to Landlord and by recording an Addendum to the
mortgage, Notice or statement (with or without the joinder of Tenant) containing
the new address. Landlord shall deliver to each Registered Mortgagee, in the
same manner as delivered to Tenant, a copy of any notice required under this
Lease at the time of giving such notice to Tenant. No termination of this Lease
or termination of Tenant's rights of possession of any portion of the Property
or reletting of any portion of the Property by Landlord predicated on the giving
of any notice to Tenant shall be effective as to any rights of any Registered
Mortgagee unless Landlord gives to that Registered Mortgagee notice (or a copy
of the notice to Tenant) as required by this Subsection 11.B(i).
(ii) If Tenant shall default under any of the provisions of this
Lease, each Registered Mortgagee will have the same concurrent grace periods as
are given Tenant for remedying such default or causing it to be remedied, plus,
in each case, an additional period of thirty (30) days after the expiration of
Tenant's period to cure, and such thirty (30) day period ("Cure Period") to cure
shall not start until Landlord has served a notice or a copy of a notice of
default upon such Registered Mortgagee.
(iii) If Tenant shall default under any of the provisions of this
Lease, each Registered Mortgagee, without prejudice to its rights against
Tenant, shall have the right to cure such default within the Cure. Period
whether the same consists of the failure to pay rent or the failure to perform
any other matter or thing which Tenant is hereby required to do or perform, and
Landlord shall accept such performance on the part of any Registered Mortgagee
as
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though the same had been done or performed by Tenant; for such purpose, Landlord
and Tenant hereby authorize any Registered Mortgagee to enter upon the Property
and to exercise any of the Tenant's rights and powers under this Lease,
including those set forth in Subsection 12.B(ii) below.
(iv) If Tenant shall default under any of the provisions of this
Lease, Landlord shall not terminate or take any action to effect a termination
of this Lease or reenter, take possession of or relet the Property or similarly
enforce performance of this Lease in any manner if, within the Cure Period, any
Registered Mortgagee either (i) cures such default; or (ii) if such default
cannot reasonably be cured within the Cure Period, promptly commences and then
proceeds with reasonable diligence to cure such default; or (iii) if physical
possession of the Property is required to cure such default, promptly commences
and then proceeds with reasonable diligence to acquire the interest of Tenant by
foreclosure or otherwise and thereafter performs all other obligations of Tenant
under this Lease. The provisions of the prior sentence shall apply only if any
Registered Mortgagee shall have fully cured any default in the payment of any
monetary obligation of Tenant within the Cure Period and shall continue to pay
currently such monetary obligations as and when the same are due. If a default
is such that it cannot be reasonably cured by a Registered Mortgagee without
possession of the Property, then Landlord shall not terminate or take any action
to effect a termination of this Lease or reenter, take possession of or relet
the Property, or similarly enforce performance of this Lease in any manner if,
within the Cure Period, any Registered Mortgagee shall promptly commence and
then proceed with reasonable diligence to acquire the interest of Tenant by
foreclosure or otherwise; provided, however, that the provisions of this
sentence shall apply only if any Registered Mortgagee shall have fully cured any
default in the payment of any monetary obligation of Tenant within the Cure
Period and shall continue to pay currently such monetary obligations as and when
the same are due and, after gaining possession of the Property, any such
Registered Mortgagee performs all other obligations of Tenant here-under as and
when the same are due and, subject to Subsection 11.D, agrees in writing to be
bound as Tenant under this Lease.
(v) If this Lease is terminated by Landlord on account of a default
by Tenant or if Tenant's interest under this Lease shall be sold, assigned or
transferred pursuant to the exercise of any remedy of any Registered Mortgagee,
or pursuant to judicial proceedings, and if (a) no rent or other charges shall
then be due and payable by Tenant under this Lease, and (b) any Registered
Mortgagee shall have cured any default of Tenant under this Lease of the type
capable of cure by any such Registered Mortgagee, then Landlord, within thirty
(30) days after receiving a request therefor, which shall be given within thirty
(30) days after such termination or transfer, will execute and deliver to any
Registered Mortgagee (if there is more than one Registered Mortgagee, the
Registered Mortgagee of the highest priority shall be entitled to
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such new Lease), its nominee or the purchaser at a foreclosure sale, or a
transferee in lieu thereof, a new Lease for the Property for the remainder of
the Lease Term of this Lease containing the same covenants, agreements, terms,
provisions and limitations contained herein. Any new Lease made pursuant to this
Subsection 11.B(v) shall have the same priority as this Lease. All liens,
charges or other consensual encumbrances on the interest of the Landlord in the
Property which are created by Landlord shall contain express provisions to the
effect that (1) such lien, charge or encumbrance shall be subject to such new
Lease to the same extent as such lien, charge or encumbrance was to this Lease,
and (2) the mortgagee or other beneficiary thereof shall, upon request, confirm
to Tenant and any Registered Mortgagee such status.
(vi) If any Registered Mortgagee is prohibited by any process or
injunction issued by any court or by reason of any action by any court having
jurisdiction of any bankruptcy or insolvency proceeding involving the Tenant or
the Property from commencing or prosecuting foreclosure or other appropriate
proceedings in the nature thereof, the Cure Period specified above for
commencing or prosecuting such foreclosure or other proceedings shall be
extended for the period of such prohibition; provided, however, that any
applicable Registered Mortgagee shall have fully cured any default of payment of
any monetary obligations of Tenant under this Lease and shall continue to pay
currently such monetary obligations as and when the same fall due and there are
no other uncured defaults, except as such Registered Mortgagee is reasonably
prohibited from or incapable of curing.
(vii) If a default under any Mortgage shall have occurred, Landlord
shall not object to any Registered Mortgagee exercising, with respect to the
Property, any right, power or remedy under the Mortgage which is not in conflict
with the provisions of this Lease.
(viii) This Lease may be assigned, without the consent of the
Landlord, to or by any Registered Mortgagee or its nominee, pursuant to
foreclosure or similar proceedings, or pursuant to the sale, assignment or other
transfer of this Lease in lieu thereof, or pursuant to the exercise of any other
right, power or remedy of any Registered Mortgagee. The Registered Mortgagee and
any assignee of this Lease, and any purchaser or transferee of the type
described above in this Subsection 11.B(viii), is herein referred to as a
"Mortgagee Party". No such assignment shall release Tenant.
(ix) No surrender by Tenant to Landlord of any interest in this
Lease (except a surrender upon expiration of the Lease Term) and no surrender by
Tenant of the Property or any part thereof, or any interest therein, and no
termination or rejection of this Lease by Tenant, shall be valid or effective,
and neither this Lease, nor any of the terms hereof, may be amended, modified,
changed, rejected or cancelled by Tenant without the prior written consent of
each Registered Mortgagee.
(x) Notwithstanding any provisions hereof to the contrary, if Tenant
exercises its right, as set forth in Subsection
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12.B(ii) below, to institute appropriate legal proceedings to dispute the
existence of a default, and should the Court determine that a default exists and
Tenant does not cure same, a Registered Mortgagee will have an additional period
of thirty (30) days to cure such default following such Court determination, as
set forth in Subsection 11.B(ii) above, but said Registered Mortgagee will not
have the right to again institute legal proceedings regarding the same default,
any such Registered Mortgagee being bound by the judgment of the Court.
(xi) Landlord, Tenant, and each Registered Mortgagee, as a condition
of becoming a Registered Mortgagee, hereby agree that all lawsuits hereunder
shall be filed in the Court of Common Pleas of Washington County, Pennsylvania
or, if the law permits, the Federal District Court for the District in which the
Property is located (said local or Federal court, as applicable, hereinafter
called the "Court"), and shall upon demand by any party submit to the Court any
document reasonably required by such adverse party to satisfy the Court
concerning its jurisdiction.
C. No Merger. There shall be no merger of this Lease nor of any interest
in this Lease nor of the interest created hereby with the interest of Landlord
or the fee estate of the Property by reason of the fact that this Lease or such
interest therein or such interest of Landlord may be directly or indirectly held
by or for the account of any person who shall hold directly or indirectly, in
whole or in part, the interest of Landlord or the fee estate in the Property, or
any interest in either such interest or estate.
D. Limitation on Personal Liability of Mortgagee Parties. Notwithstanding
the provisions of Section 14 below regarding assignment and subletting, no
Mortgagee Party shall be or become personally liable to Landlord as an assignee
of this Lease or otherwise unless it expressly assumes such liability by written
instrument, in which event the Mortgagee Party's liability shall be limited to
the period of time it is the owner of the interest created by this Lease, and no
assumption shall be inferred from or result from foreclosure or other
appropriate proceedings in the nature thereof or as the result of any other
action or remedy provided for by such Mortgage or other instrument or from a
conveyance from Tenant pursuant to which the purchaser at foreclosure or grantee
shall acquire the rights and interest of Tenant under the terms of this Lease;
provided that nothing in this Subsection 11.D shall be deemed to prevent
Landlord from exercising its remedies in accordance with Section 12 (as
qualified by this Section 11) if the obligations of Tenant under this Lease are
not subsequently performed as provided in this Lease. The provisions of this
Subsection 11.D shall apply notwithstanding that any Mortgage may provide for a
present assignment of Tenant's rights under this Lease to the Mortgagee.
E. Waiver of Landlord's Lien. Landlord hereby subordinates all right,
title and interest in and to any Landlord's lien,
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statutory or otherwise, upon the Tenant's personal property or fixtures and
arising by virtue of this Lease, to any bona fide Mortgage held by any
Registered Mortgagee.
F. Mortgagee Benefitted. The provisions of this Section 11 are for the
benefit of, and are to be enforceable by, any bona fide Registered Mortgagee.
Section 12. DEFAULT
A. Interest Conditional. The Tenant's interest created by this Lease is
granted on the condition that should any Event of Default occur and be
continuing, then Landlord may terminate this Lease and Tenant's interest as
provided in this Section 12.
B. Events of Default by Tenant. The following conditions and events shall
constitute "Events of Default" by Tenant for purposes of this Lease:
(i) Tenant fails to make or pay any rents, fees, taxes, charges or
other payments required hereunder when due to Landlord or others, within thirty
(30) days after receipt of written notice from Landlord of non-payment thereof;
(ii) Tenant fails to keep, perform and observe each and every
promise, covenant, warranty and condition set forth in this Lease on its part to
be kept, performed or observed for sixty (60) days after receipt of written
notice of such failure from Landlord, except where fulfillment of such
obligation requires activity over a period of time and Tenant has commenced to
perform whatever may be required within thirty (30) days after receipt of such
written notice from Landlord and continues such performances without
interruption, except for causes beyond its control. Notwithstanding the
foregoing, if Tenant, within forty-five (45) days after the receipt of such
written notice of default, shall in good faith dispute the existence of any such
default by both written notice to Landlord and shall also in good faith
institute appropriate legal proceedings in the Court, naming each Registered
Mortgagee as a party and requesting declaratory relief or another appropriate
remedy for the resolution of such dispute, then, so long as such proceedings
have not been finally determined and Tenant is diligently prosecuting same,
Landlord shall not have the right to terminate this Lease or exercise any other
remedy of Landlord hereunder on account of the alleged default; provided,
however, that the foregoing provisions of this Subsection 12.B(ii) shall not be
construed to preclude a Court of competent jurisdiction from entering temporary
orders or otherwise exercising its equitable powers to protect the interests of
the parties during the pendency of the above described proceedings. If it shall
be finally determined in such proceedings that Tenant is in default, then the
time within which Tenant shall have to remedy the same as set forth above shall
be computed from the date of such determination but Tenant and each Registered
Mortgagee shall have
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no further right under this Subsection 12.B(ii) to dispute such default. No such
dispute by Tenant or the filing or prosecution of any such proceedings shall
operate to relieve Tenant from or permit Tenant to defer the performance of any
of its obligations hereunder not specifically under dispute, and Tenant shall
not be relieved of any liability to Landlord for actual damages (including any
consequential damages to the extent Landlord promptly notifies Tenant of the
same as soon as Landlord could reasonably be expected to be aware that such
damages may occur) suffered by Landlord if Tenant contests the existence of the
Event of Default by appropriate proceedings as provided above but fails to
prevail in such proceedings. If the Court in which such proceedings have been
instituted determines that such proceedings have not been brought by Tenant in
good faith, such court shall make an award of damages therefor, including
attorney's fees, costs and all expenses.
(iii) The levy of any attachment or execution, or the appointment of
any receiver, or the execution of any other process of any court of competent
jurisdiction which is not vacated, dismissed or set aside within a period of
sixty (60) days from its inception and which interferes or may interfere with
Tenant's use of the Amphitheater or with Tenant's operations under this Lease.
(iv) Tenant becomes insolvent, or takes the benefit of any present
or future insolvency statute, or makes a general assignment for the benefit of
creditors, or files a voluntary petition in bankruptcy, or a petition or answer
seeking an arrangement for reorganization or for the readjustment of
indebtedness under the federal bankruptcy laws or under any other law or statute
of the United States, or of any state law, or consents to the appointment of a
receiver, trustee or liquidator for all or substantially all of its property
located within the Property.
(v) By order or decree of Court, Tenant is adjudged bankrupt, or an
order is made approving a petition filed by any of the creditors or stockholders
of Tenant seeking the reorganization or the readjustment of its indebtedness
under the federal bankruptcy laws, or under any law or statute of the United
States, or any state thereof.
(vi) A petition under any part of the federal bankruptcy laws or an
action under any present or future insolvency law or statute is filed against
Tenant and is not dismissed within one hundred twenty (120) days from the date
of filing.
(vii) By, pursuant to, or under authority of (a) any legislative
act, resolution or rule, or (b) any order or decree of any court, governmental
board, agency or officer having jurisdiction, a receiver, trustee or liquidator
takes possession or control of all or substantially all of the property of
Tenant, and such possession or control continues in effect for a period of sixty
(60) days from the date of such possession or control.
(viii) If a default under any Mortgage shall have occurred, Tenant
shall not object to any Registered Mortgagee exercising, with respect to the
Property, any right, power, or remedy under the Mortgage which is not in
conflict with the
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provisions of this Lease.
C. Remedies of Landlord. Upon the occurrence of any Event of Default by
Tenant, and, subject to the provisions of Subsection 12.B(ii) hereinabove, the
continuance of same beyond the applicable notice period, Landlord shall have the
option to pursue any one or more of the following remedies, in addition to any
remedy provided by law, provided Tenant has been given the proper notice as
required in Section 12.B above:
(i) Terminate this Lease, in which event Tenant shall immediately
surrender the Property to Landlord. Tenant shall pay to Landlord on demand the
amount of all rent due and owing to Landlord for the period prior to such
termination and all damage and loss Landlord may suffer by reason of such
termination.
(ii) Enter upon and take possession of the Property without
terminating this Lease. Landlord may relet the Property and receive the rent
therefor. Tenant agrees to pay to Landlord any deficiency that may arise.
Landlord's reasonable expenses, including any brokerage commission, attorney's
fees, remodeling expenses and other reasonable costs of reletting, shall be
subtracted from the amount of rent received under such reletting.
(iii) Enter upon the Property without terminating this Lease, and
perform Tenant's obligations under the terms of this Lease. Tenant agrees to pay
Landlord for expenses which Landlord may incur in thus effecting compliance with
Tenant's obligations under this Lease. Landlord shall not be liable for any
damages resulting to the Tenant from such action.
(iv) Declare due and owing all Rent due or to become due under this
Lease. Such acceleration shall include all Minimum Rent, all Fixed Rent, and all
Additional Rent. Additional Rent may be estimated by Landlord. No future
Percentage Rent is to be included. However, all Percentage Rents after suit and
prior to the entry of judgment hereunder shall be included to the extent that it
increases the amount due hereunder.
(v) Bring an action against Tenant for specific performance of
Tenant's obligations under this Lease.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided by law or
in equity so long as same are not inconsistent with the provisions of this
Lease. All of Landlord's rights hereunder may be exercised concurrently or
consecutively at Landlord's option. However, Landlord, in exercising its rights
as set forth above, shall be required to reasonably mitigate its damages in
accordance with the laws of the Commonwealth of Pennsylvania.
D. Events of Default by Landlord. The following conditions and events
shall constitute "Events of Default" by Landlord for purpose of this Lease:
(i) Landlord fails to keep, perform and observe each and
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every promise, covenant, warranty and condition set forth in this Lease on its
part to be kept, performed or observed for sixty (60) days after receipt of
written notice of such failure from Tenant, except where fulfillment of such
obligation requires activity over a period of time and Landlord has commenced to
perform whatever may be required within thirty (30) days after receipt of such
written notice from Tenant and continues such performance without interruption,
except for causes beyond its control. Notwithstanding the foregoing, if
Landlord, within forty-five (45) days after the receipt of such written notice
of default, shall in good faith dispute the existence of any such default by
both written notice to Tenant and shall also in good faith institute appropriate
legal proceedings in the Court, and request declaratory relief or another
appropriate remedy for the resolution of such dispute, then, so long as such
proceedings have not been finally determined and Landlord is diligently
prosecuting same, Tenant shall not have the right to terminate this Lease or
exercise any other remedy of Tenant hereunder on account of the alleged default;
provided, however, that the foregoing provisions of this Subsection 12.D(i)
shall not be construed to preclude a Court of competent jurisdiction from
entering temporary orders or otherwise exercising its equitable powers to
protect the interests of the parties during the pendency of the above described
proceedings. If it shall be finally determined in such proceedings that Landlord
is in default, then the time within which Landlord shall have to remedy the same
as set forth above shall be computed from the date of such determination but
Landlord shall have no further right under this Subsection 12.D(i) to dispute
such default. No such dispute by Landlord or the filing or prosecution of any
such proceedings shall operate to relieve Landlord from or permit Landlord to
defer the performance of any of its obligations hereunder not specifically under
dispute, and Landlord shall not be relieved of any liability to Tenant for
actual damages (including any consequential damages to the extent Tenant
promptly notifies Landlord of the same as soon as Tenant could reasonably be
expected to be aware that such damages may occur) suffered by Tenant if Landlord
contests the existence of the Event of Default by appropriate proceedings as
provided above but fails to prevail in such proceedings. If the Court in which
such proceedings have been instituted determines that such proceedings have not
been brought by Landlord in good faith, such court shall make an award of
damages there for, including attorney's fees, costs, and all expenses.
Notwithstanding any other provision contained in this Lease, if the nature of
Landlord's default is such that the failure to immediately cure same would
result in Tenant being unable to utilize the Property for the operation of the
Amphitheater and related facilities, then Tenant shall have the right, at
Tenant's option and with prior notice to Landlord, to immediately cure said
default on Landlord's behalf, and Landlord shall reimburse to Tenant any
expenses reasonably incurred by Tenant after Landlord's default within fifteen
(15) days after Landlord's receipt of a statement from Tenant setting forth such
expenses.
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(ii) The levy of any attachment or execution, or the appointment of
any receiver, or the execution of any other process of any court of competent
jurisdiction which is not vacated, dismissed, or set aside within a period of
sixty (60) days from its inception and which interferes or may interfere with
Landlord's ability to perform its obligations under this Lease.
(iii) Landlord becomes insolvent, or takes the benefit of any
present or future insolvency statute, or makes a general assignment for the
benefit of creditors, or files a voluntary petition in bankruptcy, or a petition
or answer seeking an arrangement for reorganization or for the readjustment of
indebtedness under the federal bankruptcy laws or under any other law or statute
of the United States, or of any state law, or consents to the appointment of a
receiver, trustee or liquidator for all or substantially all of its property.
(iv) By order or decree of Court, Landlord is adjudged bankrupt, or
an order is made approving a petition filed by any of the creditors or
stockholders of Landlord seeking the reorganization or the readjustment of its
indebtedness under the federal bankruptcy laws, or under any law or statute of
the United States, or any state thereof.
(v) A petition under any part of the federal bankruptcy laws or an
action under any present or future insolvency law or statute is filed against
Landlord and is not dismissed within one hundred twenty (120) days from the date
of filing.
(vi) By, pursuant to, or under authority of (a) any legislative act,
resolution or rule, or (b) any order or decree of any court, governmental board,
agency or officer having jurisdiction, a receiver, trustee or liquidator takes
possession or control of all or substantially all of the property of Landlord,
and such possession or control continues in effect for a period of sixty (60)
days from the date of such possession or control.
(vii) Landlord fails to timely pay all state corporate and federal
income taxes, and any and all other taxes, assessments, or impositions of any
kind whatsoever, assessed or imposed against, and becoming due and payable by
Landlord to any federal, state or local governmental entity or agency or
division thereof, to the extent that such obligation constitutes a lien on any
or all of the Property.
E. Remedies of Tenant. Upon the occurrence of any Event of Default by
Landlord, and, subject to the provisions of Subsection 12.D(i) hereinabove, the
continuance of same beyond the applicable notice period, Tenant shall have the
option to pursue any one or more of the following remedies, in addition to any
remedy provided by law or in equity, provided Landlord has been given the proper
notice as required by Subsection 12.D above:
(i) Terminate this Lease, preserving Tenant's rights to pursue any
and all remedies provided by law or in equity, including, but not limited to,
actions for damages or mandamus, and claims for reliance damages, such as lost
revenues, by reason
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of the default by Landlord hereunder, in which event Tenant shall immediately
surrender the Property to Landlord, and all of Tenant's obligations under this
Lease, including the obligation to pay rent, shall terminate. Landlord shall pay
to Tenant on demand the amount of all loss and damage which Tenant may suffer by
reason of such termination.
(ii) Perform the Landlord's obligations under this Lease which were
not performed by Landlord, in which event Landlord shall reimburse Tenant for
any and all charges incurred by Tenant as the result of Tenant's performance of
Landlord's obligations within thirty (30) days after Landlord's receipt of a
statement and/or invoice from Tenant setting forth the type and amounts of such
charges.
(iii) Bring an action against Landlord for specific performance by
Landlord of its obligations under this Lease.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any
other remedies herein provided or any other remedies provided by law or in
equity so long as same are not inconsistent with the provisions of this Lease.
All of Tenant's rights hereunder may be exercised concurrently or consecutively
at Tenant's option.
Section 13. TENANT FIRST REFUSAL AND CONSULTATION RIGHTS
A. Tenant's Right. During the Lease Term, Tenant shall have the right of
first refusal to purchase the Property.
B. Procedure. Before accepting a bona fide offer with respect to any
transaction which would result in the sale or transfer to a third party of an
interest of Landlord in the Property, except for coal, mining rights, oil, gas,
or drilling rights, or a transfer of the stock of Landlord which would result in
a transfer of control of Landlord to another person or entity (it being agreed
that a transfer of stock of an Affiliate of Landlord is not intended to be
covered by the provisions of this Subsection 13.B), Landlord shall first notify
Tenant of the offer and forward to Tenant either (i) a copy of said offer, which
offer shall include all terms of the proposed sale or transfer, or (ii) an
outline of the important terms of such proposed sale or transfer, including the
identity of the purchaser or transferee and such party's representation and
warranty (for Tenant's reliance as well as Landlord's reliance) that such
purchaser or transferee is not acting on behalf of any other party and does not
intend to immediately resell the Property, or for whom such purchaser or
transferee is acting or to whom such purchaser or transferee intends to resell
the Property, the purchase price, terms of seller financing, if applicable,
allocation or proration of closing costs or expenses, time periods, and any
unusual terms. Landlord and Tenant each agree to hold in confidence all such
information furnished by any proposed purchaser or transferee. Tenant shall have
thirty (30) days following receipt of such written notification within which to
elect to acquire the interest in the
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Property which is the subject of the transaction upon the same terms and
conditions (or upon any alternative terms and conditions, if any agreed to by
Landlord and Tenant) specified in the Landlord's notice. Notwithstanding any
other provision herein contained, Landlord and Tenant hereby agree that, in the
event any offer received by Landlord covers not only the Property but also an
interest in all or any portion of the Landlord's Lands or any other property, it
shall not be a condition to Tenant's right to acquire the Landlord's interest in
the Property that Tenant also acquire a portion of Landlord's Lands or any other
property that is also subject to the offer, but rather, Tenant shall be required
to acquire only Landlord's interest in the Property upon the same terms and
conditions (equitably prorated as to the Property) as are contained in any offer
to be accepted by Landlord. Landlord and Tenant further expressly agree that, in
the event any offer received by Landlord provides for non-cash consideration to
be paid to Landlord which Tenant is unable to furnish (such as a specific tract
of land to be exchanged for the Property), Tenant shall be entitled to offer
cash in lieu of such substitute consideration, in an amount equal to the fair
market value of such non-cash consideration. Upon Tenant's election to so
acquire the interest in the Property, Tenant shall have the right to designate
any one (1) or more of Tenant's Affiliates (hereinafter defined) to take title
to the interest being acquired. If Tenant does not so notify Landlord of
Tenant's election to purchase the interest in the Property, Landlord shall be
free to complete the transaction with the third party specified in the Notice
upon the terms as specified in Landlord's Notice, or upon terms and conditions
which are more favorable, as a whole, to Landlord than such terms and
conditions, as a whole, which were specified in the notice to Tenant; provided,
however, that if such transaction does not close within nine (9) months from the
date upon which Landlord gives notice to Tenant of such transaction, the same
notice procedure shall again be required prior to Landlord's conveyance of any
interest in the Property. Further, Tenant expressly agrees that Landlord shall
not be obligated to send another notice to Tenant each time, in the course of
negotiations with a prospective purchaser or transferee, minor changes in the
terms of the transaction are agreed upon which were not included in Landlord's
notice to Tenant, so long as the terms of the final transaction are
substantially the same as, or are more favorable, as a whole, to Landlord, as
the terms and conditions as set forth in Landlord's notice to Tenant. Tenant's
unwillingness or inability to exercise its right of first refusal as to any
particular transaction shall not constitute a waiver of Tenant's right of first
refusal for any subsequent transactions affecting the Property, and Tenant shall
continue to have such right regardless of the number of successive transactions
which occur as to which Tenant does not exercise its right. The parties
expressly reserve all remedies, judicial or otherwise, if a dispute should arise
concerning whether the terms and conditions of any transaction with any third
party under this Subsection 13.B are, in fact, substantially the same as or more
favorable to Landlord
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than those specified in any notice to Tenant. In the event Tenant elects not to
exercise its right of first refusal as to any particular transaction, the terms
and provisions of this Lease shall nevertheless remain in full force and effect,
and any purchaser or transferee of an interest in the Property shall, as a
condition to said purchase or transfer, be notified by Landlord of the existence
and enforceability of this Lease.
Section 14. TENANT CONCESSIONS, SUBLETTING AND ASSIGNMENT
A. Concessions, Subletting and Assignments. Tenant shall have the
unrestricted right at any time to grant concessions and/or to sublease all or
any portion of the Property and/or to assign this Lease to any party, provided
that Tenant (i) so notifies Landlord, and (ii) shall not be relieved of any
obligation under this Lease.
B. Other Assignments by Tenant.
(i) This Lease may be assigned by Tenant, upon thirty (30) days'
prior written notice to Landlord, to an assignee ("Assignee") (a) whose net
worth (exclusive of the value of this Lease) is at least $2,500,000.00, (b) who
has the expertise to carry out all of Tenant's obligations hereunder, and (c)
who accepts all the terms and conditions of this Lease and assumes all of
Tenant's duties, covenants and obligations under this Lease (such acceptance and
assumption to be expressly stated in the assignment, the notice to Landlord or
other written instrument signed by the Assignee).
(ii) In the event that the Lease is so assigned to an Assignee who
qualifies in accordance with Subsection 14.B(i) above, then Tenant's obligations
to fulfill all duties and obligations hereunder shall cease, and the Assignee's
obligations shall commence, as of the effective date of such assignment;
provided, however, that Tenant shall not be relieved from any obligations,
duties or liabilities which have accrued hereunder prior to the date of such
assignment; and provided further that, for a period of three (3) months
following the effective date of such assignment, the Assignee shall be liable
for all obligations of Tenant under this Lease. If Landlord intends to hold the
Assignee liable for any pre-assignment default, Landlord agrees to so notify
Tenant and Assignee, specifying in detail the claimed pre-assignment default.
(iii) The written notice to Landlord described above shall be
accompanied by audited financial statements of the Assignee, prepared in
accordance with generally accepted accounting principles, containing the
certification of the certified public accountant, given in accordance with the
then current standards of the American Institute of Certified Public
Accountants, and certified by the Assignee as accurate, complete, correct and
having been prepared in accordance with generally accepted accounting
principles.
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(iv) The delivery of the written notice to Landlord described above
also shall be the agreement by the Assignee that the Assignee (a) shall be bound
by all of the terms of this Lease, and (b) has the necessary expertise as
required by Subsection 14.B(i) above.
Section 15. LANDLORD'S REPRESENTATIONS, WARRANTIES AND COVENANTS
A. Organization. Landlord hereby represents and warrants to Tenant that it
is a corporation duly organized under the laws of the Commonwealth of
Pennsylvania, that it has full corporate power and authority to enter into this
Lease and to engage in the transactions contemplated hereby, and that the
joinder, consent or approval of no other person or entity is required to
properly consummate the transactions herein contemplated.
B. Warranty of Title. Landlord hereby represents and warrants to Tenant
that, as of the Effective Date hereof, the Landlord has good and indefeasible
fee simple title in and to the Landlord's Lands, subject to the matters set
forth in Exhibit "E", and that this Lease has priority over any and all liens
against Landlord's Lands. Landlord agrees to cause the holder of any lien
against Landlord's Lands to release such lien or to execute a subordination
agreement, in form reasonably satisfactory to Tenant, for the benefit of Tenant,
subordinating such lien to this Lease. Landlord shall have the right to encumber
the Land or any portion thereof, so long as the interest of any such lienholder
remains subordinate to this Lease.
C. Binding Obligation. Landlord hereby represents and warrants that this
Lease is a valid obligation of the Landlord and is binding upon the Landlord in
accordance with the terms hereof.
D. Landlord's Work. Landlord represents and warrants that it has the
capability to fulfill its obligations relative to the Landlord's Work pursuant
to the terms of this Lease and that Landlord will be able to fulfill such
obligations in a timely manner and without delay to the construction of the
Amphitheater.
E. Hazardous Wastes.
(i) Landlord represents and warrants that, to the best of its
knowledge, the Property is not currently in violation of or subject to any
investigation by any governmental authority under any applicable laws, rules
and/or regulations pertaining to health or to the environment and, further,
represents and warrants that, to the best of its knowledge, no hazardous wastes
have been disposed of or otherwise released on, to or under the Property and
Landlord shall not dispose of or otherwise release on, to or under the Property
subsequent to the signing of this Lease any such hazardous wastes. For purposes
of this Subsection 15.E, "hazardous wastes" shall be defined to be those
substances listed in
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Identification and Listing of Hazardous Wastes, 40 C.F.R. ss.ss.261.30, 261.31,
261.32 and 261.33 (1987), as amended ("Federal Statute"), as of the date of this
Lease.
(ii) If any such hazardous wastes have been disposed of or otherwise
released on, to or under the Property prior to the Effective Date hereof, then
Landlord hereby agrees that Tenant shall not be liable to Landlord or Landlord's
employees, agents, subagents, contractors or any other person whatsoever, and
Landlord will indemnify, defend and hold harmless Tenant of and from all fines,
suits, claims, demands, losses and actions (including any and all attorneys'
fees) for any injury to persons or damage to or loss of property on or about the
Property arising in connection with any condition of the Property existing prior
to the Effective Date of this Lease, which violates any laws, ordinances, rules
and regulations of any governmental entities, as same currently exist, which in
any way affect the Property, resulting from any hazardous wastes which have been
disposed of or otherwise released on, to or under the Property, and Landlord
shall comply with any of said laws, ordinances, rules and regulations requiring
the remedy of any such pre-existing condition.
(iii) If any substance has been disposed of or otherwise released
on, to or under the Property prior to the Effective Date hereof which, as of the
Effective Date of this Lease, is not included in the Federal Statute, but which
is subsequently included in the Federal Statute (or if, during the ten (10) year
period following the Effective Date hereof, the federal laws are amended such
that an equivalent list of hazardous wastes is no longer contained therein, but
is set forth in another federal statute or regulation, then reference to
"Federal Statute" shall mean such other federal statute or regulation), but only
for a period of ten (10) years from the Effective Date of this Lease, Landlord
hereby agrees that Tenant shall not be liable to Landlord or Landlord's
employees, agents, subagents, contractors or any other person whatsoever, and
Landlord will indemnify, defend and hold harmless Tenant of and from all fines,
suits, claims, demands, losses and actions (including any and all attorneys'
fees) for any injury to persons or damage to or loss of property on or about the
Property arising in connection with any condition of the Property existing prior
to the Effective Date of this Lease, which violates any laws, ordinances, rules
and regulations of any governmental entities, as same currently exist, which in
any way affect the Property, resulting from any such hazardous wastes which have
been disposed of or otherwise released on, to or under the Property, and
Landlord shall comply with any of said laws, ordinances, rules and regulations
requiring the remedy of any such pre-existing condition.
(iv) After the expiration of such ten (10) year period, if any
substance not included in the Federal Statute is determined to have been
disposed of or otherwise released on, to or under the Property prior to the
Effective Date hereof, and the presence of such substance shall cause Tenant to
be unable to utilize the Property for Tenant's intended purposes, Tenant may
notify Landlord
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of such condition. If Landlord is unable or unwilling to remedy such condition
within sixty (60) days of such notice, Tenant shall be entitled to terminate
this Lease upon thirty (30) days' prior written notice to Landlord.
Section 16. TENANT'S REPRESENTATIONS, WARRANTIES AND COVENANTS
A. Organization. Tenant hereby represents and warrants to Landlord that it
is a corporation duly authorized under the laws of the State of Delaware, that
it has full corporate power and authority to enter into this Lease and to engage
in the transactions contemplated hereby, and that the joinder, consent or
approval of no other person or entity is required to properly consummate the
transactions herein contemplated.
B. Binding Obligation. Tenant represents and warrants that this Lease is a
valid obligation of the Tenant and is binding upon the Tenant in accordance with
the terms hereof.
C. Pittsburgh Symphony. During the first two (2) years of the Lease Term,
Tenant shall use its reasonable efforts to obtain performances of the Pittsburgh
Symphony at the Amphitheater, provided that Tenant shall have no obligation to
expend any sums of money whatsoever in its efforts to obtain such performances.
D. Tenant's Improvements. Tenant represents and warrants that it has the
capability to fulfill its obligations relative to the Amphitheater pursuant to
the terms of this Lease and that it will be able to fulfill such obligations in
a timely manner and without delay to the construction of the Amphitheater and
other Improvements.
E. Taxes and Assessments. During the Lease Term, Tenant shall timely pay
all state, corporate and federal income taxes, and any and all other taxes,
assessments or impositions of any kind whatsoever, assessed or imposed against
and becoming due and payable by Tenant to any federal, state or local
governmental entity, or any agency or division thereof.
F. Repairs. Tenant shall make, at Tenant's expense, all reasonably
necessary repairs to the Property.
G. Waste and Nuisance. Tenant will not commit any waste on the Property.
Tenant will not allow any nuisance to exist on the Property; provided, however,
that Landlord agrees that, for purposes of this Lease, so long as Tenant is not
violating the provisions of Subsection 2.A regarding use of the Property, and is
conducting its business as is customarily done by other parties conducting
similar operations, Tenant shall not be in default under this Subsection 16.G.
Further, if any third party makes any claims against Tenant alleging a nuisance
or similar cause of action, regardless of the outcome of any such proceedings,
Tenant shall not
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be in default under this Subsection 16.G unless Tenant is deliberately violating
an injunction issued by a court of appropriate jurisdiction; provided, however,
that, if a governmental body or agency makes any claims against Tenant alleging
a nuisance or similar cause of action, so long as Tenant is contesting or
appealing in good faith any governmental order or judgment of a Court, Tenant
shall not be in default under this Subsection 16.G, but once a final
determination or non-appealable judgment is rendered against Tenant, Tenant
agrees it will comply with the terms thereof.
H. Zoning. Tenant, at Tenant's expense, will comply with all zoning and
changes in zoning during the Lease Term.
I. Hazardous Material. To the extent prohibited by law, Tenant shall not
permit any hazardous materials or wastes to be deposited upon the Land or
released onto, on, or under the Land.
Section 17. CESSATION OF OPERATIONS
Tenant shall have the absolute right at any time during the Lease Term to
cease operations of any kind, so long as Tenant shall continue to pay to
Landlord the full amount of the Minimum Rent due to Landlord in accordance with
Subsection 3.A of this Lease, together with all Additional Rent, Fixed Rent, and
other sums becoming due to Landlord hereunder, and further provided that Tenant
otherwise complies with all the terms and provisions of this Lease.
Section 18. MISCELLANEOUS
A. Waiver. The waiver by either party of any breach of any term, covenant
or condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or of any other term,
covenant or condition herein contained.
B. No Benefits to Others. This Lease does not confer any rights or
benefits upon any person or entity other than Landlord and Tenant and, to the
extent consistent with this Lease, their respective successors and assigns.
There are no third party beneficiaries.
C. Entire Agreement. This Lease sets forth all the covenants, promises,
agreements, conditions and understandings between Landlord and Tenant, oral or
written, relating to the subject matter of this Lease. Neither party has made
any representations or promises not expressly contained in this Lease. No
subsequent alterations, amendments, changes or additions to this Lease shall be
binding upon Landlord and Tenant unless reduced to writing and signed by each
party.
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D. Force Majeure. If either party hereto shall be delayed or hindered in
or prevented from the performance of any act required hereunder by reason of
unavoidable delays caused by fire, catastrophe, acts of God, strikes, lockouts,
labor troubles, inability to procure materials, failure of power, restrictive
governmental laws or regulations, riots, insurrection, civil commotion, war or
other reason of a like nature not the fault of the party delayed in performing
work or doing acts required under the terms of this Lease, then performance of
such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent to the
period of such delay.
Neither party shall in any event be liable in damages or otherwise, nor
shall the other party be released from any obligations hereunder because of the
interruption of any service, or a termination, or disturbance (except to the
extent, if any, expressly provided elsewhere in this Lease) attributable to
strike, lockout, breakdown, accident, war, or other emergency, order or
regulation of or by any governmental authority, failure of supply, inability to
obtain supplies, parts or employees, or any cause beyond such party's reasonable
control.
The provisions of this Subsection shall not operate to excuse Tenant from
the prompt payment of rents, or from any other payments required from either
party to the other by the terms of this Lease.
E. Notices; Approvals and Consents.
(i) All notices required or permitted to be given under this Lease
shall be in writing and shall be delivered in person, by courier service, or by
certified or registered mail, postage prepaid, return receipt requested, to the
parties at the addresses set forth hereinbelow or such other address as either
party may from time to time designate in writing to the other.
The current addresses for notices are as follows:
If to Landlord: Crossroads Properties, Incorporated
c/o Starvaggi Industries, Incorporated
401 Pennsylvania Avenue
Weirton, West Virginia 26062
Attention: G. Michael Wehr
With a copy to: McCreight, Marriner & Crumrine
800 Washington Trust Building
Washington, Pennsylvania 15301
Attn: Stephen D. Marriner, Jr.
If to Tenant: Pace Entertainment Group, Inc.
515 Post Oak Boulevard
Suite 300
Houston, Texas 77027
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Attn: Brian E. Becker
With a copy to: Strassburger McKenna Gutnick & Potter
322 Boulevard of the Allies, Suite 700
Pittsburgh, Pennsylvania 15222
Attention: H. Yale Gutnick
(ii) All notices, demands and requests shall be deemed effective
when received or, if rejected, on the date of rejection thereof.
(iii) All approvals and consents given by any party pursuant to this
Lease shall be in writing and neither party shall rely upon an approval or
consent given by the other party which is not in writing. No party shall
unreasonably delay acting upon a request by the other party for an approval or
consent called for by this Lease.
(iv) Tenant shall be entitled to designate two (2) additional
parties to whom notices shall be sent, such designation to be made in accordance
with this Subsection 18.E.
F. Captions and Section Numbers.
(i) The captions and section numbers appearing in this Lease are
inserted only as a matter of convenience and, in no way, define, limit, construe
or describe the scope or intent of any section nor in any way affect this Lease.
(ii) Reference to section numbers are references to sections within
this Lease.
G. Construction of Language. The language in all parts of this Lease shall
be construed simply, according to its fair meaning, and not strictly for or
against either Landlord or Tenant, regardless of which party initiated or
drafted particular language of this Lease. This Lease was negotiated between
parties of equal bargaining power.
When the singular or plural number or masculine, feminine or neuter
gender is used in this Lease, it shall equally apply to, extend to, and include
the other.
H. Broker's Commission. Tenant shall be responsible for the payment of any
brokerage commission becoming due and owing to Gold & Company, Inc. ("Gold")
pursuant to that certain Commission Agreement by and between Tenant and Gold,
arising out of or as a result of this Lease. Except for Tenant's agreement with
Gold, both Landlord and Tenant each warrant that it has employed no broker or
finder in connection with this transaction. However, if claims for brokerage
commission or finders fees are asserted, each party will initially bear its own
costs and indemnify the other against and hold it harmless from any and all
claims or liabilities for such fees and/or commissions (including, without
limitation, the cost of attorney's fees in connection therewith) resulting from
the acts of such indemnitor in causing such commission, fee or
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claim.
I. Interest. Interest, except as otherwise provided herein, shall accrue
on any sums owed by either party to the other, starting from the first date of
delinquency and continuing until the full amount including interest is paid, at
four percent (4%) per annum plus the announced prime rate of Pittsburgh National
Bank, which announced prime rate changes from time to time ("Penalty Rate").
J. Persons Indemnified. All agreements by either Tenant or Landlord to
indemnify or hold the other harmless contained in this Lease shall inure to the
benefit not only of the respective indemnitee but also to its Affiliates and, if
a party is a partnership, to the benefit of such party's partners, and to the
directors, officers, shareholders, employees and agents of any of the foregoing.
K. Governing Law. This Lease and all provisions hereof, irrespective of
the place of execution or performance, shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania applicable to
agreements which are executed by all parties and are performed or performable
wholly in Pennsylvania.
L. Venue. Any action brought by any party to enforce or interpret this
Lease shall be brought in the Court of Common Pleas of Washington County,
Pennsylvania or, if the law permits, the Federal District Court for the District
in which the Property is located.
M. Rights Are Cumulative. The rights and remedies conferred upon either
party in this Lease and by law or in equity are cumulative, unless and only to
the extent inconsistent with the provisions of this Lease.
N. Saving Clause. If any provision of this Lease shall be held to be
invalid or unenforceable to any extent, the same shall not affect in any respect
whatsoever the validity or enforceability of the other provisions of this Lease.
O. Attorney's Fees. If, on account of any breach or default by Landlord or
Tenant of their respective obligations under this Lease, it shall become
necessary for the other to employ an attorney to enforce or defend any of its
rights or remedies hereunder, then, in any action brought to enforce said rights
or remedies, the prevailing party in any such action, on trial or appeal, shall
be entitled to reasonable attorney's fees to be paid by the losing party as
fixed by the Court.
P. Injunctive Relief. In the event of a breach or threatened breach by
either party of any of the covenants or
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provisions of this Lease, the other party shall, in addition to any remedies
expressly mentioned in this Lease, have the right to request injunctive relief
and the right to invoke any remedy allowed at law or in equity. More
particularly, Landlord and Tenant hereby agree that, upon an Event of Default
hereunder by Landlord or Tenant, the damages incurred by Landlord or Tenant
shall be difficult to ascertain, and, in light of the difficulty of ascertaining
such damages, injunctive relief, including the remedy of specific performance,
shall be available to Tenant against Landlord and Landlord against Tenant.
Q. "Affiliate" Defined. The term "Affiliate" means any person or entity
which, directly or indirectly, is controlled by, is in control of, or is under
common control with, the person or entity with reference to which the term
"Affiliate" is used. Ownership of fifty percent (50%) or more of the voting or
decision making power with respect to any person or entity shall be deemed
control, although ownership of less than fifty percent (50%) shall not
necessarily negate control.
R. Estoppel Certificate. Landlord and Tenant agree, at any time and from
time to time upon not less than ten (10) days prior request by the other, that
Landlord and Tenant, respectively, will execute, acknowledge and deliver to the
other an estoppel certificate in writing certifying (i) that this Lease (in the
form attached to the certificate) is unmodified and in full force and effect or,
if there have been modifications, that this Lease is in full force and effect as
modified and identifying the modifications, (ii) the date to which the
Percentage Rent and other charges have been paid, and (iii) that, so far as the
certifying party knows, there is not an uncured Event of Default or act or
omission which, with the passage of time, will ripen into an Event of Default,
other than any specified in the certificate. The party requesting the estoppel
certificate may accompany its request with a proposed certificate to be executed
by the other party. Estoppel certificates may be relied upon by any person or
entity proposing to acquire Landlord's or Tenant's interest hereunder, or any
portion thereof or interest therein, as the case may be, and by any mortgagee or
encumbrancer or prospective mortgagee or encumbrancer (or any assignee thereof)
now or hereafter having any present or prospective interest in the right, title
or interest of Landlord or of Tenant.
S. Confidentiality. Landlord and Tenant will not use for its own benefit
and will hold in confidence all information which it learns from the other and
from any of the other's officers, agents, licensees, employees and
concessionaires, which information is not clearly of a public nature.
T. Lease Intended. The parties hereto intend this instrument to be
construed as a lease and the fact that Landlord is paid in part by a percentage
of Gross Receipts shall not
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establish between Landlord and Tenant a partnership or joint venture
relationship. The Tenant has been given exclusive use of the Property and
Landlord has reserved no rights to direct Tenant's "day to day" operations.
Section 19. NON-DISCRIMINATION
Neither Tenant nor any person or entity under Tenant's control will
discriminate against any customer, employee, or applicant for employment because
of race, color, religion, sex or national origin.
Section 20. SUCCESSORS AND ASSIGNS
This Agreement is binding upon and, subject to the other provisions of
this Lease, inures to the benefit of the successors and assigns of the
respective parties.
Section 21. RECORDING OF LEASE
Each party shall, upon request of the other party, execute and deliver a
Memorandum of Lease in substantially the form of Exhibit "G" attached hereto, to
be recorded in accordance with the laws and customs of the Commonwealth of
Pennsylvania.
Section 22. MULTIPLE COUNTERPARTS
This Lease may be executed by the parties hereto in multiple counterparts,
each of which shall be deemed an original and all of which shall together
constitute the same document. For convenience, each party may execute a separate
signature page and it is agreed that all of such pages may be collated together
with the body hereof to form the signature pages for this Lease.
Section 23. LETTER OF CREDIT OR GUARANTY
A. Letter of Credit. On or before the day on which Tenant requests that
Landlord commence performance of Landlord's Work, as set forth in Section 5
hereof, Tenant shall deliver to Landlord a letter of credit in the amount of
$800,000.00 ("Letter of Credit"), in substantially the form of Exhibit "H"
attached hereto, which shall be drawn upon a bank insured by the Federal Deposit
Insurance Corporation ("Issuer"). The right of Landlord to make draws against
the Letter of Credit shall be conditioned upon presentment by Landlord of the
original Letter of Credit, accompanied by Landlord's certification either (i)
stating (a) that Tenant is in default in the payment of Fixed Rent under this
Lease, and (b) the amount of Fixed Rent past due and payable, such certification
to be substantially in the form of Exhibit "I" attached hereto, or (ii) stating
that a substitute letter of credit has not been furnished to Landlord at least
five (5) business days prior to the expiration of the Letter of Credit, as
provided below. If less
45
<PAGE>
than the full $800,000.00 shall be payable, Landlord shall be entitled only to
make a partial draw, in the amount of said past due Fixed Rent, and Landlord's
reasonable expenses, not to exceed $500.00. The term of the Letter of Credit may
be for the number of years or months of the period remaining during which Fixed
Rent shall be payable, or, at Tenant's option, the term may be for a lesser
period (such as one (1) year), so long as the Letter of Credit expressly states
either that (1) same shall be automatically renewed for periods which, from the
date of its issuance, will equal the remaining period during which Fixed Rent
shall be payable, or (2) Landlord may present the Letter of Credit if a
substitute letter of credit (in the amount of the Fixed Rent remaining unpaid)
is not furnished to Landlord at least five (5) business days prior to the
expiration date of the Letter of Credit. It is further agreed that, if Landlord
receives notice from the Issuer that the Issuer will not renew the Letter of
Credit, and there remains unpaid Fixed Rent, Landlord may present the Letter of
Credit if Tenant does not furnish a substitute letter of credit (in the amount
of the Fixed Rent remaining unpaid) at least five (5) business days prior to its
expiration. The Letter of Credit additionally shall provide that the amount
thereof shall automatically reduce by a sum equal to the amount of Fixed Rent
previously paid in accordance with the terms of this Lease.
B. Guaranty. At Tenant's option, either on the day which Tenant requests
that Landlord commence performance of Landlord's Work, or at any time thereafter
during the period when Tenant is required to furnish the Letter of Credit,
Tenant may furnish to Landlord, in lieu of the Letter of Credit, a guaranty
agreement, in substantially the form of Exhibit "J" attached hereto ("Guaranty
Agreement") of Pace Management, Corporation, guaranteeing the Fixed Rent then
remaining unpaid. Further, upon furnishing to Landlord of a letter of credit in
the amount of the Fixed Rent then remaining unpaid, and which otherwise complies
with the requirements of Subsection 23.A above, the Guaranty Agreement shall be
automatically terminated and of no further force and effect, and Landlord shall
execute a written release of such Guaranty Agreement.
C. Delivery of Letter of Credit or Guaranty. Landlord shall have no duty
to commence any of Landlord's Work until the Letter of Credit in appropriate
form and/or the Guaranty Agreement is delivered to Landlord.
46
<PAGE>
EXECUTED on the dates set forth beneath the signatures hereto, but
effective for all purposes as of the Effective Date hereof.
CROSSROADS PROPERTIES, INCORPORATED
ATTEST:
By: /s/ Stephen D. Marriner, Jr. By: /s/ G. Michael Wehr
------------------------------ ------------------------------
Name: Stephen D. Marriner, Jr. Name: G. Michael Wehr
Title: Secretary Title: President
Date: December 1, 1989
- LANDLORD -
PACE ENTERTAINMENT GROUP, INC.
ATTEST:
By: /s/ John A. Rubey By: /s/ Brian E. Becker
------------------------------ ------------------------------
Name: John A. Rubey Name: Brian E. Becker
Title: Secretary Title: President
Date: November 29, 1989
- TENANT -
47
<PAGE>
by Starvaggi Industries, Incorporated, as Grantor, to Crossroads Properties,
Incorporated, as Grantee, by Deed dated June 19, 1989 and recorded, in the
Office of the Recorder of Deeds of Washington County, at Deed Book Volume 2371,
Page 220, et seq.
<PAGE>
EXHIBIT "C"
LANDLORD'S LANDS
All those certain pieces, parcels or tracts of land lying, being and situate in
the Township of Hanover, County of Washington, Commonwealth of Pennsylvania,
said pieces, parcels and tracts of land being more specifically and particularly
bounded and described as follows:
Beginning at a point at the Southwest corner of Reservation No. 1 Starvaggi
Charities, Inc., Tract VI, Deed Book Volume 989, Page 129 thence along the land
now or formerly of Pennsylvania Game Commission, State Game Lands No. 117, North
81(degrees) 32' 00" West 1478.75 feet to a point; thence along land now or
formerly of Pennsylvania Game Commission, Parcel 1, Deed Book Volume 1396, Page
18, South 34(degrees) 35' 50" West 1697.07 feet to a point common to this land
and to land of the Pennsylvania State Game Commission and to land now or
formerly of Glenn and Jean Roberts; thence along land now or formerly of Glenn
and Jean Roberts North 14(degrees) 53' 00" West 197.21 feet to a point; thence
along land now or formerly of Glenn and Jean Roberts North 81(degrees) 08' 00"
West 140.00 feet to a point; thence along land now or formerly of Glenn and Jean
Roberts North 80(degrees) 35' 00" West 991.14 feet to a point; thence along land
now or formerly of Glenn and Jean Roberts North 27(degrees) 44' 00" West 912.16
feet to a point; thence along land now or formerly of Glenn and Jean Roberts and
crossing Hanover Township Road 400 South 58(degrees) 30' 00" West 2269.40 feet
to a point; thence generally following along the westerly side of Hanover
Township Road 400 and along land of Starvaggi Industries, Incorporated North
42(degrees) 45' 00" West 2723.20 feet to a point; thence along land now of
Starvaggi Industries, Incorporated North 24(degrees) 32' 20" West 207.24 feet to
a point; thence staying within the Right-of-Way of Hanover Township Road 400 and
along land now of Starvaggi Industries, Incorporated North 37(degrees) 32' 00"
West 1165.09 feet to a point on the southerly Right-of-Way line of U.S. Route
22; thence along that same Right-of-Way by a curve to the Right, which curve is
the arc of a circle having a radius of 3654.83 feet, a chord distance of 927.567
feet to a point, the chord for the curve being North 67(degrees) 28'35" East;
thence along that same Right-of-Way South 15(degrees) 14" East 20 feet to a
point; thence along that same Right-of-Way by a curve to the Right, which curve
is the chord of a circle having a radius of 3634.83 feet, a chord distance of
334.98 feet to a point, the chord for the curve being North 77(degrees) 24' 24"
East; thence along that same Right-of-Way North 80(degrees) 02' 49" East 1947.97
feet to a point; thence along that same Right-of-Way North 09(degrees) 57' 11"
West 35 feet to a point; thence along that same Right-of-Way, North 80(degrees)
02' 49" East 19.31 feet to a point; thence along that same Right-of-Way by a
curve to the Left, which curve is the arc of a circle having a radius of 5879.65
feet a chord distance of 386.49 feet, the chord for the curve being North
78(degrees) 09' 49" East; thence along that same Right-of-Way North 72(degrees)
36' 09" East 15.00 feet to a point; thence along that same Right-of-Way North
17(degrees) 23' 51" West 25.00 feet to a point; thence along that same
Right-of-Way North 72(degrees) 36' 09" East 492.00 feet; thence along
<PAGE>
that same Right-of-Way South 17(degrees) 23' 51" East 35.00 feet to a point;
thence along that same Right-of-Way North 72(degrees) 36' 09" East 300.00 feet
to a point; thence along that same Right-of-Way North 17(degrees) 23' 51" West
35.00 feet to a point; thence along that same Right-of-Way North 72(degrees) 36'
09" East 1109.61 feet to a point; thence along that same Right-of-Way South
13(degrees) 57' 50" East 42.00 feet to a point; thence along that same
Right-of-Way North 76(degrees) 02' 10" East 332.06 feet to a point; thence along
that same Right-of-Way by a curve to the Right, which curve is the arc of a
circle having a radius of 537.27 feet, a chord distance of 57.25 feet to a
point, the chord for the curve being South 72(degrees) 58' 55" East; thence
along that same Right-of-Way South 20(degrees) 04' 20" West 100.00 feet to a
point; thence by a curve to the Right, which curve is the arc of a circle having
a radius of 437.27 feet, a chord distance of 241.76 feet to a point, the chord
of the curve being South 53(degrees) 52' 47" East; thence along that same
Right-of-Way South 65(degrees) 43' 13" East 243.01 feet to a point; thence
along that same Right-of-Way North 24(degrees) 16' 47" East 68.00 feet to a
point; thence along that same Right-of-Way South 65(degrees) 43' 13" East
164.02 feet to a point; thence along that same Right-of-Way by a curve to the
Left, which curve is the arc of a circle having a radius of 398.00 feet, a chord
distance of 364.59 feet to a point, the chord of the arc being North 87(degrees)
01' 11" East; thence along that same Right-of-Way South 30(degrees) 14' 23"
East 30.00 feet to a point; thence along that same Right-of-Way by a curve to
the Left, which curve is the arc of a circle having a radius of 428.00 feet, a
chord distance of 40.92 feet to a point, the chord of the curve being North
57(degrees) 01' 17" East; thence along that same Right-of-Way North 54(degrees)
16' 47" East 168.00 feet to a point; thence along that same Right-of-Way South
80(degrees) 43' 13" East 45.00 feet to a point; thence South 35(degrees) 43' 13"
East 560.00 feet to a point; thence along land now or formerly of D. W. Steele
and J. R. Steele South 17(degrees) 46' 00" West 66.00 feet to a point; thence
along land now or formerly of D. W. Steele and J. R. Steele North 77(degrees)
44' 00" East 160.00 feet to a point; thence to the centerline of Pennsylvania
State Route 18 North 74(degrees) 30' 00" East 63.84 feet to a point; thence
along the centerline of Pennsylvania State Route 18 Highway South 36(degrees)
14' 00" East 1971.67 feet to a point; thence leaving the centerline of
Pennsylvania State Route 18 and along land now or formerly of Bologna Coal
Company, South 53(degrees) 46' 00" West 518.80 feet to a point; thence along
land now or formerly of Bologna Coal Company, along land now or formerly Royal
Helicopter Service and along Reservation No. 1 Starvaggi Charities, Inc., Tract
VI, South 29(degrees) 43' 20" East 935.04 feet to the point of beginning.
Containing 558.365 Acres.
Being a part of all of those certain pieces, parcels and tracts of land conveyed
by Starvaggi Charities, Inc., as Grantor, to Crossroads Properties,
Incorporated, as Grantee, by Deed dated June 19, 1989 and recorded, in the
Office of the Recorder of Deeds of Washington County, at Deed Book Volume 2371,
Page 225, et seq. and
<PAGE>
EXHIBIT "D"
EASEMENT AREA
All that certain piece, parcel and tract of land lying, being and situate in the
Township of Hanover, County of Washington and Commonwealth of Pennsylvania, said
piece, parcel and tract of land to be used for vehicular and pedestrian ingress
and egress to and from the 327.22 Acre Tract and being more completely bounded
and described as follows:
Beginning at a point within the Right-of-Way of Hanover Township Road Number
400, said beginning point being South 37(degrees) 32' 00" East 537.43 feet more
or less from the Northwest corner of land of Crossroads Properties,
Incorporated, identified as Tract No. 1 and as more fully described on the Deed
from Starvaggi Industries, Incorporated, as Grantor, to Crossroads Properties,
Incorporated, as Grantee, said Deed being dated June 19, 1989 and recorded, in
the Office of the Recorder of Deeds of Washington County, at Deed Book Volume
2371, Page 220; thence, from said point of beginning, North 79(degrees) 48' 21"
East 3584.25 feet to a point; thence along a portion of the land of the 327.22
Acre Tract, South 20(degrees) 10' 00" East 101.53 feet to a point; thence South
79(degrees) 48' 21" West 3550.13 feet to a point within the Right-Of-Way of
Hanover Township Road Number 400; thence from said point within the Right-Of-Way
of Hanover Township Road Number 400 North 37(degrees) 32' 00" West 112.57 feet
to the point of beginning.
Containing an area of 8.189 Acres.
Being a part of that certain piece, parcel and tract of land identified as Tract
No. 1 in the Deed from Starvaggi Industries, Incorporated, as Grantor, to
Crossroads Properties, Incorporated, as Grantee, dated June 19, 1989 and
recorded, in the Office of the Recorder of Deeds of Washington County, at Deed
Book Volume 2371, Page 220.
<PAGE>
EXHIBIT "D"
EASEMENT AREA
All that certain piece, parcel and tract of land lying, being and situate in the
Township of Hanover, County of Washington and Commonwealth of Pennsylvania, said
piece, parcel and tract of land to be used for vehicular and pedestrian ingress
and egress to and from the 327.22 Acre Tract and being more completely bounded
and described as follows:
Beginning at a point within the Right-of-Way of Hanover Township Road Number
400, said beginning point being South 37(degrees) 32' 00" East 537.43 feet more
or less from the Northwest corner of land of Crossroads Properties,
Incorporated, identified as Tract No. 1 and as more fully described on the Deed
from Starvaggi Industries, Incorporated, as Grantor, to Crossroads Properties,
Incorporated, as Grantee, said Deed being dated June 19, 1989 and recorded, in
the Office of the Recorder of Deeds of Washington County, at Deed Book Volume
2371, Page 220; thence, from said point of beginning, North 79(degrees) 48' 21"
East 3584.25 feet to a point; thence along a portion of the land of the 327.22
Acre Tract, South 20(degrees) 10' 00" East 101.53 feet to a point; thence South
79(degrees) 48' 21" West 3550.13 feet to a point within the Right-Of-Way of
Hanover Township Road Number 400; thence from said point within the Right-Of-Way
of Hanover Township Road Number 400 North 37(degrees) 32' 00" West 112.57 feet
to the point of beginning.
Containing an area of 8.189 Acres.
Being a part of that certain piece, parcel and tract of land identified as Tract
No. 1 in the Deed from Starvaggi Industries, Incorporated, as Grantor, to
Crossroads Properties, Incorporated, as Grantee, dated June 19, 1989 and
recorded, in the Office of the Recorder of Deeds of Washington County, at Deed
Book Volume 2371, Page 220.
<PAGE>
EXHIBIT "E"
PERMITTED ENCUMBRANCES
TRACT NO. 1 -- Deed of Starvaggi Charities, Inc. to Crossroads Properties,
Incorporated dated June 19, 1989, recorded June 27, 1989 in the Recorder of
Deeds Office of Washington County, Pennsylvania, in Deed Book 2371, Page 225.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
3. A right-of-way granted by Starvaggi Charities, Inc. to Peoples Natural
Gas Company for a three inch pipeline per instrument dated December 13, 1968,
recorded January 8, 1969 in Deed Book 1291, Page 596.
4. An easement for a limited access for a highway recorded in Deed Book
1274, Page 246.
5. Agreement by Annie M. Lawrence with William A. Meyer to convey property
on or before November 15, 1939. The Agreement is dated October 11, 1939. Only a
few days after this Agreement, Annie M. Lawrence conveyed the property to the
Greensburg-Connellsville Coal & Coke Company. Nothing was found of record to
show that William A. Meyer was acting on behalf of the said
Greensburg-Connellsville Coal & Coke Company. Landlord agrees to commence and
successfully complete, on or before October 24, 1990, an Action to Quiet Title
against William A. Meyer or otherwise to appropriately acquire the interest of
William A. Meyer.
6. An oil and gas lease dated April 24, 1908 granted to J.L. Callahan per
instrument recorded in Deed Book 359, Page 440.
7. Timber on the property was conveyed to W.E. Cooper under an Article of
Agreement dated April 6, 1933, recorded April 11, 1933 in Deed Book 591, Page
108.
8. NOTICE -- This document may not sell, convey, transfer, include or
insure the title to the coal and right of support underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage may result to the surface of the land and in any house, building, or
other structure on or in such land. (This notice is set forth in the manner
provided in Section 1 of the Act of July 17, 1957, P.L. 984.)
9. See Plan Book 21, Page 415.
10. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 225 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said six tracts of land but without the right to use the
surface estate for any purpose whatsoever."
11. Excepting and reserving all the coal together with mining rights as
set forth in the deed to Crossroads Properties, Incorporated recorded in Deed
Book 2371, Page 225 as follows: "ALSO EXCEPTING AND RESERVING to the Grantor
herein all coal
<PAGE>
within and underlying each of the six above-described premises together with,
for each and every vein of coal, the free and uninterrupted right-of-way into,
upon, and under said land at such points and in such manner as may be proper and
necessary for the purpose of digging, mining, coking, draining, ventilating, and
carrying away said coal, etc., together with the privilege of mining and
removing through the described premises other coal or materials belonging to the
Grantor herein, its successors or assigns, or which may hereafter be acquired.
The reserved rights herein shall not be interpreted to include use of the
surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall not
be construed to and do not, in fact, include and permit any surface use
whatsoever by bore holes, shafts, slopes, ventilation fans, hoists, pumps and
the like, of the Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further hereby expressly acknowledge their intention
and agree that the rights, title and interest herein granted and conveyed to
Grantee shall be construed to grant and convey to Grantee, inter alia, the right
of surface support".
12. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground abutting said stream.
TRACT NO. 2 - Deed of Starvaggi Charities, Inc. to Crossroads Properties,
Incorporated dated June 19, 1989, recorded June 27, 1989 in the Recorder of
Deeds Office of Washington County, Pennsylvania, in Deed Book 2371, Page 225.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
3. A right-of-way granted by Starvaggi Charities, Inc. to Peoples Natural
Gas Company for a three inch pipeline per instrument dated December 13, 1968,
recorded January 8, 1969 in Deed Book 1291, Page 596.
4. An easement for a limited access for a highway recorded in Deed Book
1274, Page 246.
5. An oil and gas lease granted to William E. Kennedy per instrument dated
May 10, 1907 and recorded in Deed Book 351, Page 73.
6. A right-of-way granted to South Penn Oil Company per instrument dated
February 4, 1921 and recorded in Deed Book 489, Page 611.
7. A conveyance of 2.27 acres of coal made to Harmon Creek Coal
Corporation per instrument dated April 23, 1934 and recorded in Deed Book 592,
Page 446.
E-2
<PAGE>
8. A lease of 11.86 acres of coal made to Harmon Creek Coal Corporation
per instrument dated December 3, 1936, recorded December 4, 1936 in Deed Book
610, Page 134.
9. Various instruments in the chain of title providing that the property
is subject to a private right-of-way from the said Florence to Burgettstown
Public Road to the land now or late of Joseph Jackson.
10. NOTICE -- This document may not sell, convey, transfer, include or
insure the title to the coal and right of support underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage may result to the surface of the land and in any house, building, or
other structure on or in such land. (This notice is set forth in the manner
provided in Section 1 of the Act of July 17, 1957, P.L. 984.)
11. See Plan Book 21, Page 415.
12. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 225 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said six tracts of land but without the right to use the
surface estate for any purpose whatsoever."
13. Excepting and reserving all the coal together with mining rights as
set forth in the deed to Crossroads Properties, Incorporated recorded in Deed
Book 2371, Page 225 as follows: "ALSO EXCEPTING AND RESERVING to the Grantor
herein all coal within and underlying each of the six above-described premises
together with, for each and every vein of coal, the free and uninterrupted
right-of-way into, upon, and under said land at such points and in such manner
as may be proper and necessary for the purpose of digging, mining, coking,
draining, ventilating, and carrying away said coal, etc., together with the
privilege of mining and removing through the described premises other coal or
materials belonging to the Grantor herein, its successors or assigns, or which
may hereafter be acquired. The reserved rights herein shall not be interpreted
to include use of the surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall not
be construed to and do not, in fact, include and permit any surface use
whatsoever by bore holes, shafts, slopes, ventilation fans, hoists, pumps and
the like, of the Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further hereby expressly acknowledge their intention
and agree that the rights, title and interest herein granted and conveyed to
Grantee shall be construed to grant and convey to Grantee, inter alia, the right
of surface support".
E-3
<PAGE>
14. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground abutting said stream.
TRACT NO. 3 -- Deed of Starvaggi Charities, Inc. to Crossroads Properties,
Incorporated dated June 19, 1989, recorded June 27, 1989 in the Recorder of
Deeds Office of Washington County, Pennsylvania, in Deed Book 2371, Page 225.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
3. A right-of-way granted by Starvaggi Charities, Inc. to Peoples Natural
Gas Company for a three inch pipeline per instrument dated December 13, 1968,
recorded January 8, 1969 in Deed Book 1291, Page 596.
4. An easement for a limited access for a highway recorded in Deed Book
1274, Page 246.
5. Oil and gas lease granted to Cyrus Ferguson per instrument dated August
1, 1901 and recorded in Deed Book 231, Page 410.
6. Oil and gas lease granted to C.G. Kiskadden per instrument dated
December 26, 1900 and recorded in Deed Book 255, Page 498.
7. Deed to Greensburg-Connellsville Coal and Coke Company dated March 2,
1940 and recorded in Deed Book 634, Page 523. Excepting and reserving all oil
and gas leases heretofore conveyed and landowner's interest in the leases
reserved.
8. NOTICE -- This document may not sell, convey, transfer, include or
insure the title to the coal and right of support underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage may result to the surface of the land and in any house, building, or
other structure on or in such land. (This notice is set forth in the manner
provided in section 1 of the Act of July 17, 1957, P.L. 984.)
9. See Plan Book 21, Page 415.
10. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 225 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said six tracts of land but without the right to use the
surface estate for any purpose whatsoever."
11. Excepting and reserving all the coal together with mining rights as
set forth in the deed to Crossroads Properties, Incorporated recorded in Deed
Book 2371, Page 225 as follows: "ALSO EXCEPTING AND RESERVING to the Grantor
herein all coal within and underlying each of the six above-described premises
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<PAGE>
together with, for each and every vein of coal, the free and uninterrupted
right-of-way into, upon, and under said land at such points and in such manner
as may be proper and necessary for the purpose of digging, mining, coking,
draining, ventilating, and carrying away said coal, etc., together with the
privilege of mining and removing through the described premises other coal or
materials belonging to the Grantor herein, its successors or assigns, or which
may hereafter be acquired. The reserved rights herein shall not be interpreted
to include use of the surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall not
be construed to and do not, in fact, include and permit any surface use
whatsoever by bore holes, shafts, slopes, ventilation fans, hoists, pumps and
the like, of the Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further hereby expressly acknowledge their intention
and agree that the rights, title and interest herein granted and conveyed to
Grantee shall be construed to grant and convey to Grantee, inter alia, the right
of surface support".
12. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground abutting said stream.
TRACT NO. 4 - Deed of Starvaggi Charities, Inc. to Crossroads Properties,
Incorporated dated June 19, 1989, recorded June 27, 1989 in the Recorder of
Deeds Office of Washington County, Pennsylvania, in Deed Book 2371, Page 225.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
3. A right-of-way granted by Starvaggi Charities, Inc. to Peoples Natural
Gas Company for a three inch pipeline per instrument dated December 13, 1968,
recorded January 8, 1969 in Deed Book 1291, Page 596.
4. An easement for a limited access for a highway recorded in Deed Book
1274, Page 246.
5. An oil and gas lease granted to William E. Kennedy per instrument dated
May 10, 1907 and recorded in Deed Book 351, Page 73.
6. NOTICE -- This document may not sell, convey, transfer, include or
insure the title to the coal and right of support underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage may result to the surface of the land and in any house, building, or
other structure on or in such land. (This notice is set forth
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<PAGE>
in the manner provided in Section 1 of the Act of July 17, 1957, P.L. 984.)
7. See Plan Book 21, Page 415.
8. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 225 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said six tracts of land but without the right to use the
surface estate for any purpose whatsoever."
9. Excepting and reserving all the coal together with mining rights as set
forth in the deed to Crossroads Properties, Incorporated recorded in Deed Book
2371, Page 225 as follows: "ALSO EXCEPTING AND RESERVING to the Grantor herein
all coal within and underlying each of the six above-described premises together
with, for each and every vein of coal, the free and uninterrupted right-of-way
into, upon, and under said land at such points and in such manner as may be
proper and necessary for the purpose of digging, mining, coking, draining,
ventilating, and carrying away said coal, etc., together with the privilege of
mining and removing through the described premises other coal or materials
belonging to the Grantor herein, its successors or assigns, or which may
hereafter be acquired. The reserved rights herein shall not be interpreted to
include use of the surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall not
be construed to and do not, in fact, include and permit any surface use
whatsoever by bore holes, shafts, slopes, ventilation fans, hoists, pumps and
the like, of the Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further hereby expressly acknowledge their intention
and agree that the rights, title and interest herein granted and conveyed to
Grantee shall be construed to grant and convey to Grantee, inter alia, the right
of surface support".
10. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground abutting said stream.
TRACT NO. 5 -- Deed of Starvaggi Charities, Inc. to Crossroads Properties,
Incorporated dated June 19, 1989, recorded June 27, 1989 in the Recorder of
Deeds Office of Washington County, Pennsylvania, in Deed Book 2371, Page 225.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
3. A right-of-way granted by Starvaggi Charities, Inc. to Peoples
Natural Gas Company for a three inch pipeline per
E-6
<PAGE>
instrument dated December 13, 1968, recorded January 8, 1969 in Deed Book 1291,
Page 596.
4. An easement for a limited access for a highway recorded in Deed Book
1274, Page 246.
5. An oil and gas lease granted to William E. Kennedy per instrument dated
May 10, 1907 and recorded in Deed Book 351, Page 73.
6. NOTICE - This document may not sell, convey, transfer, include or
insure the title to the coal and right of support underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage may result to the surface of the land and in any house, building, or
other structure on or in such land. (This notice is set forth in the manner
provided in Section 1 of the Act of July 17, 1957, P.L. 984.)
7. See Plan Book 21, Page 415.
8. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 225 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said six tracts of land but without the right to use the
surface estate for any purpose whatsoever."
9. Excepting and reserving all the coal together with mining rights as set
forth in the deed to Crossroads Properties, Incorporated recorded in Deed Book
2371, Page 225 as follows: "ALSO EXCEPTING AND RESERVING to the Grantor herein
all coal within and underlying each of the six above-described premises together
with, for each and every vein of coal, the free and uninterrupted right-of-way
into, upon, and under said land at such points and in such manner as may be
proper and necessary for the purpose of digging, mining, coking, draining,
ventilating, and carrying away said coal, etc., together with the privilege of
mining, and removing through the described premises other coal or materials
belonging to the Grantor herein, its successors or assigns, or which may
hereafter be acquired. The reserved rights herein shall not be interpreted to
include use of the surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor, shall
not be construed to and do not, in fact, include and permit any surface use
whatsoever by bore holes, shafts, slopes, ventilation fans, hoists, pumps and
the like, of the Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further hereby expressly acknowledge their intention
and agree that the rights, title and interest herein granted and conveyed to
Grantee shall be construed to grant and convey to Grantee, inter alia, the right
of surface support".
E-7
<PAGE>
10. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground abutting said stream.
TRACT NO. 6 -- Deed of Starvaggi Charities, Inc. to Crossroads Properties,
Incorporated dated June 19, 1989, recorded June 27, 1989 in the Recorder of
Deeds Office of Washington County, Pennsylvania, in Deed Book 2371, Page 225.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
3. A right-of-way granted by Starvaggi Charities, Inc. to Peoples Natural
Gas Company for a three inch pipeline per instrument dated December 13, 1968,
recorded January 8, 1969 in Deed Book 1291, Page 596.
4. An easement for a limited access for a highway recorded in Deed Book
1274, Page 246.
5. All of the coal under the tract conveyed to J.W. Merrill per Deed Book
207, Page 28. Note that this was the coal which was conveyed to Samuel
Livingston in a Family Agreement and then to be sold by him.
6. In the deed from the Harmon Creek Coal Corporation to the Pennsylvania
Game Commission, all of the coal together with mining rights, waiver of surface
damage and oil and gas was excepted and reserved per instrument recorded in Deed
Book 658, Page 216. Also, Harmon Creek Coal Corporation reserved the right to
mine by the strip mine method.
7. An oil and gas lease granted to T.G. Phillips, et al. per instrument
dated August 16, 1890, recorded in Deed Book 161, Page 220.
8. An oil and gas lease granted to C.G. Kiskadden per instrument dated
December 12, 1900, recorded in Deed Book 255, page 494.
9. A right-of-way granted to Southwest Pennsylvania Pipelines Company per
instrument recorded in Deed Book 645, page 375.
10. A right-of-way granted to the Pennsylvania Game Commission for a road
per instrument recorded in Deed Book 654, page 620.
11. Deeds in the chain of title state that they except and reserve to the
lawful owners all of the rights-of-way and minerals previously excepted and
reserved per instrument recorded in Deed Book 1396, Page 11.
12. NOTICE - This document may not sell, convey, transfer, include or
insure the title to the coal and right of support underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage
E-8
<PAGE>
may result to the surface of the land and in any house, building, or other
structure on or in such land. (This notice is set forth in the manner provided
in Section 1 of the Act of July 17, 1957, P.L. 984.)
13. See Plan Book 21, Page 415.
14. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 225 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said six tracts of land but without the right to use the
surface estate for any purpose whatsoever."
15. Excepting and reserving all the coal together with mining rights as
set forth in the deed to Crossroads Properties, Incorporated recorded in Deed
Book 2371, Page 225 as follows: "ALSO EXCEPTING AND RESERVING to the Grantor
herein all coal within and underlying each of the six above-described premises
together with, for each and every vein of coal, the free and uninterrupted
right-of-way into, upon, and under said land at such points and in such manner
as may be proper and necessary for the purpose of digging, mining, coking,
draining, ventilating, and carrying away said coal, etc., together with the
privilege of mining and removing through the described premises other coal or
materials belonging to the Grantor herein, its successors or assigns, or which
may hereafter be acquired. The reserved rights herein shall not be interpreted
to include use of the surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall not
be construed to and do not, in fact, include and permit any surface use
whatsoever by bore holes, shafts, slopes, ventilation fans, hoists, pumps and
the like, of the Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further hereby expressly acknowledge their intention
and agree that the rights, title and interest herein granted and conveyed to
Grantee shall be construed to grant and convey to Grantee, inter alia, the right
of surface support".
16. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground and abutting said stream.
TRACT NO. 1 - Deed of Starvaggi Industries Incorporated to Crossroads
Properties, Incorporated dated June 19, 1989, recorded June 27, 1989 in the
Recorder of Deeds Office of Washington County, Pennsylvania, in Deed Book 2371,
Page 220.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
E-9
<PAGE>
3. An easement or right-of-way in deed of Starvaggi Industries
Incorporated to Washington County dated June 27, 1983 and recorded in Deed Book
2118, Page 53.
4. An easement or right-of-way in deed of Starvaggi Industries
Incorporated to Washington County dated June 27, 1983 and recorded in Deed Book
2118, Page 45.
5. Deed of PennWeir Construction Company to Washington County dated May
25, 1967 and recorded in Deed Book 1264, Page 997.
6. Deed from PennWeir Construction Company to Washington County dated
March 5, 1968 and recorded in Deed Book 1274, Page 693.
7. A right-of-way granted by Pennweir to Bell Telephone Company per
instrument dated May 24, 1966 and recorded in Deed Book 1236, Page 432.
8. A right-of-way granted by PennWeir to West Penn Power Company per
instrument dated October 1, 1965 and recorded in Deed Book 1221, Page 71.
9. A right-of-way granted by PennWeir to Manufacturers Light and Heat
Company for a six and eight inch pipeline per instrument dated February 21,
1969, recorded in Deed Book l297, Page 1072.
10. An easement for a limited access highway from PennWeir as recorded in
Deed Book 1293, Page 1114.
11. Oil and gas leases were found of record as follows:
a. To John Wiles, et ux. per instrument dated August 6, 1900, and
recorded in Deed Book 231, Page 504.
b. To William Jackson per instrument dated June 18, 1902, and
recorded in Deed Book 279, Page 345.
c. To William C. Kennedy & Co. per instrument dated May 15, 1907,
and recorded in Deed Book 351, Page 72.
d. To The Peoples Natural Gas Co. per instrument dated October 29,
1910, and recorded in Deed Book 380, Page 445.
e. To Peoples Natural Gas Company per instrument dated September 9,
1924, and recorded in Deed Book 528, Page 72.
12. A coal lease granted to Hanover Coal Company of Ohio per instrument
dated October 14, 1918, and recorded in Deed Book 460, Page 397 for a period of
twenty-five years or as much longer as it may be necessary to remove and mine
all of the coal.
13. Exception and reservations of the oil, gas, coal and mining rights by
deed of National Steel Corporation to Weirton Ice & Coal Supply Company per
instrument recorded in Deed Book 1056, Page 674. (See also Deed Book 1061, Page
380.) 19.
14. NOTICE -- This document may not sell, convey, transfer, include or
insure the title to the coal and right of support, underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage may result to the surface of the land and in any house, building,
E-10
<PAGE>
or other structure on or in such land. (This notice is set forth in the manner
provided in Section 1 of the Act of July 17, 1957, P.L. 984.)
15. See Plan Book 21, Page 416.
16. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 220 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said two tracts of land but without the right to use the
surface estate for any purpose whatsoever."
17. Excepting and reserving all the coal together with mining rights as
set forth in the deed to Crossroads Properties, Incorporated recorded in Deed
Book 2371, Page 220 as follows: "ALSO EXCEPTING AND RESERVING to the grantor
herein all coal within and underlying each of the two above-described premises
together with, for each and every vein of coal, the free and uninterrupted
right-of-way into, upon, and under said land at such points and in such manner
as may be proper and necessary for the purpose of digging, mining, coking,
draining, ventilating, mining and removing through the described premises other
coal or materials belonging to the Grantor herein, its successors or assigns, or
which may hereafter be acquired. The reserved rights herein shall not be
interpreted to include use of the surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall not
be construed to and do not, in fact, include and permit any surface use
whatsoever by Grantor including any surface use by Grantor for, inter alia, bore
holes, shafts, slopes, ventilation fans, hoists, pumps and the like, of the
Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further expressly acknowledge their intention and
agree that the rights, title and interest herein granted and conveyed to Grantee
shall be construed to grant and convey to Grantee, inter alia, the right of
surface support."
18. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground abutting said stream.
E-11
<PAGE>
EXHIBIT "F"
RATES FOR LANDLORD'S WORK
CONCRETE PRICE SCHEDULE
Delivered
Product Price/Yard
------- ----------
1988 1989 1990 1991
3000 PSI 49.10 53.03 57.27 61.85
4000 PSI 51.45 55.57 60.01 64.81
5000 PSI 52.05 56.21 60.71 65.57
5-Bag Mix 51.10 55.19 59.60 64.37
6-Bag Mix 54.05 58.37 63.04 68.09
7-Bag Mix 56.80 61.34 66.25 71.55
Floor Mix 51.65 55.78 60.24 65.06
Prices are for preparation and delivery. They do not include placement or
finishing. Prices set forth are subject to additional charges per yard for
additives. Orders of 3 yards or less are subject to a surcharge of $35.00 per
order.
PRICE SCHEDULE FOR ADDITIVES
Delivered
Product Price/Yard
------- ----------
1988 1989 1990 1991
Fibers 6.00 6.48 7.00 7.56
1% Calcium 1.75 1.89 2.04 2.20
2% Calcium 2.75 2.97 3.21 3.46
Retarder 2.00 2.16 2.33 2.52
<PAGE>
EXHIBIT "F" - continued
SLAG PRICE SCHEDULE
Price Per
Product Ton
------- ---------
1988 1989 1990 1991
2" 1.60 1.73 1.87 2.02
1" Minus 2.50 2.70 2.92 3.15
The prices for slag do not include delivery on site. No quote for delivery could
be obtained past 1988. 1988 quote is $2.25/ton
EQUIPMENT RATE SCHEDULE
Equipment with Operator Rate/Hour
- ----------------------- ---------
1988 1989 1990 1991
Caterpillar D9 Bulldozer 95.00 102.60 110.81 119.67
Caterpillar D8 Bulldozer 85.00 91.80 99.14 107.08
Michigan 275 Loader 75.00 81.00 87.48 94.48
Michigan 175 Loader 65.00 70.20 75.82 81.88
Euclid Truck 65.00 70.20 75.82 81.88
Sheepsfoot Roller
(Per Day) 50.00 54.00 58.32 62.99
10 Ton Smooth Drum Roller 35.00 37.80 40.82 44.09
Road Grader 57.00 61.56 66.48 71.80
These prices are inclusive of all expenses, including without limitation,
fuel, insurance and operators' salaries and benefits.
ADDITIONAL PROVISIONS
A. Concrete. Landlord will supply one hundred percent of the Tenant's
concrete requirement for the Amphitheater shell, parking areas, pedestrian
walkways and access roads as the Tenant contemplates in its plans. Tenant agrees
to provide Landlord notice of its daily requirement not less than three (3) days
prior to the scheduled placement of the concrete. Landlord will have no
responsibility for placement or finishing the concrete once it is delivered to
the jobsite.
<PAGE>
B. Slag. Landlord will supply Tenant's slag requirement subject to the
following limitations:
(i) That Tenant provide Landlord its proposed delivery schedule at
least thirty (30) days in advance in order to accommodate Landlord's lead
time to accumulate sufficient stockpiles of the materials contemplated in
the delivery schedule.
(ii) That Landlord is under no obligation to provide slag in amounts
greater than 1,500 tons per day.
C. Site Work and Equipment. Landlord shall provide certain equipment to
the jobsite for use by the Tenant for purposes of completing the site work rough
grading. Upon determination by Tenant of the scope and duration of the site work
to be performed, Landlord shall use its best efforts to make available the
equipment listed on the page attached hereto. Landlord is under no obligation to
rent, on the open market, equipment Landlord is unable to provide because of
scheduling conflicts arising with its mining, milling, reclamation, concreting
and river terminal activities.
D. Price Schedule. Landlord's rental rates for equipment in the foregoing
schedule are based on a Monday through Friday single daylight shift operation,
and are subject to surcharges for overtime and shift differential. All prices
are computed using the Landlord's prevailing wage scale. Adjustment will be made
in the event Landlord's employees must work under another wage agreement at the
Amphitheater site.
<PAGE>
EXHIBIT "G"
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE, by and between CROSSROADS PROPERTIES,
INCORPORATED ("Landlord") and PACE ENTERTAINMENT GROUP, INC. ("Tenant"),
executed on _____________, 19__ ("Effective Date"), and concurrently with the
execution of a Lease Agreement ("Lease") by and between Landlord and Tenant,
sets forth certain provisions of that Lease as follows:
I. LANDLORD'S NAME Crossroads Properties, Incorporated
AND ADDRESS: c/o Steven D. Marriner, Jr., Esquire
800 Washington Trust Building
Washington, PA 15301
II. TENANT'S NAME Pace Entertainment Group, Inc.
AND ADDRESS: 515 Post Oak Boulevard
Suite 300
Houston, Texas 77027
III. DATE OF
LEASE AGREEMENT: ____________________________, 19__
IV. DESCRIPTION
OF PROPERTY: Pursuant to the terms of the Lease:
1. Landlord granted to Tenant the exclusive right to lease a tract of land
containing _______ acres ("_______ Acre Tract"), those certain tracts of Land
("Leased Easements") consisting of approximately _______________ (_____ ) acres
in the aggregate (the _______ Acre Tract and the Leased Easements collectively
called the "Land"), together with any and all improvements currently on the
Land, the Land and the improvements currently on the Land and all improvements
hereafter constructed thereon being hereinafter collectively referred to as the
"Property", all located within that certain tract of land ("Landlord's Lands")
consisting of approximately _____ acres and situate at the southwest
intersection of U.S. Route 22 and Pennsylvania Route 18 in Hanover Township,
Washington County, Pennsylvania. The Land is more fully identified in Exhibit
"A" attached hereto and made a part hereof for all purposes, and the Landlord's
Lands are more fully identified in Exhibit "B" attached hereto and made a part
hereof for all purposes.
2. Landlord granted to third parties designated by Tenant the right to
acquire certain easements ("Third Party Easements") in, over, through, beneath
and across Landlord's Lands ("Easement Areas"), said Easement Areas being more
particularly described in Exhibit "C" attached hereto and made a part hereof for
all purposes. Said Third Party Easements shall benefit and shall be appurtenant
to the Property, shall be binding upon, burden and run with the Land.
<PAGE>
V. LEASE TERM:
1. Initial Term. The initial term of the Lease ("Initial Term") shall
commence on ____________________, 19__ and shall expire on December 31, ____,
unless terminated prior thereto by any party pursuant to the provisions of the
Lease.
2. Renewal Option. Tenant has the right to renew the Lease for one
twenty-five (25) year term ("Renewal Term"), with the Renewal Term commencing
upon the expiration of the Initial Term (the Initial Term, or the Initial Term,
as renewed to extend to the Renewal Term, herein called "Lease Term").
VI. TENANT'S RIGHT OF FIRST REFUSAL: During the Lease Term, Tenant shall have
the right of first refusal to purchase the Property, all in accordance with the
procedures as more fully set forth in the Lease.
VII. TENANT'S USE OF THE PROPERTY:
1. Tenant's Exclusive Use. Tenant shall have the sole and exclusive right
to use, occupy, and enjoy the Property.
2. Restrictions on Landlord. During the Lease Term, without the prior
written consent of Tenant, which consent may be withheld by Tenant in its sole
and absolute discretion, neither Landlord nor any person deriving rights
directly or indirectly from Landlord shall use any portion of Landlord's Lands
to engage in any activities, at any time, which are similar to, or competitive
with, the types of activities which at that particular time are normal and
customary for live entertainment, for commercial concert, amphitheater and arena
facilities, fairs, festivals, and events related thereto, for recreational and
leisure sports, as an educational center or conference center. In addition,
neither Landlord nor any person deriving rights from Landlord shall engage in
any conduct on any portion of the Landlord's Lands which materially interferes
with Tenant's conduct of business on or Tenant's use of, enjoyment of, or
operations on, the Property. No portion of Landlord's Lands shall be developed
or utilized in such a manner as would cause the Tenant's activities on the
Property to be in violation of any law, ordinance, regulation or other land-use
restriction, including, without limitation, any sound emission restrictions or
ordinance. The rights of Landlord, and its successors and assigns, in and to the
Landlord's Lands shall at all times be subject to the rights of Tenant under the
Lease. Landlord recognizes that it is of the utmost importance that Tenant be
free from any competitive activities upon the Landlord's Lands and from any
interference with Tenant's activities. Accordingly, all prohibitions as set
forth herein shall be construed to prohibit all activities upon the Landlord's
Lands which are competitive with, or interfere with, Tenant's activities on the
Property.
<PAGE>
EXHIBIT "H"
Bank
IRREVOCABLE LETTER OF CREDIT
Reference No.
Date:
CROSSROADS PROPERTIES, INCORPORATED
a Pennsylvania corporation
c/o McCreight, Marriner & Crumrine
800 Washington Trust Building
Washington, Pennsylvania 15301
Gentlemen:
We hereby establish our irrevocable letter of credit No. ___________,
dated _________________________________, 19__, in your favor for the account of
Pace Entertainment Group, Inc., 515 Post Oak Boulevard, Suite 300, Houston,
Texas 77027, in an amount not to exceed ________________________________________
___________________________________________ DOLLARS ($________) available by
your draft or drafts at site, accompanied by:
(a) the original of this Letter of Credit; and
(b) your certification that with respect to the Lease between Pace
Entertainment Group, Inc., as Tenant, and Crossroads Properties,
Incorporated, as Landlord, dated __________________, 19__, [Pace
Entertainment Group, Inc. is in default with respect to payment of
"Fixed Rent" under said Lease and the amount to which you are then
entitled] or [a substitute letter of credit has not been furnished
to you at least five (5) days prior to the expiration of this Letter
of Credit, as provided in said Lease].
Your drafts must be marked "Drawn under Irrevocable Letter of Credit No.
_______, dated ______________, 19__."
This credit is subject to the Uniform Customs and Practice for Documentary
Credits (1983 revision), International Chamber of Commerce, Publication No. 400
and engages us in accordance with its terms.
We engage with you that all drafts drawn under and in compliance with the
terms of this Letter of Credit shall be duly honored by us when presented at
_________________________________ Bank on or before ___________________,19___.
Yours very truly,
Authorized signature
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed this Memorandum of Lease this ___ day of ____________,
1989.
CROSSROADS PROPERTIES, INCORPORATED
ATTEST:
By: _________________________________ By: ________________________________
Name: _______________________________ Name: ______________________________
Title: Secretary Title: President
Date: ___________, 19__
- LANDLORD -
PACE ENTERTAINMENT GROUP, INC.
ATTEST:
By: _________________________________ By: ________________________________
Name: _______________________________ Name: Brian E. Becker
Title: Secretary Title: President
Date: ___________, 19__
- TENANT -
<PAGE>
EXHIBIT "I"
CROSSROADS PROPERTIES, INCORPORATED
_______________________
Bank
_______________________
Address
IN RE: Irrevocable Letter of Credit No. ____________
Dated _____________, 19__.
Gentlemen:
With respect to the Lease between Pace Entertainment Group, Inc., as
Tenant and Crossroads Properties, Incorporated, as Landlord, dated _________,
19__, [Pace Entertainment Group, Inc. is in default with respect to payment of
"Fixed Rent" under said Lease and the amount due Crossroads Properties,
Incorporated is $_________ ] or [a substitute letter of credit has not been
furnished to us at least five (5) days prior to the expiration of the Letter of
Credit as provided in said Lease].
CROSSROADS PROPERTIES, INCORPORATED
By: _________________________________
President [or Vice President]
<PAGE>
EXHIBIT "J"
GUARANTY AGREEMENT
TO INDUCE CROSSROADS PROPERTIES, INCORPORATED, a Pennsylvania corporation,
with an office for the transaction of business in the Washington Trust Building,
Washington, PA 15301 (hereinafter "Landlord") to enter into that certain Lease
Agreement dated ___________________, 19__ ("Lease") with PACE ENTERTAINMENT
GROUP, INC. (hereinafter "Tenant"):
1. The undersigned does hereby guarantee and become surety for, the prompt
and punctual payment when due of Fixed Rent, as defined and described in the
Lease, which Fixed Rent is in an original amount of up to $800,000.00.
2. Landlord shall not be required, as a condition of liability of the
undersigned to make any demand upon or to pursue any of its rights against
Tenant, or to pursue any rights which may be available to it with respect to any
other person who may be liable for the payment of Fixed Rent or any portions of
the Fixed Rent.
3. The undersigned does hereby waive any notice of the incurring by
Tenant, of additional Fixed Rent obligation to Landlord. The Undersigned also
waives notice of default with respect to any obligations of Tenant to Landlord,
and, until Landlord shall have been paid in full for Fixed Rent, any right it
might otherwise have to subrogation or the marshalling of Tenant's assets.
4. Landlord, without notice to the undersigned, shall have the right to
deal in any manner it shall see bit with the obligation of Tenant to pay Fixed
Rent to Landlord and with any security for such obligation, and may accept
partial payment on account of any obligation of Tenant, and may grant extensions
or renewals of all or any part of any such obligation, and may, at any time and
from time to time, demand or receive additional security for any such
obligation, and may accept substitutes for, or release, all or any security
which it holds or may hold for any obligation of Tenant.
5. In the event Tenant shall at any time fail to pay Landlord, when the
same shall become due, any Fixed Rent as defined under said Lease, or any
interest or penalty thereon, or any obligations in connection therewith, the
undersigned promises to pay such amount to Landlord forthwith.
6. This Guaranty Agreement shall continue in force in any event for so
long as Tenant shall owe any Fixed Rent or obligations in connection with Fixed
Rent to Landlord.
7. Landlord may, without notice to the undersigned, and without prejudice
to this Agreement, release and discharge from liability to it any of the
undersigned, if the undersigned be more than one, or any other guarantor of, or
surety for, the payment of any indebtedness for Fixed Rent or obligation of
Tenant to Landlord, or any letter or letters of credit, any of the undersigned
not so discharged agreeing to remain bound hereby notwithstanding.
8. No postponement or delay on the part of the Landlord in
<PAGE>
the enforcement of any right hereunder shall constitute a waiver of such right.
9. As used herein, "undersigned", if there be more than one, shall mean,
"all of the undersigned, or each or any of them," and in such case they are
jointly and severally bound.
WITNESS the due execution and sealing hereof with the intent of being
legally bound hereby this _______ day of ________________ 198__.
PACE MANAGEMENT CORPORATION
______________________________________
Name
______________________________________
If Corporation, State of Incorporation
______________________________________
Address
______________________________________
Federal Employer Identification Number
___________________________________ ______________________________________
Secretary By: President (SEAL)
<PAGE>
C-11518-025-id assign ground lse 4/5/90
ASSIGNMENT OF GROUND LEASE
THIS ASSIGNMENT OF GROUND LEASE ("Assignment") is made and entered
into as of the 6th day of April, 1990, by and between PACE ENTERTAINMENT GROUP,
INC., a Texas corporation, having an office at 515 Post Oak Boulevard, Suite
300, Houston, Texas 77027 ("Assignor") and YM/PACE PARTNERSHIP, a New York
general partnership, having an office at 1515 Broadway, Suite 3804, New York,
New York 10036 ("Assignee").
WHEREAS, Assignor is the owner of the leasehold estate (the
"Leasehold Estate") in the land located at the southwest intersection of U.S.
Route 22 and Pennsylvania Route 18, in Hanover Township, Washington County,
Pennsylvania, and more particularly described on Exhibit A hereto, and in the
improvements erected thereon, pursuant to a Lease Agreement, dated November 1,
1989, by and between Crossroads Properties, Incorporated, and Assignor, a
memorandum of which was recorded on January 12, 1990, in the Recorder's Office
of Washington County, Pennsylvania in Deed Book Volume 2394, Page 524 (the
"Ground Lease"); and
WHEREAS, pursuant to the terms of that certain Partnership Agreement
of Assignee, dated of even date herewith, between Pace Concerts, Inc. and YM
Corp., Pace Concerts, Inc. has agreed to cause Assignor to assign Assignor's
interest in the Ground Lease to Assignee.
NOW, THEREFORE, for TEN DOLLARS ($10.00) cash in hand paid, and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged hereby, and intending to be legally bound hereby, the parties agree
as follows:
1. Assignor hereby assigns, transfers and conveys to Assignee all of
the right, title and interest of Assignor in and to (a) the Leasehold Estate,
free and clear of all liens and encumbrances except those exceptions (the
"Permitted Exceptions") shown on Exhibit B hereto, and (b) the rights, powers,
privileges and benefits of the Tenant (as defined in the Ground Lease) in, to
and under the Ground Lease, to have and to hold the same forever. Assignor shall
indemnify and hold harmless Assignee from and against any and all liability,
loss and expense (including reasonable attorneys' fees and disbursements)
incurred by Assignee in connection with any matter arising under the Ground
Lease prior to the date hereof. Pursuant to the terms of the Ground Lease, the
within assignment of the Leasehold Estate and the rights, powers, privileges and
benefits of the Tenant will not operate to release Assignor from its obligations
under the Ground Lease.
2. Assignee hereby accepts this Assignment and assumes all of the
obligations of the Tenant under the Ground Lease arising from and after the date
hereof. Assignee shall indemnify and hold
<PAGE>
harmless Assignor from and against any and all liability, loss and expense
(including reasonable attorneys' fees and disbursements) incurred by Assignor in
connection with any matter arising under the Ground Lease from and after the
date hereof.
3. Assignee hereby acknowledges that an outdoor entertainment
facility is currently under construction on the real property covered by the
Ground Lease and agrees that the term "Permitted Exceptions", as used herein,
shall include any and all liens, claims or encumbrances arising out of such
construction including, without limitation, inchoate mechanics' and
materialmen's liens.
4. This Assignment shall be construed under the laws of the State of
Pennsylvania.
5. The provisions hereof shall bind and inure to the benefit of
Assignor and Assignee and their respective successors and assigns.
6. Assignor and Assignee each represent to the other that they have
full power and authority to execute and deliver this Assignment.
IN WITNESS WHEREOF, and intending to be legally bound, the parties
hereto have executed this Assignment as of the day and year above written.
PACE ENTERTAINMENT GROUP, INC., a
Texas corporation
ATTEST:
/s/ Jeffrey B. Lewis By: /s/ Brian E. Becker
- ----------------------- -----------------------
Name: Jeffrey B. Lewis Name: Brian E. Becker
Title: Vice President Title: Vice President
YM/PACE PARTNERSHIP, a New York
general partnership
By: YM Corp., Partner
ATTEST:
/s/ Mark Schwartz By: /s/ Marvin Cohn
- ----------------------- -----------------------
Name: Mark Schwartz Name: Marvin Cohn
Title: Assistant Secretary Title: Vice President
By: Pace Concerts, Inc., Partner
ATTEST:
/s/ Jeffrey B. Lewis By: /s/ Brian E. Becker
- ----------------------- -----------------------
Name: Jeffrey B. Lewis Name: Brian E. Becker
Title: Vice President Title: Vice President
-2-
<PAGE>
EXHIBIT A
DESCRIPTION OF LAND
All that certain piece, parcel and tract of land lying, being and situate in the
Township of Hanover, County of Washington, Commonwealth of Pennsylvania, said
piece, parcel and tract of land hereby conveyed being more specifically and
particularly bounded and described as follows:
Beginning at a point at the Southwest corner of Reservation No. 1 Starvaggi
Charities, Inc., Tract VI, Deed Book Volume 989, Page 129 thence along the land
now or formerly of Pennsylvania Game Commission, State Game Lands No. 117, North
81(degrees) 32' 00" West 1478.75 feet to a point; thence along land now or
formerly of Pennsylvania State Game Commission, Parcel 1, Deed Book Volume 1396,
Page 18, South 34(degrees) 35' 50" West 1697.07 feet to a point common to this
land and to land of the Pennsylvania State Game Commission and to land now or
formerly of Glenn and Jean Roberts; thence along land now or formerly of Glenn
and Jean Roberts North 14(degrees) 53' 00" West 197.21 feet to a point; thence
along land now or formerly of Glenn and Jean Roberts North 81(degrees) 08' 00"
West 140.00 feet to a point; thence along land now or formerly of Glenn and Jean
Roberts North 80(degrees) 35' 00" West 991.14 feet to a point; thence along land
now or formerly of Glenn and Jean Roberts and thence along land now of
Crossroads Properties, Incorporated North 27(degrees) 44' 00" West 2560.46 feet
to a point; thence along land now of Crossroads Properties, Incorporated North
52(degrees) 49' 22" East 171.80 feet to a point; thence along land now of
Crossroads Properties, Incorporated North 20(degrees) 10' 00" West 1306.52 feet
to a point on the southerly Right-of-Way line of U.S. Route 22; thence along
that same Right-of-Way North 72(degrees) 36' 09" East 15.00 feet to a point;
thence along that same Right-of-Way North 17(degrees) 23' 51" West 25.00 feet to
a point; thence along that same Right-of-Way North 72(degrees) 36' 09" East
492.00 feet; thence along that same Right-of-Way South 17(degrees) 23' 51" East
35.00 feet to a point; thence along that same Right-of-Way North 72(degrees) 36'
09" East 300.00 feet to a point; thence along that same Right-of-Way North
17(degrees) 23' 51" West 35.00 feet to a point; thence along that same
Right-of-Way North 72(degrees) 36' 09" East 1109.61 feet to a point; thence
along that same Right-of-Way South 13(degrees) 57' 50" East 42.00 feet to a
point; thence along that same Right-of-Way North 76(degrees) 02' 10" East 332.06
feet to a point; thence along that same Right-of-Way by a curve to the Right,
which curve is the arc of a circle having a radius of 537.27 feet, an arc
distance of 57.25 feet to a point, the chord for the curve being South
72(degrees) 58' 55" East; thence along that same Right-of-Way South 20(degrees)
04' 20" West 100.00 feet to a point; thence by a curve to the Right, which curve
is the arc of a circle having a radius of 437.27 feet, an arc distance of 241.76
feet to a point, the chord of the curve being South 53(degrees) 52' 47" East;
thence along that same Right-of-Way South 65(degrees) 43' 13" East 243.01 feet
to a point; thence along that same Right-of-Way North 24(degrees) 16' 47" East
68.00 feet to a point; thence along that same Right-of-Way South 65(degrees) 43'
13" East
<PAGE>
164.02 feet to a point; thence along that same Right-of-Way by a curve to the
Left, which curve is the arc of a circle having a radius of 398.00 feet, an arc
distance of 364.59 feet to a point, the chord of the arc being North 87(degrees)
01' 11" East; thence along that same Right-of-Way South 30(degrees) 14' 23" East
30.00 feet to a point; thence along that same Right-of-Way by a curve to the
Left, which curve is the arc of a circle having a radius of 428.00 feet, an arc
distance of 40.92 feet to a point, the chord of the curve being North
57(degrees) 01' 17" East; thence along that same Right-of-Way North 54(degrees)
16' 47" East 168.00 feet to a point; thence along that same Right-of-Way South
80(degrees) 43' 13" East 45.00 feet to a point; thence South 35(degrees) 43' 13"
East 560.00 feet to a point; thence along land now or formerly of D. W. Steele
and J. R. Steele South 17(degrees) 46' 00" West 66.00 feet to a point; thence
along land now or formerly of D. W. Steele and J. R. Steele North 77(degrees)
44' 00" East 160.00 feet to a point; thence to the centerline of Pennsylvania
State Route 18 North 74(degrees) 30' 00" East 63.84 feet to a point; thence
along the centerline of Pennsylvania State Route 18 South 36(degrees) 14' 00"
East 1971.67 feet to a point; thence leaving the centerline of Pennsylvania
State Route 18 and along land now or formerly of Bologna Coal Company, South
53(degrees) 46' 00" West 518.80 feet to a point; thence along land now or
formerly of Bologna Coal Company, along land now or formerly Royal Helicopter
Service and along Reservation No. 1 Starvaggi Charities, Inc., Tract VI, South
29(degrees) 43' 20" East 935.04 feet to the point of beginning.
Containing 327.22 Acres.
BEING a part of those certain pieces, parcels and tracts of land conveyed by
Starvaggi Charities, Inc., as Grantor, to Crossroads Properties, Inc., as
Grantee, by Deed dated June 19, 1989 and recorded, in the Office of the Recorder
of Deeds of Washington County, at Deed Book Volume 2371, Page 225, et seq.
A-2
<PAGE>
All that certain piece, parcel and tract of land lying, being and situate in the
Township of Hanover, County of Washington and Commonwealth of Pennsylvania, said
piece, parcel and tract of land to be used for vehicular and pedestrian ingress
and egress to and from the 327.22 Acre Tract and being more completely bounded
and described as follows:
Beginning at a point within the Right-of-Way of Hanover Township Road Number
400, said beginning point being South 37(degrees) 32' 00" East 537.43 feet more
or less from the Northwest corner of land of Crossroads Properties,
Incorporated, identified as Tract No. 1 and as more fully described on the Deed
from Starvaggi Industries, Incorporated, as Grantor, to Crossroads Properties,
Incorporated, as Grantee, said Deed being dated June 19, 1989 and recorded, in
the Office of the Recorder of Deeds of Washington County, at Deed Book Volume
2371, Page 220; thence, from said point of beginning, North 79(degrees) 48' 21"
East 3584.25 feet to a point; thence along a portion of the land of the 327.22
Acre Tract, South 20(degrees) 10' 00" East 101.53 feet to a point; thence South
79(degrees) 48' 21" West 3550.13 feet to a point within the Right-Of-Way of
Hanover Township Road Number 400; thence from said point within the Right-Of-Way
of Hanover Township Road Number 400 North 37(degrees) 32' 00" West 112.57 feet
to the point of beginning.
Containing an area of 8.189 Acres.
Being a part of that certain piece, parcel and tract of land identified as Tract
No. 1 in the Deed from Starvaggi Industries, Incorporated, as Grantor, to
Crossroads Properties, Incorporated, as Grantee, dated June 19, 1989 and
recorded, in the Office of the Recorder of Deeds of Washington County, at Deed
Book Volume 2371, Page 220.
A-3
<PAGE>
EXHIBIT B
PERMITTED EXCEPTIONS
TRACT NO. 1 -- Deed of Starvaggi Charities, Inc. to Crossroads Properties,
Incorporated dated June 19, 1989, recorded June 27, 1989 in the Recorder of
Deeds Office of Washington County, Pennsylvania, in Deed Book 2371, Page 225.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
3. A right-of-way granted by Starvaggi Charities, Inc. to Peoples Natural
Gas Company for a three inch pipeline per instrument dated December 13, 1968,
recorded January 8, 1969 in Deed Book 1291, Page 596.
4. An easement for a limited access for a highway recorded in Deed Book
1274, Page 246.
5. Agreement by Annie M. Lawrence with William A. Meyer to convey property
on or before November 15, 1939. The Agreement is dated October 11, 1939. Only a
few days after this Agreement, Annie M. Lawrence conveyed the property to the
Greensburg-Connellsville Coal & Coke Company. Nothing was found of record to
show that William A. Meyer was acting on behalf of the said
Greensburg-Connellsville Coal & Coke Company. Landlord agrees to commence and
successfully complete, on or before October 24, 1990, an Action to Quiet Title
against William A. Meyer or otherwise to appropriately acquire the interest of
William A. Meyer.
6. An oil and gas lease dated April 24, 1908 granted to J.L. Callahan per
instrument recorded in Deed Book 359, Page 440.
7. Timber on the property was conveyed to W.E. Cooper under an Article of
Agreement dated April 6, 1933, recorded April 11, 1933 in Deed Book 591, Page
108.
8. NOTICE -- This document may not sell, convey, transfer, include or
insure the title to the coal and right of support underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage may result to the surface of the land and in any house, building, or
other structure on or in such land. (This notice is set forth in the manner
provided in Section 1 of the Act of July 17, 1957, P.L. 984.)
9. See Plan Book 21, Page 415.
10. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 225 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said six tracts of land but without the right to use the
surface estate for any purpose whatsoever."
11. Excepting and reserving all the coal together with mining rights as
set forth in the deed to Crossroads Properties, Incorporated recorded in Deed
Book 2371, Page 225 as follows: "ALSO EXCEPTING AND RESERVING to the Grantor
herein all coal
<PAGE>
within and underlying each of the six above-described premises together with,
for each and every vein of coal, the free and uninterrupted right-of-way into,
upon, and under said land at such points and in such manner as may be proper and
necessary for the purpose of digging, mining, coking, draining, ventilating, and
carrying away said coal, etc., together with the privilege of mining and
removing through the described premises other coal or materials belonging to the
Grantor herein, its successors or assigns, or which may hereafter be acquired.
The reserved rights herein shall not be interpreted to include use of the
surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall not
be construed to and do not, in fact, include and permit any surface use
whatsoever by bore holes, shafts, slopes, ventilation fans, hoists, pumps and
the like, of the Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further hereby expressly acknowledge their intention
and agree that the rights, title and interest herein granted and conveyed to
Grantee shall be construed to grant and convey to Grantee, inter alia, the right
of surface support".
12. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground abutting said stream.
TRACT NO. 2 - Deed of Starvaggi Charities, Inc. to Crossroads Properties,
Incorporated dated June 19, 1989, recorded June 27, 1989 in the Recorder of
Deeds Office of Washington County, Pennsylvania, in Deed Book 2371, Page 225.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
3. A right-of-way granted by Starvaggi Charities, Inc. to Peoples Natural
Gas Company for a three inch pipeline per instrument dated December 13, 1968,
recorded January 8, 1969 in Deed Book 1291, Page 596.
4. An easement for a limited access for a highway recorded in Deed Book
1274, Page 246.
5. An oil and gas lease granted to William E. Kennedy per instrument dated
May 10, 1907 and recorded in Deed Book 351, Page 73.
6. A right-of-way granted to South Penn Oil Company per instrument dated
February 4, 1921 and recorded in Deed Book 489, Page 611.
7. A conveyance of 2.27 acres of coal made to Harmon Creek Coal
Corporation per instrument dated April 23, 1934 and recorded in Deed Book 592,
Page 446.
E-2
<PAGE>
8. A lease of 11.86 acres of coal made to Harmon Creek Coal Corporation
per instrument dated December 3, 1936, recorded December 4, 1936 in Deed Book
610, Page 134.
9. Various instruments in the chain of title providing that the property
is subject to a private right-of-way from the said Florence to Burgettstown
Public Road to the land now or late of Joseph Jackson.
10. NOTICE -- This document may not sell, convey, transfer, include or
insure the title to the coal and right of support underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage may result to the surface of the land and in any house, building, or
other structure on or in such land. (This notice is set forth in the manner
provided in Section 1 of the Act of July 17, 1957, P.L. 984.)
11. See Plan Book 21, Page 415.
12. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 225 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said six tracts of land but without the right to use the
surface estate for any purpose whatsoever."
13. Excepting and reserving all the coal together with mining rights as
set forth in the deed to Crossroads Properties, Incorporated recorded in Deed
Book 2371, Page 225 as follows: "ALSO EXCEPTING AND RESERVING to the Grantor
herein all coal within and underlying each of the six above-described premises
together with, for each and every vein of coal, the free and uninterrupted
right-of-way into, upon, and under said land at such points and in such manner
as may be proper and necessary for the purpose of digging, mining, coking,
draining, ventilating, and carrying away said coal, etc., together with the
privilege of mining and removing through the described premises other coal or
materials belonging to the Grantor herein, its successors or assigns, or which
may hereafter be acquired. The reserved rights herein shall not be interpreted
to include use of the surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall not
be construed to and do not, in fact, include and permit any surface use
whatsoever by bore holes, shafts, slopes, ventilation fans, hoists, pumps and
the like, of the Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further hereby expressly acknowledge their intention
and agree that the rights, title and interest herein granted and conveyed to
Grantee shall be construed to grant and convey to Grantee, inter alia, the right
of surface support".
E-3
<PAGE>
14. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground abutting said stream.
TRACT NO. 3 -- Deed of Starvaggi Charities, Inc. to Crossroads Properties,
Incorporated dated June 19, 1989, recorded June 27, 1989 in the Recorder of
Deeds Office of Washington County, Pennsylvania, in Deed Book 2371, Page 225.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
3. A right-of-way granted by Starvaggi Charities, Inc. to Peoples Natural
Gas Company for a three inch pipeline per instrument dated December 13, 1968,
recorded January 8, 1969 in Deed Book 1291, Page 596.
4. An easement for a limited access for a highway recorded in Deed Book
1274, Page 246.
5. Oil and gas lease granted to Cyrus Ferguson per instrument dated August
1, 1901 and recorded in Deed Book 231, Page 410.
6. Oil and gas lease granted to C.G. Kiskadden per instrument dated
December 26, 1900 and recorded in Deed Book 255, Page 498.
7. Deed to Greensburg-Connellsville Coal and Coke Company dated March 2,
1940 and recorded in Deed Book 634, Page 523. Excepting and reserving all oil
and gas leases heretofore conveyed and landowner's interest in the leases
reserved.
8. NOTICE -- This document may not sell, convey, transfer, include or
insure the title to the coal and right of support underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage may result to the surface of the land and in any house, building, or
other structure on or in such land. (This notice is set forth in the manner
provided in section 1 of the Act of July 17, 1957, P.L. 984.)
9. See Plan Book 21, Page 415.
10. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 225 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said six tracts of land but without the right to use the
surface estate for any purpose whatsoever."
11. Excepting and reserving all the coal together with mining rights as
set forth in the deed to Crossroads Properties, Incorporated recorded in Deed
Book 2371, Page 225 as follows: "ALSO EXCEPTING AND RESERVING to the Grantor
herein all coal within and underlying each of the six above-described premises
E-4
<PAGE>
together with, for each and every vein of coal, the free and uninterrupted
right-of-way into, upon, and under said land at such points and in such manner
as may be proper and necessary for the purpose of digging, mining, coking,
draining, ventilating, and carrying away said coal, etc., together with the
privilege of mining and removing through the described premises other coal or
materials belonging to the Grantor herein, its successors or assigns, or which
may hereafter be acquired. The reserved rights herein shall not be interpreted
to include use of the surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall not
be construed to and do not, in fact, include and permit any surface use
whatsoever by bore holes, shafts, slopes, ventilation fans, hoists, pumps and
the like, of the Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further hereby expressly acknowledge their intention
and agree that the rights, title and interest herein granted and conveyed to
Grantee shall be construed to grant and convey to Grantee, inter alia, the right
of surface support".
12. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground abutting said stream.
TRACT NO. 4 - Deed of Starvaggi Charities, Inc. to Crossroads Properties,
Incorporated dated June 19, 1989, recorded June 27, 1989 in the Recorder of
Deeds Office of Washington County, Pennsylvania, in Deed Book 2371, Page 225.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
3. A right-of-way granted by Starvaggi Charities, Inc. to Peoples Natural
Gas Company for a three inch pipeline per instrument dated December 13, 1968,
recorded January 8, 1969 in Deed Book 1291, Page 596.
4. An easement for a limited access for a highway recorded in Deed Book
1274, Page 246.
5. An oil and gas lease granted to William E. Kennedy per instrument dated
May 10, 1907 and recorded in Deed Book 351, Page 73.
6. NOTICE -- This document may not sell, convey, transfer, include or
insure the title to the coal and right of support underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage may result to the surface of the land and in any house, building, or
other structure on or in such land. (This notice is set forth
E-5
<PAGE>
in the manner provided in Section 1 of the Act of July 17, 1957, P.L. 984.)
7. See Plan Book 21, Page 415.
8. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 225 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said six tracts of land but without the right to use the
surface estate for any purpose whatsoever."
9. Excepting and reserving all the coal together with mining rights as set
forth in the deed to Crossroads Properties, Incorporated recorded in Deed Book
2371, Page 225 as follows: "ALSO EXCEPTING AND RESERVING to the Grantor herein
all coal within and underlying each of the six above-described premises together
with, for each and every vein of coal, the free and uninterrupted right-of-way
into, upon, and under said land at such points and in such manner as may be
proper and necessary for the purpose of digging, mining, coking, draining,
ventilating, and carrying away said coal, etc., together with the privilege of
mining and removing through the described premises other coal or materials
belonging to the Grantor herein, its successors or assigns, or which may
hereafter be acquired. The reserved rights herein shall not be interpreted to
include use of the surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall not
be construed to and do not, in fact, include and permit any surface use
whatsoever by bore holes, shafts, slopes, ventilation fans, hoists, pumps and
the like, of the Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further hereby expressly acknowledge their intention
and agree that the rights, title and interest herein granted and conveyed to
Grantee shall be construed to grant and convey to Grantee, inter alia, the right
of surface support".
10. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground abutting said stream.
TRACT NO. 5 -- Deed of Starvaggi Charities, Inc. to Crossroads Properties,
Incorporated dated June 19, 1989, recorded June 27, 1989 in the Recorder of
Deeds Office of Washington County, Pennsylvania, in Deed Book 2371, Page 225.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
3. A right-of-way granted by Starvaggi Charities, Inc. to Peoples
Natural Gas Company for a three inch pipeline per
E-6
<PAGE>
instrument dated December 13, 1968, recorded January 8, 1969 in Deed Book 1291,
Page 596.
4. An easement for a limited access for a highway recorded in Deed Book
1274, Page 246.
5. An oil and gas lease granted to William E. Kennedy per instrument dated
May 10, 1907 and recorded in Deed Book 351, Page 73.
6. NOTICE - This document may not sell, convey, transfer, include or
insure the title to the coal and right of support underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage may result to the surface of the land and in any house, building, or
other structure on or in such land. (This notice is set forth in the manner
provided in Section 1 of the Act of July 17, 1957, P.L. 984.)
7. See Plan Book 21, Page 415.
8. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 225 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said six tracts of land but without the right to use the
surface estate for any purpose whatsoever."
9. Excepting and reserving all the coal together with mining rights as set
forth in the deed to Crossroads Properties, Incorporated recorded in Deed Book
2371, Page 225 as follows: "ALSO EXCEPTING AND RESERVING to the Grantor herein
all coal within and underlying each of the six above-described premises together
with, for each and every vein of coal, the free and uninterrupted right-of-way
into, upon, and under said land at such points and in such manner as may be
proper and necessary for the purpose of digging, mining, coking, draining,
ventilating, and carrying away said coal, etc., together with the privilege of
mining, and removing through the described premises other coal or materials
belonging to the Grantor herein, its successors or assigns, or which may
hereafter be acquired. The reserved rights herein shall not be interpreted to
include use of the surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall
not be construed to and do not, in fact, include and permit any surface use
whatsoever by bore holes, shafts, slopes, ventilation fans, hoists, pumps and
the like, of the Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further hereby expressly acknowledge their intention
and agree that the rights, title and interest herein granted and conveyed to
Grantee shall be construed to grant and convey to Grantee, inter alia, the right
of surface support".
E-7
<PAGE>
10. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground abutting said stream.
TRACT NO. 6 -- Deed of Starvaggi Charities, Inc. to Crossroads Properties,
Incorporated dated June 19, 1989, recorded June 27, 1989 in the Recorder of
Deeds Office of Washington County, Pennsylvania, in Deed Book 2371, Page 225.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
3. A right-of-way granted by Starvaggi Charities, Inc. to Peoples Natural
Gas Company for a three inch pipeline per instrument dated December 13, 1968,
recorded January 8, 1969 in Deed Book 1291, Page 596.
4. An easement for a limited access for a highway recorded in Deed Book
1274, Page 246.
5. All of the coal under the tract conveyed to J.W. Merrill per Deed Book
207, Page 28. Note that this was the coal which was conveyed to Samuel
Livingston in a Family Agreement and then to be sold by him.
6. In the deed from the Harmon Creek Coal Corporation to the Pennsylvania
Game Commission, all of the coal together with mining rights, waiver of surface
damage and oil and gas was excepted and reserved per instrument recorded in Deed
Book 658, Page 216. Also, Harmon Creek Coal Corporation reserved the right to
mine by the strip mine method.
7. An oil and gas lease granted to T.G. Phillips, et al. per instrument
dated August 16, 1890, recorded in Deed Book 161, Page 220.
8. An oil and gas lease granted to C.G. Kiskadden per instrument dated
December 12, 1900, recorded in Deed Book 255, page 494.
9. A right-of-way granted to Southwest Pennsylvania, Pipelines Company per
instrument recorded in Deed Book 645, page 375.
10. A right-of-way granted to the Pennsylvania Game Commission for a road
per instrument recorded in Deed Book 654, page 620.
11. Deeds in the chain of title state that they except and reserve to the
lawful owners all of the rights-of-way and minerals previously excepted and
reserved per instrument recorded in Deed Book 1396, Page 11.
12. NOTICE - This document may not sell, convey, transfer, include or
insure the title to the coal and right of support underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage
E-8
<PAGE>
may result to the surface of the land and in any house, building, or other
structure on or in such land. (This notice is set forth in the manner provided
in Section 1 of the Act of July 17, 1957, P.L. 984.)
13. See Plan Book 21, Page 415.
14. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 225 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said six tracts of land but without the right to use the
surface estate for any purpose whatsoever."
15. Excepting and reserving all the coal together with mining rights as
set forth in the deed to Crossroads Properties, Incorporated recorded in Deed
Book 2371, Page 225 as follows: "ALSO EXCEPTING AND RESERVING to the Grantor
herein all coal within and underlying each of the six above-described premises
together with, for each and every vein of coal, the free and uninterrupted
right-of-way into, upon, and under said land at such points and in such manner
as may be proper and necessary for the purpose of digging, mining, coking,
draining, ventilating, and carrying away said coal, etc., together with the
privilege of mining and removing through the described premises other coal or
materials belonging to the Grantor herein, its successors or assigns, or which
may hereafter be acquired. The reserved rights herein shall not be interpreted
to include use of the surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall not
be construed to and do not, in fact, include and permit any surface use
whatsoever by bore holes, shafts, slopes, ventilation fans, hoists, pumps and
the like, of the Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further hereby expressly acknowledge their intention
and agree that the rights, title and interest herein granted and conveyed to
Grantee shall be construed to grant and convey to Grantee, inter alia, the right
of surface support".
16. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground and abutting said stream.
TRACT NO. 1 - Deed of Starvaggi Industries Incorporated to Crossroads
Properties, Incorporated dated June 19, 1989, recorded June 27, 1989 in the
Recorder of Deeds Office of Washington County, Pennsylvania, in Deed Book 2371,
Page 220.
1. Any variation in location of lines or dimensions or other matters which
an accurate survey would disclose.
2. Provisions of local zoning and subdivision ordinances.
E-9
<PAGE>
3. An easement or right-of-way in deed of Starvaggi Industries
Incorporated to Washington County dated June 27, 1983 and recorded in Deed Book
2118, Page 53.
4. An easement or right-of-way in deed of Starvaggi Industries
Incorporated to Washington County dated June 27, 1983 and recorded in Deed Book
2118, Page 45.
5. Deed of PennWeir Construction Company to Washington County dated May
25, 1967 and recorded in Deed Book 1264, Page 997.
6. Deed from PennWeir Construction Company to Washington County dated
March 5, 1968 and recorded in Deed Book 1274, Page 693.
7. A right-of-way granted by Pennweir to Bell Telephone Company per
instrument dated May 24, 1966 and recorded in Deed Book 1236, Page 432.
8. A right-of-way granted by PennWeir to West Penn Power Company per
instrument dated October 1, 1965 and recorded in Deed Book 1221, Page 71.
9. A right-of-way granted by PennWeir to Manufacturers Light and Heat
Company for a six and eight inch pipeline per instrument dated February 21,
1969, recorded in Deed Book l297, Page 1072.
10. An easement for a limited access highway from PennWeir as recorded in
Deed Book 1293, Page 1114.
11. Oil and gas leases were found of record as follows:
a. To John Wiles, et ux. per instrument dated August 6, 1900, and
recorded in Deed Book 231, Page 504.
b. To William Jackson per instrument dated June 18, 1902, and
recorded in Deed Book 279, Page 345.
c. To William C. Kennedy & Co. per instrument dated May 15, 1907,
and recorded in Deed Book 351, Page 72.
d. To The Peoples Natural Gas Co. per instrument dated October 29,
1910, and recorded in Deed Book 380, Page 445.
e. To Peoples Natural Gas Company per instrument dated September 9,
1924, and recorded in Deed Book 528, Page 72.
12. A coal lease granted to Hanover Coal Company of Ohio per instrument
dated October 14, 1918, and recorded in Deed Book 460, Page 397 for a period of
twenty-five years or as much longer as it may be necessary to remove and mine
all of the coal.
13. Exception and reservations of the oil, gas, coal and mining rights by
deed of National Steel Corporation to Weirton Ice & Coal Supply Company per
instrument recorded in Deed Book 1056, Page 674. (See also Deed Book 1061, Page
380.) 19.
14. NOTICE -- This document may not sell, convey, transfer, include or
insure the title to the coal and right of support, underneath the surface land
described or referred to herein, and the owner or owners of such coal may have
the complete legal right to remove all of such coal, and, in that connection,
damage may result to the surface of the land and in any house, building,
E-10
<PAGE>
or other structure on or in such land. (This notice is set forth in the manner
provided in Section 1 of the Act of July 17, 1957, P.L. 984.)
15. See Plan Book 21, Page 416.
16. Excepting and reserving all oil and gas as set forth in the Deed to
Crossroads Properties, Incorporated recorded in Deed Book 2371, Page 220 in the
following language: "EXCEPTING AND RESERVING to the Grantor herein all oil and
gas in and underlying said two tracts of land but without the right to use the
surface estate for any purpose whatsoever."
17. Excepting and reserving all the coal together with mining rights as
set forth in the deed to Crossroads Properties, Incorporated recorded in Deed
Book 2371, Page 220 as follows: "ALSO EXCEPTING AND RESERVING to the grantor
herein all coal within and underlying each of the two above-described premises
together with, for each and every vein of coal, the free and uninterrupted
right-of-way into, upon, and under said land at such points and in such manner
as may be proper and necessary for the purpose of digging, mining, coking,
draining, ventilating, mining and removing through the described premises other
coal or materials belonging to the Grantor herein, its successors or assigns, or
which may hereafter be acquired. The reserved rights herein shall not be
interpreted to include use of the surface.
Grantor and Grantee hereby expressly acknowledge their intention and agree
that the rights and privileges herein excepted and reserved to Grantor shall not
be construed to and do not, in fact, include and permit any surface use
whatsoever by Grantor including any surface use by Grantor for, inter alia, bore
holes, shafts, slopes, ventilation fans, hoists, pumps and the like, of the
Estate(s) hereby conveyed to Grantee.
Grantor and Grantee further expressly acknowledge their intention and
agree that the rights, title and interest herein granted and conveyed to Grantee
shall be construed to grant and convey to Grantee, inter alia, the right of
surface support."
18. If a stream of water flows on or abuts the premises, then the premises
are subject to riparian rights of owners of ground abutting said stream.
E-11
<PAGE>
[SEAL] REALTY TRANSFER TAX State Tax Fund
COMMONWEALTH OF PENNSYLVANIA STATEMENT OF VALUE __________________________
DEPARTMENT OF REVENUE Book Number
BUREAU OF INDIVIDUAL TAXES __________________________
POST OFFICE BOX 8910 Page Number
HARRISBURG, PA 17105-8910 __________________________
Date Recorded
__________________________
See Reverse for Instructions
================================================================================
Complete each section and file in duplicate with Recorder of Deeds when (1) the
full value/consideration is not set forth in the deed, (2) when the deed is
without consideration, or by gift, or (3) a tax exemption is claimed. A
Statement of Value is not required if the transfer is wholly exempt from tax
based on: (1) family relationship or (2) public utility easement. If more space
is needed, attach additional sheet(s).
================================================================================
A CORRESPONDENT -- All inquiries may be directed to the following person:
================================================================================
Name Telephone Number
Rex A. Bennett Area Code (412) 391-3911
- --------------------------------------------------------------------------------
Street Address City State Zip Code
2420 Grant Building Pittsburgh, PA 15219
=======================================-----------------------------------------
B TRANSFER DATA Date of Acceptance of Document
=======================================-----------------------------------------
Assignor Assignee
PACE Entertainment Group, Inc. YM/PACE Partnership
- --------------------------------------------------------------------------------
Street Address Street Address
515 Post Oak Boulevard, Suite 300 1515 Broadway, Suite 3804
- --------------------------------------------------------------------------------
City State Zip Code City State Zip Code
Houston, TX 77027 New York, NY 10036
================================================================================
C PROPERTY LOCATION
================================================================================
Street Address City, Township, Borough
Hanover Township
- --------------------------------------------------------------------------------
County School District Tax Parcel Number
Washington see below
================================================================================
D VALUATION DATA
================================================================================
1. Actual Cash 2. Other Consideration 3. Total Consideration
Consideration
+ =
- --------------------------------------------------------------------------------
4. County Assessed 2. Common Level Ratio 3. Fair Market Value
Value Factor
$83,290.00 x 3.73 = $312,578.62
================================================================================
E EXEMPTION DATA
================================================================================
1a: Amount of Exemption 1b. Percentage of Interest
Claimed Conveyed
100%
- ------------------------------------------------------
2. Check Appropriate Box Below for Exemption Claimed
|_| Will or intestate succession __________________________________________
(Name of Decedent) (Estate File Number)
Tax Number 340-010-00-00-0015-00
|_| Transfer to Industrial Development Agency. 340-010-00-00-0014-00
340-009-00-00-0010-00
|_| Transfer to agent or straw party. (Attach copy 340-010-00-00-0016-00
of agency/straw party agreement). 340-009-00-00-0009-00
|_| Transfer between principal and agent. (Attach
copy of agency/straw trust agreement). Tax paid prior to deed
(Partial) 340-032-00-00-0008-01
(Partial) 340-010-00-00-0017-00
|_| Transfers to the Commonwealth, the United States, and Instrumentalities
by gift, dedication, condemnation or implied condemnation. (Attach copy
of resolution).
|_| Transfer from mortgagor to a holder of a mortgage in default. Mortgage
Book Number _________, Page Number ________.
|_| Corrective deed (Attach copy of the prior deed).
|_| Statutory corporate consolidation, merger or division. (Attach copy of
articles).
|X| Other (Please explain exemption claimed, if other than listed above.)
No Transfer Tax is payable on this assignment of ground lease pursuant
-----------------------------------------------------------------------
to 61 PA Code 91.193 B 27
-----------------------------------------------------------------------
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
Under penalties of law, I declare that I have examined this Statement, including
accompanying information, and to the best of my knowledge and belief, it is
true, correct and complete.
- --------------------------------------------------------------------------------
Signature of Correspondent or Responsible Party Date
/s/ Rex A. Bennett 04/06/90
- --------------------------------------------------------------------------------
[SEE REVERSE]
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 6th day of April 1990, before me, the undersigned notary
public, personally appeared Brian Becker and Jeffrey Lewis who acknowledged
themselves to be the Vice President and Vice President of Pace Entertainment
Group, Inc., a Texas corporation, and that they, as such Vice President and Vice
President, being authorized so to do, executed the foregoing instrument for the
purposes therein contained, by signing the name of such corporation by
themselves as Vice President and Vice President.
In witness whereof, I hereunto set my hand and official seal.
/s/ Belinda Mellon
-------------------------
Notary Public
BELINDA MELLON
Notary Public, State of New York
No. 24-4786076
Qualified in Kings County
Commission Expires July 31, 1991
7-31-91
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 6th day of April 1990, before me, the undersigned notary
public, personally appeared Marvin Cohn and Mark Schwartz who acknowledged
themselves to be the Vice President and Assistant Secretary of YM Corp., a
Delaware corporation, and that they, as such Vice President and Assistant
Secretary, being authorized so to do, executed the foregoing instrument for the
purposes therein contained, by signing the name of such corporation by
themselves as Vice President and Assistant Secretary respectively, which
corporation is a partner of YM/Pace Partnership, a New York general partnership,
the partnership which executed the foregoing instrument, and that said
corporation was duly authorized to execute the same as such partner on behalf of
said partnership. YM/PACE PARTNERSHIP
In witness whereof, I hereunto set my hand and official seal.
/s/ Belinda Mellon
-------------------------
Notary Public
BELINDA MELLON
Notary Public, State of New York
No. 24-4786076
Qualified in Kings County
Commission Expires July 31, 1991
7-31-91
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 6th day of April 1990, before me, the undersigned notary
public, personally appeared Brian Becker and Jeffrey Lewis who acknowledged
themselves to be the Vice President and Vice President of Pace Concerts, Inc., a
Texas corporation, and that they, as such Vice President and Vice President,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of such corporation by themselves as Vice
President and Vice President respectively, which corporation is a partner of
YM/Pace Partnership, a New York general partnership, the partnership which
executed the foregoing instrument, and that said corporation was duly authorized
to execute the same as such partner on behalf of said partnership.
In witness whereof, I hereunto set my hand and official seal.
/s/ Belinda Mellon
-------------------------
Notary Public
BELINDA MELLON
Notary Public, State of New York
No. 24-4786076
Qualified in Kings County
Commission Expires July 31, 1991
7-31-91
RECORDED
WASHINGTON COUNTY, PA.
90 APR-9 AM 11:59
[SEAL]
/s/ [ILLEGIBLE]
RECORDER OF DEEDS
<PAGE>
PARTNERSHIP AGREEMENT
[WALNUT CREEK AMPHITHEATER]
This Partnership Agreement ("Agreement") is made and entered into
effective as of the 1st day of July, 1991, by and between SONY MUSIC/PACE
PARTNERSHIP, a New York general partnership, and CDC AMPHITHEATERS/I, INC., a
North Carolina corporation. For and in consideration of the mutual covenants
herein contained, the parties to this Agreement hereby form and create a general
partnership, under and pursuant to the Partnership Act for the purposes and upon
the terms, provisions, and conditions as hereinafter set forth:
ARTICLE I
Definitions
As used in this Agreement, the following terms shall have the respective
meanings indicated:
Affiliate: With respect to any Person, any other Person that directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Person specified. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and under "common control with") when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
Amphitheater: The outdoor entertainment facility currently being
constructed by the City of Raleigh and Walnut Creek Amphitheater Financing
Assistance Corporation on the Amphitheater Site.
Amphitheater Fiscal Year: Each twelve month period commencing on November
1 of a calendar year and ending on October 31 of the subsequent calendar year.
Amphitheater Season: The portion of each calendar year which is included
between the period of time from May 1 to October 31 of such calendar year, being
the contemplated portion of each calendar year during which the Amphitheater
will be open for the presentation of events, performances and shows.
<PAGE>
Amphitheater Site: That certain tract of property located in Wake County,
North Carolina being more fully described on Exhibit "A" attached hereto.
Appraised Purchase Price: Shall have the meaning assigned to it pursuant
to the provisions of Section 14.02(c)(i) hereof.
Available Cash: Cash held by the Partnership at the end of any
Amphitheater Season which, in the reasonable judgment of the Managing Partner,
is not required or reasonably expected to be required for the obligations or
business needs of the Partnership between the end of such Amphitheater Season
and the commencement of the next succeeding Amphitheater Season including,
without limitation, a reasonable capital reserve for the start-up costs
associated with the first weeks of the next succeeding Amphitheater Season.
Call Option: Shall have the meaning assigned to it pursuant to Section
14.01 hereof.
Call Purchase Price: The amount payable to CDP from SMP following an
exercise of the Call Option by SMP, as such amount is determined pursuant to the
provisions of Section 14.01 hereof.
CDP: CDC Amphitheaters/I, Inc., a North Carolina corporation.
CDP Executive Officers: The officers and/or directors of CDP who, at any
given time, are vested with the primary management responsibilities of CDP;
however, in no event shall more than three persons at any one time be deemed to
be CDP Executive Officers.
CDP Management Change: The occurrence of (a) John J. Boyle no longer being
the sole chief executive and chief operating officer of CDP or (b) John J.
Boyle's active involvement in the management of CDP becoming substantially
diminished from his current level of involvement, regardless of whether either
such occurrence is caused by (i) the sale of all or any portion of John J.
Boyle's stock ownership interest in CDP, (ii) the retirement of John J. Boyle,
(iii) the death or permanent disability of John J. Boyle or (iv) any other
reason whatsoever.
Call Trigger Event: The occurrence of one or more of the following events:
(a) The Partners having a disagreement concerning the taking of a
Major Action.
(b) The Partners failing to agree, or failing to have deemed to
agree, upon an Operating Budget for an Amphitheater Season in accordance
with the provisions of Section 12.03 hereof.
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<PAGE>
(c) CDP refusing to consent to any proposed issuance, sale,
conveyance or other transfer of a partnership interest in SMP for which
the consent of CDP is necessary as a condition to such issuance, sale,
conveyance or other transfer pursuant to the provisions of Section 18.03
hereof.
(d) The dissolution or other termination of the Other Partnership
for any reason other than a Partner Default (as such term is defined in
Section 13.3 of the Other Partnership Agreement) having occurred with
respect to SMP.
(e) SMP determining, in its reasonable discretion, at any time
following the second anniversary of the occurrence of a Qualified CDP
Management Change, that the obligations of CDP set forth in Section
12.02(b) hereof have not been performed in a manner consistent with the
levels of performance provided by CDP prior to the occurrence of such
Qualified CDP Management Change.
(f) The occurrence of a Non-Qualified CDP Management Change.
Code: The Internal Revenue Code of 1986, as amended.
CPI Index: Consumer Price Index for All Urban Consumers (all U.S. cities),
1982 -84 equals 100 Base, published monthly by the U.S. Department of Labor's
Bureau of Labor Statistics, or any successor publication.
Deficit Loan: A loan extended by a Partner to the Partnership pursuant to
the provisions of Section 6.02 hereof.
Development Management Agreement: That certain Development Management
Agreement dated effective December 1, 1990 and entered into by and among SMP,
the City of Raleigh and Walnut Creek Amphitheater Financing Assistance
Corporation. Among other things, SMP agreed in the Development Management
Agreement to provide certain development and construction management services in
connection with the construction of the Amphitheater in exchange for the payment
of a $200,000.00 fee.
Gross Revenues: All funds and other revenues actually received by the
Partnership (a) arising out of or deriving from any use, operation or sublease
of the Amphitheater including, without limitation, (i) revenues received by the
Partnership from the sale of tickets to events, shows or performances held at
the Amphitheater (net of all applicable sales taxes), (ii) revenues received by
the Partnership from the sale of merchandise, food, beverages and other
concessions at the Amphitheater (net of all applicable sales taxes), (iii)
payments or other revenues received by the Partnership from sponsors or
concessionaires at the Amphitheater and (iv) rentals or other payments received
by the Partnership from the rental or subleasing of the Amphitheater to other
Persons and (b) the gross
-3-
<PAGE>
amount received by the Partnership upon the sale, transfer or other assignment
of all or substantially all of its interest in and to the Amphitheater,
regardless whether such amount is received in the form of cash, promissory
notes, other property or any combination thereof.
Lease Agreement: That certain Lease Agreement dated effective as of
December 1, 1990 and entered into by and between the City of Raleigh, as lessor,
and SMP, as lessee, and covering the Amphitheater. A Memorandum of the Lease
Agreement was filed in Book 4839, Page 171 of the Wake County Registry.
Major Actions: Any acts taken, sums expended or obligations incurred on
behalf of the Partnership for any of the following activities:
(a) borrowing any sums of money on behalf of the Partnership or
modifying the terms of any existing indebtedness of the Partnership other
than (i) Routine Renewals of the Senior Debt, (ii) loans received from any
Partner for operating deficits pursuant to the provisions of Section 6.02
hereof and (iii) trade payables and other accounts payable incurred in the
ordinary course of the business of the Partnership;
(b) acquiring any property on behalf of the Partnership which does
not relate to the ownership, use, operation or maintenance of the
Amphitheater;
(c) expending any funds of the Partnership for Operating Expenses in
amounts which materially exceed the amounts permitted to be expended in
the Partnership's then effective Operating Budget;
(d) engaging in any other business venture or entrepreneurial
activity other than that directly related to the Partnership Purposes; and
(e) selling or otherwise transferring all or substantially all of
the Partnership's interest in the Amphitheater.
Notwithstanding anything to the contrary contained herein, the decision to
obtain or not obtain a New Lease following the occurrence of a Termination Event
(as such terms are defined in the Mutual Recognition Agreement) shall not be a
Major Action for purposes of this Agreement.
Managing Partner: SMP.
Mutual Recognition Agreement: That certain Mutual Recognition Agreement
dated effective as of December 1, 1990 and entered into by and among SMP, the
City of Raleigh, Walnut Creek Amphitheater Financing Assistance Corporation and
First Union National
-4-
<PAGE>
Bank of North Carolina. The Mutual Recognition Agreement was flied in Book
4839, Page 178 of the Wake County Registry.
Net Other Distributions: For any Amphitheater Fiscal Year, (a) the gross
amount of distributions made to SMP by the Other Partnership during such
Amphitheater Fiscal Year minus (b) the gross amount of capital contributions
made by SMP to the Other Partnership during such Amphitheater Fiscal Year.
Non-Qualified CDP Management Change: (i) Any CDP Management Change which
is not a Qualified CDP Management Change or (ii) any change in the CDP Executive
Officers occurring at any time after a CDP Management Change if, following such
change in CDP Executive Officers, the CDP Executive Officers are composed of
persons that do not satisfy the conditions contained in clauses (b) and (c) of
the definition of "Qualified CDP Management Change."
Operating Budget: The budget of Operating Expenses of the Partnership to
be prepared for each Amphitheater Season in accordance with and pursuant to the
provisions of Section 12.03 hereof.
Operating Expenses: The overhead and operating expenses of the Partnership
which relate to the day-to-day operation of the Amphitheater such as salaries
for employees and staff for the Amphitheater, utility costs for the
Amphitheater, insurance costs relating to the maintenance of casualty and
liability insurance for the Amphitheater, interest on the Senior Debt, costs
relating to maintenance, repair and upkeep of the Amphitheater and the personal
property and equipment used in connection with the operation of the Amphitheater
and costs for the purchase of office supplies and equipment. Notwithstanding
anything to the contrary implied by the immediately preceding sentence, none of
the following types of expenditures or expenses shall be "Operating Expenses"
for purposes of this Agreement:
(a) the costs directly attributable to or associated with the
booking, production, presentation or promotion of any performance or event
at the Amphitheater such as artist costs, advertising costs and costs of
staging;
(b) costs or expenses which must be incurred as the result of any
emergency, casualty or other unforeseeable occurrence at the Amphitheater;
and
(c) any and all rent and other payments due and payable by the
Partnership under and pursuant to the terms of the Lease Agreement
Other Partnership: The limited partnership created pursuant to the Other
Partnership Agreement which shall have as its sole business purposes (a) the
promotion, presentation and production of live entertainment events in the
greater Raleigh, Chapel Hill, Durham and Greensboro, North Carolina metropolitan
areas and (b) the management of
-5-
<PAGE>
the outdoor entertainment facility to be known as "The Paladium" and located at
the Carowinds Theme Park in Charlotte, North Carolina.
Other Partnership Agreement: That certain Partnership Agreement entered
into of even date herewith by and between SMP, as limited partner, and CDC of
North Carolina, Inc., an Affiliate of CDP, as general partner, pursuant to which
the Other Partnership is being created.
Partners: SMP and CDP. The term "Partners" shall not include any assignee
of a Partner's Partnership Interest, unless the other Partner agrees to admit
such assignee to the Partnership.
Partnership: The Partnership created by this Agreement.
Partnership Act: The New York Partnership Law, Chapter 39 of the
Consolidated Laws of the State of New York, as amended from time to time.
Partnership Interest: All of the interest of any Partner in the
Partnership, including his (i) right to a distributive share of the profits and
losses of the Partnership, (ii) right to a distributive share of the assets of
the Partnership, and (iii) right to participate in the management of the affairs
of the Partnership.
Partnership Purposes: The purposes for which the Partnership is formed as
set forth in Article III of this Agreement.
Percentage Interest: The respective Partnership Interest of each Partner
in the Partnership expressed as a percentage of the Partnership Interests owned
by all Partners. The Percentage Interest of SMP is sixty-six and two-thirds
percent (66-2/3%) and the Percentage Interest of CDP is thirty-three and
one-third percent (33-1/3%).
Permitted Encumbrances: The Senior Mortgage and all of the title
encumbrances included within the definition of "Permitted Encumbrances" as such
term is used in the Lease Agreement.
Permitted Rate: The lesser of (a) two percent (2%) per annum over the
Prime Rate or (b) the maximum non-usurious interest rate permitted by applicable
law from time to time in effect.
Person: Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof, or any other form of entity.
Primary Qualified Managers: David Ben Liss, David Williams and Rick
Franks.
-6-
<PAGE>
Prime Rate: The prime rate of interest per annum announced, from time to
time, by major U.S. money center banks as published daily in the "Money Rates"
column of The Wall Street Journal; provided, however, that if The Wall Street
Journal should ever cease, for any reason, to publish such rate on a daily
basis, then the Prime Rate shall be the rate of interest designated, and in
effect from time to time, by Citibank, N.A., in New York, New York as its prime
rate or base rate charged on commercial loans.
Qualified Appraiser: Either (a) a qualified MAI appraiser who is in the
business of appraising income producing real property or (b) a qualified
professional appraiser who is in the business of appraising going concerns.
Qualified CDP Management Change: A CDP Management Change with respect to
which all of the following conditions are satisfied:
(a) Such CDP Management Change occurs (i) after the end of the 1993
Amphitheater Season for any reason or (ii) before the end of the 1993
Amphitheater Season because of John J. Boyle's death or permanent
disability.
(b) Following the occurrence of such CDP Management Change, all or a
majority of the CDP Executive Officers are Primary Qualified Managers.
(c) If, following the occurrence of such CDP Management Change, less
than all of the CDP Executive Officers are Primary Qualified Managers,
then the balance of such CDP Executive Officers are Secondary Qualified
Managers.
Qualified CDP Managers: Any one or more of the Primary Qualified Managers
or the Secondary Qualified Managers.
Qualified CDP Shareholders: Any one or more of (a) the Qualified Family
Members, (b) any trust created for the benefit of any of the Qualified Family
Members, (c) any corporation, partnership or other entity which is owned and
controlled by Qualified Family Members, (d) any Qualified CDP Managers or (e)
such other persons as may be approved by SMP, which approval shall not be
unreasonably withheld or delayed.
Qualified Family Members: Any one or more of John J. Boyle, Janet Boyle or
any children of John J. Boyle or Janet Boyle.
Routine Renewals: With respect to the Senior Debt, any renewal, extension,
modification or other rearrangement of the Senior Debt which does not have the
effect of (a) increasing the principal balance of the Senior Debt, (b)
increasing the interest rate accruing on the Senior Debt or (c) materially
increasing the amounts payable under the Senior Debt during any calendar year.
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Secondary Qualified Managers: John MacDonald, Wilson Howard and Ron Cohen.
Senior Debt: (a) The obligations and liabilities of SMP to repay that
certain $4,140,000.00 loan previously obtained by SMP from the Mitsui Taiyo
Kobe Bank, Ltd. and all renewals, rearrangements and extensions of such loan and
(b) the indemnity obligations previously undertaken by SMP for the benefit of
Sony Music Entertainment, Inc. and Sony Corporation, the guarantors of the
$4,140,000.00 loan received from the Mitsui Taiyo Kobe Bank, Ltd., under that
certain Indemnity Agreement executed by SMP and dated effective as of December
1, 1990, pursuant to which SMP agreed to indemnify and hold such guarantors
harmless from and against any loss, cost, expense or other claim arising out of
or otherwise relating to such loan or the guaranty thereof.
Senior Mortgage: The liens and security interests encumbering the
leasehold estate created pursuant to the Lease Agreement in favor of Sony Music
Entertainment, Inc. and Sony Corporation as security for the Senior Debt, such
liens having been created pursuant to that certain Leasehold Deed of Trust dated
effective as of December 1, 1990 and being recorded in Book 4839, Page 200 of
the Wake County Registry.
SMP: Sony Music/PACE Partnership, a New York general partnership whose
sole general partners are PACE Concerts, Inc., a Texas corporation, and YM
Corp., a Delaware corporation.
ARTICLE II
Name of Business: Offices
2.01 Partnership Name. The name of the Partnership shall be Walnut Creek
Amphitheater Partnership. In addition to the foregoing name, the activities and
business of the Partnership may be conducted, in the Managing Partner's
discretion, under the name of "Walnut Creek Amphitheater", "Walnut Creek
Amphitheater Co.", "Walnut Creek Amphitheater Partners" or such other
modifications or variations thereof as may be designated from time to time by
the Managing Partner. The Partners shall execute and file such certificates, if
any, as are required by the provisions of any assumed name law or statute in any
jurisdiction in which the Partnership conducts business, as may be required to
reflect the Partnership's operation under such names.
2.02 Partnership Offices. The principal place of business of the
Partnership shall be at 515 Post Oak Blvd., Suite 300, Houston, Texas 77027. The
Partnership shall also maintain an office at the Amphitheater during the
Amphitheater Season which will be staffed by the employees of the Partnership
who will manage, operate and maintain the Amphitheater.
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ARTICLE III
Purpose and Power of the Partnership
3.01 Purposes. The character and purposes of the specific business to be
conducted by the Partnership are (i) to lease, operate, use and maintain the
Amphitheater and otherwise commercially exploit the Partnership's ownership
interest in the Amphitheater, (ii) to perform and fulfill all obligations and
duties of the "Tenant" under the terms and provisions contained in the Lease
Agreement and (iii) to take any and all other actions which may be incidental to
or otherwise reasonably related to the foregoing business and purposes.
3.02 Powers. The Partnership shall have the power, in fulfilling the
purposes set forth in Section 3.01, to conduct any business or take any action
which is lawful and which is not prohibited by the Partnership Act.
ARTICLE IV
Term of Partnership
The Partnership shall begin on the date first set forth above and shall
continue for a term of sixty (60) years from such date unless sooner dissolved
pursuant to Section 17.01 or by operation of law.
ARTICLE V
Contributions to Partnership
5.01 SMP's Initial Contribution.
(a) Upon execution of this Agreement, SMP shall convey, and does
hereby convey, to the Partnership all of its rights, titles and interests
in and to the Amphitheater including, without limitation, the leasehold
estate created pursuant to the Lease Agreement and all of the rights,
privileges and appurtenances appertaining thereto. The conveyance of SMP's
interest in and to the Amphitheater is being made subject to all of the
Permitted Encumbrances. SMP shall execute such further deeds, bills of
sale, assignment of leases and other conveyancing documents as may be
required by CDP to more fully effect and complete the assignment made
pursuant to the provisions of this Section 5.01(a).
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(b) It is hereby specifically agreed by and between the Partners
that the fair market value of the assets being conveyed by SMP to the
Partnership pursuant to Section 5.01(a) is equal to the aggregate amount
of all indebtedness and obligations currently owing in respect of the
Senior Debt. As a result, the initial balance of the capital account of
SMP following completion of the initial contribution required pursuant to
the provisions of Section 5.01(a) shall be $0.
5.02 Construction and Development Costs. After complete expenditure of all
of the proceeds of the Senior Debt, each Partner shall be obligated to
contribute to the capital of the Partnership its respective Percentage Interest
of any and all construction costs, development costs and start-up costs
associated with or otherwise relating to the development, construction, or
commencement of operations of the Amphitheater. Notwithstanding anything to the
contrary contained herein, in no event shall the aggregate obligation of the
Partners pursuant to this Section 5.02 exceed (a) $306,667.00, with respect to
SMP or (b) $153,333.00, with respect to CDP.
5.03 Operational Shortfalls.
(a) If a Qualified Operational Shortfall (herein defined) occurs at
any time, then the Managing Partner shall have the express right to
deliver a notice ("Capital Call Notice") to the Partners specifying the
amount of funds needed to cover such Qualified Operational Shortfall and
stating that each Partner is obligated to contribute to the capital of the
Partnership its Percentage Interest of the amount of funds needed to cover
such Qualified Operational Shortfall. Following delivery of a Capital Call
Notice to the Partners by the Managing Partner, each Partner shall be
obligated to make on or before the Due Date (herein defined) for such
Capital Call Notice a capital contribution to the Partnership in an amount
equal to its respective Percentage Interest of the amount of funds needed
to cover the Qualified Operational Shortfall as set forth in such Capital
Call Notice.
(b) If a Partner elects to extend a Deficit Loan to the Partnership
following the sending of a Capital Call Notice in order to assist the
Partnership in covering the Qualified Operational Shortfall referred to in
such Capital Call Notice, then (i) the capital contribution obligation
which accrued pursuant to Section 5.03(a) hereof as a result of the
sending of such Capital Call Notice shall still be payable by both
Partners on or before the Due Date for such Capital Call Notice and (ii)
the proceeds of such capital contribution obligation shall be used first
to discharge and pay any amounts still outstanding under such Deficit Loan
at the time that such capital contribution obligation is fulfilled.
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(c) As used herein, the term "Qualified Operational Shortfall" shall
mean the occurrence or happening, at any time, in the Managing Partner's
reasonable discretion, of the circumstance of the Partnership having an
insufficient amount of cash to pay or cover the Qualified Liabilities
(herein defined) of the Partnership as they become due.
(d) As used herein, the term "Qualified Liabilities" shall mean any
and all debts, liabilities, expenses, charges or other obligations of the
Partnership which relate to matters other than the construction,
development or commencement of operations of the Amphitheater, including
without limitation, the obligations of the Partnership in respect of the
Senior Debt and in respect of any Deficit Loans and any obligations
payable to contractors, suppliers or other vendors; provided, however,
specifically excluded from "Qualified Liabilities" shall be any amount
payable to SMP pursuant to Sections 8.01 or 8.02 hereof.
(e) As used herein, the term "Due Date" shall mean, with respect to
a Capital Call Notice, (i) the first anniversary of the date on which such
Capital Call Notice is sent to the Partners if such Capital Call Notice is
sent during an Amphitheater Season or (ii) the last day of the
Amphitheater Season immediately following the sending of such Capital Call
Notice to the Partners if such Capital Call Notice is sent on a date which
does not fall within an Amphitheater Season.
ARTICLE VI
Senior Debt and Deficit Loans
6.01 Senior Debt. The Partnership hereby contractually assumes, for the
benefit of SMP, the obligation to pay all of the Senior Debt. As between the
Partners, each shall be liable for its respective Percentage Interest of the
Senior Debt.
6.02 Deficit Loan. If the Partnership incurs a cash deficit of any kind,
then any Partner shall have the right, but not the obligation, to extend a loan
("Deficit Loan") to the Partnership in the amount of such cash deficit. Each
Deficit Loan shall bear interest at a variable rate of interest per annum equal
to the Permitted Rate and shall be repayable as soon as the Partnership has
funds available therefor. No distributions shall be made to the Partners
pursuant to Section 9.01 hereof at any time during which any Deficit Loan
remains outstanding.
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ARTICLE VII
Profits and Losses
For each taxable year of the Partnership, the income, gains, losses,
credits and deductions of the Partnership shall be allocated between the
Partners in accordance with each Partner's Percentage Interest.
ARTICLE VIII
Expenses. Reimbursements and Fees
8.01 Fees Payable to SMP. In consideration for SMP's services rendered and
to be rendered in connection with (i) the obtaining of the loan evidenced by the
Senior Debt, (ii) negotiating and obtaining the terms of the Lease Agreement,
and (iii) managing the affairs of the Partnership as required herein, the
Partnership shall pay to SMP, out of Partnership funds, during the term of this
Partnership the following fees:
(a) Subject to the adjustments set forth below, an annual fee in an
amount equal to two percent (2%) of all Gross Revenues received during
each Amphitheater Fiscal Year shall be payable by the Partnership to SMP
within thirty (30) days after the end of each such Amphitheater Fiscal
Year. The amount of each year's annual fee payable by the Partnership to
SMP pursuant to the provisions of this Section 8.01(a) shall be adjusted
in accordance with the following provisions:
(i) If the amount of Net Other Distributions during an
Amphitheater Fiscal Year exceeds $150,000.00, then the fee payable
to SMP for such Amphitheater Fiscal Year pursuant to this Section
8.01(a) shall be reduced, but not below $0, in an amount equal to
the amount by which the Net Other Distributions during such
Amphitheater Fiscal Year exceed $150,000.00.
(ii) If the amount of Net Other Distributions during an
Amphitheater Fiscal Year is less than $150,000.00, then the fee
payable to SMP for such Amphitheater Fiscal Year pursuant to the
provisions of this Section 8.01(a) shall be increased by an amount
equal to (x) $150,000.00, minus (y) the gross amount of
distributions made by the Other Partnership to SMP during such
Amphitheater Fiscal Year, plus (z) the gross amount of capital
contributions made by SMP to the Other Partnership during such
Amphitheater Fiscal Year.
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The foregoing adjustments shall continue to be made so long as the
Partnership continues in existence regardless of whether the Other
Partnership is still in existence or not. For any Amphitheater Fiscal Year
in which the Other Partnership does not exist at any time, the Net Other
Distributions shall be deemed to be $0 since no contributions or
distributions will have been made to or from the Other Partnership during
such Amphitheater Fiscal Year.
(b) An annual fee in the amount of $184,000.00 shall be payable by
the Partnership to SMP within thirty (30) days after the end of each
Amphitheater Season.
(c) An annual fee in the amount of $75,000.00 shall be payable by
the Partnership to SMP within thirty (30) days after the end of each
Amphitheater Season. The fee referred to in this Section 8.01(c) shall be
adjusted annually on the date of payment by the proportionate amount that
the CPI Index has changed since the previous year's date of payment.
(d) A one time fee in the amount of $368,000.00 shall be payable by
the Partnership to SMP upon receipt of sufficient funds from
concessionaire advances as more fully described in Section 9.02 hereof.
8.02 Unpaid Fees. No fees payable pursuant to the provisions of Section
8.01 hereof shall be paid by the Partnership at any time during which any
Qualified Liabilities (as such term is defined in Section 5.03(d) hereof) of the
Partnership are past due or delinquent in payment. Any fees payable pursuant to
the provisions of Section 8.01 hereof which are not paid on a timely basis as a
result of the Partnership having insufficient cash shall be and become accounts
payable of the Partnership to SMP and shall bear interest at the Permitted Rate.
No distributions shall be made pursuant to Section 9.01 hereof at any time
during which any fees payable pursuant to Section 8.01, or any interest thereon,
remain unpaid.
8.03 No Charges, Expenses or Reimbursements. Except for the fees payable
by the Partnership to SMP as described in Section 8.01, no other charges,
expenses or reimbursements may be received by either of the Partners from the
Partnership unless unanimously approved by the Partners.
8.04 Development Management Agreement. In order to avoid any
uncertainties, it is hereby specifically agreed, acknowledged and specified that
SMP is retaining, and does hereby retain, all of its rights, privileges, duties
and obligations created by the Development Management Agreement. As a result,
all amounts payable to SMP under or pursuant to the Development Management
Agreement, including, without limitation, the $200,000.00 management fee
referred to therein, shall be the sole and exclusive property of SMP, and the
Partnership shall have no right or interest therein.
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ARTICLE IX
Cash Distributions
9.01 Distribution of Available Cash. Subject to the provisions contained
in Section 9.02 hereof, all Available Cash shall be distributed by the
Partnership to the Partners in proportion to each Partner's respective
Percentage Interest within thirty (30) days after the end of each Amphitheater
Season.
9.02 Initial Concessionaire Advances. Reference is made to the fact that
the Partnership will enter into certain concession agreements ("Initial
Concession Agreements") relating to the Amphitheater with food, beverage and
merchandising vendors during or prior to the 1991 Amphitheater Season. Reference
is also made to the fact that it is anticipated that the Partnership will
receive loans, advances or other lump sum payments under such Initial Concession
Agreements upon execution thereof. Notwithstanding the provisions of Section
9.01 hereof, all loans, advances or other lump sum payments made pursuant to
any such Initial Concession Agreements shall be applied and distributed by the
Partnership in accordance with the following provisions:
(a) First, such loans, advances and other lump sum payments shall be
applied towards payment of the $368,000.00 fee payable to SMP pursuant to
the provisions of Section 8.01(d) hereof.
(b) Second, $460,000.00 shall be retained by the Partnership as a
reserve against the obligations of the Partners to make capital
contributions to the Partnership pursuant to Section 5.02 hereof.
(c) Third, the balance of such loans, advances and lump sum payments
shall be distributed to the Partners upon receipt thereof in proportion to
each Partner's respective Percentage Interest.
The reserve held by the Partnership pursuant to clause (b) of this Section 9.02
shall be (i) first, applied against the obligations of the Partners to make
contributions pursuant to Section 5.02 in lieu of requiring the Partners to
actually make such contributions and (ii) second, if any of such reserve remains
following payment of all amounts owed by the Partnership in respect of the
construction, development and commencement of operations of the Amphitheater,
loaned to SMP within ninety (90) days following the initial use of the
Amphitheater upon the terms outlined in the promissory note attached hereto as
Exhibit "B." SMP shall execute and deliver to the Partnership a promissory note
in substantially the same form as Exhibit "B" attached hereto as a condition to
the funding of the loan referred to in clause (ii) of the immediately preceding
sentence.
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9.03 Subsequent Concessionaire Advances. Any subsequent loans, advances or
other lump sum payments received by the Partnership pursuant to concession
agreements other than the Initial Concession Agreements shall be (i) first,
applied against loans made by the Partners pursuant to Section 9.04 hereof, if
any, and (ii) second, the balance shall be treated as cash available to the
Partnership for purposes of determining the amount of Available Cash and the
resulting amount of distributions to be made from time to time pursuant to the
provisions of Section 9.01 hereof.
9.04 Return of Concessionaire Advances. Each Partner hereby specifically
recognizes, acknowledges and agrees that should the Partnership be required to
return to any concessionaire the advance made to the Partnership by such
concessionaire as a result of an early termination of such concessionaire's
concession agreement with the Partnership, or for any other reason whatsoever,
then, if the Partnership does not have sufficient funds to cover such
obligation, each Partner shall be obligated to loan to the Partnership an amount
of money equal to the product of (x) the amount being so returned to such
concessionaire and (y) the fraction of the concession advance received by such
Partner when the concession advance was made to the Partnership. Any loan made
by a Partner pursuant to the immediately preceding sentence shall bear interest
at the Permitted Rate and shall be payable out of future loans, advances or lump
sum payments received by the Partnership from other concessionaires and shall
for all other purposes hereof be treated as a Deficit Loan.
ARTICLE X
Ownership of Partnership Property
All real or personal property acquired by the Partnership shall be owned
by the Partnership, such ownership being subject to the other terms and
provisions of this Agreement. Each Partner hereby expressly waives the right to
require partition of any Partnership property or any part thereof.
ARTICLE XI
Fiscal Matters
11.01 Fiscal Year. The fiscal year of the Partnership for tax purposes
shall end on June 30 of each calendar year or such other fiscal year as may be
required pursuant to the application of the provisions of the Code or the U.S.
Treasury Regulations promulgated thereunder. The fiscal year of the Partnership
for accounting purposes shall end on March 31 of each calendar year.
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11.02 Books and Records. Proper books and records shall be kept by
Managing Partner with reference to all Partnership transactions, and each
Partner shall at all reasonable times during business hours have access thereto.
All items of income and deductions recognized during a fiscal year shall be
allocated as of the end of each fiscal year, based on the facts and
circumstances existing as of the end of that year. Interim reports may be based
on the facts and circumstances existing at the time of these reports subject to
year-end adjustments. Year end financial statements shall be prepared, or caused
to be prepared, by the Managing Partner as of the end of each fiscal year of the
Partnership and a copy thereof provided to the Partners within 120 days after
the end of each such fiscal year.
11.03 Partnership Bank Accounts. All funds of the Partnership shall be
deposited in its name in an account or accounts maintained at a national or
state bank. Checks shall be drawn upon the Partnership and may be signed by such
persons as may be designated from time to time by the Managing Partner.
11.04 Tax Matters and Reports. Any provision hereof to the contrary
notwithstanding, solely for federal income tax purposes, each of the Partners
hereby recognizes that the Partnership will be subject to all provisions of
Subchapter K of Chapter 1 of Subtitle A of the Code; provided, however, the
filing of U.S. Partnership Returns of Income shall not be construed to extend
the purposes of the Partnership or expand the obligations or liabilities of the
Partners.
11.05 Tax Returns. The Managing Partner shall cause to be prepared and
filed all tax returns and statements, if any, which must be filed on behalf of
the Partnership with any taxing authority, and shall submit copies of all such
returns and statements to the Partners. All fees, charges and other expenses
payable to third party professionals such as attorneys or accountants relating
to the preparation and filing of tax returns and statements or otherwise
reporting of financial results of the Partnership, shall be properly chargeable
as expenses of the Partnership.
11.06 Deduction of Expenses. The Partnership shall treat as an expense for
federal income tax purposes all amounts which may be considered as ordinary and
necessary business expenses deductible under applicable rules of the Code and
the regulations promulgated thereunder. Notwithstanding the foregoing, the
Managing Partner may, from time to time, elect on behalf of the Partnership to
capitalize certain expenditures which might otherwise be considered ordinary and
necessary business expenses for federal income tax purposes, and such electives
shall be binding on all Partners.
11.07 Section 754 Election. In the case of distribution of Partnership
property within the provisions of Section 734 of the Code or in the case of a
transfer of a Partnership interest permitted by this Agreement made within the
provisions of Section 743 of the Code, the Partnership may file an election
under Section 754 of the Code in accordance with the procedures set forth in the
applicable Treasury Regulations.
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11.08 Capital Accounts of Partners. The Partnership shall maintain a
capital account for each Partner, the initial balance of each of which shall be
zero. Each Partner's capital account shall be increased (i) by any income and
gains allocated to that Partner for federal income tax purposes pursuant to
Article VII hereof, and (ii) by the amount of cash and the fair market value of
any property contributed to the Partnership by that Partner (net of liabilities
secured by such contributed property that the Partnership is considered to
assume or take subject to under Section 752 of the Code). Each Partner's capital
account shall be decreased (i) by any deductions and losses allocated to that
Partner for federal income tax purposes pursuant to Article VII hereof, and (ii)
by the amount of cash and the fair market value of any property distributed by
the Partnership to that Partner (net of liabilities secured by such distributed
property that such Partner is considered to assume or take subject to under
Section 752 of the Code).
11.09 No Interest. No Partner shall be entitled to be paid interest in
respect of either his capital account or any contributions made by him to the
Partnership.
ARTICLE XII
Management of Partnership Affairs
12.01 Major Actions. No Major Action may be taken by the Partnership or by
any Partner on behalf of the Partnership without first obtaining approval from
all of the Partners.
12.02 Management Vested in the Managing Partner.
(a) Except as provided below in clause (b), all responsibility and
authority relating to the operations and management of the Partnership,
except for the taking of Major Actions, shall be vested in the Managing
Partner. The Managing Partner is hereby authorized to take any and all
actions reasonably necessary or required to carry out the Partnership
Purposes, including, without limitation, the hiring and retaining of such
employees and other personnel as may be reasonably necessary, in the
discretion of the Managing Partner, to efficiently and effectively use,
operate and maintain the Amphitheater and otherwise fulfill the
Partnership Purposes.
(b) Notwithstanding the foregoing, CDP shall be primarily
responsible for the activities related to booking or otherwise engaging
talent for appearance at the Amphitheater, and CDP hereby agrees to
provide the necessary time and services as may be required to cause the
Amphitheater to be properly and adequately booked and engaged with first
rate national performers. All final decisions concerning the booking of
performers or other talent into the Amphitheater shall be subject to the
approval of the Managing
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Partner; provided, however, (i) if the Managing Partner refuses to book a
particular performer or show into the Amphitheater on behalf of the
Partnership which CDP desires to book, then CDP shall have the right,
subject to availability of the Amphitheater, to rent the Amphitheater from
the Partnership on a Best Commercial Basis (herein defined) for purposes
of presenting such performer or show for its own account or (ii) if the
Managing Partner desires to book an SMP Produced Tour Event (herein
defined) into the Amphitheater which CDP does not agree should be booked
into the Amphitheater by the Partnership, then CDP shall have the right to
require that the Managing Partner rent the Amphitheater from the
Partnership on a Best Commercial Basis for purposes of presenting such SMP
Produced Tour Event for its own account.
(c) As used in this Section 12.02, the following terms shall have
the meanings indicated:
(i) "Best Commercial Basis" shall mean, at any time, the
lowest and most favorable rental rates then made available by the
Partnership to third party promoters for rental of the Amphitheater
on a nightly basis, excluding rentals to municipalities, other
governmental authorities or non-profit organizations.
(ii) "SMP Produced Tour Event" shall mean a performance or
show which is part of a tour being produced nationally by SMP.
12.03 Annual Operating Budgets. On or before April 15 of each calendar
year during the existence of the Partnership, the Managing Partner shall provide
to CDP (i) a proposed Operating Budget for the forthcoming Amphitheater Season
setting forth in reasonable detail the various categories of Operating Expenses
and the budgeted amounts for each such category to be incurred by the
Partnership during the forthcoming Amphitheater Season and (ii) such reasonable
information and materials related to the proposed Operating Budget as may be
reasonably requested by CDP. If the aggregate amount of Operating Expenses
reflected in any proposed Operating Budget does not exceed the aggregate amount
of Operating Expenses reflected in the Operating Budget for the immediately
preceding Amphitheater Season by more than the greater of (i) 10% or (ii) the
percentage increase in the CPI Index during the preceding 12 month period, then
such proposed Operating Budget shall be automatically deemed to have been
approved by CDP for purposes of this Agreement. If the Managing Partner fails to
submit to CDP a proposed Operating Budget for any Amphitheater Season, then the
Operating Budget for the immediately preceding Amphitheater Season shall be
deemed to be the Operating Budget for the forthcoming Amphitheater Season unless
otherwise consented to by CDP.
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12.04 Obligations of the Managing Partner. Subject to the other provisions
of this Agreement, the Managing Partner shall manage, or cause to be managed,
the affairs of the Partnership in a prudent and businesslike manner. The
Managing Partner shall act as a fiduciary hereunder and in good faith in the
performance of its obligations hereunder, but shall have no liability or
obligation to the Partners or the Partnership for any decision made or action
taken in connection with the discharge of its duties hereunder if such decision
or action is made or taken in good faith and in the best interests of the
Partnership, irrespective of whether the same may be reasonably prudent or
whether bad judgment or negligence (excluding gross negligence) was exercised or
involved in connection therewith. It is hereby expressly agreed and acknowledged
that the Managing Partner currently owns and operates other outdoor
entertainment facilities other than the Amphitheater and that the Managing
Partner intends to acquire ownership of additional outdoor entertainment
facilities from time to time hereafter. Subject to the provisions of Section
13.02 hereof, it is hereby expressly agreed and acknowledged that (i) the
activities of the Managing Partner in respect of other outdoor entertainment
facilities shall not be or otherwise constitute a breach of the Managing
Partner's fiduciary duties to the Partnership and (ii) CDP shall have no rights,
titles or interests in or to the ownership interests of the Managing Partner in
other outdoor entertainment facilities as a result of the relationship created
hereby.
12.05 Action Without Meeting. Any action required by the Partnership Act
or by this Agreement to be taken at a meeting of the Partners, or any action
which may be taken at a meeting of the Partners, may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the Partners entitled to participate in the management of the Partnership
pursuant to the terms of the Partnership Act and such consent shall have the
same force and effect as a vote of the Partners.
12.06 The Managing Partner as Nominee of Partnership. The Managing Partner
is hereby specifically authorized, at its sole option and discretion, to conduct
any business of the Partnership or carry out any transaction on behalf of the
Partnership in its own name as nominee for the Partnership, without having to
disclose the existence of the Partnership. The Managing Partner shall be
required to provide notice to CDP each time that it chooses to conduct any
business of the Partnership in its own name as nominee for the Partnership
pursuant to the right created in this Section 12.06.
12.07 Transactions with Partners and Affiliates of Partners. It is hereby
recognized and acknowledged by and between the Partners that the Partnership
shall have the express right and authority to enter into contracts and
agreements, on an arms-length basis, with either of the Partners or any
Affiliates of the Partners and all rights accruing to such Partner or such
Affiliate under such arms-length contract shall be the sole and exclusive
property of such contracting party and neither the Partnership nor the other
Partner or its Affiliates shall have any participation rights therein or
thereto. By way of example, but not limitation, if SMP is the national tour
producer of a particular event or show, then SMP may contract with the
Partnership, as owner of the Amphitheater, to book such event or show into the
Amphitheater so long as the contractual terms thereof are arms-length when
compared to
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the terms made with similar venues not owned or operated by SMP. Each
Partner hereby agrees that, with respect to any and all contracts and
agreements entered into by and between the Partnership and any Partner or
any Affiliate of a Partner, (i) the existence thereof shall be disclosed
to the other Partner, (ii) copies thereof shall be made available to such
other Partner upon its request along with any details and other
information related thereto and (iii) each such contract and agreement
shall be subject to reasonable discussion and input from such other
Partner concerning any issues related to the arms-length nature of such
contract or agreement.
ARTICLE XIII
Other Activities
13.01 Generally. Subject to the provisions of Section 13.02 hereof, this
Agreement shall not preclude or limit in any respect the right of any Partner to
engage or invest in any business activity of any nature or description,
including those which may be similar to the business of the Partnership. Neither
the Partnership nor any Partner shall have any right by virtue of this Agreement
or any relationships created hereby in or to such other ventures or activities
or to the income or proceeds derived therefrom, unless otherwise provided by any
applicable rule of law.
13.02 Amphitheaters in North Carolina or South Carolina. Notwithstanding
any of the other provisions contained in this Agreement, the Partners hereby
agree, stipulate and acknowledge that the relationship created by this Agreement
shall be an exclusive arrangement between the Partners for the development,
acquisition, construction, management and operation of permanent outdoor
musically-based entertainment facilities which are located within either the
State of North Carolina or the State of South Carolina in accordance with the
following provisions:
(a) Neither Partner shall, directly or indirectly, develop,
construct, own or manage any permanent outdoor musically-based
entertainment facility anywhere in the States of North Carolina or South
Carolina without first having offered in writing to sell to the other
Partner one-half of such Partner's interest in such entertainment facility
on an equal basis.
(b) If a Partner elects not to participate on an equal basis with
the other Partner with respect to the development, construction, owning or
management of any permanent outdoor musically-based entertainment facility
in North Carolina or South Carolina following an offer made pursuant to
clause (a) hereof by such other Partner because of such Partner's
unwillingness to contribute its share of the required capital
contributions, then such Partner shall have a forty-five (45) day period
to negotiate in good faith with the other Partner to attempt to negotiate
a smaller percentage interest in the
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proposed transaction for a smaller capital contribution. If the parties
are unable to agree within such forty-five (45) day period as to a
mutually acceptable alternative ownership arrangement, then the Partner
initially offering such opportunity to the other Partner shall thereafter
be free to pursue such opportunity to develop, construct, own or manage
such permanent outdoor musically-based entertainment facility within the
States of North Carolina or South Carolina without any duty,
responsibility or obligation to the other Partner or to the Partnership.
The provisions of this Section 13.02 shall not be applicable with respect to (x)
the Carowinds Amphitheater (as such term is used in the Other Partnership
Agreement), it being agreed that the relationship of the parties with respect to
the Carowinds Amphitheater shall be governed by the Other Partnership Agreement
or (y) the Amphitheater, it being agreed that the relationship of the parties
with respect to the Amphitheater shall be governed by all of the other
provisions of this Agreement.
ARTICLE XIV
Call Rights of SMP
14.01 Purchase Option. If a Call Trigger Event occurs, then SMP shall have
the right and option ("Call Option") to purchase and acquire the Partnership
Interest of CDP in accordance with the following terms, provisions and
conditions:
(a) In order to validly exercise the Call Option, SMP must provide
written notice thereof ("Call Election Notice") to CDP within 90 days
after SMP acquires knowledge of the occurrence of a Call Trigger Event. In
order to be validly given, a Call Election Notice must contain therein a
purchase price ("SMP Designated Price") designated by SMP which it is
willing to pay to CDP for the purchase of CDP's Partnership Interest
pursuant to the Call Option.
(b) Upon a valid delivery of a Call Election Notice by SMP to CDP,
CDP shall have thirty (30) days thereafter to either (i) agree to sell its
Partnership Interest to SMP in accordance with the provisions of this
Section 14.01 in exchange for payment from SMP to CDP of the SMP
Designated Price (in which case, the SMP Designated Price shall be for all
purposes hereof the "Call Purchase Price") or (ii) institute the appraisal
procedures described in Section 14.02 hereof. If CDP does not provide
notice to SMP of its election pursuant to clause (i) or (ii) of the
immediately preceding sentence within thirty (30) days after receipt of a
validly given Call Election Notice, then CDP shall be deemed to have
elected to proceed under clause (i) of the immediately preceding sentence.
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(c) If CDP timely elects pursuant to clause (ii) of Section 14.0
1(b) to institute the appraisal procedures set forth in Section 14.02
hereof, then the following provisions shall apply with respect to the
purchase and acquisition of the Partnership Interest of CDP by SMP
pursuant to an exercise of the Call Option by SMP:
(i) If the Appraised Purchase Price determined in accordance
with the provisions of Section 14.02 hereof is less than or equal to
110% of the SMP Designated Price, then (1) the Call Purchase Price
shall for all purposes hereof be deemed to be equal to the greater
of (aa) the Appraised Purchase Price or (bb) the SMP Designated
Price and (2) CDP shall be obligated to pay all costs associated
with the appraisal procedures conducted in accordance with
provisions of Section 14.02 hereof.
(ii) If the Appraised Purchase Price is in excess of 110% of
the SMP Designated Price, then (1) SMP shall not be obligated to
purchase CDP's Partnership Interest at any amount greater than 110%
of the SMP Designated Price, (2) SMP shall have the option,
exercisable at any time within thirty (30) days after determination
of the Appraised Purchase Price by written notice thereof to CDP, to
designate the Call Purchase Price as being equal to the Appraised
Purchase Price for all purposes hereof, (3) CDP shall not be
obligated to sell its Partnership Interest for any amount less than
the Appraised Purchase Price, (4) CDP shall have the option,
exercisable at any time within thirty (30) days after final
determination of the Appraised Purchase Price by written notice
thereof to SMP, to designate the Call Purchase Price as being equal
to 110% of the SMP Designated Price and (5) SMP shall be obligated
to pay all costs associated with the appraisal procedures conducted
in accordance with the provisions of Section 14.02 hereof.
(iii) If the Partnership Interest of CDP is not purchased and
acquired by SMP as a result of the Appraised Purchase Price being in
excess of 110% of the SMP Designated Price, then the exercise of the
Call Option previously made by SMP shall be deemed rescinded.
(d) The closing of the sale of CDP's Partnership Interest following
a valid delivery of a Call Election Notice shall close ("Closing") on a
date mutually selected by SMP and CDP but in no event later than the date
which is forty-five (45) days after delivery of the Call Election Notice
or, if
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applicable, the date which is forty-five (45) days after the date on which
the Appraised Purchase Price is determined. The Closing shall occur at
such place in Houston, Texas as may be designated by SMP. At the Closing,
each of the Partners shall be obligated to do the following:
(i) SMP shall cause the Call Purchase Price to be paid to CDP
in immediately available funds at the Closing.
(ii) If the Other Partnership is still in existence, it shall
be terminated, dissolved and liquidated as required by the terms,
provisions and agreements contained in Section 13.1(e) of the Other
Partnership Agreement.
(iii) If the Carowinds Management Agreement (as such term is
defined in the Other Partnership Agreement) is still in force and
effect, SMP shall be obligated to take such actions and execute such
documents as may be required to convey, transfer and assign all of
its right, title and interest in and to the Carowinds Management
Agreement to CDP as additional consideration for the purchase of
CDP's Partnership Interest.
(iv) CDP shall execute such instruments of assignment as may
be reasonably required by SMP containing warranties that its
Partnership Interest is being conveyed to SMP (or any designee of
SMP) free and clear of all liens, claims, charges and encumbrances.
(v) SMP shall execute such instruments or documents as may be
necessary to (x) release CDP from all future accruing obligations
under this Agreement and (y) indemnify CDP with respect to all
debts, liabilities and obligations of the Partnership to third
parties, whether then existing or thereafter to be created.
14.02 Appraisal Procedures. If CDP elects to avail itself of its appraisal
rights pursuant to clause (ii) of Section 14.01(b) following an exercise of the
Call Option by SMP, then the following terms, provisions, conditions and
agreements shall govern the determination of the Appraised Purchase Price:
(a) SMP and CDP shall attempt to mutually agree upon a satisfactory
Person to serve as the sole appraiser of the Appraised Purchase Price. If
CDP and SMP have been unable to mutually agree upon a Person to serve as
the sole appraiser within fifteen (15) days after the date on which
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CDP provides notice of its election to avail itself of its appraisal
rights pursuant to clause (ii) of Section 14.01(b), then SMP and CDP shall
each designate within fifteen (15) additional days thereafter a Qualified
Appraiser to act as one of the appraisers in the procedure to determine
the Appraised Purchase Price. The Qualified Appraisers selected by each of
the Partners pursuant to the provisions contained in the immediately
preceding sentence shall then be required to select within fifteen (15)
days after their selection a third Qualified Appraiser to act as an
appraiser in the procedure to determine the Appraised Purchase Price.
(b) The appraiser or appraisers selected pursuant to the provisions
of clause (a) above shall determine the Appraised Purchase Price in
accordance with the specific provisions contained herein. If there is
only one appraiser as a result of SMP and CDP mutually agreeing to the
designation of one person to so act, then the Appraised Purchase Price
determined by such appraiser shall be, for all purposes of this Agreement,
the Appraised Purchase Price. If SMP and CDP are unable to mutually agree
upon one person to serve as the appraiser, then (i) the three appraisers
shall coordinate their efforts and attempt to reach a mutual decision as
to the Appraised Purchase Price (in which case the Appraised Purchase
Price shall be for all purposes hereof the amount so determined by such
appraiser) and (ii) failing a mutual decision by the three appraisers, the
average of the Appraised Purchase Prices of the two closest amounts
determined by the three appraisers shall be the Appraised Purchase Price
for all purposes of this Agreement.
(c) For all purposes of this Agreement, the Appraised Purchase Price
shall be determined by the appraisers selected pursuant to the foregoing
provisions in accordance with the following specific provisions,
instructions and limitations:
(i) The "Appraised Purchase Price" shall be equal to (x) the
fair market value of the Partnership Interest of CDP minus (y)
one-third (1/3) of the fair market value of any then remaining
contractual rights of the Other Partnership in the Carowinds
Management Agreement. As used in the immediately preceding sentence,
the term "fair market value" shall mean a value which a willing
buyer would pay to a willing seller, neither under a compulsion to
buy or sell.
(ii) For purposes of determining the fair market value of the
Partnership Interest of CDP, the appraiser or appraisers selected
pursuant to the foregoing provisions shall (x) ignore the fact that
SMP is entitled to a fee in an amount equal to two percent (2%) of
any Gross Revenues realized upon a sale,
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transfer or other assignment of the Amphitheater and (y) utilize
such standard appraisal techniques as are appropriate, in such
appraiser or appraisers reasonable professional judgment, for the
ownership interest being appraised.
(d) The appraiser or appraisers acting pursuant to the provisions of
this Section 14.02 shall provide a written report within sixty (60) days
after their selection containing the results of their analysis and
determination of the Appraised Purchase Price and providing an analysis
and reason for the decision reached. If any appraiser shall fail, refuse,
or be unable to act, a new appraiser shall be appointed in his place
following the same method as was originally followed with respect to the
selection of such appraiser to be replaced.
(e) The Partners hereby agree that the provisions contained in this
Section 14.02 shall be a binding method of arbitrating and determining the
Appraised Purchase Price, and each Partner therefore hereby specifically
agrees and acknowledges that the determination of the Appraised Purchase
Price in accordance with the provisions of this Section 14.02 shall be
final and binding upon the Partners and may not be subsequently challenged
in any court or other forum except for a challenge based upon fraud,
malfeasance or other similar causes of action relating to tampering with
the appraisal process.
ARTICLE XV
Defaults and Remedies
15.01 Default by Partner. If any Partner ("Defaulting Partner") fails to
timely perform any of its obligations contained in this Agreement, or materially
violates the terms of this Agreement, then the other Partner ("Non-Defaulting
Partner") shall have the right to give the Defaulting Partner a notice ("Default
Notice") specifically setting forth the nature of such failure or violation and
stating that the Defaulting Partner shall have a period of ten (10) days to pay
any sums of money specified therein as due and owing to the Partnership or to
any Partner or, if the failure or violation is a non-monetary default and is
capable of being cured, thirty (30) days to cure such default specified therein.
If the monies specified in the Default Notice are not paid within such ten (10)
day period, or if such non-monetary failures or violations are not capable of
being cured or, if capable of being cured, such Defaulting Partner has not cured
such non-monetary failures or violations within such thirty (30) day period,
then a "Tanner Default" shall be deemed to have occurred with respect to such
Defaulting Partner. If a Defaulting Partner cures in all material respects all
of its failures or violations which are capable of being cured within the
aforesaid notice and cure periods, then such defaults shall be deemed no longer
to exist and such Partner shall be deemed no longer to constitute a Defaulting
Partner.
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15.02 Rights and Remedies. Upon the occurrence of a Partner Default, the
Non-Defaulting Partner and the Partnership shall each have the following rights,
options and remedies which shall be cumulative and may be exercised concurrently
or independently in the sole and absolute discretion of the Non-Defaulting
Partner:
(a) The right to bring an action at law by or on behalf of the
Partnership or the Non-Defaulting Partner in order to recover the amounts
owed, if any, and any incidental or consequential damages arising from
such default (including, without limitation, reasonable attorneys' fees
and disbursements incurred by the Partnership or the Non-Defaulting
Partner, as the case may be, in prosecuting any such action).
(b) The right to bring any proceeding in the nature of injunction,
specific performance or other equitable remedy, it being acknowledged by
each of the Partners that damages at law may be an inadequate remedy for
such default.
(c) If a sum of money is owed to the Partnership, the Non-Defaulting
Partner may advance the sum of money owed to the Partnership by the
Defaulting Partner with the following results:
(i) The sum thus advanced shall be deemed to be a loan from
the Non-Defaulting Partner to the Defaulting Partner;
(ii) The principal balance of such deemed loan shall be due
and payable in whole upon written demand from the Non-Defaulting
Partner to the Defaulting Partner;
(iii) The principal balance of such deemed loan shall bear
interest at the Permitted Rate compounded monthly; and
(iv) All distributions from the Partnership that would
otherwise be made to the Defaulting Partner (whether before or after
dissolution of the Partnership) shall, instead, be paid to the
Non-Defaulting Partner until such loan and all interest accrued
thereon has been repaid in full.
(d) If a sum of money is owed to the Non-Defaulting Partner, the
Non-Defaulting Partner may require that all distributions that would
otherwise be made to the Defaulting Partner (whether before or after
dissolution of the Partnership) shall, instead, be paid to the
Non-Defaulting Partner until all such amounts owed have been repaid in
full.
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(e) For purposes of voting or giving any consents or approvals under
any provisions of this Agreement, the right to deny the Defaulting Partner
any of its voting, consent or approval rights under this Agreement.
(f) The option to purchase the Partnership Interest of the
Defaulting Partner at a purchase price equal to seventy-five percent (75%)
of the then balance in its capital account, which purchase price shall be
payable in five (5) equal annual installments of principal, together with
interest at the rate, of eight percent (8%) per annum. The option set
forth in this clause (f) is being provided in view of the fact that the
prospects for the Partnership and the Partnership Interest of the
Non-Defaulting Partner will be placed in jeopardy upon the occurrence of a
Partner Default by a Defaulting Partner, all with potential damages to the
Non-Defaulting Partner and the Partnership which cannot be foreseen or
reasonably ascertainable. Any Defaulting Partner whose Partnership
Interest is purchased under the provisions of this clause (f) shall remain
liable for its Percentage Interest of the Partnership's liabilities in
existence at the time of the closing of such purchase. The Non-Defaulting
Partner may, at its option, designate any third party of its choosing to
exercise the option granted to it in this clause (f).
ARTICLE XVI
Voluntary Withdrawal
No Partner shall have the right to, and each Partner agrees that it will
not, withdraw voluntarily from the Partnership. In the event any Partner
withdraws from the Partnership in contravention of this Agreement, such
withdrawing Partner shall remain liable for its Percentage Interest of the
Partnership liabilities in existence at the time of its withdrawal and shall, in
addition, be liable for all damages attributable to its breach of this
Agreement. The withdrawal of a Partner in contravention of this Article XVI
shall not cause the Partnership to be dissolved, and such withdrawing Partner
shall be deemed to be an assignee of a Partner's Partnership Interest and shall
have only the rights provided a Partner's assignee under the provisions of the
Partnership Act.
ARTICLE XVII
Dissolution and Termination
17.01 Dissolution. The Partnership shall be dissolved upon the occurrence
of any of the following:
(a) The unanimous agreement of the Partners;
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(b) The dissolution of the Partnership pursuant to Article IV; or
(c) The sale, transfer, assignment or termination of all or
substantially all of the Partnership's ownership interest in the
Amphitheater.
The dissolution shall be effective on the day on which the event occurs
causing dissolution ("Effective Date of Dissolution"), but the Partnership shall
not terminate until the assets have been distributed in accordance with the
provisions of this Agreement.
17.02 Nondissolution Events. None of the following events shall constitute
or cause the dissolution of the Partnership, with the result that, upon the
happening of any one or more of these events, no one shall have the right to
compel the termination and liquidation of the Partnership:
(i) the bankruptcy, dissolution or liquidation of a Partner; or
(ii) the withdrawal of a Partner.
Each Partner waives its right and power either to dissolve the Partnership, or
to seek a court decree of dissolution.
17.03 Distributions Upon Dissolution. On dissolution of the Partnership,
the Partners shall proceed diligently to wind up the affairs of the Partnership
and distribute its assets. The Managing Partner shall decide which Partnership
assets are to be sold for cash and which are to be distributed in kind. The
Partnership's assets, or the proceeds of their sale, shall be applied or
distributed in the following order of priority:
(a) In payment of all liabilities of the Partnership to creditors
other than Partners. If any liability is contingent or uncertain in
amount, a reserve equal to the maximum amount for which the Partnership
could be reasonably held liable shall be established. Upon the
satisfaction or other discharge of that contingency, the amount of the
reserve not required, if any, will be treated as income to the extent
previously treated as a deduction.
(b) In payment of any loans owed by the Partnership to any Partner.
(c) In payment of any fees payable to SMP pursuant to the provisions
of Section 8.01 hereof together with any interest which may have accrued
thereon pursuant to the provisions of Section 8.02 hereof. Should the
Effective Date of Dissolution occur during an Amphitheater Season, SMP
shall be entitled to a proportionate payment of the annual fees referred
to in Section 8.01(b) and (c) based upon the portion of the Amphitheater
Season which has elapsed through the Effective Date of Dissolution.
Additionally, SMP shall be entitled to receive the fee described in
Section 8.01(a) hereof
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with respect to any and all Gross Revenues generated from the sale,
transfer or assignment of all or substantially all of the Partnership's
interest in the Amphitheater regardless of whether such sale, transfer or
other assignment occurs before or after the Effective Date of Dissolution.
(d) To the Partners in proportion to their respective Percentage
Interests.
ARTICLE XVIII
Transfer Restrictions
18.01 Partner Interest. Except for a transfer of a Partnership Interest
made pursuant to the provisions of Article XIV of this Agreement, neither
Partner shall have the right to sell, assign, convey, transfer, pledge or
hypothecate, by operation of law or otherwise, all or any portion of its
Partnership Interest without the prior consent of the other Partner, it being
agreed and acknowledged that such consent may be withheld in such other
Partner's sole discretion for any reason whatsoever. Any purported sale,
assignment, conveyance, transfer, pledge or hypothecation of any Partner's
Partnership Interest in violation of the provisions of this Section 18.01 shall
be voidable at the option of the other Partner.
18.02 CDP's Stock.
(a) No capital stock of CDP may, at any time, be issued to, sold,
conveyed or otherwise transferred to any Person other than to a Qualified
CDP Shareholder; provided, however, that concurrently with the closing of
such issuance, sale, conveyance or transfer to any such Qualified CDP
Shareholder, such Qualified CDP Shareholder shall deliver a written
instrument to the Partnership and to SMP in which it agrees to be bound by
the transfer restrictions contained in this Section 18.02 with respect to
the stock of CDP.
(b) Notwithstanding the transfer restrictions contained in Section
18.02(a) hereof, capital stock of CDP may be issued, sold, conveyed or
otherwise transferred to a Person which is not a Qualified CDP Shareholder
so long as all of the following conditions are fulfilled:
(i) A majority of each class of capital stock of CDP shall be
owned by Qualified CDP Shareholders immediately following such
proposed issuance, sale, conveyance or transfer;
(ii) CDP shall have provided at least thirty (30) days prior
to such proposed issuance, sale, conveyance or other
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transfer (x) a notice ("Minority Sale Notice") to SMP containing the
name, address and business of the Person to whom the capital stock
of CDP is proposed to be issued, sold, conveyed or otherwise
transferred and the specific economic terms and conditions of such
proposed issuance, sale, conveyance or other transfer and (y) an
offer in favor of SMP to acquire the capital stock of CDP which is
proposed to be issued, sold, conveyed or otherwise transferred on
the same economic terms and conditions described in the Minority
Sale Notice.
(iii) The closing of such issuance, sale, conveyance or other
transfer of the capital stock of CDP shall have occurred (x) between
30 and 120 days following receipt of the Minority Sale Notice by SMP
and (y) upon the same economic terms and conditions as are described
in the Minority Sale Notice.
If SMP elects to acquire any capital stock of CDP pursuant to an offer
contained in a Minority Sale Notice, then it must provide CDP notice
thereof within thirty (30) days following receipt of the Minority Sale
Notice and must close on such acquisition within sixty (60) days following
receipt of the Minority Sale Notice. If the proposed issuance, sale,
conveyance or other transfer of the capital stock of CDP is a part of a
transaction which involves the acquisition by a Person which is not a
Qualified CDP Shareholder of a minority interest in substantially all of
the Cellar Door affiliated group of companies, then the allocation of
price to the capital stock of CDP to be included in the Minority Sale
Notice shall be made by CDP in good faith giving due consideration to the
relative values of the Partnership Interest of CDP in the Partnership and
the balance of the assets being transferred to such person.
(c) CDP shall cause John J. Boyle to execute a certificate or other
instrument in form reasonably acceptable to SMP confirming that (i) he is
the owner of all of the issued and outstanding capital stock of CDP, (ii)
his stock ownership interest in CDP will be burdened by and encumbered
with the transfer restrictions contained in this Section 18.02 and (iii)
all share certificates evidencing the capital stock in CDP will include an
appropriate legend which references the transfer restrictions contained in
this Section 18.02. A default by John J. Boyle under such certificate
shall be deemed a default by CDP under this Agreement.
18.03 SMP's Partnership Interests. No partnership interest in SMP may, at
any time, be issued to, sold, conveyed or otherwise transferred to any Person
other than to PACE Concerts, Inc., a Texas corporation, YM Corp., a Delaware
corporation, or any Affiliate of either of PACE Concerts, Inc. or YM Corp.
without the prior written consent of CDP;
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provided, however, that concurrently with the closing of such issuance, sale,
conveyance or transfer to PACE Concerts, Inc., YM Corp. or any Affiliate of
either PACE Concerts, Inc. or YM Corp., such recipient or transferee shall
deliver a written instrument to the Partnership and to CDP in which it agrees to
be bound by the transfer restrictions contained in this Section 18.03 with
respect to the partnership interests in SMP. By executing this Agreement in its
capacity as a general partner of SMP, each of the partners of SMP, in their
individual corporate capacity, hereby (i) represent and warrant that they are
the sole general partners of SMP, (ii) covenant and agree that their respective
partnership interests in SMP shall be burdened by and encumbered with the
transfer restrictions contained in this Section 18.03 and (iii) agree that all
certificates (if any) evidencing their partnership interest in SMP shall include
an appropriate legend which references the transfer restrictions contained in
this Section 18.03.
ARTICLE XIX
Miscellaneous Provisions
19.01 Notices. All notices, offers, approvals, elections, consents,
acceptances, waivers, reports, requests and other communications required or
permitted to be given hereunder (all of the foregoing hereinafter collectively
referred to as "Communications") shall be in writing and shall be deemed to have
been duly given if delivered personally with receipt acknowledged or sent by
registered or certified mail or equivalent, if available, return receipt
requested, or by facsimile, telex or cablegram (which shall be confirmed by a
writing sent by registered or certified mail or equivalent on the same day that
such facsimile, telex or cablegram is sent), or by recognized overnight courier
for next day delivery, addressed or sent to the parties at the following
addresses and facsimile numbers or to such other additional address or facsimile
number as any party shall hereafter specify by Communication to the other
parties:
SMP: c/o PACE Concerts, Inc.
515 Post Oak Blvd., Suite 300
Houston, Texas 77027
Facsimile No.: 713-622-8461
Attention: Mr. Jeffry B. Lewis
and
c/o Sony Music Entertainment, Inc.
if by mail:
P.O. Box 4450
New York, New York 10101-4450
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if by courier or personal
delivery:
666 Fifth Avenue
Sony Music Entertainment Mail Room
New York, New York 10103
Attention: Senior Vice President,
Business Affairs and
Administration
with copies to: Michael F. Rogers
Sewell & Riggs
333 Clay Avenue, Suite 800
Houston, Texas 77002
Facsimile No.: (713) 652-8808
and
Sony Music Entertainment, Inc.
(At the same addresses shown above)
Attention: Senior Vice President
and General Counsel
CDP: CDC Amphitheaters/I, Inc.
2190 S.E. 17th Street, Suite 312
Fort Lauderdale, Florida 33316
Attention: Mr. John J. Boyle
with a copy to: Richard A. Rosenbaum
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel
500 East Broward Boulevard, 13th Floor
Fort Lauderdale, Florida 33394
19.02 New York Law to Apply. This Agreement shall be construed under and
in accordance with laws of the State of New York without giving any effect to
the choice of law principles in the State of New York.
19.03 Other Instruments. The parties hereto covenant and agree that they
will execute such other and further instruments and documents as are or may
become necessary or convenient to effectuate and carry out the Partnership
created this Agreement.
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19.04. Amendment. This Agreement may be amended or modified by the
Partners from time to time but only upon approval by all of the Partners
contained in a written instrument.
19.05 Headings. The headings used in this Agreement are used for
administrative purposes only and do not constitute substantive matter to be
considered in construing the terms of this Agreement.
19.06 Parties Bound. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors, and assigns where permitted
by this Agreement.
19.07 Legal Construction. In case any one or more of the provisions
contained in this Partnership Agreement shall, for any reason, be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision thereof and this
Partnership Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein.
19.08 Counterparts. This Partnership Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original.
19.09 Gender. Wherever the context shall so require, all words herein in
the male gender shall be deemed to include the female or neuter gender, all
singular words shall include the plural, and all plural words shall include the
singular.
19.10. Affiliate Liability. Notwithstanding anything to the contrary
contained herein, or implied hereby, in no event shall any Person, except for
the Partners and the general partners of SMP, be liable for the
responsibilities, obligations or liabilities of either of the Partners
hereunder. In that connection, it is specifically agreed and acknowledged that,
except for the general partners of SMP, no officer, shareholder, director or
other Affiliate of a Partner shall be liable for any of the responsibilities,
liabilities or obligations of any Partner hereunder.
19.11 Prior Agreements Superseded. This Agreement supersedes any prior
understandings or written or oral agreements between the parties respecting the
within subject matter.
19.12 Changes to Qualified CDP Managers. At any time within 60 days after
the end of any Amphitheater Season SMP shall consider requests made by CDP as to
additional or substitute persons who CDP believes should be considered as
Primary Qualified Managers or Secondary Qualified Managers. If SMP agrees to any
such requested additions or substitutions, then this Agreement shall be modified
by written agreement setting forth
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the changes in the persons who will thereafter be Primary Qualified Managers and
Secondary Qualified Managers.
EXECUTED as of the day and year first written above.
CDC AMPHITHEATERS/I, INC.
a North Carolina corporation
By: /s/ John J. Boyle
-------------------------------------
Name: John J. Boyle
Title: Chairman
"CDP"
SONY MUSIC/PACE PARTNERSHIP, a
New York general partnership
By: PACE Concerts, Inc., a Texas
corporation
By: /s/ Louis Messina
---------------------------------
Name: Louis Messina
Title: President
By: YM Corp., a Delaware corporation
By: /s/ David H. Johnson
---------------------------------
Name: David H. Johnson
Title: V.P.
"SMP"
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<PAGE>
A certain tract or parcel of realty lying and being in the City of
Raleigh, Wake County, North Carolina, more fully described by metes and bounds
as follows, viz:
BEGINNING at an iron pipe found in the eastern right of way line of the
Cliff Benson Beltline at the south bank of Walnut Creek, said pipe being the
northernmost corner of the lands of the City of Raleigh Walnut Creek Park (south
property); thence with the meanders of Walnut Creek, defined herein as a
traverse line along the southern and western bank:
S 23 deg 07' 04" E, a distance of 159.69 feet to a point on the bank of the
creek;
S l7 deg 09' 17" E, a distance of 152.70 feet to a point on the bank of the
creek;
S 06 deg 04' 12" W, a distance of 126.04 feet to a point on the bank of the
creek;
S 35 deg 38' 50" E, a distance of 126.39 feet to a point on the bank of the
creek;
thence departing the creek and the following eight (8) new lines through said
lands of the City of Raleigh:
1) S 58 deg 42' 51" W, a distance of 429.82 feet to a new corner;
2) S 01 deg 03' 14" W, a distance of 390.68 feet to a new corner;
3) S 55 deg l4' 52" W, a distance of 340.32 feet to a new corner;
4) S 00 deg 50' 42" W, a distance of 148.63 feet to a new corner;
5) N 89 deg 39' 17' E, a distance of 483.24 feet to a new corner;
6) S 56 deg 22' 45" E, a distance of 1077.23 feet to a new corner;
7) S l4 deg 2l' 54" E, a distance of 540.11 feet to a new corner;
8) S 00 deg 03' 36" E, a distance of 740.45 feet to a new corner;
thence with the line of Green Valley Subdivision S 89 deg 56' 24" W, a distance
of 200.41 feet to an existing iron pipe;
thence with the line of Green Valley Subdivision S 89 deg 43' 39" W, a distance
of 85.83 feet to an existing iron pipe;
thence with the line of Green Valley Subdivision S 89 deg 57' 25" W, a distance
of 214.69 feet to an existing iron pipe, the northwest corner of Green Valley
Subdivision and the northeast corner of Garden Acres Subdivision;
thence with the line of Garden Acres N 89 deg 44' 19" W, a distance of 841.02
feet to an existing iron pipe, the southeast corner of lands of Allen and Debra
Shindledecker;
thence with the line of Shindledecker; N 11 deg 15' 48" E, a distance of 209.52
feet to an existing iron pipe;
thence with the line of Shindledecker; N 89 deg 44' 07" W, a distance of 143.88
feet to an existing iron pipe in the eastern right of way line of Holloway Road
(50' R/W);
thence with Holloway Road along the arc of a counter-clockwise circular curve,
the delta angle being 07 deg 10' 02", the radius length being 262.48 feet for an
arc distance of 32.83 feet, said curve defined by chord bearing S 14 deg 50' 49"
W, and chord distance of 32.81 feet to an existing iron pipe;
thence with the line of Holloway Road S 11 deg l5' 48" W, a distance of 177.17
feet to an existing iron pipe, Shindledecker's southwestern corner;
thence crossing Holloway Road N 89 deg 37' 48" W, a distance of 56.63 feet to an
existing iron pipe;
thence with the line of Charles R. Brooks and with Lorraine R. Williams N 89 deg
53' 38" W, a distance of 168.47 feet to an existing iron pipe;
thence continuing with the line of Brooks and Williams N 89 deg 52' 45" W, a
distance of 879.06 feet to an existing iron pipe, Williams' northwest corner;
thence with the line of Williams S 15 deg 59' 31" W, a distance of 628.49 feet
to an existing iron pipe on the northern right of way line of Rock Quarry Road
(60' R/W);
thence with the line of Rock Quarry Road N 65 deg 53' 25" W, a distance of
202.02 feet to an existing iron pipe, corner for James R. Rogers III;
thence with the line of Rogers N 15 deg 59' 31" E, a distance of 628.49 feet to
an existing iron pipe;
<PAGE>
thence continuing with the line of Rogers N 22 deg 21' 28" E, a distance of
2289.30 feet to an existing iron pipe;
thence continuing with the line of Rogers S 83 deg 49' 11" W, a distance of
911.18 feet to an existing iron pipe at the eastern right of way line of
Sunnybrook Road;
thence with Sunnybrook Road along the arc of a counter-clockwise circular curve,
the delta angle being 14 deg 32' 27" the radius length being 969.28 feet for an
arc distance of 245.99 feet, said curve defined by chord bearing N 43 deg 20'
31" E, and chord distance of 245.33 feet to an existing iron pipe at the
southeastern intersection of the rights of way of Sunnybrook Road and the
Cliff Benson Beltline;
thence with the Beltline along the arc of a counter-clockwise circular curve,
the delta angle being 13 deg 11' 43" the radius length being 3,990.72 feet for
an arc distance of 919.06 feet, said curve defined by chord bearing N 64 deg 24'
29" E, and chord distance of 917.03 feet to an NCDOT concrete monument found;
thence with the line of the Beltline N 58 deg 05' 28" E, a distance of 313.85
feet to a NCDOT concrete monument found;
thence with the line of the Beltline N 48 deg 01' 38" E, a distance of 209.72
feet to a NCDOT concrete monument found;
thence with the Beltline along the arc of a counter-clockwise circular curve,
the delta angle being 07 deg 14' 41", the radius length being 3,990.72 feet for
an arc distance of 504.60 feet, said curve defined by chord bearing N 46 deg 41'
36" E, and chord distance of 504.26 feet to an existing iron pipe, the point and
place of beginning and containing 120.058 acres, more or less.
This description was prepared January 11, 1991 by Murphy Yelle Associates,
Registered Land Surveyors.
EXHIBIT A
Page 2 of 2
<PAGE>
Exhibit "B"
PROMISSORY NOTE
$460,000.00 __________________, 1991
For value received, SONY MUSIC/PACE PARTNERSHIP ("Borrower"), a New York
general partnership, PROMISES TO PAY TO THE ORDER of WALNUT CREEK AMPHITHEATER
PARTNERSHIP (Lender"), a New York general partnership, the sum of FOUR HUNDRED
SIXTY THOUSAND AND NO/100 DOLLARS ($460,000.00) in lawful money of the United
States of America, which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment, and to pay interest on the unpaid
principal amount from date until maturity at the lesser of the Stated Rate
(hereinafter defined) or the Maximum Rate (hereinafter defined).
As used herein, the term "Stated Rate" shall mean a fixed rate of interest
equal to 9.46% per annum.
As used herein, the term "Maximum Rate" shall mean the lesser of (i) the
maximum non-usurious interest rate permitted by applicable law from time to
time in effect as such law may be interpreted, amended, revised, supplemented or
enacted or (ii) 18% per annum.
This Note is payable in installments on each March 11, June 11, September
11 and December 11 (the "Payment Dates") following the date of this Note in
accordance with the following provisions:
(1) On the first Payment Date following the date of this Note, a
payment in an amount equal to the product of (i) $11,712.01 and (ii) a
fraction, the numerator of which shall be the number of days between the
date of this Note and such first Payment Date and the denominator of which
shall be 91.25.
(2) On each Payment Date thereafter, through and including September
11, 1999, a payment in the amount of $11,712.01 shall be due and payable.
(3) On December 11, 1999, the entire unpaid principal balance of
this Note, together with all accrued unpaid interest hereon, shall be due
and payable.
[NOTE: If the original principal balance of this Note is less than $460,000.00,
then each reference to "$11,712.01" appearing above shall be reduced by the same
proportionate amount by which the original principal balance is less than
$460,000.00.]
<PAGE>
All amounts paid under this Note shall be applied first against accrued
unpaid interest hereon and then against the outstanding principal balance
hereof.
If Borrower fails to make any payment as herein provided, either of
principal or interest, or if this Note is declared due and payable, interest
shall accrue on the past due amount at a rate of interest per annum equal to the
Maximum Rate.
Reference is made to the fact that Borrower is a general partner in
Lender. Lender was formed pursuant to that certain Partnership Agreement
("Partnership Agreement") dated effective as of July 1, 1990, and entered into
by and between Borrower and CDC Amphitheaters/I, Inc. ("CDP"), a North Carolina
corporation. Borrower hereby acknowledges, stipulates and agrees, for the
benefit of both the Partnership and CDP, that any default of Borrower under this
Note shall constitute a default by Borrower of its obligations under the
Partnership Agreement.
If the principal balance of the Senior Debt (as such term is defined in
the Partnership Agreement) should ever be accelerated for any reason, then the
principal balance hereof shall become immediately due and payable from Borrower
to Lender.
WITNESS the execution hereof as of the date set forth above.
SONY MUSIC/PACE PARTNERSHIP,
a New York general partnership
By: PACE CONCERTS, INC.,
a Texas corporation and its
general partner
By: /s/ Louis Messina
---------------------------------
Name: Louis Messina
Title: President
By: YM Corp., a Delaware corporation
and its general partner
By: /s/ David H. Johnson
---------------------------------
Name: David H. Johnson
Title: V.P.
Exhibit "B"
Page 2 of 2
<PAGE>
FIRST AMENDMENT TO PARTNERSHIP AGREEMENT
OF
WALNUT CREEK AMPHITHEATER PARTNERSHIP
This FIRST AMENDMENT TO PARTNERSHIP AGREEMENT ("Amendment") [ILLEGIBLE]
made and entered into effective as of this 31st day of January, 1992, by and
between SONY MUSIC/PACE PARTNERSHIP ("SMP"), a New York general partnership and
CDC AMPHITHEATERS/I, INC. ("CDP"), a North Carolina corporation.
RECITALS
A. Under effective date of July 1,1991, CDP and SMP executed that certain
Partnership Agreement ("Partnership Agreement") pursuant to which a New York
general partnership ("Partnership") known as Walnut Creek Amphitheater
Partnership was formed.
B. CDP and SMP, the sole partners of the Partnership, desire to amend
certain provisions contained in the Partnership Agreement as more fully set
forth herein.
AMENDMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
1. Defined Terms. All capitalized terms used in this Amendment which are
not expressly defined herein shall have the meanings assigned to them pursuant
to the provisions of the Partnership Agreement.
2. No Adjustments to 2% Fee after 1991. Commencing with the 1992
Amphitheater Season and for each Amphitheater Season thereafter during the
existence of the Partnership, the two percent (2%) fee described in Section
8.01(a) of the Partnership Agreement shall not be adjusted in accordance with
the provisions of clauses (i) and (ii) of Section 8.01(a) of the Partnership
Agreement. Accordingly, Section 8.01(a) is hereby amended in its entirety to
read as follows:
(a) An annual fee in an amount equal to two percent (2%) of all
Gross Revenues received during each Amphitheater Fiscal Year shall be
payable by the Partnership to SMP within thirty (30) days after the end of
each such Amphitheater Fiscal Year.
<PAGE>
3. Deletion of the definition of Net Other Distributions. The defined
term "Net Other Distributions" appearing in Article I of the Partnership
Agreement is hereby deleted in its entirety.
4. Ratification. Except as expressly amended hereby, the Partnership
Agreement is hereby ratified and reaffirmed in all respects.
WITNESS the execution hereof effective as of the date and year first above
written.
SONY MUSIC/PACE PARTNERSHIP, a New
York general partnership
By: PACE CONCERTS, INC., a Texas
corporation and its general partner
By: /s/ Louis Messina
---------------------------------
Name: Louis Messina
Title: President
By: YM Corp., a Delaware corporation
and its general partner
By: /s/ David H. Johnson
---------------------------------
Name: David H. Johnson
Title: V.P.
CDC AMPHITHEATERS/I, INC., a North
Carolina corporation
By: /s/ John J. Boyle
-------------------------------------
Name: John J. Boyle
Title: Chairman
2
<PAGE>
LEASE AGREEMENT
[Walnut Creek Amphitheater]
STATE OF NORTH CAROLINA )
)
COUNTY OF WAKE )
This Lease Agreement ("Agreement") is entered into effective as of this
1st day of December, 1990, by and between the CITY OF RALEIGH, NORTH CAROLINA
("CITY"), a municipal corporation duly organized and existing under and by
virtue of the constitution and laws or the State of North Carolina, and SONY
MUSIC/PACE PARTNERSHIP ("TENANT"), a New York general partnership whose sole
general partners are YM Corp., a Delaware corporation, and PACE Concerts, Inc.,
a Texas corporation.
WITNESSETH:
1.0 DEFINITIONS AND OTHER GENERAL PROVISIONS
1.1 Definitions
Unless the context otherwise requires, the capitalized terms used herein
shall, for all purposes of this Agreement, have the following specified
meanings:
(a) "Amphitheater" shall mean the outdoor entertainment facility to
be known as "Walnut Creek Amphitheater" which is to be constructed on the
Amphitheater Site by WAAC pursuant to, and as contemplated by, the
provisions of the Lease Purchase Agreement and the Development Agreement.
The term "Amphitheater" shall include within its definition the
Amphitheater Site and all buildings, fixtures, parking lots and other
improvements which are constructed or placed on the Amphitheater Site as a
part of or related to such outdoor entertainment facility.
(b) "Amphitheater Season" shall mean a continuous period of time
during any calendar year running from May 1 to October 31 of such calendar
year.
(c) "Amphitheater Site" shall mean that certain tract of land out of
the Property being more fully described by metes and bounds in Exhibit
"A-2" attached hereto.
(d) "Deed of Trust" shall mean that certain Leasehold Deed of Trust
to be executed by WAAC as contemplated by the provisions of the Trust
Agreement, pursuant to which WAAC's leasehold interest in the Amphitheater
created pursuant to the Ground Lease shall be encumbered by a lien in
order to secure its obligations under the Trust Agreement and the
certificates of participation to be issued thereunder.
<PAGE>
(e) "Development Agreement" shall mean that certain Development
Management Agreement entered into of even date herewith by and among
TENANT, CITY and WAAC relating to, among other things, (i) the development
consulting services to be provided by TENANT in connection with the
construction and design of the Amphitheater and (ii) the contribution of
$3,500,000.00 by TENANT towards payment of construction and design costs
associated with the construction of the Amphitheater.
(f) "Gross Revenues" shall have the meaning assigned to it pursuant
to the provisions of Section 3.3 of this Agreement.
(g) "Ground Lease" shall mean that certain Ground Lease Agreement
currently contemplated to be entered into by and between CITY and WAAC
pursuant to which, among other things, CITY shall lease to WAAC the
Amphitheater Site in its currently unimproved state.
(h) "Lease Purchase Agreement" shall mean that certain
Lease/Purchase Agreement currently contemplated to be entered into by and
between WAAC and CITY pursuant to which, among other things, WAAC shall
agree to construct the Amphitheater on the Amphitheater Site and sublease
the completed Amphitheater to CITY.
(i) "Parking Facilities" shall collectively mean:
(i) that portion of the Amphitheater Site on which CITY shall
construct approximately 2,500 parking spaces and being appropriately
designated on the plat attached hereto as Exhibit "B" ("South
Parking Lot");
(ii) that portion of the Property on which CITY shall
construct approximately 1,000 parking spaces and being appropriately
designated on the plat attached hereto as Exhibit "B" ("Softball
Parking Lot");
(iii) the property located near the Property which is
currently used as a parking lot by the North Carolina Department of
Transportation, containing approximately _____ parking spaces and
being appropriately designated on the plat attached hereto as
Exhibit "B" ("NCDOT Parking Lot"); and
(iv) that portion of the Amphitheater Site on which CITY shall
construct approximately 2,500 parking spaces and being appropriately
designated on the plat attached hereto as Exhibit "B" ("Additional
Parking Facilities").
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<PAGE>
(j) "Permitted Encumbrances" shall mean, (i) the liens and security
interests created by the Deed of Trust, (ii) liens for general ad valorem
taxes and assessments, if any, not then delinquent, (iii) the estates,
interests and rights created pursuant to the Ground Lease and the Lease
Purchase Agreement, (iv) any right or claim of any mechanics, laborers,
materialmen, supplers or vendors not filed or perfected in the manner
prescribed by law and (v) the easements, rights-of-way, mineral rights,
drilling rights and other rights, reservations, covenants, conditions or
restrictions which are specifically listed or referred to in the policy of
title insurance provided to TENANT pursuant to the provisions of Section
16.1(c)(iv) hereof.
(k) "Previous Amphitheaters" shall collectively mean all other
outdoor entertainment facilities which are currently owned (either
directly or indirectly) or managed by TENANT anywhere in the United States
including, without limitation, Cynthia Woods Mitchell Pavilion (The
Woodlands, Texas), StarPlex Amphitheater (Dallas, Texas), Lakewood
Amphitheater (Atlanta, Georgia), Mud Island Amphitheater (Memphis,
Tennessee), Starwood Amphitheater (Nashville, Tennessee) and Star Lake
Amphitheater (Pittsburgh, Pennsylvania).
(l) "Property" shall mean that certain tract of land located in Wake
County, North Carolina and being more particularly described by metes and
bounds in Exhibit "A-1" attached hereto and appropriately depicted on the
plat attached hereto as Exhibit "B".
(m) "WAAC" shall mean Walnut Creek Amphitheater Financing Assistance
Corporation, a nonprofit corporation duly organized and existing under and
by virtue of Chapter 55A of the general statutes of North Carolina.
(n) "Trust Agreement" shall mean that certain Trust Agreement to be
entered into by and between Trustee and WAAC relating to the issuance of
certain Certificates of Participation to investors for the purpose of
raising money for funding the construction and design costs of the
Amphitheater.
(o) "Trustee" shall mean First Union National Bank of North
Carolina, Charlotte, North Carolina.
1.2 Lease of the Amphitheater
Subject to the terms and conditions contained in this Agreement, and in
consideration of the covenants and payment and performance set forth in this
Agreement, CITY leases and demises unto TENANT, and TENANT rents and accepts
from CITY, the Amphitheater and the Parking Facilities together with use of all
rights, easements, privileges, and appurtenances thereto.
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<PAGE>
Except as expressly provided to the contrary herein, TENANT shall be entitled to
receive and retain, as its own property, all of the revenues, royalties and
income which may be generated from its possession, use, control and operation of
the Amphitheater and the Parking Facilities pursuant to the terms of this
Agreement.
1.3 Compliance with Law
Except as otherwise provided herein, TENANT shall, during the term of this
Agreement at its sole cost and expense, promptly comply with all material laws,
ordinances, orders, rules, regulations and requirements of all federal, state
and municipal governmental agencies which may be applicable to the use or
occupancy of the Amphitheater. TENANT shall likewise observe and comply with the
material requirements of all policies of public liability, fire, and other
insurance at any time in force with respect to the Amphitheater.
Notwithstanding the foregoing, should CITY pass, enact or amend any
ordinances, laws, orders, rules, regulations or requirements after the date
hereof which relate specifically and only to the Amphitheater and which would
have the effect of requiring TENANT to expend sums in connection with the
operation or use of the Amphitheater in order to comply therewith, then such
amounts shall be paid by CITY, as owner of the Amphitheater. TENANT shall have
the express right to offset any amounts due from CITY to TENANT pursuant to the
immediately preceding sentence against payments due from TENANT to CITY pursuant
to the terms of this Agreement.
CITY agrees and acknowledges that the Amphitheater shall be used as a
commercial outdoor concert facility in a manner consistent with the manner in
which the Previous Amphitheaters have been and are being operated. Without
derogating from the generality of the immediately preceding sentence, CITY
agrees and acknowledges that the Amphitheater may be used for performing with or
without amplified sound, popular and contemporary music, rock and roll,
pyrotechnic shows, and other similar sound-intensive and light-intensive
activities; provided that TENANT acknowledges that it may be required to obtain
permits from Wake County or other governmental entities as a condition precedent
to conducting any pyrotechnic shows.
2.0 TERM
2.1 Initial Term
The initial term of this Agreement shall (i) commence upon substantial
completion of construction of the Amphitheater and the Parking Facilities and
the issuance of a certificate of occupancy for the Amphitheater and (ii) end on
the nineteenth (19th) anniversary of the last day of the first Amphitheater
Season of the initial term of this Agreement. If construction of the
Amphitheater and the Parking Facilities is substantially completed and a
certificate of occupancy is issued for the Amphitheater prior to July 15 of a
particular calendar year, then the Amphitheater Season during such calendar year
shall be deemed to be, for all purposes of this Agreement,
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<PAGE>
the "first" Amphitheater Season of the initial term of this Agreement. If
construction of the Amphitheater and the Parking Facilities is substantially
completed and a certificate of occupancy is issued for the Amphitheater after
July 15 of a particular calendar year, then the Amphitheater Season during the
next succeeding calendar year shall be deemed to be, for all purposes of this
Agreement, the "first" Amphitheater Season of the initial term of this
Agreement; provided, however, if construction of the Amphitheater and the
Parking Facilities is substantially completed and a certificate of occupancy is
issued for the Amphitheater between July 15 and October 31 of a particular
calendar year, then TENANT's right to use and operate the Amphitheater pursuant
to this Agreement shall commence upon substantial completion of construction and
issuance of the certificate of occupancy and the rental obligation described in
Section 3.2 hereof shall commence with such use and operation even though the
"first" Amphitheater Season of the initial term of this Agreement shall be the
Amphitheater Season occurring during the next calendar year.
2.2 Option to Renew
CITY hereby grants to TENANT the right and option to renew and extend this
Agreement for an additional term of twenty (20) Amphitheater Seasons commencing
on the expiration of the initial term. The renewal must be exercised by the
TENANT giving written notice to CITY of its intent to renew on or before sixty
(60) days after the end of the fifth (5th) Amphitheater Season of the initial
term of this Agreement. Simultaneously with the commencement of the renewal
term, TENANT shall pay to CITY The sum of One Million Five Hundred Thousand
Dollars ($1,500,000.00) as a renewal fee. TENANT may exercise the option
provided for in this Section 2.2 only if the original Agreement is in full force
and effect on the date the option is exercised.
3.0 RENTAL PAYMENTS
3.1 Tenant's Capital Investment
As partial consideration for CITY's agreement to enter into this Agreement
with TENANT, TENANT shall pay Four Million Five Hundred Thousand Dollars
($4,500,000.00) to CITY in the following installments:
(a) Pursuant to the terms and provisions of the Development
Agreement TENANT has agreed to pay Three Million Five Hundred Thousand
Dollars ($3,500,000.00) to be applied towards the construction, financing
and design costs associated with construction of the Amphitheater.
(b) TENANT shall be unconditionally and irrevocably obligated to pay
to CITY a rental payment of One Million Dollars ($1,000,000.00) on the
last day of the twentieth (20th) Amphitheater Season of the initial term
of this Agreement.
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<PAGE>
3.2 Monthly Rentals
TENANT shall also pay rentals to CITY, in monthly installments as provided
for in Section 3.4 of this Agreement, in the amount of seven percent (7%) of
all Gross Revenues actually received by TENANT during the term of this
Agreement.
3.3 Gross Revenues
As used in this Agreement, the term "Gross Revenues" shall mean the total
amount of revenues actually received by Tenant from time to time and during any
particular period of time during the term of this Agreement, which revenues
arise out of or relate to TENANT's possession, control, use or operation of the
Amphitheater and the Parking Facilities, including, without limitation, (i) the
gross revenues actually received from the sale of tickets to performances,
events and shows held or presented by TENANT at the Amphitheater (net of all
state, county and local sales taxes which are payable in connection with the
sale of such tickets); (ii) the gross revenues actually received by TENANT from
TENANT's direct sales of food, beverages, artist-related merchandise and any
other product or services at the Amphitheater (net of all state, county and
local sales taxes which are payable in connection with the sale of such
merchandise); (iii) gross revenues actually received by TENANT on account of or
pursuant to any license, concession or other agreement executed by TENANT which
grants to another person the right to sell food, beverages, artist-related
merchandise and any other products or services at the Amphitheater; and (iv) all
other gross revenues actually received by TENANT from the operation of the
Amphitheater such as advertising revenues, sponsorship revenues, and revenues
from the granting of telecast, broadcast, video, or audio rights relating to any
performance or show at the Amphitheater; provided, however, notwithstanding the
foregoing, the term "Gross Revenues" as used in this Agreement shall be adjusted
and modified in accordance with the following terms and provisions:
(a) The value of complimentary or promotional tickets (including the
tickets provided to CITY pursuant to Section 5.11 hereof) shall not be
included within Gross Revenues unless TENANT receives in exchange for the
distribution of such complimentary or promotional tickets specific goods
or services other than advertising time or space.
(b) All payments or grants received by TENANT from any
concessionaire or sponsor which are either (i) ultimately repayable by
TENANT to such concessionaire or sponsor or (ii) are "capital" in nature
shall not be included within Gross Revenues.
(c) The first $2,000,000.00 of revenue received during each of the
first and second Amphitheater Seasons of the initial term of this
Agreement, which would otherwise be Gross Revenues, shall be excluded from
Gross Revenues.
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<PAGE>
(d) The first $1,000,000.00 of revenue received by TENANT during the
third Amphitheater Season of the initial term of this Agreement, which
would otherwise be Gross Revenues, shall be excluded from Gross Revenues.
(e) Revenues received by TENANT from the sale of tickets to any
show, performance or event to be presented at the Amphitheater shall be
deemed to have been received as Gross Revenues by TENANT for purposes of
this Agreement during the calendar month in which such show, performance
or event is actually presented. All other items of revenue received by
TENANT which are included within Gross Revenues shall be deemed to have
been received within the calendar month of its collection.
(f) Gross Revenues shall be reduced by the amount of any "admission
taxes", "entertainment taxes" or similar types of taxes (collectively
"Special Entertainment Taxes") which may be payable by TENANT in
connection with its operation of the Amphitheater, if such Special
Entertainment Taxes are applicable only to outdoor entertainment
facilities similar to the Amphitheater. Gross Revenues shall not be
reduced by any Special Entertainment Taxes which may be payable by TENANT
in connection with its operation of the Amphitheater, if such taxes are
equally applicable to other types of entertainment venues such as football
stadiums and indoor entertainment facilities.
(g) Any revenues or reimbursements which may be received by TENANT
during CITY's (or its designee's) use of the Amphitheater pursuant to
Sections 5.8, 5.9 or 5.10 of this Agreement shall be specifically excluded
from Gross Revenues for purposes of this Agreement.
3.4 Payment Procedures for Rent
During the term of this Agreement, TENANT shall pay, as provided herein,
to CITY, in monthly payments, commencing with the first full calendar month
after the final completion of the Amphitheater and issuance of a certificate of
occupancy for the Amphitheater, seven percent (7%) of the Gross Revenues for the
immediately preceding calendar month. TENANT shall accompany each such monthly
payment with an itemized report setting forth the amount of Gross Revenues for
the prior month, which statements shall be certified to by an officer of TENANT
as to the accuracy thereof to the best of his knowledge, information and belief.
All payments shall be made no later than fifteen (15) days after the end of the
month for which the payment is due. The payment shall be paid without notice or
demand, and without any abatement, deduction, or set-off except as may be
expressly permitted pursuant to the terms hereof. All rental payments hereunder
shall be made to the City of Raleigh and delivered to:
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<PAGE>
City of Raleigh
c/o Finance Director
P.O. Box 590
222 West Hargett St.
Raleigh, N.C. 27602
All taxes, charges, costs, and expenses which TENANT is required to pay
hereunder, together with all interests and penalties that may accrue thereon in
the event of the TENANT's failure to pay such amounts, and all damages, costs,
and expenses which CITY may incur by reason of any default of TENANT or failure
by TENANT to comply with the terms of this Agreement, shall be deemed to be
additional rental due in the event of nonpayment by TENANT. CITY shall have all
the rights and remedies provided for herein or by law with respect thereto as
CITY has for the nonpayment of any other payment due pursuant to this Agreement.
3.5 Annual Reconciliation
Within sixty (60) days after the close of each calendar year, an annual
reconciliation of Gross Revenues for such calendar year shall be provided to
CITY by TENANT for determination of compliance with this Agreement and determine
what, if any, remaining funds are due and owing CITY based upon the provisions
of this Agreement. If such reconciliation reflects an overpayment, then that
amount shall be deducted from the next payment due CITY from TENANT under this
Agreement. If it is determined that TENANT underpaid CITY during such calendar
year, then, in that event, TENANT shall forthwith pay CITY said funds, and if
such underpayment was the result of fraud, gross negligence or willful neglect
on the part of TENANT, then TENANT shall additionally pay to CITY such
underpayment amount together with interest at twelve percent (12%) per annum,
calculated from the date the reconciliation reflects such funds are due.
Each annual reconciliation provided by TENANT to CITY pursuant to the
provisions of this Section 3.5 shall be accompanied with an "Opinion as to
Accuracy and Sufficiency" prepared by a national accounting firm retained by
TENANT based upon a review of TENANT's books, records and accounting procedures.
3.6 Books and Records
TENANT shall maintain accurate and complete books and records, including
income and sales tax returns and audit trails for complimentary tickets, in a
form which is consistent with the form of the books and records maintained by
TENANT at the Previous Amphitheaters, showing all Gross Revenues and shall, to
the extent possible, require all licensees, concessionaires, or others occupying
the Amphitheater or in any way doing business with TENANT at the Amphitheater to
do the same, for a period of not less than three (3) years after the expiration
of the year to which such records relate. Such records shall show all Gross
Revenues supported by documents of original entry such as sales slips, cash
register tapes, purchase invoices and tickets issued.
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In the case of admission charges, TENANT shall either: (i) issue serially
numbered tickets for each paid admission and keep accurate records of said
serial numbers issued and of those unused; (ii) record admission charges by
means of a cash register system which automatically issues a customer's receipt;
or (iii) any other method specifically approved by CITY in writing (such
approval not to be unreasonably withheld). CITY hereby approves the use of
Ticketron or comparable computerized ticket distribution system for purposes of
issuing tickets for Amphitheater events. TENANT shall make available to CITY and
shall retain for not less than three (3) years copies of all ticket
reconciliation statements and other ticket sale documentation produced by the
ticket agent selected by TENANT. TENANT shall have no obligation to retain
actual ticket stubs for more than ten (10) business days following a particular
performance. All sales and rentals of merchandise and services rendered, other
than T-shirts and other concert merchandise sold at mobile concessionaire units
which cannot reasonably have cash registers, shall be reported by means of a
cash register system. All said cash register systems shall have a lock-in,
accumulating, printed transaction counter which cannot be reset, and/or printed
detailed audit tape located within the register. Complete beginning and ending
cash register readings shall be made a matter of daily record. TENANT shall
retain sales tax returns for all merchandise and services and shall also retain
event inventory sheets for all T-shirt and other concert merchandise sales sold
at the mobile concessionaire units which cannot reasonably have cash registers.
TENANT shall retain for a period of three (3) years and make available to CITY
these above-referenced records and supporting documents. The books and records
shall be kept or made available at TENANT's place of business within Wake
County, North Carolina.
3.7 Right to Audit
CITY shall have the right to examine and audit from time to time, at the
discretion of CITY, TENANT's records of Gross Revenues, books of account and all
supporting documents relating to Gross Revenues. Notwithstanding the foregoing,
CITY shall not have the right to examine and audit the books and records of
TENANT pursuant to the right created in the immediately preceding sentence for a
second (2nd) time during any calendar year unless the first audit during such
calendar year uncovered a deviation from reported results in excess of three
percent (3%). TENANT shall use its reasonable efforts to include in each license
or concession agreement or any other agreement with anyone doing business with
respect to the Amphitheater or any part thereof, a provision giving CITY the
right of examination and audit by an independent certified public accountant or
such other person as CITY desires, at CITY's discretion, of such licensees' and
concessionaires' books and records in the same manner as provided in this
Section 3.7 with respect to Tenant's books and records.
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4.0 TAXES AND UTILITIES
4.1 Payment of Taxes, Assessments, etc.
TENANT shall pay and discharge, before any fine, penalty, interest or cost
may be added thereto for the nonpayment thereof, all taxes, and assessments of
any kind or nature whatsoever, general and special, ordinary and extraordinary,
foreseen and unforeseen, which at any time during the term of this Agreement may
be assessed, levied, confirmed or imposed upon, or become a lien on, the
Amphitheater or the Parking Facilities, or any part thereof or any appurtenance
thereto, or any tax assessed or levied as a result of any use or occupation of
the Amphitheater or Parking Facilities; provided, however, TENANT shall have the
right to contest in good faith in accordance with statutory procedures all taxes
and assessments which may be made with respect to the Amphitheater or Parking
Facilities.
4.2 Public Utility Charges
TENANT shall, at its sole cost and expense, pay or cause to be paid all
charges for gas, water, sewer, electricity, telephone or other service or
services furnished to the Amphitheater during the term of this Agreement to the
extent that such charges directly relate to TENANT's use of the Amphitheater.
CITY shall, at its sole cost and expense, pay or cause to be paid all charges
for gas, water, sewer, electricity, telephone or other service or services
furnished to the Amphitheater during the term of this Agreement to the extent
that such charges relate to the use of the Amphitheater by CITY, including,
without limitation, use of the Amphitheater pursuant to the provision of
Sections 5.8, 5.9 and 5.10 of this Agreement. Nothing contained in this Section
4.2 shall imply that TENANT or CITY shall be required to separately meter
utility charges associated with their respective use of the Amphitheater. In
that regard, it is acknowledged that TENANT shall develop standard rates to
reasonably approximate the charges for utility usage for each use of the
Amphitheater.
5.0 USE OF PREMISES
5.1 Use of Amphitheater
TENANT shall use and occupy the Amphitheater pursuant to this Agreement
solely for the operation of a quality amphitheater presenting cultural and
entertainment performances, permitting the holding of general meetings and
permitting other uses incidental to or customarily related to such uses. The
Amphitheater shall not be otherwise occupied without the prior written consent
of CITY.
TENANT shall not use or occupy the Amphitheater or permit the same to be
used or occupied in a manner which is contrary to the general manner in which
the Previous Amphitheaters are being currently, or have been previously, used
and occupied.
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TENANT shall use its reasonable skill and diligence in the conduct of the
operation of the Amphitheater and Parking Facilities, exercise sound business
judgment and undertake such commercially reasonable acts as may be reasonably
necessary so as to produce the maximum volume of trade and patronage reasonably
obtainable from the operation of the Amphitheater in a commercially reasonable
manner.
TENANT shall use its reasonable efforts to prohibit the sale of any
merchandise or services at the Amphitheater or in the Parking Facilities unless
such selling is conducted by TENANT or a licensee of TENANT.
5.2 Signs and Advertising
The location and size of any advertising signs which are visible from a
public right-of-way must receive the prior written approval of CITY as being in
compliance with all applicable laws, ordinance, rules and regulations governing
the location and size of advertising signs which are visible from public
rights-of-way. Notwithstanding anything to the contrary contained herein, it is
hereby specifically agreed and acknowledged that the location, design and size
of all signs located at the Amphitheater which are not visible from any public
right-of-way may be erected and maintained by TENANT without the obtaining of
any prior consent from CITY, except for CITY's approval of the location of such
signs which approval may only be withheld on the basis of safety concerns or
pedestrian movement problems.
5.3 Operation
TENANT shall use recognized modern business practices to provide efficient
and competent services to the public. If, at any time on or after the end of the
second (2nd) Amphitheater Season of the initial term of this Agreement, subject
to the provisions of Section 17.3 hereof, the average number of shows or events
presented at the Amphitheater by TENANT over the immediately preceding two (2)
Amphitheater Seasons is less than twenty (20) per Amphitheater Season, then
TENANT shall be deemed to have breached its obligations under this Agreement
unless TENANT pays to CITY a lump sum payment in an amount equal to the
additional rental payments which CITY would have received under this Agreement
over such two (2) year period if enough additional shows or events had been
presented at the Amphitheater by TENANT to cause the average number to equal
twenty (20). For purposes of calculating the amount of additional rental
payments which CITY would have received hereunder for shows or performances
which were not presented at the Amphitheater over a particular period of time as
required by the provisions of the immediately preceding sentence, the amount of
Gross Revenues which would have been generated at each such show or performance
shall be deemed to be equal to the average amount of Gross Revenues generated by
each performance or show which was actually presented at the Amphitheater over
such period of time.
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5.4 Handicapped Accessibility
TENANT shall operate the Amphitheater in such a manner as to assure that
it complies fully with all state, federal, and local standards for handicapped
accessibility. By way of clarification, it is hereby expressly acknowledged and
agreed that the obligation contained in the immediately preceding sentence shall
in no way impose upon TENANT an obligation to make any design or construction
changes to the Amphitheater to comply with any state, federal or local standards
for handicapped accessibility, it being agreed and acknowledged that the
foregoing provision relates solely to the manner in which the Amphitheater is
operated.
5.5 Balanced Programming
Part of the consideration inherent in CITY entering into this Agreement is
the fact that CITY considers the Amphitheater a significant community asset, but
only so long as programming at the Amphitheater is balanced in substantially the
manner hereinafter provided. As a result, it is the stated goal of the parties
hereto to each use their reasonable best efforts to cause Amphitheater
programming to be balanced so as to ensure a reasonably proportioned blend of
cultural experiences, recognizing and accepting the fact that some (e.g., so
called, "high arts") may not be as profitable as others (e.g., "rock and roll").
For purposes of this Agreement, "balance" shall mean a reasonable assortment of
varied tastes of the general population including, without limitation, popular,
rock and roll, blues, soul, jazz, folk, classical, country and western music,
comedy and theater. CITY and TENANT acknowledge that the examples contained in
this section, though applicable to 1990 tastes in entertainment, may not be
indicative of general tastes during the entire term of this Agreement. It is the
intent of the parties throughout this Agreement's term to appeal to the varied
entertainment tastes of the general public as such tastes may change over time.
CITY shall have the right to provide notice to TENANT at any time following the
end of any Amphitheater Season of any specific suggestions which it may have
with respect to future Amphitheater Seasons in order to comply with the intent
and purpose of this Section 5.5; provided, however, in no event shall the
provisions of this Section 5.5 ever be made the basis for declaring TENANT to be
in default under this Agreement because of the inherently subjective nature of
these provisions.
5.6 Traffic, Crowd Control and Cleanup
TENANT, at its expense, shall be responsible for, on those days and nights
on which TENANT presents a performance or show at the Amphitheater, cleanup of
the Amphitheater and Parking Facilities, crowd control, security, and traffic
control; provided, however, in no event shall TENANT be responsible for any
cleanup services related to trash generated by non-Amphitheater use of the
Amphitheater Site or the Parking Facilities.
TENANT shall provide adequate trash collection and cleaning service to
assure that the refuse of the patrons of the Amphitheater does not litter any
adjoining property. TENANT shall be responsible for providing such temporary
barriers and sufficient security personnel as are reasonably
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necessary to prevent patrons of the Amphitheater from parking on, walking on, or
otherwise trespassing upon adjoining properties. If it is determined by CITY
that the temporary barriers provided by TENANT pursuant to the foregoing
provisions are insufficient to prevent patrons of the Amphitheater from parking
on, walking on, or otherwise trespassing upon adjoining properties, then CITY
shall, at its sole cost and expense, provide permanent fences or other permanent
barriers as may be required in CITY's discretion.
CITY shall assist TENANT in working with the CITY Police Department to
arrange for uniformed police officers to provide traffic control on public
streets on the days and nights of Amphitheater performances or shows.
5.7 Scheduling
On or before April 1 of each calendar year, TENANT shall submit, for
informational purposes, to CITY its proposed schedule of events for the upcoming
Amphitheater Season insofar as the schedule may be known at that time. The
submission required by this Section 5.7 is in no way intended to limit or
prohibit the booking by TENANT of other events or shows during the Amphitheater
Season as dates and opportunities become available.
5.8 City Use
TENANT agrees that the CITY shall have the right to use the Amphitheater,
free of any rent, from time to time on such dates as may be approved by TENANT,
but not to exceed fourteen (14) events during each Amphitheater Season. It is
the intent of the parties that TENANT and the CITY shall jointly select the
dates to be utilized for the CITY's benefit as well as the nature of the
programs and events to occur on such dates. Without limiting the generality of
the foregoing, it is hereby specifically understood and acknowledged that TENANT
shall have the right to reject any program or event proposed by CITY pursuant to
this Section 5.8 which includes a "headline" entertainment act which has been,
in the immediately preceding twelve calendar months, or is currently, during the
next twelve calendar months, booked to perform more than eight (8) dates at
outdoor entertainment facilities having 4,000 or more seats. TENANT shall be
responsible for the presentation of such CITY events.
When the CITY presents an event pursuant to this Section 5.8, it shall be
obligated to pay to TENANT only an amount sufficient to reimburse TENANT for
actual expenses incurred for operating the Amphitheater in connection with such
event. Actual expenses shall include, but not be limited to, cleaning,
stagehands, allocable share of liability insurance premiums, security,
housestaff and public utility charges as described in Section 4.2 hereof.
CITY will receive all net income (after payment of artist costs,
advertising costs and other costs associated with the production and promotion
of a CITY event), if any, generated from the events presented by it pursuant to
this Section 5.8 after paying to TENANT the expenses determined as set out in
this section.
See Addendum A
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Addendum A to Lease Agreement
between City of Raleigh and
Sony Music/Pace Partnership ("Lease")
The following paragraph is hereby inserted at the end of Section 5.8 of
the lease:
Notwithstanding anything to the contrary contained herein, CITY shall have
the right to use the Amphitheater, free of rent, at any time during that portion
of any calendar year which is not included within an Amphitheater Season;
provided, however, that any such use of the Amphitheater by CITY shall be
conducted by CITY at its sole cost and risk and without any requirement or
obligation upon TENANT to assist in the presentation of any events to which such
use relates.
<PAGE>
5.9 Third Party Use
CITY and TENANT agree that the CITY, with the prior approval of TENANT,
may designate that a third party non-profit organization may use one or more of
the fourteen (14) dates referred to in Section 5.8 hereof for the benefit of
such organization. Any event designated as a third-party non-profit event
pursuant to this Section 5.9 shall in all other respects be governed by the
provisions of Section 5.8 of this Agreement.
5.10 Non-Gated Use
In addition to the events described in Section 5.8 hereof, TENANT agrees
that CITY may use the Amphitheater or a portion thereof for non-gated,
non-profit events (a) up to eight (8) times per Amphitheater Season by providing
no more than thirty (30) days advanced written request to TENANT and (b) an
unlimited number of times per Amphitheater Season by providing not more than ten
(10) days advanced written request to TENANT; provided, however, that if TENANT
has otherwise scheduled or is then currently expecting to schedule an event for
the Amphitheater or otherwise has contracted with others for the use of the
Amphitheater or such portion thereof for such time as the CITY shall have
requested use of the Amphitheater or such portion thereof, then CITY shall not
be entitled to use the Amphitheater for such non-gated non-profit event.
All events presented pursuant to this Section 5.10 shall in all other
respects be governed by the provisions by the second and third paragraphs of
Section 5.8 of this Agreement.
5.11 Professional Concessionaire.
If any food, beverage or other concessions are to be sold at any event,
show, performance or presentation to be held at the Amphitheater pursuant to the
provisions of Section 5.8, Section 5.9 or Section 5.10 of this Agreement, then
no third party professional vendor or concessionaire may be used without the
prior written consent of TENANT (which consent may be withheld for any reason
whatsoever), other than the professional vendors or concessionaires which
provide services at the events and performances presented by TENANT at the
Amphitheater. In no event may the concession and vending equipment owned by
TENANT or TENANT'S concessionaires or vendors be used in connection with the
sale or dispensing of any food, beverage or merchandise at any event, show,
performance or presentation held at the Amphitheater pursuant to Section 5.8,
Section 5.9 or Section 5.10 of this agreement without the express consent of the
owner of such equipment.
5.12 City Tickets
At each event or show presented at the Amphitheater by TENANT pursuant to
this Agreement, TENANT shall provide to CITY, at no charge to CITY, twenty (20)
complimentary tickets in no less than ten (10) groups of two (2) each.
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6.0 CONSTRUCTION BY TENANT
6.1 Tenant's Right to Build
TENANT shall have the right, at any time and from time to time during the
term of this Agreement, to erect, maintain, alter, remodel, reconstruct,
rebuild, replace and remove buildings and other improvements on the Amphitheater
Site and correct and change the contour of any of the buildings and other
improvements on the Amphitheater Site subject to the following conditions:
(a) The cost of any such construction, reconstruction, demolition,
or of any change, alteration or improvement shall be borne and paid by
TENANT.
(b) The Amphitheater Site shall be at all times kept free of
mechanic's and materialman's liens.
(c) At least sixty (60) days prior to the anticipated commencement
of such remodeling, construction, replacement or other improvement, TENANT
shall submit to CITY detailed plans and specifications for the proposed
change. TENANT shall not commence work until written approval of the plans
and specifications is received from CITY, such consent not to be
unreasonably withheld or delayed. Any variations in the exterior,
landscaping, sound reducing or other structural portions of the buildings
or other improvements located on the Amphitheater Site shall require the
prior written consent of the CITY, such consent not to be unreasonably
withheld or delayed.
(d) TENANT shall comply with all applicable governmental laws,
ordinances, statutes, regulations, and codes that are applicable to any
construction work conducted pursuant to this Section 6.1.
Notwithstanding the foregoing, should CITY pass, enact or amend any ordinances,
laws, orders, rules, regulations or requirements after the date hereof which
would have the effect of requiring TENANT to erect, maintain, alter, remodel,
reconstruct, rebuild, replace or remove buildings and other improvements on the
Amphitheater Site or to correct or change the contour of the buildings and other
improvements on the Amphitheater Site, then CITY shall be solely responsible for
payment of all sums required to be expended for such construction work.
6.2 Tenant's Furniture, Fixtures & Improvements
TENANT shall have the right at any time and from time to time during the
term of this Agreement to install in or upon the Amphitheater, furniture,
movable trade fixtures, and equipment and make repairs thereto and additions
thereto. All such furniture, movable trade fixtures and
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equipment shall be and remain the property of TENANT during the term of this
Agreement, and TENANT shall bear all cost, loss, and expense for any casualty or
theft risk in connection with such furniture, movable trade fixtures, and
equipment. Upon the termination or expiration of this Agreement, all such
furniture, movable trade fixtures and equipment shall be removed by TENANT.
6.3 CITY's Right to Inspect Premises
CITY shall have the right to inspect the Amphitheater at all reasonable
times upon prior notice to TENANT, so long as such inspections do not limit or
interfere with the presentation or preparation for presentation of any
performance or show at the Amphitheater.
7.0 REPAIRS AND RESTORATION
7.1 Repair and Maintenance
The obligation to cause the Amphitheater and all equipment and fixtures
used in connection with the operation of the Amphitheater to be maintained and
repaired shall be borne jointly by TENANT and CITY in accordance with the
following provisions:
(a) TENANT shall be responsible, at its sole cost and expense, to
provide all normal and routine day-to-day maintenance and repair work.
(b) CITY shall be responsible, at its sole cost and expense, to
provide all major repairs and replacements.
In the event there should be any doubt as to whether a particular item of
maintenance or repair is the responsibility of TENANT or CITY, the parties shall
be guided by generally accepted accounting principles such that TENANT shall be
responsible for payment of all items and matters which would be deductible or
expensed for accounting purposes in accordance with generally accepted
accounting principles and CITY shall be responsible for payment of all matters
which would be capitalized for accounting purposes in accordance with generally
accepted accounting principles.
7.2 Advances for Capital Improvements
If TENANT elects to extend the term of this Agreement for an additional
twenty (20) Amphitheater Seasons pursuant to the right created in Section 2.2 of
this Agreement, then, at all times after TENANT's exercise of such extension
option, TENANT shall be obligated to make advances to CITY each time CITY is
required to expend funds for capital improvements in accordance with the
provisions of section 7.1(b) of this Agreement. Each advance extended by TENANT
pursuant to the obligation contained in the immediately preceding sentence shall
(i) accrue interest at a fixed rate equal to the then average of CITY's cost of
obtaining borrowed funds, compounded annually, (ii) be repayable from CITY to
TENANT
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on the commencement of the first (1st) Amphitheater Season of the extended
twenty (20) Amphitheater Season renewal term and (iii) be payable by TENANT
offsetting against its $1,500,000.00 renewal fee obligation to CITY as set forth
in Section 2.2 of this Agreement. If the aggregate amount due and owing pursuant
to all such loans exceeds such $1,500,000.00 renewal fee payment, then TENANT
shall be authorized to continue to thereafter recoup all such amounts
outstanding, together with such continuing accrued interest thereon, from future
rental payments due under Section 3.2 of this Agreement during the renewal term.
Notwithstanding anything to the contrary contained herein, CITY is not pledging
its full faith and credit or taxing authority to the obligation to repay the
advances from TENANT to CITY hereunder, and TENANT's only recourse for repayment
of any such advanced sums shall be to offset against rental payments otherwise
payable hereunder from TENANT to CITY.
7.3 Drive Approaches
The obligation to repair, maintain and upkeep the driveways and other
vehicular approaches between the public right of ways and the various Parking
Facilities shall be the joint responsibility of Owner and CITY in accordance
with the following provisions:
(a) TENANT shall be responsible, at its sole cost and expense, to
provide the normal and routine maintenance of all driveways and drive
approaches including, without limitation, filling all potholes thereon.
(b) CITY shall be responsible, at its sole cost and expense, to
resurface all driveways and drive approaches at the same time, and in the
same manner, as CITY causes the adjacent public right of ways and streets
to be resurfaced in accordance with its standard resurfacing procedures.
7.4 Maintenance and Repair of Parking Facilities
The responsibility for upkeep, repair and maintenance of the Parking
Facilities shall be divided between CITY and TENANT in accordance with the
following provisions:
(a) CITY shall be responsible, at its sole cost and expense, for all
maintenance, repair and upkeep as may be necessary to maintain the
Softball Parking Lot, the Additional Parking Facilities and the NCDOT
Parking Lot in a good state of appearance and repair.
(b) TENANT shall be responsible, at its sole cost and expense, for
all maintenance, repair and upkeep as may be necessary to maintain the
South Parking Lot in a good state of appearance and repair during each
Amphitheater Season during the term of this Agreement. CITY shall be
responsible, at its sole cost and expense, for all maintenance, repair and
upkeep as may be necessary to maintain the South Parking Lot in a good
state
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of appearance and repair at all times other than the Amphitheater Seasons.
7.5 Damage or Destruction
In the event the Amphitheater is damaged or destroyed from any casualty,
CITY shall to the extent of available insurance proceeds, repair the damage and
restore the Amphitheater to the extent reasonable and practical under the
circumstances then existing; provided, however, CITY shall not be required to so
repair and restore the Amphitheater and shall be entitled to terminate this
Agreement by written notice to TENANT in the event (a) the Amphitheater is
damaged or destroyed from any casualty of a type then generally excluded from
conventional property insurance and if, as a result, no insurance proceeds are
available or (b) in the reasonable discretion of CITY there is an insufficient
amount of insurance proceeds available to permit adequate reconstruction and
repair of the Amphitheater and neither TENANT nor CITY agree to provide
sufficient funds to cover the amount of the deficiency. Any funds advanced by
TENANT to cover the deficiency referred to in clause (b) of the immediately
preceding sentence shall be deemed to have been advanced by TENANT to CITY
pursuant to the provisions of Section 7.2 hereof and shall be governed by the
repayment provisions thereof.
CITY shall be entitled to all of the insurance proceeds payable by reason
of any such damage or destruction; provided, however, if CITY elects not to
repair the damage and restore the Amphitheater as a result of there being an
insufficient amount of insurance proceeds, then CITY shall be obligated to pay
or cause to be paid to TENANT twenty-four percent (24%) of such insurance
proceeds. If any Mortgagee has provided notice to CITY of its existence pursuant
to the right created in the third grammatical paragraph of Section 10.2 hereof,
then any amounts payable to TENANT pursuant to this Section 7.5 shall be paid to
such Mortgagee.
All rental payments due from TENANT to CITY required hereunder shall abate
in full until completion of the repair and restoration. In case of a casualty to
the Amphitheater resulting in damage or destruction, TENANT will immediately
give written notice thereof to CITY.
7.6 Condemnation
If all or substantially all of the Amphitheater and the Parking Facilities
shall be taken in condemnation proceedings, this Agreement shall terminate as of
the taking and the rental payments due hereunder from TENANT to CITY shall be
paid to the date of such taking. For purposes of this section 7.7,
"substantially all of the Amphitheater and the Parking Facilities" shall be
deemed to have been taken if the untaken portion cannot be practically and
economically used or converted for use by TENANT, in TENANT's sole opinion, for
the purposes for which the Amphitheater and the Parking Facilities are being
used immediately prior to such taking.
Except as provided below, if only a part of the Amphitheater and the
Parking Facilities are taken in condemnation proceedings, this Agreement
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shall remain in effect as to that part of the Amphitheater and Parking
Facilities not taken; however, TENANT shall have the option by notice to CITY
within a reasonable time after such taking to restore or repair the portion of
the Amphitheater, if any, then on the Amphitheater Site to the extent TENANT
determines to be reasonable and practical under the circumstances then
obtaining. If TENANT elects to so repair or restore, TENANT shall be entitled to
the recovery of all of the award made or damages granted to the extent necessary
for such repair and restoration. In the event TENANT elects not to repair or
restore, then this Agreement shall terminate as of the taking of the part of
the Amphitheater or the Parking Facilities in question, and the rental payments
due hereunder shall be abated during the unexpired portion of this Agreement,
effective on the date of such taking. CITY and TENANT shall be entitled to each
make claim for and receive such damages in accordance with the loss and damage
suffered by each, taking into consideration all the relevant facts and
circumstances.
In any condemnation proceedings CITY and TENANT agree to cooperate in
obtaining the highest award possible. Any compensation which may be awarded on
account of the taking of all or a part of the Amphitheater or the Parking
Facilities by condemnation proceedings shall be fairly allocated between the
ownership interest of CITY and the rights, titles and interests of TENANT in and
to the Amphitheater and the Parking Facilities under this Agreement with the
loss and damage suffered by CITY and TENANT, taking into consideration all of
the relevant facts and circumstances.
8.0 TITLE IMPEDIMENTS
8.1 Prohibitions
TENANT shall not at any time suffer or permit any mechanic's liens or
other liens to be filed against the fee of the Amphitheater nor against CITY's
leasehold interest in the Amphitheater by reason of any work, labor, services,
or materials supplied or claimed to have been supplied to TENANT or anyone
holding the Amphitheater or any part thereof through or under TENANT. TENANT
will not in any way cloud the title to the Amphitheater, or any part thereof,
and will promptly pay and discharge any and all debts contracted by it in
reference thereto for labor, material, or services, to the end that no liens
shall attach to the Amphitheater.
Likewise, CITY shall not at any time suffer or permit any mechanic's liens
or other liens to be filed against the fee estate of the Amphitheater nor
against CITY's leasehold interest in the Amphitheater by reason of any work,
labor, services or materials supplied or claimed to have been supplied to CITY
or anyone holding the Amphitheater or any part thereof through or under CITY.
CITY will not in any way cloud the title to the Amphitheater, or any part
thereof and will promptly pay and discharge any and all debts contracted by it
in reference thereto for labor, material, or services, to the end that no liens
shall attach to the Amphitheater.
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TENANT and CITY each hereby stipulate, acknowledge and agree that nothing
contained in this Section 8.1 shall impose any obligation on either party hereto
to remove or cure any Permitted Encumbrance affecting title to the Amphitheater
or the Parking Facilities.
8.2 Removal of Liens
If any mechanic's or materialman's lien or any other lien shall be
recorded against the Amphitheater, or any part thereof, TENANT or CITY, as
appropriate, shall, at such party's sole cost and expense, and within sixty (60)
days after the filing thereof, cause the same to be removed. In the alternative,
if TENANT or CITY, as appropriate, in good faith desires to contest the same,
such party shall be entitled to do so but in such a case such party hereby
agrees to indemnify and save the other party harmless from all liability of a
judgment or foreclosure upon said mechanic's lien, and cause the same to be
discharged and removed prior to the execution of such judgment.
9.0 INSURANCE
9.1 Insurance Coverage
During the initial and any renewal term of this Agreement, TENANT shall,
at its sole cost and expense, carry and maintain for the mutual benefit of
itself and the CITY, a policy of fire and extended coverage insurance insuring
all improvements at any time located upon the Amphitheater Site and all
additions, alterations and improvements to the same, against damage and
destruction by all causes generally insured against in policies of fire and
extended coverage insurance written on real property. The Amphitheater Site
shall be insured for 100% of the replacement cost of all improvements located
thereon. The TENANT's furniture, movable trade fixtures, and equipment shall
also be insured for 100% of the replacement cost thereof. Such insurance shall
be written with a company authorized to engage in the business of casualty
insurance in the State of North Carolina and approved in writing by CITY, which
approval will not be unreasonably withheld or delayed. Upon commencement of the
term of this Agreement and thereafter not less than fourteen (14) calendar days
prior to the expiration date of any policies required by this section,
certificates of insurance satisfactory to CITY evidencing the payment of the
premiums shall be delivered by TENANT to CITY.
9.2 Liability Insurance
TENANT at all times during the term of this Agreement, shall procure and
maintain in full force and effect, general public liability insurance, insuring
TENANT against any and all claims, actions, causes of actions, costs and
expenses for or on account of any loss of, injury to or destruction of any
person or property, caused by or resulting from any act or omission occurring
on or about the Amphitheater Site or growing out of TENANT's use and occupancy
of the Amphitheater Site with limits, which limits may be increased upon the
mutual agreement of TENANT and CITY, of at
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least $300,000.00 for one person and at least $5,000,000.00 (if available at a
reasonable cost) for one accident for personal injury to or death of any person
or persons and at least $100,000.00 property damages on an "occurrence basis".
Such insurance shall be written with a company acceptable to CITY and authorized
to engage in the business of general liability insurance in the State of North
Carolina and shall name CITY and WAAC as additional insureds thereunder. Said
insurance shall provide that it may not be canceled without CITY's being given
fifteen (15) days notice prior to cancellation by the insurance company. TENANT
shall provide CITY with current certificates of insurance and shall also provide
CITY with paid receipts and other evidence satisfactory to CITY indicating
payment of the premium for said insurance policy or policies at least fourteen
(14) days prior to the expiration of the policy or policies of insurance.
9.3 Notice of Cancellation
Each insurance policy or certificate issued by the insurer shall contain
an agreement by the insurer that such policy shall not be canceled without at
least fifteen (15) days prior written notice to CITY and that any loss which
shall be payable to or on behalf of CITY as provided herein shall be so payable
notwithstanding any act or negligence of TENANT which might otherwise result in
a forfeiture of all or a part of such insurance.
9.4 Indemnification
TENANT covenants and agrees that it will indemnify, defend and hold CITY
and WAAC forever harmless against and from any penalty or damage or charges
imposed for any violation of any law or ordinance, whether occasioned by the act
or neglect of TENANT or those holding under TENANT (other than CITY or WAAC).
TENANT also covenants and agrees that it will indemnify, defend, and hold CITY
and WAAC harmless against and from all claims, losses, costs, damages or
expenses arising out of or from any accident or other occurrence occurring on or
about the Amphitheater premises while TENANT is in control of the use and
operation of the Amphitheater. TENANT also covenants and agrees that it will
indemnify, defend, and hold CITY and WAAC harmless against and from any and all
claims and against any and all losses, costs, damages or expenses arising out of
any failure of TENANT in any respect to comply with and perform all the material
requirements and material provisions of this Agreement.
CITY covenants and agrees that it will indemnify, defend and hold TENANT
forever harmless against and from any penalty or damage or charges imposed for
any violation of any law or ordinance, whether occasioned by the act or neglect
of CITY or those holding under CITY (other than TENANT). CITY also covenants and
agrees that it will indemnify, defend, and hold TENANT harmless against and from
all claims, losses, costs, damages or expenses arising out of or from any
accident or other occurrence occurring on or about the Amphitheater premises
while CITY is in control of the use and operation of the Amphitheater or any
portion of the Property. CITY also covenants and agrees that it will indemnify,
defend, and hold TENANT harmless against and from any and all claims and against
any and all losses, costs, damages or expenses arising out of any failure of
CITY in
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any respect to comply with and perform all the material requirements and
material provisions of this Agreement.
10.0 ASSIGNMENT AND MORTGAGES
10.1 Right to Assign
TENANT shall have the right to assign, convey or transfer TENANT's
interest in this Agreement to any affiliate of TENANT without the prior consent
of CITY, in which case such assignee shall in all respects be deemed to be the
"TENANT" for all purposes hereof from and after such assignment.
10.2 Right to Mortgage and Mortgagee Protection.
TENANT shall have the right, without the consent of CITY, at any time and
from time to time during the term hereof, to mortgage, pledge or otherwise
encumber or hypothecate, all or any part of or interest in TENANT's leasehold
estate created hereby; provided, however, any exercise of any such right shall
be made subject to all of the provisions hereof.
As used in this Section 10.2, the term "Mortgage" shall mean any deed of
trust, mortgage, security agreement, collateral assignment or other lien that
TENANT may hereafter affix or impose against the leasehold estate created hereby
and the term "Mortgagee" shall mean the owner of any indebtedness secured by any
Mortgage.
Should any Mortgagee desire to receive copies of any and all notices CITY
may give to TENANT hereunder, any such Mortgagee may give CITY written notice
thereof, which notice shall include Mortgagee's address for notice. Thereafter,
CITY shall, concurrently with the giving of any notice to TENANT, give like
notice or a copy thereof to any such Mortgagee. Any notice given to TENANT shall
not be effective or considered given for purposes of this Agreement until it or
a copy thereof is also given to each such Mortgagee who has requested CITY to
give it copies of notices CITY gives to TENANT.
Each Mortgagee shall have the right to perform any obligation of TENANT
hereunder, including without limitation, the obligation of TENANT to pay rent
hereunder, and CITY shall accept performance of any such obligation by any
Mortgagee. Any performance by a Mortgagee of any obligation of TENANT hereunder
shall have the same effect as and shall constitute performance of such
obligation by TENANT.
Notwithstanding anything to the contrary contained herein, any Mortgagee
shall have the right, without the prior consent or authorization of CITY, to (a)
conduct a foreclosure sale under its respective Mortgage and sell, transfer or
assign the leasehold estate of TENANT under this Agreement to the purchaser at
such foreclosure sale, (b) accept conveyance of TENANT's leasehold interest
under this Agreement in lieu of foreclosure under its respective Mortgage or (c)
assign, convey or transfer the
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leasehold estate created pursuant to this Agreement to a third party purchaser
following acquisition of the leasehold estate created hereunder by such
Mortgagee pursuant to the rights created in the foregoing clauses (a) or (b), so
long as the third party purchaser is an experienced operator of permanent
outdoor entertainment facilities substantially similar to the Amphitheater, in
which event such Mortgagee shall be released from all its obligations hereunder
if the third party purchaser expressly assumes all obligations of the TENANT
hereunder.
10.3 Acquisition of Tenant's Interest in the Leasehold Estate; New Agreement.
Upon the acquisition of any ownership interest in and to the leasehold
estate in the Amphitheater created by this Agreement by a Mortgagee or any other
person or entity (any such Mortgagee or other person or entity who acquires such
interest herein being called a "New Tenant", it being understood that a New
Tenant is also a TENANT for all purposes hereunder), regardless of how such
acquisition occurs, whether through foreclosure of liens created by a Mortgage
or assignment of such interest in such leasehold estate in lieu of foreclosure,
or otherwise, such New Tenant shall succeed to the rights of TENANT with respect
to such interest in such leasehold estate of the Amphitheater acquired by it,
with the same force and effect as if this Agreement had, with respect to such
interest in such leasehold estate, been originally entered into between CITY, as
landlord, and such Mortgagee or such person or entity, as TENANT, and this
Agreement shall remain in full force and effect. Notwithstanding the foregoing,
the acquisition of any such ownership interest in and to the leasehold estate
in the Amphitheater created by this Agreement by New TENANT shall not be
effective unless and until: (i) all rent payments hereunder then owing by TENANT
have been paid and (ii) CITY has been delivered a fully executed and
acknowledged counterpart of the instrument evidencing such acquisition which
contains an express assumption by New Tenant of this Agreement and of all the
obligations hereunder on the part of TENANT to be kept, observed or performed
after the effective date of such acquisition and which sets forth the mailing
address of the New Tenant for purposes of this Agreement. If, within thirty (30)
days after New Tenant acquires TENANT's interest in this Agreement, New Tenant
requests, by giving written notice to CITY, that CITY enter into a new lease
with New Tenant, then CITY, within thirty (30) days after such notice is given,
shall execute a new lease with New Tenant for the unexpired balance of the term
of this Agreement and on the same terms and conditions set forth in this
Agreement; provided, however, CITY shall not have any obligation to execute such
new lease with New Tenant unless and until such New Tenant satisfies each of the
following conditions:
(a) any uncured event of default is cured;
(b) New Tenant delivers evidence reasonably satisfactory to CITY
that such person or entity claiming to be a New Tenant is, in fact, a New
Tenant and is entitled to obtain a new Agreement from CITY pursuant to the
provisions of this Section 10.3; and
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(c) New Tenant (i) represents and warrants to CITY that it is
entitled to obtain a new lease from CITY pursuant to the provisions of
this Section 10.3 and (ii) agrees to indemnify and hold CITY harmless from
any claim, loss, cost, damage or expense (including court costs and
reasonable attorney's fees) arising out of any failure of such person or
entity actually being a New Tenant hereunder or any failure of such New
Tenant actually being entitled to obtain a new lease from CITY.
New Tenant shall reimburse CITY for all out-of-pocket expenses incurred by CITY
(including reasonable attorney's fees) in entering into a new lease with New
Tenant pursuant to the provisions of this Section 10.3.
10.4. Mortgagee's Right to a New Lease.
Upon termination of TENANT's right to possession of the Amphitheater or
upon termination of this Agreement pursuant to an exercise of CITY's remedies
following the occurrence of an event of default or upon termination of this
Agreement for any other reason, any Mortgagee who was holding a Mortgage
immediately prior to any such termination shall have the right to receive from
CITY a new lease of the Amphitheater for the unexpired balance of the term of
this Agreement (assuming for purposes of this Section 10.4 that this Agreement
has not been terminated and TENANT's right to possession has not been
terminated) on the same terms and conditions set forth in this Agreement by
giving CITY written notice ("New Agreement Notice") thereof within thirty (30)
days after the date of any such termination; provided, however, CITY shall not
have any obligation to execute such new lease with Mortgagee unless such
Mortgagee satisfies each of the following conditions within thirty (30) days
after Mortgagee gives CITY the New Agreement Notice:
(a) Any uncured event of default which can be cured by the payment
of money is cured. All income collected or received by or for the account
of CITY from the Amphitheater subsequent to the date of termination of
this Agreement or termination of TENANT's right to possession of the
Amphitheater, less all reasonable expenses incurred by CITY in managing
and operating the Amphitheater, shall be applied against rent which would
at the time of the execution and delivery of such new lease be due under
this Agreement but for such termination of this Agreement or termination
of TENANT's right to possession of the Amphitheater.
(b) Such Mortgagee delivers evidence reasonably satisfactory to CITY
that such person or entity claiming to be a Mortgagee is, in fact, a
Mortgagee and is entitled to obtain a new lease of the Amphitheater from
CITY pursuant to the provisions of this Section 10.4.
(c) Such Mortgagee (i) represents and warrants to CITY that it is a
Mortgagee and is entitled to obtain a new lease of the Amphitheater from
CITY pursuant to the provisions of this
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section 10.4 and (ii) agrees to indemnify and hold CITY harmless from any
claim, loss, cost, damage or expense (including court costs and reasonable
attorney's fees) arising out of any failure of such person or entity
actually being a Mortgagee hereunder or any failure of such Mortgagee
actually being entitled to obtain a new lease of the Amphitheater from
CITY.
CITY shall enter into such new lease of the Amphitheater with such Mortgagee
within sixty (60) days after Mortgagee gives CITY the New Agreement Notice. If
CITY enters into such new lease with such Mortgagee as a result of TENANT's
right to possession of the Amphitheater being terminated, then upon the
execution and delivery of such new lease, this Agreement shall terminate and be
of no further force and effect. If more than one Mortgagee makes written request
upon CITY in accordance with the provisions of this Section 10.4, such new lease
shall be delivered pursuant to the request of the Mortgagee whose Mortgage is
prior in lien. The Mortgagee who obtains the new lease shall reimburse CITY for
all out-of-pocket expenses incurred by CITY (including reasonable attorney's
fees) in performing its obligations under this Section 10.4. Any new lease of
the Amphitheater created pursuant to the rights contained in this Section 10.4
shall be of equal priority to this Agreement and shall in all events be prior
and superior to any lease, lien or other encumbrance created after the date
hereof. Upon acquisition of a new lease pursuant to the provisions of this
Section 10.4, the Mortgagee so acquiring such new lease shall have a one-time
right to assign, convey or transfer the leasehold estate under such new lease to
an experienced operator of permanent outdoor entertainment facilities
substantially similar to the Amphitheater without the prior consent of CITY and
such Mortgagee shall be released from its obligations under such new lease if
the permitted assignee expressly assumes all obligations of the "Tenant" under
such new lease.
Upon written notice from TENANT, and as to any Mortgagee named in such
notice, CITY and TENANT covenant and agree (for the benefit of any and all
Mortgagees so named) that this Agreement will not be modified, altered or
amended in any way, nor will CITY accept a voluntary surrender of the
Amphitheater or this Agreement without the prior written consent of any such
Mortgagees.
11.0 DEFAULT
11.1 Events of Default by Tenant
Each of the following events shall constitute a default by TENANT:
(i) If TENANT shall fail to pay any installment of rent due to CITY
from TENANT pursuant to this Agreement. Such failure to make a payment
shall not constitute default until it has continued for at least ten (10)
days past the due date of the payment.
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(ii) If TENANT shall fail to provide any policy or certificate of
insurance required herein, or if TENANT shall fail to pay any premium,
installment or other charge due with respect to any such policy of
insurance, or if TENANT shall fail to pay any installment of any tax or
assessment required hereunder or if TENANT shall fail to provide any bond
required herein.
(iii) The failure by TENANT to comply with any of the requirements
of section 5 of this Agreement (except for the requirements of Section
5.5) including the restrictions on the use of the Amphitheater.
(iv) If TENANT shall fail to remove any lien filed against the
Amphitheater, as required by this Agreement.
(v) If TENANT shall assign its interest in this Agreement without
the consent of the CITY, unless such assignment is specifically permitted
pursuant to the provisions of Sections 10.1, 10.2 or 10.4 of this
Agreement.
(vi) Failure to (x) provide the annual reconciliation of financial
information required herein, (y) provide the Opinion as to Accuracy and
Sufficiency with respect to such annual reconciliation as required herein
or (z) maintain the books and records required herein.
(vii) The failure or refusal of TENANT to perform or comply with any
other term, condition or covenant contained in this Agreement. The
numeration and description of specific acts of default shall not be
construed so as to limit the generality of this subsection.
11.2 Time to Cure Default
In the event TENANT suffers or commits any act of default as defined
above, CITY shall give written notice thereof to TENANT.
TENANT shall have thirty (30) days from the date such notice is sent or
hand-delivered to cure the default described in the notice.
Notwithstanding the foregoing, if the default of TENANT consists of the
failure of TENANT to pay any installment of rent due to the CITY or the failure
of TENANT to obtain any policy of insurance required pursuant to this Agreement
or the failure to pay any insurance premium on or before its due date, the cure
period shall be ten (10) days, rather than thirty (30) days, from notice.
Provided further, that, if the default described in CITY's notice to TENANT
shall occur other than in the payment of money, and such default cannot with due
diligence be cured within a 30-day period and, TENANT, prior to the expiration
of such 30-day cure period, commences to eliminate the cause of such default,
and diligently pursues same to its reasonable completion, but in no event longer
than 180 days, then such action shall constitute cure of such default.
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11.3 Remedies Upon Default
If, at the expiration of the above-stated period for cure, TENANT has
failed or refused to cure such default, CITY may declare this Agreement
terminated and the TENANT shall surrender the Amphitheater and its improvements
to CITY.
No action or inaction by CITY shall constitute an implied waiver of
default.
11.4 Default by City.
In the event (i) CITY should fail or refuse to perform or comply with any
term, condition or covenant contained in this Agreement which is imposed upon
CITY and such failure or refusal continues uncured or unremedied for a period of
thirty (30) days after notice thereof is provided from TENANT to CITY (provided,
however, if the default described in TENANT's notice to CITY cannot with due
diligence be cured within a thirty (30) day period and, CITY, prior to the
expiration of such thirty (30) day cure period, commences to eliminate the cause
of such default, and diligently pursues same to its reasonable completion, but
in no event longer than 180 days, then such action shall constitute cure of such
default), (ii) CITY should enact, pass or otherwise implement any law, rule,
ordinance, statute or regulation which relates specifically and only to the
Amphitheater and which has the effect of substantially and materially adversely
affecting the ability of TENANT to conduct the business contemplated by this
Agreement or (iii) TENANT's ability to conduct the business contemplated by this
Agreement in the Amphitheater is substantially and materially adversely affected
as a result of any false or untrue representation or warranty made by CITY in
this Agreement, then, in any such event, CITY shall be deemed to be in default
under the terms of this Agreement. Upon the occurrence of a default by CITY
under the terms of this Agreement, TENANT shall have the right to pursue all
rights, remedies and recourses which may be available to it at law or in equity.
12.0 SURRENDER OF AMPHITHEATER
12.1 Peaceful Surrender
TENANT hereby acknowledges the CITY'S leasehold interest in the
Amphitheater and the TENANT also recognizes and acknowledges that upon
termination of this Agreement, title to all real property and fixtures on the
Amphitheater Site shall immediately vest in the CITY without the necessity of
any action by CITY or any deed or other relinquishment of title by TENANT.
Upon the expiration of the term of this Agreement or sooner termination of
this Agreement in accordance with the provisions hereof, TENANT will quietly and
peacefully surrender to CITY the Amphitheater and all real property improvements
and fixtures thereon.
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13.0 RIGHT TO PERFORM OTHER PARTIES' COVENANTS
13.1 Right to Perform Covenants
Each of the parties hereto shall have the right at any time, after thirty
(30) days notice to the other party hereto (or without notice in case of an
emergency or in case any fine, penalty, interest or cost may otherwise be
imposed or in the case of the lapse of any insurance coverage required by this
Agreement), to make any payment or perform any act required by such other party
by any provision of this Agreement, and in exercising such right, to incur
necessary and incidental costs and expenses. Nothing herein shall imply any
obligation on the part of either party hereto to make any payment or perform any
act required of the other party hereto and the exercise of the right to do so
shall not constitute a release of any obligation or a waiver of any default.
13.2 Reimbursement
All payments made and all costs and expenses incurred in connection with
any exercise of the right referred to in Section 13.1 shall be reimbursed by the
responsible party within ten (10) days after request for such payment.
14.0 PARKING FACILITIES
14.1 Existing Parking Facilities
CITY hereby represents and warrants that it is the owner of or otherwise
has exclusive right to possession and control of the South Parking Lot, the
Softball Parking Lot and the Additional Parking Facilities. CITY hereby
acknowledges that in order for the NCDOT Parking Lot to be effectively used in
conjunction with the operation of the Amphitheater, TENANT must have the right
to exclude entry into the NCDOT Parking Lot at all times following 5:00 p.m. on
each day of any Amphitheater performance. CITY hereby agrees that, to the extent
that the NCDOT Parking Lot is needed to provide sufficient parking for the
Amphitheater, it will use its best efforts to obtain the cooperation of the
owner of the NCDOT Parking Lot to permit TENANT the right to control the use of
the NCDOT Parking Lot after 5:00 p.m. every day.
14.2 Use of Parking Facilities; Access Easements
TENANT shall have the exclusive right to possess, control and use the
Parking Facilities (which shall include the right to charge and collect parking
fees from Amphitheater patrons) at all times during which any performance or
show is being presented at the Amphitheater by TENANT pursuant to the terms of
this Agreement. Notwithstanding the provisions contained in the immediately
preceding sentence, CITY shall have the right (i) to use up to 600 spaces in the
Softball Parking Lot to accommodate the
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use of the softball fields adjacent thereto at all times and (ii) to use all of
the Parking Facilities at times during which the Amphitheater is not in use by
TENANT in a manner which does not cause an unreasonable wear and tear on the
Parking Facilities. TENANT shall be responsible, at its sole cost and expense,
to provide all necessary traffic control, security and cleanup on the Parking
Facilities with respect to its use of the Parking Facilities in conjunction with
the use, operation and control of the Amphitheater, with the exception that
TENANT shall not be responsible for cleanup or security on the 600 spaces in the
Softball Parking Lot used by CITY for patrons of the softball facilities. CITY
shall be responsible, at its sole cost and expense, to provide all traffic
control, security and cleanup on the Parking Facilities in conjunction with any
use of the Parking Facilities by CITY including, without limitation, use of the
600 spaces in the Softball Parking Lot, with the exception that CITY shall not
be responsible for traffic control to the 600 spaces in the Softball Parking Lot
on the nights that a performance or show is being presented at the Amphitheater.
CITY does hereby grant and convey to TENANT throughout the entirety of the
term of this Lease an easement on, over and across the Property as may be
required or necessary to permit sufficient vehicular and pedestrian ingress and
egress to, from and among the Amphitheater Site, the Softball Parking Lot, the
NCDOT Parking Lot and the public rights of way which abut the Property and the
Amphitheater Site.
14.3 Number of Parking Spaces
CITY hereby acknowledges and agrees that it shall be responsible for
providing a sufficient number of parking spaces within reasonable walking
distance from the Amphitheater. If the number of parking spaces available for
use in the Parking Facility should ever be less than the number which may be
required by any applicable rule, law, ordinance or regulation, then CITY shall
be obligated, and hereby does covenant, to acquire additional land located
within a reasonable walking distance from Amphitheater for purposes of
constructing additional Parking Facilities thereon.
15.0 REPRESENTATIONS, WARRANTIES AND COVENANTS
15.1 Representations, Warranties and Covenants of City
CITY hereby unconditionally warrants, represents and covenants to TENANT
as follows:
(a) The execution, delivery and performance by CITY of this
Agreement (i) is within CITY's powers and has been duly authorized in
accordance with CITY's charter, other documents or instruments governing
or controlling the existence and operation of CITY and all laws, rules,
regulations and statutes which affect or relate to the governance,
existence or operation of CITY, (ii) has received all requisite prior
governmental approval in order to be legally binding and enforceable in
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accordance with its terms; and (iii) will not violate, be in conflict
with, result in a breach of or constitute a default under, any legal
requirement or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any CITY's property or assets.
(b) To the best of CITY's knowledge, all information, reports,
papers and data given to TENANT with respect to CITY or the Property are
accurate, complete and correct in all material respects and do not omit
any fact, the inclusion of which is necessary to prevent the facts
contained therein from being materially misleading.
(c) CITY is currently the owner of fee simple title to the Property
and the Amphitheater Site subject to no liens, claims, leasehold estates
or any other encumbrances. CITY has previously delivered to TENANT a true
and correct copy of CITY's Owners Policy of Title Insurance insuring its
fee simple title in and to the Property and the Amphitheater Site. CITY
shall not (x) sell, transfer or assign its right, title and interest in
and to the Property or the Amphitheater Site in a manner which would be in
violation of or otherwise in derogation of the exclusive rights created in
favor of TENANT hereunder or (y) enter into the Ground Lease with WAAC
except and unless each of the following documents and instruments are
executed and delivered simultaneously therewith:
(i) the Lease Purchase Agreement;
(ii) the Mutual Recognition Agreement more fully described in
Section 16.1(c)(i) of this Agreement; and
(iii) the Mutual Recognition Agreement more fully described in
Section 16.1(c)(ii) of this Agreement.
(d) CITY hereby represents and warrants to TENANT that it will own,
as of the commencement of the term of this Agreement, a valid and
enforceable leasehold estate in and to the Amphitheater pursuant to the
terms of the Lease Purchase Agreement subject to no liens, claims or other
leasehold estates.
(e) CITY hereby covenants and agrees to take all actions as may be
necessary to fulfill the obligations of WAAC under the Development
Agreement.
(f) CITY hereby specifically agrees and acknowledges that all of the
rights and privileges created under this Agreement in favor of TENANT
shall be fully and completely recognized by CITY and enforceable against
CITY regardless of whether CITY's possessory interest in and to the
Amphitheater is claimed
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pursuant to its interest under the Lease Purchase Agreement, its fee
simple estate in the Amphitheater Site or otherwise.
(g) CITY agrees and covenants with TENANT that it will cooperate in
expediting and obtaining all necessary zoning classification changes or
variances, special use permits, amendments to ordinances, alcoholic
beverage permits, building permits, certificates of occupancy and other
licenses and permits relating to the construction and operation of the
Amphitheater; provided, however, nothing herein constitutes a waiver by
CITY of its governmental powers or authority or a guaranty by CITY that
such matters can be accomplished to TENANT's satisfaction.
(h) CITY hereby represents and warrants that use and operation of
the Amphitheater is exempt from the provisions of CITY's Noise Ordinance
codified as Part 12, Chapter 5 of the Raleigh City Code.
(i) Upon commencement of the term of this Agreement in accordance
with the provisions hereof, CITY hereby warrants and represents to TENANT
the quiet enjoyment and peaceful possession of the Amphitheater and the
Parking Facilities in accordance with the terms, conditions and provisions
contained in this Agreement.
15.2 Representations, Warranties and Covenants of Tenant
TENANT hereby unconditionally warrants, represents and covenants to CITY
as follows:
(a) TENANT (i) is a New York general partnership, duly organized and
validly existing under the laws of the State of New York and (ii) has all
requisite power and governmental certificates of authority, licenses,
permits, qualifications and documentation to own, lease and operate its
properties as now being conducted.
(b) The execution, delivery and performance by TENANT of this
Agreement (i) are within TENANT's powers and have been duly authorized by
TENANT's general partners, (ii) have received all (if any) requisite prior
governmental approval in order to be legally binding and enforceable in
accordance with its terms against TENANT and (iii) will not violate, be in
conflict with, result in a breach of or constitute a default under, any
legal requirement or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of TENANT's
assets.
(c) To the best of TENANT's knowledge, all information, reports,
papers and data given to CITY with respect to TENANT are accurate,
complete and correct in all material respects and
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<PAGE>
do not omit any fact, the inclusion of which is necessary to prevent the
facts contained therein from being materially misleading.
(d) TENANT hereby covenants and agrees with CITY that it will take
all actions as may be necessary to fulfill TENANT's obligations to WAAC
under the Development Agreement.
(e) TENANT hereby agrees and covenants to recognize the rights and
privileges of CITY under this Agreement regardless of whether CITY's
possessory rights in and to the Amphitheater Site are claimed under the
Lease Purchase Agreement or under its fee simple interest in the
Amphitheater Site.
16.0 CONDITIONS
16.1 Condition to Tenant's Obligations
The obligations, liabilities and requirements imposed upon TENANT pursuant
to the terms of this Agreement are conditioned upon the following conditions
precedent having been first fully and finally fulfilled:
(a) CITY shall have provided satisfactory evidence to TENANT that
this Agreement has been duly executed, authorized and delivered and is
enforceable against CITY in accordance with its terms, and, if requested
by TENANT, CITY shall have caused a legal opinion to be delivered to
TENANT from its City Attorney acceptable to TENANT in which the City
Attorney opines that this Agreement has been duly executed, authorized and
delivered by CITY and is enforceable against CITY in accordance with its
terms.
(b) The Amphitheater shall have been constructed in accordance with
its plans and specifications and otherwise in the manner contemplated by
the Development Agreement and a Certificate of Occupancy shall have been
issued with respect to the Amphitheater.
(c) CITY shall not execute or deliver the Ground Lease or the Lease
Purchase Agreement, unless the following shall have first occurred:
(i) A Mutual Recognition Agreement as originally executed and
acknowledged by an authorized officer of WAAC has been delivered to
TENANT pursuant to which, among other things, WAAC (x) agrees to
recognize the rights of TENANT under this Agreement and to be bound
by all of the terms, conditions, provisions and agreements contained
in this Agreement should WAAC acquire a possessory interest in and
to the Amphitheater for any reason during the term of
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<PAGE>
this Agreement and (y) warrants and represents to TENANT that it
owns a valid leasehold estate in and to the Property and
Amphitheater burdened only by the liens created by the Deed of Trust
and the subleasehold estate created pursuant to the Ground Lease.
(ii) A Mutual Recognition Agreement fully executed and
acknowledged by an authorized officer of Trustee has been delivered
to TENANT pursuant to which, among other things, Trustee (x) agrees
to recognize the rights of TENANT under this Agreement and to be
bound by all of the terms, conditions, provisions and agreements
contained in this Agreement should Trustee acquire a possessory
interest in and to the Amphitheater for any reason during the term
of this Agreement and (y) warrants and represents to TENANT that it
owns a valid and first lien on WAAC's leasehold estate in and to the
Amphitheater.
(iii) A Memorandum of Lease Agreement as originally executed
and acknowledged by an authorized officer of CITY as contemplated by
the provisions of Section 17.11 of this Agreement.
(iv) A title insurer reasonably acceptable to TENANT which is
authorized to issue title policies in the State of North Carolina
shall have issued to TENANT a policy of title insurance insuring
TENANT as the owner of a valid leasehold estate created pursuant to
this Agreement subject to no liens, encumbrances, or prior leasehold
estates which are not acceptable to TENANT and in a coverage amount
deemed acceptable by TENANT.
(d) All the representations and warranties made by CITY pursuant to
the terms of this Agreement shall be true and correct in all material
respects as of the commencement date of the term of this Agreement and all
of the covenants and agreements contained in this Agreement which are
required to be fulfilled as of the commencement date of the term of this
Agreement shall have been fulfilled in all material respects.
16.2 Condition of City's Obligations
The obligations, liabilities and requirements imposed upon CITY pursuant
to the terms of this Agreement are conditioned upon the following conditions
precedent having been first fully and finally fulfilled:
(a) TENANT shall have provided satisfactory evidence to CITY that
this Agreement has been duly executed and delivered and is enforceable
against TENANT in accordance with its terms,
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<PAGE>
and, if requested by CITY, TENANT shall have caused a legal opinion to be
delivered to CITY from outside legal counsel acceptable to CITY in which
such legal counsel opines that this Agreement has been duly executed and
delivered by TENANT and is enforceable against TENANT in accordance with
its terms.
(b) All of the representations and warranties made by TENANT
pursuant to the terms of this Agreement shall be true and correct in all
material respects as of the commencement date of the term of this
Agreement and all of the covenants and agreements contained in this
Agreement which are required to be fulfilled as of the commencement date
of the term of this Agreement shall have been fulfilled in all material
respects.
17.0 GENERAL PROVISIONS
17.1 No Waiver of Breach
No failure by either CITY or TENANT to insist upon the strict performance
by the other of any covenant agreement, term or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof, shall
constitute a waiver of any such breach or of such covenant, agreement, term or
condition. No waiver of any breach shall affect or alter this Agreement, but
each and every covenant, condition, agreement, and term of this Agreement shall
continue in full force and effect with respect to any other than existing or
subsequent breach.
17.2 Nondiscrimination
In consideration of the execution of this Agreement, the parties hereto
for themselves, their agents, officials, employees and servants agree not to
discriminate in any manner on the basis of race, color, creed, national origin,
sex, age, handicap, or sexual orientation with reference to the subject matter
of this Agreement, no matter how remote. The parties further agree in all
respects to conform with the provisions and intent of City of Raleigh Ordinance
1969-889, as amended. This provision is hereby incorporated into this Agreement
for the benefit of the City of Raleigh and its residents, and may be enforced by
an action for specific performance, injunctive relief, or other remedy as by law
provided. The parties also hereby agree to conform with the anti-apartheid
restrictions and regulations as enacted by the Raleigh City Council.
17.3 Unavoidable Delay
If either party shall be delayed or prevented from the performance of any
act required by this Agreement by reason of Acts of God, strikes, lockouts,
labor troubles, inability to procure materials, restrictive governmental laws
or regulations or other cause, without fault and beyond the reasonable control
of the party obligated, performance of such act shall be excused for the period
of the delay, and the period for the performance of any such act shall be
extended for a period equivalent to
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<PAGE>
the period of such delay; provided, however, nothing in this section shall
excuse TENANT from the prompt payment of any rentals to CITY required of TENANT.
17.4 Binding Effect
Each and all of the covenants, conditions and restrictions in this
Agreement shall inure to the benefit of and shall be binding upon the successors
in interest of CITY, and assignees, transferees, licensees, and other successors
in interest of TENANT.
17.5 Entire Agreement
This Agreement contains the entire understanding of the parties with
respect to the matters covered by this Agreement and no other agreement,
statement, or promise made by any party or to any employee, officer, or agent of
any party which is not contained in this Agreement shall be binding or valid.
This Agreement may be modified only by writing signed by both CITY and TENANT.
The CITY and TENANT hereby agree to meet each calendar year after the
conclusion of the Amphitheater season and prior to December 31 of each year, to
discuss the operation of the Amphitheater and any problems, and will reduce any
agreement to writing as an addendum to this Agreement; provided, however, the
provisions of this paragraph shall in no way imply that either party hereto is
under any compulsion to enter into any amendment to this Agreement unless it
freely, willingly and voluntarily enters into such amendment.
17.6 Partial Invalidity
If any term, condition or provision of this Agreement or the application
thereof to any person or circumstance shall to any extent be held invalid or
unenforceable by a court of competent jurisdiction, the other provisions of this
Agreement, or the application of such provisions to persons or circumstances
other than those to which it is held invalid or unenforceable, shall not be
affected thereby and each provision of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.
17.7 Gender
In this Agreement, the masculine gender includes the feminine and
masculine, and the singular number includes plural, and the word "person"
includes corporation, partnership, firm or association wherever the context so
requires.
17.8 Captions
Captions of the sections of this Agreement are for convenience and
reference only, and the words contained therein shall in no way be held to
explain, modify, amplify, or aid in the interpretation or meaning of the
provisions of this Agreement.
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<PAGE>
17.9 Notices
(a) All payments, sums, notices, demands or requests from one party
to another may be personally delivered or sent by mail, certified or
registered, return receipt requested, postage prepaid to the addresses
below, and shall be deemed to have been given at the time of personal
delivery or at the time of receipt.
(b) All notices, demands or requests from TENANT to CITY shall be
given to CITY at:
City of Raleigh
c/o City Manager
P.O. Box 590
222 West Hargett St.
Raleigh, N.C. 27602
(c) All notices, demands or requests from CITY to TENANT shall be
given to TENANT at:
c/o PACE Entertainment Group, Inc.
515 Post Oak Blvd., Suite 300
Houston, Texas 77027
Attention: Mr. Brian E. Becker
and
c/o Sony Music Entertainment Inc.
If by mail: P.O. Box 4450
New York, New York 10101-4450
If by courier or personal delivery:
666 Fifth Avenue
Sony Music Entertainment Mail Room
New York, New York 10103
Attention: Senior Vice President,
Business Affairs and
Administration
with a copy to: Sony Music Entertainment Inc.
Law Department
Attn: Senior Vice President and
General Counsel
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<PAGE>
17.10 Relevant Law
This Agreement shall be governed by North Carolina law. All actions
relating to this Agreement shall be instituted and litigated in state or federal
courts sitting in North Carolina.
17.11 Memorandum of Lease Agreement
Concurrently with the execution of this Agreement, at the election of
TENANT or at such later time as TENANT may request, CITY shall execute and
deliver to TENANT, for recording in the real property records of Wake County,
North Carolina, a Memorandum of this Agreement in such form and containing such
provisions (not inconsistent with this Agreement) as TENANT may specify. Such
memorandum shall include a legal description intended to describe the
Amphitheater Site. If such memorandum is recorded pursuant to the foregoing
provisions, and if for any reason TENANT's rights and obligations under this
Agreement are terminated, then TENANT shall execute such documents (including
recordable documents) as may be reasonably provided CITY for purposes of
establishing that this Agreement is no longer of any force or effect.
IN WITNESS WHEREOF, this Agreement has been executed in quadruplicate on
behalf of CITY and TENANT as of the date set forth next to their respective
signatures.
DATE: 1-14-91 CITY OF RALEIGH
ATTEST: By: /s/ [ILLEGIBLE]
-------------------------------------
City Manager
/s/ Gail G. Smith
- -------------------------
City Clerk & Treasurer
Approved as to Form
/s/ [ILLEGIBLE]
- -------------------------
City Attorney
(SEAL)
DATE: 1-14-91 SONY MUSIC/PACE PARTNERSHIP, a
New York general partnership
ATTEST: By: PACE Concerts, Inc., a
Texas corporation and its
/s/ Jeffry B. Lewis general partner
- -------------------------
ASST. SEC. By: /s/ Rodney L. Eckerman
Jeffry B. Lewis ---------------------------------
Name: Rodney L. Eckerman
Title: Vice President
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<PAGE>
EXHIBIT A-1
BEGINNING at a point, a new iron pin lying along the eastern right-of-way
line of Sunnybrook Road and at its point of intersection with the north bank of
Walnut Creek according to a reference line, thence N 4(degrees) 15' 51" W 511.40
feet to a point; thence along a curve in a clockwise direction, said curve
having an arc length of 373.35 feet, a radius of 4000.40 feet, chord bearing N
1(degrees) 35' 26" W, chord distance of 373.21 feet to a point; thence N
1(degrees) 18' 18" E 170.86 feet to a point; thence departing from the eastern
right-of-way line of Sunnybrook Road N 89(degrees) 15' 24" E 304.82 feet to a
point; thence S 15(degrees) 00' 00" W 200.00 feet to a point; thence along a
curve in a counterclockwise direction having an arc of 1134.46 feet, radius of
500.00 feet, chord bearing S 50(degrees) 00' 00" E a chord distance of 906.31
feet to a point; thence N 65(degrees) 00' 00" E 203.89 feet to a point; thence S
19(degrees) 28' 31" E 270.75 feet to a point situated on the west bank of Pace's
branch; thence along the west bank of Pace's branch the following courses and
distances of a reference line: S 8(degrees) 03' 00" E 155.34 feet to a point;
thence S 46(degrees) 38' 32" E 138.78 feet to a point; thence S 29(degrees) 24'
37" W 128.24 feet to a point; thence S 26(degrees) 01' 14" E 57.12 feet to a
point; thence S 2(degrees) 47' 31" W 75.75 feet to a point, the intersection of
the west bank of Pace's branch and the north bank of Walnut Creek, according to
reference lines; thence along the north bank of Walnut Creek the following
courses and distances of a reference line: N 84(degrees) 41' 45" W 114.51 feet
to a point; thence S 81(degrees) 32' 30" W 88.76 feet to a point; thence S
25(degrees) 04' 57" E 142.06 feet to a point; thence S 40(degrees) 59' 48" W
85.84 feet to a point; thence S 58(degrees) 42' 14" W 238.37 feet to a point;
thence S 89(degrees) 19' 23" W 118.59 feet to a point; thence N 28(degrees) 25'
58" W 170.64 feet to a point; thence N 35(degrees) 42' 13" W 126.29 feet to a
point; thence N 57(degrees) 39' 28" W 262.50 feet to a point; thence N
50(degrees) 02' 31" W 283.66 feet to a point; thence N 38(degrees) 15' 20" W
121.46 feet to a point; thence N 69(degrees) 54' 35" W 73.87 feet to the point
and place of BEGINNING, containing 24.3836 acres according to a survey of the
north portion of Walnut Creek Park dated 13 December 1989, prepared by Murphy
Yelle Associates, Registered Land Surveyors.
<PAGE>
EXHIBIT A-2
A certain tract or parcel of realty lying and being in the City of
Raleigh, Wake County, North Carolina, more fully described by metes and bounds
as follows, viz:
BEGINNING at an iron pipe found in the eastern right of way line of the
Cliff Benson Beltline at the south bank of Walnut Creek, said pipe being the
northernmost corner of the lands of the City of Raleigh Walnut Creek Park (south
property); thence with the meanders of Walnut Creek, defined herein as a
traverse line along the southern and western bank:
S 23 deg 07' 04" E, a distance of 159.69 feet to a point on the bank of the
creek;
S l7 deg 09' 17" E, a distance of 152.70 feet to a point on the bank of the
creek;
S 06 deg 04' 12" W, a distance of 126.04 feet to a point on the bank of the
creek;
S 35 deg 38' 50" E, a distance of 126.39 feet to a point on the bank of the
creek;
thence departing the creek and the following eight (8) new lines through said
lands of the City of Raleigh:
1) S 58 deg 42' 51" W, a distance of 429.82 feet to a new corner;
2) S 01 deg 03' 14" W, a distance of 390.68 feet to a new corner;
3) S 55 deg l4' 52" W, a distance of 340.32 feet to a new corner;
4) S 00 deg 50' 42" W, a distance of 148.63 feet to a new corner;
5) N 89 deg 39' 17" E, a distance of 483.24 feet to a new corner;
6) S 56 deg 22' 45" E, a distance of 1077.23 feet to a new corner;
7) S l4 deg 2l' 54" E, a distance of 540.11 feet to a new corner;
8) S 00 deg 03' 36" E, a distance of 740.45 feet to a new corner;
thence with the line of Green Valley Subdivision S 89 deg 56' 24" W, a distance
of 200.41 feet to an existing iron pipe;
thence with the line of Green Valley Subdivision S 89 deg 43' 39" W, a distance
of 85.83 feet to an existing iron pipe;
thence with the line of Green Valley Subdivision S 89 deg 57' 25" W, a distance
of 214.69 feet to an existing iron pipe, the northwest corner of Green Valley
Subdivision and the northeast corner of Garden Acres Subdivision;
thence with the line of Garden Acres N 89 deg 44' 19" W, a distance of 841.02
feet to an existing iron pipe, the southeast corner of lands of Allen and Debra
Shindledecker;
thence with the line of Shindledecker; N 11 deg 15' 48" E, a distance of 209.52
feet to an existing iron pipe;
thence with the line of Shindledecker; N 89 deg 44' 07" W, a distance of 143.88
feet to an existing iron pipe in the eastern right of way line of Holloway Road
(50' R/W)
thence with Holloway Road along the arc of a counter-clockwise circular curve,
the delta angle being 07 deg 10' 02", the radius length being 262.48 feet for an
arc distance of 32.83 feet, said curve defined by chord bearing S 14 deg 50' 49"
W, and chord distance of 32.81 feet to an existing iron pipe;
thence with the line of Holloway Road S 11 deg l5' 48" W, a distance of 177.17
feet to an existing iron pipe, Shindledecker's southwestern corner;
thence crossing Holloway Road N 89 deg 37' 48" W, a distance of 56.63 feet to an
existing iron pipe;
thence with the line of Charles R. Brooks and with Lorraine R. Williams N 89 deg
53' 38" W, a distance of 168.47 feet to an existing iron pipe;
thence continuing with the line of Brooks and Williams N 89 deg 52' 45" W, a
distance of 879.06 feet to an existing Iron pipe, Williams' northwest corner;
thence with the line of Williams S 15 deg 59' 31" W, a distance of 628.49 feet
to an existing iron pipe on the northern right of way line of Rock Quarry Road
(60' R/W);
thence with the line of Rock Quary Road N 65 deg 53' 25" W, a distance of 202.02
feet to an existing iron pipe, corner for James R. Rogers III;
thence with the line of Rogers N 15 deg 59' 31" E, a distance of 628.49 feet to
an existing iron pipe;
<PAGE>
thence continuing with the line of Rogers N 22 deg 21' 28" E, a distance of
2289.30 feet to an existing iron pipe;
thence continuing with the line of Rogers S 83 deg 49' 11" W, a distance of
911.18 feet to an existing iron pipe at the eastern right of way line of
Sunnybrook Road;
thence with Sunnybrook Road along the arc of a counter-clockwise circular curve,
the delta angle being 14 deg 32' 27" the radius length being 969.28 feet for an
arc distance of 245.99 feet, said curve defined by chord bearing N 43 deg 20'
31" E, and chord distance of 245.33 feet to an existing iron pipe at the
southeastern intersection of the rights of way of Sunnybrook Road and the
Cliff Benson Beltline;
thence with the Beltline along the arc of a counter-clockwise circular curve,
the delta angle being 13 deg 11' 43" the radius length being 3,990.72 feet for
an arc distance of 919.06 feet, said curve defined by chord bearing N 64 deg 24'
29" E, and chord distance of 917.03 feet to an NCDOT concrete monument found;
thence with the line of the Beltline N 58 deg 05' 28" E, a distance of 313.85
feet to a NCDOT concrete monument found;
thence with the line of the Beltline N 48 deg 01' 38" E, a distance of 209.72
feet to a NCDOT concrete monument found;
thence with the Beltline along the arc of a counter-clockwise circular curve,
the delta angle being 07 deg 14' 41", the radius length being 3,990.72 feet for
an arc distance of 504.60 feet, said curve defined by chord bearing N 46 deg 41'
36" E, and chord distance of 504.26 feet to an existing iron pipe, the point and
place of beginning and containing 120.058 acres, more or less.
This description was prepared January 11, 1991 by Murphy Yelle Associates,
Registered Land Surveyors.
<PAGE>
EXHIBIT "B"
Plat of Property and Parking Facilities
<PAGE>
Addendum A to Lease Agreement
between City of Raleigh and
Sony Music/Pace Partnership ("Lease")
The following paragraph is hereby inserted at the end of Section 5.8 of
the lease:
Notwithstanding anything to the contrary contained herein, CITY shall have
the right to use the Amphitheater, free of rent, at any time during a calendar
year which is not included within an Amphitheater Season; provided, however,
that any such use of the Amphitheater by CITY shall be conducted by CITY at its
sole cost and risk and without any requirement or obligation upon TENANT to
assist in the presentation of any events to which such use relates.
<PAGE>
AMENDMENT TO LEASE AGREEMENT
[Walnut Creek Amphitheater]
THIS AMENDMENT TO LEASE AGREEMENT ("Amendment") is executed and entered
into this 15th day of November, 1995, by and between WALNUT CREEK AMPHITHEATER
PARTNERSHIP ("WCAP") and CITY OF RALEIGH, NORTH CAROLINA ("City").
RECITALS
(a) Under effective date of December 1, 1990, Sony Music/PACE Partnership
("SMP") and City entered into that certain Lease Agreement ("Lease") by which
City leased and demised to SMP the outdoor entertainment facility known as
Walnut Creek Amphitheater located in Wake County, North Carolina.
(b) Under effective date of July 1, 1991, SMP assigned, transferred and
conveyed all of its rights, titles and interest in, to and under the Lease to
WCAP.
(c) WCAP, as tenant under the Lease, and City, as landlord under the
Lease, desire to amend certain provisions contained in the Lease as more fully
set forth herein.
AMENDMENT
NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual covenants and
agreements contained herein, the parties hereto do hereby agree as follows:
1. Confirmation of Exercise of Renewal Option. City and WCAP each hereby
confirm and acknowledge that WCAP has validly and timely exercised the renewal
option referenced in Section 2.2 of the Lease.
2. Modification of Gross Revenues. In order to confirm certain agreements
which have been operative since execution of the Lease, City and WCAP both agree
to amend Section 3.3 of the Lease in its entirety to read as follows:
Section 3.3 Gross Revenues.
As used in this Agreement, the term "Gross Revenues" shall mean the
total amount of revenues generated, from time to time and during any
particular period of time during the term of this Agreement, from TENANT's
possession, control, use or operation of the Amphitheater and the Parking
Facilities (net of all state, county and local sales taxes which are
payable in connection with the receipt of any such revenues), including,
without limitation, (i) gross revenues from the sale of tickets to
performances, events and shows held or presented by TENANT at the
Amphitheater (net of all state, county and local sales taxes which are
payable in
<PAGE>
connection with the sale of such tickets); (ii) gross revenues from the
sale of food, beverages, artist-related merchandise and any other products
or services at the Amphitheater, whether sold by TENANT or any licensee or
concessionaire of TENANT (net of all state, county and local sales taxes
which are payable in connection with the sale of such food, beverages,
merchandise, services or other products); and (iii) all other gross
revenue generated from the operation of the Amphitheater such as
advertising revenues, sponsorship revenues, and revenues from the granting
of telecast, broadcast, video or audio rights relating to any performance
or show at the Amphitheater; provided, however, notwithstanding the
foregoing, the term "Gross Revenues" as used in this Agreement shall be
adjusted and modified in accordance with the following terms and
provisions:
(a) The value of complementary or promotional tickets
(including the tickets provided to CITY pursuant to Section 5.11
hereof) shall not be included within Gross Revenues unless TENANT
receives in exchange for the distribution of such complimentary or
promotional tickets specific goods or services other than
advertising time or space.
(b) All payments or grants received by TENANT from any
concessionaire or sponsor which are either (i) ultimately repayable
by TENANT to such concessionaire or sponsor or (ii) are "capital" in
nature shall not be included within Gross Revenues.
(c) All fees, commissions, grants, bonuses or other payments
of any kind paid to TENANT by a concessionaire or licensee operating
a concession business of any type at the Amphitheater shall not be
included in Gross Revenues, it being agreed that the gross revenues
generated from the sales made by such concessionaire or licensee at
the Amphitheater shall be the measure of Gross Revenues for purposes
of this Agreement with respect to such concessionaire's or
licensee's concession business.
(d) With respect to any sublease of the Amphitheater to a
third party promotor for the presentation of an event at the
Amphitheater, (i) the gross revenues received by such third party
promoter from the sale of tickets to such event shall be excluded
from Gross Revenues and (ii) all amounts payable to TENANT in
consideration for the subleasing of the Amphitheater to such third
party promoter shall be included within Gross Revenues.
(e) Revenues received by TENANT from the sale of tickets to
any show, performance or event to be presented at the Amphitheater
by TENANT shall be deemed to have been received as Gross Revenues by
TENANT for purposes of this Agreement during the calendar month in
which such show, performance or event is actually presented. All
other
2
<PAGE>
items of revenue received by TENANT which are included within Gross
Revenues shall be deemed to have been received within the calendar
month of its collection.
(f) Gross Revenues shall be reduced by the amount of any
"admission taxes," "entertainment taxes" or similar types of taxes
(collectively "Special Entertainment Taxes") which may be payable by
TENANT in connection with its operation of the Amphitheater, if such
Special Entertainment Taxes are applicable only to outdoor
entertainment facilities similar to the Amphitheater. Gross Revenues
shall not be reduced by any Special Entertainment Taxes which may be
payable by TENANT in connection with its operation of the
Amphitheater, if such taxes are equally applicable to other types of
entertainment venues such as football stadiums and indoor
entertainment facilities.
(g) Any revenues or reimbursements which may be received by
TENANT during CITY's (or its designee's) use of the Amphitheater
pursuant to Section 5.8, 5.9 or 5.10 of this Agreement shall be
specifically excluded from Gross Revenues for purposes of this
Agreement.
3. Ratification. Except as expressly amended hereby, the parties hereto do
hereby ratify, reaffirm and confirm all of the terms and provisions contained in
the Lease Agreement. Each party acknowledges and agrees that the other party is
not currently in default of any of its obligations under the Lease.
WITNESS the execution hereof effective as of the date and year first above
written.
WALNUT CREEK AMPHITHEATER
PARTNERSHIP
BY: PAVILION PARTNERS, its Managing
General Partner
BY: SM/PACE INC., its Managing
General Partner
By: /s/ Brian E. Becker
---------------------------------
Name: Brian E. Becker
Title: C.E.O.
3
<PAGE>
ATTEST: CITY OF RALEIGH NORTH CAROLINA
/s/ Gail G. Smith By: /s/ [ILLEGIBLE]
- -------------------------- -------------------------------------
City Clerk & Treasurer City Manager
APPROVED AS TO FORM:
/s/ [ILLEGIBLE]
- --------------------------
City Attorney
[Signature Page to Amendment to Lease
Agreement for Walnut Creek
Amphitheater dated November 15, 1995]
4
<PAGE>
MUTUAL RECOGNITION AGREEMENT
[Walnut Creek Amphitheater]
STATE OF NORTH CAROLINA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF WAKE )
THIS MUTUAL RECOGNITION AGREEMENT ("Agreement") is entered into effective
as of this 1st day of December, 1990 by and among (i) WALNUT CREEK AMPHITHEATER
FINANCING ASSISTANCE CORPORATION ("WAAC"), a non-profit organization duly
organized and existing under and by virtue of Chapter 55A of the General
Statutes of North Carolina, as amended, (ii) FIRST UNION NATIONAL BANK OF NORTH
CAROLINA ("Trustee"), a national banking association, (iii) CITY OF RALEIGH,
NORTH CAROLINA ("City"), a municipal corporation duly organized and existing
under and by virtue of the constitution and laws of the State of North Carolina
and (iv) SONY MUSIC/PACE PARTNERSHIP ("Pace"), a New York general partnership
whose sole general partners are Pace Concerts, Inc., a Texas corporation, and YM
Corp., a Delaware corporation. For and in consideration of the mutual covenants
and agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
1. Definitions. Unless the context otherwise requires, the capitalized
terms used herein shall, for all purposes of this Agreement, have the following
specified meanings:
(a) "Amphitheater" shall mean the outdoor entertainment facility to
be known as "Walnut Creek Amphitheater" which is to be constructed on the
Amphitheater Site pursuant to, and as contemplated by, the provisions of
the Lease Purchase Agreement. The term "Amphitheater" shall include within
its definition the Amphitheater Site and all buildings, fixtures and other
improvements which are constructed or placed on the Amphitheater Site as a
part of or related to such outdoor entertainment facility.
(b) "Amphitheater Site" shall mean (i) that certain tract of land
("Tract") located in Wake County, North Carolina and being more fully
described by metes and bounds in Exhibit "A-2" attached hereto and (ii)
certain parking facilities located on the Property and certain access ways
across the Property between and among the Tract, such parking facilities
and the public rights-of-way abutting the Property and the Tract as more
fully described in the Operating Lease.
(c) "Deed of Trust" shall mean that Leasehold Deed of Trust executed
effective of even date herewith by WAAC, pursuant to which WAAC's
leasehold interest in the Amphitheater created pursuant to the Ground
Lease has been mortgaged and assigned to Trustee in order to secure the
payment of WAAC's obligations
<PAGE>
under the Trust Agreement and to secure the taxable certificates of
participation issued thereunder.
(d) "Ground Lease" shall mean that certain Ground Lease Agreement
executed effective of even date herewith by and between City and WAAC
pursuant to which, among other things, City has leased to WAAC the
Amphitheater Site in its currently unimproved state.
(e) "Lease Purchase Agreement" shall mean that certain
Lease/Purchase Agreement executed effective of even date herewith by and
between WAAC and City pursuant to which, among other things, WAAC agreed
to construct the Amphitheater on the Amphitheater Site and sublease the
completed Amphitheater to City.
(f) "Operating Lease" shall mean that certain Lease Agreement
executed effective of even date herewith by and between City and Pace
pursuant to which, among other things, City sub-subleased the
Amphitheater to Pace.
(g) "Property" shall mean that certain tract of land located in Wake
County, North Carolina and being more fully described by metes and bounds
in Exhibit "A-1" attached hereto.
(h) "Termination Event" shall mean the occurrence of either of the
following events:
(i) City's right to possession of the Amphitheater under the
terms and provisions of the Lease Purchase Agreement being
terminated for any reason whatsoever without the Lease Purchase
Agreement itself actually being terminated ("Event of Possession
Termination"); or
(ii) the Lease Purchase Agreement being terminated for any
reason whatsoever ("Event of Agreement Termination");
provided, however, if the Lease Purchase Agreement is terminated as a
result of City acquiring WAAC's interest in the Amphitheater pursuant to
the provisions of Sections 7.2(b) or 7.3 of the Lease Purchase Agreement,
then a "Termination Event" shall not be deemed to have occurred.
(i) "Trust Agreement" shall mean that certain Trust Agreement
executed effective of even date herewith by and between Trustee and WAAC
relating to the issuance of certain taxable certificates of participation
to investors for the purpose of raising money for funding the construction
and design costs of the Amphitheater.
2. [Intentionally Deleted].
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<PAGE>
3. Pace's Rights Regarding Lease Purchase Agreement.
(a) WAAC and City shall each provide to Pace copies of all notices
sent to the other under or pursuant to the Lease Purchase Agreement. Any
notice given by City or WAAC to the other shall not be effective or
considered given for purposes of the Lease Purchase Agreement until it or
a copy thereof is also given to Pace.
(b) Upon the occurrence of a Termination Event, WAAC or Trustee
shall provide written notice thereof to Pace ("Termination Notice") within
thirty (30) days after the occurrence of the Termination Event. Following
the occurrence of a Termination Event, Pace or the then tenant under the
Operating Lease shall have the following rights:
(i) If the Termination Event occurs as the result of an Event
of Agreement Termination, then Pace or the then tenant under the
Operating Lease shall have the right to receive from WAAC a new
lease ("Substitute Lease") of the Amphitheater for the unexpired
balance of the term of the Lease Purchase Agreement (assuming for
purposes of this Paragraph 3(b)(i) that the Lease Purchase Agreement
has not been terminated) on the same terms and conditions set forth
in the Lease Purchase Agreement, including without limitation the
purchase option contained therein.
(ii) If the Termination Event occurs as the result of an Event
of Possession Termination, then Pace or the then tenant under the
Operating Lease shall have the right to enter into an amended and
reinstated Lease Purchase Agreement ("Reinstated Lease") with WAAC
in which Pace or the then tenant under the Operating Lease shall be
in all respects the "Lessee" (assuming for purposes of this
Paragraph 3(b)(ii) that the City's right to possession has not been
terminated) on the same terms and conditions set forth in the Lease
Purchase Agreement, including without limitation, the purchase
option contained therein.
As used herein, the term "New Lease" shall refer to any Substitute Lease
or any Reinstated Lease.
(c) In order to validly exercise its right to receive a New Lease
pursuant to the provisions of Paragraph 3 hereof, Pace or the then tenant
under the Operating Lease must provide WAAC and Trustee written notice
("New Lease Notice") of such election within sixty (60) days after receipt
of the Termination Notice; provided, however, WAAC shall not have any
obligation to execute a New Lease with Pace unless Pace satisfies each of
the following conditions within thirty (30) days after Pace gives WAAC the
New Lease Notice:
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<PAGE>
(i) Any uncured event of default under the Lease Purchase
Agreement which can be cured by the payment of money is cured. For
purposes of the preceding sentence, all income collected or received
by or for the account of WAAC from the Amphitheater subsequent to
the date of a Termination Event, less all reasonable expenses
incurred by WAAC in managing and operating the Amphitheater, shall
be applied against rent which would at the time of the execution and
delivery of the New Lease be due under the Lease Purchase Agreement
but for such Termination Event.
(ii) Pace delivers evidence reasonably satisfactory to WAAC
and Trustee indicating that Pace was and continued to be the
"Tenant" under the Operating Lease until the occurrence of the
Termination Event and that the Operating Lease had not been validly
terminated prior to the occurrence of the Termination Event.
(d) Subject to satisfaction of the conditions contained in clauses
(i) and (ii) of Paragraph 3(c) hereof, WAAC shall enter into the New Lease
(x) with Pace within thirty (30) days after Pace gives WAAC the New Lease
Notice or (y) if Pace does not timely deliver a New Lease Notice, with a
Mortgagee which is entitled to a New Lease pursuant to the provisions of
Paragraph 3(f) hereof within thirty (30) days after such Mortgagee has
provided written notice to WAAC pursuant to Paragraph 3(f) hereof of its
election to obtain a New Lease directly. The New Lease shall contain the
same terms and conditions as are contained in the Lease Purchase Agreement
currently in force and effect (it being agreed that modifications to the
Lease Purchase Agreement made after the effective date hereof shall not be
enforceable against Pace), with (i) the minimum amount of modifications as
may be necessary to accommodate the fact that Pace is a corporation
instead of a municipality and (ii) such modifications as may be necessary
to incorporate into the New Lease provisions substantially similar to
those contained in Article 10.0 of the Operating Lease.
(e) Pace shall reimburse WAAC for all out-of-pocket expenses
incurred by WAAC (including reasonable attorney's fees) in performing its
obligations under this Paragraph 3.
(f) If, following the occurrence of a Termination Event, Pace or
the then tenant under the Operating Lease fails to exercise its right to
obtain a New Lease within sixty (60) days after receipt of the Termination
Notice, then each Mortgagee (as such term is defined in Section 10.2 of
the Operating Lease) which has provided notice to the other parties hereto
pursuant to the provisions of Paragraph 9(b) of this Agreement shall be
entitled to an additional thirty (30) day period thereafter, commencing
upon the expiration of said sixty (60) day period, to directly exercise
the rights created in favor of Pace pursuant
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<PAGE>
to Paragraph 3(b) hereof by providing written notice of such election
within such additional thirty (30) day period. If more than one Mortgagee
makes the election referred to in the immediately preceding sentence, then
the one whose lien is superior in priority shall be entitled to the rights
associated with such election. If any Mortgagee should exercise its right
to directly obtain a New Lease pursuant to the foregoing provisions, then
the New Lease shall provide that such Mortgagee shall thereafter have a
one-time right to assign its leasehold interest under such New Lease to an
experienced operator of permanent outdoor entertainment facilities
substantially similar to the Amphitheater without the prior written
consent of WAAC or Trustee and that such Mortgagee shall be released from
its obligations under the New Lease upon completing such permitted
assignment if the experienced operator assignee expressly assumes all
obligations of the "Lessee" under the New Lease.
(g) Without limiting the generality of the provisions contained in
Paragraph 10 hereof, it is specifically understood, agreed and
acknowledged that the rights of Pace created pursuant to the provisions of
this Agreement shall be (x) enforceable by any assignee of Pace who
validly acquires its rights, titles and interests created under the
Operating Lease and any Mortgagee (as such term is defined in Section 10.2
of the Operating Lease) and (y) enforceable against any assignee of WAAC's
interest in the Lease Purchase Agreement or the Ground Lease including,
without limitation, Trustee.
(h) Any New Lease which may be entered into pursuant to the
provisions of this Paragraph 3 shall be of equal priority to the Lease
Purchase Agreement and shall in all events be prior and superior to any
liens, leases or other encumbrances created after the date hereof.
4. Trustee's Recognition and Non-disturbance Agreement.
(a) The holding of a foreclosure sale, conveyance in lieu of
foreclosure, or other exercise by Trustee of any of its rights under the
Deed of Trust or any other security documents executed in connection
therewith shall not (i) terminate the Lease Purchase Agreement or any New
Lease previously created pursuant to the provisions of Paragraph 3(b) of
this Agreement or (ii) terminate the continuing rights created in favor of
Pace pursuant to the provisions of Paragraph 3 hereof.
(b) Upon the acquisition of WAAC's interest in the Amphitheater by
any person or entity, including Trustee (herein any such person or entity,
including Trustee, being called "New Owner"), whether such acquisition
occurs through purchase at a foreclosure sale, conveyance in lieu of
foreclosure or any other exercise by Trustee of any of its rights under
the Deed of Trust or any other document executed in connection therewith,
New
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<PAGE>
Owner shall be (i) subject to the rights created in favor of Pace pursuant
to the provisions of Paragraph 3 hereof and (ii) bound to the tenant under
the Lease Purchase Agreement or the tenant under any New Lease previously
created pursuant to the provisions of Paragraph 3 of this Agreement under
all of the terms, covenants and conditions of the Lease Purchase Agreement
or such New Lease; provided, however, that New Owner shall not be:
(i) liable for any act or omission of any prior lessor
(including WAAC);
(ii) subject to any offsets or defenses which the tenant under
the Lease Purchase Agreement or any such New Lease might have
against any prior lessor; or
(iii) bound by any amendment or modification of the Lease
Purchase Agreement or any such New Lease made without its consent
and written approval.
5. Attornment Agreement. Upon the acquisition of WAAC's interest in the
Amphitheater by a New Owner, whether such acquisition occurs through purchase at
a foreclosure sale, conveyance in lieu of foreclosure or any other exercise by
Trustee of any of its rights under the Deed of Trust or any other document
executed in connection therewith, the following provisions shall apply:
(a) If, at the time New Owner acquires WAAC's interest in the
Amphitheater, the Lease Purchase Agreement is still in full force and
effect, then City shall be deemed to have attorned (and does hereby
attorn) to the New Owner, as the new landlord under the Lease Purchase
Agreement; provided, however, that City shall be under no obligation to
pay rent to the New Owner until City receives written notice from New
Owner that it has succeeded to the interest of WAAC under the Lease
Purchase Agreement.
(b) If, at the time New Owner acquires WAAC's interest in the
Amphitheater, a New Lease has been previously entered into pursuant to the
provisions of Paragraph 3(b) of this Agreement, then Pace shall be deemed
to have attorned (and does hereby attorn) to New Owner, as the new
landlord under such New Lease; provided, however, that Pace shall be under
no obligation to pay rent to New Owner until Pace receives written notice
from New Owner that it has succeeded to the interest of WAAC under such
New Lease.
6. Agreements of City in Favor of Pace.
(a) City hereby specifically agrees and acknowledges that all of the
rights and privileges created under the Operating Lease in favor of Pace
shall be fully and completely recognized
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<PAGE>
by City and enforceable against City regardless of whether the Ground
Lease is in existence or not and regardless of whether City's possessory
interest in and to the Amphitheater exists pursuant to (i) its rights
under the Lease Purchase Agreement, (ii) the purchase or other acquisition
of WAAC's interest in and to the Amphitheater under the Ground Lease,
(iii) its fee simple estate in the Amphitheater Site or (iv) any other
legal reason or means whatsoever.
(b) By way of clarification of the foregoing provisions, but not by
way of limitation, should (x) the Operating Lease ever terminate as a
result of City having lost its possessory interest in and to the
Amphitheater because of a termination of the Lease Purchase Agreement or
for any other reason, (y) Pace continue to use and operate the
Amphitheater continuously thereafter pursuant to a New Lease or otherwise
and (z) City subsequently obtain a possessory interest in and to the
Amphitheater as a result of a termination of the Ground Lease or for any
other reason, then City shall be obligated to reinstate the Operating
Lease in favor of Pace at the time of such acquisition of a possessory
interest in and to the Amphitheater by City for its then remaining term in
the same manner as if the Operating Lease had been in force and effect and
fully performed since termination thereof and as if it had been renewed
pursuant to its terms.
(c) If Pace or a Mortgagee should obtain a New Lease following a
Termination Event pursuant to the rights created in Paragraph 3 of this
Agreement, then upon reinstatement of the Operating Lease with City
pursuant to the provisions of Paragraph 6(b) hereof following termination
of the Ground Lease, the tenant under such reinstated Operating Lease
shall not be obligated to make payment of rental payments, renewal fees or
other amounts otherwise payable under such reinstated Operating Lease
until the balance of the Excess Payment Account (hereinafter defined) has
been reduced to zero, it being agreed that the tenant under such
reinstated Operating Lease shall receive a dollar for dollar credit
against its obligation to make rental payments, renewal fees and other
amounts payable under such reinstated Operating Lease to the extent of any
positive balance in the Excess Payment Account. As used herein the
following terms shall have the meanings indicated:
(i) "Excess Payment Account" shall mean a bookkeeping account
only which shall have an initial balance of zero. The balance of the
Excess Payment Account shall be increased on the last day of each
and every calendar year following the entering into of a New Lease
by (A) the Excess Payment Amount (hereinafter defined) for such
calendar year and (B) an amount equal to the product of (x) the
prime rate of interest then charged by large U.S. money center banks
and (y) the then balance of the Excess
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<PAGE>
Payment Account as of the last day of such calendar year following
the increase made pursuant to clause (A) for such calendar year (if
any) and following the decrease made pursuant to clause (C) for such
calendar year (if any). The balance of the Excess Payment Account
shall be decreased (C) on the last day of each and every calendar
year following the entering into of a New Lease by the Deficit
Payment Amount (hereinafter defined) for such calendar year and (D)
on the due date of each rental payment under the Operating Lease
after it has been reinstated with City pursuant to the provisions of
Paragraph 6(b) hereof by an amount equal to such rental payment or
such portion of such rental payment which will have the effect of
reducing the balance of the Excess Payment Account to zero.
(ii) "Excess Payment Amount" shall mean, for any calendar
year, the amount by which all rental payments due during such
calendar year under a New Lease exceed (if any) the aggregate amount
of rental payments which would have been payable under the Operating
Lease during such calendar year if it had not been previously
terminated.
(iii) "Deficit Payment Amount" shall mean, for any calendar
year, the amount by which all rental payments due during such
calendar year under a New Lease are less than (if any) the aggregate
amount of rental payments which would have been payable under the
Operating Lease during such calendar year if it had not been
terminated.
(d) Without limiting the generality of the provisions of Paragraph
10 hereof, it is specifically understood, agreed and acknowledged that (i)
the obligations undertaken by City in this Paragraph 6 shall be
enforceable against any and all assignees of all or any portion of City's
interest in the Amphitheater and (ii) the rights created in favor of Pace
and Mortgagee pursuant to this Paragraph 6 shall inure to the benefit of
Pace, Mortgagee and their respective successors and assigns.
(e) Pace shall have the specific right and authority, as tenant
under the Operating Lease, to perform any obligation of City under the
Lease Purchase Agreement on behalf of City. Any payment made or sum
expended by Pace in fulfilling any obligation of City under the Lease
Purchase Agreement shall be credited against rental obligations due from
Pace to City under and pursuant to the terms of the Operating Lease.
(f) City hereby specifically covenants and agrees with Pace that it
will apply all rental amounts received by City under and pursuant to the
terms of Operating Lease from Pace, to the extent of amounts so received,
towards payment of its rental obligations under the Lease Purchase
Agreement.
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<PAGE>
7. Satisfaction of Section 16.1(c)(i) and (ii) of the Operating Lease.
Pace hereby specifically acknowledges, agrees and stipulates that this
Agreement, upon full execution and delivery hereof by all of the parties hereto,
shall satisfy the conditions to Pace's obligations under the Operating Lease set
forth in clauses (i) and (ii) of Section 16.1(c) of the Operating Lease.
8. Representations, Warranties and Covenants.
(a) Trustee hereby unconditionally warrants and represents to the
other parties hereto as follows:
(i) Trustee is a national banking association, duly organized,
validly existing and in good standing.
(ii) The execution, delivery and performance by Trustee of
this Agreement are within Trustee's powers and have been duly
authorized.
See (iii) Attached
(b) WAAC hereby unconditionally warrants, represents and covenants
to the other parties hereto as follows:
(i) WAAC (x) is a non-profit corporation duly organized and
existing under and by virtue of Chapter 55A of the General Statutes
of North Carolina duly organized, validly existing and in good
standing and (y) has all requisite power and governmental
certificates of authority, licenses, permits, qualifications and
documentation to own, lease and operate its properties as now being
conducted.
(ii) The execution, delivery and performance by WAAC of this
Agreement (x) are within WAAC's powers and have been duly authorized
by WAAC's board of directors, (y) have received all (if any)
requisite prior governmental approval in order to be legally binding
and enforceable in accordance with its terms against WAAC and (z)
will not violate, be in conflict with, result in a breach of or
constitute a default under, any legal requirement or result in the
creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of WAAC's assets.
(iii) WAAC is currently the owner of a leasehold estate in and
to the Amphitheater created pursuant to the terms of the Ground
Lease, subject only to the liens created by the Deed of Trust and
the subleasehold estate in favor of City created pursuant to the
terms of the Lease Purchase Agreement.
(iv) WAAC shall not sell, transfer or assign its right, title
or interest in and to the Amphitheater in a
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<PAGE>
manner which would be in violation of or otherwise in derogation of
the terms, provisions, agreements and conditions contained in this
Agreement.
(c) City hereby unconditionally warrants, represents and covenants
to the other parties hereto as follows:
(i) City (x) is a municipal corporation existing under and by
virtue of the constitution and laws of the State of North Carolina
duly organized, validly existing and in good standing under the laws
of the State of North Carolina and (y) has all requisite power and
governmental certificates of authority, licenses, permits,
qualifications and documentation to own, lease and operate its
properties as now being conducted.
(ii) The execution, delivery and performance by City of this
Agreement (x) are within City's powers and have been duly authorized
in accordance with City's charter, other documents or instruments
governing or controlling the existence and operation of City and all
laws, rules, regulations and statutes which affect or relate to the
governance, existence or operation of City, (y) have received all
requisite prior governmental approval in order to be legally binding
and enforceable in accordance with its terms and (z) will not
violate, be in conflict with, result in a breach of or constitute a
default under, any legal requirement or result in the creation or
imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of City's property or assets.
(iii) City is currently the owner of fee simple title to the
Amphitheater and Property, subject only to the leasehold estate
created in favor of WAAC pursuant to the terms of the Ground Lease.
(iv) City is currently the owner of a valid subleasehold
estate in and to the Amphitheater created pursuant to the terms of
the Lease Purchase Agreement, subject only to the sub-subleasehold
estate created in favor of Pace pursuant to the terms of the
Operating Lease.
(v) City shall not sell, transfer or assign any of its right,
title or interest in and to the Amphitheater in a manner which would
be in violation of or otherwise in derogation of the terms,
provisions, agreements and conditions contained in this Agreement.
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<PAGE>
(d) Pace hereby unconditionally warrants, represents and covenants
to the other parties hereto as follows:
(i) Pace (x) is a New York general partnership, duly organized
and validly existing under the laws of the State of New York and (y)
has all requisite power and governmental certificates of authority,
licenses, permits, qualifications and documentation to own, lease
and operate its properties as now being conducted.
(ii) The execution, delivery and performance by Pace of this
Agreement (x) are within Pace's powers and have been duly authorized
by Pace's general partners, (y) have received all (if any) requisite
prior governmental approval in order to be legally binding and
enforceable in accordance with its terms against Pace and (z) will
not violate, be in conflict with, result in a breach of or
constitute a default under, any legal requirement or result in the
creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of Pace's assets.
(iii) Pace is currently the owner of a valid sub-subleasehold
estate in and to the Amphitheater created pursuant to the Operating
Lease.
(iv) Pace shall not sell, transfer or assign its right, title
and interest in and to the Amphitheater in a manner which would be
in violation of or otherwise in derogation of the terms, provisions,
agreements and conditions contained in this Agreement.
9. Notices.
(a) All notices or other communications hereunder between or among
any of the parties hereto shall be sufficiently given and shall be deemed
to have been received three business days after deposit in the United
States Mail in certified form, postage prepaid, addressed to the party to
receive such notice at the following addresses:
Trustee: First Union National Bank of
North Carolina
2 First Union Center - CMG-4
Corporate Trust Department
Charlotte, North Carolina 28288-1153
Attention: Corporate Trust Department
TRST-4
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<PAGE>
WAAC: Walnut Creek Amphitheater Financing
Assistance Corporation
c/o City of Raleigh
Post Office Box 590
Raleigh, North Carolina 27602
Attention: City Manager
City: City of Raleigh, North Carolina
P.O. Box 590
Raleigh, North Carolina 27602
Attention: City Manager
Pace: c/o Pace Entertainment Group, Inc.
515 Post Oak Blvd., Suite 300
Houston, Texas 77027
Attention: Mr. Brian E. Becker
and
c/o Sony Music Entertainment Inc.
If by mail: P.0. Box 4450
New York, New York 10101-4450
If by courier or other personal delivery:
666 Fifth Avenue
Sony Music Entertainment
Mail Room
New York, New York 10103
Attention: Senior Vice President,
Business Affairs and
Administration
with copy to: Sony Music Entertainment Inc.
Law Department
Attention: Senior Vice President and
General Counsel
Any party hereto, by notice properly given hereunder, may designate a
different address to which subsequent notices, certificates or other
communications shall be sent.
(b) Should any Mortgagee (as such term is defined in Section 10.2 of
the Operating Lease) desire to receive copies of any and all notices which
any party hereto may give or is required to give to Pace hereunder, any
such Mortgagee may give the other parties hereto written notice thereof,
which notice shall include Mortgagee's address for notice. Thereafter, the
other parties to this Agreement shall, concurrently with the giving of any
notice to Pace hereunder, give like notice or a copy thereof to any such
Mortgagee.
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<PAGE>
10. Covenants Running with Land and Binding Effect. The covenants and
agreements contained herein shall be deemed to run with all ownership interests
in and to the Amphitheater. This Agreement shall inure to the benefit of and
shall be binding upon all of the parties hereto and each of their respective
successors and assigns including, but without limitation, any (i) New Owner
which acquires an interest in the Amphitheater by, through or under any judicial
foreclosure or private sale proceedings pursuant to the Deed of Trust, or deed
in lieu of such foreclosure or proceedings, or otherwise and (ii) any assignee
of an ownership interest in and to the Amphitheater.
11. Severability. In the event any provision of this Agreement shall be
held invalid or unenforceable by a court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision hereof.
12. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
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<PAGE>
In witness whereof, this Agreement has been executed by the parties hereto
effective as of the date and year first above written.
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, a national
Attest: banking association
/s/ Donna M. Fay
- ------------------------------
Name: Donna M. Fay By: /s/ Terry W. Baker
Title: Assistant Secretary -------------------------------------
[SEAL] Name: Terry W. Baker
Title: Ass't Vice President
WALNUT CREEK AMPHITHEATER
FINANCING ASSISTANCE CORPORATION,
a North Carolina non-profit
Attest: corporation
/s/ [ILLEGIBLE]
- ------------------------------
Name: By: /s/ [ILLEGIBLE]
------------------------- -------------------------------------
Title: Secretary Name:
[SEAL] ------------------------------
Title: President
Attest: CITY OF RALEIGH, NORTH
CAROLINA,
/s/ Gail Smith a municipal corporation
- ------------------------------
Name: Gail Smith
Title: City Clerk
Approved as to form: By: /s/ Dempsey Benton
-------------------------------------
Dempsey Benton
/s/ Thomas A. McCormick, Jr. City Manager
- -------------------------------
City Attorney
[SEAL]
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<PAGE>
SONY MUSIC/PACE PARTNERSHIP,
Attest: a New York general partnership
/s/ Jeffry B. Lewis By: PACE Concerts, Inc., a Texas
- ------------------------------- corporation, and its general
Name: Jeffry B. Lewis partner
Title: ASST SEC.
By: /s/ Rodney L. Eckerman
--------------------------------
Name: Rodney L. Eckerman
Title: Vice President
ACKNOWLEDGMENT OF EXECUTION ON BEHALF OF TRUSTEE
STATE OF NORTH CAROLINA ss.
ss.
COUNTY OF Mecklenburg ss.
Before me, the undersigned, a Notary Public in and for said County and
State, on this 14th day of January, 1991 A.D. personally appeared Terry W.
Baker, being and to me known to be a Asst. vice president of First Union
National Bank, who being by me duly sworn, says that by authority duly given by,
and as the act of, said corporation, the foregoing and annexed Mutual
Recognition Agreement, dated as of December 1, 1990, was signed by him as said
vice president on behalf and in the name of First Union National Bank, and
personally appeared, Donna M. Fay, being and to me known to be an assistant
secretary of First Union National Bank, who, being by me duly sworn, says that
by authority duly given by said First Union National Bank he impressed the
corporate seal of First Union National Bank upon the foregoing and annexed
Mutual Recognition Agreement in execution thereof for and on behalf of First
Union National Bank and that he attested the same as said assistant secretary by
affixing his signature in attestation thereof, and said vice president and
assistant secretary further acknowledged that the foregoing and annexed Mutual
Recognition Agreement is the act and deed of the First Union National Bank.
Given under my hand and seal the day and year above stated.
[SEAL]
/a/ Anne Butler [ILLEGIBLE]
-----------------------------------------
Notary Public
My Commission Expires: Oct 8, 1991
-15-
<PAGE>
ACKNOWLEDGMENT OF EXECUTION ON BEHALF OF WAAC
STATE OF NORTH CAROLINA ss.
ss.
COUNTY OF WAKE ss.
Before me, the undersigned, a Notary Public in and for said County and
State, on this 14th day of January, 1991 A.D. personally appeared Robin M.
Hammond, being and to me known to be the President of Walnut Creek Amphitheater
Financing Assistance Corporation, who being by me duly sworn, says that by
authority duly given by, and as the act of, said corporation, the foregoing and
annexed Mutual Recognition Agreement, dated as of December 1, 1990, was signed
by him as said President on behalf and in the name of Walnut Creek Amphitheater
Financing Assistance Corporation, and personally appeared, Thomas A. McCormick,
being and to me known to be the Secretary of Walnut Creek Amphitheater Financing
Assistance Corporation, who, being by me duly sworn, says that by authority duly
given, by said Walnut Creek Amphitheater Financing Assistance Corporation he
impressed the corporate seal of Walnut Creek Amphitheater Financing Assistance
Corporation upon the foregoing and annexed Mutual Recognition Agreement in
execution thereof for and on behalf of Walnut Creek Amphitheater Financing
Assistance Corporation and that he attested the same as said Secretary by
affixing his signature in attestation thereof, and said President and Secretary
further acknowledged that the foregoing and annexed Mutual Recognition Agreement
is the act and deed of the Walnut Creek Amphitheater Financing Assistance
Corporation.
Given under my hand and seal the day and year above stated.
[SEAL]
JANET L. ROSE /s/ Janet L. Rose
-----------------------------------------
NOTARY Notary Public
PUBLIC My Commission Expires: 9-1-91
WAKE CO. N.C.
-16-
<PAGE>
ACKNOWLEDGMENT OF EXECUTION ON BEHALF OF CITY
STATE OF NORTH CAROLINA )
)
COUNTY OF WAKE )
Before me, the undersigned, a Notary Public in and for said County and
State, on this 14th day of January, 1991 A.D. personally appeared Avery C.
Upchurch being and to me known to be the City Manager of the city of Raleigh,
North Carolina, who, being by me duly sworn, says that by authority duly given
by the City Council of said City, and as the act and deed, of said City Council,
the foregoing and annexed Mutual Recognition Agreement, dated as of December 1,
1990, was signed by him as said Mayor on behalf and in the name of said City,
and personally appeared, Gail Smith, being and to me known to be the City Clerk
of said City who, being by me duly sworn, says that by authority duly given by
said City Council she impressed the corporate seal of said City upon the
foregoing and annexed Mutual Recognition Agreement in execution thereof for and
on behalf of said City and that she attested the same as said City Clerk by
affixing her signature therein in attestation thereof, and said Dempsey Benton
and Gail Smith further acknowledged that said Mutual Recognition Agreement is
the act and deed of said City.
Given under my hand and seal the day and year above stated.
[SEAL]
JANET L. ROSE /s/ Janet L. Rose
-----------------------------------------
NOTARY Notary Public
PUBLIC My Commission Expires: 9-1-91
WAKE CO. N.C.
-17-
<PAGE>
ACKNOWLEDGMENT OF EXECUTION ON BEHALF OF PACE
STATE OF NORTH CAROLINA )
)
COUNTY OF WAKE )
I, Janet L. Rose, a Notary Public of Wake County, do hereby certify that
Jeffry B. Lewis personally came before me this day and acknowledged that he is
the Asst. Secretary of Pace Concerts, Inc., a corporation, and that by authority
duly given and as the act of the corporation, and as the act of SONY MUSIC/PACE
PARTNERSHIP, a New York general partnership (the "Partnership") in which the
corporation is a general partner (the "General Partner"), the foregoing
instrument was signed in its name by its Vice President, sealed with its
corporate seal and attested by himself as its Asst. Secretary.
Witness my hand and notarial seal, this 14th day of January, 1991.
[SEAL]
JANET L. ROSE /s/ Janet L. Rose
-----------------------------------------
NOTARY Notary Public
PUBLIC
WAKE CO. N.C.
[NOTARY SEAL]
My Commission Expires:
9-1-91
-18-
<PAGE>
EXHIBIT A-1
BEGINNING at a point, a new iron pin lying along the eastern right-of-way
line of Sunnybrook Road and at its point of intersection with the north bank of
Walnut Creek according to a reference line, thence N 4(degrees) 15' 51" W 511.40
feet to a point; thence along a curve in a clockwise direction, said curve
having an arc length of 373.35 feet, a radius of 4000.40 feet, chord bearing N
1(degrees) 35' 26" W, chord distance of 373.21 feet to a point; thence N
1(degrees) 18' 18" E 170.86 feet to a point; thence departing from the eastern
right-of-way line of Sunnybrook Road N 89(degrees) 15' 24" E 304.82 feet to a
point; thence S 15(degrees) 00' 00" W 200.00 feet to a point; thence along a
curve in a counterclockwise direction having an arc of 1134.46 feet, radius of
500.00 feet, chord bearing S 50(degrees) 00' 00" E a chord distance of 906.31
feet to a point; thence N 65(degrees) 00' 00" E 203.89 feet to a point; thence S
19(degrees) 28' 31" E 270.75 feet to a point situated on the west bank of Pace's
branch; thence along the west bank of Pace's branch the following courses and
distances of a reference line: S 8(degrees) 03' 00" E 155.34 feet to a point;
thence S 46(degrees) 38' 32" E 138.78 feet to a point; thence S 29(degrees) 24'
37" W 128.24 feet to a point; thence S 26(degrees) 01' 14" E 57.12 feet to a
point; thence S 2(degrees) 47' 31" W 75.75 feet to a point, the intersection of
the west bank of Pace's branch and the north bank of Walnut Creek, according to
reference lines; thence along the north bank of Walnut Creek the following
courses and distances of a reference line: N 84(degrees) 41' 45" W 114.51 feet
to a point; thence S 81(degrees) 32' 30" W 88.76 feet to a point; thence S
25(degrees) 04' 57" E 142.06 feet to a point; thence S 40(degrees) 59' 48" W
85.84 feet to a point; thence S 58(degrees) 42' 14" W 238.37 feet to a point;
thence S 89(degrees) 19' 23" W 118.59 feet to a point; thence N 28(degrees) 25'
58" W 170.64 feet to a point; thence N 35(degrees) 42' 13" W 126.29 feet to a
point; thence N 57(degrees) 39' 28" W 262.50 feet to a point; thence N
50(degrees) 02' 31" W 283.66 feet to a point; thence N 38(degrees) 15' 20" W
121.46 feet to a point; thence N 69(degrees) 54' 35" W 73.87 feet to the point
and place of BEGINNING, containing 24.3836 acres according to a survey of the
north portion of Walnut Creek Park dated 13 December 1989, prepared by Murphy
Yelle Associates, Registered Land Surveyors.
<PAGE>
EXHIBIT A-2
A certain tract or parcel of realty lying and being in the City of
Raleigh, Wake County, North Carolina, more fully described by metes and bounds
as follows, viz:
BEGINNING at an iron pipe found in the eastern right of way line of the
Cliff Benson Beltline at the south bank of Walnut Creek, said pipe being the
northernmost corner of the lands of the City of Raleigh Walnut Creek Park (south
property); thence with the meanders of Walnut Creek, defined herein as a
traverse line along the southern and western bank:
S 23 deg 07' 04" E, a distance of 159.69 feet to a point on the bank of the
creek;
S l7 deg 09' 17" E, a distance of 152.70 feet to a point on the bank of the
creek;
S 06 deg 04' 12" W, a distance of 126.04 feet to a point on the bank of the
creek;
S 35 deg 38' 50" E, a distance of 126.39 feet to a point on the bank of the
creek;
thence departing the creek and the following eight (8) new lines through said
lands of the City of Raleigh:
1) S 58 deg 42' 51" W, a distance of 429.82 feet to a new corner;
2) S 01 deg 03' 14" W, a distance of 390.68 feet to a new corner;
3) S 55 deg l4' 52" W, a distance of 340.32 feet to a new corner;
4) S 00 deg 50' 42" W, a distance of 148.63 feet to a new corner;
5) N 89 deg 39' 17' E, a distance of 483.24 feet to a new corner;
6) S 56 deg 22' 45" E, a distance of 1077.23 feet to a new corner;
7) S l4 deg 2l' 54" E, a distance of 540.11 feet to a new corner;
8) S 00 deg 03' 36" E, a distance of 740.45 feet to a new corner;
thence with the line of Green Valley Subdivision S 89 deg 56' 24" W, a distance
of 200.41 feet to an existing iron pipe;
thence with the line of Green Valley Subdivision S 89 deg 43' 39" W, a distance
of 85.83 feet to an existing iron pipe;
thence with the line of Green Valley Subdivision S 89 deg 57' 25" W, a distance
of 214.69 feet to an existing iron pipe, the northwest corner of Green Valley
Subdivision and the northeast corner of Garden Acres Subdivision;
thence with the line of Garden Acres N 89 deg 44' 19" W, a distance of 841.02
feet to an existing iron pipe, the southeast corner of lands of Allen and Debra
Shindledecker;
thence with the line of Shindledecker; N 11 deg 15' 48" E, a distance of 209.52
feet to an existing iron pipe;
thence with the line of Shindledecker; N 89 deg 44' 07" W, a distance of 143.88
feet to an existing iron pipe in the eastern right of way line of Holloway Road
(50' R/W);
thence with Holloway Road along the arc of a counter-clockwise circular curve,
the delta angle being 07 deg 10' 02", the radius length being 262.48 feet for an
arc distance of 32.83 feet, said curve defined by chord bearing S 14 deg 50' 49"
W, and chord distance of 32.81 feet to an existing iron pipe;
thence with the line of Holloway Road S 11 deg l5' 48" W, a distance of 177.17
feet to an existing iron pipe, Shindledecker's southwestern corner;
thence crossing Holloway Road N 89 deg 37' 48" w, a distance of 56.63 feet to an
existing iron pipe;
thence with the line of Charles R. Brooks and with Lorraine R. Williams N 89 deg
53' 38" W, a distance of 168.47 feet to an existing iron pipe;
thence continuing with the line of Brooks and Williams N 89 deg 52' 45" W, a
distance of 879.06 feet to an existing iron pipe, Williams' northwest corner;
thence with the line of Williams S 15 deg 59' 31" W, a distance of 628.49 feet
to an existing iron pipe on the northern right of way line of Rock Quarry Road
(60' R/W);
thence with the line of Rock Quarry Road N 65 deg 53' 25" W, a distance of
202.02 feet to an existing iron pipe, corner for James R. Rogers III;
thence with the line of Rogers N 15 deg 59' 31" E, a distance of 628.49 feet to
an existing iron pipe;
<PAGE>
thence continuing with the line of Rogers N 22 deg 21' 28" E, a distance of
2289.30 feet to an existing iron pipe;
thence continuing with the line of Rogers S 83 deg 49' 11" W, a distance of
911.18 feet to an existing iron pipe at the eastern right of way line of
Sunnybrook Road;
thence with Sunnybrook Road along the arc of a counter-clockwise circular curve,
the delta angle being 14 deg 32' 27" the radius length being 969.28 feet for an
arc distance of 245.99 feet, said curve defined by chord bearing N 43 deg 20'
31" E, and chord distance of 245.33 feet to an existing iron pipe at the
southeastern intersection of the rights of way of Sunnybrook Road and the
Cliff Benson Beltline;
thence with the Beltline along the arc of a counter-clockwise circular curve,
the delta angle being 13 deg 11' 43" the radius length being 3,990.72 feet for
an arc distance of 919.06 feet, said curve defined by chord bearing N 64 deg 24'
29" E, and chord distance of 917.03 feet to an NCDOT concrete monument found;
thence with the line of the Beltline N 58 deg 05' 28" E, a distance of 313.85
feet to a NCDOT concrete monument found;
thence with the line of the Beltline N 48 deg 01' 38" E, a distance of 209.72
feet to a NCDOT concrete monument found;
thence with the Beltline along the arc of a counter-clockwise circular curve,
the delta angle being 07 deg 14' 41", the radius length being 3,990.72 feet for
an arc distance of 504.60 feet, said curve defined by chord bearing N 46 deg 41'
36" E, and chord distance of 504.26 feet to an existing iron pipe, the point and
place of beginning and containing 120.058 acres, more or less.
This description was prepared January 11, 1991 by Murphy Yelle Associates,
Registered Land Surveyors.
<PAGE>
DEVELOPMENT MANAGEMENT AGREEMENT
[Walnut Creek Amphitheater]
THIS DEVELOPMENT MANAGEMENT AGREEMENT ("Agreement") is entered into
effective as of this 1st day of December, 1990 by and among (i) SONY MUSIC/PACE
PARTNERSHIP ("Consultant"), a New York general partnership whose sole general
partners are YM Corp., a Delaware corporation, and PACE Concerts, Inc., a Texas
corporation, (ii) CITY OF RALEIGH, NORTH CAROLINA ("City"), a municipal
corporation duly organized and existing under and by virtue of the constitution
and laws of the State of North Carolina, and (iii) WALNUT CREEK AMPHITHEATER
FINANCING ASSISTANCE CORPORATION ("Owner"), a non-profit corporation duly
organized and existing under and by virtue of Chapter 55A of the General
Statutes of North Carolina. For and in consideration or the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
Article I. Definitions
Unless the context otherwise requires, the capitalized terms used herein
shall, for all purposes of this Agreement have the following specified meanings:
Section 1.1 "Agency Agreement" shall mean the Agency Agreement of even
date herewith entered into by and between City and Owner pursuant to which City
has agreed to construct, acquire and equip the Amphitheater on behalf of Owner
on the Property.
Section 1.2 "Amphitheater" shall mean the outdoor entertainment facility
and related parking facilities to be known as "Walnut Creek Amphitheater" which
is to be constructed on the Property by Owner pursuant to the provisions of this
Agreement. The term "Amphitheater" shall include within its definition all
buildings, fixtures and other improvements which are constructed or placed on
the Property as a part of or related to such outdoor entertainment facility.
Section 1.3 "Bonds" shall mean the taxable Certificates of Participation
(Walnut Creek Amphitheater Project), Series 1990 which are being sold by Owner
as a source of funds for paying Project Costs associated with the construction
of the Amphitheater.
Section 1.4 "Consultant Escrow Fund" shall mean the separate escrow fund
to be maintained by Trustee with the $3,500,000.00 contribution made by
Consultant pursuant to the provisions of Section 3.2 of this Agreement.
Section 1.5 "Lease Agreement" shall mean that certain Lease Agreement
entered into of even date herewith by and between City and Consultant which
relates to, among other things, the use, control, possession and operation of
the Amphitheater upon completion of its construction.
<PAGE>
Section 1.6 "Preliminary Plans" shall mean the currently existing
preliminary plans, drawings and specifications of the Amphitheater which were
prepared by Sustaita & Associates and which have been presented to the City
Council of City.
Section 1.7 "Project Costs" shall mean (i) with respect to any item or
portion of the Amphitheater the contract price paid or to be paid therefor upon
the construction, acquisition or equipping thereof, in accordance with a
purchase order or contract therefor, including, without limitation, all
administrative, engineering, legal, financial and construction costs incurred in
connection with the construction, design, financing and equipping of the
Amphitheater and all applicable sales taxes and other charges resulting from
such construction, acquisition of equipping and (ii) all items of expense
directly or indirectly payable by or reimbursable to Owner or City relating to
the financing of the Amphitheater from the proceeds of the Bonds, including but
not limited to filing and recording costs, settlement costs, printing costs,
word processing costs, reproduction and binding costs, initial fees and charges
of the Trustee, Bond insurance premiums, legal fees and expenses and charges,
financing and other professional consultant fees and expenses, costs of rating
agencies or credit ratings, fees for execution, transportation and safekeeping
of the Bonds and charges and fees in connection with the foregoing.
Section 1.8 "Project Fund" shall mean the separate fund to be maintained
by Trustee upon issuance of the Bonds in which the proceeds of such Bonds shall
be held for disbursement to pay Project Costs.
Section 1.9 "Property" shall mean that certain tract of land located in
Wake County, North Carolina and being more particularly described by metes and
bounds in Exhibit "A" attached hereto.
Section 1.10 "September 4th Agreement" shall mean that certain Agreement
dated September 4, 1990 and entered into by and between Consultant and City
relating to, among other things, (i) the expenditure of certain funds by
Consultant and City in connection with the Amphitheater and (ii) the
reimbursement thereof upon the occurrence of certain events.
Section 1.11 "Trustee" shall mean First Union National Bank at North
Carolina.
Article II. Construction of Amphitheater
Section 2.1 Owner's Construction Obligations.
(a) Upon fulfillment of all of the conditions contained in clause
(b) of this Section 2.1, Owner shall be obligated to construct the
Amphitheater on the Property in substantially the same design and scope as
contemplated by the Preliminary Plans. Consultant hereby acknowledges and
agrees that, pursuant to the provisions of the Agency Agreement, the City
will
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<PAGE>
acquire, equip and construct the Amphitheater on behalf of the Owner and
that the City will rely upon the consulting services to be provided by
Consultant pursuant to the provisions of Section 2.3 hereof in connection
with the equiping and constructing of the Amphitheater.
(b) The obligation imposed upon Owner pursuant to the provisions of
clause (a) of this Section 2.1 is conditioned upon the following
conditions precedent having been first fully and finally fulfilled:
(i) Owner shall have successfully completed all financing
arrangements, upon terms and conditions reasonably satisfactory to
Owner, in order to fund all Project Costs which will not be funded
from the Consultant Escrow Fund.
(ii) All permits and authorizations which are required to be
obtained by any and all legal requirements prior to commencement of
construction of the Amphitheater shall have been obtained,
including, without limitation, all required building permits,
grading permits, special use permits and environmental permits.
(c) Owner hereby agrees to use its reasonable best efforts to cause
all of the conditions contained in clause (b) of this Section 2.1 to be
completed and Fulfilled as soon as practicable after the date of this
Agreement.
2.2 Offsite Roadway Improvements. In connection with construction of the
Amphitheater, City hereby agrees and covenants with both Owner and Consultant
that it will cause, at its sole cost and expense, all necessary offsite roadway
improvements to be completed prior to completion of construction of the
Amphitheater as may be desirable or necessary to permit an efficient traffic
flow to and from the parking facilities at the Amphitheater.
2.3 Project Consulting Services. City hereby retains and engages
Consultant to perform the consulting services hereinafter described, and
Consultant hereby accepts such engagement on and subject to the terms and
conditions contained in this Agreement. The consulting services to be provided
by Consultant to City pursuant to this Section 2.3 shall include all such
consulting services as may be reasonably requested by Owner in connection with
the design and construction of the Amphitheater by City on behalf of Owner
pursuant to the terms and provisions of the Agency Agreement, such services to
include, without limitation, the following:
(a) assisting Owner and City in the preparation of investment
projections, budgets, and income and expense projections;
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<PAGE>
(b) assisting Owner and City in the coordination of interviews and
selection of architects, engineers and other specialized consultants and
assisting in the negotiation and finalization of contracts with such
parties;
(c) consulting with and coordinating the design team's activities in
creating all preliminary conceptual designs of the Amphitheater including
such matters as:
(i) land use and site planning;
(ii) traffic flow of vehicles and pedestrians;
(iii) materials and finishes (both interior and exterior);
(iv) primary building systems;
(v) fast-track design and construction scheduling;
(vi) early selection and order placement of long delivery
building components; and
(vii) budgets and allowances;
(d) coordinating and assisting Owner and City in the preparation of
public bid packages for all necessary construction contracts which must be
offered for public bid;
(e) coordinating and assisting Owner and City in the analysis of all
return bid packages;
(f) coordinating and assisting Owner and City in the negotiation of
all construction contracts with those contractors which are selected
following the public bid process;
(g) providing assistance to Owner and City in connection with the
inspection of construction activities as required to insure compliance
with plans, specifications and required quality of workmanship;
(h) assisting Owner and City in its review, approval and processing
of each contractor's applications for payment;
(i) assisting Owner and City in its preparation and submission of
funding requests to Trustee for draws from the Project Fund and the
Consultant Escrow Fund;
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<PAGE>
(j) assisting Owner and City in the maintaining of accounting
records relating to the construction of the Amphitheater;
(k) providing assistance to Owner and City in connection with the
evaluation and negotiation of any change orders;
(l) providing assistance to Owner and City in connection with the
obtaining of all necessary utility services to the Amphitheater;
(m) assisting and coordinating all efforts to complete punch list
items in order to cause construction of the Amphitheater to be fully and
finally completed; and
(n) providing assistance to Owner and City and supervision in
connection with the ensuring or satisfactory substantial completion of all
construction work on the Amphitheater and assisting in the securing of all
warranties, guarantees and occupancy permits.
2.4 Requisitions from Project Fund. Neither City nor Owner shall make any
draw request or requisition for any amount from the Project Fund or the
Consultant Escrow Fund unless and until Consultant has received and approved in
writing, such approval not to be unreasonably withheld, such draw request or
requisition.
2.5 Relationship of Consultant to Owner. Consultant shall not have control
or charge of and shall not be responsible for construction means, methods,
techniques, sequences or procedures in connection with the construction work
associated with the Amphitheater, for the acts or omissions of any contractors,
subcontractors or any other persons performing any of such work, or for the
failure of any of them to carry out the work in accordance with their respective
contract documents. In instances where Consultant has reviewed and approved draw
requests from any contractors, subcontractors or any other persons performing
any construction work on the Amphitheater, such approval shall be deemed to be
strictly limited to an acknowledgment by Consultant that, based upon its review
and diligence, the funds requested therein are due and owing under the terms of
the applicable construction contracts and shall not, in any way, be deemed to
imply any warranty, representation or approval by Consultant that the
improvements constructed through the date of such draw request have been
constructed in accordance with the plans and specifications for the
Amphitheater.
2.6 Consulting Fee. If construction of the Amphitheater is commenced by
City on behalf of Owner, then Owner and City shall be obligated to pay to
Consultant for its services rendered hereunder a fixed fee of $200,000.00 plus
reimbursement of all out-of-pocket costs and expenditures incurred by Consultant
in connection with carrying out its duties hereunder. The $200,000.00
development fee referred to in the immediately preceding sentence shall be paid
in two (2) equal installments of
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<PAGE>
$100,000.00, the first of which shall be payable upon commencement of
construction of the Amphitheater and the second of which shall be payable upon
completion of construction of the Amphitheater. Reimbursement of Consultant's
out-of-pocket expenditures shall be made upon Consultant invoicing Owner and
City for such amounts, but no more frequently than once per month.
Article III. Financing of Project Costs
3.1 Pre-Bond Financing Expenditures.
(a) Consultant hereby authorizes City to expend funds of up to
$150,000.00 in connection with the Amphitheater, subject to reimbursement
by Consultant upon the occurrence at the events described below. Such
funds may be expended by City for, among other things, acoustic studies,
traffic studies, environmental studies, topography studies, surveys, the
acquisition of real property options in connection with site testing for
the Amphitheater and outside legal costs for the financing of the
Amphitheater. Any funds previously expended by City pursuant to the
provisions of Section 1 of the September 4th Agreement shall be deemed to
have been expended by City pursuant to the provisions of this Section
3.1(a).
(b) City and Owner hereby authorize Consultant to expend funds of up
to $350,000.00 in connection with the Amphitheater, subject to
reimbursement by City upon the occurrence of the events described below.
Such funds may be expended by Consultant for, among other things,
architectural and engineering services (including travel expenses) in
connection with the preparation of plans and specifications for the
construction of the Amphitheater. Any funds previously expended by
Consultant pursuant to the provisions of Section 2 of the September 4th
Agreement shall be deemed to have been expended by Consultant pursuant to
the provisions of this Section 3.1(b). In no event will Consultant be
obligated to expend more than $350,000.00 in fulfilling its obligations
under this Agreement prior to commencement of construction of the
Amphitheater.
(c) City will pay to Consultant on demand the amount specified by
Consultant to City in a statement, accompanied by invoices and statements
satisfactory to City of costs incurred by Consultant pursuant to clause
(b) of this Section 3.1 upon (i) the failure to obtain the applicable
special use permit in time to begin construction of the Amphitheater for
operation by the May, 1991 season or (ii) the failure to obtain financing
for the construction of the Amphitheater in time to begin construction of
the Amphitheater for operation by the May, 1992 season, due to a failure
to carry out or complete any duty or responsibility totally within the
control or discretion of City.
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<PAGE>
(d) Consultant will pay to City, but not to exceed one-third (1/3rd)
of the amount specified in clause (a) of this Section 3.1, and City will
pay to Consultant, but not to exceed two-thirds (2/3rds) of the amount
specified in clause (b) of this Section 3.1, the costs incurred to date by
City or Consultant, as the case may be, for the items specified in clauses
(a) and (b), respectively, upon the occurrence of either of the following
events:
(i) the inability of Consultant or City to obtain the
environmental permits necessary to construct and operate the
Amphitheater; or
(ii) the failure of City to obtain financing for the
construction of the Amphitheater due to an event outside the control
of City or Consultant.
(e) Upon issuance of the Bonds and full funding of the Project Fund,
all amounts previously advanced pursuant to the provisions of this Section
3.1 by Consultant and City shall be forthwith reimbursed out of the
Project Fund.
(f) The provisions of this Section 3.1 shall in all respects replace
and supersede all of the terms, provisions and agreements contained in the
September 4th Agreement. As a result, the parties hereto hereby terminate
and cancel the September 4th Agreement.
Section 3.2 Consultant's Contribution.
(a) Upon fulfillment of all of the conditions contained in clause
(b) of this Section 3.2, Consultant shall deliver to Trustee $3,500,000.00
to be held in a separate escrow fund ("Consultant Escrow Fund"). The
Consultant Escrow Fund shall be governed by an Escrow Agreement entered
into of even date herewith by and between Trustee and Consultant. The
Consultant Escrow Fund shall be used solely for payment of the Project
Costs.
(b) The obligation imposed upon Consultant pursuant to the terms of
clause (a) of this Section 3.2 is conditioned upon the following
conditions precedent having been first fully and finally fulfilled:
(i) The Bonds having been issued and the Project Fund having been
fully funded in an amount equal to the difference between (x) the
projected total of all Project Costs which will be expended to complete
construction of the Amphitheater minus (y) $3,500,000.00.
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<PAGE>
(ii) All of the conditions to Consultant's obligations under the
Lease Agreement as set forth in Section 16.1 thereof, other than the
condition that construction of the Amphitheater be completed, having been
fully and finally fulfilled.
IV. Insurance and Indemnity
4.1 Insurance. Owner shall obtain and maintain, or cause to be obtained
and maintained, at all times through and including commencement of the initial
term of the Development Agreement, for the mutual benefit of Owner and
Consultant, the insurance coverage described in this Section 4.1, with such
insurance companies as may be approved by Consultant. Consultant shall be
included, without cost to it, as an additional named insured on all policies of
insurance maintained with respect to the Amphitheater as required pursuant to
the provisions of this Section 4.1. The insurance required to be maintained
pursuant to the provisions of this Section 4.1 are as follows:
(a) Workers' compensation and occupational disease insurance for all
employees at the site of construction of the Amphitheater. All such
workers' compensation insurance shall comply with the requirements of the
laws of North Carolina and shall be maintained in amounts equal to or
greater than the statutorially mandated minimum amounts.
(b) Comprehensive general liability insurance covering: operations -
premises liability; contractor's protective liability; completed
operations product liability; contractual liability; and broad form
property damage endorsement and property damage. The limits of such
liability insurance shall be no less than:
(i) bodily injury:
$1,000,000.00 each person
$1,000,000.00 each occurrence
$1,000,000.00 aggregate completed operations - products
(ii) property damage:
$1,000,000.00 each occurrence
$1,000,000.00 aggregate operations
$1,000,000.00 aggregate protective
$1,000,000.00 aggregate completed operations - products
(c) Comprehensive automobile liability insurance covering all owned,
hired or non-owned vehicles including the loading or unloading thereof
with limits no less than:
-8-
<PAGE>
(i) automobile bodily injury:
$1,000,000.00 each person
$1,000,000.00 each occurrence
(ii) automobile property damage:
$1,000,000.00 each occurrence
(d) Umbrella liability insurance covering all operations with limits
of liability for personal injury and property liability not less than:
$25,000,000.00 each occurrence
$25,000,000.00 aggregate
(e) Policy of fire and extended coverage insurance (including
builder's all-risk coverage) insuring all of the improvements associated
with the construction of the Amphitheater and all additions, alterations
and improvements to the same, against damage and destruction by all
causes generally insured against in policies of fire and extended coverage
insurance. All of the improvements associated with the construction of the
Amphitheater shall be insured pursuant to such insurance policy at 100% of
its replacement cost.
All policies of insurance to be provided pursuant to the provisions of this
Section 4.1 shall be endorsed to provide that the underwriters and insurance
companies issuing same shall not have any right of subrogation against
Consultant or any of its subsidiaries, agents, employees, invitees, servants,
subcontractors, insurers, underwriters and such other parties as Consultant may
designate. Owner shall furnish certificates of insurance evidencing the
insurance required pursuant to this provisions of Section 4.1 and, upon request
of Consultant, shall furnish true copies of the actual policies. Each
certificate shall provide that thirty (30) days prior written notice shall be
given to Consultant in the event of cancellation or material change in the
policies.
4.2 Indemnity to Consultant by Owner and City. Consultant shall not be
liable for and Owner and City shall jointly defend, indemnify and save
Consultant harmless against all loss and damage and all claims, demands,
actions, costs and fines of any kind which Consultant may incur, which may be
asserted against Consultant or for which Consultant may become liable by reason
of Consultant's performance under this Agreement or any other contract or
agreement entered into by Owner or City or by Consultant (and approved by Owner
or City), pursuant to this Agreement and in connection with the development of
the Amphitheater, or by reason of any action taken by Consultant as Owner's or
City's representative whether or not pursuant to a specific written
authorization by Owner or City, unless caused by or attributable to the
negligence or wanton or willful misconduct on the part of Consultant, its
employees or agents or by action taken or omitted to be taken by it or them in
breach of, or outside the scope of its or their authority under this Agreement.
-9-
<PAGE>
4.3 Indemnity to Owner and City by Consultant. Consultant shall defend,
indemnify and save Owner and City harmless against all loss and damage and all
claims, demands, actions, costs and fines of any kind which Owner or City may
incur or for which Owner or City may become liable by reason of negligence or
wanton and willful misconduct on the part of Consultant, its employees or
agents, or by reason of any action taken or omitted to be taken by it or them
in breach of, or outside the scope of its or their authority under this
Agreement. The indemnity herein provided for shall not extend to any
consequential damages, including but not limited to damages or expenses
resulting from loss of profit or interruption of business.
V. Miscellaneous Provisions
5.1 Default. If any party to this Agreement defaults hereunder and such
default is not cured (i) within thirty (30) days after written notice thereof
from the other party, if such default is a failure to pay money or (ii) within
sixty (60) days after written notice thereof from the other party, if such
default is not a failure to pay money, or if such non-monetary default cannot be
cured within sixty (60) days, or within an additional reasonable period of time
if the defaulting party has commenced curative action within such sixty (60) day
period and thereafter prosecutes with diligence the curing thereof, then the
non-defaulting party may thereupon terminate this Agreement by written notice to
the defaulting party or may seek such other remedies and recourses as may be
available to it at law or in equity.
5.2 Exclusive Engagement. The engagement of Consultant pursuant to this
Agreement and the Lease Agreement is an exclusive arrangement. As a result, if
the Amphitheater is not constructed for any reason other than a failure or
default of an obligation of Consultant contained herein or in the Lease
Agreement, then neither Owner nor City shall, directly or indirectly, construct
or acquire any outdoor entertainment facility similar in scope and design to the
Amphitheater anywhere within a ninety (90) mile radius of the City at Raleigh
for a period of 2 years without including Consultant in the same capacity
contemplated by the provisions of this Agreement and the provisions of the Lease
Agreement.
5.3 Notices.
(a) All payments, sums, notices, demands or requests from one party
to another may be personally delivered or sent by mail, certified or
registered, return receipt requested, postage prepaid to the address
below, and shall be deemed to have been given at the time of personal
delivery or at the time of receipt.
(b) All notices, demands or requests to City shall be given to City
at:
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<PAGE>
City of Raleigh
c/o City Manager
P.O. Box 590222
West Hargett Street
Raleigh, North Carolina 27602
(c) All notices, demands or requests to Owner shall be given to
Owner at:
Raleigh Amphitheater Assistance
Corporation
c/o City Manager
P.O. Box 590222
West Hargett Street
Raleigh, North Carolina 27602
(d) All notices, demands or requests to Consultant shall be given to
Consultant at:
c/o Pace Entertainment Group, Inc.
515 Post Oak Blvd., Suite 300
Houston, Texas 77027
Attention: Mr. Brian E. Becker
and
c/o Sony Music Entertainment Inc.
If by mail: P. O. Box 4450
New York, New York 10101-4450
If by courier or other personal delivery:
666 Fifth Avenue
Sony Music Entertainment Inc.
Mail Room
New York, New York 10103
Attention: Senior Vice President,
Business Affairs and
Administration
with copy to: Sony Music Entertainment Inc.
Law Department
Attention: Senior Vice President and
General Counsel
Section 5.4 Assignment. Consultant, shall have the right to assign, convey
or transfer Consultant's rights, liabilities and obligations under this
Agreement to any affiliate of Consultant without the prior consent of City or
Owner, in which case such assignee shall in all respects be deemed to be the
"Consultant" for all purposes hereof from and after such assignment.
-11-
<PAGE>
Section 5.5 Relevant Law. This Agreement shall be governed by North
Carolina law.
In witness whereof this Agreement has been executed effective as of the
day and year first above written.
WALNUT CREEK AMPHITHEATER ASSISTANCE
CORPORATION
Attest: By: /s/ Robin Hammond
-------------------------------------
Name: Robin Hammond
/s/ [ILLEGIBLE] Title: President
- ---------------------------
Secretary
CITY OF RALEIGH, NORTH CAROLINA
Attest: By: /s/ Dempsey Benton
-------------------------------------
Name: Dempsey Benton
/s/ Gail G. Smith Title: City Manager
- ---------------------------
City Clerk
Approved as to Form:
/s/ [ILLEGIBLE]
- ---------------------------
City Attorney
SONY MUSIC/PACE PARTNERSHIP, a
New York general partnership
Attest:
/s/ Jeffry B. Lewis By: PACE Concerts, Inc., a Texas
- --------------------------- corporation and its general
Jeffry B. Lewis partner
Asst. Sec.
By: /s/ Rodney L. Eckerman
---------------------------------
Name: Rodney L. Eckerman
Title: Vice President
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<PAGE>
EXHIBIT A
A certain tract or parcel of realty lying and being in the City of
Raleigh, Wake County, North Carolina, more fully described by metes and bounds
as follows, viz:
BEGINNING at an iron pipe found in the eastern right of way line of the
Cliff Benson Beltline at the south bank of Walnut Creek, said pipe being the
northernmost corner of the lands of the City of Raleigh Walnut Creek Park (south
property); thence with the meanders of Walnut Creek, defined herein as a
traverse line along the southern and western bank:
S 23 deg 07' 04" E, a distance of 159.69 feet to a point on the bank of the
creek;
S l7 deg 09' 17" E, a distance of 152.70 feet to a point on the bank of the
creek;
S 06 deg 04' 12" W, a distance of 126.04 feet to a point on the bank of the
creek;
S 35 deg 38' 50" E, a distance of 126.39 feet to a point on the bank of the
creek;
thence departing the creek and the following eight (8) new lines through said
lands of the City of Raleigh:
1) S 58 deg 42' 51" W, a distance of 429.82 feet to a new corner;
2) S 01 deg 03' 14" W, a distance of 390.68 feet to a new corner;
3) S 55 deg l4' 52" W, a distance of 340.32 feet to a new corner;
4) S 00 deg 50' 42" W, a distance of 148.63 feet to a new corner;
5) N 89 deg 39' 17' E, a distance of 483.24 feet to a new corner;
6) S 56 deg 22' 45" E, a distance of 1077.23 feet to a new corner;
7) S l4 deg 2l' 54" E, a distance of 540.11 feet to a new corner;
8) S 00 deg 03' 36" E, a distance of 740.45 feet to a new corner;
thence with the line of Green Valley Subdivision S 89 deg 56' 24" W, a distance
of 200.41 feet to an existing iron pipe;
thence with the line of Green Valley Subdivision S 89 deg 43' 39" W, a distance
of 85.83 feet to an existing iron pipe;
thence with the line of Green Valley Subdivision S 89 deg 57' 25" W, a distance
of 214.69 feet to an existing iron pipe, the northwest corner of Green Valley
Subdivision and the northeast corner of Garden Acres Subdivision;
thence with the line of Garden Acres N 89 deg 44' 19" W, a distance of 841.02
feet to an existing iron pipe, the southeast corner of lands of Allen and Debra
Shindledecker;
thence with the line of Shindledecker; N 11 deg 15' 48" E, a distance of 209.52
feet to an existing iron pipe;
thence with the line of Shindledecker; N 89 deg 44' 07" W, a distance of 143.88
feet to an existing iron pipe in the eastern right of way line of Holloway Road
(50' R/W)
thence with Holloway Road along the arc of a counter-clockwise circular curve,
the delta angle being 07 deg 10' 02", the radius length being 262.48 feet for an
arc distance of 32.83 feet, said curve defined by chord bearing S 14 deg 50' 49"
W, and chord distance of 32.81 feet to an existing iron pipe;
thence with the line of Holloway Road S 11 deg l5' 48" W, a distance of 177.17
feet to an existing iron pipe, Shindledecker's southwestern corner;
thence crossing Holloway Road N 89 deg 37' 48" W, a distance of 56.63 feet to an
existing iron pipe;
thence with the line of Charles R. Brooks and with Lorraine R. Williams N 89 deg
53' 38" W, a distance of 168.47 feet to an existing iron pipe;
thence continuing with the line of Brooks and Williams N 89 deg 52' 45" W, a
distance of 879.06 feet to an existing iron pipe, Williams' northwest corner;
thence with the line of Williams S 15 deg 59' 31" W, a distance of 628.49 feet
to an existing iron pipe on the northern right of way line of Rock Quarry Road
(60' R/W);
thence with the line of Rock Quarry Road N 65 deg 53' 25" W, a distance of
202.02 feet to an existing iron pipe, corner for James R. Rogers III;
thence with the line of Rogers N 15 deg 59' 31" E, a distance of 628.49 feet to
an existing iron pipe;
<PAGE>
thence continuing with the line of Rogers N 22 deg 21' 28" E, a distance of
2289.30 feet to an existing iron pipe;
thence continuing with the line of Rogers S 83 deg 49' 11" W, a distance of
911.18 feet to an existing iron pipe at the eastern right of way line of
Sunnybrook Road;
thence with Sunnybrook Road along the arc of a counter-clockwise circular curve,
the delta angle being 14 deg 32' 27" the radius length being 969.28 feet for an
arc distance of 245.99 feet, said curve defined by chord bearing N 43 deg 20'
31" E, and chord distance of 245.33 feet to an existing iron pipe at the
southeastern intersection of the rights of way of Sunnybrook Road and the
Cliff Benson Beltline;
thence with the Beltline along the arc of a counter-clockwise circular curve,
the delta angle being 13 deg 11' 43" the radius length being 3,990.72 feet for
an arc distance of 919.06 feet, said curve defined by chord bearing N 64 deg 24'
29" E, and chord distance of 917.03 feet to a NCDOT concrete monument found;
thence with the line of the Beltline N 58 deg 05' 28" E, a distance of 313.85
feet to a NCDOT concrete monument found;
thence with the line of the Beltline N 48 deg 01' 38" E, a distance of 209.72
feet to a NCDOT concrete monument found;
thence with the Beltline along the arc of a counter-clockwise circular curve,
the delta angle being 07 deg 14' 41", the radius length being 3,990.72 feet for
an arc distance of 504.60 feet, said curve defined by chord bearing N 46 deg 41'
36" E, and chord distance of 504.26 feet to an existing iron pipe, the point and
place of beginning and containing 120.058 acres, more or less.
This description was prepared January 11, 1991 by Murphy Yelle Associates,
Registered Land Surveyors.
<PAGE>
PARTNERSHIP AGREEMENT
STARWOOD AMPHITHEATER OPERATING COMPANY
THIS AGREEMENT made and entered into this 23 day of February, 1986, by and
between BELZ INVESTMENT COMPANY, INC., a Tennessee corporation organized under
the laws of the State of Tennessee, and MARTIN S. BELZ, both of the preceeding
hereinafter referred to as "Belz", and PACE PRODUCTIONS, INC., a corporation
organized under the laws of the State of Texas, hereinafter referred to as
"Pace", as the Original Partners, each hereinafter referred to individually as
"Partner" or collectively as "Partners".
WITNESSETH:
WHEREAS, Belz and Pace desire to form a partnership for the specific
purposes and upon the specific terms hereinafter set out;
NOW, THEREFORE, for and in consideration of the premises and their mutual
covenants and agreements contained herein the parties do agree as follows:
Article I
Formation of Partnership
Section 1.01 - Formation of Partnership
(a) Belz and Pace hereby enter into and form a partnership (the
"Partnership") for the limited purpose and scope set forth herein, which shall
be known as STARWOOD AMPHITHEATER OPERATING COMPANY.
(b) Except as expressly provided for herein to the contrary, the rights
and obligations of the Partners and the administration of the Partnership shall
be governed by the Tennessee Uniform Partnership Act.
(c) A Partner's interest in the Partnership shall be personal property for
all purposes. All real and other property owned by the Partnership shall be
deemed owned by the Partnership as an entity, and no Partner, individually,
shall have any ownership of such property.
(d) No Partner shall be liable for any obligations incurred by the other
Partners whether incurred before or after the execution of this Agreement,
except obligations incurred by the Partnership pursuant to the terms of this
Agreement. Each Partner hereby indemnifies the other and agrees to hold the
others harmless from all such excluded obligations.
Section 1.02 - Purposes and Scope of the Partnership
The business of the Partnership shall be limited strictly to the
development and management of an outdoor Amphitheater and entertainment facility
to be constructed in Davidson County, Tennessee (hereinafter the "Project") and
in connection therewith the Partnership may purchase, lease, or otherwise
acquire, hold, own, manage, operate, mortgage, sell, convey, exchange, develop,
improve, option, lease, sublease, subdivide, or otherwise dispose of real estate
and related personal property, of every class and description (including without
limitation interests in other corporations, partnerships, joint ventures,
associations and syndicates involved in said activities), and any said estate or
interest therein, including leaseholds, for any term, in any of the states,
districts, territories, or colonies of the United States, and in any and all
foreign countries, subject to the laws of such state, district, territory,
colony, or country and the operation and management thereof for the production
of income and profit, including the payment of all ad valorem taxes,
assessments, and other impositions thereon, preparing detailed plans for the
development thereof, the construction of buildings and other improvements, and
such other activities ordinarily included in the operation and management of
outdoor Amphitheaters and entertainment facilities for the production of income
and profit, and shall not be extended by implication or otherwise except by the
written agreement of the Partners. Except as otherwise expressly and
specifically provided in this Agreement, no Partner shall have any authority to
act for or to assume any obligation or responsibility on behalf of any other
Partner or the Partnership.
Section 1.03 - Name of Partnership
The sole business and affairs of the Partnership shall be conducted solely
under the name of Starwood Amphitheater Operating Company and such name shall be
used at all times in connection with the Partnership business and affairs.
<PAGE>
Section 1.04 - Scope of Partner's Authority
Except as otherwise expressly and specifically provided in this Agreement,
no Partner shall have any authority to act for, or to assume any obligation or
responsibility on behalf of, any other Partner or the Partnership.
Section 1.05 - Principal Place of Business
The principal place of business of the Partnership shall be:
5118 Park Avenue
Memphis, Tennessee 38117
Article II
Management of Partnership
Section 2.01 - Managing General Partner
Pace Productions, Inc. (the Managing General Partner) shall act as the
Managing General Partner of the Partnership subject to and in accordance with
the terms of this Agreement.
Section 2.02 - Duties of Managing General Partner
(a) The Managing General Partner at the expense of, and on behalf of, the
Partnership, shall in good faith use its best efforts to (i) implement or cause
to be implemented all Major Decisions approved by the Executive Committee and
(ii) to conduct or cause to be conducted the day-to-day business and affairs of
the Partnership in accordance with, and as limited by, this Agreement, including
the following:
1. Protect and preserve the assets owned by the Partnership;
2. Render for taxation and pay all ad valorem taxes, assessments, and
other impositions applicable to the property owned by the
Partnership;
3. Negotiate and when approved by the Executive Committee, enter into
and supervise the performance of contracts covering the construction
of improvements;
4. Determine the type and limits of fidelity bonds obtained on various
employees of the Partnership;
5. Keep all books of account and other records of the Partnership;
6. Retain or employ and coordinate the services of all employees and
other persons necessary or appropriate to carry out the business of
the Partnership;
7. To the extent that funds from the Partnership are available
therefor, pay all debts and other obligations of the Partnership,
including all amounts due under financing of improvements, if
applicable, or other loans to the Partnership and costs of operation
and maintenance of the improvements therefore;
8. Maintain all funds of the Partnership held by Executive Committee in
a Partnership account in a bank or banks approved by the Partners;
9. The Managing General Partner shall cause to be prepared and
furnished to each Partner promptly after the close of each calendar
month, and unaudited statement, certified by the Managing General
Partner to be true and correct to the best of its knowledge and
belief, showing the operation of the Partnership for such month, the
unpaid balance due of all obligations of the Partnership, and all
other information reasonably requested by the Partners. The Managing
General Partner shall cause to be prepared and furnished to the
Partners, promptly after the close of each calendar year, all
information necessary for which a balance sheet of the Partnership
dated as of the end of the calendar year, and a related statement of
income or loss for such calendar year may be prepared. The Managing
General Partner shall also cause to be prepared and filed all
applicable partnership tax returns.
10. Make distributions periodically to the Partners, in accordance with
the provisions of this Agreement;
2
<PAGE>
11. Perform other normal business functions and otherwise operate and
manage the day to day business and affairs of the Partnership in
accordance with, and as limited by, this Agreement;
12. Purchase contracts of liability, casualty or other insurance for the
protection of the Partnership the limits of which shall be approved
by the Executive Committee; and
13. Perform other obligations as directed by the Partners and as
provided elsewhere in this Agreement to be performed by the Managing
General Partner.
(b) The Managing General Partner shall be obligated to perform its
responsibilities and obligations hereunder only to the extent that funds of the
Partnership are available therefore.
Section 2.03 - Executive Committee
(a) Disposition of all Major Decisions of the Partnership shall be vested
in an Executive Committee comprised of two (2) groups with Belz as one group and
Pace as a group, each respective group being entitled to one (1) vote upon any
matter required to be approved by the Executive Committee. All Major Decisions
with respect to the overall management and control of the Executive Committee
shall be made and agreed to by the Partners and shall be binding on the
Partnership and all Partners. The Executive Committee shall at all times consist
of 2 members, one to be appointed by each Group. Any member of the Executive
Committee may be removed and replaced at any time by the respective Group that
appointed such member upon written notice of such removal and replacement to the
other Managers. Initially, and until replaced as above, the members for the
Executive Committee shall be:
For Pace: Allen J. Becker
4543 Post Oak Place Dr.
Suite 200
Houston, TX 77027
For Belz: Jack A. Belz
5118 Park Avenue
Memphis, TN 38117
In the event of the death, resignation, or removal of any member of the
Executive Committee, the Partner who appointed such member shall have ten (10)
days within which to appoint a successor member. The Executive Committee, at its
first meeting, shall establish a regular meeting time and place and may also
meet upon ten days' (10) written notice from one Partner to the other Partners.
The Executive Committee shall designate one of its members to serve as Secretary
and it shall be the responsibility of the Secretary to keep the minutes of
meetings and of decisions made pursuant to written approvals and shall timely
furnish copies to all Partners. Except as may otherwise be permitted under this
Agreement or other Agreements approved by the Executive Committee, no action of
the Partnership shall be effective or binding upon the Partnership or any of its
Partners without the vote of both members of the Executive Committee. The
Executive Committee may act without a meeting if action taken is approved in
writing prior to the taking of such action by the members necessary to take such
action at a meeting.
(b) No act shall be taken or sum expended or obligation incurred by the
Partnership, Executive Committee, or any Partner with respect to a matter within
the scope of any of the major decisions ("Major Decisions") affecting the
Partnership, as defined below, unless the Major Decisions have been approved
unanimously by the members of the Executive Committee. The Major Decisions shall
be the following:
1. Purchase of real property;
2. General architectural considerations with respect to the improvement
of the real property owned, leased or acquired by the Partnership;
3. Determining whether or not distribution should be made to the
Partners, as provided by Section 5.03 herein;
4. Financing obtained by the Partnership;
3
<PAGE>
5. Sale, leasing, mortgaging or the placing of any other encumbrance
upon any real property owned or leased by the Partnership;
6. All decisions relative to the use and development of the real
property owned or acquired by the Partnership;
7. Applications for zoning or other arrangements involving the use or
development of the property owned or acquired by the Partnership;
8. The contracting for the construction of any improvements on
Partnership property involving an expenditure of more than
$10,000.00;
9. Terminating or modifying (i) any lease or (ii) any other contract
excluding contracts between the Partnership and entertainers or
performing artists for personal services at the Project which shall
be performed in eight days or less;
10. Approving each Budget pursuant to Section 2.04 herein;
11. Making any expenditure or incurring a sum in excess of $10,000.00
for the transaction or group of similar transactions, provided,
however that this provision shall not apply to contracts with
entertainers or performing artists which are included in the Budget
and shall be performed in eight days or less;
12. Determination of the maximum and minimum working capital
requirements of the Partnership;
13. The adjustment, compromise or settlement of any claim, objection,
debt, demand, suit or judgment against the Partnership in excess of
$10,000.00;
14. Any Agreement, Contract, Lease or other arrangement whether written
or oral with any Partner or any affiliate of a Partner. For the
purpose of this paragraph, Affiliate shall include relatives or
family members of a Partner as well as any entity controlled by a
Partner, or in which a Partner has an equity involvement and shall
include entities related to a Partner;
It is agreed that the exceptions to 2.03 (b) 9 and 11 are for the purpose
of enabling the Managing Partner to implement the day to day operation of the
Project by contracting with performing artists and entertainers. It is the
intention of the Partners, however, to consult on a regular, periodic basis
relative to the type of entertainment to be presented at the Project and general
financial parameters relative thereto. The Managing Partner shall submit for the
approval of the Executive Committee annually, with the Budget provided for in
Section 2.04 hereinbelow, a proposed list of artists and entertainers with whom
it intends to contract during the following year. This listing shall be updated
quarterly and the Managing Partner shall use best efforts not contract with or
employ any artists or entertainers which are objectionable to a member of the
Executive Committee.
Section 2.04 - Budgets
Not less often than once each fiscal year, the Managing General Partner
shall prepare and submit to the Executive Committee for its consideration a
budget ("Budget") setting forth the estimated receipts and expenditures
(capital, operating and other) of the Partnership for the period covered by the
Budget. When approved by the Executive Committee, the Managing General Partner
shall use its best efforts to implement the Budget and shall be authorized
without the need for further approval by the Executive Committee to make the
expenditures and incur the obligations only to the extent as is provided for in
the Budget.
Section 2.05 - Compensation of the Partners
Except as may be expressly provided for herein or hereafter approved by
the Partners, no payment will be made by the Partnership to any Partner for the
services of such Partner or any representative or employee of any Partner nor
shall any Partner receive or retain directly or indirectly any fees for their
services in development, planning, marketing, promotion and operation of the
Project. The Partners agree to devote an appropriate portion of their time and
efforts toward the planning, development, marketing and operation of the
Project. Partners may be reimbursed for their verified out of pocket expenses
4
<PAGE>
incurred in furtherance of the Project provided such expenses are set forth in
the Annual Budget.
Section 2.06 - Contracts with Related Parties
The Partnership shall not enter into any contract, agreement, lease, or
other arrangement for the furnishing to or by the Partnership of goods, services
or space or payment of commission to any party or entity related to or
affiliated with any Partner, or with respect to which any Partner or party or
entity related to or affiliated with any Partner has a direct or indirect
ownership or control unless such contract, agreement, lease or other arrangement
has been approved unanimously by the Executive Committee. There shall be no
disproportionate charges to the Project for any joint services or similar
contracts involving other sites managed or owned by a Partner.
Section 2.07 - Consents and Approval
In any instance under this Agreement in which the consent or approval of a
Partner to any proposed action is required, such consent or approval shall be
deemed to have been given unless written objection to such proposed action,
stating the grounds therefor with particularity, is sent by such objecting
Partner to the other Partner within seven days after receipt of a written
request for such consent or approval.
Article III
Transfer Of Property Or Partner Interests
Section 3.01 - Sale, Assignment, Transfer of Other Disposition
(a) Except as provided in this Article III hereof, no Partner may sell,
transfer, assign or otherwise dispose of, or mortgage, hypothecate, or otherwise
encumber or permit or suffer any encumbrance of all or any part of its interest
in the Partnership unless approved by the Partners and any attempt to so
transfer or encumber any such interest shall be void.
(b) The interest of any Partner in the Partnership may be sold,
transferred, assigned, pledged, encumbered, hypothecated or conveyed upon the
following conditions:
(1) A Partner may sell, transfer or encumber any part of his/its interest
in the Partnership to one or more Partners; provided, however, each other
Partner shall have the primary right to purchase that portion of the
transferred Partnership interest, computed by the proportion which such
Partner's percentage interest bears to the percentage interest of all the
other Partners (excluding the percentage interest of the Partner desiring
to transfer part of his/its interest) and also a secondary right to
purchase any remaining percentage not purchased by the other Partners.
(2) A Partner may transfer all or any portion of his/its interest in the
Partnership by will, or intestacy, to the decedent's heirs, devisees,
administrators or executors, provided that any such devisees, heirs,
administrators or executors shall hold such interest subject to all the
terms and provisions of this Agreement.
(3) Belz shall be permitted to transfer all or a part of its interest to
other members of the Belz family, or entities of which controlling
interest are owned by such member, i.e., from descendants of Philip Belz
or their spouses, without the consent of the other Partner(s) provided the
other Partner(s) are notified at least ten (10) days prior to such
transfer.
(4) Pace shall be permitted to transfer all or a part of its interest to
entities of which a controlling interest is owned by Allen J. Becker or
Sidney Shlenker (or to members of their immediate families or their
spouses, provided that either Allen Becker or Sidney Shlenker continues to
be the managing partner or chief executive officer of the assignee)
without the consent of the other Partner(s) provided the other partner(s)
are notified at least ten (10) days prior to such transfer.
(5) A Partner may sell, transfer, assign, pledge, encumber, hypothe-
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cate or convey all or any part of his interest in the Partnership upon the
written approval of the Partners.
Notwithstanding the foregoing, none of the Partners may, without the consent of
all the Partners, assign its interest in the Partnership if such proposed
assignment, when considered with any other assignment of Partnership interest
during the twelve (12) month period ending on the date of such proposed
assignment, would cause the termination of the Partnership for federal tax
purposes.
Section 3.02 - Right of Sale and First Refusal
(a) If any Partner (hereinafter called the "Selling Party") shall desire
to sell (any type of disposition including any transfer or encumbrance is
hereinafter included in the term "sell" or "sale") all or any portion of its
interest in the Partnership to a person or party in a transaction other than as
may be provided for herein, the Selling Party may consummate such sale only if
it has complied with the following provisions and conditions:
(1) The Selling Party shall deliver to the other Partners, within seven
(7) days of the execution thereof, an executed copy of a bona-fide
written contract with an individual, partnership, firm or corporation.
Such contract shall be unassignable; provide for a closing not less than
thirty (30) or more than one hundred twenty (120) days from the date of
the contract; be accompanied by a good certified or bank cashier's check
for not less than five percent (5%) of the purchase price (which check
shall on request of any Partner be placed in escrow until the closing);
provide for a consideration of the balance of the purchase price to be
paid in cash (all or a portion of which may be represented by a purchase
money mortgage) only, and also be accompanied by a statement, in
reasonable detail, or the personal and financial information relating to
the prospective purchaser. The executed copy of the contract, a copy of
the check, and the statement, shall be accompanied by a request by the
Selling Party to approve such sale or to purchase the Selling Party's
interest in the Partnership as provided in the Contract;
(2) The other Partners shall have the right either (1) to allow the
Selling Party to sell its interest in the Partnership as called for in the
contract, or (ii) to purchase the interest of the Selling Party in the
Partnership as specified in the contract equal to the proportionate
interest of each Partner in the Partnership at the price contained in the
contract and on the other terms and conditions of such contract (except
that the other Partners may pay the entire purchase price in cash at the
closing). Should any of the other Partners elect not to purchase its pro
rata portion of such interest, the remaining Partners may purchase any
such portion, provided however, unless all of the interest of the Selling
Party is purchased by the other Partners, the other Partners shall be
deemed to have allowed the proposed sale; and
(3) The other Partners shall have a period of fifteen (15) days after the
service of the Selling Party's notice specified in subparagraph (1) above
to serve upon the Selling Party a notice which shall specify whether such
Partners shall approve the sale to the prospective purchaser, or whether
such Partners shall purchase the interest of the Selling Party specified
in the contract as provided above. If the other Partners fail to respond
within such time or fail to agree within such time to purchase the
interest of the Selling Party specified in the contract, they shall, if
necessary, execute, acknowledge and deliver such documents, or cause the
same to be done, as shall be required to effectuate the sale of such
interest in accordance with such contract.
Any closing in respect to the sale of the Selling Party's interest in the
Partnership shall be held at the time and place specified in the
bona-fide contract, or as specified by the purchasing Partners, as the
case may be, but in any event within ninety (90) days after the notice
sent to the Partners by the Selling Party. If said sale to a third party
is not completed within said ninety (90) day period, the Selling Party
must again submit the contract (or any new contract) to
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the other Partners, and the other Partners shall have all of the right
provided in this Article 3.02.
(b) If the Selling Party has agreed to pay any commission or fee to any
agent or broker by reason of the sale or proposed sale under this Section, the
Selling Party shall cause said agent or broker to deliver to Selling Party a
certification by the agent or broker as to the identity of all parties who will
share such commission and the respective amounts to be shared. A true and
correct copy of the certification shall also accompany the copy of the bona fide
contract. To the extent that the certification discloses that the broker or
agent will share any part of the commission or fee with the proposed purchaser,
then to the extent permitted by law, the broker shall be required to share the
commission to the same extent with the other Partners. However, in no event
shall the Partnership or the other Partners be required to pay any commission or
fees to any broker or agent.
(c) In the event that the proposed sale is completed pursuant to such
contract, the new Partner shall be a Partner under the terms and provisions of
this Agreement together with all of the rights, duties and obligations
pertaining thereto including the right and restrictions contained in this
Section with respect to further sale, however, no such new Partner shall possess
any rights of management and, in addition, no party shall become such a new
Partner if there has been any change in the identity of the proposed new
Partner, or any substantial change in the terms and conditions of the bona fide
contract or sale unless approved by the Partners.
Section 3.03 - No Right to Partition
No partner shall have the right to partition any property of the
partnership during the term of this Agreement nor shall any partner make
application to any court or authority having jurisdiction in the matter or
commence or prosecute any action or proceeding for partition or the sale
thereof, and upon any breach of the provisions of this paragraph by any partner,
the others, in addition to all rights and remedies in law and in equity they may
have, shall be entitled to a decree or order restraining and enjoining such
application, action or proceeding.
Article IV
Finance
Section 4.01 - Initial Contributions
The initial contributions and interests of the Partners are as follows:
Cash
Contribution
As to Belz Investment Company, Inc. $ 9,400.00
As to Martin S. Belz 600.00
As to Pace: $10,000.00
Belz and Pace shall contribute to the Partnership good, marketable and
insurable fee simple title to acres of real property more particularly
described on Exhibit "A" hereto at a stated and agreed net value to be
reflected in its capital account which is based on a value of $15,000 per
acre.
Section 4.02 - Additional Contributions
(a) If, from time to time, the aggregate of the Partnership net income and
the sums contributed to the Partnership, pursuant to Section 4.01 hereof, are
not adequate to finance the (i) cost of any property acquisition, development or
any improvements, (ii) operating deficits, and (iii) other sums of money
required to be expended in connection with the business and affairs of the
Partnership, then from time to time, as required by the vote of the Executive
Committee, the Partners, in their respective Ownership Percentage, shall
contribute to the Partnership such additional capital as may be required to
finance the expenditures referred to in subsections (i) through (iii) of Section
4.02. The amounts so contributed shall be credited to the Partners' respective
capital accounts. The need for additional capital, the amount of
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additional capital required and the time for contribution of such additional
capital shall be determined from time to time by the Executive Committee and
written notice thereof shall be given to all Partners at least thirty (30) days
prior to the time payments are required. Each Partner shall, within the time
prescribed by the Executive Committee, contribute such amount of additional
capital as his then current Ownership Percentage bears to the total additional
capital then being contributed by all Partners.
(b) In the absence of Executive Committee requirement, as aforesaid, the
Partners shall make additional capital contributions (the "Additional
Contributions") to the Partnership in proportion to their Percentage Interests
after written notice from any Partner to the other Partners of the total amount
of capital contribution which is required in order for the Partnership to have
at least Ten Thousand Dollars ($10,000.00) in cash on hand for general working
capital or for the Partnership to make any payment required to cure or prevent
default under any obligation of the Partnership (provided said obligation was
incurred with approval of the Executive Committee) or any payment to prevent
execution on any judgment obtained against the Partnership or any property of
the Partnership provided the property was acquired with approval of the
Executive Committee. Within ten (10) days after receipt of notice from any
Partner pursuant to Section 8.01 for a call for Additional Contributions or a
decision is reached pursuant to this Article for Additional Contributions, each
Partner agrees to contribute to the Partnership an amount equal to the product
of his Percentage Interest (in effect at the time of such notice) multiplied by
the aggregate amount of such Additional Contribution required by the
Partnership. Each Partner shall be personally liable to the Partnership for his
share of the Additional Contribution. The amounts so contributed shall be
credited to the Partners' respective capital accounts.
(c) No interest shall accrue to be paid on any capital contributions to
capital made by any Partner.
(d) In the event a Partner ("Non-Contributing Partner") does not
contribute his entire pro-rata share of additional capital as is required by
this Section, such of the other Partners as shall have contributed their
pro-rata share of such additional capital, may, on a pro rata basis, contribute
such Non-Contributing Partners uncontributed amount of additional capital. In
such an event, the contributing Partner or Partners may by reason of their extra
contribution, acquire a portion of the Non-Contributing Partner's interest in
the Partnership which portion shall be that portion required to cause each
Partner's interest in the Partnership to be in precise proportion to each
Partner's total contribution to the Capital of the Partnership (including the
initial contribution to the capital of the Partnership). The failure of a
Partner to contribute such additional sums of money shall be considered a
default only in event the other Partners shall fail or refuse to contribute such
Non-Contributing Partner's share of additional capital as hereinabove set forth.
(e) Any advances of money to the Partnership by any Partner in excess of
its agreed capital contribution may at the option of the Partner so advancing
the funds be deemed a loan to the Partnership by said Partner, to be repaid by
the Partnership on a bear interest, at the same rate as the prime rate as set by
First Tennessee Bank, for 12 months. If said loan is not repaid to the Partner
by the Partnership within a period of 12 months then such sum shall cease to be
a loan and shall immediately become a capital contribution by said Partner to
the said Partner's capital account and the provision of Article Four (b) shall
be applicable.
(f) The Partnership shall endeavor to obtain the most favorable financing
arrangements for improvements to be constructed by the Partnership, including
non-recourse financing when available. To the extent that guarantees of
indebtedness may be required in connection with financing of improvements, such
guarantees shall be in proportion to the Partnership interests of the individual
Partners and not joint and several guarantees unless otherwise agreed by the
Executive Committee.
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Article V
Accounting and Distributions
Section 5.01 - Ownership of Partnership
The Partnership shall be owned initially by the Partners in the percentage
interest (hereinafter referred to as "Ownership Percentage") set forth opposite
each of their names below, to wit:
Ownership
Percentage
----------
PACE PRODUCTIONS, INC. 50
MARTIN S. BELZ 3
BELZ INVESTMENT COMPANY, INC. 47
Section 5.02 - Tax Status, Allocations, and Reports
(a) Any provision hereof to the contrary notwithstanding, solely for the
United States federal income taxes purposes, each of the Partners hereby
recognizes that the Partnership will be subject to all provisions of subchapter
K of chapter 1 of subtitle A of the United States Internal Revenue Code of 1954;
provided, however, the filing of a U. S. Partnership Return of Income shall not
be construed to extend the purposes of the Partnership or expand the obligations
of the Partners. At the request of any Partner, the Partnership shall file an
election under Section 754 of the United States Internal Revenue Code of 1954.
All of the partners shall share in the property and capital of the Partnership
in the proportions set forth in Section 5.01, opposite their respective names,
and subject to the terms and conditions hereinafter provided, each class or item
of income, gain, loss, deduction, or credit of the Partnership shall be
allocated in the proportions set forth in Section 5.01 and all available cash,
irrespective of how realized, shall be distributed as provided in Section 5.03.
(b) The Managing General Partner shall prepare or cause to be prepared all
tax returns and statements, if any, which must be filed on behalf of the
Partnership with any taxing authority, and shall submit such returns and
statements to all of the Partners for their approval prior to filing, and upon
approval thereof by all the Partners, make timely filing thereof.
(c) For accounting and federal and state income tax purposes, except as
herein and otherwise specifically provided, all income, deductions, credits,
gains and losses of the Partnership shall be allocated to the Partners in the
Ownership Percentage, provided, however, if the computation of the amount of any
such item uses a basis of property transferred to the Partnership by a Partner
different from the tax basis of such property the difference between such amount
and the amount of such item computed by using the tax basis of such property
shall be allocated for tax purposes to the Partner transferring such property to
the Partnership. Any item which is stipulated to be an expense of the
Partnership under the terms of this Agreement or which would be so treated in
accordance with generally accepted accounting principles shall be treated as an
expense of the Partnership for all purposes hereunder, whether or not such item
is deductible for purposes of computing net income for federal income tax
purposes.
Section 5.03 - Distribution to the Partners
(a) At the end of each calendar quarter, the Executive Committee shall
determine reasonable working capital requirements of the Partnership to service
the debt and other obligations of the partnership. The terms "Distributable
Funds" shall mean the amount by which the total of the cash owned by the
Partnership from time to time is in excess of the sum of the reasonable working
capital requirements of the Partnership, and the outstanding loans by the
Partners to the Partnership.
(b) Within 90 days after the end of each twelve month period for which it
has been determined pursuant to Section 5.03 (a) hereof that Distributable Funds
exist, such Distributable Funds shall be distributed to the Partners in their
respective Ownership Percentage, without regard to the Partner's capital
account, except as provided in 5.03(c) hereinbelow.
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(c) In the event that the Partners agree to sell, finance or refinance all
or any portion or any interest in the property of the Partnership, then in such
event, the net proceeds of such sale or excess proceeds of financing or
refinancing (except for the part thereof required to be paid to any mortgagees
or third party creditors) shall be distributed first to reduce the outstanding
loans (principal and interest) made by the Partners to the Partnership pursuant
to Section 4.02 and only thereafter to reduce the capital accounts to levels
proportionate to the Partners respective percentage interests in the Partnership
and, if funds are available, to the Partners in accordance with their percentage
interests.
Section 5.04 - Accounting
(a) The fiscal year of the Partnership shall end on the last day of
December.
(b) The books of the Partnership shall be kept and maintained by the
Managing Partner at all times at the place or places approved by the Partners.
The books of account shall be maintained on an accrual basis in accordance with
generally accepted accounting principles, consistently applied and shall show
all items of income and expense, with tax matters to be determined by the
Managing Partner.
(c) The Managing General Partner, at the expense of the Partnership, shall
prepare or cause to be prepared and furnish to each of the Partners promptly
after the close of each calendar with an unaudited statement, certified by the
Managing Partner to be true and correct to the best of its knowledge and belief,
showing the operation of the Partnership for such month, the balance in each
Partner's capital account, the unpaid balance due under all obligations of the
Partnership, and all other information reasonably requested by any Partner. The
Managing General Partner shall cause to be prepared and furnished, at the
expense of the Partnership, to the Partners promptly after the close of each
fiscal year, a balance sheet of the Partnership dated as of the end of the
fiscal year, a related statement of income or loss for the Partnership for such
fiscal year; and the same information for the fiscal year as is required to be
included in the aforesaid monthly reports, all of which shall be prepared in the
customary manner by an independent public accountant appointed by the Executive
Committee.
(d) Each Partner shall have the right at all reasonable times during usual
business hours to audit, examine and make copies of, or extracts from, the books
of account and other corporate records of the Partnership. Such right may be
exercised through any agent or employee of such Partner designated, in writing,
by it or by an independent public accountant, designated, in writing, by such
Partner. Each Partner shall bear all expenses incurred in any examination made
by such Partner.
Section 5.05 - Gain or Loss or Disposition of Property Contributed by Partner.
If property which was contributed by an partner is sold and a taxable gain
or loss is realized thereon, such taxable gain or loss shall be allocated solely
to that partner to the extent of the difference between the agreed value of such
property at the time that it was contributed to the partnership and the tax
basis of such property at said time. Any additional gain or any loss realized
upon sale or other disposition of the property shall be allocated to all
partners in accordance with their ownership percentage.
Article VI
Term and Termination
Section 6.01 - Term
The Partnership shall be in effect for a term beginning on the date hereof
and shall continue until the earlier of September 1, 2064 or such time as it is
terminated and liquidated in accordance with the provisions hereof. All
provisions of this agreement relative to termination and liquidation shall be
cumulative; that is, the exercise or use of one of the provisions hereof shall
not preclude the exercise or use of any other provisions hereof.
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Section 6.02 - Automatic Termination
(a) If any of the following events shall occur, namely:
(1) If any Partner shall file a voluntary petition in bankruptcy or shall
be adjudicated a bankrupt or insolvent, or shall file any petition or
answer seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under the present or
any future United States Bankruptcy Code or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency, or other relief for debtors or shall seek or consent to or
acquiesce in the appointment of any trustee, receiver, conservator, or
liquidator of said Partner or of all or any substantial part of its
properties or its interest in the Partnership (the term "acquiesce"
includes, but is not limited to, failure to file a petition or motion to
vacate or discharge any order, judgement, or decree providing for such
appointment within ten days after the appointment); or
(2) If a court of competent jurisdiction shall enter an order, judgement,
or decree approving a petition filed against any Partner seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under the present or any future Federal
Bankruptcy Act, or any other present or future applicable federal, state
or other statute, or law relating to bankruptcy, insolvency, or other
relief for debtors, and said Partner shall acquiesce in the entry for such
order, judgement, or decree (the term "acquiesce" includes, but is not
limited to, the failure to file a petition or motion to vacate or
discharge such order, judgement or decree within ten days after the entry
of the order, judgement or decree), or such order, judgement, or decree
shall remain unvacated and unstayed for an aggregate of 90 days (whether
or not consecutive) from the date of entry thereof or any trustee,
receiver, conservator, or liquidator of said Partner or of all or any
substantial part of its property or its interest in the Partnership shall
be appointed without the consent or acquiescence of said Partner and such
appointments shall remain unvacated and unstayed for an aggregate of 60
days (whether or not consecutive); or
(3) Any Partner shall admit in writing its inability to pay its debts as
they mature; or
(4) Any Partner shall give notice to any governmental body of insolvency
or pending insolvency, or suspension or pending suspension of its
operation; or
(5) Any Partner shall make an assignment for the benefit of creditors or
take any similar action for the protection or benefit of creditors; or
(6) Any Partner shall cause the partnership to be dissolved by reason of
any "cause of dissolution" as defined in the Tennessee Uniform Partnership
Act;
(7) Any Partner shall cease to be a Partner immediately upon adjudication
of incompetency or insanity and the Partnership shall terminate.
(8) Upon dissolution or liquidation of a Corporate Partner, the
Partnership shall terminate.
Then and in any such event but except as provided in Section 6.02(b)
hereof, the Partnership shall terminate automatically, and any Partner causing
such termination shall be deemed to be the "Withdrawing Party", as of the date
of occurrence of the respective event of termination.
(b) Notwithstanding the preceding, the Partner(s) whose actions did not
trigger any event of termination set forth in (1) through (6) hereinabove, may
elect to continue the Partnership by providing written notice of its intention
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within thirty (30) days of the act which would otherwise have occasioned the
automatic termination.
(c) Death. In the event a Partner is an individual, upon the death of a
Partner, his legal representative, or his heir of his Partnership interest if
that interest shall be bequeathed to a specific heir, shall continue as a
Partner in the Partnership or may sell the interest therein for the heir's
benefit or the benefit of the deceased Partner's estate pursuant to Article III.
The election to exercise the option to continue as a Partner shall be made
within three (3) months of the death of a Partner by providing the
surviving Partners with written notice of that intention. The election to
continue shall substitute the heir or legal representative as a full
Partner, with all rights, powers, and duties of a Partner, and the heir or
legal representative shall acknowledge compliance in writing with the
Partnership Agreement.
An election not to continue as a Partner shall result in the sale of the
deceased Partner's interest to the Partnership, and the purchase price
shall be paid by the surviving Partners within forty-five (45) days after
notice of that election.
6.03 - Liability of Partner on Withdrawal or Termination
Subject to the provisions of Article 6.04 and the following paragraph,
upon the termination of a Partner due to any of the events referred to in
Article 6.02 of this Agreement, its liability as a Partner shall cease as to any
obligation not then accrued and the Partnership shall promptly take all steps
reasonably necessary under the Act to cause such cessation of liability.
Notwithstanding the provisions of the preceding paragraph, if the
Partnership does not continue pursuant to the provisions of Article 6.02 (b) or
6.04(c), the liability of the terminated Partner shall continue for purposes of
the winding up of the Partnership pursuant to Article 6.04(b) of this Agreement.
The Partner as to whom the Event of Dissolution has occurred (such Partner
being referred to as the "Withdrawing Partner") shall immediately cease to be a
Partner and shall have no right to participate in the management and control of
the Partnership, and the remaining Partner or Partners, as the case may be, may
send such notices of the dissolution to such persons and entities as the
remaining Partner or Partners, as the case may be.
The remaining Partner or Partners, as the case may be, shall settle the
business of the Partner as expeditiously as its nature will permit and account
for the interests of the Partners. Such settlement procedure may include, but
shall not be limited to, a purchase by the remaining Partner of the Distribution
Percentage Interest of the Withdrawing Partner at a price determinated in
accordance with an appraisal or appraisals of the interest of the Withdrawing
Partner made by three generally recognized competent real estate appraisers in
the area, one selected by each Partner and the third selected by the appraisers
selected by the Partners, a public sale of all or any part of the assets of the
Partnership, a winding up the Partnership, or, after causing the Partnership to
convey the Property and improvements to the Partners (including the Withdrawing
Partner) as tenants-in-common in accordance with the respective Distribution
Percentage Interests, a petition to a court of appropriate jurisdiction
requesting that such court supervise and approve a partitioning of the Property
and Improvements.
The prior written consent of the remaining Partner or Partners, as the
case may be, shall be required prior to any consent to any administration of the
Property and Improvements by any referee, trustee or court of bankruptcy.
The remaining Partners shall have the right at all times to continue the
business and affairs of the Partnership.
6.04 - Dissolution and Winding Up of the Partnership
a. Dissolution of the Partnership.
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1. Except as otherwise provided in Article 6.02 and 6.03 of this
Agreement, the termination of a Partner due to any of the events referred
to in Article 6.02(a) of this Agreement shall cause a dissolution of the
Partnership.
2. The Partnership shall also be dissolved upon (i) the unanimous vote to
do so of the Partners (ii) the expiration of the term of the Partnership,
or (iii) the sale of the Property in its entirety.
b. Winding up of the Partnership. Upon the dissolution of the Partnership,
the Partners shall take full account of the Partnership's assets and liabilities
and the assets shall be liquidated as promptly as is consistent with obtaining
the fair value thereof, and the proceeds therefrom, to the extent sufficient
therefor, shall be applied and distributed in the following order, unless
otherwise required by the Act;
1. To the payment and discharge of all of the Partnership's debts and
liabilities to creditors and persons other than Partners;
2. To the payment and discharge of all of the Partnership's debts and
liabilities to the Partners other than on account of their Capital
Contributions and share of the profits of the Partnership;
3. To the Partners in liquidation of their capital accounts, all such
distributions to be proportionate of their capital accounts immediately
prior to such distributions;
4. The balance, if any, to the Partners in proportion to their Partnership
Percentage;
Nothing contained in the Agreement shall prohibit the Partners from
purchasing any assets of the Partnership upon dissolution.
c. Continuation of Partnership upon Dissolution. Notwithstanding the
withdrawal or termination of a Partner pursuant to Article XII or the
dissolution of the Partnership due to the provisions of Article XIII(1a) or
Article XIII(1b) of this Agreement, the Partners may, within a period of three
(3) months after any of the listed events, by an affirmative vote of Partners,
elect to continue the Partnership. Thereupon, the Partnership shall continue
until the end of the term for which it is formed or until the occurrence of one
of the listed events, in which event the Partners shall again elect whether to
continue the Partnership. This Agreement shall be amended to reflect such
continuation.
ARTICLE VII
Arbitration
7.01 In the event the members of the Executive Committee are unable to
agree upon a matter requiring the Executive Committee approval, any member of
the Executive Committee may submit such matter for arbitration in accordance
with terms of this Article. The initiating member shall notify the other members
of the Executive Committee and in such notice shall designate the first
arbitrator. Within five (5) days after the giving of such notice, the other
member shall designate, in a written notice, the second arbitrator. If the party
entitled to do so fails to timely designate the second arbitrator, the first
arbitrator shall proceed to determine the matter of valuation at issue. If a
second arbitrator is designated, the arbitrators shall meet within five (5) days
after the designation of the second arbitrator and select a third arbitrator
within five (5) days. A decision of the arbitrators so chosen shall be given
within a period of fifteen (15) days after the appointment of the third
arbitrator. A decision in which any two arbitrators shall have concurred shall
be binding and conclusive on the parties hereto or if no two arbitrators concur,
then the average of the two closest mathematical determinations shall constitute
the decision of all three arbitrators and shall be similarly binding and
conclusive as to the matters which are subject to mathematical resolution. If
any arbitrator shall fail, refuse or become unable to act, a new arbitrator
shall be appointed in his place following the same method as was originally
followed with respect to the arbitrator to be replaced. The Partnership shall
pay the fees and expenses of arbitration. All hearing and proceedings held and
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all investigations and actions taken by the arbitrators shall take place in
Nashville, Tennessee. Any arbitrator designated to serve in accordance with the
provisions of this Section 7.01 shall be qualified to appraise commercial real
estate in the county and state where the property subject to the disagreement is
located (or if the disagreement does not involve a particular jurisdiction in
Tennessee) of the type described in this Partnership Agreement, shall be a
member of the American Institute of Real Estate Appraisers or any successor
association or body of comparable standing if such institute is not then in
existence and shall have been actively engaged in the appraisal of similar real
estate in Tennessee for a period of not less than five (5) years immediately
preceding such arbitrator's appointment. Except as expressly provided for
herein, no dispute or controversy shall be settled or determined by arbitration.
Article VIII
General
Section 8.01 - Notices
All notices, demands, or requests provided for or permitted to be given
pursuant to this Agreement must be in writing. All notices, demands and requests
to be sent pursuant hereto shall be deemed to have been properly given or served
by depositing the same in the United States mail, post paid and registered or
certified with return receipt requested at the following addresses:
Mr. Allen J. Becker
Pace Productions, Inc.
4543 Post Oak Drive
Suite 200
Houston, TX 77027
Mr. Martin S. Belz
P.O. Box 171199
5118 Park Avenue
Memphis, TN 38117
Mr. Jack A. Belz
Belz Investment Company, Inc.
5118 Park Avenue
Memphis, TN 38117
(b) All notices, demands, or requests shall be effective upon being
deposited in the United States mail; however, the time period in which a
response to any such notice, demands, or request must be given shall commence to
run from the date of receipt on the return receipt of the notice, demand, or
request by the addressee thereof.
(c) By giving to the other party at least seven days' written notice
thereof, the parties hereto and the respective successors and assigns shall have
the right from time to time at any time during the time of this Agreement to
change their respective addresses and each shall have the right to specify at
its address any other address within the United States of America.
(d) No assignee of any interest by an Partner shall be entitled to receive
a notice independent of the notice sent to the Partner making such transfer. A
notice sent or made to a Partner shall be deemed to have been sent and made to
all assignees, if any, to such Partner.
(e) All payments to be made pursuant hereto to any Partner shall be made
at the address as provided herein for such Partner. All such payments shall be
effective upon receipt.
Section 8.02 - Insurance
(a) The Partnership shall carry and maintain in force such insurance as
may be required, including, but not limited to, the following insurance, the
premiums of which shall be a cost and expense to be borne by the Partnership;
(i) Workmen's Compensation
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(ii) Comprehensive general liability insurance on an "occurrence" basis
for the benefit of the Partners as named insureds against claims for
"personal injury", including without limitation, bodily injury,
death, or property damage.
(iii) Hazard insurance on physical improvements situated upon the
Property.
The limits of liability and insurance coverages shall be approved by the
Executive Committee.
Section 8.03 - Entire Agreement
This Agreement contains the entire agreement between the parties hereto
relative to its formation of this Partnership. No variation, modifications, or
changes herein or hereof shall be binding upon any party hereto unless set forth
in a document duly executed by, and on behalf of, such parties.
Section 8.04 - Waiver
No consent or waiver, expressed or implied, by and Partner to or of any
breach or default by the other in the performance by the other of its
obligations hereunder shall be deemed or construed to be a consent or waiver to
or of any other breach or default in the performance by such other party of the
same or any other obligations of such Partner hereunder. Failure on the part of
any Partner to complain of the act or failure to act of any other Partner or to
declare any other Partner in default, irrespective of how long such failure
continues, shall not constitute a waiver by such Partner of its rights
hereunder.
Section 8.05 - Severability
If any provision of this Agreement or the application thereof to any
person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provisions to other
persons or circumstances shall not be effected thereby and shall be enforced to
the greatest extent permitted by law.
Section 8.06 - Binding Agreement
Subject to the restrictions on transfers and encumbrances set forth
herein, this Agreement shall inure to the benefit of and be binding upon the
undersigned Partners and their respective legal representatives, successors and
assign. Whenever, in this Agreement a reference is made to any party or Partner
is made, such reference shall be deemed to include a reference to the legal
representatives, successors and assigns of such party or Partner.
Section 8.07 - Miscellaneous
a. Financial Assets. As soon as reasonably practicable after the end of
each fiscal year, but not later than 45 days following the close of such fiscal
year, each Partner shall be furnished with a copy of a balance sheet of the
Partnership as of the last day of such fiscal year and statements of income or
loss, source and application of funds, and cash flow of the Partnership for such
year, and a statement showing the amounts allocated to or allocated against such
Partner pursuant to the Agreement during or in respect of such year, and any
items of income, deduction, credit or loss allocated to such Partner for
purposes of the Internal Revenue Code of 1954, as amended, and any applicable
state or local income tax laws.
b. Annual Reports. The financial statements provided for in this Agreement
shall be accompanied by a report in reasonable detail, containing a description
of activities of the Partnership during such year. Such report shall set forth
the distributions to the Partners during such year and shall separately identify
distributions from (i) cash flow from operations during the year, (ii) cash flow
from prior periods and (iii) proceeds from any financing or disposition of
Partnership assets.
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c. Fiscal Year. The fiscal year of the Partnership shall be the calendar
year.
d. Banking. All funds of the Partnership shall be initially deposited in a
separate bank account or accounts or in an account or accounts of a savings and
loan association as shall be determined by the General Partners, but such funds
may be invested in any manner as determined by the General Partners, consistent
with their obligations under this Agreement.
e. Tax Election. Upon the transfer of an interest in the Partnership or in
the event of a distribution of the Partnership's property, the Partnership shall
elect pursuant to Section 754 of the Internal Revenue Code of 1954, as amended,
to adjust the basis of the Partnership's property as allowed by Sections 734(b)
and 743(b) thereof.
f. Tax Returns. The General Partners shall, for each fiscal year, file on
behalf of the Partnership a Partnership return within the time prescribed by law
(including any extensions) for such filing. The General Partners shall also file
on behalf of the Partnership such state and/or city income tax returns as may be
required by law. The Schedule K-1, Form 1065 for each taxable year shall be
supplied to each Partner by March 1st of the following year.
IN WITNESS WHEREOF, this Agreement is executed effective as of the date
set forth herein above.
BELZ INVESTMENT COMPANY, INC. PACE PRODUCTIONS, INC.
BY: /s/ Jack A. Belz BY: /s/ Allan J. Becker
-------------------------- --------------------------
Jack A. Belz, President Allan J. Becker, President
/s/ Martin S. Belz
--------------------------
Martin S. Belz
16
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FIRST AMENDMENT TO PARTNERSHIP AGREEMENT
OF
STARWOOD AMPHITHEATER OPERATING COMPANY
This Agreement made and entered into this 15th day of June, 1986 by and
among BELZ INVESTMENT COMPANY, INC., a Tennessee corporation, having an address
at 5118 Park Avenue, Memphis, Tennessee 38117 ("Investment Company"), and MARTIN
S. BELZ having an address at 5118 Park Avenue, Memphis, Tennessee 38117
("Belz"), BELZ-STARWOOD, INC., a Tennessee corporation having an address at
5118 Park Avenue, Memphis, Tennessee 38117 ("Belz-Starwood"), and PACE
PRODUCTIONS, INC., a Texas corporation having an address at 4543 Post Oak Drive,
Suite 200, Houston, Texas 77027 ("Pace").
W I T N E S S T H:
WHEREAS, Investment Company, Belz and Pace are parties to the Partnership
Agreement (the "Agreement") of Starwood Amphitheater Operating Company (the
"Partnership"); and
WHEREAS, Investment Company and Belz desire to assign their interests in
the Partnership to Belz-Starwood, in accordance with their respective Ownership
Percentages (as defined in the Agreement) in the Partnership. Pace has agreed to
consent to such assignment as hereinafter set forth; and
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein, the parties hereby agrees as follows:
1. ASSIGNMENT, CONSENT AND ASSUMPTION. Belz and Investment Company hereby
assign, transfer, set over and deliver unto Belz-Starwood all of their
respective right, title and interest in and to the Partnership. Pace hereby
consents to the aforesaid assignment by Belz and Investment Company, and
Belz-Starwood hereby expressly agrees to assume the obligations of Belz and
Investment Company under the Agreement as amended hereby, and to be obligated by
all of its terms, as if a signatory thereto.
2. AMENDMENT TO AGREEMENT. The Agreement is hereby amended as follows:
A. The first paragraph of the Agreement shall be deleted in its entirety
and the following shall be inserted in its place:
This Agreement made and entered into this 28th day of February, 1986 by
and between BELZ-STARWOOD, INC., a Tennessee corporation having an address at
5118 Park Avenue, Memphis, Tennessee 38117, hereinafter referred to as "Belz"
and PACE PRODUCTIONS, INC., a corporation organized under the laws of the State
of Texas, hereinafter referred to "Pace", as the original partners each
hereinafter referred individually as "Partner" or collectively as "Partners".
B. In section 5.01 of the Agreement, the chart setting forth Ownership
Percentages is hereby deleted in its entirety and the following new chart is
hereby inserted in its place;
Ownership Percentage
PACE PRODUCTIONS, INC. 50
BELZ-STARWOOD, INC. 50
C. In section 801 of the Agreement, the addresses for Martin S. Belz and
Belz Investment Company, Inc. shall be deleted in their entirety and the
following shall be inserted in lieu thereof;
Mr. Jack A. Belz
Belz-Starwood, Inc.
5118 Park Avenue
Memphis, TN 38117
3. AGREEMENT TO CONTINUE AS AMENDED. Except as modified by this Amendment,
the Agreement shall remain in full force and effect after the date
<PAGE>
hereof. Terms used in and not otherwise defined herein shall have the meanings
respectively given them in the Agreement.
4. GOVERNING LAW. This Amendment shall be construed in accordance with and
governed by the laws of the State of Tennessee.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
/s/ Martin S. Belz
-----------------------------
Martin S. Belz
BELZ INVESTMENT COMPANY, INC.
By: /s/ Jimmie D. Williams
-------------------------
Jimmie D. Williams, Vice President
BELZ-STARWOOD, INC.
By: /s/ Jimmie D. Williams
-------------------------
Jimmie D. Williams, Vice President
PACE PRODUCTIONS, INC.
By: /s/ Allen J. Becker
-------------------------
Allen J. Becker, President
2
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PARTNERSHIP AGREEMENT
FOR
CORAL SKY AMPHITHEATER PARTNERSHIP
This Partnership Agreement ("Agreement") is made and entered into this
11th day of June, 1997 but made effective as of the 15th day of May, 1996, by
and between PAVILION PARTNERS, a Delaware general partnership, and CDC/SMT,
INC., a Florida corporation. For and in consideration of the mutual covenants
herein contained, the parties to this Agreement hereby form and create a general
partnership, under and pursuant to the Partnership Act for the purposes and upon
the terms, provisions, and conditions as hereinafter set forth:
ARTICLE I
Definitions
Capitalized terms used in this Agreement shall have the respective
meanings indicated in the glossary of terms attached hereto as Exhibit "A".
ARTICLE II
Name of Business; Offices
2.01 Partnership Name. The name of the Partnership shall be Coral Sky
Amphitheater Partnership. In addition to the foregoing name, the activities and
business of the Partnership may be conducted, in the Managing Partner's
reasonable discretion, under such name or names as may be designated from time
to time by the Managing Partner. The Partners shall execute and file such
certificates, if any, as are required by the provisions of any assumed name law
or statute in any jurisdiction in which the Partnership conducts business, as
may be required to reflect the Partnership's operation under such names.
2.02 Partnership Offices. The principal place of business of the
Partnership shall be at 515 Post Oak Blvd., Suite 300, Houston, Texas 77027. The
Partnership shall also maintain an office at the Amphitheater.
ARTICLE III
Purpose and Power of the Partnership
3.01 Purposes. The character and purposes of the specific business to be
conducted by the Partnership are (i) to lease, operate, use and maintain the
Amphitheater and (ii) to perform
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and fulfill all obligations and duties of the "Tenant" under the terms and
provisions contained in the Lease Agreement and (iii) to take any and all other
actions which may be incidental to or otherwise reasonably related to the
foregoing business and purposes.
3.02 Powers. The Partnership shall have the power, in fulfilling the
purposes set forth in Section 3.01, to conduct any business or take any action
which is lawful and which is not prohibited by the Partnership Act.
ARTICLE IV
Term of Partnership
The Partnership shall begin on the date first set forth above and shall
continue for a term of sixty (60) years from such date unless sooner dissolved
pursuant to Section 17.01 or by operation of law.
ARTICLE V
Contributions to Partnership
5.01 Pavilion's Initial Contribution.
(a) Upon execution of this Agreement, Pavilion shall convey, and
does hereby convey, to the Partnership all of its rights, titles and
interests in and to the Amphitheater including, without limitation, the
leasehold estate created pursuant to the Lease Agreement and all of the
rights, privileges and appurtenances appertaining thereto, subject to the
following provisions:
(1) The conveyance of Pavilion's interest in and to the
Amphitheater is being made subject to the following provisions:
(A) Except for the express representations set forth
below, the conveyance of the Amphitheater to the Partnership
is being made on an "AS IS, WHERE IS" basis with no
representations or warranties from Pavilion of any kind, type
or nature, express or implied.
(B) Subject to clause (1)(C), the conveyance of the
Amphitheater to the Partnership is being made subject to (i)
all of the Permitted Encumbrances and (ii) any claims of third
parties, known or unknown, which may have arisen as a part of
the process of developing and constructing the Amphitheater.
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<PAGE>
(C) Notwithstanding the foregoing, Pavilion represents
and warrants to Cellar Door that it has not previously
executed or entered into a written agreement with any other
party granting an ownership or possessory interest in the
Amphitheater, other than (i) the sublease rights granted to
Fine Host Corporation for the purpose of operating a food and
beverage concession business at the Amphitheater, (ii) event
rentals in the ordinary course of business, (iii) the creation
of certain signage rights in favor of sponsors in the ordinary
course of business and (iv) similar operational agreements
made in the ordinary course of business.
(2) In regard to the foregoing, Cellar Door does hereby
acknowledge, stipulate and agree that it (A) has been given an
opportunity, in regard to the development and construction of the
Amphitheater, to review, at the expense of the Partnership, the
files and records of Pavilion to its satisfaction and has been
provided copies of all documents, instruments and records which it
has requested from Pavilion, (B) is a sophisticated and experienced
owner, operator and manager of entertainment facilities similar to
the Amphitheater and therefore capable of assessing the risks and
benefits of making this investment in the Partnership and (C) is
willing to accept its Percentage Interest of all of the risks, known
and unknown, which are or may be attendant to the development,
construction and subsequent operation of the Amphitheater.
(3) In connection with the conveyance of Pavilion's interest
in and to the Amphitheater to the Partnership, Pavilion does hereby
represent and warrant as follows:
(A) To the Current Actual Knowledge of Pavilion, there
are no Hazardous Substances which have been disposed of, or
otherwise released, on or under the real property on which the
Amphitheater is located.
(B) To the Current Actual Knowledge of Pavilion, neither
Pavilion nor any of its property is currently involved in any
litigation at law or in equity, or any proceeding before any
court, or by or before any governmental or administrative
agency, federal, state or local, which would have a material
adverse effect on Pavilion's ownership interest in and to the
Amphitheater.
(C) To the Current Actual Knowledge of Pavilion, the
terms and provisions of this Agreement will not (i) result in
the breach of any of the terms, conditions or provisions of,
or conflict with or constitute a default in, or result in the
creation of any lien, charge or encumbrance upon all or any
portion of the Amphitheater pursuant to, any indenture,
mortgage, deed of trust, agreement, license or other
instrument to which Pavilion is a party or by which it may be
bound, (ii) violate any of the provisions of its
3
<PAGE>
Partnership Agreement, any statute or any applicable order,
writ, injunction, judgment or decree of any court, or any
order or other rule or governmental regulation applicable to
Pavilion or (iii) require any consent, approval or
authorization of, or any declaration or filing with, any
governmental authority.
(D) Except for those contracts listed on Exhibit "D"
attached hereto, to the Current Actual Knowledge of Pavilion
there are no material contracts or agreements (other than
event related agreements and contracts) with a term greater
than one (1) year which relate to or affect the ownership,
operation, use, maintenance or other exploitation of the
Amphitheater.
Upon execution hereof, Pavilion shall (i) execute such further deeds,
bills of sale, assignment of leases and other conveyancing documents as
may be required by Cellar Door to more fully effect and complete the
assignment made pursuant to the provisions of this Section 5.01(a) in a
manner consistent with the provisions contained herein and (ii) acquire,
at the cost of the Partnership, a new Leasehold Owner's Title Policy in
the name of the Partnership in substantially the same form as the Title
Policy attached hereto as Exhibit "E".
(b) It is hereby specifically agreed by and between the Partners
that the fair market value of the assets being conveyed by Pavilion to the
Partnership pursuant to Section 5.01(a) is equal to $10,858,577
("Pavilion's Gross Contribution Amount"), being calculated as (i)
$11,458,577 (the Total Project Cost) minus (ii) $600,000 (the portion of
the Total Project Cost attributable to the food service equipment
purchased by the Amphitheater's food and beverage concessionaire).
(c) Following completion of the contribution required to be made by
Pavilion pursuant to the provisions of Section 5.01(a), (i) Pavilion shall
be deemed to have made a capital contribution to the Partnership in an
amount equal to Pavilion's Initial Balance and (ii) the initial balance of
Pavilion's Capital Account shall be equal to Pavilion's Initial Balance.
As used herein, the term "Pavilion's Initial Balance" shall mean the
amount by which Pavilion's Gross Contribution Amount exceeds the sum of
(i) $7,701,501, the principal balance of the Senior Debt as of the date of
this Agreement, (ii) $538,289, the principal balance of the Pavilion Loan
as of the date of this Agreement and (iii) $900,000, the principal balance
of the loan payable to the Amphitheater's food and beverage
concessionaire. Pavilion's Initial Balance therefore is the pecuniary sum
of $1,718,787.
5.02 Cellar Door's Initial Contribution and Distribution to Pavilion.
(a) Upon execution hereof, but subject to the provisions of clause
(d) of this Section 5.02, Cellar Door shall contribute to the capital of
the Partnership a cash amount of $429,697 which is equal to twenty-five
percent (25%) of Pavilion's Initial Balance.
4
<PAGE>
(b) Upon receipt of such sum from Cellar Door pursuant to clause (a)
of this Section 5.02, the Partnership shall immediately make a cash
distribution to Pavilion in the same amount.
(c) The Partners hereby agree that, pursuant to Section 707 of the
Code, the transactions effected pursuant to this Section 5.02 shall be
characterized, for federal income tax purposes, as a sale of an undivided
25% interest in the Amphitheater by Pavilion to Cellar Door.
(d) Cellar Door shall have the right through and until August 31,
1997 (the period of time expiring on August 31, 1997 being herein called
the "Review Period") to review the books, records, invoices and other
supporting documentation relating to the determination of the amount of
the Total Project Cost. If, as a result of the review of such books,
records, invoices and other documentation during the Review Period, Cellar
Door disputes the amount of the Total Project Cost designated in this
Agreement, then Cellar Door shall have the right to require that such
dispute be resolved by a binding arbitration proceeding (the "Cost
Arbitration") as more fully described below so long as a detailed notice
of such dispute is provided to Pavilion prior to the expiration of the
Review Period. If the amount of the Total Project Cost should be changed
as a result of any such dispute, then upon final settlement of such
dispute, the amount of the capital contribution required to be made by
Cellar Door pursuant to Section 5.02(a) and the amount of the distribution
required to be made to Pavilion pursuant to Section 5.02(b) shall be
appropriately modified such that the initial balances of the Capital
Accounts of the Partners will be in proportion to their respective
Percentage Interests. If Cellar Door fails to provide notice of a dispute
pursuant to this Section 5.02(d) prior to the expiration of the Review
Period, then Cellar Door shall be deemed to have accepted the amount of
the Total Project Cost as specified herein. The Cost Arbitration shall be
a proceeding conducted in West Palm Beach, Florida in accordance with the
rules as then in effect of the American Arbitration Association. If the
Partners cannot agree on an arbitrator, then an arbitrator who is familiar
with the construction industry shall be selected for the Partners by the
American Arbitration Association upon the request of either Partner. The
decision of the arbitrator as to the actual amount of the Total Project
Cost shall be final and binding upon both parties hereto. The costs
(including, without limitation, reasonable fees and expenses of counsel
and experts for the Partners) of such arbitration shall be borne by the
non-prevailing party.
5.03 Capitalization of the Total Project Cost. Reference is made to the
fact that the Total Project Cost has been funded as follows:
(a) $7,701,501 of the Total Project Cost has been funded with sums
advanced under the Senior Debt.
(b) $538,239 of the Total Project Cost has been funded with sums
advanced under the Pavilion Loan.
5
<PAGE>
(c) $1,500,000 of the Total Project Cost has been funded with sums
advanced from the Amphitheater's food and beverage concessionaire.
(d) The balance of the Total Project Cost has been funded with
capital contributions made pursuant to this Article V.
5.04 Operational Shortfalls.
(a) If a Qualified Operational Shortfall (herein defined) occurs at
any time, then the Managing Partner shall have the express right to
deliver a notice ("Operating Expense Notice") to the Partners specifying
the amount of funds needed to cover such Qualified Operational Shortfall
and stating that each Partner is obligated to contribute to the capital of
the Partnership its Percentage Interest of the amount of funds needed to
cover such Qualified Operational Shortfall. Following delivery of an
Operating Expense Notice to the Partners by the Managing Partner, each
Partner shall be obligated to contribute to the capital of the Partnership
its respective Percentage Interest of the amount of funds needed to cover
the Qualified Operational Shortfall as set forth in such Operating Expense
Notice on or before the due date determined in accordance with the
following provisions:
(1) The due date for all of Pavilion's required contributions
pursuant to an Operating Expense Notice shall be twenty (20) days
following receipt of such Operating Expense Notice.
(2) Except as provided in clause (3), the due date for all of
Cellar Door's required contributions pursuant to an Operating
Expense Notice shall be twenty (20) days following receipt of such
Operating Expense Notice.
(3) To the extent, but only to the extent, that the aggregate
capital contributions required to be made by Cellar Door pursuant to
this Section 5.04(a) with respect to any Amphitheater Fiscal Year
exceed $250,000, the due date for such contributions to the
Partnership shall be one hundred twenty (120) days following receipt
of the corresponding Operating Expense Notice.
(b) As used herein, the term "Qualified Operational Shortfall" shall
mean the occurrence or happening, at any time, in the Managing Partner's
reasonable discretion, of the circumstance of the Partnership having an
insufficient amount of cash to pay or cover the Qualified Liabilities
(herein defined) of the Partnership as they become due.
(c) As used herein, the term "Qualified Liabilities" shall mean any
and all debts, liabilities, expenses, charges or other obligations of the
Partnership which relate to matters other than the construction,
development or commencement of operations of the Amphitheater. Qualified
Liabilities shall include, without limitation, the obligations of
6
<PAGE>
the Partnership in respect of the Senior Debt, the Pavilion Loan and any
Deficit Loans and in respect of any obligations payable to contractors,
suppliers or other vendors.
ARTICLE VI
Senior Debt, Pavilion Loan and Deficit Loans
6.01 Senior Debt and Lease Agreement. The Partnership hereby contractually
assumes, for the benefit of Pavilion, (i) the obligation to pay all of the
Senior Debt and (ii) all of Pavilion's responsibilities, obligations and
liabilities under the Lease Agreement. As between the Partners, each shall be
liable for its respective Percentage Interest of the Senior Debt and the
tenant's obligations under the Lease Agreement.
6.02 Pavilion Loan. The Partners hereby agree that $538,289 of the gross
amount contributed to the Partnership by Pavilion pursuant to Section 5.01(a)
shall be deemed to be, and shall be characterized as, a loan ("Pavilion Loan")
by Pavilion to the Partnership in the total amount of $538,289. The Partnership
shall execute a promissory note to Pavilion upon execution hereof in a form
reasonably satisfactory to Pavilion which will evidence the Partnership's
obligation to repay the Pavilion Loan in accordance with the following
provisions:
(a) Interest shall accrue on principal amounts outstanding under the
Pavilion Loan from the effective date hereof at a per annum rate equal to
the Permitted Rate.
(b) All accrued and unpaid interest on the Pavilion Loan shall be
due and payable on October 31 of each calendar year commencing upon
October 31, 1996 and continuing until October 31, 2004.
(c) The entire unpaid principal balance of the Pavilion Loan,
together with all accrued unpaid interest thereon, shall be due and
payable on October 31, 2005.
(d) The Partnership shall have the right to make prepayments on the
Pavilion Loan without penalty; provided, however, that no such prepayment
may be made without the express written consent of Cellar Door.
6.03 Deficit Loan. If the Partnership incurs a cash deficit of any kind,
then any Partner shall have the right, but not the obligation, to extend a loan
("Deficit Loan") to the Partnership in the amount of such cash deficit. If any
such cash deficit should occur, the Managing Partner shall provide notice
thereof to both Partners as to the amount of such cash deficit. If both Partners
elect to extend a Deficit Loan to the Partnership, then each shall fund its
Percentage Interest of such cash deficit. If one of the Partners elects not to
extend a Deficit Loan in the amount of its Percentage Interest of such cash
deficit, then the other Partner shall have the right to extend a Deficit Loan up
to the full amount of such cash deficit. Each Deficit Loan shall bear interest
at a variable rate of interest per annum equal to the Permitted Rate and shall
be repayable
7
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as soon as the Partnership has funds available therefor. No distributions shall
be made to the Partners pursuant to Section 9.01 hereof at any time during which
any Deficit Loan remains outstanding. The provisions of this Section 6.03 shall
not negate, affect, limit, alter or otherwise change the obligations of the
Partners to make capital contributions for Qualified Operational Shortfalls in
accordance with the provisions of Section 5.04 hereof.
6.04 Return of Concessionaire Advances. Each Partner hereby specifically
recognizes, acknowledges and agrees that should the Partnership be required to
return to any concessionaire the advance made to the Partnership by such
concessionaire as a result of an early termination of such concessionaire's
concession agreement with the Partnership, or for any other reason whatsoever,
then each Partner shall be obligated to extend a Deficit Loan to the Partnership
in an amount equal to the product of (i) the amount being so returned to such
concessionaire and (ii) such Partner's Percentage Interest. Any Deficit Loan
made by a Partner pursuant to the immediately preceding sentence shall be
payable out of future loans, advances or lump sum payments received by the
Partnership from other concessionaires.
ARTICLE VII
Tax Allocations and
Maintenance of Capital Accounts
7.01 Generally. For each taxable year of the Partnership, the income,
gains, losses, credits and deductions of the Partnership shall be allocated
between the Partners in accordance with each Partner's Percentage Interest.
7.02 Section 704(c). Income, gain, loss and deduction with respect to any
item of property contributed to the Partnership shall, solely for federal income
tax purposes, be allocated between the Partners so as to take into account any
difference between the Gross Asset Value of such item of property and its
adjusted basis for federal income tax purposes on the date of such contribution,
in accordance with the requirements of Section 704(c) of the Code. All
allocations under this Section 7.02 shall be made in such a manner as the
Managing Partner shall determine reasonably reflects the requirements of Section
704(c) of the Code. No allocations pursuant to this Section 7.02 shall be
reflected as an adjustment to any Partner's Capital Account.
7.03 Maintenance of Capital Accounts. A Capital Account shall be
established and maintained for each Partner in accordance with the following
provisions:
(a) Increases in Capital Accounts. Each Partner's Capital Account
shall be increased by (i) the amount of cash and the fair market value of
all property contributed by such Partner to the Partnership (net of
liabilities assumed by the Partnership or to which the contributed
property is subject) and (ii) that Partner's allocable share of income and
gain for federal income tax purposes (excluding any allocations made
pursuant to Section 7.02 hereof).
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(b) Decreases in Capital Accounts. Each Partner's Capital Account
shall be decreased by (i) the amount of cash and the fair market value of
all property distributed to such Partner (net of liabilities assumed by
the Partner or to which the property is subject) and (ii) that Partner's
allocable share of losses and other items of deduction for federal income
tax purposes (excluding any allocations made pursuant to Section 7.02
hereof).
(c) Use of Gross Asset Value. For purposes of computing the amount
of any item of income, gain, loss, or deduction to be reflected in the
Partners' Capital Accounts, the determination, recognition and
classification of such items shall be the same as their determination,
recognition and classification for federal income tax purposes, except
that (i) gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed with reference to the Gross Asset
Value of the property disposed of, rather than its adjusted basis, and
(ii) depreciation, amortization, or other cost recovery deductions with
respect to an item of Partnership property shall be computed with
reference to the Gross Asset Value of such property rather than its
adjusted basis.
(d) Compliance with Treasury Regulations. The foregoing provisions
and the other provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with the Treasury Regulations
issued pursuant to Section 704(b) of the Code, and shall be interpreted
and applied in a manner consistent with such regulations. If the Partners
shall determine that it is prudent to modify the manner in which the
Capital Accounts are computed or maintained in order to comply with such
regulations, the Partners may make such modification.
(e) Capital Account Make-Up Provision. If a Partner's Capital
Account has a deficit balance following liquidation (as defined in
Treasury Regulation Section 1.704-1(b)(2)(ii)(g)) of the Partner's
Partnership Interest in the Partnership (after taking into account all
Capital Account adjustments for the taxable year of the Partnership in
which liquidation occurs), the Partner shall, by the end of such taxable
year (or, if later, within 90 days after the date of such liquidation),
contribute to the Partnership an amount necessary to increase the balance
in its Capital Account to zero. Any amount so contributed shall be
distributed as provided in Section 17.03 hereof.
ARTICLE VIII
Fees
Neither Partner shall be entitled to receive any fees from the Partnership
without the express prior written approval of both Partners.
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ARTICLE IX
Cash Distributions
All Available Cash of the Partnership, as of the end of each Amphitheater
Fiscal Year, shall be distributed by the Partnership to the Partners in
proportion to each Partner's respective Percentage Interest within forty-five
(45) days after the end of such Amphitheater Fiscal Year.
ARTICLE X
Ownership of Partnership Property
All real or personal property acquired by the Partnership shall be owned
by the Partnership, such ownership being subject to the other terms and
provisions of this Agreement. Each Partner hereby expressly waives the right to
require partition of any Partnership property or any part thereof.
ARTICLE XI
Fiscal Matters
11.01 Fiscal Year. The fiscal year of the Partnership for tax purposes
shall end on October 31 of each calendar year or such other fiscal year as may
be required pursuant to the application of the provisions of the Code or the
U.S. Treasury Regulations promulgated thereunder. The fiscal year of the
Partnership for accounting purposes shall end on the date selected by the
Managing Partner.
11.02 Books and Records and Audit Rights.
(a) Proper books and records shall be kept by the Managing Partner
with reference to all Partnership transactions, and each Partner shall at
all reasonable times during business hours have access thereto. All items
of income and deductions recognized during a fiscal year shall be
allocated as of the end of each fiscal year, based on the facts and
circumstances existing as of the end of that year. Interim monthly reports
may be based on the facts and circumstances existing at the time of these
reports subject to year-end adjustments. Year end financial statements
shall be prepared, or caused to be prepared, by the Managing Partner as of
the end of each fiscal year of the Partnership and a copy thereof provided
to the Partners within 120 days after the end of each such fiscal year.
(b) Without limiting the generality of the provisions contained in
clause (a) of this Section 11.02, it is specifically understood, agreed
and acknowledged that each Partner shall have the right to go to the
principal office of the Partnership where the
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books and records are maintained for the purpose of auditing such books
and records and shall have access, in connection with any such audit, to
all workpapers and other documents and information then in existence which
relate to, or were used in connection with the generation of, the
Partnership's books and records.
(c) If Cellar Door engages the services of a firm of certified
public accountants to conduct an audit of the financial books and records
of the Partnership with respect to any fiscal year of the Partnership,
then, upon delivery of a photocopy of the invoice from such firm of
certified public accountants reflecting the cost of the services rendered
in connection with such audit (the "Cost of the Audit"), Pavilion shall
pay to Cellar Door the lesser of (i) the Audit Reimbursement Amount for
such fiscal year or (ii) the Cost of the Audit for such fiscal year. As
used herein, (A) the term "Audit Reimbursement Amount" shall mean, with
respect to any fiscal year, the sum of (i) $5000.00 and (ii) the Audit
Carryforward Amount for such fiscal year and (B) the term "Audit
Carryforward Amount" shall mean, with respect to any fiscal year, (i)
$0.00 if Pavilion was required to reimburse amounts to Cellar Door
pursuant to this clause (c) for each of the immediately two preceding
fiscal years, (ii) $5000.00 if Pavilion was required to reimburse amounts
to Cellar Door pursuant to this clause (c) for only one of the immediately
two preceding fiscal years, and (iii) $10,000 if Pavilion was not required
to reimburse amounts to Cellar Door pursuant to this clause (c) for either
of the immediately two preceding fiscal years. Notwithstanding the
foregoing provisions, (x) the Audit Carryforward Amount for the first
fiscal year of the Partnership shall be $0.00 and (ii) the Audit
Carryforward Amount for the second fiscal year of the Partnership shall be
(I) $5000.00 if Pavilion was not required to reimburse amounts to Cellar
Door pursuant to this clause (c) for the first fiscal year of the
Partnership and (II) $0.00 if Pavilion was required to reimburse amounts
to Cellar Door pursuant to this clause (c) for the first fiscal year of
the Partnership.
(d) If, as a result of any audit conducted by Cellar Door pursuant
to the provisions of clause (c) above, the amount of cash held by the
Partnership as of the end of the fiscal year to which such audit relates
is adjusted by $25,000 or more from the amount originally reflected in the
year end financial statements prepared and delivered by the Managing
Partner for such fiscal year pursuant to the provisions of Section
11.02(a) hereof, then Pavilion shall be obligated to pay to Cellar Door a
monetary sum equal to the Cost of the Audit for such fiscal year less the
amounts previously paid by Pavilion to Cellar Door pursuant to Section
11.02(c) with respect to the audit for such fiscal year.
(e) Pavilion shall not be permitted to charge to the Partnership any
portion of Pavilion's cost of obtaining an audit of Pavilion's business
operations. Cellar Door shall have no right to receive or review
Pavilion's audit or the workpapers generated in connection with the
preparation thereof.
11.03 Partnership Bank Accounts. All funds of the Partnership shall be
deposited in its name in an account or accounts maintained at a national or
state bank. Checks shall be drawn
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upon the Partnership and may be signed by such persons as may be designated from
time to time by the Managing Partner.
11.04 Tax Matters and Reports. Any provision hereof to the contrary
notwithstanding, solely for federal income tax purposes, each of the Partners
hereby recognizes that the Partnership will be subject to all provisions of
Subchapter K of Chapter 1 of Subtitle A of the Code; provided, however, the
filing of U.S. Partnership Returns of Income shall not be construed to extend
the purposes of the Partnership or expand the obligations or liabilities of the
Partners. The Managing Partner shall be the "Tax Matters Partner" for all
purposes related to federal, state and local income tax laws; provided, however,
that the Tax Matters Partner shall not take any action which adversely affects
the other Partner without such other Partner's prior written consent.
11.05 Tax Returns. The Managing Partner shall cause to be prepared and
filed all tax returns and statements, if any, which must be filed on behalf of
the Partnership with any taxing authority, and shall submit copies of all such
returns and statements to the Partners in time for the Partners to prepare and
file their respective tax returns and statements on a timely basis. All fees,
charges and other expenses payable to third party professionals such as
attorneys or accountants relating to the preparation and filing of tax returns
and statements or otherwise reporting of financial results of the Partnership,
shall be properly chargeable as expenses of the Partnership.
11.06 Section 754 Election. In the case of distribution of Partnership
property within the provisions of Section 734 of the Code or in the case of a
transfer of a Partnership interest permitted by this Agreement made within the
provisions of Section 743 of the Code, the Partnership shall file an election
under Section 754 of the Code in accordance with the procedures set forth in the
applicable Treasury Regulations upon the request of any Partner if such
requesting Partner agrees to pay all costs incurred by the Partnership in
connection with the making of such election.
11.07 No Interest. No Partner shall be entitled to be paid interest in
respect of either his Capital Account or any contributions made by him to the
Partnership.
ARTICLE XII
Management of Partnership Affairs
12.01 Major Actions. No Major Action may be taken by the Partnership or by
any Partner on behalf of the Partnership without first obtaining written
approval from all of the Partners.
12.02 Management Vested in the Managing Partner.
(a) Except as provided below in clause (b) and except for the taking
of Major Actions, all responsibility and authority relating to the
operations and management of the
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Partnership shall be vested in the Managing Partner. The Managing Partner
is hereby authorized to take any and all actions (other than Major
Actions) reasonably necessary or required to carry out the Partnership
Purposes, including, without limitation, the hiring and retaining of such
employees and other personnel as may be reasonably necessary, in the
discretion of the Managing Partner, to efficiently and effectively use,
operate and maintain the Amphitheater and otherwise fulfill the
Partnership Purposes.
(b) Notwithstanding the foregoing, Cellar Door shall be primarily
responsible for the activities related to booking or otherwise engaging
talent for appearance at the Amphitheater, and Cellar Door hereby agrees
to provide the necessary time and services as may be required to cause the
Amphitheater to be properly and adequately booked and engaged with first
rate national performers; provided, however, it is understood that Cellar
Door has made no guarantee as to the type or number of performances which
will be booked during any Amphitheater Fiscal Year. All final decisions
concerning the booking of performers or other talent into the Amphitheater
shall be subject to the approval of the Managing Partner, provided,
however, (i) if the Managing Partner refuses to book a particular
performer or show into the Amphitheater on behalf of the Partnership which
Cellar Door desires to book, then Cellar Door shall have the right,
subject to availability of the Amphitheater, to rent the Amphitheater from
the Partnership on a Best Commercial Basis (herein defined) for purposes
of presenting such performer or show for its own account or (ii) if the
Managing Partner desires to book a Pavilion Produced Tour Event (herein
defined) into the Amphitheater which Cellar Door does not agree should be
booked into the Amphitheater by the Partnership, then Cellar Door shall
have the right to require that the Managing Partner rent the Amphitheater
from the Partnership on a Best Commercial Basis for purposes of presenting
such Pavilion Produced Tour Event for its own account.
(c) As used in this Section 12.02, the following terms shall have
the meanings indicated:
(i) "Best Commercial Basis" shall mean, at any time, the
lowest and most favorable rental rates then made available by the
Partnership to third party promoters for rental of the Amphitheater
on a nightly basis, excluding rentals to municipalities, other
governmental authorities or non-profit organizations.
(ii) "Pavilion Produced Tour Event" shall mean a performance
or show which is part of a tour being produced nationally by
Pavilion.
12.03 Annual Operating Budgets. On or before October 15 of each calendar
year during the existence of the Partnership, the Managing Partner shall provide
to Cellar Door (i) a proposed Operating Budget for the forthcoming Amphitheater
Fiscal Year setting forth in reasonable detail the various categories of
Operating Expenses and the budgeted amounts for each such category to be
incurred by the Partnership during the forthcoming Amphitheater Fiscal Year and
(ii) such information and materials related to the proposed Operating Budget as
may be requested by
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Cellar Door; provided, however, if such information and materials cannot be
generated in the ordinary course of business by the Managing Partner, then (x)
the Managing Partner shall provide notice thereof to Cellar Door ("Additional
Cost Notice") and (y) Cellar Door shall be required to reimburse to the Managing
Partner the reasonable costs incurred by the Managing Partner in generating such
requested information or materials if Cellar Door renews its request for such
information and materials after receipt of the Additional Cost Notice. To be
adopted, a proposed Operating Budget must be approved unanimously by both
Partners; however, if no Agreement is reached as to an Operating Budget for any
Amphitheater Fiscal Year within forty-five (45) days after the commencement of
such Amphitheater Fiscal Year, then the Operating Budget for such Amphitheater
Fiscal Year shall be deemed to be, until a different Operating Budget is
mutually approved by the Partners, the Operating Budget for the prior
Amphitheater Fiscal Year with each line item increased by the greater of (i) 5%
or (ii) the percentage increase in the CPI Index during the immediately
preceding Amphitheater Fiscal Year.
12.04 Obligations of the Managing Partner.
(a) Subject to the other provisions of this Agreement, the Managing
Partner shall manage, or cause to be managed, the affairs of the
Partnership in a prudent and businesslike manner. The Managing Partner
shall act as a fiduciary hereunder and in good faith in the performance of
its obligations hereunder, but shall have no liability or obligation to
the Partners or the Partnership for any decision made or action taken in
connection with the discharge of its duties hereunder if such decision or
action is (i) not a direct violation of, or in excess of the authority
granted by, the provisions of this Agreement and (ii) made or taken in
good faith and in the best interests of the Partnership, irrespective of
whether the same may be reasonably prudent or whether bad judgment or
negligence (excluding gross negligence) was exercised or involved in
connection therewith.
(b) The Managing Partner and all of its partners, agents, employees,
officers, directors and other representatives shall be indemnified and
held harmless by the Partnership, to the extent of the assets of the
Partnership, from and against any and all claims, demands, liabilities,
costs (including, without limitation, the cost of litigation and
reasonable attorneys' fees), damages and causes of action of any nature
whatsoever arising out of a claim asserted by any third party and relating
to the management of the affairs of the Partnership, except where the
claim at issue is based upon (i) the gross negligence or willful
misconduct of the indemnified party or (ii) an action taken by the
indemnified party in direct violation of, or in excess of the authority
granted by, the provisions of this Agreement. The indemnification rights
herein contained shall be cumulative of, and in addition to, any and all
rights, remedies and recourses to which the indemnified parties described
herein shall be entitled, whether pursuant to some other provision of this
Agreement, at law or in equity.
12.05 Obligations of Cellar Door.
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(a) Cellar Door shall fulfill its obligations specified in Section
12.02(b) hereof in a prudent and businesslike manner. Cellar Door shall
act as a fiduciary hereunder and in good faith in the performance of its
obligations hereunder, but shall have no liability or obligation to the
Partners or the Partnership for any decision made or action taken in
connection with the discharge of its duties hereunder if such decision or
action is (i) not a direct violation of, or in excess of the authority
granted by, the provisions of this Agreement and (ii) made or taken in
good faith and in the best interests of the Partnership, irrespective of
whether the same may be reasonably prudent or whether bad judgment or
negligence (excluding gross negligence) was exercised or involved in
connection therewith.
(b) Cellar Door and all of its partners, agents, employees,
officers, directors and other representatives shall be indemnified and
held harmless by the Partnership, to the extent of the assets of the
Partnership, from and against any and all claims, demands, liabilities,
costs (including, without limitation, the cost of litigation and
reasonable attorneys' fees), damages and causes of action of any nature
whatsoever arising out of a claim asserted by any third party and relating
to the management of the affairs of the Partnership, except where the
claim at issue is based upon (i) the gross negligence or willful
misconduct of the indemnified party or (ii) an action taken by the
indemnified party in direct violation of, or in excess of the authority
granted by, the provisions of this Agreement. The indemnification rights
herein contained shall be cumulative of, and in addition to, any and all
rights, remedies and recourses to which the indemnified parties described
herein shall be entitled, whether pursuant to some other provision of this
Agreement, at law or in equity.
12.06 Action Without Meeting. Any action required by the Partnership Act
or by this Agreement to be taken at a meeting of the Partners, or any action
which may be taken at a meeting of the Partners, may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the Partners entitled to participate in the management of the Partnership
pursuant to the terms of the Partnership Act and such consent shall have the
same force and effect as a vote of the Partners.
12.07 Transactions with Partners and Affiliates of Partners. Each Partner
hereby agrees that, with respect to any and all contracts and agreements entered
into by and between the Partnership and any Partner or any Affiliate of a
Partner, (i) the existence thereof shall be disclosed to the other Partner, (ii)
copies thereof shall be made available to such other Partner along with any
details and other information related thereto and (iii) the execution of each
such contract and agreement shall require the consent of the other Partner
(which consent shall not be unreasonably withheld or delayed).
12.08 Loaned Employees. Notwithstanding the provisions of Section 12.07
hereof, but subject to the provisions hereof relating to the Partnership's
Operating Budget, the Managing Partner shall have the express right and
authority to fill the staffing needs of the Partnership by causing employees of
the Managing Partner, the partners of the Managing Partner, Affiliates of
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the partners of the Managing Partner, Cellar Door or Affiliates of Cellar Door
to provide services to the Partnership on a full or part-time basis. Each such
employee who is so loaned to the Partnership shall have all or such appropriate
portion of his or her salary and benefit costs reimbursed by the Partnership to
the actual employer of such employee. Upon request of Cellar Door, the Managing
Partner shall provide a list of all individuals who have been loaned to the
Partnership pursuant to the provisions of this Section 12.08 and the details as
to the compensation arrangement for each such individual.
ARTICLE XIII
Other Activities
13.01 Generally. Subject to the provisions of Sections 13.02 and 13.03
hereof, this Agreement shall not preclude or limit in any respect the right of
any Partner to engage or invest in any business activity of any nature or
description, including those which may be similar to the business of the
Partnership. Neither the Partnership nor any Partner shall have any right by
virtue of this Agreement or any relationships created hereby in or to such other
ventures or activities or to the income or proceeds derived therefrom, unless
otherwise provided by any applicable rule of law.
13.02 Provisions Regarding Booking of Events in South Florida Area.
(a) Prior to the dissolution of the Partnership, neither Partner nor
any of its Affiliates shall (i) present, produce or promote, for its own
account or for the account of others, any Event in the South Florida Area
(other than at the Amphitheater) which is part of an Amphitheater Tour or
(ii) assist or otherwise participate in the booking of any Event in the
South Florida Area (other than at the Amphitheater) which is part of an
Amphitheater Tour unless and except such Partner (or its Affiliate) first
offers to the Partnership the right and option to book any such Event into
the Amphitheater on the same or better terms.
(b) The provisions of clause (a) of this Section 13.02 shall not
apply with respect to any Event for which the headline act has been
presented with a fair and competitive offer to appear at the Amphitheater
but who unilaterally, and with no provocation or encouragement from any
officer, employee, representative, attorney, contractor or agent of a
Partner or any Affiliate of such Partner, refuses to perform at the
Amphitheater; provided, however, if either Partner or any of its
Affiliates proposes to promote, present or produce any such Event in the
South Florida Area during the term of the Partnership pursuant to the
provisions of this Section 13.02(b), then (A) such Partner must provide
oral notice to a designated representative of the other Partner (to be
confirmed by fax) as to its plans for such Event, (B) such Partner must
advise the other Partner as to the terms offered to the headline act for
such Event by such Partner (or any of its Affiliates) for appearance at
another venue in the South Florida Area simultaneously with, or prior to,
the making of each such offer, (C) such Partner shall be obligated to
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make additional and better offers to the headline act appearing in such
Event on behalf of the Partnership upon the direction of the other Partner
and (D) such Partner shall be obligated to offer to the Partnership an
option and right to co-produce, co-promote and co-present such Event on a
50-50 basis with such Partner (or its Affiliate) if such Partner
successfully arranges for the booking of such Event at another venue in
the South Florida Area. As used in the immediately preceding sentence, the
phrase "co-produce, co-promote and co-present such Event on a 50-50 basis"
means sharing on a 50-50 basis (i) in all revenues related in anyway to
such Event and to which such Partner (or its Affiliate) is entitled, (ii)
in all discounts, rebates and other similar expense reductions to which
such Partner (or its Affiliate) may be entitled and (iii) in all costs,
expenses and losses which may be suffered or incurred by such Partner (or
its Affiliate); provided, however, if such Event is being presented at a
venue owned or controlled by such Partner (or any of its Affiliates), then
the amounts paid to such venue for rent and other expenses related to such
Event shall not exceed arms-length amounts consistent with industry
practices.
(c) Any offer required to be made pursuant to the provisions of
Section 13.02(b) by a Partner to the Partnership with respect to any Event
must (i) be made in writing or, if made orally, confirmed in writing by
facsimile within 24 hours after such oral notice, (ii) include such
information concerning the economic terms and conditions of such Event as
the Partnership may reasonably request and (iii) be open for acceptance
for no less than three (3) business days. The decision as to whether the
Partnership shall accept or reject any offer required to be made pursuant
to the provisions of Section 13.02(b) hereof by a Partner shall be made by
the other Partner. If, after the Partnership has declined any offer made
by a Partner pursuant to the provisions of Section 13.02(b) with respect
to any Event, then such Partner (or its Affiliates) shall have the right
to present, produce or promote for its own account, or for the account of
others, such Event in a venue in the South Florida Area; provided,
however, if the economic terms and conditions of such Event should
thereafter change in any material respect, then such Partner shall
re-offer such Event to the Partnership in accordance with the provisions
hereof.
13.03 Competitive Outdoor Facilities. During the term of the Partnership,
each of the Partners and all of their respective Affiliates shall be precluded
from being involved and hereby covenant not to become involved in any manner
whatsoever, directly or indirectly, in the ownership or management of any
Competitive Outdoor Facility.
13.04 Competitive Enclosed Facilities. Neither Partner nor any of its
Affiliates shall become involved in any manner whatsoever, directly or
indirectly, in the ownership or management of any Competitive Enclosed Facility
unless and except such Partner offers to the other Partner the right and option
to acquire, on the same terms, twenty-five percent (25%) of the interest in such
Competitive Enclosed Facility being acquired by such Partner (or its Affiliate).
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ARTICLE XIV
Pavilion's Call Option and Cellar Door's Put Option
14.01 Put and Call Option. On and subject to the provisions set forth
below, (i) Pavilion shall have the right and option ("Call Option") to purchase
Cellar Door's Partnership Interest and (ii) Cellar Door shall have the right and
option ("Put Option") to require Pavilion to purchase Cellar Door's Partnership
Interest (the Call Option and the Put Option being herein collectively called
the "Options" and individually called an "Option"):
(a) Neither of the Options may be exercised by either party at any
time prior to November 1, 2000.
(b) In order to validly exercise its respective Option, a Partner
must provide written notice ("Option Election Notice") of the exercise
thereof to the other Partner within 60 days after the end of an
Amphitheater Fiscal Year.
(c) Upon a valid exercise of an Option by either Partner, Cellar
Door shall be obligated to sell its Partnership Interest to Pavilion and
Pavilion shall be obligated to purchase Cellar Door's Partnership Interest
for a purchase price ("Option Purchase Price") equal to the sum of (A) the
product of(i) the Applicable Multiplier and (ii) Cellar Door's Percentage
Interest of the average Cash Flow Amount for the three Amphitheater Fiscal
Years immediately preceding the delivery of the Option Election Notice
plus (B) the aggregate amount of Cellar Door's capital contributions made
pursuant to Section 5.02 hereof.
(d) As used herein, the term "Applicable Multiplier" shall mean (i)
two (2) if Cellar Door exercised the Put Option and (ii) five (5) if
Pavilion exercised the Call Option.
(e) The closing ("Closing") of the sale of Cellar Door's Partnership
Interest following a valid delivery of an Option Election Notice shall
occur on a date mutually selected by Pavilion and Cellar Door but in no
event later than the date which is forty-five (45) days after delivery of
the Option Election Notice. The Closing shall occur at such place in
Florida as may be designated by Pavilion. At the Closing, each of the
Partners shall be obligated to do the following:
(i) Pavilion shall cause the Option Purchase Price to be paid
to Cellar Door in immediately available funds at the Closing.
(ii) Cellar Door shall execute and deliver such instruments
of assignment as may be reasonably required by Pavilion containing
warranties that its Partnership Interest is being conveyed to
Pavilion (or any designee of Pavilion) free and clear of all liens,
claims, charges and encumbrances.
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(iii) Cellar Door shall execute, such reasonable documents as
may be required by Pavilion to evidence the agreement of Cellar Door
to be bound by the non-compete covenants contained in Section 14.02
hereof following the Closing of the Put Option.
(iv) Pavilion shall execute such instruments or documents as
may be necessary to (x) release Cellar Door from all future accruing
obligations under this Agreement (other than those created in
Section 14.02 hereof) and (y) indemnify Cellar Door with respect to
all debts, liabilities and obligations of the Partnership to third
parties, whether then existing or thereafter to be created.
14.02 Termination of Non-Compete. Following the closing of the sale of
Cellar Door's Partnership Interest pursuant to an exercise of the Call Option or
the Put Option, neither Partner (nor any of its Affiliates) shall be subject to
any continuing restriction on its business activities pursuant to the provisions
of this Agreement.
14.03 Specific Performance. It is expressly agreed that the remedy at law
for breach of the obligation to sell or buy Cellar Door's Partnership Interest
following an exercise of one of the Options is inadequate in view of (i) the
complexities and uncertainties in measuring the actual damages that would be
sustained by reason of such breach and (ii) the uniqueness of the Partnership
business and the Partnership relationship. Accordingly, it is agreed that the
obligation to buy and sell Cellar Door's Partnership Interest following an
exercise of one of the Options shall be enforceable by an equitable order of
specific performance.
ARTICLE XV
Defaults and Remedies
15.01 Default by Partner. If any Partner ("Defaulting Partner") fails to
timely perform any of its obligations contained in this Agreement, or materially
violates the terms of this Agreement, then the other Partner ("Non-Defaulting
Partner") shall have the right to give the Defaulting Partner a notice ("Default
Notice") specifically setting forth the nature of such failure or violation and
stating that the Defaulting Partner shall have a period of ten (10) days to pay
any sums of money specified therein as due and owing to the Partnership or to
any Partner or, if the failure or violation is a non-monetary default and is
capable of being cured, thirty (30) days to cure such default specified therein.
If the monies specified in the Default Notice are not paid within such ten (10)
day period, or if such non-monetary failures or violations are not capable of
being cured or, if capable of being cured, such Defaulting Partner has not cured
such non-monetary failures or violations within such thirty (30) day period,
then a "Partner Default" shall be deemed to have occurred with respect to such
Defaulting Partner. If a Defaulting Partner cures in all material respects all
of its failures or violations which are capable of being cured within the
aforesaid notice and cure periods, then such defaults shall be deemed no longer
to exist and such Partner shall be deemed no longer to constitute a Defaulting
Partner.
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15.02 Rights and Remedies. Upon the occurrence of a Partner Default, the
Non-Defaulting Partner and the Partnership shall each have the following
rights, options and remedies which shall be cumulative and may be exercised
concurrently or independently in the sole and absolute discretion of the
Non-Defaulting Partner:
(a) The right to bring an action at law by or on behalf of the
Partnership or the Non-Defaulting Partner in order to recover the amounts
owed, if any, and any incidental or consequential damages arising from
such default (including, without limitation, reasonable attorneys' fees
and disbursements incurred or paid by the Partnership or the
Non-Defaulting Partner, as the case may be, in prosecuting any such
action).
(b) The right to bring any proceeding in the nature of injunction,
specific performance or other equitable remedy, it being acknowledged by
each of the Partners that damages at law may be an inadequate remedy for
such default.
(c) If a sum of money is owed to the Partnership, the Non-Defaulting
Partner may advance the sum of money owed to the Partnership by the
Defaulting Partner with the following results:
(i) The sum thus advanced shall be deemed to be a loan from
the Non-Defaulting Partner to the Defaulting Partner;
(ii) The principal balance of such deemed loan shall be due
and payable in whole upon written demand from the Non-Defaulting
Partner to the Defaulting Partner;
(iii) The principal balance of such deemed loan shall bear
interest at the Permitted Rate compounded monthly; and
(iv) All distributions from the Partnership that would
otherwise be made to the Defaulting Partner (whether before or after
dissolution of the Partnership) shall, instead, be paid to the
Non-Defaulting Partner until such loan and all interest accrued
thereon has been repaid in full.
(d) If a sum of money is owed by the Defaulting Partner to the
Non-Defaulting Partner, the Non-Defaulting Partner may require that all
distributions that would otherwise be made to the Defaulting Partner
(whether before or after dissolution of the Partnership) shall, instead,
be paid to the Non-Defaulting Partner until all such amounts owed have
been repaid in full.
(e) For purposes of voting or giving any consents or approvals under
any provisions of this Agreement, the right to deny the Defaulting Partner
any of its voting, consent or approval rights under this Agreement.
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(f) The option to purchase the Partnership Interest of the
Defaulting Partner at a purchase price equal to seventy-five percent (75%)
of the then balance in its Capital Account, which purchase price shall be
payable in five (5) equal annual installments of principal, together with
interest at the rate of eight percent (8%) per annum. The option set forth
in this clause (f) is being provided in view of the fact that the
prospects for the Partnership and the Partnership Interest of the
Non-Defaulting Partner will be placed in jeopardy upon the occurrence of a
Partner Default by a Defaulting Partner, all with potential damages to the
Non-Defaulting Partner and the Partnership which cannot be foreseen or
reasonably ascertained. Any Defaulting Partner whose Partnership Interest
is purchased under the provisions of this clause (f) shall (i) remain
liable for its Percentage Interest of the Partnership's liabilities in
existence at the time of the closing of such purchase and (ii) remain
subject to the restrictions on competitive activities set forth in Article
XIII hereof for a period of three (3) Amphitheater Fiscal Years following
completion of the purchase of its interest pursuant to this clause (f).
The Non-Defaulting Partner may, at its option, designate any third party
of its choosing to exercise the option granted to it in this clause (f).
ARTICLE XVI
Voluntary Withdrawal
No Partner shall have the right to, and each Partner agrees that it will
not, withdraw voluntarily from the Partnership. In the event any Partner
withdraws from the Partnership in contravention of this Agreement, such
withdrawing Partner shall remain liable for its Percentage Interest of the
Partnership liabilities in existence at the, time of its withdrawal and shall,
in addition, be liable for all damages attributable to its breach of this
Agreement. The withdrawal of a Partner in contravention of this Article XVI
shall not cause the Partnership to be dissolved, and such withdrawing Partner
shall be deemed to be an assignee of a Partner's Partnership Interest and shall
have only the rights provided a Partner's assignee under the provisions of the
Partnership Act.
ARTICLE XVII
Dissolution and Termination
17.01 Dissolution. The Partnership shall be dissolved upon the occurrence
of any of the following:
(a) The unanimous agreement of the Partners;
(b) The dissolution of the Partnership pursuant to Article IV; or
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(c) The sale, transfer, assignment or termination of all or
substantially all of the Partnership's ownership interest in the
Amphitheater.
The dissolution shall be effective on the day on which the event occurs
causing dissolution ("Effective Date of Dissolution"), but the Partnership shall
not terminate until the assets have been distributed in accordance with the
provisions of this Agreement.
17.02 Nondissolution Events. None of the following events shall constitute
or cause the dissolution of the Partnership, with the result that, upon the
happening of any one or more of these events, no one shall have the right to
compel the termination and liquidation of the Partnership:
(a) the bankruptcy, dissolution or liquidation of a Partner; or
(b) the withdrawal of a Partner.
Each Partner waives its right and power either to dissolve the Partnership, or
to seek a court decree of dissolution.
17.03 Distributions Upon Dissolution. On dissolution of the Partnership,
the Partners shall proceed diligently to wind up the affairs of the Partnership
and distribute its assets. The Managing Partner shall decide which Partnership
assets are to be sold for cash and which are to be distributed in kind. The
Partnership's assets, or the proceeds of their sale, shall be applied or
distributed (after all adjustments to the Capital Accounts of the Partners which
are required (i) following any sale of Partnership property or (ii) by the
Treasury Regulations upon a distribution of an item of Partnership property in
kind) in the following order of priority:
(a) In payment of all liabilities of the Partnership to creditors
other than Partners. If any liability is contingent or uncertain in
amount, a reserve equal to the maximum amount for which the Partnership
could be reasonably held liable shall be established. Upon the
satisfaction or other discharge of that contingency, the amount of the
reserve not required, if any, will be treated as income to the extent
previously treated as a deduction.
(b) In payment of any loans owed by the Partnership to any Partner.
(c) To the Partners in proportion to and to the extent of the
balance in their respective Capital Accounts.
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ARTICLE XVIII
Transfer Restrictions
18.01 Partner Interest. Except for a transfer of a Partnership Interest
made pursuant to the provisions of Article XIV of this Agreement, neither
Partner shall have the right to sell, assign, convey, transfer, pledge or
hypothecate, by operation of law or otherwise, all or any portion of its
Partnership Interest without the prior consent of the other Partner, it being
agreed and acknowledged that such consent may be withheld in such other
Partner's sole discretion for any reason whatsoever. Any purported sale,
assignment, conveyance, transfer, pledge or hypothecation of any Partner's
Partnership Interest in violation of the provisions of this Section 18.01 shall
be voidable at the option of the other Partner.
18.02 Cellar Door's Stock.
(a) No capital stock of Cellar Door may, at any time, be issued to,
sold, conveyed or otherwise transferred to any Person other than to a
Qualified Cellar Door Shareholder. However, as a condition to the
issuance, sale, conveyance or transfer of any Cellar Door capital stock to
any Qualified Cellar Door Shareholder, the Qualified Cellar Door
Shareholder acquiring ownership of such capital stock shall be required to
deliver a written instrument to the Partnership and to Pavilion in which
it agrees to be bound by the transfer restrictions contained in this
Section 18.02 with respect to the capital stock of Cellar Door.
(b) Notwithstanding the transfer restrictions contained in Section
18.02(a) hereof, capital stock of Cellar Door may be issued, sold,
conveyed or otherwise transferred to a Person which is not a Qualified
Cellar Door Shareholder so long as all of the following conditions are
fulfilled:
(i) A majority of each class of capital stock of Cellar Door
shall be owned by Qualified Cellar Door Shareholders immediately
following such proposed issuance, sale, conveyance or transfer;
(ii) Cellar Door shall have provided at least thirty (30) days
prior to such proposed issuance, sale, conveyance or other transfer
(x) a notice ("Minority Sale Notice") to Pavilion containing the
name, address and business of the Person to whom the capital stock
of Cellar Door is proposed to be issued, sold, conveyed or otherwise
transferred and the specific economic terms and conditions of such
proposed issuance, sale, conveyance or other transfer and (y) an
offer in favor of Pavilion to acquire the capital stock of Cellar
Door which is proposed to be issued, sold, conveyed or otherwise
transferred on the same economic terms and conditions described in
the Minority Sale Notice. To avoid uncertainty, ambiguity or doubt,
it is hereby expressly stipulated and acknowledged that the
provisions of this Section 18.02(b)(ii) shall apply solely and
exclusively to the
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capital stock of Cellar Door only and not to the capital stock of
any of its Affiliates.
(iii) The closing of such issuance, sale, conveyance or other
transfer of the capital stock of Cellar Door shall have occurred (x)
between 30 and 120 days following receipt of the Minority Sale
Notice by Pavilion and (y) upon the same economic terms and
conditions as are described in the Minority Sale Notice.
If Pavilion elects to acquire any capital stock of Cellar Door pursuant to
an offer contained in a Minority Sale Notice, then it must provide Cellar
Door notice thereof within thirty (30) days following receipt of the
Minority Sale Notice and must close on such acquisition within sixty (60)
days following receipt of the Minority Sale Notice. If the proposed
issuance, sale, conveyance or other transfer of the capital stock of
Cellar Door is a part of a transaction which involves the acquisition by a
Person which is not a Qualified Cellar Door Shareholder of a minority
interest in substantially all of the Cellar Door affiliated group of
companies, then the allocation of price to the capital stock of Cellar
Door to be included in the Minority Sale Notice shall be made by Cellar
Door in good faith giving due consideration to the relative values of the
Partnership Interest of Cellar Door in the Partnership and the balance of
the assets being transferred to such person.
(c) Cellar Door shall cause John J. Boyle to execute, of even date
herewith, a certificate or other instrument in form reasonably acceptable
to Pavilion confirming that (i) he is the owner of all of the issued and
outstanding capital stock of Cellar Door, (ii) his stock ownership
interest in Cellar Door will be burdened by and encumbered with the
transfer restrictions contained in this Section 18.02 and (iii) all share
certificates evidencing the capital stock in Cellar Door will include an
appropriate legend which references the transfer restrictions contained in
this Section 18.02. A default by John J. Boyle under such certificate
shall be deemed a default by Cellar Door under this Agreement.
18.03 Pavilion's Partnership Interests. Without the prior written consent
of Cellar Door, no partnership interest in Pavilion may, at any time, be issued
to, sold, conveyed or otherwise transferred to any Person, if as a result of
such issuance, sale, conveyance or transfer, 50% or more of the partnership
interests in Pavilion will be controlled by one or more Persons other than PACE,
Sony and Viacom and Affiliates of PACE, Sony or Viacom. By executing this
Agreement in its capacity as a general partner of Pavilion, each of the partners
of Pavilion, in their individual capacity, hereby (i) represent and warrant that
they are the sole general partners of Pavilion, (ii) covenant and agree that
their respective partnership interests in Pavilion shall be burdened by and
encumbered with the transfer restrictions contained in this Section 18.03 and
(iii) agree that all certificates (if any) evidencing their partnership interest
in Pavilion shall include an appropriate legend which references the transfer
restrictions contained in this Section
24
<PAGE>
18.03. A default by any of the Partners of Pavilion with respect to the
obligations undertaken in this Section 18.03 shall be deemed to be a default by
Pavilion under this Agreement.
ARTICLE XIX
Miscellaneous Provisions
19.01 Notices. All notices, offers, approvals, elections, consents,
acceptances, waivers, reports, requests and other communications required or
permitted to be given hereunder (all of the foregoing hereinafter collectively
referred to as "Communications") shall be in writing and shall be deemed to have
been duly given if delivered personally with receipt acknowledged or sent by
registered or certified mail or equivalent, if available, return receipt
requested, or by facsimile, telex or cablegram (which shall be confirmed by a
writing sent by registered or certified mail or equivalent on the same day that
such facsimile, telex or cablegram is sent), or by recognized overnight courier
for next day delivery, addressed or sent to the parties at the following
addresses and facsimile numbers or to such other additional address or facsimile
number as any party shall hereafter specify by Communication to the other
parties:
Pavilion: c/o SM/PACE, Inc.
515 Post Oak Blvd., Suite 300
Houston, Texas 77027
Facsimile No.: 713-622-8461
Attention: Mr. Jeffry B. Lewis
with copies to: Michael F. Rogers
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002
Facsimile No.: (713) 308-5808
Cellar Door: Cellar Door
7800 Cellar Door Drive
Bristow, VA 20136
Attention: Mr. John J. Boyle
with a copy to: Richard A. Rosenbaum
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel
515 East Las Olas Boulevard
Fort Lauderdale, Florida 33301
19.02 Delaware Law to Apply. This Agreement shall be construed under and
in accordance with laws of the State of Delaware without giving any effect to
the choice of law principles in the State of Delaware.
25
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19.03 Other Instruments. The parties hereto covenant and agree that they
will execute such other and further instruments and documents as are or may
become necessary or convenient to effectuate and carry out the Partnership
created by this Agreement.
19.04. Amendment. This Agreement may be amended or modified by the
Partners from time to time but only upon approval by all of the Partners
contained in a written instrument.
19.05 Headings. The headings used in this Agreement are used for
administrative purposes only and do not constitute substantive matter to be
considered in construing the terms of this Agreement.
19.06 Parties Bound. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors, and assigns where permitted
by this Agreement.
19.07 Legal Construction. In case any one or more of the provisions
contained in this Partnership Agreement shall, for any reason, be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision hereof and this
Partnership Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein.
19.08 Counterparts. This Partnership Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original.
19.09 Gender. Wherever the context shall so require, all words herein in
the male gender shall be deemed to include the female or neuter gender, all
singular words shall include the plural, and all plural words shall include the
singular.
19.10. Affiliate Liability. Notwithstanding anything to the contrary
contained herein, or implied hereby, in no event shall any Person, except for
the Partners and the general partners of Pavilion, be liable for the
responsibilities, obligations or liabilities of either of the Partners
hereunder. In that connection, it is specifically agreed and acknowledged that,
except for the general partners of Pavilion and except for the obligations
undertaken John J. Boyle pursuant to the execution of separate documents
referenced herein, no officer, shareholder, director or other Affiliate of a
Partner shall be liable for any of the responsibilities, liabilities or
obligations of any Partner hereunder.
19.11 Prior Agreements Superseded. This Agreement supersedes any prior
understandings or written' or oral agreements between the parties respecting the
within subject matter.
19.12 Attorneys Fees. The prevailing party in any dispute, litigation or
other proceeding between the parties hereto involving the subject matter of this
Agreement shall be entitled to be
26
<PAGE>
reimbursed by the other party for all of its reasonable attorneys' fees incurred
or paid in connection with the pursuit of such dispute, litigation or other
proceeding.
19.13 Effective Date. Although this Agreement has been executed on June
11, 1997, it is agreed and understood that it shall be effective as of May 15,
1996. Accordingly, although Pavilion held title to the Amphitheater through and
until the date of the execution hereof, it is agreed that the books and records
related to the operation of the Amphitheater shall be kept and maintained as if
the Partnership owned and operated the Amphitheater since May 15, 1996.
EXECUTED as of the day and year first written above.
CDC/SMT, INC.
a Florida corporation
By: /s/ A.J. Wasson
-----------------------------------
Name: A.J. Wasson
----------------------------
Title: Executive Vice President
----------------------------
"CELLAR DOOR"
PAVILION PARTNERS, a
Delaware general partnership
By: SM/PACE, Inc., a Texas corporation
and its managing partner
By: /s/Rodney L. [ILLEGIBLE]
-----------------------------------
Name: Rodney L. [ILLEGIBLE]
----------------------------
Title: Vice President
----------------------------
"PAVILION"
27
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Exhibit "A"
GLOSSARY OF TERMS
Affiliate: With respect to any Person, any other Person that directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Person specified. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and under "common control with") when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
Applicable Multiplier: Shall have the meaning assigned to it pursuant to
Section 14.01(d) hereof.
Applicable Outdoor Facilities: Any outdoor entertainment facility other
than (i) sports stadiums with a capacity of more than 40,000 persons and (ii)
small outdoor facilities with a capacity of less than 4000 persons
Amphitheater: The outdoor entertainment facility currently being
constructed by Pavilion on the Amphitheater Site.
Amphitheater Tour: Any Tour which includes within it performances at (A)
two or more Applicable Outdoor Facilities which are owned, managed, booked or
operated by (i) Pavilion, (ii) Cellar Door, (iii) any Affiliate of Pavilion or
the partners of Pavilion or (iv) any Affiliate of Cellar Door or (B) any four or
more Applicable Outdoor Facilities.
Amphitheater Fiscal Year: Each twelve month period commencing on November
1 of a calendar year and ending on October 31 of the subsequent calendar year.
Amphitheater Site: That certain tract of property located in Palm Beach
County, Florida being more fully described on Exhibit "B" attached hereto.
Available Cash: After repayment of all outstanding Deficit Loans, cash
held by the Partnership at the end of any Amphitheater Fiscal Year which, in the
reasonable judgment of the Managing Partner, is not required for a necessary
working capital reserve for the obligations or business needs of the Partnership
during the next succeeding Amphitheater Fiscal Year.
Call Option: Shall have the meaning assigned to it pursuant to Section
14.01 hereof.
Capital Account: The tax capital account maintained by the Partnership for
each Partner in accordance with, and as required by, the provisions of Section
7.03 of this Agreement.
1
<PAGE>
Cash Flow Amount: For any Amphitheater Fiscal Year, the amount of the
Partnership's net income (as determined in accordance with generally accepted
accounting principles) during such Amphitheater Fiscal Year plus the amount of
depreciation and amortization deductions taken by the Partnership during such
Amphitheater Fiscal Year in calculating the Partnership's earnings minus the
amount of all regularly scheduled principal payments paid during such
Amphitheater Fiscal Year on the Senior Debt and minus the amount of all sums
expended by the Partnership (other than Development Costs) during such
Amphitheater Fiscal Year for repairs, capital improvements and other items which
are required to be capitalized pursuant to generally accepted accounting
principles.
Cellar Door: CDC/SMT, Inc., a Florida corporation.
Closing: Shall have the meaning assigned to it pursuant to Section
14.01(c) hereof.
Code: The Internal Revenue Code of 1986, as amended.
Competitive Enclosed Facility: Any Competitive Facility other than a
Competitive Outdoor Facility.
Competitive Facility: Any building, arena, amphitheater, bowl, stadium,
hall, auditorium or other venue located in the South Florida Area (other than
the Amphitheater) in which Events can be presented with a capacity for more than
2,100 people, other than (i) Sunrise and (ii) a venue designed and used
primarily for the presentation of performing arts events such as symphony,
opera, ballet and theatrical performances.
Competitive Outdoor Facility: Any open-air and unenclosed Competitive
Facility.
CPI Index: Consumer Price Index for All Urban Consumers (all U.S. cities),
1982 - 84 equals 100 Base, published monthly by the U.S. Department of Labor's
Bureau of Labor Statistics, or any successor publication.
Current Actual Knowledge: When used with respect to Pavilion, the current
actual conscious knowledge of Brian E. Becker, Jeffry B. Lewis and Michael F.
Rogers.
Default Notice: Shall have the meaning assigned to it pursuant to Section
15.01 hereof.
Defaulting Partner: Shall have the meaning assigned to it pursuant to
Section 15.01 hereof.
Deficit Loan: A loan extended by a Partner to the Partnership pursuant to
the provisions of Section 6.03 hereof.
Exhibit "A"
Page 2 of 8
<PAGE>
Development Costs: The (i) Old Development Costs and (ii) costs and
expenses incurred in connection with the development or construction of the
Amphitheater, including the following:
(a) Costs incurred in connection with land planning, engineering and
designing such as fees to architects, engineers, land planners,
environmental consultants and other similar professionals.
(b) Legal fees and accounting fees incurred in connection with (i)
negotiating, preparing and executing the Lease Agreement and all other
agreements or contracts necessary for the operation and use of the
Amphitheater (such as a food and beverage concession agreement) and (ii)
regulatory matters related to land planning and use.
(c) Premiums, costs and charges related to the obtaining of title
commitments and title insurance for the leasehold estate and the liens
created pursuant to the Senior Mortgage.
(d) Costs and fees incurred in connection with obtaining surveys and
plats of the Amphitheater site and surrounding land.
(e) Direct costs of construction, including costs of materials and
labor and fees payable to contractors and construction managers or
consultants.
(f) Costs of acquiring rights-of-way, easements or similar rights
necessary for the construction or subsequent operation of the
Amphitheater.
(g) The start-up costs related to the opening of the Amphitheater in
its first year of operation, to the extent that such start-up costs are
capitalized by Pavilion in accordance with its past practices.
Development Cost Notice: Shall have the meaning assigned to it pursuant to
Section 5.02(b) hereof.
Effective Date of Dissolution: Shall have the meaning assigned to it
pursuant to Section 17.01 hereof.
Event: Any live performance or concert featuring professional musicians,
performers or artists, but excluding "free" performances or concerts for which
no patron or spectator is required to pay an admission price.
Gross Asset Value: Subject to the adjustments described in the next
succeeding sentence, the fair market value of each item of Partnership property
at the time of contribution to the capital of the partnership. The Gross Asset
Value of each item of Partnership property shall be
Exhibit "A"
Page 3 of 8
<PAGE>
adjusted by depreciation, amortization or other cost recovery deductions
determined pursuant to Section 7.03(c)(ii) of this Agreement.
Hazardous Substances: Any hazardous, toxic or contaminated substance or
material within the scope of any federal, state or local environmental law or
ordinance.
Initial Gross Contribution Amount: Shall have the meaning assigned to it
pursuant to Section 5.01(b) hereof.
Lease Agreement: That certain Lease Agreement dated effective as of
January 4, 1995 and entered into by and between South Florida Fair and Palm
Beach County Expositions, Inc. ("Landlord"), as lessor, and Pavilion, as lessee,
and covering the Amphitheater, as amended pursuant to that certain First
Amendment to Lease dated June 5, 1995 and that certain Second Amendment to
Lease dated July 31, 1995. A Memorandum of the Lease Agreement was filed in
Official Records Book 8871, Page 826 of the Public Records of Palm Beach County,
Florida.
Major Actions: Any acts taken, sums expended or obligations incurred on
behalf of the Partnership for any of the following activities:
(a) borrowing any sums of money on behalf of the Partnership or
modifying the terms of any existing indebtedness of the Partnership other
than (i) Routine Renewals of the Senior Debt, (ii) loans received from any
Partner as contemplated in Sections 6.02, 6.03, or 6.04 hereof and (iii)
trade payables and other accounts payable incurred in the ordinary course
of the business of the Partnership;
(b) acquiring any property on behalf of the Partnership which does
not relate to the ownership, use, operation or maintenance of the
Amphitheater;
(c) expending any funds of the Partnership for Operating Expenses in
amounts which (i) exceed by 10% or more the amounts permitted to be
expended in any single line item of the Partnership's then effective
Operating Budget or (ii) would result in the total amount of Operating
Expenses actually expended for any Amphitheater Fiscal Year to exceed the
total budgeted amount of Operating Expenses set forth in the Operating
Budget for such Amphitheater Fiscal Year;
(d) granting a right of possession or management rights to any
Person at the Amphitheater by lease, license, sublease or other
arrangement for a term of two years or more;
(e) commencing any item of litigation involving an amount in dispute
of $100,000 or more;
Exhibit "A"
Page 4 of 8
<PAGE>
(f) commencing, or permitting to commence, any bankruptcy proceeding
against the Partnership;
(g) engaging in any other business venture or entrepreneurial
activity other than that directly related to the Partnership Purposes;
(h) selling or otherwise transferring all or substantially all of
the Partnership's interest in the Amphitheater;
(i) except as expressly contemplated to the contrary in Section
12.03 hereof, approving or amending any Operating Budget;
(j) entering into any new line of business; and
(k) selling or otherwise transferring any item of property which
does not relate to the ownership, use, operation or maintenance of the
Amphitheater.
Managing Partner: Pavilion.
Minority Sale Notice: Shall have the meaning assigned to it pursuant to
Section 18.02(b)(ii) hereof.
Non-Defaulting Partner: Shall have the meaning assigned to it pursuant to
Section 15.01 hereof.
Old Development Costs: $421,590 of costs previously incurred and paid by
PACE Music Group, Inc. in connection with and related to the pursuit of
potential amphitheater developments in the South Florida Area which were never
constructed. The Old Development Costs are detailed on Exhibit "C" attached
hereto.
Operating Budget: The budget of Operating Expenses of the Partnership to
be prepared for each Amphitheater Fiscal Year in accordance with and pursuant to
the provisions of Section 12.03 hereof.
Operating Expenses: The overhead and operating expenses of the Partnership
which relate to the day-to-day operation of the Amphitheater such as salaries
for employees and staff for the Amphitheater, utility costs for the
Amphitheater, insurance costs relating to the maintenance of casualty and
liability insurance for the Amphitheater, interest on the Senior Debt, costs
relating to maintenance, repair and upkeep of the Amphitheater and the personal
property and equipment used in connection with the operation of the Amphitheater
and costs for the purchase of office supplies and equipment. Notwithstanding
anything to the contrary implied by the immediately preceding sentence, none of
the following types of expenditures or expenses shall be "Operating Expenses"
for purposes of this Agreement:
Exhibit "A"
Page 5 of 8
<PAGE>
(a) the costs directly attributable to or associated with the
booking, production, presentation or promotion of any performance or event
at the Amphitheater such as artist costs, advertising costs and costs of
staging;
(b) costs or expenses which must be incurred as the result of any
emergency, casualty or other unforeseeable occurrence at the Amphitheater;
and
(c) any and all rent and other payments due and payable by the
Partnership under and pursuant to the terms of the Lease Agreement.
Operating Expense Notice: Shall have the meaning assigned to it pursuant
to Section 5.04(a) hereof.
Options: Shall have the meaning assigned to it pursuant to Section 14.01
hereof.
Option Election Notice: Shall have the meaning assigned to it pursuant to
Section 14.01(b) hereof.
Option Purchase Price: Shall have the meaning assigned to it pursuant to
Section 14.01(c) hereof.
PACE: PACE Entertainment Corporation, a Texas corporation.
Partners: Pavilion and Cellar Door. The term "Partners" shall not include
any assignee of a Partner's Partnership Interest, unless the other Partner
agrees to admit such assignee to the Partnership.
Partnership: The Partnership created by this Agreement.
Partnership Act: The Delaware Uniform Partnership Act, Title 6, Chapter 15
of the Delaware Code (1974 Revision), as amended from time to time.
Partnership Interest: All of the interest of any Partner in the
Partnership, including his (i) right to a distributive share of the profits and
losses of the Partnership, (ii) right to a distributive share of the assets of
the Partnership, and (iii) right to participate in the management of the affairs
of the Partnership.
Partnership Purposes: The purposes for which the Partnership is formed as
set forth in Article III of this Agreement.
Pavilion: Pavilion Partners, a Delaware general partnership whose sole
general partners are (i) SM/PACE, Inc., a Texas corporation and indirect
wholly-owned subsidiary of PACE, and
Exhibit "A"
Page 6 of 8
<PAGE>
(ii) Amphitheater Entertainment Partnership, a Delaware general partnership
whose sole general partners are wholly-owned subsidiaries of Sony and Viacom.
Pavilion's Initial Balance: Shall have the meaning assigned to it pursuant
to Section 5.01(c) hereof.
Pavilion Loan: Shall have the meaning assigned to it pursuant to Section
6.02 hereof.
Percentage Interest: The respective Partnership Interest of each Partner
in the Partnership expressed as a percentage of the Partnership Interests owned
by all Partners. The Percentage Interest of Pavilion is seventy-five percent
(75%) and the Percentage Interest of Cellar Door is twenty-five (25%).
Permitted Encumbrances: The Senior Mortgage and all of the title
encumbrances included within the definition of "Permitted Encumbrances" as such
term is used in the Lease Agreement.
Permitted Rate: The lesser of (a) two percent (2%) per annum over the
Prime Rate or (b) the maximum non-usurious interest rate permitted by applicable
law from time to time in effect.
Person: Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof, or any other form of entity.
Prime Rate: The prime rate of interest per annum announced, from time to
time, by major U.S. money center banks as published daily in the "Money Rates"
column of The Wall Street Journal; provided, however, that if The Wall Street
Journal should ever cease, for any reason, to publish such rate on a daily
basis, then the Prime Rate shall be the rate of interest designated, and in
effect from time to time, by Citibank, N.A., in New York, New York as its prime
rate or base rate charged on commercial loans.
Put Option: Shall have the meaning assigned to it pursuant to Section
14.01 hereof.
Qualified Cellar Door Shareholders: Any one or more of (a) the Qualified
Family Members, (b) any trust created for the benefit of any of the Qualified
Family Members, (c) any corporation, partnership or other entity which is owned
and controlled by Qualified Family Members, or (d) such other persons as may be
approved by Pavilion, which approval shall not be unreasonably withheld or
delayed.
Qualified Family Members: Any one or more of John J. Boyle, Janet Boyle or
any children of John J. Boyle or Janet Boyle.
Exhibit "A"
Page 7 of 8
<PAGE>
Routine Renewals: With respect to the Senior Debt, any renewal, extension,
modification or other rearrangement of the Senior Debt which does not have the
effect of (a) increasing the principal balance of the Senior Debt, (b)
materially modifying the manner in which the interest rate accruing on the
Senior Debt is calculated or (c) materially accelerating the required principal
amortization of the Senior Debt during any calendar year.
Senior Debt: (a) The obligations and liabilities of Pavilion to repay that
certain loan previously obtained by Pavilion from The Sanwa Bank, Ltd. in the
maximum aggregate principal amount of $8,000,000 and all renewals,
rearrangements and extensions of such loan and (b) the indemnity obligations
previously undertaken by Pavilion for the benefit of Sony and Viacom, the
guarantors of such loan received from The Sanwa Bank, Ltd., under that certain
Indemnity Agreement executed by Pavilion and dated effective as of December 15,
1995, pursuant to which Pavilion agreed to indemnify and hold such guarantors
harmless from and against any loss, cost, expense or other claim arising out of
or otherwise relating to such loan or the guaranty thereof.
Senior Mortgage: The liens and security interests encumbering the
Partnership's leasehold estate in the Amphitheater created (i) in favor of Sony
and Viacom as security for the Senior Debt and (ii) pursuant to that certain
Leasehold Mortgage, Assignment of Rents and Leases and Security Agreement dated
effective as of December 6, 1995 and being recorded in Official Record Book
9044, Pages 1882 - 1907 of the Palm Beach County Official Records.
Sony: Sony Music Entertainment Inc., a Delaware corporation.
South Florida Area: The geographical area encompassed by Broward, Dade and
Palm Beach Counties.
Sunrise: A concert venue with a maximum capacity for 3968 patrons and
located at 5555 NW 95th Avenue, Sunrise, Florida 33351.
Total Project Cost: $11,458,577, the total amount of Development Costs
actually incurred and paid through final completion of the construction of the
Amphitheater.
Tour: Any series of performances by an entertainer or group of
entertainers in two or more locations with no single break longer than 30 days
in duration.
Treasury Regulations: The Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
Viacom: Viacom Inc., a Delaware corporation.
Exhibit "A"
Page 8 of 8
<PAGE>
EXHIBIT "B"
AMPHITHEATER PARCEL
A portion of Tracts 17, 18, 19 and 20, Block 7, PALM BEACH FARMS COMPANY, PLAT
NO. 3, recorded in Plat Book 2, Pages 45 through 54, Public Records of Palm
Beach County, Florida, being more particularly described as follows:
COMMENCING at the Northwest corner of Tract 29, Block 7, of said PALM BEACH
FARMS COMPANY PLAT NO. 3, thence North 00-55-30 West, a distance of 60.00 feet
to a point 60.00 feet North of as measured at a 90 degree angle to the North
line of said Tract 29; thence South 89-50-54 West, a distance of 16.72 feet to
the POINT OF BEGINNING; thence North 04-33-57 East, a distance of 23.40 feet to
the Point of Curvature of a curve concave to the southwest having a radius of
86.00 feet; thence northwesterly along the arc of said curve through a central
angle of 94-27-03, a distance of 141.77 feet to the Point of Tangency; thence
North 89-53-06 West, a distance of 113.47 feet; thence North 06-43-58 West, a
distance of 59.63 feet; thence North 10-23-49 West, a distance of 376.62 feet;
thence North 00-00-00 West, a distance of 168.46 feet; thence North 89-38-52
East, a distance of 250.67 feet; thence South 87-47-17 East, a distance of
585.09 feet; thence South 26-31-59 East, a distance of 85.04 feet to the Point
of Curvature of a curve concave westerly having a radius of 590.00 feet; thence
southerly along the arc of said curve through a central angle of 63-12-28, a
distance of 650.88 feet to a point on a non-tangent line; thence South 89-50-54
West, a distance of 546.53 feet to the POINT OF BEGINNING.
Containing 13.510 acres, more or less.
<PAGE>
EXHIBIT "C"
MIAMI AMPHITHEATRE - 210
CAPITAL CONSTRUCTION SUMMARY
3/31/91
================================================================================
BALANCE CURRENT YEAR BALANCE
DESCRIPTION 6/30/90 MONTH TO DATE 3/31/91
================================================================================
C01 General Construction 0 0 0 0
- --------------------------------------------------------------------------------
General Constr. Subtotal 0 0 0 0
THEATRICAL EQUIPMENT
--------------------
C31 Audio 0 0 0 0
C32 Spotlights 0 0 0 0
C33 Rigging 0 0 0 0
- --------------------------------------------------------------------------------
Theatrical Equip Sub. 0 0 0 0
EQUIPMENT
---------
C34 Seating 0 0 0 0
C35 Drop Boxes 0 0 0 0
C36 Patio Tables & Chairs 0 0 0 0
C37 Office Furniture & Equip. 0 0 0 0
C38 Dressing Furniture 0 0 0 0
C39 Cleaning & Maintenance 0 0 0 0
C40 Telephone 0 0 0 0
C41 Communication 0 0 0 0
C42 Computer 0 0 0 0
C43 Facility Signage 0 0 0 0
C44 Guard House 0 0 0 0
- --------------------------------------------------------------------------------
Equipment Subtotal 0 0 0 0
OVERHEAD
--------
C45 Architectural 4,031 1,314 1,314 5,345
C46 Structural Engineering 0 0 0 0
C47 Geotechnical Engineer 0 0 0 0
C48 Survey (meters & Bounds, Topo) 159 0 0 159
C49 M.E.P. Engineering 0 0 0 0
C50 Civil Engr. (Grading, Drives) 0 0 0 0
C51 Storm & Utilities 0 0 0 0
C52 Erosion & Sedimentation 0 0 0 0
C53 Water Engineering 0 0 0 0
C54 Wastewater Engineering 0 0 0 0
C55 Environment Engineering 30 0 0 30
C56 Landscape Architecture 460 0 0 460
C57 Traffic Engineering 73,884 0 0 73,884
C58 Offsite Roads (Engr) 0 0 0 0
C59 Offsite Roads (Environ.) 0 0 0 0
C60 Acoustical Engineer 0 0 0 0
C60A Project Manager 0 0 0 0
C61 Construction Mgmnt. 0 0 0 0
C62 Arch. & Engr. Contingency 0 0 0 0
Engineering Other 0 0 0 0
- --------------------------------------------------------------------------------
Overhead Subtotal 78,564 1,314 1,314 79,878
<PAGE>
EXHIBIT "C"
MIAMI AMPHITHEATRE - 210
CAPITAL CONSTRUCTION SUMMARY
3/31/91
================================================================================
BALANCE CURRENT YEAR BALANCE
DESCRIPTION 6/30/90 MONTH TO DATE 3/31/91
================================================================================
START-UP
--------
C63 G & A, Marketing, Etc. 205 0 0 205
C78 Consultant 12,581 0 0 12,581
C79 Market Study 0 0 0 0
C64 Legal 183,054 0 2,393 185,447
C65 Title Insurance 0 0 0 0
C66 Relocation 0 0 0 0
C67 Misc. 3,353 0 0 3,353
C68 Electrical Connection 0 0 0 0
C69 Travel 32,438 0 1,486 33,924
C70 Concession Equipment 0 0 0 0
C71 Consultant 0 0 0 0
C72 Broker 0 0 0 0
C73 Contractor Fee 0 0 0 0
C76 Options Payments 22,500 0 0 22,500
C77 Fees, Licenses, Permits 5,000 0 0 5,000
C63B Postage & Delivery 1,409 0 0 1,409
C63H Public Relations 62,000 0 0 62,000
C63I Telephone 485 0 0 485
C75 Entertainment 487 0 0 487
Printing 80 0 0 80
Productions Fee 0 0 0 0
Professional 7,680 0 0 7,680
Photographer 30 0 0 30
Promotional 0 0 0 0
C63G Office Supplies 21 0 0 21
C63C Office Rent 6,311 0 0 6,311
Taxes 199 0 0 199
- --------------------------------------------------------------------------------
Start-Up Subtotal 337,833 0 3,879 341,712
GRAND TOTAL 416,397 1,314 5,193 421,590
================================================================================
<PAGE>
Exhibit "D"
List of Material Contracts
Amphitheater Vendors
Vendor Description
- ------ -----------
Fine Host Corporation Concessions
Innovative State Concepts Stage Labor
Ranger Construction Industries Parking
The West Palm Beach Auto Auction Parking
The Contemporary Services Company Security
Comar Video Productions Lawn Video
Nutrition, Inc. Catering
Clair Brothers Audio Systems Lawn Sound
Palm Beach County Sheriff Police
Multi-Year Sponsorship Agreements
Sponsor Category
- ------- --------
GMC Truck Trucks
Coca-Cola Beverage
Republic Security Bank Bank
Budweiser Beer
Bell South Mobility Phone Company
Seagrams VIP Club Name
Miller Second Beer
American Express Official Credit Card
<PAGE>
(American Land Title Association Leasehold Owner's Policy - 10-17-92)
(With Florida Modifications)
================================================================================
OWNER'S LEASEHOLD TITLE INSURANCE POLICY
Attorneys' Title Insurance Fund, Inc.
ORLANDO, FLORIDA
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED
IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, ATTORNEYS' TITLE INSURANCE
FUND, INC., a Florida corporation, herein called The Fund, insures, as of Date
of Policy shown in Schedule A, against loss or damage, not exceeding the Amount
of Insurance stated in Schedule A, sustained or incurred by the insured by
reason of:
1. Title to the estate or interest described in Schedule A being vested
other than as stated therein;
2. Any defect in or lien or encumbrance on the title;
3. Unmarketability of the title;
4. Lack of a right of access to and from the land.
The Fund will also pay the costs, attorneys' fees and expenses incurred in
defense of the title, as insured, but only to the extent provided in the
Conditions and Stipulations.
In Witness Whereof, ATTORNEYS' TITLE INSURANCE FUND, INC. has caused this policy
to be signed and sealed as of Date of Policy shown in Schedule A, the policy to
become valid when countersigned by an authorized signatory.
Attorneys' Title Insurance Fund, Inc.
[Corporate Seal]
By /s/Charles J. Kovaleski
Charles J. Kovaleski
President
SERIAL
OPL- 67874
================================================================================
FUND FORM OPL (rev 2/93)
EXHIBIT "E"
<PAGE>
EXHIBIT "A"
AMPHITHEATER PARCEL
A portion of Tracts 17, 18, 19 and 20, Block 7, PALM BEACH FARMS COMPANY, PLAT
NO. 3, recorded in Plat Book 2, Pages 45 through 54, Public Records of Palm
Beach County, Florida, being more particularly described as follows:
COMMENCING at the Northwest corner of Tract 29, Block 7, of said PALM BEACH
FARMS COMPANY PLAT NO. 3, thence North 00-55-30 West, a distance of 60.00 feet
to a point 60.00 feet North of as measured at a 90 degree angle to the North
line of said Tract 29; thence South 89-50-54 West, a distance of 16.72 feet to
the POINT OF BEGINNING; thence North 04-33-57 East, a distance of 23.40 feet to
the Point of Curvature of a curve concave to the southwest having a radius of
86.00 feet; thence northwesterly along the arc of said curve through a central
angle of 94-27-03, a distance of 141.77 feet to the Point of Tangency; thence
North 89-53-06 West, a distance of 113.47 feet; thence North 06-43-58 West, a
distance of 59.63 feet; thence North 10-23-49 West, a distance of 376.62 feet;
thence North 00-00-00 West, a distance of 168.46 feet; thence North 89-38-52
East, a distance of 250.67 feet; thence South 87-47-17 East, a distance of
585.09 feet; thence South 26-31-59 East, a distance of 85.04 feet to the Point
of Curvature of a curve concave westerly having a radius of 590.00 feet; thence
southerly along the arc of said curve through a central angle of 63-12-28, a
distance of 650.88 feet to a point on a non-tangent line; thence South 89-50-54
West, a distance of 546.53 feet to the POINT OF BEGINNING.
Containing 13.510 acres, more or less.
EXHIBIT "E"
<PAGE>
FUND OWNER'S FORM
SCHEDULE B
Policy No.: OPL-67874
This policy does not insure against loss or damage by reason of the following:
1. All matters as shown on The Palm Beach Farms Co. Plat No. 3 recorded in
Plat Book 2, Pages 45-54, inclusive, except and excluding herefrom the 25
feet road right-of-way running east-west and the 50 feet road right-of-way
running north-south on the Entire Tract as defined in the Lease Agreement
dated January 4, 1995.
2. Resolutions fixing set back lines along State Road 80 as recorded in Deed
Book 1148, page 51 and Deed Book 1148, page 62.
3. Restrictions and conditions as contained in the County Deed dated June 20,
1995, between PALM BEACH COUNTY and SOUTH FLORIDA FAIR AND PALM BEACH
COUNTY EXPOSTIONS, INC., recorded July 13, 1995 in Official Record Book
8830, Page 1728. Said restrictions include a right of reversion.
4. Removal Agreements for Future Right of Way with Palm Beach County and
recorded in Official Record Book 3225, page 210 and Official Record Book
6699, page 1569.
5. Blanket Easement contained in document recorded Jan. 24, 1975, in Official
Records Book 2386, Page 356. (Southern Bell Tel. & Tel. Co.)
6. Agreement recorded June 14, 1982 in Official Records Book 3740, Page 1476.
(Developers Agreement with Palm Beach County re: utilities)
7. Right-of-way for Southern Boulevard, a/k/a State Road 80, as now laid out
and in use and as granted by those Right-of-Way Deeds recorded in Deed
Book 986, page 576; Deed Book 1018, page 506; Deed Book 1018, page 510;
and as conveyed from the County of Palm Beach to the State of Florida by
that Quit Claim Deed recorded in Deed Bk 1024, pg. 142.
8. Mortgage from SOUTH FLORIDA FAIR AND PALM BEACH COUNTY EXPOSITIONS, INC.
to SOUTHEAST BANK, N. A. (now known as FIRST UNION NATIONAL BANK OF
FLORIDA), recorded in Official Record Book 5986, page 598, and modified in
Official Record Book 8188, page 1776.
9. Assignment of Rents, Leases, Profits and Contracts recorded March 3, 1989,
in Official Record Book 5986, page 637, and amended in Official Record
Book 8188, page 1790.
10. UCC-1 Financing Statement recorded March 3, 1989 in Official Record Book
5986, page 644.
11. The encroachments as shown on the plat of survey dated July 28, 1995,
prepared by Mock, Roos the power line encroachment along the south
property line and the encroachment of the adjoining property owner to the
south with pallet and trailer storage over
See Continuation Sheet
EXHIBIT "E"
<PAGE>
CONTINUATION SHEET
(SCHEDULE B CONTINUED)
Commitment or Policy No.: OPL-67874
the line running along that westerly portion of Tracts 31 and 42.
NOTE: All of the above book and page references are to the public records of
Palm Beach County, Florida, and any reference to Tracts and Blocks are to The
Palm Beach Farms Company Plat No. 3.
NOTE: The exceptions set forth in Items 8, 9, and 10 above shall be affirmative
insured over by endorsement upon recording of an acceptable Subordination,
Nondisturbance and Attornment Agreement.
EXHIBIT "E"
<PAGE>
Exclusions from Coverage
The following matters are expressly excluded from the coverage of this policy
and The Fund will not pay loss or damage, costs, attorneys' fees or expenses
which arise by reason of:
1.(a) Any law, ordinance or governmental regulation (including but not
limited to building and zoning laws, ordinances, or regulations)
restricting, regulating, prohibiting or relating to (i) the occupancy,
use, or enjoyment of the land; (ii) the character, dimensions or location
of any improvement now or hereafter erected on the land; (iii) a
separation in ownership or a change in the dimensions or area of the land
or any parcel of which the land is or was a part; or (iv) environmental
protection, or the effect of any violation of these laws, ordinances or
governmental regulations, except to the extent that a notice of the
enforcement thereof or a notice of a defect, lien or encumbrance resulting
from a violation or alleged violation affecting the land has been recorded
in the public records at Date of Policy.
(b) Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect, lien
or encumbrance resulting from a violation or alleged violation affecting
the land has been recorded in the public records at Date of Policy.
2. Rights of eminent domain unless notice of the exercise thereof has been
recorded in the public records at Date of Policy, but not excluding from
coverage any taking which has occurred prior to Date of Policy which would
be binding on the rights of a purchaser for value without knowledge.
3. Defects, liens, encumbrances, adverse claims or other matters:
(a) created, suffered, assumed or agreed to by the insured claimant;
(b) not known to The Fund, not recorded in the public records at Date of
Policy, but known to the insured claimant and not disclosed in writing to
The Fund by the insured claimant prior to the date the insured claimant
became an insured under this policy;
(c) resulting in no loss or damage to the insured claimant;
(d) attaching or created subsequent to Date of Policy; or
(e) resulting in loss or damage which would not have been sustained if the
insured claimant had paid value for the estate or interest insured by this
policy.
4. Any claim, which arises out of the transaction vesting in the insured the
estate or interest insured by this policy, by reason of the operation of
federal bankruptcy, state insolvency, or similar creditors' rights laws,
that is based on:
(a) the transaction creating the estate or interest insured by this policy
being deemed a fraudulent conveyance or fraudulent transfer; or
(b) the transaction creating the estate or interest insured by this policy
being deemed a preferential transfer except where the preferential
transfer results from the failure:
(i) to timely record the instrument of transfer; or
(ii) of such recordation to impart notice to a purchaser for value or a
judgment or lien creditor.
Conditions and Stipulations (below insert)
EXHIBIT "E"
<PAGE>
Conditions and Stipulations
1. Definition of Terms
The following terms when used in this policy mean:
(a) "insured": the insured named in Schedule A, and, subject to any rights
or defenses The Fund would have had against the named insured, those who succeed
to the interest of the named insured by operation of law as distinguished from
purchase including, but not limited to, heirs, distributees, devisees,
survivors, personal representatives, next of kin, or corporate or fiduciary
successors.
(b) "insured claimant": an insured claiming loss or damage.
(c) "knowledge" or "known": actual knowledge, not constructive knowledge
or notice which may be imputed to an insured by reason of the public records as
defined in this policy or any other records which impart constructive notice of
matters affecting the land.
(d) "land": the land described or referred to in Schedule A, and
improvements affixed thereto which by law constitute real property. The term
"land" does not include any property beyond the lines of the area described or
referred to in Schedule A, nor any right, title, interest, estate or easement in
abutting streets, roads, avenues, alleys, lanes, ways or waterways, but nothing
herein shall modify or limit the extent to which a right of access to and from
the land is insured by this policy.
(e) "mortgage": mortgage, deed of trust, trust deed, or other security
instrument.
(f) "public records": records established under state statutes at Date of
Policy for the purpose of imparting constructive notice of matters relating to
real property to purchasers for value and without knowledge. With respect to
Section 1(a)(iv) of the Exclusions from Coverage, "public records" shall also
include environmental protection liens filed in the records of the clerk of the
United States district court for the district in which the land is located.
(g) "unmarketability of the title": an alleged or apparent matter
affecting the title to the land, not excluded or excepted from coverage, which
would entitle a purchaser of the estate or interest described in Schedule A to
be released from the obligation to purchase by virtue of a contractual condition
requiring the delivery of marketable title.
(h) "leasehold estate": the right of possession for the term or terms
described in Schedule A hereof subject to any provisions contained in the Lease
which limit the right of possession.
2. Continuation of Insurance After Conveyance of Title
The coverage of this policy shall continue in force as of Date of Policy
in favor of an insured only so long as the insured retains an estate or interest
in the land, or holds an indebtedness secured by a purchase money mortgage given
by a purchaser from the insured, or only so long as the insured shall have
liability by reason of covenants of warranty made by the insured in any transfer
or conveyance of the estate or interest. This policy shall not continue in force
in favor of any purchaser from the insured of either (i) an estate or interest
in the land, or (ii) an indebtedness secured by a purchase money mortgage given
to the insured.
3. Notice of Claim To Be Given by Insured Claimant
The insured shall notify The Fund promptly in writing (i) in case of any
litigation as set forth in Section 4(a) below, (ii) in case knowledge shall come
to an insured hereunder of any claim of title or interest which is adverse to
the title to the estate or interest, as insured, and which might cause loss or
damage for which The Fund may be liable by virtue of this policy, or (iii) if
title to the estate or interest, as insured, is rejected as unmarketable. If
prompt notice shall not be given to The Fund, then as to the insured all
liability of The Fund shall terminate with regard to the matter or matters for
which prompt notice is required; provided, however, that failure to notify The
Fund shall in no case prejudice the rights of any insured under this policy
unless The Fund shall be prejudiced by the failure and then only to the extent
of the prejudice.
4. Defense and Prosecution of Actions; Duty of Insured Claimant To Cooperate
(a) Upon written request by the insured and subject to the options
contained in Section 6 of these Conditions and Stipulations, The Fund, at its
own cost and without unreasonable delay, shall provide for the defense of an
insured in litigation in which any third party asserts a claim adverse to the
title or interest as insured, but only as to those stated causes of action
alleging a defect, lien or encumbrance or other matter insured against by this
policy. The Fund shall have the right to select counsel of its choice (subject
to the right of the insured to object for reasonable cause) to represent the
insured as to those stated causes of action and shall not be liable for and will
not pay the fees of any other counsel. The Fund will not pay any fees, costs or
expenses incurred by the insured in the defense of those causes of action which
allege matters not insured against by this policy.
(b) The Fund shall have the right, at its own cost, to institute and
prosecute any action or proceeding or to do any other act which in its opinion
may be necessary or desirable to establish the title to the estate or interest,
as insured, or to prevent or reduce loss or damage to the insured. The Fund may
take any appropriate action under the terms of this policy, whether or not it
shall be liable hereunder, and shall not thereby concede liability or waive any
provision of this policy. If The Fund shall exercise its rights under this
paragraph, it shall do so diligently.
(c) Whenever The Fund shall have brought an action or interposed a defense
as required or permitted by the provisions of this policy, The Fund may pursue
any litigation to final determination by a court of competent jurisdiction and
expressly reserves the right, in its sole discretion, to appeal from any adverse
judgment or order.
(d) In all cases where this policy permits or requires The Fund to
prosecute or provide for the defense of any action or proceeding, the insured
shall secure to The Fund the right to so prosecute or provide defense in the
action or proceeding, and all appeals therein, and permit The Fund to use, at
its option, the name of the insured for this purpose. Whenever requested by The
Fund, the insured, at The Fund's expense, shall give The Fund all reasonable aid
(i) in any action or proceeding, securing evidence, obtaining witnesses,
prosecuting or defending the action or proceeding, or effecting settlement, and
(ii) in any other lawful act which in the opinion of The Fund may be necessary
or desirable to establish the title to the estate or interest as insured. If The
Fund is prejudiced by the failure of the insured to furnish the required
cooperation, The Fund's obligations to the insured under the policy shall
terminate, including any liability or obligation to defend, prosecute, or
continue any litigation, with regard to the matter or matters requiring such
cooperation.
5. Proof of Loss or Damage
In addition to and after the notices required under Section 3 of these
Conditions and Stipulations have been provided The Fund, a proof of loss or
damage signed and sworn to by the insured claimant shall be furnished to The
Fund within 90 days after the insured claimant shall ascertain the facts giving
rise to the loss or damage. The proof of loss or damage shall describe the
defect in, or lien or encumbrance on the title, or other matter insured against
by this policy which constitutes the basis of loss or damage and shall state, to
the extent possible, the basis of calculating the amount of the loss or damage.
If The Fund is prejudiced by the failure of the insured claimant to provide the
required proof or loss or damage, The Fund's obligations to the insured under
the policy shall terminate, including any liability or obligation to defend,
prosecute, or continue any litigation, with regard to the matter or matters
requiring such proof of loss or damage.
In addition, the insured claimant may reasonably be required to submit to
examination under oath by any authorized representative of The Fund and shall
produce for examination, inspection and copying, at such reasonable times and
places as may be designated by any authorized representative of The Fund, all
records, books, ledgers, checks, correspondence and memoranda, whether bearing a
date before or after Date of Policy, which reasonably pertain to the loss or
damage. Further, if requested by any authorized representative of The Fund, the
insured claimant shall grant its permission, in writing, for any authorized
representative of The Fund to examine, inspect and copy all records, books,
ledgers, checks, correspondence and memoranda in the custody or control of a
third party, which reasonably pertain to the loss or damage. All information
designated as confidential by the insured claimant provided to The Fund pursuant
to this Section shall not be disclosed to others unless, in the reasonable
judgment of The Fund, it is necessary in the
Conditions and Stipulations (continued on following page)
EXHIBIT "E"
<PAGE>
Conditions and Stipulations (continued)
administration of the claim. Failure of the insured claimant to submit for
examination under oath, produce other reasonably requested information or grant
permission to secure reasonably necessary information from third parties as
required in this paragraph shall terminate any liability of The Fund under this
policy as to that claim.
6. Options To Pay or Otherwise Settle Claims; Termination of Liability
In case of a claim under this policy, The Fund shall have the following
additional options:
(a) To Pay or Tender Payment of the Amount of Insurance.
To pay or tender payment of the amount of insurance under this policy
together with any costs, attorneys' fees and expenses incurred by the insured
claimant, which were authorized by The Fund, up to the time of payment or tender
of payment and which The Fund is obligated to pay.
Upon the exercise by The Fund of this option, all liability and
obligations to the insured under this policy, other than to make the payment
required, shall terminate, including any liability or obligation to defend,
prosecute, or continue any litigation, and the policy shall be surrendered to
The Fund for cancellation.
(b) To Pay or Otherwise Settle With Parties Other than the Insured or With
the Insured Claimant.
(i) to pay or otherwise settle with other parties for or in the name
of an insured claimant any claim insured against under this policy, together
with any costs, attorney's fees and expenses incurred by the insured claimant
which were authorized by The Fund up to the time of payment and which The Fund
is obligated to pay; or
(ii) to pay or otherwise settle with the insured claimant the loss
or damage provided for under this policy, together with any costs, attorneys'
fees and expenses incurred by the insured claimant which were authorized by The
Fund up to the time of payment and which The Fund is obligated to pay.
Upon the exercise by The Fund of either of the options provided for in
paragraphs (b)(i) or (ii), The Fund's obligations to the insured under this
policy for the claimed loss or damage, other than the payments required to be
made, shall terminate, including any liability or obligation to defend,
prosecute or continue any litigation.
7. Determination, Extent of Liability and Coinsurance
This policy is a contract of indemnity against actual monetary loss or
damage sustained or incurred by the insured claimant who has suffered loss or
damage by reason of matters insured against by this policy and only to the
extent herein described.
(a) The liability of The Fund under this policy shall not exceed the least
of:
(i) the Amount of Insurance stated in Schedule A; or,
(ii) the difference between the value of the insured estate or
interest as insured and the value of the insured estate or interest subject to
the defect, lien or encumbrance insured against by this policy.
(b) (This paragraph dealing with Coinsurance was removed from Florida
policies.)
(c) The Fund will pay only those costs, attorneys' fees and expenses
incurred in accordance with Section 4 of these Conditions and Stipulations.
8. Apportionment
If the land described in Schedule A consists of two or more parcels which
are not used as a single site, and a loss is established affecting one or more
of the parcels but not all, the loss shall be computed and settled on a pro rata
basis as if the amount of insurance under this policy was divided pro rata as to
the value on Date of Policy of each separate parcel to the whole, exclusive of
any improvements made subsequent to Date of Policy, unless a liability or value
has otherwise been agreed upon as to each parcel by The Fund and the insured at
the time of the issuance of this policy and shown by an express statement or by
an endorsement attached to this policy.
9. Limitation of Liability
(a) If The Fund establishes the title, or removes the alleged defect, lien
or encumbrance, or cures the lack of a right of access to or from the land, or
cures the claim of unmarketability of title, all as insured, in a reasonably
diligent manner by any method, including litigation and the completion of any
appeals therefrom, it shall have fully performed its obligations with respect to
that matter and shall not be liable for any loss or damage caused thereby.
(b) In the event of any litigation, including litigation by The Fund or
with The Fund's consent, The Fund shall have no liability for loss or damage
until there has been a final determination by a court of competent jurisdiction,
and disposition of all appeals therefrom, adverse to the title as insured.
(c) The Fund shall not be liable for loss or damage to any insured for
liability voluntarily assumed by the insured in settling any claim or suit
without the prior written consent of The Fund.
10. Reduction of Insurance; Reduction or Termination of Liability
All payments under this policy, except payments made for costs, attorneys'
fees and expenses, shall reduce the amount of the insurance pro tanto.
11. Liability Noncumulative
It is expressly understood that the amount of insurance under this policy
shall be reduced by any amount The Fund may pay under any policy insuring a
mortgage to which exception is taken in Schedule B or to which the insured has
agreed, assumed, or taken subject, or which is hereafter executed by an insured
and which is a charge or lien on the estate or interest described or referred to
in Schedule A, and the amount so paid shall be deemed a payment under this
policy to the insured owner.
12. Payment of Loss
(a) No payment shall be made without producing this policy for endorsement
of the payment unless the policy has been lost or destroyed, in which case proof
of loss or destruction shall be furnished to the satisfaction of The Fund.
(b) When liability and the extent of loss or damage has been definitely
fixed in accordance with these Conditions and Stipulations, the loss or damage
shall be payable within 30 days thereafter.
13. Subrogation Upon Payment or Settlement
(a) The Fund's Right of Subrogation.
Whenever The Fund shall have settled and paid a claim under this policy,
all right of subrogation shall vest in The Fund unaffected by any act of the
insured claimant.
The Fund shall be subrogated to and be entitled to all rights and remedies
which the insured claimant would have had against any person or property in
respect to the claim had this policy not been issued. If requested by The Fund,
the insured claimant shall transfer to The Fund all rights and remedies against
any person or property necessary in order to perfect this right of subrogation.
The insured claimant shall permit The Fund to sue, compromise or settle in the
name of the insured claimant and to use the name of the insured claimant in any
transaction or litigation involving these rights or remedies.
If a payment on account of a claim does not fully cover the loss of the
insured claimant, The Fund shall be subrogated to these rights and remedies in
the proportion which The Fund's payment bears
Conditions and Stipulations (continued on reverse page)
EXHIBIT "E"
<PAGE>
Conditions and Stipulations (continued)
to the whole amount of the loss.
If loss should result from any act of the insured claimant, as stated
above, that act shall not void this policy, but The Fund, in that event, shall
be required to pay only that part of any losses insured against by this policy
which shall exceed the amount, if any, lost to The Fund by reason of the
impairment by the insured claimant of The Fund's right of subrogation.
(b) The Fund's Rights Against Non-insured Obligors.
The Fund's right of subrogation against non-insured obligors shall exist
and shall include, without limitation, the rights of the insured to indemnities,
guaranties, other policies of insurance or bonds, notwithstanding any terms or
conditions contained in those instruments which provide for subrogation rights
by reason of this policy.
14. Valuation of Estate or Interest Insured
If, in computing loss or damage incurred by the insured, it becomes
necessary to determine the value of the estate or interest insured by this
policy, the value shall consist of the then present worth of the excess, if any,
of the fair market rental value of the estate or interest, undiminished by any
matters for which claim is made, for that part of the term stated in Schedule A
then remaining plus any renewal or extended term for which a valid option to
renew or extend is contained in the Lease, over the value of the rent and other
consideration required to be paid under the Lease for the same period.
15. Miscellaneous Items of Loss
In the event the insured is evicted from possession of all or a part of
the land by reason of any matters insured against by this policy, the following,
if applicable, shall be included in computing loss or damage incurred by the
insured, but not to the extent that the same are included in the valuation of
the estate or interest insured by this policy.
(a) The reasonable cost of removing and relocating any personal property
which the insured has the right to remove and relocate, situated on the land at
the time of eviction, the cost of transportation of that personal property for
the initial twenty-five miles incurred in connection with the relocation, and
the reasonable cost of repairing the personal property damaged by reason of the
removal and relocation. The costs referred to above shall not exceed in the
aggregate the value of the personal property prior to its removal and
relocation.
"Personal property," above referred to, shall mean chattels and property
which because of its character and manner of affixation to the land, can be
severed therefrom without causing appreciable damage to the property severed or
to the land to which the property is affixed.
(b) Rent or damages for use and occupancy of the land prior to the
eviction which the insured as owner of the leasehold estate may be obligated to
pay to any person having paramount title to that of the lessor in the Lease.
(c) The amount of rent which, by the terms of the Lease, the insured must
continue to pay to the lessor after eviction from the land, or part thereof,
from which the insured has been evicted.
(d) The fair market value, at the time of the eviction, of the estate or
interest of the insured in any sublease of all or part of the land existing at
the date of the eviction.
(e) Damages which the insured may be obligated to pay to any sublessee on
account of the breach of any sublease of all or part of the land caused by the
eviction.
16. Arbitration
Unless prohibited by applicable law, arbitration pursuant to the Title
Insurance Arbitration Rules of the American Arbitration Association may be
demanded if agreed to by both The Fund and the insured. Arbitrable matters may
include, but are not limited to, any controversy or claim between The Fund and
the insured arising out of or relating to this policy, and service of The Fund
in connection with its issuance or the breach of a policy provision or other
obligation. Arbitration pursuant to this policy and under the Rules in effect on
the date the demand for arbitration is made or, at the option of the insured,
the Rules in effect at Date of Policy shall be binding upon the parties. The
award may include attorneys' fees only if the laws of the state in which the
land is located permit a court to award attorneys' fees to a prevailing party.
Judgment upon the award rendered by the Arbitrator(s) may be entered in any
court having jurisdiction thereof.
The law of the situs of the land shall apply to an arbitration under the
Title Insurance Arbitration Rules.
A copy of the Rules may be obtained from The Fund upon request.
17. Liability Limited to this Policy; Policy Entire Contract
(a) This policy together with all endorsements, if any, attached hereto by
The Fund is the entire policy and contract between the insured and The Fund. In
interpreting any provision of this policy, this policy shall be construed as a
whole.
(b) Any claim of loss or damage, whether or not based on negligence, and
which arises out of the status of the title to the estate or interest covered
hereby or by any action asserting such claim, shall be restricted to this
policy.
(c) No amendment of or endorsement to this policy can be made except by a
writing endorsed hereon or attached hereto signed by either the President, a
Vice President, or Agent of The Fund.
18. Severability
In the event any provision of the policy is held invalid or unenforceable
under applicable law, the policy shall be deemed not to include that provision
and all other provisions shall remain in full force and effect.
19. Notices, Where Sent
All notices required to be given The Fund and any statement in writing
required to be furnished The Fund shall include the number of this policy and
shall be addressed to The Fund at its principal office at Post Office Box
628600, Orlando, Florida 32862-8600.
EXHIBIT "E"
<PAGE>
================================================================================
OWNER'S
LEASEHOLD
TITLE INSURANCE
POLICY
Attorneys'
Title Insurance Fund,
Inc.
ORLANDO, FLORIDA
======
The
Fund
======
For information about coverage or assistance in
resolving complaints, call 407-240-3863.
================================================================================
EXHIBIT "E"
<PAGE>
CERTIFICATE OF REPRESENTATIONS,
WARRANTIES AND COVENANTS
[John J. Boyle]
By executing this Certificate in the space provided below, John J. Boyle
hereby represents, warrants and certifies to Pavilion Partners ("Pavilion"), a
Delaware general partnership, as follows:
(a) He is currently the owner of all of the issued and outstanding
capital stock of CDC/SMT, Inc. ("CDC/SMT"), a Florida corporation. Said
shares are fully paid and non-assessable and subject to no liens,
encumbrances, rights to purchase or other interests.
(b) His stock ownership interest in CDC/SMT shall be burdened by and
encumbered with the transfer restrictions contained in Section 18.02 of
that certain Partnership Agreement ("Partnership Agreement") dated
effective as of May 15, 1996 and entered into by and between Pavilion and
CDC/SMT regarding the formation of a general partnership between Pavilion
and CDC/SMT to be known as Coral Sky Amphitheater Partnership.
(c) Simultaneously herewith, all share certificates evidencing the
capital stock in CDC/SMT are being altered so as to include an appropriate
legend which references the transfer restrictions contained in Section
18.02 of the Partnership Agreement.
The undersigned additionally understands, agrees and acknowledges that (i)
Pavilion has relied upon the execution and delivery of this Certificate in
connection with its decision to enter into the Partnership Agreement with
CDC/SMT, (ii) Pavilion would not have entered into the Partnership Agreement but
for the agreement of the undersigned to execute and deliver this Certificate and
(iii) he shall indemnify, defend and hold Pavilion harmless from and against any
loss, cost, damage or claim which may be suffered by Pavilion arising out of or
relating to any of the representations and warranties contained herein being
untrue or any of the covenants set forth herein being breached.
DATED: May 15, 1996.
/s/ John J. Boyle
-------------------------------
JOHN J. BOYLE
<PAGE>
- --------------------------------------------------------------------------------
LEASE AGREEMENT, EASEMENT AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
by and between
SOUTH FLORIDA FAIR AND
PALM BEACH COUNTY EXPOSITIONS, INC.
and
PAVILION PARTNERS
- --------------------------------------------------------------------------------
Dated as of January 4, 1995
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS AND USAGE ......................................... 1
Section 1.1 Defined Terms ......................................... 1
Section 1.2 Number and Gender; Captions; References ............... 14
ARTICLE 2 - GRANT OF LEASE RIGHTS AND EASEMENT RIGHTS ..................... 15
Section 2.1 Premises Leased ....................................... 15
Section 2.2 Parking Facilities .................................... 15
Section 2.3 Access Easement ....................................... 15
Section 2.4 Utility Easement ...................................... 16
Section 2.5 Habendum .............................................. 17
Section 2.6 Title Review .......................................... 17
Section 2.7 Title Insurance ....................................... 19
Section 2.8 No Interest in Fee Estate ............................. 19
ARTICLE 3 - TERM OF LEASE ................................................. 20
Section 3.1 Initial Term .......................................... 20
Section 3.2 Renewal Options ....................................... 20
Section 3.3 Landlord's Buy-Out Option ............................. 20
ARTICLE 4 - RENT AND IMPOSITIONS .......................................... 22
Section 4.1 Payment of Rent ....................................... 22
Section 4.2 Rights Fee and Loan ................................... 22
Section 4.3 Annual Rental Payments ................................ 23
Section 4.4 Payment of Impositions and Sales Tax .................. 25
Section 4.5 Tax Contests .......................................... 26
Section 4.6 Evidence Concerning Impositions ....................... 27
Section 4.7 Separate Assessment and Rendition ..................... 27
Section 4.8 Landlord's Right to Perform Tenant's Obligation as to
Impositions ........................................... 28
Section 4.9 Accounting Books and Records .......................... 28
Section 4.10 Annual Reports and Audit Rights ....................... 28
Section 4.11 Rent for Calendar Year 1995 ........................... 29
ARTICLE 5 - CONSTRUCTION, USE AND MAINTENANCE OF AMPHITHEATER ............. 29
Section 5.1 Conditions Precedent .................................. 29
Section 5.2 Construction of Amphitheater .......................... 30
Section 5.3 Title to Improvements ................................. 32
Section 5.4 Continuing Right of Tenant to Make Changes, Alterations
and Additions ......................................... 32
Section 5.5 Tenant's Obligation to Discharge Mechanic's and
Materialman's Liens ................................... 33
i
<PAGE>
Section 5.6 Use of the Amphitheater Tract ......................... 33
Section 5.7 Compliance with Laws .................................. 34
Section 5.8 Repair ................................................ 34
Section 5.9 Utilities ............................................. 34
Section 5.10 Inappropriate Events .................................. 35
Section 5.11 As Built Plans ........................................ 35
ARTICLE 6 - LANDLORD'S RIGHT TO USE AMPHITHEATER .......................... 35
Section 6.1 Landlord Events ....................................... 35
Section 6.2 Landlord Events during the South Florida Fair ......... 38
Section 6.3 Landlord Events during the Pioneer Days Event ......... 38
Section 6.4 Other Landlord Events ................................. 39
ARTICLE 7 - IMPOSITION OF RESTRICTIVE COVENANTS ON LANDLORD LAND .......... 39
Section 7.1 Restrictive Covenants ................................. 39
Section 7.2 Exception for South Florida Fair and Pioneer Days Event 40
Section 7.3 Restriction on Use of Parking Facilities .............. 40
Section 7.4 Enforceability of Restrictive Covenants ............... 40
Section 7.5 Concessions ........................................... 40
ARTICLE 8 - PROVISIONS CONCERNING PARKING FACILITIES ...................... 41
Section 8.1 Joint Use ............................................. 41
Section 8.2 Maintenance of Parking Facilities ..................... 42
ARTICLE 9 - INSURANCE AND INDEMNITY ....................................... 42
Section 9.1 Property Insurance .................................... 42
Section 9.2 Builder's Risk Insurance .............................. 43
Section 9.3 Liability Insurance ................................... 43
Section 9.4 Worker's Compensation Insurance ....................... 44
Section 9.5 Concessionaire's Insurance ............................ 44
Section 9.6 Indemnity ............................................. 44
ARTICLE 10 - ASSIGNMENT, SUBLETTING AND ENCUMBERING BY TENANT; MORTGAGEE
MATTERS; GRANTING OF EASEMENTS ............................... 45
Section 10.1 Assignment, Subletting and Encumbering by Tenant ...... 45
Section 10.2 Notice to Mortgagees .................................. 46
Section 10.3 Mortgagee's Right to Perform Tenant's Obligations ..... 47
Section 10.4 Acquisition of Tenant's Interest in the Leasehold
Estate; New Lease ..................................... 47
Section 10.5 Further Assurances; Estoppel Certificate .............. 48
Section 10.6 Granting of Easements ................................. 49
Section 10.7 Tenant's Remedies ..................................... 49
Section 10.8 Mortgagee's Right to a New Lease ...................... 49
ii
<PAGE>
Section 10.9 Concurrent Exercise of Rights ......................... 50
Section 10.10 No Modification of Lease .............................. 50
ARTICLE 11 - LANDLORD'S REPRESENTATIONS, WARRANTIES AND COVENANTS ......... 51
Section 11.1 Peaceful Possession ................................... 51
Section 11.2 Organization .......................................... 51
Section 11.3 Binding Obligation .................................... 51
Section 11.4 Mortgage of Fee Estate ................................ 51
Section 11.5 Hazardous Substances .................................. 51
Section 11.6 Indemnification ....................................... 52
ARTICLE 12 - TENANT'S REPRESENTATIONS, WARRANTIES AND COVENANTS ........... 52
Section 12.1 Organization .......................................... 52
Section 12.2 Binding Obligation .................................... 52
Section 12.3 Hazardous Substances .................................. 53
Section 12.4 Waste ................................................. 53
Section 12.5 Security .............................................. 53
Section 12.6 Indemnification ....................................... 53
ARTICLE 13 - DEFAULT AND REMEDIES ......................................... 54
Section 13.1 Event of Tenant Default ............................... 54
Section 13.2 Landlord Remedies ..................................... 54
Section 13.3 Tenant's Failure to Perform Non-Rent Obligations ...... 55
Section 13.4 Event of Landlord Default ............................. 55
Section 13.5 Tenant's Remedies ..................................... 56
ARTICLE 14 - CASUALTY AND CONDEMNATION .................................... 56
Section 14.1 Casualty and Reconstruction ........................... 56
Section 14.2 Total and Partial Taking .............................. 58
Section 14.3 Awards ................................................ 58
Section 14.4 Temporary Taking ...................................... 59
Section 14.5 No Waiver ............................................. 60
ARTICLE 15 - MISCELLANEOUS ................................................ 60
Section l5.1 Notices ............................................... 60
Section 15.2 Modifications and Non-Waiver .......................... 61
Section 15.3 Florida Law ........................................... 61
Section 15.4 Unavoidable Delay ..................................... 61
Section 15.5 Severability .......................................... 61
Section 15.6 Attorneys Fees ........................................ 61
Section 15.7 Surrender of Premises; Holding Over ................... 62
Section 15.8 Relation of Parties ................................... 62
iii
<PAGE>
Section l5.9 Non-Merger ........................................... 62
Section 15.10 Entireties ........................................... 62
Section 15.11 Successors and Assigns ............................... 62
Section 15.12 Memorandum of Lease Agreement ........................ 62
Section l5.13 Arbitration .......................................... 63
Section 15.14 Brokerage Indemnity .................................. 63
Section 15.15 Liability of Tenant .................................. 64
Section 15.16 Landlord's Failure to Present Fair ................... 64
Section 15.17 Restrictions on Public Announcements ................. 64
Section l5.18 Board Approval ....................................... 64
Section 15.19 Cooperation on Sponsorships .......................... 64
Section 15.20 Counterparts ......................................... 65
Section 15.21 Time of the Essence .................................. 65
Section 15.22 Name of Amphitheater ................................. 65
Section l5.23 Signage .............................................. 65
Section 15.24 Box Seats and Tickets for the Landlord ............... 65
Section 15.25 Monetary Obligations ................................. 65
iv
<PAGE>
EXHIBITS:
A-1 Entire Tract
A-2 Amphitheater Tract
A-3 Plat Depicting the Amphitheater Tract and the Parking Tract
B Promissory Note for Credit Line
C Form of Owner Leasehold Policy
D Form of First Amendment
v
<PAGE>
LEASE AGREEMENT, EASEMENT AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
This LEASE AGREEMENT, EASEMENT AGREEMENT AND DECLARATION OF RESTRICTIVE
COVENANTS ("Lease") is entered into as of the 4th day of January, 1995 by and
between SOUTH FLORIDA FAIR AND PALM BEACH COUNTY EXPOSITIONS, INC. and PAVILION
PARTNERS. For and in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND USAGE
Section 1.1 Defined Terms.
(a) As used in this Lease, the following terms shall have the
respective meanings indicated:
(1) "Access Easement" shall mean the non-exclusive easement
created in favor of Tenant pursuant to the provisions of Section 2.3
hereof for the purpose of providing vehicular and pedestrian ingress
and egress to, from, between and among the (i) Amphitheater Tract,
(ii) the public rights of way abutting the boundaries of the Entire
Tract and (iii) the Parking Facilities.
(2) "Affiliate" shall mean, with respect to any Person, any
other Person which, directly or indirectly, controls or is
controlled by or is under common control with such Person. For
purposes of this definition, the terms "control," "controlled by"
and "under common control with," with respect to any Person, shall
mean possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or
otherwise.
(3) "Amphitheater" shall mean the outdoor entertainment
facility which Tenant shall construct on the Amphitheater Tract. It
will consist of approximately 5,000 (but in no event less than
4,500) permanent, fixed seats, of which, approximately 4,200 will be
under a roof, and lawn seating for approximately 15,000 persons. The
term "Amphitheater" shall include within its definition all
buildings, fixtures, personal property and other Improvements which
are constructed, installed or placed on the Amphitheater Tract as a
part of or related to such outdoor entertainment facility.
<PAGE>
(4) "Amphitheater Season" shall mean the continuous period of
time during any calendar year from May 1 through October 31 of such
calendar year.
(5) "Amphitheater Tract" shall mean that portion of the Entire
Tract described by metes and bounds on Exhibit "A-2" attached
hereto. The Amphitheater Tract is designated and depicted on the
plat attached hereto as Exhibit "A-3" attached hereto.
(6) "Applicable Cash Flow Amount" shall mean the average of
the Cash Flow Amount for each of the last three (3) Lease Years
prior to the Special Termination Effective Date.
(7) "Applicable Percentage" shall mean (i) two percent (2%) in
each of the first through fourth Lease Years and (ii) three percent
(3%) in all of the other Lease Years during the remainder of the
Term.
(8) "Cash Flow Amount" shall mean, in any Lease Year, (i) the
amount of all revenues, receipts and other funds received by Tenant,
on a cash basis, from the operation, ownership or use of the
Amphitheater during such Lease Year minus (ii) the amount of (a) all
expenditures paid by Tenant, on a cash basis, during such Lease Year
for any expenses, costs or charges which are related to the use,
ownership, maintenance, management or operation of the Amphitheater
and (b) all Rent paid under this Lease, on a cash basis, by Tenant
during such Lease Year.
(9) "Civic Events" shall mean any event or performance held,
conducted or presented at the Amphitheater which does not feature or
include as any part thereof a performance by a Touring Act. Civic
Events shall include, without limitation, the following types of
events:
(i) Cultural and community events including, but not
limited to, graduation exercises, convention events, meeting
award ceremonies, seminars, conferences and beauty pageants;
(ii) Events featuring local performers that do not
include or feature a performance by a Touring Act;
(iii) Local and regional performing arts and classical
events; and
(iv) Classical artists which require the support of the
local arts, so long as such artists are not a Touring Act.
2
<PAGE>
(10) "Commencement Date" shall mean the later of (A) the date
on which the Development Permit Condition is satisfied or is waived
in writing by Tenant, (B) the date on which the Construction Cost
Condition is satisfied or is waived in writing by Tenant, (C) the
date on which the Parking Capacity Condition is satisfied or is
waived in writing by Tenant or (D) the earlier of (i) the date on
which all of the Encumbrances (as such term is defined in Section
2.6(c) hereof) have been cured or removed or (ii) the date on which
Tenant waives in writing the right to terminate the Lease created
pursuant to the provisions of Section 2.6(d) hereof.
(11) "Construction Cost Condition" shall have the meaning
assigned to such term pursuant to the provisions of Section 5.1(b)
hereof.
(12) "Contingent Rental Amount" shall mean, for any Lease
Year, the sum of (i) the Applicable Percentage of the Ticket Revenue
Amount for such Lease Year plus (ii) 1.5% of the amount (if any) by
which the Ticket Revenue Amount for such Lease Year exceeds
$5,000,000. For purposes of the immediately preceding sentence, the
amount "$5,000,000" shall be increased at the end of every fifth
Lease Year in the same percentage amount by which the CPI Index
shall have increased during such five (5) year period.
(13) "CPI Index" shall mean the Consumer Price Index for All
Urban Consumers (U.S. City Average for all Items), 1982 - 84 equals
100 Base, published monthly by the U.S. Department of Labor's Bureau
of Labor of Statistics, or any successor agency or publication.
(14) "Development Permit Condition" shall have the meaning
assigned to it pursuant to the provisions of Section 5.1(a) hereof.
(15) "Drop Dead Date" shall mean, subject to the provisions of
the next succeeding sentence, May 1, 1995. If the Commencement Date
has not occurred on or before May 1, 1995 by reason of the
occurrence of one or more Unavoidable Delays, then the Drop Dead
Date shall be extended beyond May 1, 1995 by a length of time equal
to the duration of such Unavoidable Delays.
(16) "Eligible Revenues" shall mean the total amount of
revenues or other things of value actually received by Tenant from
time to time and for any particular period of time during the Term,
which arise out of or relate to Tenant's possession, control, use or
operation of the Amphitheater and the parking, access and/or utility
or other easements granted herein, or exercise of Tenant's rights
hereunder including, without limitation, (i) the revenues actually
received from direct sales (as "sales" is defined in Section
3
<PAGE>
212.02(16), Florida Statutes (1993)) of food, beverages,
merchandise, or other products or personal property at the
Amphitheater; and (ii) advertising revenues, season ticket revenues,
box seat sales, sponsorship revenues, service charge rebates,
facility charges, rental income and revenues from the granting of
telecast, broadcast, video or audio rights relating to any
performance or show at the Amphitheater; provided, however,
notwithstanding the foregoing, the term "Eligible Revenues," as used
in this Lease, shall (A) be net of all sums payable to third parties
pursuant to any agreement, license, concession or other contract
which grants the right to (i) sell food, beverages or Merchandise at
the Amphitheater, (ii) operate other concessions at the Amphitheater
or (iii) park vehicles for events at the Amphitheater and (B) not
include any of the following:
(i) All cash proceeds attributable to the sale of
tickets for admission to any events held, presented or
conducted at the Amphitheater.
(ii) All proceeds of loans, borrowings, financings or
other similar arrangements which require subsequent repayment
of such proceeds by Tenant.
(iii) All Ineligible Concession Advances.
(iv) The value of any advertising time or space received
in exchange for complimentary tickets.
(v) Insurance proceeds, condemnation proceeds and
casualty and condemnation loss settlements.
(vi) Revenues received by Tenant in connection with or
relating to Landlord Events.
(vii) Refunds, abatements or adjustments of Impositions.
(viii) Receipts attributable to returned Merchandise.
(17) "Employee" shall mean, (i) when used in conjunction with
the Amphitheater, any and all executive personnel of Tenant or
Tenant's general partners and all employees, agents, contractors,
concessionaires and all other employees and personnel under the
direction of Tenant, Tenant's contractors or Tenant's
concessionaires who perform duties or services related to the
development, construction, use, management, operation or maintenance
of the Amphitheater and (ii) when used in conjunction with the Fair
Operations, any and all executive personnel of Landlord and all
4
<PAGE>
employees, agents, contractors, concessionaires and all other
employees and personnel under the direction of Landlord, Landlord's
contractors or Landlord's concessionaires who perform duties or
services related to the use, management, operation or maintenance of
the Fair Operations.
(18) "Entire Tract" shall mean all of the tracts or parcels of
land described by metes and bounds on Exhibit "A-1" attached hereto.
The Entire Tract consists of the Fairground Tract, the Amphitheater
Tract and the Parking Tract.
(19) "Event of Landlord Default" shall mean the happening or
occurrence of any event or circumstance described in Section 13.4
hereof.
(20) "Event of Tenant Default" shall mean the happening or
occurrence of any event or circumstance described in Section 13.1
hereof.
(21) "Excess Rental Amount" shall mean, for any Lease Year,
the amount (if any) by which (i) the total amount of Rent payable by
Tenant to Landlord pursuant to the provisions of Section 4.3(a) and
Section 4.3(b) hereof with respect to such Lease Year exceeds (ii)
the Minimum Rental Amount for such Lease Year.
(22) "Fair Operations" shall collectively refer to the
Landlord's operations and businesses conducted on the Fairground
Tract including, without limitation, the South Florida Fair, the
Pioneer Days Event and the other trade shows, expositions, banquets,
conventions, festivals, seminars, conferences and similar events
conducted from time to time on the Fairground Tract.
(23) "Fair Requirement" shall collectively refer to the rules,
provisions and requirements imposed by deed, restrictive covenant,
statute, law, rule, ordinance, or other Legal Requirement which, in
any way, (i) require the holding, conducting or presenting of a fair
on the Entire Tract or (ii) subject Landlord's fee title interest in
the Entire Tract to potential forfeiture or reverter in the event
that a fair is not held, conducted or presented on the Entire Tract
during any specified period of time.
(24) "Fairground Tract" shall mean all of the Entire Tract
save and except the Amphitheater Tract and the Parking Tract.
(25) "Governmental Authority" shall mean any and all courts,
boards, agencies, commissions, special districts, offices or
authorities of any nature whatsoever for any governmental unit
(federal, state, county, district, municipal, city or otherwise)
whether now or hereafter in existence.
5
<PAGE>
(26) "Gross Concession Revenues" shall mean, with respect to a
particular concession sold, leased or licensed at the Amphitheater,
all gross revenues (net of applicable sales and other applicable
taxes) generated from the sale, lease or license of such concession
at the Amphitheater.
(27) "Hazardous Substances" shall mean any hazardous or toxic
substance or contaminated material including, without limitation,
asbestos, oil and petroleum products and those substances within the
scope of all federal, state and local environmental laws and
ordinances, including the Resource Conservation and Recovery Act, as
amended, the Comprehensive Environmental Response, Compensation and
Liability Act, as amended and the Superfund Amendment and
Reauthorization Act of 1986, as amended.
(28) "Impositions" shall mean any and all taxes and
assessments (ad valorem and non-ad valorem), use and occupancy
taxes, sales and use taxes, possessory interest taxes, water and
sewer charges, rates and rents, charges for public utilities,
excises, levies, license and permit fees, stormwater management
fees, user fees, and other charges by any public authority or
Governmental Authority, general and special, ordinary and
extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever, which shall or may during the Term be assessed, levied,
charged, confirmed or imposed by any public authority or
Governmental Authority upon or accrued or become a lien on the
Amphitheater Tract or which shall arise in connection with Tenant's
use, occupancy, or possession of the Amphitheater or exercise of any
Tenant's rights hereunder from time to time during the Term
(together with any interest and penalties thereon); provided,
however, Impositions shall not include any income tax, capital levy,
estate, succession, inheritance or transfer taxes, or similar tax of
Landlord; any franchise tax imposed upon any owner of the fee of the
Entire Tract; or any income, profits, or revenue tax, assessment, or
charge imposed upon the Rent or other benefit received by Landlord
under this Lease by any municipality, county, state, the United
States of America, or any other Governmental Authority.
(29) "Improvement" shall mean any building, structure,
construction, demolition, excavation, landscaping, fixture,
equipment or any part thereof existing or to be built, erected,
placed, installed, made, or done by Tenant on the Entire Tract or
any portion thereof for Tenant's benefit including, without
limitation, retention lakes, drainage facilities, utility
installations, paving, off-site improvements, lighting, walkways,
concession buildings, bathrooms, office facilities, stagehouse,
seating, roofing, berm and landscaping.
6
<PAGE>
(30) "Ineligible Concession Advances" shall mean that portion
of any lump sum payments received by Tenant from any concessionaire
in connection with the grant of a right to operate a concession at
the Amphitheater that does not exceed (i) $200,000 multiplied by
(ii) the number of years that such concessionaire is being granted
the right to operate such concession at the Amphitheater. For
purposes of the immediately preceding sentence, the amount
"$200,000" shall be increased at the end of every fifth Lease Year
in the same percentage amount by which the CPI Index shall have
increased during such five (5) year period.
(31) "Industry Standards" shall mean and refer to the
procedural practices used or followed at permanent outdoor
entertainment facilities which are similar in size and purpose to
the Amphitheater.
(32) "Initial Term" shall mean the initial term of this Lease
as described in Section 3.1 hereof.
(33) "Insolvent" shall mean the occurrence or happening of any
one or more of the following events with respect to Tenant:
(i) the commencement of a voluntary case under Title 11
of the United States Code ("Title 11") as from time to time in
effect, or Tenant authorizing, by appropriate proceedings of
trustees or other governing body, the commencement of such a
voluntary case;
(ii) Tenant filing an answer or other pleading admitting
or failing to deny the material allegations of a petition
filed against it commencing an involuntary case under Title
11, or seeking, consenting to or acquiescing in the relief
therein provided, or by its failing to controvert, in a timely
manner, the material allegations of any such petition;
(iii) the entry of an order for relief in any
involuntary case commenced under Title 11;
(iv) Tenant seeking relief as a debtor under any
applicable law, other than Title 11, in any jurisdiction,
which law relates to the liquidation or reorganization of
debtors or to the modification or alteration of the rights of
creditors, or by its consenting to or acquiescing in such
relief;
(v) the entry of an order by a court of competent
jurisdiction (1) finding Tenant to be bankrupt or insolvent,
(2) ordering or approving Tenant's liquidation, reorganization
or any modification or
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alteration of the rights of its creditors, or (3) assuming
custody of, or appointing a receiver or other custodian for,
all or a substantial part of Tenant's property; or
(vi) Tenant making an assignment for the benefit of, or
entering into a composition with, its creditors, or appointing
or consenting to the appointment of a receiver or other
custodian for all or a substantial part of its property;
provided, however, that this definition shall include any
adjudication, determination, declaration, appointment, assignment,
petition or execution only if the same shall not be set aside,
vacated, discharged or bonded within sixty (60) days after the
issuance hereof.
(34) "Landlord" shall mean South Florida Fair and Palm Beach
County Expositions, Inc., a Florida not-for-profit corporation
organized under Chapter 616 of the Florida statutes.
(35) "Landlord Land" shall collectively mean the Fairground
Tract and the Parking Tract.
(36) "Landlord Events" shall mean the events, shows or
performances presented by Landlord at the Amphitheater pursuant to
the rights and provisions contained in Section 6.1 or Section 6.4
hereof.
(37) "Lease Year" shall mean any one of the full calendar
years during the Term. The first Lease Year shall be the calendar
year 1996. Each subsequent Lease Year shall be the subsequent
calendar years thereafter during the Term.
(38) "Legal Requirements" shall mean (i) any and all present
and future judicial decisions, statutes, rulings, rules,
regulations, permits, certificates or ordinances of any Governmental
Authority in any way applicable to the Amphitheater, including the
construction, ownership, use, occupancy, possession, operation,
maintenance, alteration, repair or reconstruction thereof and (ii)
any and all terms, provisions, agreements or restrictions created or
imposed pursuant to any lease, contract, instrument or restrictive
covenants or other documents applicable to and enforceable against
the Amphitheater or the owner or operator of the Amphitheater.
(39) "Merchandise" shall mean any non-consumable items,
programs and souvenirs, tapes, records, T-shirts, caps, books and
similar souvenir type items sold or rented at the Amphitheater by
concessionaires authorized to sell such items on the Amphitheater
Tract.
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(40) "Minimum Rental Amount" shall mean, for any Lease Year,
the amount determined in accordance with the following provisions:
(i) The Minimum Rental Amount shall be, for each of the
first ten Lease Years, the amount specified below for such
Lease Year:
Lease Year Minimum Rental Amount
---------- ---------------------
1 $155,000
2 165,000
3 175,000
4 200,000
5-10 250,000
(ii) The Minimum Rental Amount shall be, for each of the
11th through 15th Lease Years, an amount equal to the greater
of (A) $300,000 or (B) the Minimum Rental Amount for each of
the 6th through 10th Lease Years increased by the percentage
amount that the CPI Index increased during the period of time
included within the 6th through 10th Lease Years.
(iii) The Minimum Rental Amount shall be, for each of
the 16th through 20th Lease Years, an amount equal to the
greater of (A) $350,000 or (B) the Minimum Rental Amount for
the 11th through 15th Lease Years increased by the percentage
amount that the CPI Index increased during the period of time
included in the 11th through 15th Lease Years.
(iv) The Minimum Rental Amount shall be, for each of the
21st through 25th Lease Years, an amount equal to the greater
of (A) $400,000 or (B) the Minimum Rental Amount for each of
the 16th through 20th Lease Years increased by the percentage
amount that the CPI Index increased during the period of time
included within the 16th through 20th Lease Years.
(v) The Minimum Rental Amount shall be, for each of the
26th through 30th Lease Years, an amount equal to the Minimum
Rental Amount for the immediately preceding Lease Year
increased by the percentage amount that the CPI index
increased during such immediately preceding Lease Year.
(41) "Mortgage" shall mean any deed of trust, mortgage,
security agreement, collateral assignment or other lien that Tenant
may hereafter
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affix or impose, during the Term, from time to time, at any time and
so often and as many times as Tenant may desire, against all or any
portion of the rights, interests and estates created hereunder in
favor of Tenant, including, without limitation, the leasehold estate
in the Premises created by this Lease.
(42) "Mortgagee" shall mean the owner of any indebtedness or
obligation secured by any Mortgage.
(43) "Net Concession Revenues" shall mean, with respect to a
particular concession sold or leased at the Amphitheater, the Gross
Concession Revenues with respect to such concession net of (i)
royalties and other fees due or payable out of the Gross Concession
Revenues to the owner of any trademark, tradename, servicemark or
copyright which is a part of such concession and (ii) any
commissions, costs, payments or other fees payable to, or retained
by, the concessionaire selling or leasing such concession at the
Amphitheater.
(44) "New Lease Notice" shall have the meaning assigned to it
pursuant to the provisions of Section 10.8 hereof.
(45) "Non-Rent Event of Default" shall have the meaning
assigned to it pursuant to the provisions of Section 13.3 hereof.
(46) "Non-Rent Obligations" shall mean any and all of the
covenants, warranties, representations and other obligations (other
than to pay the Rent) made or undertaken by Tenant to Landlord
pursuant to the provisions hereof.
(47) "Opening Date" shall mean the date upon which the first
public performance is presented at the Amphitheater.
(48) "Parking Capacity Condition" shall have the meaning
assigned to it pursuant to the provisions of Section 5.1(c) hereof.
(49) "Parking Easement" shall mean the non-exclusive easements
and rights granted to Tenant in and to the Parking Facilities
pursuant to the provisions of Section 2.2 hereof.
(50) "Parking Facilities" shall mean the parking facilities
currently located, or hereafter constructed in accordance with the
provisions of this Lease, on the Parking Tract.
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(51) "Parking Tract" shall mean that portion of the Entire
Tract designated and depicted on the plat attached hereto as Exhibit
"A-3".
(52) "Patron" shall mean, (i) when used in conjunction with
the Amphitheater, any person holding a ticket for a particular
performance or show to be held or presented at the Amphitheater on
the date of such performance or show and (ii) when used in
conjunction with the Fair Operations, any person attending an event
or other function on the Fairground Tract.
(53) "Permitted Encumbrances" shall have the meaning assigned
pursuant to the provisions of Section 2.6(c) hereof.
(54) "Permitted Rate" shall mean the lesser of (i) the prime
rate of interest charged from time to time by large U.S. money
center banks plus two percent (2%) per annum or (ii) the maximum
non-usurious interest rate permitted by applicable law from time to
time in effect.
(55) "Person" shall mean any individual, corporation,
partnership, limited liability company, estate, trust, governmental
agency, governmental authority or other legal entity.
(56) "Pioneer Days Event" shall mean an event and function
which focuses and highlights on the history of South Florida and is
conducted by Landlord annually for up to six consecutive days during
the month of May on the Fairground Tract in substantially the same
manner as such event and function was conducted in 1994. Tenant
acknowledges that Landlord may be required to change the name of
such event and function from Pioneer Days Event to some other name.
(57) "Plans and Specifications" shall mean the final plans and
specifications to be used during construction of the Amphitheater,
including a detailed amphitheater site plan, "as built" plans,
landscape plans, water management plans, architectural renderings,
elevations and drawings showing the topography of the land, the
location, layout, design and appearance of all improvements,
including sound containment devices, all improvements, off-site work
and the specifications describing the quality, style, color, if
relevant to the appearance of the improvements, and quantity of all
materials of which the buildings and improvements are to be
constructed. Without limiting the generality of the foregoing "Plans
and Specifications" shall include all documents required to be
submitted for governmental authorization and issuance of the
Required Permits.
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(58) "Pre-Approved Mortgagee" shall mean any one or more of
Sony Music Entertainment Inc., Viacom Inc. or any Affiliate of
either such corporation.
(59) "Pre-Approved Owner" shall mean any Affiliate of Tenant
or any Affiliate of any one or more of PACE Entertainment
Corporation, Viacom Inc. or Sony Music Entertainment Inc. (or their
respective corporate successors).
(60) "Premises" shall mean the rights, properties and
interests of Landlord being leased and demised hereby as more fully
described in Section 2.1 hereof.
(61) "Previous Amphitheaters" shall collectively mean all
other outdoor entertainment facilities which are currently owned
(either directly or indirectly) or managed by Pavilion, anywhere in
the United States, including, without limitation, The Woodlands,
Pittsburgh, Nashville, Raleigh, Charlotte, Phoenix and San
Bernardino.
(62) "Qualified Appraiser" shall mean a person (i) who is an
MAI Member of the American Institute of Real Estate Appraisers, or
equivalent designation or institute if such ceases to exist, (ii)
having at least seven (7) years of current experience appraising
land and commercial buildings and improvements (including
entertainment facilities of size and quality and in markets similar
to the Amphitheater), and (iii) having no direct or indirect
business or financial interest in Landlord or Tenant or their
respective Affiliates.
(63) "Renewal Terms" shall have the meaning assigned to it
pursuant to the provisions of Section 3.2 hereof.
(64) "Rent" shall mean all amounts required to be paid by
Tenant under the terms of this Lease.
(65) "Required Permits" shall mean all permits and
authorizations which are required to be obtained pursuant to any
applicable Legal Requirement for proper authorization to construct
and subsequently use, operate, repair and maintain the Amphitheater,
including, without limitation, all required building permits,
grading permits, concurrency reservation, water management permits,
health permits, indirect source permits, special use permits, zoning
or variance orders and agreements from Governmental Authorities to
provide offsite sanitary sewer, storm sewer and roadway improvements
which are necessary or required to permit adequate vehicular
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flow to and from the Parking Facilities to efficiently accommodate
Patrons of the Amphitheater.
(66) "Restrictive Covenants" shall mean the restrictive
covenants imposed on the Landlord Land pursuant to the provisions of
Article 7 hereof.
(67) "Rights Fee" shall mean the $600,000.00 payment due from
Tenant to Landlord on the Commencement Date as required pursuant to
the provisions of Section 4.2(a) hereof.
(68) "Season Ticket Revenue" shall mean all revenues and
receipts (net of applicable sales and other similar taxes)
attributable to the sale of season tickets or season passes for all
Tenant Events at the Amphitheater, inclusive of revenue derived from
the sale of box seats.
(69) "Show Hours" shall mean, on the days for which a
performance or event is scheduled to be held or presented at the
Amphitheater, those hours of the day beginning four hours prior to
the scheduled time for commencement of such performance or event and
ending four hours after the scheduled time for the conclusion of
such performance or event.
(70) "South Florida Fair" shall mean the annual public fair
and exposition held and presented on the Landlord Land by the
Landlord.
(71) "Special Termination Effective Date" shall have the
meaning assigned thereto pursuant to the provisions of Section
3.3(a) hereof.
(72) "Sponsor" shall mean any and all persons, firms and
corporations which agree to pay sums of money to Tenant in exchange
for the right to have its name associated with the Amphitheater or
any particular event to be held, conducted or presented at the
Amphitheater.
(73) "Sponsorship Revenue" shall mean any and all sums paid to
Tenant by a Sponsor which is directly related to the Amphitheater or
an event held, conducted or presented at the Amphitheater,
regardless of whether such amount is tied to the amount of revenues
generated from the Amphitheater or generated from a particular event
held, conducted or presented at the Amphitheater.
(74) "Tenant" shall mean Pavilion Partners, a Delaware general
partnership whose sole general partners are SM/PACE, Inc., a Texas
corporation, and Amphitheater Entertainment Partnership, a Delaware
general partnership.
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(75) "Tenant Events" shall mean all events, performances or
shows presented at the Amphitheater other than Landlord Events.
(76) "Term" shall mean the period of time covered by the
Initial Term and all of the Renewal Terms.
(77) "Ticket Revenue Amount" shall mean, for any Lease Year,
the total amount of cash proceeds attributable to the sale of
tickets for admission to Tenant Events during such Lease Year net of
(i) any applicable sales taxes, (ii) any commissions or other
charges retained by or payable to third party ticket selling
agencies and (iii) any Season Ticket Revenue.
(78) "Title Company" shall have the meaning assigned to it
pursuant to the provisions of Section 2.6(a)(1) hereof:
(79) "Touring Act" shall mean, as of any time, a performer,
entertainer, musician, comedian, actor or any group of the foregoing
which have been, during the immediately preceding 24 month period,
or are currently, for the next 12 month period, booked or scheduled
to appear or perform five or more dates or shows at performance
facilities with capacities for 8,000 or more people; provided,
however, the term "Touring Act" shall in no event include religious
and motivational lecturers.
(80) "Unavoidable Delay" shall mean a delay by reason of acts
of God, strikes, lockouts, labor troubles, inability to procure
materials, acts of war, restrictive governmental laws or regulations
or other similar causes.
(81) "Utility Easement" shall mean the easement granted to
Tenant pursuant to the provisions of Section 2.4 hereof for purposes
of installing, constructing, laying, operating, maintaining,
repairing, removing, demolishing and reconstructing Utility Lines
across the Landlord Land in order to provide utility services to the
Amphitheater.
(82) "Utility Lines" shall mean all such pipes, wires,
conduits, equipment, apparatus and facilities as shall be necessary
or appropriate for the provision of utility services to the
Amphitheater.
(b) All financial or accounting terms used in this Lease, which are
not otherwise defined herein, such as "net profit," "revenues,"
"depreciation" and "amortization," shall have the meanings given to them
pursuant to generally accepted accounting principles.
Section 1.2 Number and Gender; Captions; References. Pronouns, wherever
used herein, and of whatever gender, shall include natural persons and
corporations and
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associations of every kind and character, and the singular shall include the
plural wherever and as often as may be appropriate. Article and section headings
in this Lease are for convenience of reference and shall not affect the
construction or interpretation of this Lease. Whenever the terms "hereof",
"hereby", "herein", or words of similar import are used in this Lease, they
shall be construed as referring to this Lease in its entirety rather than to a
particular section or provision, unless the context specifically indicates to
the contrary. Any reference to a particular "Article" or "Section" shall be
construed as referring to the indicated article or section of this Lease.
ARTICLE 2
GRANT OF LEASE RIGHTS AND
EASEMENT RIGHTS
Section 2.1 Premises Leased. On and subject to the terms, provisions and
conditions contained herein, Landlord does hereby lease unto Tenant, and Tenant
does hereby rent and lease from Landlord, the following described property:
(a) all of the Amphitheater Tract; and
(b) all vertical and subterranean rights, presently existing or
hereafter arising, appurtenant to the Amphitheater Tract, and all
interests in and to the streets or alleyways in or contiguous thereto
owned or claimed by Landlord or in which Landlord has any right, title or
interest.
Section 2.2 Parking Facilities. Landlord does hereby GRANT and CONVEY unto
Tenant a non-exclusive easement and right ("Parking Easement") during the Term
to use the Parking Tract for purposes of parking the vehicles of all Employees
and Patrons of the Amphitheater. Article 8 of this Lease more fully sets forth
the relative rights and obligations of Landlord and Tenant in respect of the
Parking Easement and the use of the Parking Facilities pursuant to the Parking
Easement.
Section 2.3 Access Easement. Landlord does hereby GRANT and CONVEY unto
Tenant a non-exclusive easement during the Term on, over and across the Parking
Tract and the Fairground Tract ("Access Easement") for the purpose of providing
vehicular and pedestrian ingress and egress to, from, between and among (i) the
Amphitheater Tract, (ii) the public rights of way abutting the boundaries of the
Entire Tract and (iii) the Parking Facilities, on and subject to the following
terms, provisions and conditions:
(a) Use of the Access Easement shall be limited to the current
location of the existing roads, ramps, drives, stairways, bridges,
curb-cuts, walkways and passages as are currently constructed and located
on the Landlord Land.
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(b) The Access Easement shall be usable by all Employees and Patrons
of the Amphitheater.
(c) Landlord may not relocate, remove or otherwise alter any
existing road, ramp, drive, stairway, bridge, curb-cut, walkway or passage
currently located on the Landlord Land and which could reasonably be
expected to be used by Patrons and Employees of the Amphitheater for
access to or from the Amphitheater unless and until substitute access
facilities have been constructed and provided for the use of the Patrons
and Employees of the Amphitheater which provide pedestrian and vehicular
access to, from, between and among (i) the Amphitheater Tract, (ii) the
public rights of way abutting the boundaries of the Entire Tract and (iii)
the Parking Facilities in substantially the same manner, scope and quality
as is currently provided.
Section 2.4 Utility Easement. Landlord does hereby GRANT and CONVEY unto
Tenant during the Term a non-exclusive easement over, across, on and under the
Parking Tract and the Fairground Tract ("Utility Easement") for the purpose of
establishing, installing, constructing, laying, operating, maintaining,
repairing, removing, demolishing and reconstructing all such pipes, wires,
conduits, equipment, apparatus and facilities (collectively, "Utility Lines") as
shall be necessary or appropriate for the provision of utility services to the
Amphitheater or any portion thereof, including, but not limited to, water,
electricity, steam, natural gas, telephone, sanitary sewer, storm sewer and oil.
The Utility Easement shall be governed by the following terms, conditions and
provisions:
(a) Tenant shall utilize the Utility Easement in such locations and
places over, across, on and under the Landlord Land so as to minimize
interference with the current use of the Landlord Land.
(b) Prior to installing, constructing or laying any Utility Lines
on, over, across or under the Landlord Land. Tenant shall provide thirty
(30) days prior notice of the location of the specific route which such
Utility Lines shall take across the Landlord Land. If Landlord (i)
believes that the location of such Utility Lines may be moved in a manner
which would be less intrusive or disruptive of the current land usage of
the Landlord Land or (ii) desires that the location of such Utility Lines
be moved for better integration into the existing Utility Lines used by
Landlord, then Landlord shall have the right, during such thirty (30) day
period to notify Tenant thereof and provide notice of a proposed relocated
route. If Tenant and Landlord are unable to agree upon the specific route
of any Utility Line to be installed, constructed or laid pursuant to
Tenant's rights under the Utility Easement, then such matter shall be
resolved in accordance with the dispute resolution provisions contained in
Section 15.13 hereof. To the extent practicable, Tenant shall confine all
of the Utility Lines for each of the various utility services to be
provided to the Amphitheater within a singular area on, over, across and
under the
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Landlord Land no wider, at any one point, than the minimum width required
to accommodate the requirements of the various utility providers.
(c) Upon completion of construction of the Amphitheater, Tenant
shall execute and deliver to Landlord such instruments, documents and
agreements as may be reasonably requested by Landlord which amend the
Utility Easement in such a manner as to specifically locate by metes and
bounds the Utility Easement on, over, across and under the actual portion
of the Landlord Land where Utility Lines were actually placed by Tenant
for the provision of utility services to the Amphitheater, together with a
reasonable amount of space on either side thereof to permit Tenant access
to the Utility Lines for maintenance, repair and replacement.
(d) The Utility Easement, or any portion thereof, shall be
assignable by Tenant, separate and apart from the other rights, easements,
licenses, interests and estates created pursuant to this Lease, to any
third party utility provider.
(e) All Utility Lines shall be buried between the property line of
the Entire Tract and the property line of the Amphitheater Tract. Tenant
shall not disrupt, demolish, move or relocate Landlord's existing utility
lines, connections or installations without the prior consent of Landlord,
which consent may be expressly conditioned on Tenant's relocation of said
existing utilities at Tenant's expense.
Section 2.5 Habendum. TO HAVE AND TO HOLD, subject to the Permitted
Encumbrances, the Premises, the Parking Easement, the Access Easement and the
Utility Easement together with all and singular the rights, privileges, and
appurtenances thereunto attaching or in anywise belonging, unto Tenant and its
successors and assigns, for the Term.
Section 2.6 Title Review.
(a) Within fifteen (15) days after the date of this Lease, Landlord,
at its sole cost and expense, shall deliver or cause to be delivered to
Tenant the following:
(1) A current commitment for title insurance ("Title Report")
issued by Foster, Foster and Heffling, as agent for Attorneys' Title
Insurance Fund, Inc. ("Title Company"), setting forth the status of
title of the Entire Tract, and showing all liens, claims,
encumbrances, rights-of-way, reservations, restrictions, outstanding
mineral interests, and other matters, if any, relating to the Entire
Tract.
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(2) A true, correct and legible copy of all documents referred
to in the Title Report, including, without limitation, plats, deeds,
restrictions and easements.
(3) A written list ("Landlord Contract List") detailing any
and all contracts, agreements or other commitments by which Landlord
is bound and which could have any effect on the free and unfettered
right of Tenant to operate its business at the Amphitheater as
contemplated in accordance with the terms of this Lease. Landlord
shall include with the Landlord Contract List a true, correct and
complete copy of each contract, agreement or other commitment
included in the Landlord Contract List.
(b) Within fifteen (15) days after the date of this Lease, Landlord,
at the sole cost and expense of Tenant, shall deliver to Tenant a survey
("Survey") prepared by a surveyor ("Surveyor") acceptable to Tenant and
Title Company consisting of a plat and a metes and bounds description of
the Entire Tract, the Fairground Tract, the Parking Tract and the
Amphitheater Tract. The Survey shall (i) be prepared pursuant to a current
on the ground staked survey reflecting the actual dimensions of the Entire
Tract, the Fairground Tract, the Parking Tract and the Amphitheater Tract,
the total area of each such tract to the nearest square foot, location of
any easements, rights-of-way, setback lines, encroachments or overlaps
thereon or thereover and the outside boundary lines of any improvements
located thereon, (ii) identify any easements, setback lines or other
matters referred to in the Title Report by recording reference, (iii)
include the surveyor's registered number and seal, the date of the Survey
and a certificate satisfactory to Tenant and Title Company, (iv) be
sufficient to cause Title Company to delete, to the maximum extent
allowable, any survey exceptions which would otherwise be contained in the
Leasehold Policy (as such term is defined in Section 2.7 hereof), (v)
reflect any area within the Entire Tract which lies within any "wetlands"
area, any navigable water, any "waters of the state" or any protected
wetland as defined and regulated by either the federal government, the
State of Florida, any of their respective regulatory agencies or any other
Governmental Authority and (vi) reflect any area within the Entire Tract
which lies within the 100 year flood plain or any special flood hazard
area or general hazard area based on the Federal Emergency Management
Agency Flood Insurance Rate Maps or based on the maps or other guidelines
of any other Governmental Authority with jurisdiction in the State of
Florida over flood plains or flood ways.
(c) Tenant shall have fifteen (15) days from the receipt of the last
of the Title Report, the Survey and the Landlord Contract List in which to
examine same and notify Landlord of those encumbrances and contracts which
Tenant will accept the Premises subject to ("Permitted Encumbrances") and
those encumbrances and contracts which Tenant finds objectionable
("Encumbrances"). Both Landlord and Tenant shall have the right, but not
the obligation, to cure or remove any or all of
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the Encumbrances. Notwithstanding anything to the contrary contained
herein, any lien or mortgage which encumbers all or any portion of the
Entire Tract shall be deemed to be an Encumbrance for all purposes hereof
unless Landlord (i) obtains a full release of such liens or mortgages,
(ii) causes the holders of such liens or mortgages to enter into a Mutual
Recognition, Non-Disturbance and Attornment Agreement with Tenant in a
form acceptable to Tenant or (iii) causes the holders of such liens or
mortgages to subordinate such liens or mortgages to the interest of Tenant
created by this Lease in a manner acceptable to Tenant.
(d) If Landlord refuses or fails to cause the Encumbrances (other
than Permitted Encumbrances) to be removed or cured, then Tenant shall
have the right, as its exclusive right and remedy, at any time prior to
the Commencement Date, to terminate this Lease by providing written notice
thereof to Landlord. If Tenant elects to waive its right to terminate this
Lease pursuant to the provisions of the immediately preceding sentence,
then all Encumbrances which have not been previously removed or cured
shall thereafter be deemed to be "Permitted Encumbrances" for all other
purposes of this Lease.
Section 2.7 Title Insurance. On or before the Commencement Date, Landlord
shall deliver or cause to be delivered to Tenant, a Leasehold Owner Policy of
Title Insurance ("Leasehold Policy") in the amount of $8,750,000 issued by the
Title Company, subject to the Permitted Encumbrances and in the form attached
hereto as Exhibit "C." To the extent permissible under the applicable rules and
guidelines, (A) the printed exceptions numbered 1 through 5 on Schedule B of the
Leasehold Policy will be waived by endorsement, or other appropriate means, and
(B) the Leasehold Policy shall be issued or endorsed in such a manner as will
provide insurance to Tenant, subject only to the Permitted Encumbrances, that
(i) Tenant is the owner of a valid leasehold estate in and to the Amphitheater
Tract on and subject to the terms, provisions and conditions of this Lease, (ii)
Tenant is the owner of an irrevocable non-exclusive easement and right to park
vehicles on the Parking Tract on and subject to the terms of this Lease, (iii)
Tenant is the owner of a valid easement estate pursuant to the Access Easement
and the Utility Easement on and subject to the terms of this Lease and (iv) the
restrictive covenants imposed upon the Landlord Land pursuant to the provisions
of this Lease are enforceable by Tenant in accordance with their terms. The
premium for the issuance of the Leasehold Policy shall be paid one-half by
Landlord and one-half by Tenant. If Tenant requires the issuance of a Leasehold
Mortgagee Policy, the premium for the issuance thereof shall be borne solely by
Tenant.
Section 2.8 No Interest in Fee Estate. Notwithstanding anything contained
herein to the contrary, this Lease and the rights and interests conferred
hereunder shall not operate or be construed as granting to Tenant (i) any
interest in the fee simple estate of the Landlord or (ii) the right, power or
privilege to hereafter encumber the fee simple estate of the Landlord.
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ARTICLE 3
TERM OF LEASE
Section 3.1 Initial Term. The Initial Term of this Lease shall begin on
the Commencement Date and end on the last day of the tenth (10th) Lease Year.
Notwithstanding anything to the contrary contained herein, if the Commencement
Date has not occurred by the Drop Dead Date, then either party hereto may, at
any time thereafter, terminate this Lease by providing notice thereof to the
other party, in which event neither party hereto shall have any further rights,
privileges, duties or obligations hereunder. The right to terminate this Lease
pursuant to the provisions of the immediately preceding sentence shall terminate
upon the occurrence of the Commencement Date.
Section 3.2 Renewal Options. Tenant shall have four (4) successive options
to renew and extend this Lease for ten (10) additional years each, subject to
the following terms, provisions and conditions:
(a) Tenant shall not have the right to exercise any of such options
to extend the Term of this Lease at any time during which an Event of
Tenant Default is then in existence.
(b) In order to validly exercise any of its four (4) successive
options to extend the Term of this Lease pursuant to the foregoing
provisions, Tenant must provide written notice of its election to Landlord
no later than one hundred and eighty (180) days prior to the expiration of
the then effective Term. If Tenant fails to notify Landlord on or before
the date which is one hundred eighty (180) days prior to the expiration of
the then effective Term of Tenant's decision to exercise its then
applicable option to extend the Term of this Lease, then such failure to
so notify shall constitute a waiver of Tenant's right to extend the Term
pursuant to the provisions hereof and this Lease shall terminate upon
conclusion of the then effective Term.
Each ten (10) year period for which Tenant elects to extend the Term shall be
herein called a "Renewal Term" and shall be included within the Term of this
Lease.
Section 3.3 Landlord's Buy-Out Option. Landlord shall have a one-time
right and option (the "Special Termination Option") to terminate this Lease,
effective as of the end of the twentieth (20th) Lease Year or as of the end of
any Lease Year thereafter, in accordance with and subject to the following
terms, provisions and conditions:
(a) in order to validly exercise the Special Termination Option,
Landlord must provide written notice to Tenant of its exercise of the
Special Termination Option at least five (5) years prior to the date on
which the termination of this
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Lease pursuant to the Special Termination Option shall be effective (the
"Special Termination Effective Date").
(b) The Special Termination Effective Date must be the last day of a
Lease Year. In no event shall the Special Termination Effective Date be
prior to the last day of the twentieth (20th) Lease Year.
(c) If Landlord elects to terminate this Lease pursuant to the
Special Termination Option, then Landlord shall be obligated to pay to
Tenant, in immediately available funds, on the Special Termination
Effective Date, unless the parties otherwise agree to a different time
schedule for payment, an amount equal to the discounted present value,
utilizing the then yield on newly issued 10-year U.S. Treasury Bonds as
the discount rate, as of the Special Termination Effective Date of the
Cash Flow Equivalent Annuity (herein defined).
(d) As used above, the term "Cash Flow Equivalent Annuity" shall
mean a hypothetical right to receive equal annual lump sum payments in an
amount equal to the Applicable Cash Flow Amount on November 30 of each
calendar year commencing on the first November 30 following the Special
Termination Effective Date and continuing until November 30 of the
calendar year that this Lease would have terminated had Tenant exercised
all renewal options.
(e) If Landlord has previously exercised the Special Termination
Option, then Tenant shall thereafter (i) provide Landlord, with respect to
each of the last five (5) Lease Years prior to the Special Termination
Effective Date, an annual financial statement for the operations of the
Amphitheater and (ii) permit Landlord to examine its books and records
concerning or supporting Tenant's calculation of the Cash Flow Amount for
each of the last five (5) Lease Years prior to the Special Termination
Effective Date.
(f) Commencing with the date which is six (6) years prior to the
last day of the twentieth (20th) Lease Year and at any time thereafter,
Landlord shall have the right to provide a notice ("Inquiry Notice") to
Tenant requesting a determination and calculation of the Applicable Cash
Flow Amount as if, for these purposes only, the Special Termination
Effective Date was the last day of the Lease Year which most recently
ended before the giving of the Inquiry Notice. Within sixty (60) days
after receipt of an Inquiry Notice from Landlord, Tenant shall provide,
based upon Tenant's financial books and records, Landlord with a written
estimate of the Applicable Cash Flow Amount as if, for these purposes
only, the Special Termination Effective Date was the last day of the Lease
Year which most recently ended before the giving of the Inquiry Notice. If
requested by Landlord, Tenant shall provide Landlord reasonable access to
the books and records of Tenant relating to the operation and use of the
Amphitheater as may be necessary for
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Landlord to confirm the financial information and procedures used by
Tenant in the calculation of the Applicable Cash Flow Amount for these
purposes.
(g) If Landlord fails to pay to Tenant as and when due the amount
determined in accordance with the above provisions, and such failure to
pay continues for a period of thirty (30) days after Landlord has been
given notice thereof, then Tenant shall have the right and option of
either (x) treating such failure as a Landlord Event of Default and
exercising any and all remedies provided for under or pursuant to the
provisions of this Lease following the occurrence of a Landlord Event of
Default or (y) requiring that this Lease remain and continue in full force
and effect throughout the remaining Term notwithstanding the prior
exercise of the Special Termination Option by Landlord.
ARTICLE 4
RENT AND IMPOSITIONS
Section 4.1 Payment of Rent. All Rent payable hereunder by Tenant to or
for the account of Landlord is and shall be payable at 9067 Southern Boulevard,
P.O. Box 15915, West Palm Beach, Florida 33416-5915.
Section 4.2 Rights Fee and Loan. In partial consideration for the rights,
licenses and estates created in favor of Tenant pursuant to this Lease, Tenant
agrees as follows:
(a) Rights Fee. Tenant shall pay and deliver, in immediately
available funds, $600,000.00 to Landlord on the Commencement Date. The
Rights Fee represents a payment being made by Tenant to Landlord in
consideration for the rights being created in favor of Tenant over the
entirety of the Term pursuant to the provisions of this Lease.
(b) Credit Line. Tenant shall make available to Landlord an
advancing type line of credit with a maximum aggregate principal balance
of $400,000 ("Credit Line"). The terms of the Credit Line are summarized
as follows:
(1) Landlord may receive advances under the Credit Line from
Tenant at any time on or after the Opening Date and before the fifth
anniversary of the Opening Date by providing written notice to
Tenant of the amount of the advance request.
(2) No interest shall be payable on the principal outstanding
under the Credit Line from time to time.
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(3) The aggregate amount of principal advances under the
Credit Line shall not exceed $400,000.
(4) An annual principal payment for each Lease Year shall be
payable from Landlord to Tenant in an amount equal to the lesser of
(i) the Excess Rental Amount for such Lease Year or (ii) the then
outstanding principal balance under the Credit Line. The principal
installments for each Lease Year shall be payable from Landlord to
Tenant on the same date that Tenant's payment of Rent pursuant to
Section 4.3 hereof for such Lease Year is payable to Landlord, and
Tenant shall have the specific right and authority to offset against
such payment of Rent an amount equal to the required principal
reduction on the Credit Line.
(5) Landlord shall execute, prior to any advances being made
under the Credit Line, a promissory note in substantially the same
form as is attached hereto as Exhibit "B" to evidence its obligation
to repay all amounts advanced under the Credit Line.
(6) Any principal amounts outstanding under the Credit Line on
the ninth anniversary of the Opening Date shall be immediately due
and payable from Landlord to Tenant.
Section 4.3 Annual Rental Payments. For each of the Lease Years included
within the Term, Tenant shall pay to Landlord the following amounts as Rent:
(a) For each of the first thirty (30) Lease Years during the Term,
Tenant shall pay to Landlord an annual payment of Rent equal to the
greater of (i) the Minimum Rental Amount for such Lease Year or (ii) the
Contingent Rental Amount for such Lease Year. The Rent payable for each
Lease Year pursuant to the provisions of this Section 4.3(a) shall be
payable as follows:
(1) On the last day of May, June, July, August and September
of such Lease Year, an amount equal to 20% of the Minimum Rental
Amount for such Lease Year shall be due and payable.
(2) Within thirty (30) days after the end of such Lease Year,
Tenant shall pay to Landlord the amount, if any, by which the
Contingent Rental Amount for such Lease Year exceeds the Minimum
Rental Amount for such Lease Year.
(b) For each of the first thirty (30) Lease Years during the Term,
Tenant shall additionally pay to Landlord, within thirty (30) days after
the end of such Lease Year, an amount equal to the sum of the following
amounts:
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(1) The First Tranche Percentage of the lesser of (i) the
total amount of Eligible Revenues for such Lease Year or (ii)
$2,000,000.
(2) The Second Tranche Percentage of the amount, if any, by
which (A) the lesser of (i) the total amount of Eligible Revenues
for such Lease Year or (ii) $3,000,000 exceeds (B) $2,000,000.
(3) The Third Tranche Percentage of the amount, if any, by
which (A) the total amount of Eligible Revenues for such Lease Year
exceeds (B) $3,000,000.
As used herein, (i) the term "First Tranche Percentage" shall mean 1%
during each of the first 10 Lease Years and 2% during each of the 11th
through 30th Lease Years, inclusive, (ii) the term "Second Tranche
Percentage" shall mean 2% during each of the first 10 Lease Years and 4%
during each of the 11th through 30th Lease Years, inclusive, and (iii) the
term "Third Tranche Percentage" shall mean 5% during each of the first 10
Lease Years and 6% during each of the 11th through 30th Lease Years,
inclusive. For purposes of this Section 4.3(b), the references to the
amounts "$2,000,000" and "$3,000,000" contained herein shall each be
increased at the end of every fifth Lease Year in the same percentage
amount by which the CPI Index shall have increased during such five (5)
year period.
(c) For each of the thirty-first (31st) through the fiftieth (50th)
Lease Years, inclusive, the total amount of Rent payable by Tenant to
Landlord shall be equal to the Fair Market Rental Amount (as herein
defined). In this connection, the following provisions shall apply:
(1) If, at any time after the end of the twenty-eighth (28th)
Lease Year, Landlord and Tenant have not executed and entered into
an amendment to this Lease setting forth the specific amount of Rent
which will be payable during each of the thirty-first (31st) through
fiftieth (50th) Lease Years, then either party hereto may commence
an arbitration proceeding pursuant to Section 15.13 hereof to
determine the Fair Market Rental Amount. If (i) Tenant has exercised
the third renewal option provided for in Section 3.2 hereof covering
the thirty-first (31st) through the fortieth (40th) Lease Years,
inclusive, and (ii) the amount of Rent payable by Tenant to Landlord
during each of the thirty-first (31st) through fiftieth (50th) Lease
Years has not been determined by agreement or arbitration on or
before the date which is 120 days prior to the end of the thirtieth
(30th) Lease Year, then Landlord and Tenant shall be obligated and
required to commence at such time an arbitration proceeding pursuant
to Section 15.13 hereof to determine the Fair Market Rental Amount.
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(2) If Tenant has exercised the third renewal option provided
for in Section 3.2 hereof covering the thirty-first (31st) through
fortieth (40th) Lease Years, inclusive, before determination of the
Fair Market Rental Amount, then Tenant shall have the express right
and authority to thereafter cancel its exercise of such renewal
option upon final determination of the Fair Market Rental Amount. If
the thirty-first (31st) Lease Year commences before determination of
the Fair Market Rental Amount, then the amount of the Rent payable
by Tenant to Landlord shall be, until determination of the Fair
Market Rental Amount, equal to the amount of Rent payable during the
thirtieth (30th) Lease Year and, upon determination of the Fair
Market Rental Amount, Landlord and Tenant shall make appropriate
payments and adjustments between themselves as may be necessary to
reflect any overpayment or underpayment of the actual amount of Rent
which would have been due in accordance with the Fair Market Rental
Amount.
(3) As used herein, the term "Fair Market Rental Amount" shall
mean, as of the commencement of the thirty-first (31st) Lease Year,
the amount of annual rent which a willing tenant would then pay to a
willing landlord, neither under a compulsion to enter into a lease
transaction, for lease of the Amphitheater upon the terms and
conditions contained herein for a twenty (20) year term and taking
into consideration the size, purpose and condition of the
Amphitheater as it then exists.
(4) For purposes of any arbitration proceeding to be conducted
pursuant to Section 15.13 hereof to determine the Fair Market Rental
Amount, the arbitrators to be designated in accordance with the
provisions of Section 15.13 hereof must each be Qualified
Appraisers.
Section 4.4 Payment of Impositions and Sales Tax.
(a) During the Term, Tenant will pay as and when the same shall
become due all Impositions. Impositions for the tax year in which this
Lease commences as well as during the year in which the Term ends shall be
apportioned so that Tenant shall pay its proportionate share of the
Impositions for such periods of time. Where any Imposition that Tenant is
obligated to pay may be paid pursuant to law in installments, Tenant may
pay such Imposition in installments as and when such installments become
due. Tenant shall furnish to Landlord, promptly upon receipt thereof,
copies of all notices of Impositions. Upon the payment by Tenant of any
Impositions, Tenant shall deliver to Landlord evidence of such payment.
(b) Tenant shall pay to Landlord all state and local sales taxes
which are applicable to, or payable in connection with, the Rent payable
by Tenant to Landlord pursuant to the provisions of this Lease. Landlord
shall be responsible
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for collecting, receipting and delivering all such sales taxes to the
appropriate Governmental Authorities.
Section 4.5 Tax Contests.
(a) Tenant shall have the right, at its own expense, to contest the
amount or validity, in whole or in part, of any Imposition by appropriate
proceedings diligently conducted in good faith but only after payment of
such Imposition unless such payment, in Tenant's reasonable judgment,
would operate as a bar to such contest or would adversely affect Tenant's
chances for success in such contest, in which event, payment of such
Imposition shall be postponed if and only so long as:
(1) Neither the Entire Tract nor any part thereof would by
reason of such postponement or deferment be, in the reasonable
judgment of Landlord, in danger of being forfeited, lost or
materially affected; and
(2) Tenant shall have deposited with Landlord, or at the
election of Tenant, a bank or trust company ("Escrow Agent"),
mutually acceptable to Landlord and Tenant, cash in the amount so
contested and unpaid, together with all interest and penalties in
connection therewith and all charges that may or might be assessed
against or become a charge on the Entire Tract or any part thereof
in such proceedings (to the extent the amounts of all such interest,
penalties and charges are then ascertainable).
Upon the termination of any proceedings, it shall be the obligation of
Tenant to pay the amount of such Imposition or part thereof as finally
determined in such proceedings, the payment of which may have been
deferred during the prosecution of such proceedings, together with any
costs, fees, interests, penalties or other liabilities in connection
therewith, and, upon such payment, Landlord shall return (or shall direct
the Escrow Agent to return) any amount deposited with it, not theretofore
expended, with respect to such Imposition; provided, however, Landlord
shall, if requested by Tenant, disburse said monies on deposit with it (or
shall direct the Escrow Agent to disburse said monies on deposit with it)
direct to the imposing authority to whom such Imposition is payable. If,
at any time during the continuance of such proceedings, Landlord shall
reasonably deem the amount deposited as aforesaid insufficient, Tenant
shall, upon demand, make an additional deposit, as aforesaid, of such
additional sums as Landlord reasonably may request. Nothing herein
contained, however, shall be so construed as to allow such Imposition to
remain unpaid for such length of time as shall permit the Amphitheater
Tract, or any part thereof, to be sold, taken or otherwise adversely
affected by any Governmental Authority for the non-payment of the same;
and if at any time, in the reasonable judgment of Landlord, it shall
become necessary to do so, Landlord, after notice to Tenant, may direct
the application of the said
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monies as deposited or so much thereof as may be required to prevent the
adverse action against the Amphitheater Tract. If the amount so deposited
as aforesaid shall exceed the amount of such payments, then the excess
shall be paid to Tenant or, in case there shall be any deficiency, the
amount of such deficiency shall be promptly paid by Tenant. Tenant shall
promptly furnish Landlord with copies of all proceedings and documents
with regard to any such contest, and Landlord shall have the right, at its
expense, to participate therein.
(b) Landlord will, at the request of Tenant, reasonably cooperate in
contesting the amount or validity, in whole or in part, of any Imposition.
In that connection, Landlord shall execute, within fifteen (15) days after
receipt of written request therefor, any and all documents reasonably
requested by Tenant in connection with the foregoing. Tenant shall
reimburse Landlord for all out-of-pocket expenses incurred by Landlord
(including reasonable attorney's fees) in performing their obligations
under this Section 4.5. Notwithstanding anything contained herein to the
contrary, nothing in this Lease shall be construed as requiring Landlord
to do anything or execute any document which may, in Landlord's reasonable
opinion, cause Landlord or its property or transactions to be subject to
an Imposition for which it is not otherwise liable.
Section 4.6 Evidence Concerning Impositions. The certificate, advice,
bill, or statement issued or given by the appropriate officials authorized by
law to issue the same or to receive payment of any Imposition of the existence,
nonpayment, or amount of such Imposition shall be prima facie evidence for all
purposes of the existence, nonpayment, or amount of such Imposition.
Section 4.7 Separate Assessment and Rendition.
(a) Landlord hereby grants and gives permission to Tenant to render
the Premises and any improvements situated thereon from time to time
during the Term for each Governmental Authority imposing Impositions
thereon and may, if Tenant shall so desire, endeavor at any time or from
time to time to obtain a lowering of the valuation of the Premises and any
improvements situated thereon for the purpose of reducing Impositions
thereon and, in such event, Landlord will, at the request of Tenant,
reasonably cooperate in effecting such a reduction. In that connection,
Landlord shall execute, within fifteen (15) days after receipt of written
request therefor, any and all documents reasonably requested by Tenant in
connection with the foregoing. Tenant shall reimburse Landlord for all
out-of-pocket expenses incurred by Landlord (including reasonable
attorney's fees) in performing its obligations under this Section 4.7.
(b) To the extent that Tenant is permitted by the appropriate
Governmental Authorities to do so, Tenant agrees that Tenant will cause
the Premises to be separately assessed from the Fairground Tract and the
Parking Tract. Landlord
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hereby agrees to sign, to file and to process such subdivision documents
with the appropriate Governmental Authorities, all as may be reasonably
requested by Tenant to obtain such separate assessment of the Premises
and, further, to cooperate with Tenant in satisfying any additional
requirements relative thereto. For any tax year for which the Premises is
not separately assessed from Landlord Land, Landlord and Tenant shall
apportion the amount of Impositions due for such taxable year on a per
acre basis between the Premises, on the one hand, and the Fairground Tract
and the Parking Tract, on the other hand.
Section 4.8 Landlord's Right to Perform Tenant's Obligation as to
Impositions. If Tenant fails to timely pay any Imposition for which it is
responsible hereunder and if Tenant is not contesting the validity or amount of
such Imposition pursuant to the provisions of Section 4.5 hereof, then Landlord
may, at its election (but without obligation), pay such Imposition with any
interest and penalties due thereon, and the amount so paid shall be repayable by
Tenant, on demand, together with interest thereon at the Permitted Rate from the
date of such payment until repaid. Before Landlord may pay any Imposition on
behalf of Tenant, Landlord shall give Tenant fifteen (15) days' prior written
notice thereof.
Section 4.9 Accounting Books and Records. Tenant shall keep and maintain
complete, true and accurate records, books and accounts, at the Amphitheater, in
accordance with good and sound accounting practices, of its gross revenues and
other transactions and financial matters relating to the obligations of Tenant
under this Lease, including, but not limited to, ticket revenues, parking
receipts, concession revenues and sponsorship revenues. Landlord shall have the
right, during regular business hours and upon reasonable advance notice to
Tenant, to examine and inspect the books and records of Tenant, including any
tax reports pertaining to the transactions relating to this Lease, for the
purpose of investigating and verifying the accuracy of any statement of revenue
derived from the use of the Amphitheater by Tenant. Tenant shall keep all of
these records for a minimum of three years. Any inspection conducted by Landlord
of the books, records and accounts of Tenant pursuant to this Section 4.9 shall
be limited in scope exclusively to the business records of Tenant regarding the
transactions contemplated in this Agreement and shall not extend to any other
books, records, accounts or business ventures of Tenant or its partners.
Section 4.10 Annual Reports and Audit Rights. Within ninety (90) days
after the completion of each Lease Year, Tenant shall provide to Landlord a
complete report of the Ticket Revenue Amount for such Lease Year and of the
amount of Eligible Revenues for such Lease Year prepared by Tenant in a form
consistent with sound accounting practices. Additionally, Landlord may once in a
calendar year cause an audit of the business and transactions of Tenant relating
to this Lease to be made by a certified public accountant selected by Landlord
and if the statement of receipts and revenues previously made to Landlord is
found to be inaccurate, then there shall be an appropriate adjustment, and one
party shall pay to the other on demand the sums necessary to settle
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in full the accurate amount of money that should have been paid to Landlord or
retained by Tenant for the period or periods covered by the inaccurate statement
or statements. If the certified audit discloses an inaccuracy or an error of
greater than five percent (5%) in the amount of receipts or revenues reported by
Tenant for the period of the report, then Tenant shall immediately pay to
Landlord the cost of the audit; otherwise, the cost of the audit shall be paid
by Landlord. Any audit conducted by a certified public accountant on behalf of
Landlord shall be limited in scope exclusively to the business records and
transactions of Tenant relating to its obligations under this Lease and shall
not extend to any other books, records, accounts or businesses of Tenant. Any
inspection or audit conducted by Landlord pursuant to this Section 4.10 shall be
conducted at Amphitheater, where Tenant shall make its records available to
Landlord. Tenant agrees to cooperate with any auditor selected by Landlord for
this purpose.
Section 4.11 Rent for Calendar Year 1995. To avoid any ambiguity or
uncertainty, it is hereby specified and acknowledged that no Rent shall be due
or payable pursuant to the provisions of Section 4.3 hereof with respect to
calendar year 1995; however, notwithstanding the provisions contained in Article
7 hereof, Landlord shall have the express right, privilege and authority to
hold, conduct and present the Heritage Festival in November, 1995, but not at
any other time, on the Landlord Land in a manner similar to the holding,
conducting and presentation of the Heritage Festival in prior years.
ARTICLE 5
CONSTRUCTION, USE AND MAINTENANCE
OF AMPHITHEATER
Section 5.1 Conditions Precedent. Tenant's obligations under this Lease
shall be conditioned upon satisfaction and fulfillment of the following
conditions precedent:
(a) Tenant having obtained all of the Required Permits ("Development
Permit Condition") in a manner which will satisfy the following
provisions:
(1) The Required Permits shall not contain any provision which
imposes any requirement or obligation which could, in Tenant's
reasonable discretion, have a substantial adverse impact on the
ultimate construction, use, maintenance or operation of the
Amphitheater.
(2) The deadlines imposed upon Tenant pursuant to the Required
Permits for commencement and completion of construction and
commencement of use of the Amphitheater shall be commercially
reasonable and reasonably performable by Tenant.
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7. Placement of Phone Lines. A new clause (d) is hereby added at the end
of Section 2.3 of the Lease to read as follows:
(d) Landlord shall not agree to the future placement and location
of any phone utility lines anywhere on the Amphitheater Tract
or the Parking Tract pursuant to that certain Right-of-way
Easement recorded January 24, 1975, in Official Records Book
2386, Page 356 of Palm Beach County, or otherwise, without the
prior consent of Tenant, such consent not to be unreasonably
withheld.
8. Conformance with Utility Development Obligations. A new Section 11.7 is
hereby added at the end of Article 11 of the Lease to read in its entirety as
follows:
11.7 Development Agreement. Landlord represents and warrants to
Tenant that all of the obligations imposed upon, or undertaken
by, Landlord pursuant to the provisions of that certain
Agreement dated May 25, 1982, and entered into by and between
Landlord and Palm Beach County relating to the construction of
certain water and sewer facilities have been fully and
completely fulfilled and discharged.
9. Clean-Up of Parking Facilities. A new Section 8.3 is hereby added at
the end of Article 8 of the Lease to read in its entirety as follows:
8.3 Clean-Up of Parking Facilities.
(a) Tenant shall be responsible for removing, at its sole
cost and expense, all trash, litter and other debris
from the Parking Facilities as soon as reasonably
possible following the completion of each major use of
the Parking Facilities by, through or under Tenant, but
in any event prior to the next major use of the Parking
Facilities.
(b) Landlord shall be responsible for removing, at its sole
cost and expense, all trash, litter and other debris
from the Parking Facilities as soon as reasonably
possible following the completion of each major use of
the Parking Facilities by, through or under Landlord,
but in any event prior to the next major use of the
Parking Facilities.
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10. New Exhibits. Exhibits "E-1," E-2" and "E-3" attached to this
Amendment are hereby deemed to be attached and appended to the Lease as Exhibits
"E-1," "E-2" and "E-3," respectively.
11. Ratification. Except as expressly amended hereby, the parties hereto
do hereby ratify, confirm and reaffirm the terms, provisions and conditions
contained in the Lease and agree to be bound by all of the provisions thereof
on, subject to and in accordance with the provisions contained therein. In
particular, Landlord and Tenant each hereby agree and acknowledge that the Lease
is currently a binding, subsisting and enforceable agreement on and subject to
the terms, conditions and provisions contained therein (as amended hereby)
notwithstanding any prior application of the provisions of Section 15.18 of the
Lease.
WITNESS the execution hereof effective as of the date and year first above
written.
PAVILION PARTNERS
By: SM/PACE, INC., its general partner
By: /s/ Brian E. Becker
---------------------------------
Name: Brian E. Becker
Title: C.E.O.
SOUTH FLORIDA FAIR AND PALM BEACH COUNTY
EXPOSITIONS, INC., a Florida not-for-
profit corporation
By: /s/ Raymond C. Tylander
-------------------------------------
Name: Raymond C. Tylander
Title: President
6
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Exhibit "E-1"
[GRAPHIC OMITTED]
<PAGE>
Exhibit "E-2"
[GRAPHIC OMITTED]
<PAGE>
[PHOTO OMITTED]
Picket fence behind concrete barrier
[PHOTO OMITTED]
North side of Lake Brantley
Exhibit "E-3"
<PAGE>
[Letterhead of Sewell & Riggs]
August 28, 1995
Mr. Jeffry B. Lewis
PACE Entertainment Corporation
515 Post Oak Boulevard, Suite 300
Houston, Texas 77057
Re: SOUTH FLORIDA FAIR AND PALM BEACH COUNTY EXPOSITIONS, INC.
Dear Jeff:
In connection with the proposed amphitheater to be constructed in West
Palm Beach, enclosed with this letter for your files and records are the
following:
1. Copy of the fully executed Second Amendment to Lease Agreement by
and between South Florida Fair and Palm Beach County Expositions,
Inc. and Pavilion Partners; and
2. Copy of the fully executed Escrow Agreement between and among South
Florida Fair and Palm Beach County Expositions, Inc., Pavilion
Partners and First Union National Bank of Florida.
If you should have any questions or comments, please give me a call.
Sincerely,
/s/ Michael F. Rogers
Michael F. Rogers
MFR:rmg
Enclosures
<PAGE>
SECOND AMENDMENT TO LEASE AGREEMENT
THIS SECOND AMENDMENT TO LEASE AGREEMENT ("Second Amendment") is executed
and entered into effective as of this 31st day of July, 1995, by and between
SOUTH FLORIDA FAIR AND PALM BEACH COUNTY EXPOSITIONS, INC. ("Landlord") and
PAVILION PARTNERS ("Tenant").
RECITALS
A. Under effective date of January 4, 1995, Landlord and Tenant entered
into that certain Lease Agreement, Easement Agreement and Declaration of
Restrictive Covenants ("Original Lease") relating to the lease of certain real
property located in Palm Beach County, Florida, for the construction of an
outdoor entertainment facility thereon by Tenant.
B. Landlord and Tenant have previously modified and amended certain
provisions contained in the Original Lease pursuant to that certain First
Amendment to Lease Agreement dated June 5, 1995 (as so amended, the Original
Lease being herein called the "Lease").
C. Landlord and Tenant desire to further amend certain provisions of the
Lease as set forth herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties hereto do hereby agree as follows:
1. Defined Terms. All capitalized terms used in this Amendment which are
not defined herein shall have the meanings assigned by the provisions of the
Lease.
2. Extension of Drop Dead Date. Section 1.1(a)(15) of the Lease is hereby
deleted in its entirety and replaced with the following:
(15) "Drop Dead Date" shall mean, subject to the succeeding
provisions hereof, August 11, 1995. The Drop Dead Date may thereafter be
extended to August 31, 1995 in accordance with the following provisions:
(i) If Landlord has not caused all of the Encumbrances (other
than the Permitted Encumbrances) to be removed or cured, to the
satisfaction of Tenant, on or before August 11, 1995, then the Drop
Dead Date shall be automatically extended until August 31, 1995 with
no further action required by either Landlord or Tenant.
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(ii) If Landlord has caused all of the Encumbrances (other
than the Permitted Encumbrances) to be removed or cured, to the
satisfaction of Tenant, on or before August 11, 1995, then Tenant
shall have the right and option to unilaterally extend the Drop Dead
Date until August 31, 1995, by (A) delivering notice of the exercise
of such option to Landlord on or before August 14, 1995 and (B)
delivering to Landlord, within three (3) business days after
provision of the notice of the exercise of such option, a
non-refundable payment of $50,000.00 which will be credited against
and toward Tenant's obligation to pay the Rights Fee on the
Commencement Date pursuant to Section 4.2(a) hereof.
In addition to the foregoing, if the Commencement Date has not occurred on
or before the Drop Dead Date by reason of the occurrence of one or more
Unavoidable Delays, then the Drop Dead Date shall be extended by a length
of time equal to the duration of such Unavoidable Delays.
3. Modification of Description of Amphitheater Tract. Exhibit "A-2"
attached to the Lease is hereby deleted in its entirety and replaced with the
metes and bounds description attached to this Amendment as Exhibit "A-2".
4. Designation of Parking Tract. Exhibit "A-3" attached to the Lease is
hereby deleted in its entirety and replaced with the metes and bounds
description attached to this Amendment as Exhibit "A-3".
5. Provisions Regarding Rights Fee.
(a) Section 1.1(a)(67) of the Lease is hereby deleted in its entirety and
replaced with the following:
(67) "Rights Fee" shall mean the aggregate payment of $600,000.00
due from Tenant to Landlord as required pursuant to the provisions of
Section 4.2(a) hereof.
(b) Section 4.2(a) of the Lease is hereby deleted in its entirety and
replaced with the following:
(a) Tenant is obligated to pay and deliver to Landlord the aggregate
sum of $600,000.00 as a Rights Fee in accordance with the following
provisions:
(1) Tenant has previously paid, and Landlord acknowledges
prior receipt of, a $50,000.00 non-refundable payment which shall be
credited towards the $600,000.00 Rights Fee obligation described in
this Section 4.2(a).
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(2) If Tenant exercises its right and option to extend the
Drop Dead Date to August 31, 1995 pursuant to the provisions of
Section 1.1(a)(15)(ii) of this Lease, then the non-refundable
payment of $50,000.00 payable in accordance with such provisions
shall be credited towards the aggregate $600,000.00 Rights Fee
payment described in this Section 4.2(a).
(3) The unpaid balance of the aggregate $600,000.00 Rights Fee
shall be due and payable on the Commencement Date.
In addition, if Tenant exercises the option to extend the Drop Dead Date
to August 31, 1995 pursuant to the provisions of Section 1.1(a)(15)(ii)
of this Lease, then Tenant shall be obligated to pay and deliver to
Landlord on the Commencement Date an additional sum equal to the amount of
interest which would have accrued on the unpaid portion of the Rights Fee
from and after August 11, 1995 until the actual date of payment of the
Rights Fee at a rate of 6.5% per annum. The Rights Fee represents a
payment being made by Tenant to Landlord in consideration of the rights
being created in favor of Tenant over the entirety of the Term pursuant to
the provisions of this Lease.
6. Provisions Regarding Sales Tax. A new clause (c) is hereby added at the
end of Section 4.5 of the Lease to read in its entirety as follows:
(c) Landlord hereby agrees that Tenant shall not be required to pay
to Landlord any sales tax which could potentially be applicable with
respect to any Rent (including, without limitation, the Rights Fee)
payable hereunder ("Potential Sales Tax") which both Tenant and Landlord
mutually believe are not rightfully due and owing under applicable law.
Notwithstanding the foregoing, Tenant shall indemnify and hold Landlord
harmless from and against any claim, demand, cause of action or proceeding
asserted, brought or filed against Landlord in connection with or relating
to any Potential Sales Tax which is not paid by Tenant pursuant to the
provisions hereof including, without limitation, any and all penalties and
interest thereon and attorneys' fees and other costs of defense related
thereto. Notwithstanding the provisions of clause (a) of this Section 4.5,
Tenant shall have the right, at its own expense, to contest the amount or
validity, in whole or in part, of any Potential Sales Tax by appropriate
proceedings diligently conducted in good faith without the requirement of
any prior payment of, or escrow for, such Potential Sales Tax. For
purposes of the forgoing provisions, Landlord and Tenant each hereby
confirm their mutual belief that no state, county or local sales tax is
due and owing in respect of the Rights Fee payable hereunder because of
the tax exempt status of the Landlord.
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7. Timing of Construction. The first sentence of Section 5.2(a) is hereby
deleted and replaced with the following:
Subject to Unavoidable Delays, Tenant shall (i) commence construction of
the Amphitheater on the Amphitheater Tract within five (5) business days
after issuance of Tenant's soil disturbance permit, (ii) diligently and
continuously pursue completion of construction of the Amphitheater after
commencement of construction and (iii) substantially complete construction
of the Amphitheater on or before March 31, 1996. Landlord specifically
agrees and authorizes Tenant to commence construction of the Amphitheater
on the Amphitheater Tract pursuant to the foregoing provisions even though
construction activity may begin prior to the Commencement Date.
B. New Retention Ponds, New Auto Auction Lots and Demolition of Speedway
Facilities. Section 5.2(b) of the Lease is hereby deleted in its entirety and
replaced with the following:
(b) Landlord and Tenant hereby agree to the following matters:
(1) Tenant hereby agrees and covenants with Landlord that it
will construct a shell rock parking lot on the site designated as
the "New Auto Auction Lot" on the plat attached hereto as Exhibit
"F" to approximately the same standards and specifications as the
shell rock parking lot currently located on the site designated as
the "Old Auto Auction Lot" on Exhibit "F" attached hereto.
(2) Landlord hereby grants to Tenant the right, for no
additional fee or charge, to enter into and go upon the Fairground
Tract at the specific locations identified as the "Dig Areas" on
Exhibit "F" attached hereto, for purposes of digging retention ponds
("New Retention Ponds") at such sites and removing the earth, clay
and soil therefrom and placing such earth, clay and soil on the
Amphitheater Tract to be incorporated into the Amphitheater's berm.
The construction work associated with the creation of the New
Retention Ponds shall be done at the sole cost and expense of Tenant
and in compliance with all Applicable Legal Requirements. In
addition, Tenant agrees that the banks surrounding the New Retention
Ponds shall be seeded or sodded in a manner reasonably acceptable to
both Tenant and Landlord. That portion of the work associated with
the digging and creation of the New Retention Ponds which will
destroy the Old Auto Auction Lot may not be commenced until
completion of the work described in clause (1) above in regard to
the construction of the New Auto Auction Lot.
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(3) On and subject to the conditions set forth below, Tenant
agrees to (A) remove the earth, clay and soil constituting the berm
formally used as a part of Landlord's speedway on the Fairground
Tract, (B) demolish and remove the old speedway building located
adjacent to the speedway berm and (C) cause the area comprising the
speedway berm and the old speedway building to be left in a level,
graded condition. The foregoing obligations are subject to the
following conditions:
(i) Tenant shall not be obligated to do any of the
foregoing if any permits are required to be obtained to
complete such work unless Landlord obtains such required
permits, at its sole cost and expense, prior to completion of
construction of the Amphitheater's berm so that Tenant may use
the materials in the speedway berm and the speedway building
as a part of the Amphitheater's berm.
(ii) Tenant shall not be obligated to do any of the
foregoing if Tenant determines, in its reasonable discretion,
that the materials contained in the speedway berm or speedway
building are not suitable for incorporation into the
Amphitheater's berm by reason of the existence of any
hazardous substances therein.
(4) Upon completion of the construction of the New Retention
Ponds, Tenant shall, as soon thereafter as is reasonably
practicable, but in no event later than December 15, 1995, construct
a north-south roadway on the Fairground Tract immediately adjacent
to and along the easterly boundary of the Amphitheater Tract
providing access between the two east-west roadways located
immediately to the north and the south of the Amphitheater Tract,
respectively, with a 15-foot wide asphalt surface located within the
middle of a 20-foot wide graded, level right-of-way area.
9. Modification of Development Obligations. Notwithstanding the provisions
of Section 5.12 of the Lease, Landlord hereby agrees with Tenant as follows:
(a) Landlord shall complete the removal of all trailers,
utility connections and other improvements or fixtures
on the Trailer Park pursuant to Section 5.12(a)(i) of
the Lease on or before August 18, 1995.
(b) The Landlord shall clear up to 250 feet of the southerly
portion of the Trailer Park pursuant to Section
5.12(a)(i) of the Lease. The shell rock parking lot to
be constructed by Tenant
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pursuant to Section 5.2(b)(1) of the Lease (as amended
hereby) shall be coextensive with the portion of the
Trailer Park cleared by Landlord pursuant to Section 5.1
2(a)(i) of the Lease.
(c) Landlord shall relocate the entrance of the Trailer Park
to the southern side of the Trailer Park.
10. Tenant's Secondary Use of Landlord's Parking Areas. A new Section 8.4
is hereby added at the end of Article 8 of the Lease to read in its entirety as
follows:
Section 8.4 Tenant's Use of Landlord's Parking Areas.
(a) Reference is made to the following:
(1) There are certain parking lots and improvements
("Landlord's Parking Facilities") located on the Fairground
Tract which are used by Landlord in conducting its various
activities and businesses on the Fairground Tract.
(2) Due to the size of the Parking Tracts and the number
of vehicles that can feasibly be parked thereon, it is
possible that, on the night of an event or performance to be
held at the Amphitheater for which the expected crowd will be
at or near the Amphitheater's capacity ("Large Attendance
Night"), there will not be a sufficient number of parking
spaces within the Parking Facilities to accommodate all of the
vehicles of the Amphitheater's Patrons.
(b) Landlord hereby grants to Tenant a limited, non-exclusive
right and license ("Limited Parking License") to use the Landlord's
Parking Facilities on each Large Attendance Night on and subject to
the following provisions:
(1) As a condition to Tenant's right to use any portion
of the Landlord's Parking Facilities on a Large Attendance
Night pursuant to the Limited Parking License, Tenant must
provide written notice ("Parking Use Notice") to Landlord no
earlier than 45 days and no later than 10 days before such
Large Attendance Night specifying the maximum expected number
of parking spaces within the Landlord's Parking Facilities
which will be required by Tenant on the Large Attendance Night
specified in such Parking Use Notice.
(2) The number of parking spaces in the Landlord's
Parking Facilities which Tenant may use pursuant to the
Limited Parking License on any Large Attendance Night shall
not exceed the
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lesser of (i) the number of spaces specified in the Parking
Use Notice for such Large Attendance Night or (ii) the number
of spaces which Landlord notifies Tenant within 5 days after
receipt of such Parking Use Notice will be available in the
Landlord's Parking Facilities for use by Tenant on such Large
Attendance Night after subtracting the number of spaces which
the Landlord reasonably expects to put to use during such
Large Attendance Night for its own purposes.
(3) Without the prior consent of Landlord, Tenant may
not begin parking the vehicles of the Amphitheater's Patrons
in the Landlord's Parking Facilities on a Large Attendance
Night pursuant to the Limited Parking License until the
Parking Facilities are substantially full.
(4) So long as the minimum number of spaces determined
in accordance with clause (2) above are provided for Tenant's
use, Landlord shall have the right to designate the portions
of the Landlord's Parking Facilities which will be available
for Tenant's use on a Large Attendance Night pursuant to the
Limited Parking License; provided, however, Landlord shall act
reasonably in making such space allocations to take into
account the proximity of the spaces designated for the
Tenant's use to the Amphitheater and the proximity of the
spaces retained by the Landlord to the locale of Landlord's
event being held on the Fairground Tract. Tenant shall have
the right to "rope off" the areas designated for its use and
restrict access thereto.
(5) For purposes of Section 8.3 hereof and Article 9
hereof, the portions of the Landlord's Parking Facilities
which are used by Tenant on any Large Attendance Night
pursuant to the Limited Parking License shall be deemed to be
a part of the Parking Facilities. All revenues attributable to
the use of the Landlord's Parking Facilities by Tenant
pursuant to the Limited Parking License shall be the sole and
exclusive property of Tenant.
(6) Tenant hereby agrees and acknowledges that, with
respect to the portion of the Landlord's Parking Facilities
designated as the "New Auto Auction Lot" on the plat attached
hereto as Exhibit "F", the Limited Parking License is subject
and subordinate to the prior right of AA Property Holdings,
Inc. and ADT Automotive, Inc. to use the New Auto Auction Lot
for purposes of parking vehicles thereon in connection with
the operation of its auto auction business.
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(7) The Landlord's Parking Rep and the Tenant's Parking
Rep will work together in a reasonable and logical manner to
implement the logistics of Tenant's use of the Landlord's
Parking Facilities pursuant to the Limited Parking License.
11. Insurance Provisions. The phrase "additional named insured" appearing
in Section 6.1(c) and in Section 9.3 of the Lease are each hereby amended to be
references to the phrase "additional insured."
12. New Exhibit. Exhibit "F" attached to this Amendment is hereby deemed
to be attached and appended to the Lease as Exhibit "F" thereto.
13. Ratification. Except as expressly amended hereby, the parties hereto
do hereby ratify, confirm and reaffirm the terms, provisions and conditions
contained in the Lease and agree to be bound by all of the provisions thereof
on, subject to and in accordance with the provisions contained therein.
14. Replacement of Letter Agreement. This Second Amendment replaces and
supersedes in all respects the letter agreement dated July 28, 1995 and signed
on behalf of Tenant by Michael F. Rogers and on behalf of Landlord by John Fenn
Foster.
15. Right of Set-Off Related to Landlord's Mortgage. Tenant shall have the
express right and authority to advance its own funds to cure any monetary
default existing under or in respect of any indebtedness secured by a lien on
Landlord's fee estate in the Entire Tract. If Tenant should ever advance its own
funds pursuant to the provisions of the immediately preceding sentence, then (i)
Landlord shall immediately repay all of such amounts so advanced, together with
interest thereon at the Permitted Rate upon demand and (ii) Tenant shall have
the express right of set-off from any sums due and owing under the Lease to
Landlord for recoupment of all amounts so advanced. Notwithstanding the
foregoing, Tenant expressly agrees and acknowledges that the provisions of this
Paragraph 15 shall not be binding upon any person that acquires ownership of the
fee estate in the Entire Tract pursuant to a foreclosure of, or conveyance in
lieu of foreclosure in respect of, any lien on the fee estate in the Entire
Tract.
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WITNESS THE EXECUTION HEREOF effective as of the date and year first above
written.
PAVILION PARTNERS
By: SM/PACE, INC., its general partner
By: Jeffry B. Lewis
---------------------------------
Name: Jeffry B. Lewis
Title: Secretary
"TENANT"
SOUTH FLORIDA FAIR AND PALM BEACH
COUNTY EXPOSITIONS, INC., a Florida
not-for-profit corporation
By: /s/ Raymond C. Tylander
-------------------------------------
Name: Raymond C. Tylander
Title: President
"LANDLORD"
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EXHIBIT "A-2"
AMPHITHEATER PARCEL
A portion or Tracts 17, 18, 19 and 20, Block 7, PALM BEACH FARMS COMPANY. PLAT
NO. 3, recorded in Plat Book 2, Pages 45 through 54, Public Records of Palm
Beach County, Florida, being more particularly described as follows:
COMMENCING at the Northwest corner of Tract 29, Block 7, of said PALM BEACH
FARMS COMPANY PLAT NO. 3, thence North 00-55-30 West, a distance of 60.00 feet
to a point 60.00 feet North of as measured at a 90 degree angle to the North
line of said Tract 29; thence South 89-50-54 West, a distance of 16.72 feet to
the POINT OF BEGINNING; thence North 04-33-57 East, a distance of 23.40 feet to
the Point of Curvature of a curve concave to the southwest having a radius or
86.00 feet; thence northwesterly along the arc of said curve through a central
angle of 94-27-03, a distance of 141.77 feet to the Point of Tangency; thence
North 89-53-06 West, a distance of 113.47 feet; thence North 06-43-58 West, a
distance of 59.63 feet; thence North 10-23-49 West, a distance of 376.62 feet;
thence North 00-00-00 West, a distance of 168.46 feet; thence North 89-38- 52
East, a distance of 250.67 feet; thence South 87-47-17 East, a distance of
585.09 feet; thence South 26-31-59 East, a distance of 85.04 feet to the Point
of Curvature of a curve concave westerly having a radius of 590.00 feet; thence
southerly along the arc of said curve through a central angle of 63-12-28, a
distance of 650.88 feet to a point on a non-tangent line; thence South 89-50-54
West, a distance or 546.53 feet to the POINT OF BEGINNING.
Containing 13.510 acres, more or less.
<PAGE>
EXHIBIT "A-3"
PARKING TRACT A
A portion of Tracts 17, 18, 19 and 20, Block 7, PALM BEACH FARMS COMPANY. PLAT
NO. 3, recorded in Plat Book 2, Pages 45 through 54, Public Records of Palm
Beach County, Florida, being more particularly described as follows:
COMMENCING at the Northwest corner of Tract 29, Block 7, of said PALM BEACH
FARMS COMPANY PLAT NO. 3, run thence North 00-55-30 West, a distance of 60.00
feet to a point 60.00 feet North od as measured at a 90 degree angle to the
North line of said Tract 29; thence South 89-50-54 West, a distance of 16.72
feet; thence North 04-33-57 East, a distance of 23.40 feet to the Point of
Curvature of a curve concave to the southwest having a radius of 86.00 feet;
thence northwesterly along the arc of said curve through a central angle of
94-27-03, a distance of 141.77 feet to the Point of Tangency; thence North
89-53-06 West, a distance of 113.47 feet; thence North 06-43-58 West, a distance
of 59.63 feet; thence North 10-23-49 West, a distance of 166.14 feet to the
POINT OF BEGINNING; thence South 89-04-30 West, a distance of 263.38 feet;
thence South 00-55-30 East, a distance of 198.00 feet; thence South 89-04-30
West, a distance of 473.00 feet; thence North 00-55-30 West, a distance of
616.73 feet; thence North 89-04-30 East, a distance of 128.60 feet; thence North
02-44-46 East, a distance of 529.74 feet; thence North 89-05-43 East, a distance
of 1128.97 feet; thence South 00-54-17 East, a distance of 275.64 feet; thence
South 45-54-17 East, a distance of 41.21 feet; thence North 89-05-43 East, a
distance of 129.07 feet; thence South 00-55-30 East, a distance of 295.71 feet;
thence North 87-47-17 West, a distance of 495.22 feet; thence South 89-38-52
West, a distance of 250.67 feet; thence South 00-00-00 East, a distance of
168.46 feet; thence South 10-23-49 East, a distance of 210.48 feet to the POINT
OF BEGINNING.
Containing 24.628 acres, more or less.
PARKING TRACT B
A portion of Tracts 17, 18, 19 and 20, Block 7, PALM BEACH FARMS COMPANY, PLAT
NO. 3, recorded in Plat Book 2, Pages 45 through 54, Public Records of Palm
Beach County, Florida, being more particularly described as follows:
Commencing at the Northwest corner of Tract 29 said Palm Beach Farms Company
Plat No. 3, run thence South 00-57-57 East along the West line of said Tract 29,
a distance of 56.74 feet; thence South 89-04-30 West (departing from said West
line), a distance of 42.72 feet to the Point of Beginning; thence South 35-00-45
West, a distance of 190.55 feet to the Point of Curvature of a curve concave
easterly having a radius of 530.00 feet; thence southerly along the arc of said
curve through a central angle of 35-58-42, a distance of 332.81 feet to the
Point of Tangency; thence South 00-57-57 East, a distance of 122.17 feet; thence
North 89-02-03 East, a distance of 270.84 feet; thence South 00-57-57 East, a
distance of 555.55 feet; thence South 89-03-16 West, a distance of 964.77 feet;
thence South 00-58-57 East, a distance of 342.15 feet; thence North 88-31-05
West, a distance of 301.18 feet; thence North 44-45-17 West, a distance of 34.58
feet; thence North 00-59-28 West, a distance of 886.78 feet; thence North
89-04-30 East, a distance of 377.69 feet; thence North 00-55-30 West, a
distance of 561.46 feet; thence North 89-04-30 East, a distance of 320.00 feet;
thence South 00-55-30 East, a distance of 108.00; thence North 89-04-30 East, a
distance of 192.00 feet; thence North 00-55-30 West; thence North 89-04-30 East,
a distance of 357.08 feet to the Point of Beginning.
Containing 28.343 acres, more or less
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EXHIBIT "F"
[GRAPHIC OMITTED]
(NEW RETENTION PONDS)
<PAGE>
FIRST AMENDMENT TO LEASE AGREEMENT
THIS FIRST AMENDMENT TO LEASE AGREEMENT ("First Amendment") is executed
and entered into this 5th day of June, 1995, by and between SOUTH FLORIDA FAIR
AND PALM BEACH COUNTY EXPOSITIONS, INC. ("Landlord") and PAVILION PARTNERS
("Tenant").
RECITALS:
A. Under effective date of January 4, 1995, Landlord and Tenant entered
into that certain Lease Agreement, Easement Agreement and Declaration of
Restrictive Covenants ("Lease") relating to the lease of certain real property
located in Palm Beach County, Florida, for the construction of an outdoor
entertainment facility thereon by Tenant.
B. Landlord and Tenant have previously modified and amended certain
provisions contained in the Lease pursuant to various written amendments and
letters (herein collectively called the "Prior Amendments").
C. Landlord and Tenant desire to further amend certain provisions of the
Lease as set forth herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties hereto do hereby agree as follows:
1. Elimination of Prior Amendments. Each and all of the Prior Amendments
are hereby terminated, canceled and voided to the same extent and in the same
manner as if the Prior Amendments had never been prepared, executed and
delivered.
2. Nonrefundable Payment by Tenant. Landlord acknowledges prior receipt
from Tenant of a $50,000 payment ("Rights Fee Advance"). The Rights Fee Advance
(i) shall in no event be refundable by Landlord to Tenant and (ii) shall be
applied towards Tenant's obligation contained in Section 4.2(a) of the Lease.
Accordingly, the reference to "$600,000" appearing in Section 4.2(a) of the
Lease is hereby amended to be a reference to "$550,000."
3. Concurrency Reservation. Landlord acknowledges prior receipt of the sum
of $15,000 from Tenant as reimbursement of the concurrency reservation fee
previously paid by Landlord.
4. Deletion of Requirement for Prior Approval. Tenant hereby represents
and warrants to Landlord that Tenant's Executive Committee has unanimously
approved the
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transaction contemplated by the Lease Agreement upon the terms, conditions and
provisions contained therein. Landlord hereby represents and warrants to Tenant
that Landlord's Board of Trustees has unanimously approved the transaction
contemplated by the Lease Agreement upon the terms, conditions and provisions
contained therein. Accordingly, Landlord and Tenant do hereby delete, as of
January 31, 1995, the entirety of (i) Section 15.18 of the Lease and (ii)
Exhibit "D" attached to the Lease.
5. Alteration of Certain Critical Dates. Landlord and Tenant agree to make
the following modifications to the Lease specified below:
(a) The phrase "within fifteen (15) days after the date of this
Lease" appearing in the first line of Section 2.6(a) of the Lease is
hereby deleted and replaced with the phrase "on or before April 17, 1995."
(b) The phrase "within fifteen (15) days after the date of this
Lease" appearing in the first line of Section 2.6(b) of the Lease is
hereby deleted in its entirety and replaced with the phrase "on or before
June 12, 1995."
(c) The three references to "May 1, 1995" appearing in the
definition of the term "Drop Dead Date" in Section 1.1(a)(15) of the
lease are each hereby deleted and replaced with references to "July 31,
1995."
6. Imposition of Certain Development Obligations upon Landlord. A new
Section 5.12 is hereby added at the end of Article 5 of the Lease to read in its
entirety as follows:
Section 5.12. Landlord's Development Obligations. Landlord agrees
with Tenant that it shall, at its sole cost and expense, complete
and fulfill each and all of the following obligations to the
reasonable satisfaction of Tenant on or before November 1, 1995:
(a) Trailer Park. In regard to the trailer park currently located
near the northeast corner of the Entire Tract (the "Trailer
Park"), the Landlord shall:
(i) remove all trailers, utility connections and other
improvements or fixtures (excluding the existing lift
station, dump stations and underground piping) located
on the southerly most 150 feet of the Trailer Park as
shown in yellow and designated as item 1 on Exhibit
"E-1" attached hereto (such portion of the Trailer Park
being herein called the "Cleared Portion of the Trailer
Park");
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(ii) install a barrier or fence with a mutually agreed upon
design and with a minimum height of 8 feet around the
remaining portions of the Trailer Park in the location
identified by a red line on Exhibit "E-1" attached
hereto; and
(iii) relocate the entrance to the Trailer Park to the
northeast corner of the Trailer Park.
If the Cleared Portion of the Trailer Park should not be
included in the Parking Tract after finalization of the
description of the Parking Tract as contemplated by the
provisions of Section 5.1(c) hereof, then (i) Tenant shall
have the right, privilege, license and authority to go into
and enter upon the Cleared Portion of the Trailer Park
throughout the Term for purposes of planting, cultivating,
maintaining and replacing vegetation and landscaping along the
most northerly 15 feet of the Cleared Portion of the Trailer
Park and (ii) no improvements or fixtures (other than (i)
surfaces for parking motor vehicles and (ii) the existing lift
station, dump station and underground piping) shall be
constructed or installed, and no business or commercial
venture (other than the parking of motor vehicles) shall be
operated, upon any portion of the Cleared Portion of the
Trailer Park at any time during the Term, without the prior
written consent of Tenant.
(b) Crosswalks. Landlord shall cause the crosswalks identified as
items 2A and 2B on Exhibit "E-1" attached hereto to be removed
in the same manner as Landlord has previously removed the two
crosswalks previously located on the southern portion of the
Entire Tract.
(c) Boneyard. In regard to that portion of the Entire Tract
designated as item 3 on Exhibit "E-1" attached hereto (herein
called the "Boneyard"), Landlord shall:
(i) construct an 8 foot tall wooden fence in the location
indicated in red around the Boneyard on Exhibit "E-1"
attached hereto;
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(ii) include in such fence wooden gates which, when shut,
will leave the Boneyard completely out of public view;
and
(iii) paint the roof on the east side of the existing storage
area in the Boneyard to provide a consistent and
professional look with no rust or other unsightly
blemishes.
(d) Yesteryear Village. In regard to the area designated as item 4
on Exhibit "E-1" attached hereto (herein called the
"Yesteryear Village"), the following provisions shall apply:
(i) Landlord shall have the right to construct a museum in
the area designated in blue on Exhibit "E-1" attached
hereto consistent with the renderings attached hereto as
Exhibit "E-2."
(ii) Landlord shall construct and install a 5 foot to 6 foot
tall picket fence consistent with the rendering attached
hereto as Exhibit "E-3" around the entirety of the
Yesteryear Village and the adjacent stables identified
as item 5 on Exhibit "E-1" attached hereto along the
green line on Exhibit "E-1" attached hereto.
(e) Stables. Landlord shall convert the use of the building
located at item 5 on Exhibit "E-1" attached hereto from a
stable to other uses. Landlord hereby declares, establishes
and adopts a restrictive covenant on the entirety of the
tracts of land identified as items 4 and 5 on Exhibit "E-1"
attached hereto such that no portion thereof shall, at any
time during the Term, be used as a stable for livestock or
other live animals.
(f) Fencing. Landlord shall replace any rusted fencing materials
with new fencing materials in the fence adjacent to the east
entrance road into the Entire Tract.
In addition to the foregoing obligations, Landlord shall remove, or caused
to be removed, on or before August 1,1995, the chain link fence and other
debris (but not including any buildings, structures or fixtures) located
on the Amphitheater Tract near the rodeo area.
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From and after the execution of this Lease, both Landlord and Tenant shall
each take all such reasonable actions as may be necessary to attempt to
obtain all of the Required Permits as soon hereafter as is reasonably
practicable. Tenant shall bear all costs, expenses and fees associated
with obtaining the Required Permits; provided, however, that Tenant shall
not be required to reimburse or pay Landlord for any of Landlord's
corporate overhead or cost of manpower attributable or allocable to the
effort of obtaining the Required Permits.
(b) Tenant having become satisfied ("Construction Cost Condition")
that, in its reasonable business judgment, the total cost of constructing
the Amphitheater on the Amphitheater Tract, including any and all design
costs and other soft costs associated therewith, and the amount of the
Rights Fee, will not exceed, in the aggregate $8,750,000. If Tenant
determines that the foregoing condition will not be satisfied, for any
reason, then Tenant may terminate this Lease by providing written notice
thereof to Landlord.
(c) Tenant having become satisfied ("Parking Capacity Condition")
that, in its reasonable business judgment, (i) the Parking Tract is of a
sufficient size to permit the parking of no less than 6,500 automobiles
without violating any applicable Legal Requirements and (ii) Exhibit "A-3"
attached hereto has been revised in a manner satisfactory to Tenant which
adequately describes the Parking Tract. If Tenant determines that the
foregoing condition will not be satisfied, for any reason, then Tenant may
terminate this Lease by providing written notice thereof to Landlord.
Section 5.2 Construction of Amphitheater.
(a) Subject to Unavoidable Delays, Tenant shall (i) commence
construction of the Amphitheater on the Amphitheater Tract within thirty
(30) days after the Commencement Date, but in no event earlier than the
end of the 1995 South Florida Fair, and (ii) substantially complete
construction of the Amphitheater on or before December 31, 1995. All
construction work and other activities related to the Improvements shall
be conducted subject to and in compliance with the Plans and
Specifications, all applicable Legal Requirements, the Required Permits
and any other requirements lawfully imposed by any Governmental Authority.
All costs and expenses relating to the Improvements including, without
limitation, compliance with Legal Requirements, design, permitting, site
preparation, construction and development, and those expenses pertaining
to the fulfilling of Tenant's obligations hereunder shall be the sole
responsibility of the Tenant. Prior to January 31,1995, Tenant shall
submit to Landlord a preliminary set of drawings and plans ("Preliminary
Plans") describing the Amphitheater which Tenant intends to construct on
the Amphitheater Tract. Landlord shall have the right to provide
reasonable comments to the Preliminary Plans. In addition, prior to
commencement of construction, Tenant shall submit to Landlord the Plans
and Specifications,
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which shall not differ in any substantial and material respect from the
design and scope contemplated in the Preliminary Plans.
(b) Landlord hereby grants to Tenant the right, for no additional
fee or charge, to remove and use the earth, clay and soil described below
for construction of the Amphitheater's berm:
(1) The earth, clay and soil on the Fairground Tract at the
locations where certain retention lakes are to be dug. The specific
location and dimensions of the retention lakes to be dug shall be
specifically described in the Plans and Specifications, and the work
associated therewith shall constitute a part of the Improvements.
(2) The earth, clay and soil constituting the berm formerly
used as a part of Landlord's speedway. Upon completion of the
removal of the speedway berm, Tenant shall demolish and remove the
old speedway building located adjacent to the speedway berm and
cause the area comprising the speedway berm and the old speedway
building to be left in a level, graded condition.
The removal and delivery of all such earth, clay and soil to the
Amphitheater Tract (i) may not be commenced until after the completion of
the 1995 South Florida Fair on January 29, 1995 and (ii) shall be done at
the sole cost and expense of Tenant. If Tenant elects to obtain fill
material from other sources for the construction of the Amphitheater's
berm, then Tenant shall (i) provide written notice of such election to
Landlord on or before July 31, 1995 and (ii) be under no obligation,
except as may be required by the Required Permits or any other Legal
Requirements, to remove and use the earth, clay and soil described in this
Section 5.2(b) or to fulfill any of the other obligations imposed upon
Tenant pursuant to this Section 5.2(b).
(c) To the extent that Tenant needs or desires additional improved
parking surfaces on the Parking Tract, Tenant shall cause such parking
improvements to be put in place on the Parking Tract at the sole cost and
expense of Tenant. Landlord does hereby grant to Tenant the right and
easement to enter into and go upon the Parking Tract for the purpose of
completing any such parking improvements on the Parking Tract as
referenced in the immediately preceding sentence. Any such parking
improvements shall be included as a part of the Plans and Specifications
and shall constitute a part of the Improvements.
(d) Tenant shall conduct all construction activities which are
carried out at any time during which the South Florida Fair is being held
or conducted in such a manner so as to minimize any interference or
disruption of the holding and conducting of the South Florida Fair. If any
conflict between Landlord and Tenant
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should arise regarding the interpretation of the provision contained in
the immediately preceding sentence, then such conflict shall be resolved
in favor of Landlord and the free uninterrupted use of the Entire Tract
during the time that the South Florida Fair is being held or conducted. At
all times other than the times during which the South Florida Fair is
being held or conducted, Tenant shall use its reasonable efforts to
minimize any interference or disruption of other Fair Operations as a
result of construction activities related to the Improvements.
(e) Tenant shall be solely liable and responsible to Landlord for
any damage which may occur to the existing buildings, improvements,
roadways, accessways, sidewalks or other improvements on, or adjacent to,
the Fairground Tract which may be caused by the construction activities
associated with the construction of the Amphitheater.
(f) Tenant shall have the special right and easement, at its sole
option, to enter into and go upon the Amphitheater Tract, prior to the
Commencement Date, to begin the process of delivering and placing fill
material which will be used in constructing the Amphitheater's berm to be
used for lawn seating.
(g) Prior to commencement of construction or the placing of fill
material on the Amphitheater Tract, Tenant shall, at its sole cost and
expense, secure the Amphitheater Tract with appropriate fencing in
accordance with the Plans and Specifications and all Legal Requirements.
Section 5.3 Title to Improvements. Title to the Amphitheater, and any and
all depreciation, amortization and investment tax credits generated thereby or
available in connection therewith, shall belong to, and accrue to the benefit of
Tenant during the Term. Upon the expiration or termination of this Lease, title
to the Amphitheater shall automatically vest in Landlord; provided, however,
that all Removables (hereinafter defined) which have been removed from the
Amphitheater on or before the termination of this Lease, shall remain the
property of Tenant. Any property not so removed shall, at the expiration of the
Term, be considered abandoned property and Landlord shall have the right, if it
wishes, to claim such property. As used herein, the term "Removables" shall mean
(i) trade fixtures installed or located at the Amphitheater which can be removed
without damaging the buildings and improvements comprising the Amphitheater and
(ii) all of Tenant's personal property or equipment located at the Amphitheater.
Section 5.4 Continuing Right of Tenant to Make Changes, Alterations and
Additions. After the completion of any improvements or parts thereof upon the
Amphitheater Tract, Tenant shall have the right at any time and from time to
time to make such changes, alterations, and additions thereto so often and as
many times as Tenant may desire; provided, however, that if such change,
alteration or addition constitutes a material change, alteration or addition, or
would result in the Amphitheater no longer being able to be used for the purpose
for which it was originally intended, then such
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change, alteration and addition may not be made without the receipt of the prior
approval of Landlord (such approval not to be unreasonably withheld or delayed).
Section 5.5 Tenant's Obligation to Discharge Mechanic's and Materialman's
Liens. At all times during the Term of this Lease, Tenant shall insure and
guarantee that the Amphitheater and the Entire Tract and all improvements
thereon remain free and clear of all liens and claims of lien for labor,
service, materials, supplies, or equipment performed on or furnished to the
Amphitheater Tract. Should Tenant fall to insure the compliance with this
obligation within ten (10) days after service on Tenant of written request from
Landlord to do so, Landlord may pay, adjust, compromise and discharge any such
lien or claim of lien on such terms and manner as Landlord may deem appropriate.
In such event, Tenant shall, on or before the first day of the next calendar
month following any such payment by Landlord, reimburse Landlord for the full
amount paid by Landlord in paying, adjusting compromising and discharging such
lien or claim of lien, upon such terms and manner as Landlord may reasonably
deem appropriate including any reasonable attorney's fees or other costs
expended by Landlord, together with interest at the Permitted Rate from the date
of payment by Landlord to the date of repayment by Tenant. However, this Section
5.5 shall not impose any obligation on Landlord to satisfy any of Tenant's
lienor(s). Landlord's interest in the Premises will not be subject to lien for
any Improvements made on the order of Tenant. All persons performing labor or
service and furnishing materials to the Amphitheater Tract on the order of
Tenant must look solely to Tenant and Tenant's interest in the Premises for
payment. At the request of Landlord, the Memorandum of Lease to be recorded in
the Real Property Records of Palm Beach County, Florida pursuant to the
provisions of Section 15.12 hereof shall include, in a form reasonably
acceptable to Landlord, a summary of the provisions contained in this Section
5.5; provided, however, if requested by Tenant, such provision in the Memorandum
of Lease shall specify that it is not intended to benefit any third parties.
Section 5.6 Use of the Amphitheater Tract. Subject only to Landlord's
right to use the Amphitheater pursuant to the right created in Article 6 hereof,
Tenant shall have the sole and exclusive right to use, occupy and enjoy the
Amphitheater Tract during the Term. Tenant shall have the right to use the
Amphitheater Tract for producing and presenting (i) commercial concerts of
musical performers or comedians, (ii) artistic performances of symphonic music,
ballet or opera, (iii) theatrical performances, (iv) cinemagraphic films and (v)
pre-recorded or simulcast video and audio productions (herein sometimes called
the "Main Purposes"). In addition, Tenant shall have the right to use the
Amphitheater Tract in conjunction with the Main Purposes, for the following
activities.
(a) as a place for selling food, beverages (including alcoholic
beverages) and other merchandise;
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(b) as a place for conducting activities which are associated with a
concert or similar event being staged at the Amphitheater so long as such
activities are conducted in a similar manner at similar venues in
conjunction with the same concert or event; and
(c) for any and all other lawful purposes which are, in a direct
way, incidental or related to the Main Purposes.
Landlord agrees and acknowledges that the Amphitheater shall be used as a
commercial outdoor concert facility in a manner consistent with the manner in
which the Previous Amphitheaters have been and are being operated. Without
limiting the generality of the provisions contained in the immediately preceding
sentence, Landlord agrees and acknowledges that the Amphitheater may be used for
performing with or without amplified sound, popular and contemporary music, rock
and roll, pyrotechnic shows, and other similar sound-intensive and light-
intensive activities. Tenant shall not use the Amphitheater Tract to conduct any
activity or business other than those permitted or contemplated by the
provisions contained in this Section 5.6.
Section 5.7 Compliance with Laws. Tenant shall promptly obey and comply
with all present and future laws, ordinances, rules, regulations, statutes,
orders and other Legal Requirements of all Governmental Authorities. This
includes compliance with minimum health, building, safety and nuisance codes and
standards. Landlord shall have no liability in the event that any Legal
Requirements should interfere with or disrupt Tenant's ability to conduct its
business on the Amphitheater Tract, unless Landlord took affirmative actions to
encourage the adoption, implementation or enforcement of such Legal Requirement.
Tenant shall have the right, at its sole cost and expense, to contest the
validity of any Legal Requirement in good faith. If necessary, Landlord agrees
to join in any such protest or contest; provided, however, that the cost
thereof, including Landlord's reasonable attorney's fees shall be borne by
Tenant. Tenant hereby agrees to indemnify Landlord from all fines, penalties,
costs, loss or damage whatsoever, including Landlord's reasonable attorney's
fees, from Tenant's failure to abide by any such Legal Requirement.
Section 5.8 Repair. Tenant shall, during the term of this Lease, and at
Tenant's sole cost and expense, keep and maintain the Amphitheater and other
Improvements in good and sanitary order, condition and repair, (i) consistent
with Industry Standards and the practices at the Previous Amphitheaters and (ii)
as may be necessary to allow the Amphitheater to continue to be operable as a
commercial outdoor concert facility.
Section 5.9 Utilities. Tenant shall, during the Term, construct, arrange
and pay for all utilities (including any charge, rates, or fees) to the extent
used in or on the Amphitheater or any Improvements to be constructed by Tenant,
and Landlord, in its capacity as Landlord under this Lease (not in its capacity
as a third party) shall have no responsibility for any interruptions in the
supply of such utilities. Where possible during
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the Term hereof, Tenant shall obtain and pay for separate meters for all utility
connections and shall promptly pay all utility bills before they become
delinquent. All utility work to be done by Tenant shall be considered as a part
of the Improvements and shall be included in the Plans and Specifications. All
utility lines, conduits or connections shall be underground from the boundary
line of the Entire Tract to the boundary line of the Amphitheater Tract. The
term "utility" or "utilities" shall mean water, electricity, gas, telephone,
wastewater (sewer), cable television, trash, garbage collection and similar
services. It shall be the responsibility of Tenant to provide a compactor on
site and arrange for regular pick up and disposal for refuse at the Amphitheater
Tract.
Section 5.10 Inappropriate Events. Because of the family oriented nature
of the Fair Operations and its wholesome reputation in the community, Tenant
agrees that it will not book any events or other acts for appearance at the
Amphitheater which have been determined to be obscene or illegal by any state or
federal court according to the community standards existing at that time in
Southeast Florida.
Section 5.11 As Built Plans. Within ten (10) days after final completion
of the Amphitheater and all Improvements, or as soon thereafter as available,
Tenant shall provide to Landlord one complete set of the "as built" plans for
the Improvements.
ARTICLE 6
LANDLORD'S RIGHT TO USE AMPHITHEATER
Section 6.1 Landlord Events. As additional consideration for the
agreements contained herein in favor of Tenant, Tenant does hereby grant to
Landlord the right to use the Amphitheater (excluding Tenant's executive offices
only) for the presentation of events, performances or shows ("Landlord Events")
during each Lease Year concurrently with (i) the holding and conducting of the
South Florida Fair and (ii) the holding and conducting of the Pioneer Days
Event. Landlord's use of the Amphitheater pursuant to this Section 6.1 shall be
governed by the following provisions:
(a) At each of the Landlord Events, Tenant shall, if requested by
Landlord, (i) make available a production manager and general operational
staff (which includes its security manager, housestaff, supervisor,
marketing director and an accountant) and (ii) operate the Amphitheater
during such Landlord Events, at no charge to Landlord. Landlord shall be
responsible for paying all costs of organizing, promoting, producing and
presenting each of Landlord Events and shall reimburse to Tenant all of
Tenant's actual out-of-pocket costs (including utility costs) incurred in
connection with the holding, presenting or performing of each of Landlord
Events at the Amphitheater.
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(b) it is specifically and expressly prohibited to feature or
include a Touring Act in any Landlord Event presented concurrently with
the holding and conducting of the Pioneer Days Event. However, Touring
Acts may be featured or included in Landlord Events presented concurrently
with the holding and conducting of the South Florida Fair.
(c) Landlord shall secure and maintain in force during each Landlord
Event a comprehensive general liability insurance with, subject to
commercial availability, limits of not less than $5,000,000 with respect
to bodily injury or death to any number of persons in one accident or
occurrence and with respect to property damage in any one accident or
occurrence. All insurance maintained in accordance with the provisions of
this Section 6.1(c) shall be issued by companies qualified to do business
in the State of Florida and with a Best Insurance Guide Rating of B+ or
better, shall be carried in the name of both Landlord and Tenant, as their
respective interests may appear, and shall contain a mortgagee clause
acceptable to the Mortgagees. Such liability insurance policy shall name
Tenant as an additional named insured and shall include contractual
liability endorsements. Landlord shall furnish Tenant with duplicate
originals or copies certified as being true and correct of the policy of
insurance required pursuant to the provisions of this Section 6.1(b), and
shall furnish to, and maintain with, Tenant at all times as a condition to
the holding presenting or performance of any Landlord Events, a
certificate of the insurance carrier certifying that such insurance shall
not be canceled without at least 15 days' advance written notice to
Tenant. The insurance described in this Section 6.1(c) may be obtained by
Landlord by endorsement or equivalent means under any blanket insurance
policies maintained by Landlord, provided that the coverage and other
terms of such insurance comply with the provisions of this Section 6.1(c).
The limits of insurance coverage provided for herein shall be increased by
Landlord from time to time at the request of Tenant, but no more
frequently than once every five (5) years during the Term to such amounts
as should be reasonably carried or provided for the insured perils being
covered so long as such increased amount of coverage can be obtained in a
commercially reasonable rate.
(d) At each of Landlord Events, Tenant shall not be liable for any
damage, loss or injury suffered by any person in or about the Amphitheater
Tract or the Parking Facilities (except to the extent same were caused by
Tenant or Tenant's agents or employees). Landlord covenants and agrees to
indemnify, defend, protect and save harmless Tenant from and against any
and all liabilities, penalties, damages, claims, costs, charges and
expenses including, without limitation, court costs and reasonable
attorneys' fees, which may be imposed upon, incurred by or asserted
against Tenant or Tenant's interest in the Amphitheater from any cause or
in any manner whatsoever (except to the extent those liabilities,
penalties, damages, claims, costs, charges or expenses were caused by acts
or omissions of Tenant or Tenant's agents or employees) relating to or
arising
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out of the operation, possession or use of the Amphitheater or the Parking
Facilities in connection with any Landlord Event. The provisions of this
Section 6.1(d) and of any other indemnity provisions elsewhere contained
in this Lease shall survive the expiration or earlier termination of this
Lease with respect to acts, occurrences or omissions occurring prior to
the expiration or earlier termination of this Lease.
(e) Except as provided in clause (f) of this Section 6.1, Landlord
shall be entitled to receive and retain all ticket and other revenue
directly derived from each Landlord Event. Landlord shall be solely
responsible for arranging the sale and distribution of tickets to each of
the Landlord Events. Landlord shall have the right to make sponsorship
arrangements for the Landlord Events; provided, however, that it shall be
specifically prohibited for Landlord to place (i) any type of signs or
other advertisements on the Amphitheater Tract which identify any sponsor
(or its products) which manufactures or sells any products which are
directly competitive with any of Tenant's sponsors at the Amphitheater and
(ii) any signs or other advertisements on the Parking Tract which would be
visible to Patrons of the Amphitheater while seated in the Amphitheater
and which identify any sponsor (or its products) which manufactures or
sells any products which are directly competitive with any of Tenant's
sponsors at the Amphitheater.
(f) Subject to the provisions of the next succeeding sentence,
Tenant shall maintain, during and in respect of all of Landlord Events,
the sole and exclusive right (i) to operate all concession facilities and
operations at the Amphitheater including, without limitation, the sale of
food, beverage, alcohol and merchandise at the Amphitheater and (ii) to
receive and retain all revenues associated with the operation of such
concession facilities and operations at the Amphitheater during Landlord
Events. Notwithstanding the foregoing, Tenant shall be obligated to pay
and deliver to Landlord, within 15 days after each of the Landlord Events,
(i) 17-1/2% of the Gross Concession Revenues attributable to the sale of
food and beverages at such Landlord Event and (ii) 50% of the Net
Concession Revenues attributable to the sale of merchandise at such
Landlord Event.
(g) At the request of Landlord, Tenant shall assist and provide, at
no charge to Landlord, such services as may be reasonably requested in
connection with booking acts to appear and perform at Landlord Events.
Notwithstanding the foregoing, Landlord shall bear all financial
responsibility associated with, or related to, the engagement of any
performer or other artist to appear at any Landlord Event. Tenant has not
made, and does not hereby make, any representations or warranties that it
will be successful in obtaining any particular acts, performers or other
artists to appear at any of the Landlord Events or that Landlord will be
able to generate a profitable level of revenues at any of the Landlord
Events.
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(h) Landlord's use of the Amphitheater for the presentation of
Landlord Events shall be conducted on and subject to the rules and
regulations generally imposed from time to time by Tenant on third party
promoters in the ordinary course of business. If requested, Landlord shall
execute a separate sublease agreement for each Landlord Event or for each
series of Landlord Events during each Lease Year in substantially the same
form as Tenant uses when subleasing the Amphitheater to third party
promoters in the ordinary course of business; provided, however, that if
any conflict or inconsistency should exist between the terms and
provisions contained in such separate sublease agreement and the terms and
provisions contained in this Lease, then the terms and provisions of this
Lease shall govern and control.
(i) The Landlord's use of the Amphitheater pursuant to the
provisions of this Section 6.1 shall be limited in duration by the
following provisions:
(1) Landlord's right to use the Amphitheater concurrently with
the holding and conducting of the South Florida Fair pursuant to the
provisions of this Section 6.1 shall be confined to no more than a
single 30 consecutive day period during each Lease Year.
(2) Landlord's right to use the Amphitheater concurrently with
the holding and conducting of the Pioneer Days Event pursuant to the
provision of this Section 6.1 shall be confined to the 6 consecutive
day period during each Lease Year commencing 3 days before Memorial
Day and ending 2 days after Memorial Day.
Section 6.2 Landlord Events during the South Florida Fair. To protect
dates for Landlord's use of the Amphitheater concurrently with the South
Florida Fair during each Lease Year, Tenant agrees with Landlord that it will
not schedule any events or activities in the Amphitheater during the month of
January and the first seven days of February ("Fair Blacked Out Period") during
each Lease Year. If, for any Lease Year, the South Florida Fair is scheduled to
be held, wholly or partially, at a time other than during the Fair Blacked Out
Period, then Landlord may require, with at least 150 days prior notice to
Tenant, that the Fair Blacked Out Period for such Lease Year be moved to another
specified period of time, provided that (i) the changed Fair Blacked Out Period
remains a single period of no more than 38 consecutive days and (ii) no portion
of the changed Fair Blacked Out Period is included in the Amphitheater Season.
Section 6.3 Landlord Events during the Pioneer Days Event. To protect
dates for Landlord's use of the Amphitheater concurrently with the holding and
conducting of the Pioneer Days Event during each Lease Year, Tenant agrees with
Landlord, subject to the provisions of the next succeeding sentence, that it
will not schedule any events or activities in the Amphitheater during the six
day period commencing on the date which is three days before Memorial Day of
such Lease Year and ending on the date which is
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two days after Memorial Day during such Lease Year ("Pioneer Blacked Out
Period"). If, with respect to any one or more of the dates included in the
Pioneer Blacked Out Period for any Lease Year, Tenant wishes to hold a Tenant
Event at the Amphitheater, then Tenant may provide notice thereof to Landlord no
earlier than 120 days prior to such dates. If Landlord does not provide notice
to Tenant, within 15 days after receipt of the notice provided by Tenant
pursuant to the immediately preceding sentence, of a specific performance or
event which is scheduled to be held at the Amphitheater on such dates by
Landlord, then Tenant shall be free to book events for presentation at the
Amphitheater for its own account on such dates without violating the rights of
Landlord described in this Article 6.
Section 6.4 Other Landlord Events. On and subject to the following
provisions, Landlord shall have the right and privilege, in addition to the
rights created in Section 6.1 hereof, to use the Amphitheater for the
presentation of Civic Events from time to time during the Term:
(a) The use of the Amphitheater for a Civic Event to be presented
pursuant to this Section 6.4 is strictly subject to availability of the
Facility. For purposes of the preceding sentence, Tenant shall be the
sole and exclusive arbiter for scheduling and availability of dates at the
Amphitheater and may reserve or retain dates for its own use, and thereby
decline to approve the release of any such date to Landlord, regardless of
whether Tenant then has an event booked for presentation at the
Amphitheater on such date.
(b) It is specifically and expressly prohibited to feature or
include a Touring Act in any Civic Event presented at the Amphitheater
pursuant to the provisions of this Section 6.4.
(c) Civic Events presented at the Amphitheater by Landlord pursuant
to the provisions of this Section 6.4 shall be deemed to be a Landlord
Event for all purposes of this Lease and shall therefore be governed by
the provisions of clauses (a), (c), (d), (e), (f) and (h) of Section 6.1
hereof.
ARTICLE 7
IMPOSITION OF RESTRICTIVE COVENANTS ON LANDLORD LAND
Section 7.1 Restrictive Covenants. Landlord does hereby declare, establish
and adopt the following restrictive covenants ("Restrictive Covenants") on all
of Landlord Land to be effective during the entirety of the Term of this Lease:
(a) No portion of the Landlord Land may be used to present, promote
or produce any concert, performance or similar event which (i) features a
musical,
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comedic, artistic or theatrical performance of professional artists,
entertainers or performers (other than religious and motivational
lecturers) and (ii) requires the payment of an admission price by the
general public. Notwithstanding the foregoing, Landlord may present
concerts, performances or similar events on the Fairground Tract which are
directly related to, and merely incidental to, a trade show, exposition,
flea market, carnival, banquet, flat show (such as an antique show, gun
show or collectible show), charity benefit with a capacity for 1,500
people or less or similar event being concurrently conducted and held on
the Fairground Tract, so long as such event does not feature or include a
Touring Act.
(b) Neither Landlord nor any person deriving rights from Landlord
shall engage in any conduct or activity on the Landlord Land which could
generate noise sufficient to interfere with an event or other performance
presented at the Amphitheater.
(c) No portion of the Landlord Land will be developed or utilized in
such a manner as would cause Tenant's activities on the Amphitheater Tract
to be in violation of any law, ordinance, regulation or other land use
restriction, including without limitation, any sound emission restriction
or ordinance.
Section 7.2 Exception for South Florida Fair and Pioneer Days Event.
Notwithstanding anything to the contrary contained in, or implied by, the
provisions of Section 7.1 of this Lease, it is hereby specifically agreed,
stipulated and acknowledged by and between Landlord and Tenant that Landlord's
current use of the Landlord Land for the South Florida Fair and the Pioneer Days
Events shall not be a violation of the Restrictive Covenants.
Section 7.3 Restriction on Use of Parking Facilities. Neither Landlord nor
any person claiming under Landlord shall use the Parking Facilities in any
manner on any day for which an event or show is scheduled to be held or
presented at the Amphitheater, except as may be permitted in accordance with the
provisions of Article 8 hereof.
Section 7.4 Enforceability of Restrictive Covenants. The Restrictive
Covenants adopted and established on the Landlord Land and the Parking
Facilities by the provisions of this Article 7 shall (a) run with the Landlord
Land and the Premises, (b) be binding upon and enforceable against each
purchaser, tenant, grantee and owner of the Landlord Land or any portion
thereof, and the respective heirs, legal representatives, successors and assigns
of each such purchaser, tenant, grantee and owner and (c) inure to the benefit
of and be enforceable by each purchaser, tenant, grantee and owner of the
Premises.
Section 7.5 Concessions. Reference is made to the fact that an important
source of revenue from Tenant's intended use of the Premises shall be the sale
of licensed
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merchandise relating to the performers and artists which will appear at the
Amphitheater. Tenant intends to license concessionaires to sell such licensed
merchandise at the Premises immediately before, during and after performances
and shows at the Amphitheater. Landlord hereby covenants and agrees to implement
reasonable policing procedures to prevent and discourage the sale of unlicensed
merchandise anywhere on the Landlord Land.
ARTICLE 8
PROVISIONS CONCERNING PARKING FACILITIES
Section 8.1 Joint Use. The Parking Facilities shall be used jointly by
Tenant and Landlord in accordance with the following provisions:
(a) Tenant's Use. During Show Hours on the day of a Tenant Event,
Tenant shall have the exclusive right, privilege and authority to use the
Parking Tract for the purpose of parking the vehicles of the
Amphitheater's Patrons and Employees. At all other times, Tenant's use of
the Parking Tract shall be limited to such use as may be necessary to park
the vehicles of the Amphitheater's Employees. All revenues attributable to
the use of the Parking Facilities by Tenant pursuant to the right created
in this Section 8.1(a) shall be the sole and exclusive property of Tenant.
(b) Landlord's Use. At all times other than during Show Hours on the
day of a Tenant Event, Landlord shall have the right, privilege and
authority to use the Parking Tract for the parking of vehicles of the
Patrons and Employees of the Fair Operations, subject only to Tenant's
right to have sufficient space allocated to it for use by the
Amphitheater's Employees. During Show Hours on the day of a Tenant Event,
Landlord may not use the Parking Tract for any purpose except as may be
permitted pursuant to the provisions of Section 8.1(c) hereof. All
revenues attributable to the use of the Parking Facilities by Landlord
pursuant to the right created in this Section 8.1(b) shall be the sole and
exclusive property of Landlord.
(c) Cooperation and Coordination. Understanding that the joint use
of the Parking Tract will require periodic coordination and cooperation,
Tenant and Landlord agree as follows:
(1) Each of Tenant and Landlord will designate a specific
person who will be responsible for assisting in the coordination of
the joint use of the Parking Tract in accordance with the provisions
hereof (such representatives being herein respectively called
"Tenant's Parking Rep" and "Landlord's Parking Rep").
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(2) Tenant's Parking Rep and Landlord's Parking Rep shall meet
monthly or at such other regular intervals as they believe is
necessary to discuss and agree upon the logistics and coordination
of the joint use of the Parking Tract.
(3) As soon as Tenant is in a position to estimate with
certainty the number of Patrons that will attend a specific Tenant
Event, Tenant's Parking Rep shall advise Landlord's Parking Rep as
to whether all of the Parking Tract is expected to be needed for
such Tenant Event. If less than all of the Parking Tract is expected
to be required by Tenant for such Tenant Event, then the excess
spaces shall be available for allocation to Landlord for use during
the Show Hours on the day of such Tenant Event.
(4) Allocation of parking spaces between Landlord and Tenant
shall be done in a rational, logical manner taking into account such
factors as (i) the logistical requirements for insuring a smooth
ingress and egress of all vehicles being parked, (ii) the location
of the allocated spaces in relation to the location of the function
on the Entire Tract that is being attended, (iii) the logistics of
allowing separate access, if necessary, to the vehicles being parked
for Tenant's purposes and the vehicles being parked for Landlord's
purposes.
(5) Disputes concerning specific allocation of parking spaces
in the Parking Tract shall be settled by (i) Tenant's Parking Rep
for the days that a Tenant Event is scheduled to be performed or
presented at the Amphitheater and (ii) Landlord's Parking Rep for
all other days.
Section 8.2 Maintenance of Parking Facilities. Tenant shall be responsible
for maintaining and repairing the Parking Facilities (which shall include
regularly mowing any grass thereon and repairing potholes thereon, each as
necessary) such that the Parking Facilities remain in a usable condition
throughout the Term; provided, however, Landlord shall be obligated to reimburse
to Tenant, from time to time and upon invoice therefor, 50% of all costs and
expenses so incurred by Tenant in maintaining or repairing the Parking
Facilities.
ARTICLE 9
INSURANCE AND INDEMNITY
Section 9.1 Property Insurance. Tenant shall, at its sole cost and
expense, keep and maintain in force policies of insurance on all improvements
situated on the Amphitheater Tract against loss or damage by fire and against
loss or damage by any other risk now and from time to time insured against by
"extended coverage" provisions
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of policies generally enforced on improvements of similar type in Florida in an
amount which Tenant, in the exercise of Tenant's reasonable judgment and
discretion, shall deem appropriate, but not less than replacement cost of the
improvements being insured. All such policies shall be issued by companies
qualified to do business in the State of Florida and with a Best's Insurance
Guide rating of B+ or better, shall be carried in the name of both Landlord and
Tenant, as their respective interests may appear, and shall contain a mortgagee
clause reasonably acceptable to the Mortgagees. All such policies shall
expressly provide that any loss thereunder may be adjusted with Tenant and the
Mortgagees. Tenant shall furnish Landlord with duplicate originals or copies
certified as being true and correct of all such insurance policies and shall
furnish and maintain with Landlord, at all times, a certificate of the insurance
carrier certifying that such insurance shall not be canceled without at least
fifteen (15) days advance written notice to Landlord. Landlord's rights in and
to any proceeds from any such insurance policy shall be subordinate and inferior
to the rights of all Mortgagees in and to such proceeds. If Tenant fails to
maintain such insurance, Landlord, at its election but without obligation to do
so, may procure such insurance as may be necessary to comply with these
requirements, and Tenant agrees to repay the cost of same to Landlord on demand,
with interest thereon at the Permitted Rate from the date of expenditure until
paid. All insurance described in this Section 9.1 may be obtained by Tenant by
endorsement or equivalent means under any blanket insurance policies maintained
by Tenant, provided that the coverage and other terms of such insurance comply
with this Section 9.1.
Section 9.2 Builder's Risk Insurance. During any period of construction on
the Amphitheater Tract, Tenant shall maintain, or cause to be maintained,
Builder's Risk Insurance in an amount not less than the total amount of the
insurable improvements being constructed, with responsible insurance companies
legally authorized to transact business in Florida and with a Best's Insurance
Guide Rating of B+ or better.
Section 9.3 Liability Insurance. Tenant shall secure and maintain in force
comprehensive general liability insurance with, subject to commercial
availability, (i) limits of not less than $5,000,000 with respect to bodily
injury or death to any number of persons in any one accident or occurrence and
with respect to property damage in any one accident or occurrence and (ii) a
maximum deductible of $100,000. Tenant shall also secure and maintain, or cause
to be secured and maintained, liability insurance which specifically covers the
risks attendant to the serving of alcoholic beverages on the Amphitheater Tract
with, subject to commercial availability, aggregate limits of not less than
$5,000,000 with respect to bodily injury or death to any number of persons in
any one accident or occurrence and with respect to property damage in any one
accident or occurrence. All insurance maintained in accordance with the
provisions of this Section 9.3 shall be issued by companies qualified to do
business in the State of Florida and with a Best's Insurance Guide Rating of B+
or better, shall be carried in the name of both Landlord and Tenant, as their
respective interests may appear, and shall contain a mortgagee clause acceptable
to the Mortgagees. All liability insurance policies shall name Landlord as an
additional named insured and shall include contractual liability endorse-
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ments. Tenant shall furnish Landlord with duplicate originals or copies
certified as being true and correct of all insurance policies required under
this Section 9.3, and shall furnish and maintain with Landlord, at all times, a
certificate of the insurance carrier certifying that such insurance shall not be
canceled without at least fifteen (15) days advance written notice to Landlord.
If Tenant fails to maintain such insurance, Landlord, at its election but
without obligation to do so, may procure such insurance as may be necessary to
comply with these requirements, and Tenant agrees to repay the cost of same to
Landlord on demand, with interest thereon at the Permitted Rate from the date of
expenditure until paid. All insurance described in this Section 9.3 may be
obtained by Tenant by endorsement or equivalent means under any blanket
insurance policies maintained by Tenant, provided that the coverage and other
terms of such insurance comply with this Section 9.3. The limits of insurance
coverage provided for herein shall be increased by Tenant from time to time at
the request of Landlord, but no more frequently than once every five (5) years,
to such amounts as should be reasonably carried or provided, for the insured
perils being covered so long as such increased amount of coverage can be
obtained at a commercially reasonable rate.
Section 9.4 Worker's Compensation Insurance. Tenant and each of its
concessionaires and subcontractors shall secure and maintain, throughout the
Term, worker's compensation insurance as required by any Legal Requirements.
Section 9.5 Concessionaire's Insurance. As a condition to the granting of
any concession right to vendors or other concessionaires for the sale of food,
candy, cigarettes, beverages, merchandise or similar items at the Amphitheater,
Tenant shall require such vendor or other concessionaire to secure and maintain
in force, throughout the term of such concession right, liability policies of
insurance consistent with Industry Standards naming Tenant and Landlord as
additional insureds thereunder. Such liability policies of insurance shall be
specifically required to remain in force and effect during the Landlord Events.
Section 9.6 Indemnity. Landlord shall not be liable for any damage, loss
or injury suffered by any person in or about the Amphitheater Tract or the
Parking Facilities (except to the extent same were caused by Landlord or
Landlord's agents or employees). Tenant covenants and agrees to indemnify,
defend, protect and save harmless Landlord from and against any and all
liabilities, penalties, damages, claims, costs, charges and expenses, including
without limitation, court costs and reasonable attorney's fees, which may be
imposed upon, incurred by or asserted against Landlord or Landlord's interest in
the Amphitheater Tract from any cause or in any manner whatsoever (except to the
extent those liabilities, penalties, damages, claims, costs, charges or expenses
(i) were caused by acts or omissions of Landlord or Landlord's agents or
employees, (ii) arose out of or related to the operation, possession or use of
the Amphitheater in connection with the presentation of any of the Landlord
Events, (iii) arose out of or relating to the presence of any Hazardous
Substances on, under or at the Entire Tract which were not placed there by
Tenant, Tenant's agents, licensees or employees or (iv) are of a type described
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in any express indemnity section contained in this Lease made by Landlord in
favor of Tenant) relating to or arising out of Tenant's ownership, operation,
possession or management of the Amphitheater or the Parking Facilities. The
provisions of this Section 9.6 and of any other indemnity provisions elsewhere
contained in this Lease shall survive the expiration or earlier termination of
this Lease with respect to acts, occurrences or omissions occurring prior to the
expiration or earlier termination of this Lease.
ARTICLE 10
ASSIGNMENT, SUBLETTING AND ENCUMBERING
BY TENANT; MORTGAGEE MATTERS; GRANTING OF EASEMENTS
Section 10.1 Assignment, Subletting and Encumbering by Tenant.
(a) Tenant shall have the right, without the consent of Landlord, at
any time and from time to time during the Term, to (i) sublease the
Amphitheater to other promoters or operators in the ordinary course of
business (i.e., on a daily or weekly basis, but not for a material portion
of then remaining Term), (ii) grant concession rights to vendors or other
concessionaires for the sale of food, candy, cigarettes, beverages,
merchandise or similar items, (iii) fix a mechanic's or materialman's lien
upon its leasehold estate in the Premises; or (iv) make similar transfers;
provided, however, any exercise of any such right shall be subject to all
of the provisions of this Lease and shall not discharge Tenant of its
obligations hereunder.
(b) Tenant shall also have the right, without the consent of
Landlord, at any time and from time to time during the Term, to (i)
mortgage its leasehold estate created hereby to a Pre-Approved Mortgagee
and/or (ii) assign its leasehold estate created hereby to a Pre-Approved
Owner; provided, however, that any exercise of any such right shall be
subject to all of the provisions of this Lease and shall not discharge
Tenant from any of its obligations hereunder, including the obligation to
pay Rent and all Non-Rent Obligations.
(c) Except as expressly permitted by provisions of clauses (a) or
(b) of this Section 10.1, Tenant may not sell, assign, sublet, rent, grant
or otherwise transfer all or any portion of the leasehold estate created
hereby without first obtaining the consent of Landlord, which consent may
not be unreasonably withheld, conditioned or delayed. To assist in the
interpretation and application of the provision contained in the
immediately preceding sentence, Landlord and Tenant hereby agree that the
following shall constitute "reasonable" reasons for Landlord to withhold
its consent pursuant to this clause (c) to a proposed sale, assignment,
sublease or other transfer of all or any portion of the leasehold estate
created hereby:
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(1) the proposed transferee is, or is an Affiliate of, a
person that has been previously convicted of a felony;
(2) the proposed transferee does not have experience in the
operation, management and use of outdoor entertainment facilities
similar in size, design and use to the Amphitheater; or
(3) the proposed transferee has insufficient resources to (i)
carry on and conduct the business operations required of Tenant
under this Lease and (ii) fulfill its obligations under this Lease.
(d) Without limiting the other provisions contained in this Section
10.1, any purported sale, assignment or other transfer (other than a
mortgage, pledge or other encumbering) of all or substantially all of
Tenant's interest in this Lease and the leasehold estate in the Premises
created hereby shall not be effective unless and until: (i) all Rent then
owing by Tenant has been paid and (ii) Tenant has delivered to Landlord a
fully executed and acknowledged counterpart of the instrument of sale,
assignment or transfer which contains an express assumption by the
purchaser, assignee or transferee of this Lease and of all the obligations
hereunder on the part of Tenant to be kept, observed or performed after
the effective date of such sale, assignment or transfer and which sets
forth the mailing address of such purchaser, assignee or transferee for
purposes of this Lease.
(e) Upon an effective sale, assignment or transfer as defined above
(other than a mortgage, pledge or other encumbering) of all of Tenant's
interest in this Lease and the leasehold estate in the Premises created
hereby, other than pursuant to clause (b) of this Section 10.1, Tenant,
with respect to the payment or performance of any obligation hereunder
(including the obligation to pay Rent) which accrues after the date any
such sale, assignment or transfer shall be effective, shall be released of
liability therefor, and the purchaser, assignee or transferee of this
Lease shall at all times thereafter be deemed to be the "Tenant" for
purposes of this Lease.
Section 10.2 Notice to Mortgagees. Should any Mortgagee desire to receive
copies of any and all notices Landlord may give to Tenant hereunder, any such
Mortgagee may give Landlord written notice thereof, which notice shall include
Mortgagee's address for notice. Thereafter, Landlord shall, concurrently with
the giving of any notice to Tenant, give like notice or a copy thereof to any
such Mortgagee. Any notice given to Tenant shall not be effective or considered
given for purposes of this Lease until it or a copy thereof is also given to
each such Mortgagee who has requested Landlord to give it copies of notices
Landlord gives to Tenant. Any Mortgagee who has given Landlord written notice
pursuant to the foregoing provisions of this Section 10.2 may designate a
different address for purposes of notice hereunder by giving Landlord
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written notice thereof. Any such notice shall be effective ten (10) days after
receipt thereof by Landlord.
Section 10.3 Mortgagee's Right to Perform Tenant's Obligations. Each
Mortgagee shall have the right to perform any obligation of Tenant hereunder,
including without limitation, the obligation of Tenant to pay Rent, and Landlord
shall accept performance of any such obligation by any Mortgagee. Any
performance by a Mortgagee of any obligation of Tenant hereunder shall have the
same effect as and shall constitute performance of such obligation by Tenant.
Section 10.4 Acquisition of Tenant's Interest in the Leasehold Estate; New
Lease. Upon the acquisition of any ownership interest in and to the leasehold
estate in the Premises created by this Lease by a Mortgagee or any other person
or entity (any such Mortgagee or other person or entity who acquires such
interest herein being called a "New Tenant," it being understood that a New
Tenant is also a Tenant for all purposes hereunder), regardless of how such
acquisition occurs, whether through foreclosure of liens created by a Mortgage
or assignment of such interest in such leasehold estate in lieu of foreclosure,
or otherwise, such New Tenant shall succeed to the rights of Tenant with respect
to such interest in such leasehold estate of the Premises acquired by it, with
the same force and effect as if this Lease had, with respect to such interest in
such leasehold estate, been originally entered into between Landlord, as
landlord, and such Mortgagee or such person or entity, as tenant, and this Lease
shall remain in full force and effect. Notwithstanding the foregoing, the
acquisition of any such ownership interest in and to the leasehold estate in the
Premises created by this Lease by New Tenant shall not be effective unless and
until: (i) all Rent then owing by Tenant has been paid and (ii) Landlord has
been delivered a fully executed and acknowledged counterpart of the instrument
evidencing such acquisition which contains an express assumption by New Tenant
of this Lease and of all the obligations hereunder on the part of Tenant to be
kept, observed or performed after the effective date of such acquisition and
which sets forth the mailing address of the New Tenant for purposes of this
Lease. If, within thirty (30) days after New Tenant acquires Tenant's interest
in this Lease, New Tenant requests, by giving written notice to Landlord, that
Landlord enter into a new lease with New Tenant, then Landlord, within thirty
(30) days after such notice is given, shall execute a new lease with New Tenant
for the unexpired balance of the Term and on the same terms and conditions set
forth in this Lease; provided, however, Landlord shall not have any obligation
to execute such new lease with New Tenant unless and until such New Tenant
satisfies each of the following conditions:
(a) any uncured Event of Tenant Default is cured;
(b) New Tenant delivers evidence reasonably satisfactory to Landlord
that such person or entity claiming to be a New Tenant is, in fact, a New
Tenant and is entitled to obtain a new lease from Landlord pursuant to the
provisions of this Section 10.4; and
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(c) New Tenant (i) represents and warrants to Landlord that it is
entitled to obtain a new lease from Landlord pursuant to the provisions of
this Section 10.4 and (ii) agrees to indemnify and hold Landlord harmless
from any claim, loss, cost, damage or expense (including court costs and
reasonable attorney's fees) arising out of any failure of such person or
entity actually being a New Tenant hereunder or any failure of such New
Tenant actually being entitled to obtain a new lease from Landlord.
New Tenant shall reimburse Landlord for all out-of-pocket expenses incurred by
Landlord (including reasonable attorney's fees) in entering into a new lease
with New Tenant pursuant to the provisions of this Section 10.4. Should Landlord
fail to perform its obligations under this Section 10.4 as herein provided,
Tenant shall have the rights set forth in Section 10.7 hereof.
Section 10.5 Further Assurances; Estoppel Certificate. Landlord shall
execute any further documents which may be reasonably required by Tenant, any
New Tenant or any Mortgagee at any time and from time to time to effectuate the
intent and purposes of this Article 10. In that connection, Landlord shall
execute and deliver to Tenant or any person or entity designated by Tenant,
including without limitation a Mortgagee, from time to time and at such time or
times as Tenant may request in writing, within thirty (30) days after receipt of
such written request, an estoppel certificate stating:
(a) whether or not this Lease is in full force and effect;
(b) whether or not this Lease has been modified or amended in any
respect, and submitting copies of such modifications or amendments, if
any;
(c) to best knowledge and belief of Landlord, whether or not there
are any existing defaults under this Lease and specifying the nature of
such defaults, if any;
(d) to best knowledge and belief of Landlord, whether or not any
particular provision of this Lease has been complied with;
(e) Landlord's current address for the purpose of giving notice to
Landlord; and
(f) such other information that may be reasonably requested.
Should Landlord fail to perform its obligations under this Section 10.5 as
herein provided, Tenant shall have the rights set forth in Section 10.7 hereof.
Tenant shall reimburse Landlord for all out-of-pocket expenses incurred by
Landlord (including reasonable attorney's fees) in performing its obligations
under this Section 10.5.
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Section 10.6 Granting of Easements. Landlord acknowledges that easements
over, along and across the Amphitheater Tract will be required from time to time
in connection with Tenant's use and occupancy of the Premises. Landlord shall
join with Tenant in the granting of any such easements for the purposes of
furnishing utilities or providing for ingress and egress to the Amphitheater
Tract and any improvements or parts thereof located thereon as Tenant may desire
and are prudent and consistent with the reasonable ownership, development and
operation of the Amphitheater taking into account Landlord's reversionary
interest in the Amphitheater Tract. Tenant shall reimburse Landlord for all
out-of-pocket expenses incurred by Landlord (including reasonable attorney's
fees) in performing its obligations under this Section 10.6. Any controversy
between Landlord and Tenant arising out of the provisions of this Section 10.6
shall be resolved by the dispute resolution provisions contained in Section
15.13 hereof.
Section 10.7 Tenant's Remedies. If Landlord fails to timely execute any
document or instrument required to be executed by Landlord pursuant to any of
the provisions of this Article 10, and such failure continues for sixty (60)
days after Tenant or the Mortgagee entitled to a new lease pursuant to the
provisions of Section 10.8, whichever is applicable, gives Landlord written
notice thereof, then Tenant or such Mortgagee, whichever is applicable, in
addition to all other rights and remedies available to it at law or in equity,
may withhold all payments of Rent hereunder until such time as Landlord complies
with such requirement. Upon Landlord complying with any such requirement, all
payments of Rent which have been withheld by Tenant as authorized by the
provisions of the immediately preceding sentence shall be due and payable to
Landlord, without interest. Any such withholding by Tenant or such Mortgagee
shall not be an Event of Tenant Default under this Lease.
Section 10.8 Mortgagee's Right to a New Lease. Upon termination of
Tenant's right to possession of the Premises or upon termination of this Lease
pursuant to an exercise of Landlord's remedies following the occurrence of an
Event of Tenant Default or upon termination of this Lease for any other reason,
any Mortgagee who was holding a Mortgage immediately prior to any such
termination shall have the right to receive from Landlord a new lease of the
Premises for the unexpired balance of the Term (assuming for purposes of this
Section 10.8 that this Lease has not been terminated and Tenant's right to
possession has not been terminated) on the same terms and conditions set forth
in this Lease by giving Landlord written notice ("New Lease Notice") thereof
within thirty (30) days after the date of any such termination; provided,
however, Landlord shall not have any obligation to execute such new lease with
Mortgagee unless such Mortgagee satisfies conditions within thirty (30) days
after Mortgagee gives Landlord the New Lease Notice:
(a) Any uncured Event of Tenant Default which can be cured by the
payment of money is cured. All income collected or received by or for the
account of Landlord from the Premises subsequent to the date of
termination of this Lease
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or termination of Tenant's right to possession of the Premises, less all
reasonable expenses incurred by Landlord in managing and operating the
Premises, shall be applied against Rent which would at the time of the
execution and delivery of such new lease be due under this Lease but for
such termination of this Lease or termination of Tenant's right to
possession of the Premises.
(b) Such Mortgagee delivers evidence reasonably satisfactory to
Landlord that such person or entity claiming to be a Mortgagee is, in
fact, a Mortgagee and is entitled to obtain a new lease of the Premises
from Landlord pursuant to the provisions of this Section 10.8.
(c) Such Mortgagee (i) represents and warrants to Landlord that it
is a Mortgagee and is entitled to obtain a new lease of the Premises from
Landlord pursuant to the provisions of this Section 10.8 and (ii) agrees
to indemnify and hold Landlord harmless from any claim, loss, cost, damage
or expense (including court costs and reasonable attorney's fees) arising
out of any failure of such person or entity actually being a Mortgagee
hereunder or any failure of such Mortgagee actually being entitled to
obtain a new lease of the Premises from Landlord.
Landlord shall enter into such new lease of the Premises with such Mortgagee
within sixty (60) days after Mortgagee gives Landlord the New Lease Notice. If
Landlord enters into such new lease with such Mortgagee as a result of Tenant's
right to possession of the Premises being terminated, then upon the execution
and delivery of such new lease, this Lease shall terminate and be of no further
force and effect if more than one Mortgagee makes written request upon Landlord
in accordance with the provisions of this Section 10.8, such new lease shall be
delivered pursuant to the request of the Mortgagee whose Mortgage is prior in
lien. The Mortgagee who obtains the new lease shall reimburse Landlord for all
out-of-pocket expenses incurred by Landlord (including reasonable attorney's
fees) in performing their obligations under this Section 10.8. Should Landlord
fail to perform its obligations under this Section 10.8 as herein provided,
Mortgagee shall have the rights set forth in Section 10.7 hereof. Any new lease
of the Premises created pursuant to the rights contained in this Section 10.8
shall be of equal priority to this Lease and shall in all events be prior and
superior to any lease, lien or other encumbrance created after the date hereof.
The provisions of this Section 10.8 shall survive the termination of this Lease.
Section 10.9 Concurrent Exercise of Rights. Tenant, each Mortgagee and
each New Tenant may exercise any and all of its rights under this Article 10
concurrently (including the affixation of two (2) or more Mortgages
concurrently), at any time or times, and from time to time during the Term, so
often and as many times as they may desire.
Section 10.10 No Modification of Lease. Landlord and Tenant covenant and
agree (for the benefit of any and all Mortgagees which are entitled to copies of
notices pursuant
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to Section 10.2 hereof) that this Lease will not be modified, altered or amended
in any way, nor will Landlord accept a voluntary surrender of the Premises,
without the prior written consent of any such Mortgagees.
ARTICLE 11
LANDLORD'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 11.1 Peaceful Possession. Landlord covenants and warrants that
Tenant shall and may peaceably and quietly have, hold, occupy, use and enjoy,
and shall have the use and enjoyment of, all of the Premises during the entire
Term; and Landlord and its successors and assigns agree to WARRANT AND FOREVER
DEFEND the title to the Premises, subject to the Permitted Encumbrances and
subject to and upon the covenants, agreements, terms, provisions and imitations
herein set forth, unto Tenant and its successors and assigns against the claims
of any and all persons whomsoever lawfully claiming or to claim the same or any
part thereof.
Section 11.2 Organization. Landlord hereby represents and warrants to
Tenant that it is a non-profit corporation duly organized under the laws of the
State of Florida, that it has full power and authority to enter into this Lease
and to engage in the transaction contemplated hereby, and that the joinder,
consent or approval of no other person or entity is required to properly
consummate the transactions herein contemplated.
Section 11.3 Binding Obligation. Landlord hereby represents and warrants
that this Lease is a valid obligation of Landlord and is binding upon Landlord
in accordance with the terms hereof.
Section 11.4 Mortgage of Fee Estate. Landlord hereby represents and
warrants to Tenant that there are no mortgages or liens affecting Landlord's fee
simple estate in and to the Amphitheater Tract or Landlord Land other than the
mortgage in favor of First Union National Bank of Florida. Landlord shall have
the right to subsequently encumber its fee simple estate in and to the Landlord
Land after the date hereof, so long as the liens and security interests created
thereby remain in all respects subordinate to this Lease.
Section 11.5 Hazardous Substances. Landlord hereby represents, warrants
and covenants unto Tenant as follows:
(a) The Entire Tract is not currently in violation of or subject to
any investigation by any Governmental Authority under any applicable laws,
rules or regulations pertaining to health or environment.
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(b) No Hazardous Substances have been disposed of or otherwise
released on, to or under the Landlord Land.
(c) Landlord shall not cause or permit subsequent to the execution
of this Lease any Hazardous Substance to be disposed of or otherwise
released on, to or under the Entire Tract.
(d) No portion of the Entire Tract has ever been used as a landfill,
dump, site for injection wells or cemetery, and Landlord shall not use or
permit any portion of the Entire Tract to be used for any such purpose
subsequent to the execution of this Lease.
Section 11.6 Indemnification. Landlord will reimburse, indemnify and hold
Tenant and each of its agents, employees, partners, attorneys, contractors,
concessionaires, subtenants and other persons claiming under Tenant harmless
from and against:
(a) any all damages, losses, deficiencies, liabilities, costs and
expenses resulting from, relating to or arising out any false or
misleading representation contained in this Article 11 or the breach of
any covenant or obligation of Landlord contained in this Article 11; and
(b) any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs and other expenses
(including, without limitation, reasonable attorneys' fees) incident to
any of the indemnified claims referred to in clause (a) above or to the
enforcement of the provisions of this Section 11.6.
ARTICLE 12
TENANT'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 12.1 Organization. Tenant hereby represents and warrants to
Landlord that it is a general partnership duly organized under the laws of the
State of Delaware, that it has full power and authority to enter into this Lease
and to engage in the transactions contemplated hereby, and that the joinder,
consent or approval of no other person or entity is required properly consummate
the transactions herein contemplated.
Section 12.2 Binding Obligation. Tenant hereby represents and warrants
that this Lease is a valid obligation of Tenant and is binding upon Tenant in
accordance with the terms hereof.
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Section 12.3 Hazardous Substances. Tenant shall not cause or permit, at
any time during the Term of this Lease, any Hazardous Substances to be disposed
of or otherwise released on, to or under the Entire Tract. Tenant agrees to
indemnify, defend and hold harmless Landlord and each of its agents, employees,
officers, partners, attorneys, contractors, concessionaires, subtenants and
other persons claiming under Landlord of and from all fines, suits, claims,
demands, losses and actions (including any and all attorneys' fees) arising out
of or otherwise relating to any condition or circumstance which would not
otherwise exist but for the failure of Tenant to fulfill its covenant contained
in this Section 12.3.
Section 12.4 Waste. Tenant shall not commit or permit waste of the
Amphitheater and must, subject to the provisions of Section 14.1 hereof, return
it to Landlord upon expiration of the Term in the same condition as it was in at
the time the Amphitheater was newly constructed (subject to any changes,
alterations or additions made during the Term in accordance with the provisions
hereof), ordinary wear and tear excepted.
Section 12.5 Security. During the Term of this Lease, for each Tenant
Event, Tenant shall provide security at the Amphitheater and Parking Tract in
accordance with Industry Standards and the standards utilized at the Previous
Amphitheaters. Notwithstanding the foregoing, Tenant shall not be responsible
for providing security with respect to (i) the Fairground Tract, at any time, or
(ii) the Parking Tract at any time other than during Show Hours on the day of a
Tenant Event.
Section 12.6 Indemnification. Tenant will reimburse, indemnify and hold
Landlord and each of its agents, employees, partners, attorneys, contractors,
concessionaires, subtenants and other persons claiming under Landlord harmless
from and against:
(a) Any and all damages, losses, deficiencies, liabilities, costs
and expenses resulting from, relating to or arising out of any false or
misleading representation contained in this Article 12 or the breach of
any covenant or obligation of Tenant contained in this Article 12; and
(b) Any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs and other expenses
(including, without limitation, reasonable attorneys' fees) incident to
any of the indemnified claims referred to in clause (a) above or to the
enforcement of the provisions of this Section 12.6.
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ARTICLE 13
DEFAULT AND REMEDIES
Section 13.1 Event of Tenant Default. An "Event of Tenant Default" for
purposes of this Lease shall be deemed to have occurred hereunder if (i) any
installment of Rent payable to Landlord or any third party under this Lease
remains unpaid on the date upon which the same is due to be paid and continues
to be unpaid for thirty (30) days after Tenant and each Mortgagee which has
given Landlord the notice referred to in Section 10.2 hereof have been given a
written notice specifying that such installment remains unpaid, (ii) Tenant
fails to present a concert, performance or other entertainment event at the
Amphitheater for three (3) consecutive months during any Amphitheater Season and
continues to fail to present a concert, performance or other entertainment event
in the Amphitheater for thirty (30) days after Tenant and each Mortgagee which
has given Landlord the notice referred to in Section 10.2 hereof have been given
a written notice specifying that Tenant has so failed to present a concert,
performance or other entertainment event in the Amphitheater for three (3)
consecutive months during an Amphitheater Season or (iii) Tenant becomes
insolvent.
Section 13.2 Landlord Remedies. If an Event of Tenant Default occurs, then
Landlord, at any time thereafter prior to the curing thereof shall have, as its
sole and exclusive remedy, the right to do any one or more of the following:
(a) Landlord may terminate this Lease by giving Tenant (and each
Mortgagee which has given Landlord the notice referred to in Section 10.2
hereof) written notice thereof, in which event this Lease and the
leasehold estate hereby created and all interest of Tenant and all parties
claiming by, through, or under Tenant shall automatically terminate upon
the effective date of such notice with the same force and effect and to
the same extent as if the effective date of such notice were the day
originally fixed in Article 3 hereof for the expiration of the Term;
(b) Landlord and its agents or representatives shall have the right,
after giving Tenant (and each Mortgagee which has given Landlord the
notice referred to in Section 10.2 hereof) fifteen (15) days prior written
notice, to reenter and take possession of the Premises and remove all
persons and property therefrom; and
(c) Landlord may file such lawsuits against Tenant in any court of
competent jurisdiction as may be necessary to obtain a judgment against
Tenant for payment of any unpaid Rent through the date of termination
hereof and for payment of all costs and expenses (including reasonable
attorneys' fees) expended or incurred by Landlord in connection with
exercising its remedies hereunder.
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Section 13.3 Tenant's Failure to Perform Non-Rent Obligations. If any of
the Non-Rent Obligations of Tenant are not performed and discharged as and when
called for, and (a) the failure, refusal or neglect to perform and discharge
such Non-Rent Obligation continues for a period of thirty (30) days after
Tenant and each Mortgagee which has given Landlord the notice referred to in
Section 10.2 hereof have been given notice thereof or (b) if by reason of the
nature of such Non-Rent Obligation the same cannot be remedied within thirty
(30) days, (i) performance and discharge of such Non-Rent Obligation is not
commenced within such thirty (30) day period, (ii) the performance and discharge
of such Non-Rent Obligation is not diligently and continuously prosecuted or
(iii) such Non-Rent Obligation is not fully performed and discharged within
ninety (90) days after Tenant and each Mortgagee which has given Landlord the
notice referred to in Section 10.2 hereof have been given notice thereof, then a
"Non-Rent Event of Default" shall be deemed to have occurred for all purposes of
this Lease. Upon the occurrence of a Non-Rent Event of Default, Landlord shall
have, as its sole and exclusive remedy, the right to do any one or more of the
following:
(a) File such lawsuits against Tenant as may be necessary to pursue
Landlord's rights and remedies provided by law or in equity against Tenant
for damages or mandamus and claims for damages by reason of the existence
of such Non-Rent Event of Default;
(b) Perform the Non-Rent Obligations of Tenant which gave rise to
the existence of such Non-Rent Event of Default, in which event Tenant
shall be obligated to reimburse to Landlord all expenses incurred by
Landlord as the result of Landlord's performance of the Non-Rent
Obligations of Tenant together with interest thereon at the Permitted Rate
from the date of expenditure; and
(c) Attempt to enforce the Non-Rent Obligations of Tenant under this
Lease by an action for specific performance;
provided, however, in no event shall Landlord have, and Landlord hereby
specifically waives, the right to terminate or seek termination of this Lease
and the right to terminate or seek termination of Tenant's right to possession
of the Premises upon the occurrence of a Non-Rent Event of Default, it being
specifically agreed and acknowledged that Landlord may only terminate this Lease
pursuant to the right created in Section 13.2(a) following the occurrence of an
Event of Tenant Default.
Section 13.4 Event of Landlord Default. If any of the obligations of
Landlord under this Lease is not performed and discharged as and when called for
and (a) the failure, refusal or neglect to perform and discharge such obligation
continues for a period of thirty (30) days after Landlord has been given notice
thereof or (ii) if by reason of the nature of such obligation the same cannot be
remedied within thirty (30) days, (i) performance and discharge of such
obligation is not commenced within such thirty (30) day period, (ii) the
performance and discharge of such obligation is not diligently and continuously
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prosecuted or (iii) such obligation is not fully performed and discharged within
ninety (90) days after Landlord has been given notice thereof, then an "Event of
Landlord Default" shall be deemed to have occurred for all purposes of this
Lease.
Section 13.5 Tenant's Remedies. If an Event of Landlord Default occurs,
then Tenant, at any time thereafter prior to the curing thereof shall have, as
its sole and exclusive remedy, the right to do any one or more of the following:
(a) terminate this Lease by providing written notice thereof to
Landlord, in which event Tenant shall surrender possession of the Premises
to Landlord and all of Tenant's obligations under this Lease, including
the obligation to pay Rent, shall immediately terminate;
(b) file such lawsuits against Landlord as may be necessary to
pursue Tenant's rights and remedies provided by law or in equity against
Landlord for damages or mandamus, and claims for reliance damages, such as
lost revenues, by reason of the existence of such Event of Landlord
Default and recovery of any unamortized portion of the Rights Fee;
(c) perform the obligations of Landlord which gave rise to the
existence of such Event of Landlord Default, in which event Landlord shall
be obligated to reimburse to Tenant all expenses incurred by Tenant as the
result of Tenant's performance of the obligations of Landlord together
with interest thereon at the Permitted Rate from the date of expenditure;
and
(d) attempt to enforce the obligations of Landlord under this Lease
by an action for a specific performance.
All of Tenant's rights and remedies listed above may be exercised concurrently
or consecutively at Tenant's option. Tenant shall have the express right to
offset against future Rent due to Landlord for recovery of any amounts expended
by Tenant pursuant to clause (c) above.
ARTICLE 14
CASUALTY AND CONDEMNATION
Section 14.1 Casualty and Reconstruction. Should the Amphitheater be
wholly or partially destroyed or damaged by fire or any other casualty, Tenant
shall promptly repair, replace, restore and reconstruct the same in
substantially the form in which it existed prior to such casualty, with at least
as good workmanship and quality as the improvements being repaired or replaced;
provided, however, Tenant's obligation under this Section 14.1 shall be limited
to the extent of insurance proceeds that are available to Tenant (or would
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considered as vacant and unimproved and not subject to the
provisions of this Lease.
(3) "Landlord Fraction" - A fraction, the numerator of which
is the Condemned Land Value and the denominator of which is the sum
of the Condemned Land Value and the Condemned Improvement Value.
(b) All awards resulting from any taking as set forth in Section
14.2 hereof shall be distributed as follows:
(1) First, to Landlord, an amount of money equal to the
product of the total award resulting from such taking times Landlord
Fraction relating to, and determined as of the date of, such taking.
(2) Second, the balance shall be distributed as follows:
(i) If the date of such taking is during the initial
Term, then one hundred percent (100%) of such balance shall be
distributed to Tenant;
(ii) If the date of such taking is during the first
Renewal Term, then eighty percent (80%) of such balance shall
be distributed to Tenant and twenty percent (20%) thereof to
Landlord;
(iii) If the date of such taking is during the second
Renewal Term, then sixty percent (60%) of such balance shall
be distributed to Tenant and forty percent (40%) thereof to
Landlord;
(iv) If the date of such taking is during the third
Renewal Term, then forty percent (40%) of such balance shall
be distributed to Tenant and sixty percent (60%) thereof to
Landlord; or
(v) If the date of such taking is during the fourth
Renewal Term, then twenty percent (20%) of such balance shall
be distributed to Tenant and eighty percent (80%) thereof to
Landlord.
(c) The terms and provisions of this Section 14.3 shall survive the
termination of this Lease.
Section 14.4 Temporary Taking. If the whole or any portion of the Premises
shall be taken for temporary use or occupancy, the Term shall not be reduced or
affected and Tenant shall continue to pay the Rent in full. Except to the extent
Tenant is prevented from so doing pursuant to the terms of the order of the
condemning authority, Tenant shall continue to perform and observe all of the
other covenants, agreements, terms, and
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provisions of this Lease. In the event of any temporary taking, Tenant shall be
entitled to receive the entire amount of any award therefor unless the period of
temporary use or occupancy shall extend beyond the expiration of the Term, in
which case such award, after payment to Landlord therefrom for the estimated
cost of restoration of the Premises to the extent that any such award is
intended to compensate for damage to the Premises, shall be apportioned between
Tenant and Landlord as of the day of expiration of the Term in the same ratio
that the part of the entire period for such compensation is made failing before
the day of expiration and that part falling after, bear to such entire period.
Section 14.5 No Waiver. Nothing contained herein shall be construed as a
waiver by Tenant of any claim which it may have against the condemnor for taking
all or any part of the Premises, and Tenant shall have the right to appear and
file its claim for damages in any such condemnation proceedings, to participate
in any and all hearings, trials and appeals thereon, to be represented by
counsel of its choice therein, and to receive the share of any such awards so
adjudicated to be due it.
ARTICLE 15
MISCELLANEOUS
Section 15.1 Notices. Any notice provided for or permitted to be given
hereunder must be in writing and shall be deemed to have been duly given if
delivered personally with receipt acknowledged or sent by registered or
certified mail or equivalent, if available, return receipt requested, or by
facsimile, telex or cablegram (which shall be confirmed by a writing sent by
registered or certified mail or equivalent on the same day that such facsimile,
telex or cablegram is sent), or by recognized overnight courier for next day
delivery, addressed or sent to the parties at the following addresses and
facsimile numbers or to such other or additional addresses or facsimile number
as any party shall hereafter specify by written notice to the other parties:
Landlord: South Florida Fair and
Palm Beach County Expositions, Inc.
9067 Southern Boulevard
P.O. Box 15915
West Palm Beach, Florida 33416
FACSIMILE: (407) 790-5210
With a copy to: Mr. John Fenn Foster
Foster, Foster & Heffling, Professional
Association
1897 Palm Beach Lakes Boulevard
Crossroads, Suite 219
West Palm Beach, Florida 33409
FACSIMILE: (407) 478-0224
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Tenant: Pavilion Partners
c/o SM/PACE, Inc.
515 Post Oak Boulevard
Suite 300
Houston, Texas 77027
ATTN: Mr. Jeffry B. Lewis
FACSIMILE: (713) 963-0617
All notices shall be deemed effective when received or, if rejected, on the date
of rejection thereof.
Section 15.2 Modifications and Non-Waiver. No variations, modifications,
or changes herein or hereof shall be binding upon any party hereto unless set
forth in a writing executed by it or by a duly authorized officer or agent. No
waiver by either party of any breach or default of any term, condition, or
provision hereof, including without limitation the acceptance by Landlord of any
Rent at any time or in any manner other than as herein provided, shall be deemed
a waiver of any other or subsequent breaches or defaults of any kind, character,
or description under any circumstance. No waiver of any breach or default of any
term, condition, or provision hereof shall be implied from any action of any
party, and any such waiver, to be effective, shall be set out in a written
instrument signed by the waiving party.
Section 15.3 Florida Law. This Lease shall be construed and enforced in
accordance with the laws of the State of Florida.
Section 15.4 Unavoidable Delay. If either party to this Lease shall be
delayed or prevented from the performance of any act required by this Agreement
by reason of any Unavoidable Delay, performance of such act shall be excused for
the period of such Unavoidable Delay, and the period for the performance of any
such act shall be extended for a period equivalent to the period of such
Unavoidable Delay; provided, however, nothing in this section shall excuse
Tenant from the prompt payment of any Rent payable pursuant to the provisions of
this Lease.
Section 15.5 Severability. If any provision of this Lease or the
application thereof shall, at any time or to any extent, be invalid or
unenforceable, and the basis of the bargain between the parties hereto is not
destroyed or rendered ineffective thereby, the remainder of this Lease, or the
application of such provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby.
Section 15.6 Attorneys Fees. If litigation is ever instituted by either
party hereto to enforce, or to seek damages for the breach of, any provision
hereof, the prevailing party therein shall be promptly reimbursed by the other
party for all attorneys' fees reasonably incurred by the prevailing party.
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Section 15.7 Surrender of Premises; Holding Over. Upon termination or the
expiration of this Lease, Tenant shall peaceably quit, deliver up, and surrender
the Premises to Landlord free of all claims and encumbrances other than the
Permitted Encumbrances. Upon such termination or expiration, Landlord may,
without further notice, enter upon, reenter, possess, and repossess itself of
the Premises by force, summary proceedings, ejectment, or otherwise, and may
dispossess and remove Tenant from the Premises and may have, hold, and enjoy the
Premises and all rental and other income therefrom, free of any claim by Tenant
with respect thereto. If Tenant does not surrender possession of the Premises at
the end of the Term, such action shall not extend the Term, Tenant shall be a
tenant at sufferance, and during such time of occupancy Tenant shall pay to
Landlord, as damages, an amount equal to one hundred fifty percent (150%) of the
amount of Rent that was being paid immediately prior to the end of the Term.
Landlord shall not be deemed to have accepted a surrender of the Premises by
Tenant, or to have extended the Term, other than by execution of a written
agreement specifically so stating.
Section 15.8 Relation of Parties. It is the intention of the parties to
hereby create the relationship of landlord and tenant, and no other relationship
whatsoever is hereby created. Nothing in this Lease shall be construed to make
the parties hereto partners or joint venturers or to render either party hereto
liable for any obligation of the other.
Section 15.9 Non-Merger. Notwithstanding the fact that fee title in the
tracts or parcels of land described in Article I hereof and the leasehold estate
hereby created may, at any time, be held by the same party, there shall be no
merger of the leasehold estate hereby created unless the owner thereof executes
and files for record in the Office of the County Clerk of Palm Beach County,
Florida a document expressly providing for the merger of such estates.
Section 15.10 Entireties. This Lease constitutes the entire agreement of
the parties hereto with respect to its subject matter, and all prior agreements
with respect thereto are merged herein.
Section 15.11 Successors and Assigns. This Lease shall constitute a real
right and covenant running with the Premises, and shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. Whenever a reference is made herein to
either party, such reference shall include the party's heirs, legal
representatives, successors and assigns.
Section 15.12 Memorandum of Lease Agreement. Concurrently with the
execution of this Lease, at the ejection of Tenant or at such later time as
Tenant may request, Landlord shall execute and deliver to Tenant, for recording
in the Real Property Records of Palm Beach County, Florida, a Memorandum of this
Lease in such form and containing such provisions (not inconsistent with this
Lease) as Tenant may specify. Such Memorandum shall include a legal description
intended to describe the Amphitheater
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Tract, the Parking Tract and the Landlord Land. If such Memorandum is recorded
pursuant to the foregoing provisions, and if for any reason Tenant's rights and
obligations under this Lease are terminated, then Tenant shall execute such
documents (including recordable documents) as may be reasonably requested by
Landlord for purposes of establishing that this Lease is no longer of any force
or effect.
Section 15.13 Arbitration. This Section shall only apply where express
provision is made in this Lease for resolution of a dispute pursuant to this
Section 15.13. If a party desires to submit a dispute or matter to arbitration,
such party shall so notify the other party and in such notice shall designate
the first arbitrator. Within ten (10) days after the giving of such notice, the
other party shall designate, in a written notice, the second arbitrator. If the
party entitled to do so fails to timely designate the second arbitrator, then
the first arbitrator shall proceed to determine the matter or dispute. If a
second arbitrator is designated the arbitrators shall meet within ten (10) days
after the designation of the second arbitrator, and if within thirty (30) days
thereafter they have not agreed upon the matter in issue, they shall appoint a
third arbitrator; if the two arbitrators are unable to agree upon a third
arbitrator within ten (10) days after the expiration of the aforesaid thirty
(30) day time period, a third arbitrator shall be selected by Landlord and
Tenant if they can agree thereon within a further period of fifteen (15) days.
If the parties do not so agree, then either party on behalf of both may request
such appointment by the American Arbitration Association in accordance with its
Commercial Arbitration Rules. A decision of the arbitrators so chosen shall be
given within a period of thirty (30) days after the appointment of the third
arbitrator. A decision in which any two arbitrators shall have concurred shall
be binding and conclusive on the parties hereto, or if no two arbitrators
concur, then the average of the two closest mathematical determinations shall
constitute the decision of all three arbitrators and shall be similarly binding
and conclusive, as to matters which are subject to mathematical resolution. If
any arbitrator shall fail, refuse, or become unable to act, a new arbitrator
shall be appointed in his place following the same method as was originally
followed with respect to the arbitrator to be replaced. Landlord and Tenant
shall pay the fees and expenses of the arbitrator appointed by them, and the
fees and expenses of the third arbitrator and all other expenses of arbitration
shall be borne equally by the parties. All hearings and proceedings held and all
investigations and actions taken by the arbitrators shall take place in Miami,
Florida. Any arbitrator designated to serve in accordance with the provision of
this Section 15.13 shall be a land planning consultant, architect, engineer,
real estate attorney or real estate appraiser.
Section 15.14 Brokerage Indemnity. Landlord hereby agrees to indemnify and
hold harmless Tenant, and Tenant hereby agrees to indemnify and hold harmless
Landlord, against and in respect of any claims for brokerage, commission,
finder's or other fees relative to this Lease and the transactions set forth
herein based in any way on agreements, arrangements or understandings made by
the indemnifying party with any other party or parties.
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Section 15.15 Liability of Tenant. Notwithstanding any other provision of
this Lease, without regard to the number of persons or entities which may
constitute Tenant at any time, the obligations of all such persons or entities
are and shall be joint and several.
Section 15.16 Landlord's Failure to Present Fair. If Landlord fails to
satisfy the Fair Requirement during any Lease Year, then, notwithstanding
anything to the contrary contained in this Lease, Tenant shall have the right,
privilege, license and authority, but not the obligation, to hold, conduct and
present, on the Entire Tract during the next succeeding Lease Year, a fair or
such other activities as may be necessary to satisfy the Fair Requirement.
Section 15.17 Restrictions on Public Announcements. Neither Landlord nor
Tenant shall, at any time prior to the Commencement Date, make any public
announcement, press release or other intentional announcement to third parties
concerning the execution or existence of this Lease.
Section 15.18 Board Approval. This Lease, and the parties' obligations
hereunder, are expressly conditioned upon the occurrence of (i) Tenant's
Executive Committee authorizing and approving the transaction contemplated
hereby upon the terms, conditions and provisions contained herein and (ii)
Landlord's Board of Trustees authorizing and approving the transaction
contemplated hereby upon the terms, conditions and provisions contained herein.
Neither Tenant's Executive Committee nor Landlord's Board of Trustees shall be
under any duty, responsibility or obligation, express or implied, to approve or
authorize the transaction contemplated hereby, it being understood, agreed and
acknowledged that either Tenant's Executive Committee or Landlord's Board of
Trustees may refuse or decline to approve the transaction contemplated by this
Lease for any reason whatsoever, reasonable or unreasonable. Landlord and Tenant
each hereby specify, agree and acknowledge that, if a first Amendment to Lease
in substantially the same form as Exhibit "D" attached hereto has not been
executed and entered into by and between Landlord and Tenant on or before the
close of business on January 31, 1995, then this Lease shall be deemed to have
been terminated, canceled and voided ab initio with no further action required
by any party hereto in the same manner, and to the same extent, as if this Lease
had never been executed and entered into by and between the parties hereto.
Section 15.19 Cooperation on Sponsorships. Landlord and Tenant each agree
to be mutually respectful of the sponsorship arrangements made by the other in
connection with the Fair Operations conducted by Landlord on the Fairground
Tract and the business operations to be conducted by Tenant on the Amphitheater
Tract. In this regard, (i) Landlord covenants and agrees with Tenant that it
shall not place a sponsor's sign on the Landlord Land in a manner which could be
visible to Patrons of the Amphitheater while seated in the Amphitheater and (ii)
Tenant covenants and agrees with
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Landlord that it shall not place a sponsor's sign on the Amphitheater Tract in a
manner which would be visible to a Patron of the Fair Operations while on the
Fairground Tract.
Section 15.20 Counterparts. This Lease may be executed in multiple
counterparts, each of which shall be deemed an original of one and the same
instrument.
Section 15.21 Time of the Essence. For purposes of this Lease, time shall
be deemed to be of the essence.
Section 15.22 Name of Amphitheater. The name of the Amphitheater shall be
Blockbuster Sony Music Center at the South Florida Fairgrounds. Any subsequent
change in the name of the Amphitheater must be approved by Landlord, such
approval not to be unreasonably withheld, conditioned or delayed.
Section 15.23 Signage. All signs to be placed on the Amphitheater Tract by
Tenant which are visible from other portions of the Entire Tract must be uniform
in design, compatible with the aesthetic design of the Amphitheater and not
placed in a manner to block existing signs on other portions of the Entire
Tract. Any signs to be placed on the Amphitheater Tract which are visible from
other portions of the Entire Tract which do not meet the standards contained in
the immediately preceding sentence, must be approved by Landlord, such approval
not to be unreasonably withheld, delayed or conditioned.
Section 15.24 Box Seats and Tickets for the Landlord. During the Term, (i)
Tenant shall provide to Landlord, at no cost or expense to Landlord, a four-seat
reserved box in the covered portion of the Amphitheater; provided, however, if a
six-seat box is available, then Tenant shall provide such six-seat box to
Landlord in lieu of the four-seat box referred to herein and (ii) Landlord shall
have the right to purchase up to twenty (20) of the best available reserved
seats (excluding the first 15 rows and any other "specially priced" reserved
seating areas) at face value for each Tenant Event. Any tickets purchased by
Landlord from Tenant pursuant to the provisions of clause (ii) of the
immediately preceding sentence may not be resold for amounts in excess of the
face value thereof.
Section 15.25 Monetary Obligations. Any sums payable by one party to the
other pursuant to the provisions of this Lease which are not required to be paid
by a time certain shall be due and payable within thirty (30) days after written
demand is made by the obligee to the obligor.
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EXECUTED as of the date and year first above written.
SOUTH FLORIDA FAIR AND PALM BEACH
COUNTY EXPOSITIONS, INC., a Florida
not-for-profit corporation
By: /s/ Raymond C. Tylander
-----------------------------------
Name: Raymond C. Tylander
----------------------------
Title: President
----------------------------
"LANDLORD"
PAVILION PARTNERS, a Delaware general
partnership
By: SM/PACE, Inc., its general partner
By: /s/ Brian E. Becker
------------------------------
Name: Brian E. Becker
-----------------------
Title: Chief Executive Officer
-----------------------
"TENANT"
THE STATE OF FLORIDA )
)
COUNTY OF PALM BEACH )
This instrument was acknowledged before me on the 5th day of January,
1995, by Raymond C. Tylander, President of SOUTH FLORIDA FAIR AND PALM BEACH
COUNTY EXPOSITIONS, INC., a Florida not-for-profit corporation, on behalf of
said corporation.
/s/ John Fenn Foster
-----------------------------------
NOTARY PUBLIC
FOR AND IN THE STATE OF FLORIDA
[SEAL] JOHN FENN FOSTER
MY COMMISSION #195988
EXPIRES
April 22, 1996
BONDED THRU TROY FAIN
INSURANCE, INC.
66
<PAGE>
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on the 4th day of January,
1995, by Brian E. Becker, CEO of SM/PACE, INC., a Texas corporation, in its
capacity as a general partner of PAVILION PARTNERS, a Delaware partnership, on
behalf of said partnership.
/s/ J. Kathleen Quigley
-----------------------------------
NOTARY PUBLIC
FOR AND IN THE STATE OF TEXAS
[SEAL] J. KATHLEEN QUIGLEY
MY COMMISSION EXPIRES
August 15, 1997
67
<PAGE>
Exhibit "A-1"
Legal Description of Entire Tract
DESCRIPTION
A parcel of land lying in Blocks 7 and 8, Pale Beach Farms Company Plat No. 3,
recorded in Plat Book 2, Pages 45 through 54, Public Records of Palm Beach
County, Florida, described as follows:
Commencing at the Northeast Corner of Tract 17 said Block 7, run thence South
89-05-43 West along the North line of said Tract 17, a distance of 40.00 feet
to a point on a line 40.00 feet West of and parallel with the East line of said
Tract 17; said parallel line also being the West right-of-way line of Sansbury
Way as laid out and in use; thence South 00-56-58 East along said parallel line
and along said West right-of-way line of Sansbury Way, a distance of 1349.75
feet to a point on the North line of Tract 29, said Block 7; thence South
89-04-30 West along said North line of Tract 29 (departing from said West
right-of-way line of Sansbury Way), a distance of 950.11 feet to the Northeast
corner of Tract 30, said Block 7; thence South 00-57-57 East along the East line
of said Tract 30 and the East lines of Tracts 31 and 42 said Block 7, a distance
of 1583.14 feet to a point on the North right-of-way line of Southern Boulevard
(State Road 80) as same is shown on the Florida Department of Transportation
Right-of-Way Map Section Number 9312-108, dated January 1952; thence North
88-31-05 West along said North right-of-way line, a distance of 100.09 feet to a
point on a line 100.00 feet West of and parallel with said East line of Tract
42; thence North 00-57-57 West (departing from said North right-of-way line of
Southern Boulevard), a distance of 378.81 feet to a point on a line 120.00 feet
North of and parallel with North line of said Tract 31; thence South 89-03-16
West along said parallel line, a distance of 864.77 feet to a point on a line
25.00 feet East of and parallel with the West line of said Tract 31; thence
South 00-58-57 East along said parallel line, a distance of 342.15 feet to a
point on the said North right-of-way line of Southern Boulevard; thence North
88-31-05 West along said North right-of-way line, a distance of 301.18 feet to a
point on the East right-of-way line of Fairgrounds Road as same is described in
Official Record Book 2749, Pages 1880 through 1884; thence North 44-45-17 West
along said East right-of-way line of Fairgrounds Road (departing from said North
right-of-way line of Southern Boulevard), a distance of 34.58 feet; thence
North 00-59-28 West continuing along said East right-of-way line of Fairgrounds
Road, a distance of 886.78 feet; thence North 56-25-36 West, a distance of
221.35 feet to the Point of Curvature of a curve concave northeasterly having a
radius of 341.36 feet; thence northwesterly along the arc of said curve through
a central angle of 55-26-09, a distance of 330.28 feet to the Point of Tangency;
thence North 00-59-27 West, a distance of 1536.80 feet; thence North 44-00-51
East, a distance of 35.36 feet to a point on the North line of Tract 7, said
Block 8 said North line also being the South right-of-way line of Fairgrounds
Road North as laid out and in use; thence North 89-01-09 East along said North
line of Tract 7 and along said South right-of-way line of Fairgrounds Road
North, a distance of 555.22 feet to the Northeast corner of said Tract 7; thence
North 89-05-43 East along a westerly prolongation of the North line of Tracts
17 and 18 said Block 7 and along the said North line of Tracts 17 and 18 and
continuing along the said South right-of-way line of Fairgrounds Road North, a
distance of 1991.00 feet to the Point of Beginning.
Containing 122.296 acres, more or less.
<PAGE>
EXHIBIT "A-2"
Amphitheater Tract
A portion of Tracts 17, 18, 19 and 20, Block 7, PALM BEACH FARMS COMPANY, PLAT
NO. 3, recorded in Plat Book 2, Pages 45 through 54, Public Records of Palm
Beach County, Florida, being more particularly described as follow:
COMMENCING at the Northwest corner of Tract 29, Block 7, of said PALM BEACH
FARMS COMPANY PLAT NO. 3, thence North 00-55-30 West, a distance of 60.00 feet
to a point in a line 60.00 feet North of and parallel with the North line of
said Tract 29, said point also being the POINT OF BEGINNING; thence North 00-55-
30 West, a distance of 132.00 feet; thence South 89-04-30 West, a distance of
160.00 feet; thence North 20-46-09 West, a distance of 141.40 feet; thence North
00-55-30 West, a distance of 405.00 feet; thence North 89-04-30 East, a distance
of 820.00 feet; thence South 46-55-30 East, a distance of 91.92 feet; thence
South 00-55-30 East, a distance of 540.00 feet; thence South 44-04-30 West, a
distance of 91.92 feet to a point on said line 60.00 feet North of and parallel
with the North line of Tract 29; thence South 89-04-30 West, along said parallel
line, a distance of 612.00 feet to the POINT OF BEGINNING.
Containing 12.812 acres, more or less.
<PAGE>
EXHIBIT "A-3"
Plat Depicting the Amphitheater Tract and the Parking Tract
To be furnished pursuant to Section 5.1(c)
<PAGE>
EXHIBIT "B"
PROMISSORY NOTE
[Credit Line Note]
$400,000.00 _______________, 1995
FOR VALUE RECEIVED, SOUTH FLORIDA FAIR AND PALM BEACH COUNTY EXPOSITIONS,
INC. ("Borrower"), a Florida not-for-profit corporation, PROMISES TO PAY TO THE
ORDER OF PAVILION PARTNERS ("Lender"), a Delaware general partnership, in
Houston, Harris County, Texas, the sum of FOUR HUNDRED THOUSAND AND NO/100
DOLLARS ($400,000.00), or, if less, the aggregate unpaid principal amount of
advances made by Lender to Borrower pursuant to this Note, in lawful money of
the United States of America, which shall be legal tender in payment of all
debts and dues, public and private, at the time of payment. Except for past due
amounts, which shall bear interest in accordance with the provisions hereof, the
principal balance of this Note shall not bear any interest.
As used herein, the term "Maximum Rate" shall mean the maximum
non-usurious interest rate permitted by applicable law from time to time in
effect as such law may be interpreted, amended, revised, supplemented or
enacted.
This Note is the Promissory Note referred to in and is entitled to the
benefits of that certain Lease Agreement, Easement Agreement and Declaration of
Restrictive Covenants (as may hereafter be amended and supplemented, the
"Lease") dated January __, 1995 and entered into by and between Borrower, as
Landlord, and Lender, as Tenant. Capitalized terms used herein which are not
defined herein shall have the meaning assigned thereto by the provisions of the
Lease.
This Note is payable as follows:
(a) An annual principal payment for each Lease Year shall be payable
from Borrower to Lender in an amount equal to the lesser of (i) the Excess
Rental Amount for such Lease Year or (ii) the then outstanding principal
balance under this Note. The principal installments for each Lease Year
shall be payable from Borrower to Lender on the same date that Lender's
payment of Rent pursuant to Section 4.3 of the Lease for such Lease Year
is payable to Borrower, and Lender shall have the specific right and
authority to offset against such payment of Rent an amount equal to the
required principal reduction on the Credit Line.
(b) The entire unpaid balance of this Note shall be due and payable
on the ninth (9th) anniversary of the Opening Date.
<PAGE>
Borrower shall have the right to freely prepay all or any portion of the
principal balance hereof, without penalty or premium.
It is agreed that time is of the essence for this agreement. Upon the
occurrence of an Event of Default (as such term is hereafter defined), Lender
may accelerate and declare this Note immediately due and payable without further
notice. Any failure to exercise this option shall not constitute a waiver by
Lender of the right to exercise the same at any other time. As used above, the
term "Event of Default" shall mean the occurrence of Borrower failing or
refusing to pay any installment due under this Note and such failure continuing
for 10 days after notice thereof is provided to Borrower.
If Borrower fails to make any payment as herein provided, either of
principal or interest, or if this Note is declared due and payable, then
interest shall accrue on all past due amounts at the rate ("Default Rate") equal
to the lesser of (i) eighteen percent (18%) per annum or (ii) the Maximum Rate.
Borrower hereby agrees to pay all expenses incurred, including reasonable
attorneys' fees, all of which shall become a part of the principal hereof,
incurred by Lender in connection with the making and enforcement of the loan
("Loan") evidenced by this Note and the exercise by Lender of its rights,
remedies and recourses under this Note, including without limitation, all such
expenses incurred if this Note is placed in the hands of an attorney for
collection or if collected by suit or through any probate, bankruptcy or any
other legal proceedings.
Borrower agrees that the Maximum Rate to be charged or collected pursuant
to this Note shall be the applicable indicated rate ceiling as defined in TEX.
REV. CIV. STAT. ANN. Art. 5069-1.04, provided that Lender may rely on other
applicable laws, including without limitation the laws of the United States, for
calculation of the Maximum Rate if the application thereof results in a greater
Maximum Rate. The provisions of TEX. REV. CIV. STAT. ANN. Art. 5069-15.01, et
seq., as may be amended, shall not apply to the Loan or any of the Security
Documents. Except as provided above, the provisions of this Note shall be
governed by the laws of the State of Texas.
Except as may be specifically provided for herein, each maker, surety,
guarantor and endorser waives demand, grace, notice, presentment for payment,
notice of intention to accelerate the maturity hereof, notice of acceleration of
the maturity hereof, and protest, and agrees that this Note may be renewed,
and the time of payment extended from time to time, without notice and without
releasing any of the foregoing.
Any check, draft, money order or other instrument given in payment of all
or any part hereof or on any part of the indebtedness evidenced hereby may be
accepted by the holder hereof and handled in collection in a customary manner,
but same shall not
- --------
Initials EXHIBIT "B"
Page 2 of 3
<PAGE>
constitute payment hereof or diminish any rights of Lender, except to the extent
that actual cash proceeds of such instrument are unconditionally received by
Lender.
The principal of and interest on this Note are payable at Lender's office
located at 515 Post Oak Boulevard, Suite 300, Houston, Texas 77027, or as
otherwise designated by Lender in writing. Any suit by Lender to enforce any
right hereunder or to obtain a declaration of any right or obligation hereunder
may, at the sole option of Lender, be brought (i) in any court of competent
jurisdiction in Houston, Harris County, Texas, or (ii) in any court of competent
jurisdiction where jurisdiction may be had over Borrower. Borrower hereby
expressly consents to the jurisdiction of the foregoing courts for such
purposes.
The principal of this Note represents funds which Lender may advance to
Borrower from time to time upon request of Borrower in a series of increments
which may aggregate, in total, the principal sum of this Note; each such
increment so advanced shall constitute a part of the principal hereof and shall
bear interest from the respective date of the advance thereof.
EXECUTED as of the date set forth above.
SOUTH FLORIDA FAIR AND PALM BEACH
COUNTY EXPOSITIONS, INC.
By: ___________________________________
Name: ____________________________
Title: ____________________________
"BORROWER"
- --------
Initials EXHIBIT "B"
Page 3 of 3
<PAGE>
Exhibit "C"
(American Land Title Association Leasehold Owner's Policy - 10-17-92)
(With Florida Modifications)
================================================================================
OWNER'S LEASEHOLD TITLE INSURANCE POLICY
Attorneys' Title Insurance Fund, Inc.
ORLANDO, FLORIDA
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED
IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, ATTORNEYS' TITLE INSURANCE
FUND, INC., a Florida corporation, herein called The Fund, insures, as of Date
of Policy shown in Schedule A, against loss or damage, not exceeding the Amount
of Insurance stated in Schedule A, sustained or incurred by the insured by
reason of:
1. Title to the estate or interest described in Schedule A being vested
other than as stated therein;
2. Any defect in or lien or encumbrance on the title;
3. Unmarketability of the title;
4. Lack of a right of access to and from the land.
The Fund will also pay the costs, attorneys' fees and expenses incurred in
defense of the title, as insured, but only to the extent provided in the
Conditions and Stipulations.
In Witness Whereof, ATTORNEYS' TITLE INSURANCE FUND, INC. has caused this policy
to be signed and sealed as of Date of Policy shown in Schedule A, the policy to
become valid when countersigned by an authorized signatory.
Attorneys' Title Insurance Fund, Inc.
[Corporate Seal]
By /s/ Charles J. Kovaleski
Charles J. Kovaleski
President
SERIAL
OPL-
================================================================================
FUND FORM OPL (rev 2/93)
1.40 Preparing the Forms [Rev. 5 December 31, 1993]
<PAGE>
Exhibit "C"
Page 2 of 3
- --------------------------------------------------------------------------------
FUND OPL FORM
Schedule A
Policy No.: OPL-22222 Effective Date: May 3, 1993 Agent's File Reference: 93-134
Amount of Insurance: $200,000
1. Name of Insured: Albert Lessee
2. The estate or interest in the land described herein and which is covered
by this policy is leasehold as defined in Paragraph 1(g) of the Conditions
and Stipulations of this policy, created by the instrument herein referred
to as the Lease, executed by I.M. Owner and Jill Owner, his wife, as
lessor, and Albert Lessee, as lessee, and recorded in Official Records
Book 11844, Page 2121 of the Public Records of Dade County, Florida.
3. The land referred to in this policy is described as follows:
Lot 3 in Block 3 of Happy Acres, according to the plat thereof recorded in
Plat Book 100, Page 100, Public Records of Dade County, Florida.
I, the undersigned agent, hereby certify that
o the transaction insured herein is governed by RESPA, [x]Yes [ ]No
o If Yes to the above, I have performed all "core
title agent services." [x]Yes [ ]No
Smith & Jones, P.A. 9999 /s/ Abel Smith
- -------------------------------- --------- ------------------------------
ISSUING AGENT - ATTORNEY OR FIRM AGENT NO. AGENT'S SIGNATURE
OF ATTORNEYS
10 Main Street Palm Tree City Florida 00000
- --------------------------- ----------------------- ---------------
MAILING ADDRESS CITY ZIP
FUND Form OPL-SCH. A (Rev. 12/92) DISTRIBUTION: WHITE copy to client. BLUE
copy to The Fund. YELLOW copy for your
file.
- --------------------------------------------------------------------------------
1.42 Preparing the Forms [Rev.5 December 31, 1993]
<PAGE>
Exhibit "C"
Page 3 of 3
- --------------------------------------------------------------------------------
FUND OPL FORM
SCHEDULE B
Policy No.: OPL-22222
This policy does not insure against loss or damage by reason of the following
exceptions:
1. Taxes for the year of the effective date of this policy or guarantee and
taxes or special assessments which are not shown as existing liens by the
public records.
2. Rights or claims of parties in possession not shown by the public records.
3. Encroachments, overlaps, boundary line disputes, and any other matters
which would be disclosed by an accurate survey and inspection of the
premises.
4. Easements or claims of easements not shown by the public records.
5. Any lien, or right to a lien, for services, labor, or material heretofore
or hereafter furnished, imposed by law and not shown by the public
records.
6. Subject to mortgage in favor of Best Bank of Florida executed by Albert
Lessee, dated May 4, 1993 and recorded May 4, 1993 at 4:00 P.M. in
Official Records Book 11844, Page 2126 of the Public Records of Dade
County, Florida.
7. Subject to the rights, if any, of the public to use a public beach or
recreation area any part of the land lying or formerly lying between the
body of water abutting the subject property and the natural line of
vegetation, bluff, extreme high water line or other apparent boundary line
separating the publicly used area from the upland private or such upland
private area as it may have existed prior to the construction, if any, of
sea wall or bulkhead thereon.
8. This policy does not insure title to tidelands or lands comprising the
shores or bottoms of navigable waters or lands beyond the harbor or
bulkhead lines as established by governmental authority.
9. This policy does not insure riparian or littoral rights.
10. Subject to easements granted to Florida Power and Light Company, recorded
in Official Records Book 11822, Page 245 and Official Records Book 11822,
Page 292 of the Public Records of Dade County, Florida.
11. Subject to easements for public utilities on the North 17 feet of said lot
as shown on the plat recorded in Plat Book 100, Page 100.
12. The interest insured herein is subject to the terms of the lease between
I.M. Owner and Jill Owner, Lessors, and Albert Lessee, Lessee, recorded in
Official Records Book 11844, Page 2121, Public Records of Dade County,
Florida.
- --------------------------------------------------------------------------------
FUND Form OPL-SCH. B (8/15/94)
[ILLEGIBLE]
- --------------------------------------------------------------------------------
1.44 Preparing the Forms [Rev. 4 April 16, 1993]
<PAGE>
EXHIBIT "D"
First Amendment to Lease Agreement
THIS FIRST AMENDMENT TO LEASE AGREEMENT ("First Amendment") is executed and
entered into effective as of this ____ day of January, 1995, by and between
SOUTH FLORIDA FAIR AND PALM BEACH COUNTY EXPOSITIONS, INC. ("Landlord") and
PAVILION PARTNERS ("Tenant").
RECITALS
A. Under effective date of January ____, 1995, Landlord and Tenant entered
into that certain Lease Agreement, Easement Agreement and Declaration of
Restrictive Covenants ("Lease Agreement") relating to the lease of certain real
property located in Palm Beach County, Florida, for the construction of an
outdoor entertainment facility thereon by Tenant.
B. Pursuant to the provisions of Section 15.18, the obligations of
Landlord and Tenant under the Lease Agreement were conditioned upon approval of
the transaction contemplated thereby by Tenant's Executive Committee and
Landlord's Board of Trustees.
C. Tenant's Executive Committee and Landlord's Board of Trustees have each
independently approved the transaction contemplated by the Lease Agreement.
D. Accordingly, Landlord and Tenant desire to delete the provisions
contained in Section 15.18 of the Lease Agreement.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties hereto do hereby agree as follows:
1. Deletion of Requirement for Prior Approval. Tenant hereby represents
and warrants to Landlord that Tenant's Executive Committee has unanimously
approved the transaction contemplated by the Lease Agreement upon the terms,
conditions and provisions contained therein. Landlord hereby represents and
warrants to Tenant that Landlord's Board of Trustees has unanimously approved
the transaction contemplated by the Lease Agreement upon the terms, conditions
and provisions contained therein. Accordingly, Landlord and Tenant do hereby
delete, in its entirety, Section 15.18 of the Lease Agreement.
2. Concurrency Reservation. Upon execution hereof, Tenant shall pay to
Landlord the sum of $15,000 as reimbursement of the concurrency reservation fee
previously paid by Landlord.
<PAGE>
3. Ratification. Except as expressly amended hereby, the parties hereto do
hereby ratify, confirm and reaffirm the terms, provisions and conditions
contained in the Lease Agreement and agree to be bound by all of the provisions
thereof on, subject to and in accordance with the provisions contained therein.
WITNESS the execution hereof effective as of the date and year first above
written.
SOUTH FLORIDA FAIR AND PALM BEACH
COUNTY EXPOSITIONS, INC., a Florida
not-for-profit corporation
By: [Do Not Sign - Exhibit Only]
-----------------------------------
Name:
----------------------------
Title:
----------------------------
"LANDLORD"
PAVILION PARTNERS, a Delaware general
partnership
By: SM/PACE, Inc., its general partner
By: [Do Not Sign - Exhibit Only]
------------------------------
Name:
-----------------------
Title:
-----------------------
"TENANT"
Exhibit "D"
Page 2 of 2
<PAGE>
PARTNERSHIP AGREEMENT
FOR
WESTERN AMPHITHEATER PARTNERS
This Partnership Agreement ("Agreement") is made and entered into
effective as of this 4th day of April, 1997 by and between PAVILION PARTNERS, a
Delaware general partnership, and IRVINE MEADOWS AMPHITHEATER, a California
general partnership. For and in consideration of the mutual covenants herein
contained, the parties to this Agreement hereby form and create a general
partnership, under and pursuant to the Partnership Act for the purposes and upon
the terms, provisions, and conditions as hereinafter set forth:
ARTICLE I
Definitions
Capitalized terms used in this Agreement shall have the respective
meanings indicated in the glossary of terms attached hereto as Exhibit "A".
ARTICLE II
Name of Business; Offices
2.01 Partnership Name. The name of the Partnership shall be Western
Amphitheater Partners. In addition to the foregoing name, the activities and
business of the Partnership may be conducted under such other name or names as
may be designated from time to time by the Executive Committee. The Partners
shall execute and file such certificates, if any, as are required by the
provisions of any assumed name law or statute in any jurisdiction in which the
Partnership conducts business, as may be required to reflect the Partnership's
operation under such names.
2.02 Partnership Offices. The principal places of business of the
Partnership shall be at 515 Post Oak Blvd., Suite 300, Houston, Texas 77027 and
at 17835 Ventura Blvd., Suite 300, Encino, California 91316. The Partnership
shall also maintain an office at each of the Subject Amphitheaters.
ARTICLE III
Purpose and Power of the Partnership
3.01 Purposes. As the owners of the Subject Amphitheaters, each of the
Partners agrees that the integration of the resources and management of the
Subject Amphitheaters will result in
<PAGE>
substantial and significant operating efficiencies by, among other things,
eliminating unnecessary duplication of efforts in the area of marketing,
sponsorship sales, management oversight, facility maintenance and other
essential operations necessary for the proper use, operation and maintenance of
the Subject Amphitheaters. Accordingly, the character and purposes of the
specific business to be conducted by the Partnership are (i) to operate, use and
exploit each of the Subject Amphitheaters and (ii) to perform and fulfill all
obligations and duties imposed upon the Partnership pursuant to the terms and
provisions contained in each of the Amphitheater Contribution Agreements and
(iii) to take any and all other actions which may be incidental to or otherwise
reasonably related to the foregoing business and purposes. Notwithstanding
anything to the contrary contained herein, reference is made to the fact that
the Underlying Owner of each of the Subject Amphitheater has retained the right
to make the following major decisions with respect to such Subject Amphitheater:
(a) selling, transferring, conveying or otherwise disposing of such
Subject Amphitheater (subject to the provisions of Section 14.01 hereof);
(b) creating a mortgage, lien or other encumbrance upon the
Underlying Owner's interest in such Subject Amphitheater (subject to the
provisions of the Amphitheater Contribution Agreement which make the
Underlying Owner solely and exclusively obligated to discharge all
indebtedness and obligations secured by any such mortgage, lien or other
encumbrance); and
(c) making capital improvements at the Subject Amphitheaters
(subject to the provisions of the Amphitheater Contribution Agreement
which requires the Underlying Owner to be solely and exclusively obligated
to pay the costs of any such capital improvements).
Accordingly, the Partnership shall not have the authority to effect any of the
foregoing major decisions.
3.02 Powers. The Partnership shall have the power, in fulfilling the
purposes set forth in Section 3.01, to conduct any business or take any action
which is lawful and which is not prohibited by the Partnership Act.
ARTICLE IV
Term of Partnership
The term of the Partnership shall begin on the date first set forth above
and shall continue until November 30, 2016, unless sooner dissolved pursuant to
Section 17.01 or by operation of law.
2
<PAGE>
ARTICLE V
Contributions to Partnership
5.01 Pavilion's Initial Contribution.
(a) Pavilion shall hereafter contribute to the capital of the
Partnership on the Closing Date certain rights, licenses, assets and other
benefits relating to Glen Helen Amphitheater on, subject to and pursuant
to the terms and provisions contained in the Amphitheater Contribution
Agreement for Glen Helen Amphitheater.
(b) The Partners hereby agree that the combined fair market value of
the rights, licenses, assets and other benefits to be hereafter
contributed by Pavilion to the capital of the Partnership (net of
liabilities assumed by the Partnership or to which such rights, licenses,
assets and other benefits are subject) pursuant to the Amphitheater
Contribution Agreement for Glen Helen Amphitheater is $5,000,000 ("Initial
Contribution Amount") and that the initial balance of Pavilion's Capital
Account shall therefore equal the Initial Contribution Amount.
5.02 IMA's Initial Contribution.
(a) IMA shall hereafter contribute to the capital of the Partnership
on the Closing Date certain rights, licenses, assets and other benefits
relating to Irvine Meadows Amphitheater on, subject to and pursuant to the
terms and provisions contained in the Amphitheater Contribution Agreement
for Irvine Meadows Amphitheater.
(b) The Partners hereby agree that the combined fair market value of
the rights, licenses, assets and other benefits to be hereafter
contributed by IMA to the capital of the Partnership (net of liabilities
assumed by the Partnership or to which such rights, licenses, assets and
other benefits are subject) pursuant to the Amphitheater Contribution
Agreement for Irvine Meadows Amphitheater is equal to the Initial
Contribution Amount and that the initial balance of IMA's Capital Account
shall therefore equal the Initial Contribution Amount.
5.03 Operational Shortfalls. If an Operational Shortfall occurs at any
time and a Deficit Loan is not made by one or both of the Partners pursuant to
the provisions of Article VI hereof in an amount sufficient to cover such
Operational Shortfall, then each Partner shall be obligated to contribute to the
capital of the Partnership its Percentage Interest of the amount of funds needed
to cover such Operational Shortfall.
5.04 No Other Capital Contribution Obligations. Except for the specific
obligations to make contributions to the capital of the Partnership as expressly
set forth in this Article V and in Section 17.03 hereof, neither Partner shall
have any other obligation to make contributions to capital of the Partnership.
3
<PAGE>
ARTICLE VI
Deficit Loans
If an Operational Shortfall occurs at any time, then any Partner shall
have the right, but not the obligation, to extend a loan ("Deficit Loan") to the
Partnership in the amount of such Operational Shortfall. If both Partners elect
to extend a Deficit Loan to the Partnership upon the occurrence of an
Operational Shortfall, then each shall fund its Percentage Interest of the
amount of such Operational Shortfall. If one of the Partners elects to refrain
from extending a Deficit Loan with respect to any Operational Shortfall, then
the other Partner shall have the right to extend a Deficit Loan up to the full
amount thereof. Each Deficit Loan shall bear interest at a variable rate of
interest per annum equal to the Permitted Rate and shall be repayable as soon as
the Partnership has funds available therefor. No distributions shall be made to
the Partners pursuant to Article IX hereof at any time during which any Deficit
Loan remains outstanding.
ARTICLE VII
Tax Matters and
Maintenance of Capital Accounts
7.01 Generally. For each taxable year of the Partnership, the income,
gains, losses, credits and deductions of the Partnership shall be allocated
between the Partners in accordance with each Partner's Percentage Interest.
7.02 Section 704(c). Income, gain, loss and deduction with respect to any
item of property contributed to the Partnership shall, solely for federal income
tax purposes, be allocated between the Partners so as to take into account any
difference between the Gross Asset Value of such item of property and its
adjusted basis for federal income tax purposes on the date of such contribution,
in accordance with the requirements of Section 704(c) of the Code. All
allocations under this Section 7.02 shall be made in such a manner as the
Executive Committee shall determine reasonably reflects the requirements of
Section 704(c) of the Code. No allocations pursuant to this Section 7.02 shall
be reflected as an adjustment to any Partner's Capital Account.
7.03 Maintenance of Capital Accounts. A Capital Account shall be
established and maintained for each Partner in accordance with the following
provisions:
(a) Increases in Capital Accounts. Each Partner's Capital Account
shall be increased by (i) the amount of cash and the fair market value of
all property contributed by such Partner to the Partnership (net of
liabilities assumed by the Partnership or to which the contributed
property is subject) and (ii) that Partner's allocable share of income and
gain for federal income tax purposes (excluding any allocations made
pursuant to Section 7.02 hereof).
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(b) Decreases in Capital Accounts. Each Partner's Capital Account
shall be decreased by (i) the amount of cash and the fair market value of
all property distributed to such Partner (net of liabilities assumed by
the Partner or to which the property is subject) and (ii) that Partner's
allocable share of losses and other items of deduction for federal income
tax purposes (excluding any allocations made pursuant to Section 7.02
hereof).
(c) Use of Gross Asset Value. For purposes of computing the amount
of any item of income, gain, loss, or deduction to be reflected in the
Partners' Capital Accounts, the determination, recognition and
classification of such items shall be the same as their determination,
recognition and classification for federal income tax purposes, except
that (i) gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed with reference to the Gross Asset
Value of the property disposed of, rather than its adjusted basis, and
(ii) depreciation, amortization, or other cost recovery deductions with
respect to an item of Partnership property shall be computed with
reference to the Gross Asset Value of such property rather than its
adjusted basis.
(d) Compliance with Treasury Regulations. The foregoing provisions
and the other provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with the Treasury Regulations
issued pursuant to Section 704(b) of the Code, and shall be interpreted
and applied in a manner consistent with such regulations. If the Partners
shall determine that it is prudent to modify the manner in which the
Capital Accounts are computed or maintained in order to comply with such
regulations, the Partners may make such modification.
7.04 Taxes Attributable to Post-1996 Receipts.
(a) All Post-1996 Receipts received prior to the Closing Date shall
be, for purposes of federal, state and local income tax, the income of the
recipient thereof. Accordingly, the recipient of all Post-1996 Receipts
received prior to the Closing Date shall be responsible for payment of,
and shall indemnify the Partnership with respect to, all federal, state
and local taxes payable on account of such Post-1996 Receipts.
(b) All Post-1996 Receipts received after the Closing Date shall be,
for purposes of federal, state and local income tax, the income of the
Partnership and allocated to the Partners pursuant to the provisions of
Section 7.01 hereof.
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ARTICLE VIII
Fees
8.01 Generally. Except as specifically provided in Section 8.02 hereof,
neither Partner shall be entitled to receive any fees from the Partnership
without the express prior written approval of both Partners.
8.02 Pavilion's Fee for Sponsorship Services. In consideration for the
services to be rendered by Pavilion in respect of the solicitation and
procurement of sponsors for the Subject Amphitheaters (as described in Section
12.09(a)(i) hereof), the Partnership shall pay a fee to Pavilion, within 30 days
following the completion of each Amphitheater Fiscal Year, in an amount equal to
20% of the amount (if any) by which (i) the Net Sponsorship Revenue for such
Amphitheater Fiscal Year exceeds (ii) the Net Sponsorship Revenue for the
Amphitheater Fiscal Year which ended on December 31, 1996. If the Executive
Committee should, at any time hereafter, elect to remove Pavilion as the party
primarily responsible for directing the efforts of soliciting, procuring and
obtaining sponsors for each of the Subject Amphitheaters pursuant to the
provisions of Section 12.09(c) hereof, then the fee provided for in this Section
8.02 shall not be payable to Pavilion for any Amphitheater Fiscal Year
thereafter.
ARTICLE IX
Rent Obligations and Cash Distributions
9.01 Advance of Rental Payments. Reference is made to the fact that
pursuant to the provisions of each of the Amphitheater Contribution Agreements,
(i) Pavilion is responsible for payment of all lease payments and rental
obligations due under arid pursuant to its Lease Agreement with the County of
San Bernardino at the Glen Helen Amphitheater and (ii) IMA is responsible for
the payment of all lease payments and rental obligations due under and pursuant
to its Lease Agreement with The Irvine Company at the Irvine Meadows
Amphitheater. To the extent that the Executive Committee determines that the
Partnership has cash available which is not required for a reasonable working
capital reserve for the obligations or business needs of the Partnership, the
Partnership shall fund the lease payments and rental obligations due in respect
of the Lease Agreements at each of the Subject Amphitheaters as and when due and
payable. All amounts so advanced by the Partnership shall be deemed to be a loan
made by the Partnership to (x) Pavilion with respect to all amounts so funded in
respect of the Glen Helen Amphitheater and (y) IMA with respect to all amounts
so funded in respect of the Irvine Meadows Amphitheater (such loans being herein
collectively called the "Rental Loans").
9.02 Annual Distribution of Available Cash. All Available Cash of the
Partnership, as of December 31 of each calendar year, shall be distributed by
the Partnership to the Partners on or before January 31 of the next succeeding
calendar year in the amounts determined in accordance with the following
provisions:
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(a) Subject to the other provisions of this Section 9.02, the
Partnership shall distribute to each Partner an amount equal to its
Percentage Interest of the amount of Available Cash being distributed.
(b) Prior to making the distribution of the amount specified in
clause (a) of this Section 9.02, the Partnership shall reduce, deduct and
offset against such distribution to each Partner the then amount (if any)
of the Rental Loan owed by such Partner to the Partnership.
(c) All amounts withheld by the Partnership pursuant to clause (b)
of this Section 9.02 in repayment of the then outstanding Rental Loans
shall then be distributed to each of the Partners in proportion to their
respective Percentage Interests.
If a Partner's distributable share of Available Cash determined pursuant to
Section 9.02(a) hereof is less than the then amount of the Rental Loan owed by
such Partner, then such Partner shall immediately be obligated to pay to the
Partnership a cash sum to be applied against such Partner's Rental Loan in the
amount by which the then balance of such Rental Loan exceeds such Partner's
distributable share of Available Cash. All amounts received by the Partnership
pursuant to the immediately preceding sentence shall immediately thereafter be
distributed to the Partners in proportion to their respective Percentage
Interests.
ARTICLE X
Ownership of Partnership Property
All real or personal property acquired by the Partnership shall be owned
by the Partnership, such ownership being subject to the other terms and
provisions of this Agreement. Each Partner hereby expressly waives the right to
require partition of any Partnership property or any part thereof.
ARTICLE XI
Fiscal Matters
11.01 Fiscal Year. The fiscal year of the Partnership for tax purposes
shall end at such time as is required pursuant to the application of the
provisions of the Code or the U.S. Treasury Regulations promulgated thereunder.
The fiscal year of the Partnership for accounting purposes shall end on December
31; provided, however, the Partnership's Accounting Staff shall provide to
Pavilion such data and information as may be reasonably necessary to permit
Pavilion to incorporate the operating results of the Partnership into Pavilion's
financial reports and statements as of the end of each of Pavilion's fiscal
years (which currently ends on September 30 of each year).
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11.02 Books and Records.
(a) Proper books and records shall be kept by the staff at each of
the Subject Amphitheaters reflecting all financial transactions, receipts
and expenditures relating to the operation, use, maintenance and
exploitation of such Subject Amphitheater. The Executive Committee shall
establish certain financial reporting requirements from time to time that
shall apply equally to each of the Subject Amphitheaters. The staff at
each Subject Amphitheater, under the direction of the general manager of
such Subject Amphitheater, shall be responsible for complying with such
financial reporting requirements, and all reports so generated will be
provided simultaneously to both of the Partners.
(b) Pursuant to the provisions of Section 12.05 hereof, certain
accounting personnel employed by an Affiliate of a partner of IMA will be
loaned to the Partnership ("Partnership's Accounting Staff"), upon terms
consistent with the Operating Budget or otherwise approved by the
Executive Committee, who will be responsible for consolidating the books
and records of the Partnership, and each Partner shall at all reasonable
times during business hours have access to those consolidated books and
records. The Partnership's Accounting Staff shall prepare (in a form and
manner promulgated by Pavilion) and distribute to each of the Partners (i)
monthly financial statements within 20 days after the end of each calendar
month and (ii) annual financial statements within 45 days after the end of
each fiscal year of the Partnership. All financial reports prepared by the
Partnership's Accounting Staff (and the underlying accounting data) shall
be made available to the Partners, upon the request of either Partner, in
a manner enabling such Partner to load the information on a computer.
(c) All items of income and deductions recognized during a fiscal
year shall be allocated as of the end of each fiscal year, based on the
facts and circumstances existing as of the end of that year. Interim
monthly reports may be based on the facts and circumstances existing at
the time of those reports subject to year-end adjustments.
11.03 Partnership Bank Accounts. All funds of the Partnership shall be
deposited in its name in an account or accounts maintained at a national or
state bank selected by the Executive Committee. Checks shall be drawn upon the
Partnership and may be signed by such persons as may be designated from time to
time by the Executive Committee.
11.04 Tax Matters and Reports. Any provision hereof to the contrary
notwithstanding, solely for income tax purposes, each of the Partners hereby
recognizes that the Partnership will be subject to all provisions of Subchapter
K of Chapter 1 of Subtitle A of the Code; provided, however, the filing of U.S.
Partnership Returns of Income shall not be construed to extend the purposes of
the Partnership or expand the obligations or liabilities of the Partners.
Pavilion shall be the "Tax Matters Partner" for all purposes related to federal,
state and local income tax laws.
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11.05 Tax Returns. The Partnership's Accounting Staff shall prepare, or
cause to be prepared, all tax returns and statements, if any, which must be
filed on behalf of the Partnership with any taxing authority, and shall submit
copies of all such returns and statements to the Partners. To the extent
provided for in the then effective Operating Budget or otherwise approved by the
Executive Committee, the fees, charges and other expenses payable to third party
professionals such as attorneys or accountants relating to the preparation and
filing of tax returns and statements or otherwise reporting of financial results
of the Partnership, shall be properly chargeable as expenses of the Partnership.
11.06 Section 754 Election. In the case of distribution of Partnership
property within the provisions of Section 734 of the Code or in the case of a
transfer of a Partnership interest permitted by this Agreement made within the
provisions of Section 743 of the Code, the Partnership shall file an election
under Section 754 of the Code in accordance with the procedures set forth in the
applicable Treasury Regulations upon the request of any Partner if such
requesting Partner agrees to pay all costs incurred by the Partnership in
connection with the making of such election.
11.07 No Interest. No Partner shall be entitled to be paid interest on
either the balance of its Capital Account or any contributions made by it to the
Partnership.
11.08 Operational Audits. Each Partner shall have the right, at any time
and from time to time, without prior notice to the other Partner, to cause one
or more employees or other representatives of the auditing Partner, at the sole
cost and expense of the auditing Partner, to enter into and go upon the premises
of one or both of the Subject Amphitheaters to conduct audits of the operational
procedures and practices of the Subject Amphitheaters. Each Partner hereby
covenants and agrees with the Partnership and with the other Partner, that no
such audit of the operational procedures and practices of either of the Subject
Amphitheaters shall be conducted in a manner which is disruptive to the business
of the Partnership or either of the Subject Amphitheaters.
11.09 Complimentary Tickets. Each Partner shall have the right to receive
up to 48 complimentary tickets, subject to availability, for each Event
presented at the Subject Amphitheaters. If either Partner (or any of such
Partner's constituent partners or any Affiliate of any of such Partner's
constituent partners) should sell, or knowingly permit to be sold, any such
complimentary tickets (unless the sales price does not exceed the face value of
equivalent non-complimentary tickets and the proceeds are immediately remitted
to the Partnership), then such Partner shall be obligated and required to pay to
the Partnership, as liquidated damages and not as a penalty, the sum of (i) 125%
of all proceeds of such sales and (ii) interest on the amounts so owed from the
date of such sales until payment at a daily compounded rate of interest equal to
4% over the national prime rate.
11.10 Prohibition Against Scalping. If either Partner (or any of such
Partner's constituent partners or any Affiliate of any of such Partner's
constituent partners) should sell, or knowingly permit to be sold, without
Executive Committee approval, any ticket to an Event being
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presented at either of the Subject Amphitheaters for an amount that exceeds the
face value thereof and any applicable service charge, then such Partner shall be
obligated and required to pay to the Partnership, as liquidated damages and not
as a penalty, the sum of (i) 125% of all proceeds of such sales in excess of the
face value thereof and (ii) interest on the amounts so owed from the date of
such sales until payment at a daily compounded rate of interest equal to 4% over
the national prime rate.
11.11 Formation Costs. The Partners agree that the legal fees incurred by
each of the Partners in connection with the negotiation, preparation and
execution of this Agreement, the Amphitheater Contribution Agreements, the
Promotion Agreement and the T.B.A. Marketing Agreement are reasonable and
necessary costs related to the formation of the Partnership and shall be
reimbursed by the Partnership to each of the Partners.
ARTICLE XII
Management of Partnership Affairs
12.01 Management. The management and control of the Partnership's business
shall be vested in the Partners, who shall exercise such management and control
exclusively through and by virtue of their respective selection of the
Representatives to serve on the Executive Committee in accordance with the
provisions of this Article XII.
12.02 Executive Committee.
(a) Executive Committee's Authority. The Executive Committee shall
have (i) full, exclusive and complete authority and discretion to manage
and control, and shall make all decisions affecting, the Partnership's
business; (ii) full authority to effectuate the purposes of the
Partnership and to take any action required, permitted or authorized
pursuant to the terms of this Agreement; and (iii) full power to exercise
all rights and powers generally inferred or conferred by law in connection
therewith. Notwithstanding the foregoing, the Executive Committee shall
not have the right to make the major decisions referenced in Section 3.01
hereof, it being agreed that the authority to make such major decisions
with respect to each of the Subject Amphitheaters has been retained by the
Underlying Owner of such Subject Amphitheater.
(b) Unanimous Approval Required. Actions and decisions to be taken
by the Executive Committee shall require the unanimous approval of the
Representatives of the Executive Committee attending a duly called and
held meeting of the Executive Committee at which a quorum of the
Representatives are in attendance.
(c) Selection of Representatives on Executive Committee. The
Executive Committee shall be comprised of six (6) individual
Representatives. Pavilion shall have the right, at any time, and from time
to time, to designate and select three (3) out of the
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six (6) Representatives who shall serve on the Executive Committee. IMA
shall have the right, at any time, and from time to time, to designate and
select three (3) out of the six (6) Representatives who shall serve on the
Executive Committee. Each Partner's Representatives on the Executive
Committee may be removed or replaced at any time, for any reason,
temporarily or permanently, by such Partner upon notice thereof to the
other Partner.
(d) Meetings of the Executive Committee.
(1) Meetings of the Executive Committee may be held at such
regular times as may be specified by the Executive Committee and, in
addition, may be called by any Representative by giving at least ten
(10) days prior notice thereof to each of the Representatives.
Notice of each meeting shall be in writing and shall state the date,
time, and place at which such meeting is to be held (which must be a
place in either Houston, Texas or Los Angeles, California) and the
purposes for which such meeting is called. The attendance of a
Representative at a meeting shall constitute a waiver of notice of
such meeting.
(2) An annual meeting of the Executive Committee shall be held
on the last Monday of March in each year (unless such date is a
holiday, in which event such meeting shall be held on the next
business day thereafter) or at such other time and place as the
Executive Committee may designate.
(3) Any action required or permitted to be taken at a meeting
of the Executive Committee may be taken (i) by means of a telephone
conference in which all Representatives participating in the meeting
and constituting a quorum can hear and speak to each other or (ii)
by means of unanimous written consent executed by all of the
Representatives. All action taken pursuant to the immediately
preceding sentence shall be deemed for all purposes to have been
taken at a meeting of the Executive Committee.
(4) The presence at a meeting of at least four (4) of the
Representatives shall constitute a quorum for the transaction of all
business of the Executive Committee. Any meeting of the Executive
Committee which is properly called and at which a quorum is present
may be adjourned to a date which is no later than twenty-one (21)
days from the date upon which the initial meeting was called.
12.03 Annual Operating Budgets. Attached hereto as Exhibit "B" is the
Operating Budget for the Amphitheater Fiscal Year ending on December 31, 1997.
On or before November 30 of each calendar year, commencing on November 30, 1997,
the Partnership's Accounting Staff shall prepare and provide to the
Representatives (i) a proposed Operating Budget for the forthcoming Amphitheater
Fiscal Year setting forth in reasonable detail the various categories of
Budgeted Operating Expenses and the amounts for each such category to be
incurred
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by the Partnership during the forthcoming Amphitheater Fiscal Year and (ii) such
information and materials related to the proposed Operating Budget as may be
requested by any of the Representatives so long as such information and
materials can be generated in the ordinary course of business. To be adopted, a
proposed Operating Budget must be approved by the Executive Committee; however,
if no Operating Budget is approved by the Executive Committee for any
Amphitheater Fiscal Year prior to the commencement of such Amphitheater Fiscal
Year, then the Operating Budget for such Amphitheater Fiscal Year shall be
deemed to be, until a different Operating Budget is approved by the Executive
Committee, the Operating Budget for the prior Amphitheater Fiscal Year with each
line item increased by the greater of (i) 5% or (ii) the percentage increase in
the CPI Index during the immediately preceding Amphitheater Fiscal Year.
12.04 Transactions with Partners and Affiliates of Partners. Each Partner
hereby agrees that, with respect to any and all contracts and agreements entered
into by and between the Partnership (on the one hand) and any Partner, the
constituent partner of any Partner or any Affiliate of a constituent partner of
any Partner (on the other hand), (i) the existence of such affiliation shall be
disclosed to the other Partner prior to such agreement or contract being made
and entered into, (ii) copies thereof shall be made available to such other
Partner upon its request along with any details and other information related
thereto and (iii) the execution of each such contract and agreement shall
require the prior written consent of the other Partner (which consent shall not
be unreasonably withheld or delayed).
12.05 Partnership Staffing. Subject to the provisions hereof relating to
the Partnership's Operating Budget and the approval of the Executive Committee,
the staffing needs of the Partnership shall be filled by having employees of the
Partners, the constituent partners of the Partners, and Affiliates of the
constituent partners of the Partners, loaned to the Partnership on a full or
part-time basis. Each such employee who is so loaned to the Partnership shall
have all or such appropriate portion of his or her salary and benefit costs
reimbursed by the Partnership to the actual employer of such employee. If the
Executive Committee is unable to reach agreement concerning the staffing needs
of the Partnership at any time, then (i) Pavilion's designated Representatives
shall have the right to select and appoint the employees who provide services in
respect of the operation, maintenance and use of the Glen Helen Amphitheater,
subject to the limitations of the Partnership's Operating Budget, and (ii) IMA's
designated Representatives shall have the right to select and appoint the
employees who provide services in respect of the operation, maintenance and use
of the Irvine Meadows Amphitheater, subject to the limitations of the
Partnership's Operating Budget.
12.06 Special Right to Enforce Rights under Amphitheater Contribution
Agreements. Notwithstanding anything to the contrary contained in this Article
XII, (A) Pavilion shall have the exclusive right, power and authority, for and
on behalf of the Partnership, to (i) enforce all of the Partnership's rights,
benefits and privileges created under, by or pursuant to the Amphitheater
Contribution Agreement for Irvine Meadows Amphitheater, including, without
limitation, the right to make elections thereunder on behalf of the Partnership
and to enforce any remedies available to the Partnership thereunder and (ii)
conduct and direct the defense of any
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claims made by IMA against the Partnership for any alleged breach by the
Partnership of the provisions thereof and (B) IMA shall have the exclusive
right, power and authority, for and on behalf of the Partnership, to (i) enforce
all of the Partnership's rights, benefits and privileges created under, by or
pursuant to the Amphitheater Contribution Agreement for Glen Helen Amphitheater,
including, without limitation, the right to make elections thereunder on behalf
of the Partnership and to enforce any remedies available to the Partnership
thereunder and (ii) conduct and direct the defense of any claims made by
Pavilion against the Partnership for any alleged breach by the Partnership of
the provisions thereof.
12.07 Promotion Agreement. Notwithstanding anything to the contrary
contained in this Article XII:
(a) The Partnership shall delegate the booking and logistical
production of all Events to be presented at the Subject Amphitheaters to
the Promoter on, subject to and in accordance with the terms, provisions
and conditions contained in the Promotion Agreement.
(b) Either Partner (acting alone or together with the other Partner)
shall have the right, power and authority, for and on behalf of the
Partnership, to (i) enforce all of the Partnership's rights, benefits and
privileges created under, by or pursuant to the Promotion Agreement
including, without limitation, the right to make elections thereunder on
behalf of the Partnership and to enforce any remedies available to the
Partnership thereunder and (ii) conduct and direct the defense of any
claims made by the Promoter against the Partnership for any alleged breach
by the Partnership of the provisions thereof. Without limiting the
generality of the foregoing, it is specifically recognized, agreed and
acknowledged that either Partner (acting alone or together with the other
Partner) shall have the right and authority, for and on behalf of the
Partnership, to (A) exercise the right, if available, to terminate the
Promotion Agreement pursuant to the provisions of Section 4(b), (c) or (d)
thereof and (B) elect to exercise the right, if available, to send a
Probationary Notice (as defined in the Promotion Agreement) pursuant to
the provisions of Section 4(c) thereof.
(c) Notwithstanding the provisions of clause (b) of this Section
12.07, only the Executive Committee, acting unanimously, shall have the
right and authority, for and on behalf of the Partnership, to (i) accept
any offer made by the Promoter pursuant to the provisions of Section 5(a)
of the Promotion Agreement and (ii) exercise the right created pursuant to
the provisions of Section 6(a) of the Promotion Agreement to approve of
booking offers proposed to be made by the Promoter after a Probationary
Notice has been provided pursuant to the provisions of Section 4(c) of the
Promotion Agreement; provided, however, that all Promoter-Related
Representatives shall be excluded from voting on any matter brought before
the Executive Committee which is described in this Section 12.07(c).
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(d) If the Promotion Agreement should be terminated at any time
during the Term, then the selection of a new "booking agent" for the
Partnership shall be made by Pavilion, subject to IMA's consent (which
consent shall not be unreasonably withheld or delayed).
(e) If (i) the Promotion Agreement should be terminated at any time
during the Term pursuant to the provisions of section 4(b), (c) or (d) of
the Promotion Agreement by the unilateral action of Pavilion without the
written approval of Azoff Inc. and (ii) as a result of such termination,
Geddes Inc. exercises the IMA Put Option, then the following provisions
shall thereafter apply and become effective:
(1) IMA shall (i) deliver, or cause to be delivered, to
Pavilion, within three business days following receipt, a copy of
the notice of the exercise of the IMA Put Option and (ii) obtain, or
cause to be obtained, the consent of Pavilion (such consent not to
be unreasonably withheld or delayed) as to decisions related to the
selection and designation of appraisers in connection with the IMA
Put Option.
(2) At any time within thirty (30) days following receipt by
Azoff Inc. of the "Accountant's Notice" of the "Purchase Price" (as
such terms are defined in Section 3.03 of the Partnership Agreement
of IMA), Azoff Inc. may provide written notice (the "No-Interest
Notice") to Pavilion that Azoff Inc. does not wish to purchase all
or its "Percentage Interest" (as determined under Section 3.03 of
the Partnership Agreement of IMA) of the interest of Geddes Inc. in
IMA pursuant to the IMA Put Option. A No-Interest Notice given by
Azoff Inc. to Pavilion pursuant to the foregoing provisions shall
not be considered to have been received by Pavilion for purposes
hereof until Pavilion has received a copy of the Accountant's Notice
of the Purchase Price.
(3) At any time within ten (10) days after Koll Inc.'s receipt
of a No-Interest Notice from Azoff Inc., but in no event later than
forty (40) days after Azoff Inc.'s receipt of the Accountant's
Notice of the Purchase Price, Koll Inc. may provide written notice
(also a "No-Interest Notice") to Pavilion that Koll Inc. does not
wish to purchase the interest of Geddes Inc. in IMA pursuant to the
IMA Put Option.
(4) If Pavilion should receive (A) a No-Interest Notice from
Azoff Inc. within 30 days following receipt by Azoff Inc. of the
Accountant's Notice of the Purchase Price and (B) a No Interest
Notice from Koll Inc. by the earlier of (i) 10 days after Koll
Inc.'s receipt of the No-Interest Notice from Azoff Inc. or (ii) 40
days following receipt by Azoff Inc. of the Accountant's Notice of
the Purchase Price, then Pavilion shall provide a written notice to
IMA that Pavilion has elected to do one of the following:
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(A) purchase all of the interest of Geddes Inc. in IMA
in accordance with the terms and provisions of the IMA Put
Option; or
(B) terminate the Partnership effective as of the last
day of the Amphitheater Fiscal Year in which such notice is
provided.
If Pavilion fails to fulfill its obligation to provide such notice
to IMA within thirty (30) days after the later of (i) receipt of the
No-Interest Notice from Azoff Inc. or (ii) receipt of the
No-Interest Notice from Koll Inc., then Pavilion shall be deemed to
have elected to terminate the Partnership pursuant to clause (B)
above.
If Azoff Inc. should, at any time hereafter, agree to amend, without the
express prior consent of Pavilion, any of the terms, provisions or
conditions contained in the IMA Put Option which relate to the methodology
of calculating the purchase price, the timing of the payment of the
purchase price, the deadlines for exercising the put option or any other
similar provision in a manner which makes such terms less favorable to
Pavilion, then the foregoing provisions of this Section 12.07(e) shall be
of no further force or effect.
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12.08 Marketing Agreement. Notwithstanding anything to the contrary
contained in this Article XII:
(a) The Partnership shall delegate the responsibility of marketing
and advertising all Events to be presented at the Subject Amphitheaters to
T.B.A. on, subject to and in accordance with the terms, provisions and
conditions contained in the T.B.A. Marketing Agreement.
(b) Either Partner (acting alone or together with the other Partner)
shall have the right, power and authority, for and on behalf of the
Partnership, to (i) enforce all of the Partnership's rights, benefits and
privileges created under, by or pursuant to the T.B.A. Marketing Agreement
including, without limitation, the right to make elections thereunder on
behalf of the Partnership and to enforce any remedies available to the
Partnership thereunder and (ii) conduct and direct the defense of any
claims made by T.B.A. against the Partnership for any alleged breach by
the Partnership of the provisions thereof. If the T.B.A. Marketing
Agreement should be terminated at any time during the Term, then the
selection of a new "marketing agent" for the Partnership shall be made by
the Executive Committee.
12.09 Sponsorship Services.
(a) Notwithstanding the other provisions contained in this Article
XII, it is hereby agreed that (i) Pavilion shall be primarily responsible
for overseeing and directing, for and on behalf of the Partnership, the
solicitation, procurement and obtaining of sponsors for each of the
Subject Amphitheaters, (ii) a mutually approved employee of Pavilion (or
an Affiliate of a partner of Pavilion) shall be loaned on a part-time or
full-time basis to the Partnership pursuant to Section 12.05 hereof, upon
terms consistent with the Operating Budget or otherwise approved by the
Executive Committee, to assist in the procurement and implementation of
sponsorship arrangements applicable to the Glen Helen Amphitheater and
(iii) a mutually approved employee of IMA, a constituent partner of IMA or
an Affiliate of a constituent partner of IMA will be loaned on a part-time
basis to the Partnership, upon terms approved by the Executive Committee,
to assist in the procurement and implementation of sponsorship
arrangements applicable to the Irvine Meadows Amphitheater. Except for the
employee referenced in clause (ii) of the immediately preceding sentence,
Pavilion shall not be reimbursed for the cost of any other employees of
Pavilion providing the services referenced in clause (i) of the
immediately preceding sentence, it being agreed that the sole and
exclusive compensation to Pavilion for the fulfillment of such services
referenced in clause (i) of the immediately preceding sentence shall be
the fee set forth in Section 8.02 of this Agreement.
(b) Notwithstanding the provisions of clause (a) of this Section
12.09, no sponsorship arrangement may be accepted on behalf of the
Partnership except in accordance with the following provisions:
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(1) If such sponsorship arrangement is for three or fewer
Events, then such sponsorship arrangement may be approved by the
general manager of the Subject Amphitheater to which such
sponsorship arrangement relates.
(2) For all other sponsorship arrangements not described in
clause (1), the Executive Committee must unanimously approve the
acceptance of such sponsorship arrangement before it is executed and
entered into for and on behalf of the Partnership.
(c) If Pavilion's performance of the services referenced in Section
12.09(a)(i) hereof during any Amphitheater Fiscal Year results in
sponsorship revenues at the Subject Amphitheaters during such Amphitheater
Fiscal Year which (i) are materially less than the amount of sponsorship
revenues generated at similar outdoor entertainment facilities or (ii)
fails to meet an objective standard hereafter adopted by the Executive
Committee, then IMA shall have the right, power and authority, for and on
behalf of the Partnership, to remove Pavilion as the party primarily
responsible for overseeing and directing the solicitation, procurement and
obtaining of sponsors for each of the Subject Amphitheaters in which case
a successor "sponsorship person" shall be selected for the Partnership by
the Executive Committee.
(d) Reference is made to the fact that certain existing sponsorship
arrangements applicable to the Irvine Meadows Amphitheater which will be
contributed to the capital of the Partnership by IMA on the Closing Date
are burdened by certain commission obligations referenced in Exhibit "C"
attached hereto. The Partnership hereby acknowledges such commission
obligations and agrees to honor such commission obligations to the extent
identified on Exhibit "C" attached hereto, as and when the applicable
sponsorship revenues are received by the Partnership. The foregoing
provisions shall not apply to any renewals or replacements of the existing
contractual sponsorship arrangements identified on Exhibit "C" attached
hereto.
12.10 Legal Review of Form of Contracts. Pavilion's legal staff and IMA's
legal staff shall each have the right to review and provide input on the form of
contracts to be used for various types of standard arrangements in connection
with the operation, use, management and exploitation of the Subject
Amphitheaters.
12.11 Liability Insurance. Selection and purchase of the Partnership's
liability insurance covering the operations and activities at each of the
Subject Amphitheaters shall be an Executive Committee decision taking into
account the best interest of the Partnership's economic and financial
considerations. If the Executive Committee should so approve, the Partnership's
liability insurance may be separately placed at each of the Subject
Amphitheaters.
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ARTICLE XIII
Other Activities
13.01 Restrictions on Concert Promotion. During the Term, neither Partner
shall Promote an Amphitheater Event in the Restricted Area, or permit any of
such Partner's Related Parties to Promote an Amphitheater Event in the
Restricted Area, unless and except such Partner ("Promoting Partner") has first
offered, or caused to be offered, to the Partnership an option and right to
co-Promote such Amphitheater Event on an equal economic basis with the Promoting
Partner or its Related Party, as applicable. Any offer which a Promoting Partner
is required to make, or cause to be made, pursuant to the provisions of the
immediately preceding sentence with respect to any Amphitheater Event to be
presented in the Restricted Area must (i) be made in writing to the other
Partner ("Non-Promoting Partner"), (ii) include such information concerning the
economic terms and conditions of such Amphitheater Event as the Non-Promoting
Partner may reasonably request and (iii) be open for acceptance for no less than
five (5) business days. The decision on behalf of the Partnership to accept or
reject any offer made pursuant to the foregoing provisions shall be made,
notwithstanding anything to the contrary contained herein, by the Non-Promoting
Partner. If the economic terms and conditions upon which an Amphitheater Event
in the Restricted Area is to be Promoted should change in any respect after the
Non-Promoting Partner has declined on behalf of the Partnership the offer made
by the Promoting Partner pursuant to the foregoing provisions but prior to the
"on-sale" date for such Amphitheater Event, then another offer ("New Offer")
describing the changed terms and conditions must be made, or caused to be made,
by the Promoting Partner to the Partnership in accordance with the foregoing
provisions; provided, however, if the change in economic terms and conditions is
not material, then the New Offer may, by its terms, be open for acceptance for
less than five (5) business days but no less than forty-eight (48) hours.
13.02 Restrictions on Sell-Offs. If, during the Term, either Partner
("Sell Off Partner"), or any of its Related Parties, proposes to sell the right
to Promote an Amphitheater Event to a third party ("Unrelated Promoter") for
presentation in the Restricted Area, then the following provisions shall apply:
(a) Completion of the sale of the right to Promote such Amphitheater
Event in the Restricted Area may not be completed earlier than five (5)
business days following delivery of a notice to the other Partner
("Non-Sell Off Partner") setting forth the specific terms of such proposed
sale to the Unrelated Promoter and such other reasonable information
related thereto as may be requested by the Non-Sell Off Partner.
(b) The Non-Sell Off Partner shall have the right and authority,
notwithstanding anything to the contrary contained herein, to require that
the Partnership make a competing offer to the Sell-Off Partner
("Partnership's Competing Offer") for the purchase from the Sell-Off
Partner of the right to Promote such Amphitheater Event at one of the
Subject Amphitheaters for an amount up to, but not in excess of, the
amount being offered by the Unrelated Promoter.
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(c) If the Non-Sell Off Partner exercises the right to issue a
Partnership's Competing Offer pursuant to the provisions of clause (b)
that matches the economics of the offer made by the Unrelated Promoter,
then the Sell-Off Partner shall exercise its reasonable efforts to cause
the Partnership's Competing Offer to be accepted with the express
understanding that the final decision as to which offer will be accepted
may not belong to the Sell-Off Partner.
Section 13.03 No Other Restrictions. Except as expressly provided in
Sections 13.01 and 13.02 above, this Agreement shall not preclude or limit in
any respect the right of any Partner to engage or invest in any business
activity of any nature or description, including those which may be similar to
the business of the Partnership. Neither the Partnership nor any Partner shall
have any right by virtue of this Agreement or any relationships created hereby
in or to such other ventures or activities or to the income or proceeds derived
therefrom. Notwithstanding the foregoing provisions or anything else to the
contrary contained herein or implied hereby, (i) the restrictions, limitations
and prohibitions set forth in the Promotion Agreement shall not be affected,
limited, lessened or otherwise altered in any respect by the provisions of this
Article XIII and all such matters contained in the Promotion Agreement shall
apply independently of, and cumulatively with, the provisions hereof and (ii)
the provisions of this Article XIII shall not limit, restrict or affect the
right of Irving Azoff to serve as an artist manager and to perform the functions
and services customarily performed by him in that capacity.
Section 13.04 Certain Defined Terms. As used in this Article XIII, the
following terms shall have the respective meanings indicated below:
(a) "Amphitheater Event" shall mean any Event which is part of a
tour in which seventy percent (70%) or more of the total number of dates
included in such tour are being played in outdoor entertainment facilities
with a seating capacity of more than 7500 and less than 30,000.
(b) "Restricted Area" shall mean the geographical area encompassed
by the counties of San Bernardino, California and Orange County,
California.
(c) "Related Parties" shall mean, with respect to either Partner,
the constituent partners of such Partner and the Affiliates of each
constituent partner of such Partner.
(d) "Promote" shall mean, respect to any Amphitheater Event, the
business activity of (i) acquiring from the artist appearing in such
Amphitheater Event (or his agent or other representative) the right to
present such Amphitheater Event at a specific venue on a specific date in
exchange for an appearance fee and (ii) taking the risk that gross
revenues from the presentation of such Amphitheater Event will exceed the
sum of the appearance fee and other costs of presenting such Amphitheater
Event.
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ARTICLE XIV
Rights of Refusal
14.01 Subject Amphitheaters. Except as expressly permitted by the
provisions of this Section 14.01, neither Partner shall sell, transfer or convey
the Subject Amphitheater owned by it. If one Partner ("Selling Partner")
receives after December 31, 1999, but not before, a written offer from a third
party ("Proposed Purchaser") to purchase the Subject Amphitheater owned by the
Selling Partner which the Selling Partner desires to accept, then the Selling
Partner shall have the right, to sell all, but not less than all, of its
interest in its Subject Amphitheater if, but only if, the Selling Partner
complies with all of the following provisions:
(a) The Selling Partner shall provide prompt written notice to the
other Partner ("Non-Selling Partner") upon the commencement of negotiation
concerning any proposed sale of the Selling Partner's Subject Amphitheater
to the Proposed Purchaser.
(b) Upon request of the Non-Selling Partner at any time following
the notice given pursuant to clause (a), the Selling Partner shall provide
an oral report as to the status of the negotiations for the proposed sale
of the Selling Partner's Subject Amphitheater to the Proposed Purchaser.
(c) The Selling Partner shall provide to the Non-Selling Partner,
from time to time after receipt, copies of all written drafts, letters or
other documentation pertaining to such proposed sale of the Selling
Partner's Subject Amphitheater to the Proposed Purchaser.
(d) Within five (5) days following the execution of a binding letter
of intent or other binding agreement ("Purchase Agreement") pursuant to
which the Selling Partner agrees to sell its Subject Amphitheater to the
Proposed Purchaser, the performance of each party thereto being
conditioned expressly upon the provisions of this Section 14.01, the
Selling Partner shall provide a true, correct, complete and accurate copy
thereof to the Non-Selling Partner.
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(e) Following receipt of a Purchase Agreement, the Non-Selling
Partner shall have the right and option ("Purchase Option"), exercisable
in its sole discretion, to purchase the Selling Partner's Subject
Amphitheater upon the same terms, provisions and conditions contained in
such Purchase Agreement.
(f) The Purchase Option may be exercised by the Non-Selling Partner
at any time within fifteen (15) days after receipt of a Purchase Agreement
by providing written notice thereof to the Selling Partner. If the
Non-Selling Partner should exercise the Purchase Option in a timely
manner, then (A) the closing of the sale of the Selling Partner's Subject
Amphitheater to the Non-Selling Partner shall occur on or before the later
of (i) sixty (60) days following the exercise of the Purchase Option or
(ii) the outside date for closing the transaction contemplated by the
Purchase Agreement which was the subject of the Purchase Option and (B)
the Selling Partner shall, simultaneously with the closing of the sale of
the Subject Amphitheater to the Non-Selling Partner, sell, transfer,
assign and convey its interest in the Partnership to the Non-Selling
Partner for no additional consideration.
(g) If, at any time after delivery of a Purchase Agreement to the
Non-Selling Partner, whether before or after the deadline for the
Non-Selling Partner's decision to exercise the Purchase Option, any of the
terms or provisions contained in such Purchase Agreement should be amended
by agreement between the Selling Partner and the Proposed Purchaser in a
manner which is favorable to the Proposed Purchaser to any material
extent, then the Selling Partner shall provide prompt written notice of
such modification to the Non-Selling Partner, and the Purchase Option
shall be extended until the date which is fifteen (15) days after the
provision of such notice of such amendment.
(h) If the Non-Selling Partner does not exercise the Purchase Option
within fifteen (15) days after receipt of a Purchase Agreement (or, if
applicable, after receipt of notification pursuant to clause (g) of an
amendment to a Purchase Agreement which is favorable to the Proposed
Purchaser to any material extent), then the Selling Partner may thereafter
complete the proposed sale of its Subject Amphitheater to the Proposed
Purchaser upon the same terms, conditions and provisions contained in the
Purchase Agreement previously provided to the Non-Selling Partner in
accordance with the provisions thereof, provided that the following
provisions are complied with at the closing of the sale:
(1) The Proposed Purchaser must execute such reasonable
documentation as may be requested or required by the Non-Selling
Partner to indicate the Proposed Purchaser's agreement that it is
acquiring title to the Subject Amphitheater subject to and burdened
by the provisions of the Amphitheater Contribution Agreement for
such Subject Amphitheater through and until the end of the
Amphitheater Fiscal Year in which such sale occurs.
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(2) The Selling Partner must pay to the Non-Selling Partner,
as a break-up fee, a lump sum amount equal to the Non-Selling
Partner's Percentage Interest of two times the Average Cash Flow
Amount for the most recently completed Amphitheater Fiscal Year;
provided, however, such break-up fee shall not be payable to the
Non-Selling Partner if the Proposed Purchaser simultaneously
acquires and purchases the Partnership Interest of the Selling
Partner and the Non-Selling Partner consents and agrees, in its sole
discretion, to the admission of the Proposed Purchaser as a
substitute general partner in the Partnership.
If any such sale of the Selling Partner's Subject Amphitheater is
completed to a Proposed Purchaser in accordance with the foregoing
provisions, then, unless the Non-Selling Partner consents and agrees (in
its sole discretion) to the admission of the Proposed Purchaser as a
substitute general partner in the Partnership, the Partnership shall be
dissolved effective as of the last day of the Amphitheater Fiscal Year in
which such sale occurs.
14.02 IMA Partnership Interests. By executing this Agreement on behalf of
IMA, each of the partners of IMA hereby agree, in their respective individual
capacities, that Pavilion shall have a subordinate right and option ("Secondary
Refusal Option") to purchase any partnership interest in IMA which any such
partner proposes to sell, transfer, convey or assign. The Secondary Refusal
Option shall be upon the same terms, conditions and provisions as the right and
option that each partner in IMA has to purchase the partnership interests of the
other partners in IMA ("First Refusal Option") but shall only apply to the
extent that any partnership interest proposed to be sold, transferred, conveyed
or assigned by a partner in IMA is not acquired by the other partners in IMA
pursuant to the First Refusal Option. Copies of all notices given pursuant to
the First Refusal Option shall be provided to Pavilion. If Pavilion wishes to
exercise the Secondary Refusal Option, then Pavilion must conditionally exercise
the Secondary Refusal Option within the time periods granted pursuant to the
First Refusal Option; however, any such exercise shall only be effective to the
extent that the partnership interest in IMA that is then subject to the
Secondary Refusal Option is not acquired by the other partners in IMA pursuant
to the First Refusal Option.
14.03 Specific Performance. It is expressly agreed that the remedy at law
for breach of the obligations created in this Article XIV is inadequate in view
of (i) the complexities and uncertainties in measuring the actual damages that
would be sustained by reason of such breach and (ii) the uniqueness of the
Partnership business, the Partnership relationship and the Subject
Amphitheaters. Accordingly, it is agreed that the obligations created by this
Article XIV shall be enforceable by an equitable order of specific performance.
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ARTICLE XV
Defaults and Remedies
15.01 Default by Partner. If any Partner ("Defaulting Partner") fails to
timely perform any of its obligations contained in this Agreement, or materially
violates the terms of this Agreement, then the other Partner ("Non-Defaulting
Partner") shall have the right to give the Defaulting Partner a notice ("Default
Notice") specifically setting forth the nature of such failure or violation and
stating that the Defaulting Partner shall have a period of ten (10) days to pay
any sums of money specified therein as due and owing to the Partnership or to
any Partner or, if the failure or violation is a non-monetary default and is
capable of being cured, thirty (30) days to cure such default specified therein.
If the monies specified in the Default Notice are not paid within such ten (10)
day period, or if such non-monetary failures or violations are not capable of
being cured or, if capable of being cured, such Defaulting Partner has not cured
such non-monetary failures or violations within such thirty (30) day period,
then a "Partner Default" shall be deemed to have occurred with respect to such
Defaulting Partner. If a Defaulting Partner cures in all material respects all
of its failures or violations which are capable of being cured within the
aforesaid notice and cure periods, then such defaults shall be deemed no longer
to exist and such Partner shall be deemed no longer to constitute a Defaulting
Partner.
15.02 Rights and Remedies. Upon the occurrence of a Partner Default, the
Non-Defaulting Partner and the Partnership shall each have the following rights,
options and remedies which shall be cumulative and may be exercised concurrently
or independently in the sole and absolute discretion of the Non-Defaulting
Partner:
(a) The right to bring an action at law by or on behalf of the
Partnership or the Non-Defaulting Partner in order to recover the amounts
owed, if any, and any damages arising from such default (including,
without limitation, reasonable attorneys' fees and disbursements incurred
or paid by the Partnership or the Non-Defaulting Partner, as the case may
be, in prosecuting any such action).
(b) The right to bring any proceeding in the nature of injunction,
specific performance or other equitable remedy, it being acknowledged by
each of the Partners that damages at law may be an inadequate remedy for
such default.
(c) If a sum of money is owed to the Partnership, the Non-Defaulting
Partner may advance the sum of money owed to the Partnership by the
Defaulting Partner with the following results:
(i) The sum thus advanced shall be deemed to be a loan from
the Non-Defaulting Partner to the Defaulting Partner;
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(ii) The principal balance of such deemed loan shall be due
and payable in whole upon written demand from the Non-Defaulting
Partner to the Defaulting Partner;
(iii) The principal balance of such deemed loan shall bear
interest at the Permitted Rate compounded monthly; and
(iv) All distributions from the Partnership that would
otherwise be made to the Defaulting Partner (whether before or after
dissolution of the Partnership) shall, instead, be paid to the
Non-Defaulting Partner until such loan and all interest accrued
thereon has been repaid in full.
(d) If a sum of money is owed by the Defaulting Partner to the
Non-Defaulting Partner pursuant to the provisions of this Agreement, then
the Non-Defaulting Partner may require that all distributions that would
otherwise be made to the Defaulting Partner (whether before or after
dissolution of the Partnership) shall, instead, be paid to the
Non-Defaulting Partner until all such amounts owed have been repaid in
full.
(e) For purposes of voting or giving any consents or approvals under
any provisions of this Agreement, the right to deny the Defaulting Partner
any of its voting, consent or approval rights under this Agreement.
ARTICLE XVI
Voluntary Withdrawal
No Partner shall have the right to, and each Partner agrees that it will
not, withdraw voluntarily from the Partnership. In the event any Partner
withdraws from the Partnership in contravention of this Agreement, such
withdrawing Partner shall remain liable for its Percentage Interest of the
Partnership liabilities in existence at the time of its withdrawal and shall, in
addition, be liable for all damages attributable to its breach of this
Agreement. The withdrawal of a Partner in contravention of this Article XVI
shall not cause the Partnership to be dissolved, and such withdrawing Partner
shall be deemed to be an assignee of a Partner's Partnership Interest and shall
have only the rights provided a Partner's assignee under the provisions of the
Partnership Act.
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ARTICLE XVII
Dissolution and Termination
17.01 Dissolution. The Partnership shall be dissolved upon the occurrence
of any of the following:
(a) the unanimous agreement of the Partners;
(b) expiration of the Term;
(c) a valid termination of the Partnership's exclusive license for
the use, possession and enjoyment of either of the Subject Amphitheaters
created pursuant to the Amphitheater Contribution Agreement for such
Subject Amphitheater;
(d) the election of either Partner by providing a notice of
dissolution to the other Partner within 60 days following the completion
of any Amphitheater Fiscal Year for which one of the following conditions
exist:
(1) the Partnership's Cash Flow for such Amphitheater Fiscal
Year is less than $0.00; or
(2) the Promotion Agreement was terminated at least three
years prior to the end of such Amphitheater Fiscal Year and the
Average Cash Flow Amount for such Amphitheater Fiscal Year is less
than the Cash Flow Target Amount for such Amphitheater Fiscal Year;
(e) the election of Pavilion by providing a notice of dissolution to
IMA within 60 days following the completion of any Amphitheater Fiscal
Year for which one of the following conditions exist:
(1) the paid attendance at the Events presented at Glen Helen
Amphitheater during such Amphitheater Fiscal Year is less than 35%
of the total paid attendance at all of the Events presented at both
of the Subject Amphitheaters during such Amphitheater Fiscal Year;
or
(2) the total paid attendance at all of the Events presented
at Glen Helen Amphitheater during such Amphitheater Fiscal Year and
each of the 2 immediately preceding Amphitheater Fiscal Years is
less than 38% of the total paid attendance at all of the Events
presented at both of the Subject Amphitheaters during such
Amphitheater Fiscal Year and each of the 2 immediately preceding
Amphitheater Fiscal Years;
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(f) the election of IMA by providing a notice of dissolution to
Pavilion within sixty (60) days following the completion of any
Amphitheater Fiscal Year for which both of the following conditions exist:
(1) the Promotion Agreement was terminated prior to the
commencement of such Amphitheater Fiscal Year; and
(2) the paid attendance at the Events presented at Irvine
Meadows Amphitheater during such Amphitheater Fiscal Year is less
than 42.5% of the total paid attendance at all of the Events
presented at both of the Subject Amphitheaters during such
Amphitheater Fiscal Year;
(g) the election of Pavilion by providing a notice of dissolution to
IMA at any time following the occurrence of a Use Termination Event with
respect to the Irvine Meadows Amphitheater;
(h) the election of IMA by providing a notice of dissolution to
Pavilion at any time following the occurrence of an Use Termination Event
with respect to the Glen Helen Amphitheater;
(i) the last day of any Amphitheater Fiscal Year during which one of
the Subject Amphitheaters is sold to a third party purchaser in accordance
with, and as permitted by, the provisions of Section 14.01 hereof unless
the Non-Selling Partner consents and agrees, in its sole discretion, to
the admission of the Proposed Purchaser as a substitute general partner in
the Partnership;
(j) the election or deemed election of Pavilion to terminate the
Partnership pursuant to the provisions of Section l2.07(e)(2) hereof
following receipt of a No-Interest Notice given by Azoff Inc. pursuant to
Section 12.07(e)(1) hereof; and
(k) any event or circumstance which requires a dissolution of the
Partnership pursuant to the provisions of the Partnership Act.
The dissolution shall be effective on the day on which the event occurs causing
dissolution ("Effective Date of Dissolution"), but the Partnership shall not
terminate until the assets have been distributed in accordance with the
provisions of this Agreement.
17.02 Distributions Upon Dissolution. On dissolution of the Partnership,
the Partners shall proceed diligently to wind up the affairs of the Partnership
and distribute its assets as soon as reasonably practicable without causing any
interference with the operation of the Subject Amphitheaters. The assets of the
Partnership are to be distributed in kind, unless expressly approved otherwise
by the Executive Committee. The Partnership's assets shall be applied or
distributed (after all adjustments to the Capital Accounts of the Partners which
are required (i)
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following any sale of Partnership property or (ii) by the Treasury Regulations
upon a distribution of an item of Partnership property in kind) in the following
order of priority:
(a) In payment of all liabilities of the Partnership to creditors
other than Partners. If any liability is contingent or uncertain in
amount, a reserve equal to the maximum amount for which the Partnership
could be reasonably held liable shall be established. Upon the
satisfaction or other discharge of that contingency, the amount of the
reserve not required, if any, will be treated as income to the extent
previously treated as a deduction.
(b) In payment of any loans owed by the Partnership to any Partner.
(c) (i) A cash sum equal to the amount of Post-Dissolution Receipts
for Glen Helen Amphitheater received prior to the making of this
distribution and all of the then existing Operating Assets of Glen Helen
Amphitheater shall be distributed to Pavilion (subject to the ordinary
course payables, obligations and liabilities related to, or associated
with, the use, operation or maintenance of Glen Helen Amphitheater, to the
extent not then past due) and (ii) a cash sum equal to the amount of
Post-Dissolution Receipts for Irvine Meadows Amphitheater received prior,
to the making of this distribution and all of the then existing Operating
Assets of Irvine Meadows Amphitheater shall be distributed to IMA (subject
to the ordinary course payables, obligations and liabilities related to,
or associated with, the use, operation or maintenance of Irvine Meadows
Amphitheater, to the extent not then past due).
(d) To the Partners in proportion to and to the extent of the
balance in their respective Capital Accounts (after adjustments to the
Capital Account balances for the distributions made pursuant to clause (c)
of this Section 17.02).
(e) To the Partners in proportion to their respective Percentage
Interests.
17.03 Capital Account Make-Up. If a Partner's Capital Account has a
deficit balance following completion of the liquidating distribution required to
be made by the provisions of Section 17.02(c) hereof (after taking into account
all Capital Account adjustments for the taxable year of the Partnership in which
liquidation occurs), the Partner shall, immediately following the receipt of
such distribution, contribute to the Partnership a cash sum in an amount
necessary to increase the balance in its Capital Account to zero. Any amount so
contributed shall be distributed as provided in Section 17.02(d) hereof or, if
applicable, Section 17.02(e) hereof.
ARTICLE XVIII
Transfer Restrictions
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Neither Partner shall have the right to sell, assign, convey, transfer,
pledge or hypothecate, by operation of law or otherwise, all or any portion of
its Partnership Interest without the prior consent of the other Partner, it
being agreed and acknowledged that such consent may be withheld in such other
Partner's sole discretion for any reason whatsoever. Any purported sale,
assignment, conveyance, transfer, pledge or hypothecation of any Partner's
Partnership Interest in violation of the provisions of this Article XVIII shall
be voidable at the option of the other Partner. Notwithstanding the foregoing,
either Partner may pledge its Partnership Interest as security for borrowed
money.
ARTICLE XIX
Dispute Resolution
19.01 Generally. In the event of (i) any dispute between the Partners or
assignees of the Partners or the Partnership or (ii) any Major Operational
Deadlock (any such dispute or Major Operational Deadlock being herein
collectively called a "Dispute"), which cannot be otherwise informally resolved
by the Partners, the Partners will utilize the procedures specified in this
Article XIX (the "Procedure") to resolve the Dispute. The Partner seeking to
initiate the Procedure (the "Initiating Party") shall give written notice to the
other Partner and the Partnership, describing in general terms the nature of the
Dispute, the Initiating Party's claim for relief and identifying one or more
individuals with authority to settle the Dispute on such Partner's behalf. The
Partner receiving such notice (the "Responding Party") shall have ten (10)
business days within which to designate by written notice to the Initiating
Party, one or more individuals with authority to settle the Dispute on such
Party's behalf. The individuals so designated shall be known as the "Authorized
Individuals."
19.02 Negotiations. The Authorized Individuals shall be entitled to make
such investigation of the Dispute as they deem appropriate, but agree to
promptly, and in no event later than thirty (30) days from the date of the
Initiating Party's written notice, meet to discuss resolution of the Dispute.
The Authorized Individuals shall meet at such times and places and with such
frequency as they may agree. The Partners agree to participate in good faith in
the direct negotiations to resolve the Dispute. If the Dispute has not been
resolved within thirty (30) days from the date of their initial meeting, the
Partners shall cease direct negotiations and shall submit the Dispute to
arbitration in accordance with the following procedure.
19.03 Arbitration. All Disputes will be settled by arbitration by an
arbitrator mutually acceptable to the Partners in an arbitration proceeding
conducted in (i) Houston, Texas (if IMA is the Initiating Party) or (ii) in Los
Angeles, California (if Pavilion is the Initiating Party), in accordance with
the rules as then in effect of the American Arbitration Association. If the
Partners hereto cannot agree on an arbitrator within ten (10) business days of
the initiation of the arbitration proceeding, an arbitrator with experience in
the live entertainment industry shall be selected for the Partners by the
American Arbitration Association. The decision of such arbitrator shall be final
(except that errors of law shall be subject to appeal), and judgment upon the
award rendered by the arbitration may be entered in any court having
jurisdiction thereof. The costs
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(including, without limitation, reasonable fees and expenses of counsel and
experts for the Partners) of such arbitration (including the costs to enforce or
preserve the rights awarded in the arbitration) shall be borne by the Partners
in the amounts and proportions specified by the arbitrator in his final
decision.
19.05 Press Releases. All press releases which are issued by the
Partnership or any Partner (or any constituent partner of a Partner or any
Affiliate of a Partner or a constituent partner of a Partner) concerning the
subject matter of this Agreement shall first be approved by the Executive
Committee before the release thereof.
ARTICLE XX
Miscellaneous Provisions
20.01 Notices. All notices, offers, approvals, elections, consents,
acceptances, waivers, reports, requests and other communications required or
permitted to be given hereunder (all of the foregoing hereinafter collectively
referred to as "Communications") shall be in writing and shall be deemed to have
been duly given if delivered personally with receipt acknowledged or sent by
registered or certified mail or equivalent, if available, return receipt
requested, or by facsimile, telex or cablegram (which shall be confirmed by a
writing sent by registered or certified mail or equivalent on the same day that
such facsimile, telex or cablegram is sent), or by recognized overnight courier
for next day delivery, addressed or sent to the parties at the following
addresses and facsimile numbers or to such other additional address or facsimile
number as any party shall hereafter specify by Communication to the other
parties:
Pavilion: c/o SM/PACE, Inc.
515 Post Oak Blvd., Suite 300
Houston, Texas 77027
Facsimile No.: (713) 693-8660
Attention: Mr. Rodney L. Eckerman
with copies to: c/o SM/PACE, Inc.
515 Post Oak Blvd., Suite 300
Houston, Texas 77027
Facsimile No.: (713) 693-8617
Attention: Mr. Jeffry B. Lewis
and
Sony Music Entertainment Inc.
550 Madison Avenue
New York, New York 10022-3211
Facsimile No.: (212) 833-8083
Attention: David H. Johnson. Esq.
and
26
<PAGE>
Michael F. Rogers
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002
Facsimile No.: (713) 308-5555
IMA: Irvine Meadows Amphitheater
17835 Ventura Boulevard, Suite 206
Encino, CA 91316
Facsimile No.: (818) 881-1716
Attention: Mr. Robert Geddes
with a copies to: 5000 Campus Drive
Newport Beach, California 92660-2181
Facsimile No.: (714) 833-0633
Attention: Mr. Paul C. Hegness
and
8900 Wilshire Blvd., Suite 200
Beverly Hills, CA 90211
Facsimile No: (310) 289-5556
Attention: Mr. Irving Azoff
and
4343 Von Karman
Newport Beach, CA 92660
Facsimile No: (714) 250-4344
Attention: Mr. Donald M. Koll
20.02 California Law to Apply. This Agreement shall be construed under and
in accordance with laws of the State of California without giving any effect to
the choice of law principles in the State of California.
20.03 Other Instruments. The parties hereto covenant and agree that they
will execute such other and further instruments and documents as are or may
become necessary or convenient to effectuate and carry out the Partnership
created by this Agreement.
20.04 Amendment. This Agreement may be amended or modified by the Partners
from time to time but only upon approval by all of the Partners contained in a
written instrument.
20.05 Headings. The headings used in this Agreement are used for
administrative purposes only and do not constitute substantive matter to be
considered in construing the terms of this Agreement.
27
<PAGE>
20.06 Parties Bound. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors, and assigns where permitted
by this Agreement.
20.07 Legal Construction. In case any one or more of the provisions
contained in this Partnership Agreement shall, for any reason, be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision hereof and this
Partnership Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein.
20.08 Counterparts. This Partnership Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original.
20.09 Gender. Wherever the context shall so require, all words herein in
the male gender shall be deemed to include the female or neuter gender, all
singular words shall include the plural, and all plural words shall include the
singular.
20.10 Prior Agreements Superseded. This Agreement supersedes any prior
understandings or written or oral agreements between the parties respecting the
within subject matter.
20.11 Attorneys Fees. The prevailing party in any dispute, litigation or
other proceeding between the parties hereto involving the subject matter of this
Agreement shall be entitled to be reimbursed by the other party for all of its
reasonable attorneys' fees incurred in connection with the pursuit of such
dispute, litigation or other proceeding.
ARTICLE XXI
Use Impairments and Use Termination Events
21.01 Use Impairments. If a Use Impairment occurs at either of the Subject
Amphitheaters, then the following provisions shall apply:
(a) The Underlying Owner of such Subject Amphitheater (and not the
Partnership) shall be entitled to receive and retain any property
insurance proceeds or condemnation award payable on account of the
occurrence of such Use Impairment.
(b) The Partnership (and not the Underlying Owner of such Subject
Amphitheater) shall be entitled to receive and retain any business
interruption insurance proceeds payable on account of the occurrence of
such Use Impairment.
(c) The Underlying Owner of such Subject Amphitheater shall have the
option of either (i) agreeing to correct, cure or repair the event,
circumstance or condition giving
28
<PAGE>
rise to such Use Impairment ("Cure Option") or (ii) refusing to correct,
cure or repair the condition giving rise to such Use Impairment ("Non-Cure
Option"). If the Underlying Owner of such Subject Amphitheater has not
exercised the option referred to in the immediately preceding sentence by
providing notice thereof to the other Partner within sixty (60) days
following written notice from the other Partner that such Use Impairment
is in existence, then the Underlying Owner of such Subject Amphitheater
shall be deemed to have exercised the Non-Cure Option for all purposes
hereof. If the Underlying Owner of such Subject Amphitheater elects the
Cure Option, then such Underlying Owner shall be obligated pursuant to
this Agreement to (x) thereafter diligently pursue the correction, cure
and repair of the event, circumstance or condition giving rise to such Use
Impairment and (y) in any event to complete such correction, cure and
repair within one (1) year following the electing of the Cure Option.
(d) If the Underlying Owner of such Subject Amphitheater elects, or
is deemed to elect, the Non-Cure Option following the occurrence of a Use
Impairment, then a "Use Termination Event" shall be deemed to have
occurred with respect to such Subject Amphitheater.
21.02 Continuing Covenants Following Termination of Partnership as a
Result of a Use Termination Event. If the Partnership should be dissolved
pursuant to the provisions of clauses (g) or (h) of Section 17.01 hereof
following the occurrence of a Use Termination Event with respect to a Subject
Amphitheater, then the Underlying Owner of such Subject Amphitheater shall not
place such Subject Amphitheater back into operation as a venue for the
performance of live entertainment events at any time during the next 10 years
without first offering to the other Partner the right and option of re-forming
the Partnership upon the terms and conditions contained in this Agreement. The
right and option referenced in the immediately preceding sentence shall be
available for exercise for a period of sixty (60) days after receipt of written
notice of the offering of such right and option. The covenants and agreements
contained in this Section 21.02 shall survive the dissolution and termination of
the Partnership.
EXECUTED as of the day and year first written above.
Irvine Meadows Amphitheater, a California partnership
By: Irvine Meadows Investment Corp., a
California corporation
By: /s/ Donald M. Koll
----------------------------------------
Name: Donald M. Koll
Title: President
29
<PAGE>
By: Shelli Meadows, Inc., a California
corporation
By: /s/ Irving Azoff
----------------------------------------
Name: Irving Azoff
Title: President
By: Audrey & Jane, Inc., a California
corporation
By: /s/ Robert E. Geddes
----------------------------------------
Name: Robert E. Geddes
Title: President
By: Peach Street Partners, L.P., a California
limited partnership
By: Imua, Inc.
By: /s/ Paul C. Hegness
----------------------------------
Name: Paul C. Hegness
Title: President
"IMA"
PAVILION PARTNERS, a
Delaware general partnership
By: SM/PACE, Inc., a Texas corporation
By: /s/ Rodney Eckerman
----------------------------------------
Name: Rodney Eckerman
Title: VP
"PAVILION"
30
<PAGE>
Exhibit "A"
GLOSSARY OF TERMS
Affiliate: With respect to any Person, any other Person that directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Person specified. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and under "common control with") when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
Amphitheater Contribution Agreement: With respect to either of the Subject
Amphitheaters, the Amphitheater Contribution and License Agreement executed and
entered of even date herewith by and between the Partner who owns title to such
Subject Amphitheater and the Partnership.
Amphitheater Fiscal Year: Each twelve month period commencing on January 1
of a calendar year and ending on December 31 of such calendar year.
Available Cash: After repayment of all outstanding Deficit Loans, cash
held by the Partnership on each December 31st during the Term which, in the
judgment of the Executive Committee, is not required for a reasonable working
capital reserve for the obligations or business needs of the Partnership through
the next revenue generating period.
Avalon: New Avalon, Inc., a California corporation and an Affiliate of one
of the partners of IMA.
Average Cash Flow Amount: (i) With respect to the Amphitheater Fiscal Year
ending on December 31, 1999, the average of the Partnership's Cash Flow for the
Amphitheater Fiscal Years ending on December 31, 1998 and 1999 and (ii) with
respect to the Amphitheater Fiscal Year ending on December 31, 2000 and each
Amphitheater Fiscal Year thereafter, the average of the Partnership's Cash Flow
for such Amphitheater Fiscal Year and the two immediately preceding Amphitheater
Fiscal Years.
Azoff Inc.: Shelli Meadows, Inc., a California corporation wholly-owned by
Irving Azoff and one of the constituent partners of IMA.
Budgeted Operating Expenses: The overhead and operating expenses of the
Partnership which relate to the day-to-day operation and maintenance of the
Subject Amphitheaters such as salaries for employees and staff for the Subject
Amphitheaters, utility costs for the Subject Amphitheaters, insurance costs
relating to the maintenance of casualty and liability insurance for the Subject
Amphitheaters, costs relating to maintenance, repair and upkeep of the Subject
Amphitheaters and the personal property and equipment used in connection with
the operation
1
<PAGE>
of the Subject Amphitheaters and costs for the purchase of office supplies and
equipment. Notwithstanding anything to the contrary implied by the immediately
preceding sentence, Show Expenses shall not be "Budgeted Operating Expenses" for
purposes of this Agreement.
Capital Account: The tax capital account maintained by the Partnership for
each Partner in accordance with, and as required by, the provisions of Section
7.03 of this Agreement.
Cash Flow: For any Amphitheater Fiscal Year, the amount (if any) by which
(A) the sum of (i) the cash receipts received by the Partnership which are
properly attributable to the use, operation and exploitation of the Subject
Amphitheaters during such Amphitheater Fiscal Year and (ii) the net profit (or
net loss) of the Partnership attributable to the co-promotion of Events during
such Amphitheater Fiscal Year which were offered to it by the Promoter pursuant
to Section 5(a)(ii) of the Promotion Agreement exceeds (B) the cash expenditures
paid or payable by the Partnership which are properly attributable to the
operation, use, maintenance and exploitation of the Subject Amphitheaters during
such Amphitheater Fiscal Year (excluding Rental Loans made to the Partners
pursuant to the provisions of Section 9.01 hereof and expenditures attributable
to capital asset additions or improvements).
Cash Flow Target Amount: With respect to the Amphitheater Fiscal Year
ending oh December 31, 1999, a monetary amount equal to $2,000,000. For each
subsequent Amphitheater Fiscal Year, the Cash Flow Target Amount shall be equal
to the Cash Flow Target Amount for the immediately preceding Amphitheater Fiscal
Year increased in the same percentage amount by which the CPI Index increased
during the twelve (12) calendar months since the beginning of the immediately
preceding Amphitheater Fiscal Year.
Closing Date: The date upon which the capital contributions required to be
made pursuant to the terms of the Amphitheater Contribution Agreements are made.
In accordance with the terms of the Amphitheater Contribution Agreements, the
Closing Date shall be March 3, 1997.
Code: The Internal Revenue Code of 1986, as amended.
CPI Index: Consumer Price Index for All Urban Consumers (all U.S. cities),
1982 - 84 equals 100 Base, published monthly by the U.S. Department of Labor's
Bureau of Labor Statistics, or any successor publication.
Default Notice: Shall have the meaning assigned to it pursuant to Section
15.01 hereof.
Defaulting Partner: Shall have the meaning assigned to it pursuant to
Section 15.01 hereof.
Deficit Loan: A loan extended by a Partner to the Partnership pursuant to
the provisions of Article VI hereof.
Exhibit "A"
Page 2 of 7
<PAGE>
Effective Date of Dissolution: Shall have the meaning assigned to it
pursuant to Section 17.01 hereof.
Event: Any live public performance or concert featuring professional
musicians, performers or artists, including "free" performances or concerts for
which no patron or spectator is required to pay an admission price.
Executive Committee: The committee of individuals selected, from time to
time, by the Partners pursuant to the provisions of Section 12.02(c) of this
Agreement, to whom the responsibility of managing and controlling the operations
of the Partnership is delegated.
Geddes Inc.: Audrey & Jane, Inc., a California corporation wholly-owned by
Robert E. Geddes and one of the constituent partners of IMA.
Glen Helen Amphitheater: Glen Helen Blockbuster Pavilion, an outdoor
entertainment facility located in San Bernardino, California.
Gross Asset Value: Subject to the adjustments described in the next
succeeding sentence, the fair market value of each item of Partnership property
at the time of contribution to the capital of the partnership. The Gross Asset
Value of each item of Partnership property shall be adjusted by depreciation,
amortization or other cost recovery deductions determined pursuant to Section
7.03(c)(ii) of this Agreement.
IMA: Irvine Meadows Amphitheater, a California general partnership.
IMA Put Option: The currently existing provisions contained in Section
3.03 of the Partnership Agreement of IMA whereby Geddes Inc. is given the right
to require Azoff Inc. or Koll Inc. to purchase the partnership interest of
Geddes Inc. in IMA upon the occurrence of certain events specified therein, a
true, correct and complete copy of such provisions being attached to this
Agreement as Exhibit "D".
Initial Contribution Amount: Shall have the meaning assigned to it
pursuant to Section 5.01(b) hereof.
Initial Promoter: Azoff Inc. and Geddes Inc., jointly and severally.
Irvine Meadows Amphitheater: Irvine Meadows Amphitheater, an outdoor
entertainment facility located in Orange County, California.
Koll Inc.: IMA Investment Corp., a California corporation wholly-owned by
Donald M. Koll and one of the constituent partners of IMA.
Major Operational Deadlock: The circumstance of the Executive Committee or
the Partners being unable to reach agreement with respect to an operational
decision (i) which must be made in order to permit the Subject Amphitheaters to
be used and operated consistent with their intended purpose and (ii) for which
another procedure of resolution is not provided for
Exhibit "A"
Page 3 of 7
<PAGE>
elsewhere in this Agreement. An example of a "Major Operational Deadlock" would
be failure of the Partners to reach agreement pursuant to Section 12.07(d)
hereof on the selection of a "booking agent" to be engaged by the Partnership
following a termination of the Promotion Agreement.
Net Sponsorship Revenue: With respect to any Amphitheater Fiscal Year, the
excess of (A) all of the sponsorship revenues properly attributable to the
operation of the subject Amphitheaters during such Amphitheater Fiscal Year over
(B) all of the expenses, costs and other charges (i) incurred in connection with
the solicitation, acquisition or implementation of any sponsorship arrangement
at the Subject Amphitheaters (including the costs of any benefits conferred upon
or granted to sponsors and the costs of the Partnership for the employees
referenced in Section 12.09(a)(ii) and (iii) hereof) and (ii) properly
attributable to the operation of the Subject Amphitheaters during such
Amphitheater Fiscal Year.
Non-Defaulting Partner: Shall have the meaning assigned to it pursuant to
Section 15.01 hereof.
Operating Assets: With respect to either of the Subject Amphitheaters, as
of any time, all concession contracts, sponsorship agreements, service
contracts, maintenance agreements, utility agreements, accounts receivable,
trademarks, trade names, customer lists, price lists, vehicles, sound equipment,
copy machines, phone equipment, computers, facsimile machines, office supplies,
furniture, fixtures, equipment and other intangible assets or personal property
then owned by, or leased or licensed to, the Partnership and used in connection
with, or having been acquired on account of, the use, operation, maintenance or
management of such Subject Amphitheater.
Operating Budget: The budget of Budgeted Operating Expenses of the
Partnership to be prepared for each Amphitheater Fiscal Year in accordance with
and pursuant to the provisions of Section 12.03 hereof.
Operational Shortfall: The occurrence or happening, at any time, of the
circumstance of the Partnership having an insufficient amount of cash to pay or
cover any of its debts, liabilities or obligations as they become due.
Partners: Pavilion and IMA. The term "Partners" shall not include any
assignee of a Partner's Partnership Interest, unless the other Partner agrees to
admit such assignee to the Partnership.
Partnership: The Partnership created by this Agreement.
Partnership Act: The Uniform Partnership Act as set forth in Title 2,
Chapter 1 of the California Corporations Code.
Exhibit "A"
Page 4 of 7
<PAGE>
Partnership Interest: All of the interest of any Partner in the
Partnership, including his (i) right to a distributive share of the profits and
losses of the Partnership, (ii) right to a distributive share of the assets of
the Partnership, and (iii) right to participate in the management of the affairs
of the Partnership.
Partnership Purposes: The purposes for which the Partnership is formed as
set forth in Article III of this Agreement.
Partnership's Accounting Staff: Shall have the meaning assigned thereto
pursuant to the provisions of Section 11.02(b) hereof.
Pavilion: Pavilion Partners, a Delaware general partnership.
Percentage Interest: The respective Partnership Interest of each Partner
in the Partnership expressed as a percentage of the Partnership Interests owned
by all Partners. The Percentage Interest of Pavilion is fifty percent (50%) and
the Percentage Interest of IMA is fifty (50%).
Permitted Rate: The lesser of (a) two percent (2%) per annum over the
Prime Rate or (b) the maximum non-usurious interest rate permitted by applicable
law from time to time in effect.
Person: Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof, or any other form of entity.
Post-1996 Receipts: Revenues which are properly attributable to the
operation, use or exploitation of either of the Subject Amphitheaters after the
Closing Date, whether received before or after the Closing Date.
Post-Dissolution Receipts: Revenues which are properly attributable to the
operation, use or exploitation of either of the Subject Amphitheaters after the
Effective Date of Dissolution, whether received before or after the Effective
Date of Dissolution.
Prime Rate: The prime rate of interest per annum announced, from time to
time, by major U.S. money center banks as published daily in the "Money Rates"
column of The Wall Street Journal; provided, however, that if The Wall Street
Journal should ever cease, for any reason, to publish such rate on a daily
basis, then the Prime Rate shall be the rate of interest designated, and in
effect from time to time, by Citibank, N.A., in New York, New York as its prime
rate or base rate charged on commercial loans.
Promoter: As of any time, the person or entity then responsible for
performing the booking and promotion services under the Promotion Agreement. As
of the date hereof, the Promoter is Avalon.
Exhibit "A"
Page 5 of 7
<PAGE>
Promoter-Related Representative: Any Representative on the Executive
Committee who is either (i) selected and designated as a Representative by an
officer, director, constituent partner or shareholder of the Promoter or by an
Affiliate of an officer, director, constituent partner or shareholder of the
Promoter or (ii) an officer, director, constituent partner or shareholder of the
Promoter.
Promotion Agreement: That certain Promotion Agreement being executed of
even date herewith by and between the Partnership and the Initial Promoter
whereby the Partnership has engaged and retained the services of the Initial
Promoter to provide booking and promotion services in respect of all Events to
be presented at the Subject Amphitheaters. Upon execution of the Promotion
Agreement, the Initial Promoter is subcontracting and delegating its
responsibilities thereunder to Avalon.
Representatives: The individuals who serve on the Executive Committee.
Show Expenses: Costs attributable to the production, promotion or
presentation of Events at the Subject Amphitheaters including, without
limitation, (i) fees payable to the performers appearing at such Event, (ii)
advertising costs directly associated with the promotion of such Event, (iii)
marginal costs of staffing which are directly attributable to such Event for
ushers, ticket takers, security personnel, parking attendants and similar
temporary employees and (iv) marginal costs for utilities and insurance which
are directly attributable to such Event.
Subject Amphitheaters: Glen Helen Amphitheater and Irvine Meadows
Amphitheater.
T.B.A.: T.B.A. Media, Inc., a corporation and an Affiliate of one of the
partners of IMA.
T.B.A. Marketing Agreement: That certain Marketing Agreement to be
hereafter executed and entered into by and between the Partnership and T.B.A.
whereby the Partnership shall engage and retain the services of T.B.A. to
provide marketing and advertising services with respect to all Events to be
presented at the Subject Amphitheaters upon terms and provisions to be hereafter
approved and adopted by the Executive Committee.
Term: The term of the Partnership as specified in Article IV hereof.
Treasury Regulations: The Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
Underlying Owner: With respect to Irvine Meadows Amphitheater, IMA and
with respect to Glen Helen Amphitheater, Pavilion Partners.
Use Impairment: With respect to either of the Subject Amphitheaters, the
occurrence of any event, circumstance or condition which results in the
Partnership suffering a material
Exhibit "A"
Page 6 of 7
<PAGE>
impairment (or termination) of its right or ability to book, produce, present
and promote Events at such Subject Amphitheater consistent with past practices
and with a maximum capacity of at least 90% of current maximum capacities. The
following are examples (which are intended to be illustrative and not exclusive)
of events or circumstances which would constitute a "Use Impairment" with
respect to one of the Subject Amphitheaters for purposes of this Agreement:
(a) Loss by the Underlying Owner of such Subject Amphitheater of its
possessory right to such Subject Amphitheater as a result of a failure of
title, a default under the applicable Lease Agreement or any other reason.
(b) A determination that such Subject Amphitheater is an unsafe
locale for the presentation of public events because of the presence of
toxic or hazardous waste on the site at which such Subject Amphitheater is
located.
(c) A fire, earthquake, flood or other casualty which results in
such Subject Amphitheater no longer being able to be used for its intended
purposes at 90% or more of its current maximum capacity.
(d) Condemnation of all or any portion of such Subject Amphitheater
through the exercise of any governmental authority's power of eminent
domain which results in such Subject Amphitheater no longer being able to
be used for its intended purposes at 90% or more of its current maximum
capacity.
(e) The discovery of any defects in the buildings, structures or
other improvements constituting a part of such Subject Amphitheater which
would materially and adversely interfere with the use of such Subject
Amphitheater as presently operated.
(f) The occurrence of any event or circumstance resulting in a loss
or restriction of access to public roads necessary to satisfy the current
and reasonably anticipated normal transportation requirements of such
Subject Amphitheater's business as presently operated.
(g) The occurrence of any event or circumstance resulting in such
Subject Amphitheater no longer having parking availability sufficient to
satisfy the parking requirements for an Event at which the Subject
Amphitheater is sold-out at its current maximum capacity.
(h) Loss of the use of necessary utilities (including water,
electricity, natural gas, sewer and telephone) in such quantity and
quality as are necessary to satisfy the current business activities of
such Subject Amphitheater as currently operated.
Use Termination Event: Shall have the meaning assigned thereto pursuant to
the provisions of Section 21.01(d) hereof.
Exhibit "A"
Page 7 of 7
<PAGE>
Exhibit "B"
- --------------------------------------------------------------------------------
WESTERN AMPHITHEATRE PARTNERS
- --------------------------------------------------------------------------------
OPERATING BUDGET 1997
- --------------------------------------------------------------------------------
IMA BBP WAP
- --------------------------------------------------------------------------------
OVERHEAD EXPENSES
- --------------------------------------------------------------------------------
SALARIES - ADMINISTRATIVE $399,400 $275,039 $674,439
- --------------------------------------------------------------------------------
SALARIES - TEMPORARY HELP 1,800 0 1,800
- --------------------------------------------------------------------------------
SALARIES - BOX OFFICE/STAGE 0 0 0
- --------------------------------------------------------------------------------
PAYROLL TAXES 53,919 30,231 84,150
- --------------------------------------------------------------------------------
EMPLOYEE BENEFITS 13,200 23,261 36,461
- --------------------------------------------------------------------------------
WORKERS COMP 5,000 0 5,000
- --------------------------------------------------------------------------------
RENT - OFFICE 52,200 0 52,200
- --------------------------------------------------------------------------------
EQUIPMENT RENTAL 6,000 0 6,000
- --------------------------------------------------------------------------------
ALLOCATED G & A - BOOKING DEPARTMENT 0 0 0
- --------------------------------------------------------------------------------
ADVERTISING 24,000 7,374 31,374
- --------------------------------------------------------------------------------
ADVERTISING - SPONSORSHIP 6,000 13,000 19,000
- --------------------------------------------------------------------------------
BANK CHARGES 200 250 450
- --------------------------------------------------------------------------------
BUSINESS ENTERTAINMENT 10,000 6,000 16,000
- --------------------------------------------------------------------------------
CONTRIBUTIONS 1,200 4,400 5,600
- --------------------------------------------------------------------------------
CONSULTING FEES 15,000 0 15,000
- --------------------------------------------------------------------------------
CUSTODIAL SERVICES 6,000 74,999 80,999
- --------------------------------------------------------------------------------
DUES & SUBSCRIPTIONS 2,400 2,502 4,902
- --------------------------------------------------------------------------------
EQUIPMENT 2,400 4,847 7,247
- --------------------------------------------------------------------------------
INSURANCE EXPENSE 26,016 37,199 63,215
- --------------------------------------------------------------------------------
LEGAL & PROFESSIONAL 40,000 31,170 71,170
- --------------------------------------------------------------------------------
MESSENGER SERVICE 180 0 180
- --------------------------------------------------------------------------------
OFFICE EXPENSES 18,000 15,198 33,198
- --------------------------------------------------------------------------------
PRINTING 2,000 0 2,000
- --------------------------------------------------------------------------------
POSTAGE 6,600 8,748 15,348
- --------------------------------------------------------------------------------
FEDERAL EXPRESS 3,000 0 3,000
- --------------------------------------------------------------------------------
PROMOTION 10,000 3,000 13,000
- --------------------------------------------------------------------------------
REPAIRS & MAINTENANCE - STAGE 20,000 10,000 30,000
- --------------------------------------------------------------------------------
REPAIRS & MAINTENANCE - HOUSE 72,000 10,000 82,000
- --------------------------------------------------------------------------------
REPAIRS & MAINTENANCE - GENERAL 113,500 49,002 162,502
- --------------------------------------------------------------------------------
SECURITY 12,000 2,000 14,000
- --------------------------------------------------------------------------------
SERVICE BUREAU 10,800 0 10,800
- --------------------------------------------------------------------------------
SMALL TOOLS & EQUIPMENT 2,800 9,999 12,799
- --------------------------------------------------------------------------------
TELEPHONE 50,000 24,000 74,000
- --------------------------------------------------------------------------------
TRAVEL - OTHER 24,000 17,594 41,594
- --------------------------------------------------------------------------------
UTILITIES 124,000 74,881 198,881
- --------------------------------------------------------------------------------
TAXES & LICENSES 2,400 6,000 8,400
- --------------------------------------------------------------------------------
MISCELLANEOUS 6,000 500 6,500
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL OVERHEAD EXPENSES $1,142,015 $741,194 $1,883,209
- --------------------------------------------------------------------------------
Page 1
<PAGE>
Exhibit "C"
List of Existing Sponsorship Commission Obligations at Irvine Meadows
15% commission due to Eric/Chandler Marketing on each of the following:
Sponsor Sponsorship Revenue
------- -------------------
Mission Viejo Imports $ 40,000
Coors Brewing Company $200,000 (+$25,000 bonus)
Farmer John $ 2,300
Domino's Pizza $ 11,000
Round Hill Wineries $ 2,500
Specialty Coffee Company $ 9,200
Del Taco $ 12,500
Ruby's Diner $ 12,500
Evian $ 7,077
Baskin Robbins $ 12,000
Better Beverage $ 3,500
<PAGE>
EXHIBIT "D"
Paragraph 3.03 Appraised Buy-Out of the Partnership Interest of A&J, is
hereby amended and restated in it's entirety to read as follows:
5
<PAGE>
EXHIBIT "D"
3.03 If, and only if SMI and A&J are terminated as the booking agents for
WAP pursuant to the terms of the Promotion Agreement with WAP, as it now exists
or as it may be modified in the future, then for a period of thirty (30) days
following such termination, A&J shall have the right, but not the obligation, by
delivering written notice ("Election Notice") to IMA Corp. and SMI, to cause
the purchase of the entire Partnership Interest of A&J in accordance with the
provisions of this Section 3.03. In the event A&J timely and validly makes such
an election, then except as hereinafter otherwise provided SMI shall be required
to purchase the entire Partnership Interest of A&J in accordance with the
provisions of this Section 3.03; provided, however, for a period of thirty (30)
days following the effective date of the "Accountant's Notice" of the "Purchase
Price" (as such terms are hereinafter defined), SMI shall have the right, but
not the obligation, to elect either (A) by delivering written notice (the "Pro
Rata Notice") to IMA Corp., to cause IMA Corp. and SMI to each purchase the
portion of the Partnership Interest of A&J that corresponds, in the case of SMI,
to the fraction obtained by dividing (i) the Percentage Interest (as of the
effective date of the Accountant's Notice) of SMI by (ii) the aggregate
Percentage Interests (as of the effective date of the Accountant's Notice) of
SMI and the Koll Partners, and, in the case of IMA Corp., to the fraction found
by dividing (i) the aggregate Percentage Interests (as of the effective date of
the Accountant's Notice) of the Koll Partners by (ii) the aggregate Percentage
Interests (as of the effective date of the Accountant's Notice) of SMI and the
Koll Partners; or (B) by written notice (the "No-Interest Notice") to IMA Corp.,
A&J and Pavilion Partners, to decline to purchase any portion of the Partnership
Interest of A&J. If SMI fails to timely make either such election, then SMI
shall be required to purchase the entire Partnership Interest of A&J in
accordance with the provisions of this Section 3.03. If SMI timely gives the
No-Interest Notice, then IMA Corp. may, at any time within ten (10) days after
its receipt of SMI's No-Interest Notice, provide written notice (also a
"No-Interest Notice") to Pavilion Partners, SMI and A&J that IMA Corp. does not
wish to purchase the Partnership Interest of A&J. If IMA Corp. fails to timely
give the No-Interest Notice, then IMA Corp. shall be required to purchase the
entire Partnership Interest of A&J in accordance with the provisions of this
Section 3.03. Any such purchase and sale of the Partnership Interest of A&J by
SMI alone or by SMI and IMA Corp., or by IMA Corp. alone (the "Purchasing
Partner(s)"), as the case may be, shall be made in accordance with the following
terms and conditions:
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EXHIBIT "D"
(a) The Election Notice shall include the name of an appraiser with
at least five (5) years experience appraising businesses similar in nature
to the Project. Within forty (40) days after the effective date of the
Election Notice, the Purchasing Partner(s) shall either agree to such
appraiser or select a second appraiser (with similar appraisal experience)
and notify A&J of such second appraiser. If two (2) appraisers are
selected, then they shall appoint a third appraiser (with similar
appraisal experience) within five (5) days of the selection of the second
appraiser. In the event A&J, on the one hand, or the Purchasing
Partner(s), on the other hand, fail to appoint an appraiser within the
time period specified, and after the expiration of five (5) days following
the effective date of written demand that an appraiser be appointed, then
the appraiser duly appointed by the party making such demand and
appointing such appraiser shall proceed to make the appraisal as herein
set forth and the determination of such appraiser shall be conclusive.
Upon the failure of the two (2) appointed appraisers to timely appoint a
third appraiser within the time period specified therefor, either A&J, on
the one hand, or the Purchasing Partner(s), on the other hand, may
petition a court of competent jurisdiction to appoint a third appraiser,
in the same manner as provided for the appointment of an arbitrator
pursuant to Code of Civil Procedure Section 1281.6.
(b) The appraiser or three (3) appraisers, as the case may be, shall
promptly fix a time for the completion of the appraisal, which shall not
be later than thirty (30) days from the date of appointment of the last
appraiser. Each appraiser shall determine the fair market value of the
combined business and assets of the Partnership which shall be the fairest
price estimated in terms of money which the Partnership could obtain if
such business and assets were sold in the open market as a going concern,
allowing a reasonable time to find a purchaser who purchases with
knowledge of the uses which such business and assets in their then
condition are adapted and for which such business and assets are capable
of being used as of the effective date of the Election Notice.
(c) Upon the submission of the appraisal setting forth the opinions
as to the fair market value of the combined business and assets of the
Partnership (determined by each appraiser in accordance with Section
3.03(b)), the two (2) such appraisals which are nearest
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EXHIBIT "D"
in amount shall be retained, and the third appraisal shall be discarded.
The average of the two (2) retained appraisals shall constitute the
"Appraised Value"; provided, however, that if one of the appraisals is the
mean of the other two (2), then that appraisal shall constitute the
"Appraised Value".
(d) Within fifteen (15) days after the determination of the
Appraised Value, the certified public accountants regularly employed by
the Partnership shall determine the purchase price ("Purchase Price") for
the Partnership Interest of A&J. The Purchase Price shall be equal to the
greater of (i) the sum of the balances standing in the Unrecovered
Contribution Account and Unrecovered Additional Contribution Account of
A&J, determined as of the effective date of the Election Notice, or (ii)
one hundred percent (100%) of the aggregate amount of cash that would be
distributed to A&J pursuant to Section 8.02(c) if (A) the combined
business and assets of the Partnership were sold for the Appraised Value
thereof as of the effective date of the Election Notice; (B) the
liabilities of the Partnership were liquidated pursuant to Section
8.02(a); (C) a reserve were established for any contingent or unforeseen
liabilities of the Partnership pursuant to Section 8.02(b); and (D) the
Partnership made its required distributions to the Partners pursuant to
Section 8.02(c). Upon the determination by the accountants of the Purchase
Price, such accountants shall give A&J, SMI and IMA Corp. written notice
("Accountant's Notice") of the Purchase Price. The determination by such
accountants of the Purchase Price, and any and all components thereof
(including, without limitation, the amount of any reserve) shall be deemed
conclusive.
(e) The closing of a purchase and sale pursuant to this Section 3.03
shall be held at the principal place of business of the Partnership on
such date as is designated by the Purchasing Partner(s), but in no event
later than the one hundred twentieth (120th) day following the effective
date of the Accountant's Notice. A&J shall transfer to the Purchasing
Partner(s) the entire Partnership Interest of A&J free and clear of all
liens, security interests, and competing claims (other than security
interests granted in favor of the Purchasing Partner(s) and shall deliver
to the Purchasing Partner(s) such instruments of transfer, and such
evidence of due authorization, execution, and delivery, and of the absence
of any such liens, security interests, or
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EXHIBIT "D"
competing claims, as the Purchasing Partner(s) shall reasonably request.
The Purchasing Partner(s) shall pay the Purchase Price to A&J at the
closing by delivering to A&J cash, a certified or bank cashier's check or
a confirmed wire transfer of funds payable to the order of A&J.
(f) The portion of the Purchase Price for the Partnership Interest
of A&J to be paid by any Purchasing Partner shall be offset by the unpaid
balance of any and all Partner Loan(s) (together with all accrued interest
thereon) made by such Purchasing Partner to A&J. Such Partner Loan(s)
(together with all accrued interest thereon) shall be deemed paid to the
extent of such offset, with such deemed payment to be applied first to the
accrued interest thereon and thereafter to the payment of the outstanding
principal amount thereof. If the Purchase Price for the Partnership
Interest of A&J is insufficient to fully offset the outstanding, unpaid
balances (including all principal amounts thereof and all accrued interest
thereon) made by any and all of the Purchasing Partners to A&J, then such
loans shall be offset in proportion to their respective outstanding
balances (including all principal amounts thereof and all accrued, unpaid
interest thereon). In addition, the outstanding, unpaid balances
(including all principal amounts thereof and all accrued interest thereon)
made by any one or more non-purchasing Partners to A&J shall be due and
payable at the closing of the transfer of the Partnership Interest of A&J
pursuant to this Section 3.03 and shall be repaid, in proportion to such
respective outstanding balances, out of any and all of the proceeds of the
Purchase Price (after reduction of such price otherwise payable to A&J
pursuant to this Section 3.03 pursuant to the offset described above in
this Section 3.03(f)), prior to any payment of such proceeds to A&J
pursuant to this Section 3.03. To the extent any portion of any Partner
Loan made by a Partner to A&J is not satisfied pursuant to the foregoing
provisions of this Section 3.03(f), then A&J shall pay the remaining
outstanding balance (including all principal amounts thereof and all
accrued, unpaid interest thereon) at the closing. Also, notwithstanding
any provision of this Agreement to the contrary, the outstanding unpaid
balance of any and all Partner Loan(s) (including all principal amounts
thereof and all accrued, unpaid interest thereon) made by A&J to any
Partner shall be due and payable in full to A&J at the closing of the
purchase of the Partnership Interest of A&J pursuant to Section 3.03(e).
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EXHIBIT "D"
(g) All costs (including, without limitation, the costs of the
appraisers and the accountants referenced in Sections 3.03(a) and/or
3.03(d) of the purchase and sale of the Partnership Interest of A&J
pursuant to this Section 3.03 shall be paid one-half (1/2) by A&J and
one-half (1/2) by the Purchasing Partner(s) (with such costs being divided
between such Purchasing Partners based upon the relative portion of the
Partnership Interest of A&J purchased by each such Purchasing Partner).
(h) On or before the closing of a purchase and sale transaction held
pursuant to this Section 3.03, the Purchasing Partner(s) shall use such
Partner's(s') reasonable, diligent, and good faith efforts to obtain
written releases of A&J and/or any Affiliates of A&J from all guarantees
of liabilities of the Partnership previously executed by A&J and/or such
Affiliates. To the extent such releases cannot be obtained by the
Purchasing Partner(s), the Purchasing Partner(s) shall severally in
proportion to their respective Percentage Interests as of the effective
date of the Election Notice) indemnify, defend, and hold free and harmless
A&J from and against any and all claims, liabilities, causes of action,
liens, charges, and all other matters arising out of or in connection with
the business and affairs of the Partnership, whether arising prior to or
subsequent to the effective date of such closing, except for unknown
liabilities arising prior to the effective date of such closing and not
taken into account in calculating the Purchase Price for the Partnership
Interest of A&J.
Provided, however, that if IMA Corp. and SMI both timely give their respective
No-Interest Notice, then, pursuant to the terms of the WAP Agreement, Pavilion
Partners shall be obligated either to purchase the entire Partnership Interest
of A&J or to terminate the WAP Agreement. In any event or circumstance where IMA
Corp. and SMI, elect after Determination of the Purchase Price not to effect the
purchase, thereby giving rise to an obligation to Pavilion Partners to effect
such purchase, and in the circumstance where Pavilion Partners, for any reason
fails or refuses to effect such purchase, then the Partnership shall immediately
proceed to dissolve the WAP Partnership, thereby causing, concurrent with such
dissolution, the reinstatement of the Agreement from the date of dissolution
forward, without
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EXHIBIT "D"
regard to, the terms or the effects of this First Amendment which shall, from
the date of dissolution forward be null, void, and without further effect.
Moreover, in the event of any such failure or refusal by Pavilion Partners, A&J
acknowledges and agrees that the obligations of IMA Corp. and/or SMI to effect
any purchase of A&J's interest, pursuant to this paragraph 3.03, shall be null,
void, and without effect, and further that A&J agrees to indemnify and hold IMA
Corp., SMI, and their respective shareholders, officers and agents free and
harmless from and against any such obligation to effect any such purchase.
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AMENDED AND RESTATED
AGREEMENT RE GROUND LEASE
by and between
THE IRVINE COMPANY,
a Michigan corporation
("Company")
and
IRVINE MEADOWS,
a California general partnership
("Meadows")
October 1, 1991
<PAGE>
AMENDED AND RESTATED AGREEMENT
This AMENDED AND RESTATED AGREEMENT (the "Agreement") is entered into as of the
1st day of October, 1991, by and between THE IRVINE COMPANY, a Michigan
corporation ("Company"), and IRVINE MEADOWS, a California general partnership
("Meadows").
RECITALS
A. Company, as lessor, and Lion Country Safari, Inc.-California ("LCS"),
as lessee, are parties to that certain ground lease dated February 11, 1969,
covering certain real property in Orange County, California described therein,
as amended by Amendments Nos. 1 through 9 (collectively, the "Master Lease").
The leasehold estate created by the Master Lease as hereinafter referred to as
the "Master Leasehold". The Master Lease will expire on February 28, 1997,
unless sooner terminated as therein provided.
B. LCS, as sublessor, and Feyline Presents, Inc. ("Feyline"), as sublessee,
are parties to that certain Sublease Agreement dated August 7, 1980, as amended
by those certain Amendments to Sublease dated September 16,1980 and January 8,
1981, and by that certain Letter Agreement dated February 23, 1984
(collectively, the "Sublease"). Meadows is successor-in-interest to the interest
of Feyline under the Sublease. The Sublease will expire on February 28, 1997,
unless sooner terminated as therein provided.
C. The Sublease covers a portion of the Master Leasehold (the "Subleased
Premises"), which is composed of an area demised for the exclusive use of
Meadows ("Exclusive Area"), and an area demised for non-exclusive common use by
Meadows and LCS for parking of automobiles ("Common Area"). The Subleased
Premises are described on Exhibit A and depicted on Exhibit B, each attached
hereto and incorporated herein by reference.
D. Meadows operates the Irvine Meadows Amphitheater (the "Amphitheater") on
the Subleased Premises.
E. Meadows and Company entered into that certain Assignment and Purchase
Agreement and Grant of Option to Ground Lease dated April 27, 1984, as amended
on November 26, 1986 (the "Purchase Agreement").
F. Meadows and Company desire to amend and restate in its entirety the
Purchase Agreement as hereinafter set forth, excepting therefrom those covenants
and provisions of the Purchase Agreement which have been fully performed by the
party so obligated thereunder.
NOW, THEREFORE, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
1.01. NEW GROUND LEASE shall refer to that certain ground lease attached
hereto as Exhibit C and by this reference incorporated herein.
ARTICLE II
COMPLETED OBLIGATIONS
2.01. RETAINED INCOME STREAM. The parties acknowledge that the
Retained Income Stream, or RIS, as such terms are defined in the Purchase
Agreement, has been acquired by Meadows, as obligor thereunder, and is,
therefore, extinguished as an obligation of Meadows.
2.02. ASSIGNED INCOME STREAM. The parties acknowledge that the Assigned
Income Stream, or AIS, as such terms are defined in the Purchase Agreement, has
reverted and been assigned to LCS by Meadows pursuant to the LCS/TIC Assignment
(as defined in the Purchase Agreement), and is now the direct obligation of
Meadows to LCS.
2.03. TAXES. The parties acknowledge that nothing herein contained shall
alter Meadow's obligation to pay taxes directly to Company pursuant to Paragraph
4(b) of Amendment No. 9 to the Master Lease.
2.04. PURCHASE AGREEMENT SUPERSEDED. This Agreement shall supersede the
Purchase Agreement in its entirety.
ARTICLE III
GENERAL PROVISIONS
3.01. TERM. This Agreement, and all rights and obligations created
hereunder, other than the obligation of Meadows to pay the sums provided in
Sections 4.02 and 8.02(b), shall terminate on the first of the following to
occur (the "Termination Date"):
(a) March 1, 1997;
(b) The termination of the Master Lease;
(c) The termination of the Sublease for any reason other than the
termination of the Master Lease, and the concurrent commencement of the New
Ground Lease as provided in Subsection 7.01; and
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(d) The termination of this Agreement by Company as provided in Section
8.02(a).
3.02. LCS AGREEMENT. Nothing herein shall have the effect of, nor be
construed as, altering or modifying any of the rights accruing to LCS, or the
obligations of Meadows to LCS, under any other agreement, including, without
limitation, the Sublease and the Master Lease.
3.03. INDEMNITY. Meadows hereby agrees that it shall indemnify, defend and
hold Company harmless from and against any and all claims, losses, damages,
actions, causes of action, costs and expenses, including reasonable attorneys'
fees and costs of collection and defense, incurred by Company with respect to
the failure by Meadows to pay and perform each and every obligation to be
performed by it under this Agreement. In addition, in the event that any person
or entity shall bring an action or actions against Company and/or its past,
present or future shareholders, officers, directors, employees or agents (the
"Indemnified Parties") seeking damages, declaratory relief, injunctive relief or
other remedy at equity or law against the Indemnified Parties on the basis of,
with respect to, or resulting from (i) Company's entry into the Purchase
Agreement, this Agreement and all other agreements and instruments incorporated
herein, (ii) any action or inaction by the Indemnified Parties which is in any
way related to the performance or administration of the Purchase Agreement, this
Agreement and all other agreements and instruments incorporated herein, or (iii)
any action, claim, demand or proceeding initiated by any person or entity with
respect to the Purchase Agreement, this Agreement, any agreements or instruments
incorporated herein, or any rights or interests allegedly affected thereby, then
Meadows shall in each such event defend, indemnify and hold Company harmless
from and against any and all claims, losses, damages, actions, causes of action,
costs and expenses, including reasonable attorneys' fees and costs of defense,
in relation thereto. The defense of any such action shall be by counsel selected
by Company and Meadows shall promptly pay any monetary judgment awarded in any
such action (or provide Company with a bond against such judgment pending
appeal), including attorneys' fees and costs, and any amount agreed to be paid
in settlement of such action. The Indemnified Parties shall promptly notify
Meadows in writing of the service of any such action, shall reasonably cooperate
with Meadows in the defense thereof, and shall not admit liability in such
action or agree to any settlement thereof without the consent or approval of
Meadows, which consent shall not be unreasonably withheld, delayed or
conditioned. The foregoing shall apply to any action of the type described
herein, whether styled as a class action, derivative action or otherwise.
Payment shall not be a condition precedent to recovery by Company upon the
foregoing indemnities. Such indemnities shall survive the termination of this
Agreement.
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ARTICLE IV
PAYMENTS BY MEADOWS
4.01. ANNUAL PAYMENTS. From and after the date hereof, and continuing until
the Termination Date, Meadows shall pay Company One Hundred Fifty Thousand
Dollars ($150,000) per annum, payable quarterly in installments of Thirty Seven
Thousand Five Hundred Dollars ($37,500), in advance, commencing on the first day
of September, 1991; provided however, that the first such quarterly payment
shall include a pro rata portion for the period from October 1, 1990 to December
31, 1991.
4.02. AIS PURCHASE PRICE. In consideration of Company's execution and
delivery of this Agreement, Meadows agrees to pay Company the sum of One Million
One Hundred Twenty Five Thousand Two Hundred Sixty Eight Dollars ($1,125,268),
with interest thereon from the date hereof until paid in full at a rate equal to
the prime rate of interest announced from time to time by Security Pacific
National Bank plus one and one-half percent (1 1/2%) per annum (the "AIS
Purchase Price"). Said sum shall be payable monthly, in arrears, in principal
installments of Eight Thousand Three Hundred Thirty Three Dollars ($8,333),
plus accrued interest, commencing on the first day of October, 1990. The then
outstanding principal balance owing, plus accrued and unpaid interest, shall be
immediately due and payable in full on the earlier to occur of (i) any
assignment of the Sublease, in whole or part, by Meadows (other than an
assignment as security to an Institutional lender providing a loan in connection
with the improvement or operation of the Amphitheater), or (ii) any sale of the
Amphitheater, or any interest therein, by Meadows, or (iii) any sale of Meadows,
or any interest therein, or (iv) February 28, 1997, or (v) the termination of
the Master Lease or the Sublease unless there is a concurrent commencement of
the New Ground Lease as provided in Subsection 7.01.
4.03. GUARANTEE OF PAYMENTS. Concurrently with the execution and delivery
of this Agreement, Donald M. Koll, Irving Azoff and Robert E. Geddes, each the
principal shareholder of a corporate general partner of Meadows, and Paul
Hegness, a general partner in Meadows, agree to execute and deliver to Company a
joint and several guarantee of Meadows obligations under Sections 4.01 and 4.02
hereof in the form attached hereto as Exhibit D.
ARTICLE V
AMPHITHEATER OPERATIONS
5.01. AMPHITHEATER OPERATIONS. Meadows agrees that:
(a) the Amphitheater shall have a fixed seating capacity of no more
than 16,300 seats unless a greater seating capacity is approved by Company
in writing prior to Meadows undertaking any increase in such seating
capacity. In determining whether to grant or withhold
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<PAGE>
such consent, Landlord may consider the effect of such expanded operations
on other property owned by Landlord in the vicinity of the Subleased
Premises;
(b) total ticketed attendance at the Amphitheater shall not exceed
16,300 persons for each performance unless an increase in seating capacity
is approved by Company as aforesaid, in which event the total ticketed
attendance at the Amphitheater shall not exceed the number of fixed seats
as so approved by Company;
(c) performances of any kind at the Amphitheater on any day other than
Friday, Saturday or Sunday evenings or holidays shall commence no earlier
than 8:00 p.m. and will terminate no later than 12:00 midnight. For
purposes of this subpart (c), holidays shall refer to any day when state
and national banks and governmental offices are closed in California;
(d) all operations at the Amphitheater shall at all times comply with
applicable State and local ordinances, laws and regulations, including,
without limitation, all such ordinances, laws and regulations pertaining to
noise, and shall be compatible with adjacent land use designations of
governmental agencies having jurisdiction over such land uses; and
(e) all site plans, grading plans, working drawings and construction
plans for any work to be performed at the Amphitheater, together with all
other approvals as may be required by the Master Lease, shall be submitted
to Company for its approval prior to the commencement of any work on the
Subleased Premises.
5.02. OBTAINING LCS CONSENT. Nothing herein contained shall relieve Meadows
of any obligation it may have to obtain the consent of LCS to any matter in
connection with the operation of the Amphitheater, or any work to be performed
in connection therewith, including, without limitation, the requirement of
obtaining the consent of LCS to any performance at the Amphitheater other than
between the hours of 8:00 p.m. and 12:00 midnight.
5.03. CONTINUING COVENANTS. Each of the covenants contained in the Consent
Agreement (as defined in the Purchase Agreement) shall continue in effect and be
the obligation of Meadows even if Company assumes the rights and obligations of
the sublessor under the Sublease as contemplated in Paragraph 4 of the Consent
Agreement.
5.04. COMPANY ENFORCEMENT OF SUBLEASE. Meadows acknowledges and agrees that
Company shall have the right, but not the obligation, to enforce performance of
the Sublease by Meadows, and such right shall be independent of Meadow's
obligations hereunder. No action by Company to enforce the Sublease shall act to
release, suspend or otherwise affect in any
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<PAGE>
manner the obligations of Meadows to make the payments to Company provided in
Section 4.02 above.
5.05. SIGNAGE. The parties acknowledge that Company is currently providing
two signage locations off the Subleased Premises for identification by Meadows
of Amphitheater attractions. Meadows acknowledges that Company may develop or
otherwise utilize property which it owns in the vicinity of the Subleased
Premises in a manner which makes it necessary or desirable, in Company's sole
judgment, to remove such signs from their present locations. Therefore, from
time to time during the term of this Agreement, and during the term of the New
Ground Lease, Company shall have the right to cause Meadows to relocate such
signage to other locations to be provided by Company, at no cost or expense to
Company. Furthermore, Meadows shall make no changes in the present signs without
first obtaining Company's prior written consent. Any new signs, or signs to be
relocated as aforementioned, shall be subject to Company's prior written
approval as to size, design, location, and esthetics, and Meadows shall be
responsible for obtaining any and all zoning or other land use entitlements
necessary in order to maintain or relocate such signs, at no cost or expense to
Company.
5.06. FENCING AND LANDSCAPING. Company acknowledges that the Subleased
Premises are currently bounded by a chain link fence erected by Meadows, and
that portions of said fence have been screened by landscaping. Meadows hereby
agrees that, from time to time during the term of this Agreement and the New
Ground Lease, in the event Company undertakes the sale, lease or development of
property in the vicinity of the Subleased Premises, Company shall have the right
to require that Meadows plant suitable and adequate additional landscape
screening of said fence in locations where such fence is not currently
landscaped and which are visible from such development on property owned by
Company as of the date hereof; provided, however, that such landscaping shall
not exceed Ten Thousand Dollars ($10,000) unless Company shall agree to pay for
any cost in excess thereof. In addition, in the event Company undertakes the
sale, lease or development of property adjacent to the Subleased Premises,
Company shall have the right to construct fencing or walls between the Subleased
Premises and the adjacent property (such as, block wall, stucco, brick or other
architectural fencing), and, in such event, Meadows agrees to pay Company
one-half (1/2) of the costs and expenses incurred in the design and construction
of such walls or fencing within thirty (30) days following written demand
therefor from Company, accompanied by reasonable supporting documentation for
the costs and expenses incurred by Company; provided, however, that the portion
of the cost of such fencing to be borne by Meadows shall not exceed Twenty-Five
Thousand Dollars ($25,000) unless Company shall agree to pay for any cost in
excess thereof. In connection with the limitation on the cost of both the
landscaping and fencing to be incurred by Meadows pursuant to this Section 5.06,
the aforementioned limits shall be increased annually from the day hereof by any
percentage increase in the Consumer Price Index, All Urban Consumers, All Items,
Los Angeles-Long Beach-Anaheim, California Area, 1982-84 = 100.
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ARTICLE VI
BOOKS AND RECORDS
6.01. RECORDS. Meadows shall keep and maintain, and shall require its
subtenants and concessionaires, if any, to keep and maintain, at the Subleased
Premises, or at such other place as Company may approve in writing, complete and
accurate books of account and records of all trade or business activity
conducted on, at or from the Subleased Premises. Such records shall be kept in
accordance with generally accepted accounting principles (GAAP) consistently
applied and shall include, but not be limited to, all purchases and receipts of
merchandise, services, fees and expenses paid for or on account of performing
artists or acts, inventories, goods, services, and all sales and other
transactions from which Meadows' gross sales, expenditures, and net operating
profit or loss can be determined. Such records shall also include complete
internal accounting controls and written documentation of such internal control
procedures. Meadows agrees to document and record all sales, purchases, loans,
borrowings, and business transactions of any kind, at the time each such
transaction is made. Meadows shall keep all original books and records relating
to transactions taking place in a calendar year for at least three (3) years
following the end of such calendar year. Such records shall include, but not be
limited to, (i) daily dated register tapes, (ii) serially numbered sales slips,
(iii) settlement report sheets of transactions with sublessees, concessionaires,
licensees, and performing acts, (iv) receipts or other records of all leases,
licenses, contracts, documents, and instruments entered into by Meadows with
respect to any activity on the Subleased Premises, (v) duplicate bank deposit
slips and bank statements, (vi) all state and federal sales and occupation tax
returns, and (vii) such other records as would normally be required to be kept
and examined by an independent accountant in accordance with accepted auditing
practices in performing an audit of Meadows' gross sales, and net operating
profit and loss.
6.02. COMPANY INSPECTION RIGHTS. All books, records and documents
maintained by Meadows pursuant to Section 6.01 above shall be available for
inspection and copying by Company at any time during normal business hours.
6.03. REPORTS.
(a) ANNUAL PROJECTIONS. Meadows shall prepare and deliver to Company on or
before March 31 of each calendar year, a pro forma and operating plan for all
activities to be conducted on the Subleased Premises during the then current
calendar year (the "Annual Projection"). The Annual Projection shall set forth
Meadows' analysis of anticipated gross receipts, and net operating profit and
loss for each quarter of the ensuing calendar year.
(b) QUARTERLY UPDATES. On July 31 and October 31 of each year, Meadows
shall submit to Company a revised Annual Projection for the current
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calendar year which shall include actual financial performance, including gross
receipts, and net operating profit or loss through the close of the preceding
calendar quarter.
(c) CLOSING ANNUAL REPORT. On February 28 of each calendar year, Meadows
shall submit a Closing Annual Report of its actual financial performance during
the preceding calendar year which shall show the actual totals of gross
receipts, and net operating profit or loss for that preceding year.
6.04. AUDIT. At any time within three (3) years after receipt of any Annual
Projection, quarterly updates, or Annual Report (a "Report") furnished to it by
Meadows, and upon five (5) days' prior written notice to Meadows, Company may
cause a special audit to be made of Meadows' business affairs and records
relating to the Subleased Premises for the period covered by such Report. The
cost of such audit shall be paid by Company.
ARTICLE VII
NEW LEASE
7.01. AGREEMENT TO ENTER INTO NEW LEASE. Company and Meadows hereby agree
to enter into the New Ground Lease of the Subleased Premises effective the
Termination Date; provided however, that if the Termination Date occurs pursuant
to Section 3.01(c), other than concurrently with termination of the Master
Lease, or Section 3.01(d), this Agreement shall terminate and Company shall have
no obligation to enter into the New Ground Lease, and all rights on Meadows
hereunder shall automatically terminate. The Subleased Premises are referred to
in the New Ground Lease as the "Premises."
7.02. CONDITIONS PRECEDENT.
(a) Company shall have no obligation to enter into the New Ground
Lease at any time Meadows is in default under any material provision of
this Agreement, or any agreement or document incorporated herein by
reference.
(b) Company shall have no obligation to enter into the New Lease
unless and until Meadows shall have either (i) obtained approval of and
filed for record a final subdivision or parcel map (the "Map") creating the
Premises as one or more separate legal lots pursuant to the Subdivision Map
Act of the State of California (Government Code ss.66410-66458.99) (the
"Map Act"), as hereafter supplemented or revised, and the local rules and
regulations promulgated thereunder from time to time, or (ii) obtained an
exception to the Map Act. Company makes no representations or warranties
that the Map and/or other land use approvals and entitlements required in
connection with obtaining the approval and recordation of the Map, can be
obtained by Meadows; provided, however, that Company
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agrees that it will reasonably cooperate with Meadows in the application
for and processing of such Map with the County of Orange in order to record
such Map prior to the Commencement Date of the New Lease. All costs and
expenses incurred or paid by Company from time to time in connection with
the preparation, filing and processing of the Map shall be reimbursed by
Meadows to Company from time to time within thirty (30) days after demand
therefor from Company, accompanied by reasonable supporting documentation
of such costs and expenses.
7.03. PROCEDURE FOR EXECUTING NEW GROUND LEASE. Within five (5) days
following the Termination Date pursuant to Sections 3.01(a), (b), or (c) if such
termination occurs concurrently with termination of the Master Lease, Meadows
shall execute, date and deliver to Company, three copies of the New Ground
Lease, together with (i) all payments which may then be due and payable under
this Agreement through the Termination Date, including, without limitation, the
AIS Purchase Price, and (ii) all payments due and payable under the New Ground
Lease as of the commencement date of the New Ground Lease. Company shall, as
soon as reasonably possible thereafter, execute the three copies of the New
Ground Lease tendered by Meadows and return one fully executed copy to Meadows.
7.04. TERMINATION OF AGREEMENT. In the event of any breach or violation by
Meadows of any provision of this Agreement which is not cured within the time
period specified for such cure in Section 8.01, then Company, in addition to any
other rights or remedies it may have hereunder or by law or equity, shall have
no further obligation hereunder to enter into the New Ground Lease, and
thereafter Company shall have no further liability or responsibility under this
Article VII.
7.05. NO ASSIGNMENT. Meadows may not assign its rights under this Agreement
without the express prior written consent of Company, which consent may be
withheld by Company in its sole discretion. Any such attempted assignment made
in violation of this Section 7.05 shall be null and void.
7.06. PROHIBITION AGAINST RECORDATION. Meadows shall not cause or allow
this Agreement or a short form memorandum or assignment hereof to become of
record in any public office without Company's prior written consent, which
consent may be withheld in Company's sole discretion.
7.07. ACCEPTANCE OF PREMISES. The parties acknowledge that Meadows is
currently in possession of the Subleased Premises, that Meadows has made certain
improvements thereon including the construction of the Amphitheater and related
facilities, and that in the course of such possession and activities Meadows has
become fully familiar with the condition of the Subleased Premises. Meadows has
made such investigation of title to the Subleased Premises as it deems
appropriate and has entered into this Agreement without representation or
warranty as to title as of the date hereof or any subsequent date. Meadows
acknowledges that Company has retained in the Master Lease the right to convey
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easements and other interests in the Subleased Premises for the term of the
Master Lease and enters into this Agreement subject to all such easements and
interests which Company may reasonably grant during the remaining term of the
Master Lease, and all such other conditions as may be contained in the Master
Lease. Meadows shall take its leasehold interest in the Subleased Premises
subject to matters then of record or apparent. Meadows acknowledges and agrees
that except as expressly provided in this Agreement or the New Ground Lease, (i)
Meadows has satisfied itself as to the condition of the Subleased Premises and
its suitability for the purposes intended by Meadows (including, but not limited
to, soil and geological conditions, drainage, acreage, topography, climate, air,
mineral or water rights, access, grading or other site work, utilities, title
condition, private or governmental use restrictions, present or future zoning,
subdivision, coastal or environmental regulations, or the necessity or
availability of any governmental approvals for the sale, use or development of
the Subleased Premises or any litigation or other formal controversy concerning
any or all of the above); (ii) that Meadows will lease the Subleased Premises
"AS IS," in its then present state and condition; and (iii) that Meadows will
rely solely upon its own inspection and investigations and not upon any
representation, warranty, statement, study, report, description, guideline or
other information or material made or furnished by Company or its
representatives, whether written or oral, express or implied, of any nature
whatsoever regarding any of the foregoing matters.
7.08. GOVERNMENTAL PERMITS. So long as Meadows is not in breach of any
provision of this Agreement, it may elect at any time and at its sole cost and
expense to apply for and obtain any or all approvals required from the
applicable governmental authorities having jurisdiction, for the purpose of
developing the Subleased Premises for purposes permitted by the Sublease or the
New Ground Lease. Prior to submitting any applications, proposals, plans,
exhibits, maps, reports, requests, questionnaires, responses or other documents
(collectively, the "Documents") to any governmental agency, Meadows shall first
obtain Company's prior written approval in concept of all development proposals
for the Subleased Premises contemplated under such Documents and thereafter
shall submit to Company copies of all such Documents for the review and
information of the Company. Company shall be deemed to have given its approval
in concept of all such matters unless it shall give Meadows written notice
within thirty (30) days after receipt thereof specifying in reasonable detail
each item which Company disapproves.
ARTICLE VIII
DEFAULTS AND REMEDIES
8.01. DEFAULTS. The occurrence and subsequent failure to cure within the
specified cure period, if any, of any one or more of the following events shall
constitute an event of default under this Agreement:
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(a) The failure of Meadows to submit any Annual Projection, quarterly
update or closing annual report as required by Section 6.03 when due, provided
that Company shall give Meadows ten (10) days' prior written notice of such
failure before taking any remedy for such default.
(b) The failure of Meadows to pay any amount as required by this Agreement,
within ten (10) days after written notice by Company to Meadows of such failure.
(c) The breach of any representation or warranty made herein by Meadows or
any person executing this Agreement on behalf of Meadows without any requirement
of cure period or the giving of notice of default prior to Company seeking a
remedy therefor.
(d) The failure of Meadows to observe or perform any term, covenant,
promise or agreement on its part to be observed or performed under this
Agreement, the Sublease or any other document, instrument or agreement
incorporated herein by reference, other than a default as specified in (a), (b)
or (c) above, which failure shall continue for a period of thirty (30) days
after written notice thereof from Company to Meadows; provided, however, that if
the nature of Meadows' default is such that more than thirty (30) days are
reasonably required for its cure, then Meadows shall not be deemed in default if
Meadows shall commence such cure within such thirty (30) day period and
thereafter diligently prosecute such cure to completion.
(e) (i) The making by Meadows of any general assignment for the benefit of
creditors; (ii) the filing by or against Meadows of a petition to have Meadows
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Meadows, the same is dismissed within ninety (90) days); (iii) the appointment
of a trustee or receiver to take possession of substantially all of Meadows'
assets located at the Subleased Premises or of tenant's interest in the Sublease
or this Agreement, where possession is not restored to Meadows within thirty
(30) days; (iv) the attachment, execution or other Judicial seizure of
substantially all of Meadows' assets located at the Subleased Premises or of
Meadows' interest in the Sublease or this Agreement whether such seizure is not
discharged within ninety (90) days; or (v) Meadows' convening of a meeting of
its creditors or any class thereof for the purpose of effecting a moratorium
upon or composition of its debts.
8.02. REMEDIES.
(a) Upon any event of default as defined in Section 8.01 above, Company
may, in addition to the exercise of any remedy available to it at law or equity:
(i) terminate this Agreement in the manner provided in Section 7.05; (ii)
terminate the Sublease if Company is the Sublessor at the time of default, or
if notice of default is required hereunder, at the time such notice of default
is given; and (iv) take any other action or remedy as provided elsewhere in this
Agreement.
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(b) An termination of this Agreement shall not relieve Meadows from payment
of any sum due and owing pursuant to Section 4.02, and the remaining balance of
such AIS Purchase Price shall be immediately due and payable by Meadows to
Company. Any termination of this Agreement shall not relieve Meadows from any
claim for damages accruing against Meadows under this Agreement, and any such
termination shall not prevent Company from enforcing the payment of any such
claim for damages by any remedy provided for by law, or from recovering damages
from Meadows for any default hereunder. All rights and remedies of Company
contained in this Agreement shall be construed to any cumulative, and no one of
them shall be exclusive of the other, and Company shall have the right to pursue
any one or all of such remedies or any other remedy or relief which may be
provided by law, whether or not stated in this Agreement. No waiver by Company
of a breach of any of the covenants, conditions or restrictions of this
Agreement shall be construed or held to be a waiver of any succeeding or
preceding breach of the same or any other covenant, condition or restriction
herein contained.
ARTICLE IX
OFFSITE IMPROVEMENTS
9.01. OFFSITE IMPROVEMENTS. The parties acknowledge and agree that all
Offsite Improvements (as defined in the Purchase Agreement) have been completed
and the costs thereof allocated and paid by Meadows and Company in accordance
with the Purchase Agreement.
ARTICLE X
ASSIGNMENT AND HYPOTHECATION
10.1. HYPOTHECATION.
(a) Notwithstanding any other provision of this Agreement to the contrary,
Meadows shall have the right, subject to Company's written consent, which
consent shall not be unreasonably withheld, to execute, acknowledge and deliver
an assignment, mortgage, deed of trust or other instrument hypothecating all or
any portion of its interest In this Agreement to secure any bona fide loan or
loans to Meadows; provided, however, that any such encumbrance shall be subject
and subordinate to all of Company's rights, title and interest in and to the
Subleased Premises and Company's rights under this Agreement. Any such mortgage
or deed of trust or assignment shill specifically provide: (i) that in the event
of a default by Meadows thereunder, Company shall have the right at its option
(but shall not be required) to cure such default; and (ii) that no action shall
be taken by the lender to foreclose upon any such mortgage, deed of trust or
assignment until at least thirty (30) days after such lender shall have notified
Company in writing of any default by Meadows at the address specified herein for
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notices or otherwise designated by Company to said lender. The rights of any
such encumbrancer shall be subject to all of the terms and provisions of this
Agreement (as the same may be amended from time to time). The making of any such
encumbrance shall not relieve Meadows of any obligation or liability hereunder
and shall not render any such encumbrancer liable to perform or satisfy any of
the terms or provisions of this Agreement unless such encumbrancer acquires, by
foreclosure or otherwise, Meadows' interest hereunder, in which case it shall be
liable for the performance of the terms and provisions hereof to be performed by
Meadows during the term of this Agreement, including, without limitation, the
payment of interest as provided herein on any sums that are required to be paid
by Meadows under this Agreement. Any purchaser of Meadows' interest hereunder
upon foreclosure or under power of sale shall succeed to the rights of Meadows
hereunder, including possession of the Subleased Premises, and shall be liable
for the performance of the terms and provisions hereof to be performed by
Meadows during the term of this Agreement. Meadows shall furnish Company at the
time of such encumbrance a complete copy of all documents and agreements
evidencing such encumbrance or executed in connection therewith.
(b) Company shall not have any obligation to deliver to Meadows'
encumbrancer any notices delivered by Company hereunder unless and until Company
shall receive a request for such notices from the encumbrancer together with the
encumbrancer's address for notices.
10.02. ASSIGNMENT.
(a) Except as provided in Section 10.01, Meadows shall not either
voluntarily or involuntarily, by operation of law, under legal process, through
receivership or bankruptcy, or otherwise in any manner assign, sell, encumber,
pledge or otherwise transfer all or any part of Meadows' interests
(collectively, "Assignment") under this Agreement without Company's prior
written consent in each instance, which consent may be withheld by Company in
its sole discretion without reference to any objective standard or any standard
of good faith or fair dealing applied to the facts and circumstances of any
withholding of consent by Company, it being the express understanding of the
parties that the identity of Meadows and its principals is a material and
determining factor in Company's willingness to enter this Agreement and that
Company would not enter this Agreement but for Meadows' agreement to limit
assignments as herein provided. The hypothecation, sale, assignment or other
transfer (whether voluntary or involuntary, by operation of law, under legal
process, through receivership or bankruptcy, or otherwise in any manner) of (i)
any partnership interests in Meadows in the aggregate in excess of twenty-five
percent (25%), or (ii) any portion of the partnership interest of Audrey & Jane,
Inc, a California corporation, IMA Investment Corporation, a California
Corporation, Shelli Meadows, Inc., a California corporation, or Paul Hegness in
Meadows, or (iii) any interest of Donald M. Koll in IMA Investment Corporation,
or Irving Azoff in Shelli Meadows, Inc., or Robert E. Geddes in Audrey & Jane,
Inc., shall be deemed an Assignment within the meaning of this Section 10.02.
Meadows hereby represents and warrants that the copies of its partnership
agreement previously delivered to Company are true,
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correct and complete copies and accurately reflect the partnership interests of
each partner therein. Meadows agrees to reimburse Company for Company's
reasonable costs and attorneys' fees incurred in connection with the processing
and documentation of any requested assignment, transfer, or hypothecation of
this Agreement or Meadows' interests hereunder. Any attempted assignment made
in violation of this Section 10.02 shall be null and void, it being the intent
of the parties that Meadows shall have nether the right nor the power to make an
assignment in violation of this Section.
(b) If the above limitation on Meadows' right to assign any interest
hereunder is declared or rendered unenforceable or invalid for any reason or to
any extent, then the parties agree that Paragraph 5(b)(i) of the New Ground
Lease shall be amended to provide for the payment of Percentage Rent in the
amount, if any, by which fifteen percent (15%) Of Tenant's Gross Sales during a
Lease Year exceeds the Minimum Rent paid by Tenant for such period.
ARTICLE XI
MISCELLANEOUS
11.01. SEPARABILITY. Any provision of this Agreement which shall prove to
be invalid, void or illegal shall In no way affect, impair or invalidate any
other provision hereof, and such remaining provisions shall remain in full force
and effect.
11.02. LATE PAYMENTS. Except as otherwise specifically provided in this
Agreement, any amount due from Meadows to Company hereunder which is not paid to
Company when due shall bear Interest at the lesser of 18% per annum or the
maximum rate of interest then permitted by applicable usury law, accruing from
the date due until the same is fully paid. Payment of such interest shall not
excuse or cure any default by Meadows.
11.03. TRIAL WITHOUT JURY.
MEADOWS AND COMPANY EACH ACKNOWLEDGE THAT IT HAS HAD THE ADVICE OF COUNSEL
OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY UNDER THE
CONSTITUTIONS OF THE UNITED STATES AND THE STATE OF CALIFORNIA. EACH PARTY
EXPRESSLY AND KNOWINGLY WAIVES AND RELEASES ALL SUCH RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE
OTHER ON ANY MATTERS ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT
AND/OR ANY CLAIM OF INJURY OR DAMAGE.
/s/ [ILLEGIBLE]
- -------------------------------- ---------------------------------
Meadow's Initials Company's Initials
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11.04. TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Agreement in which time of performance is
a factor.
11.05. HEADINGS. The article and section captions contained in this
Agreement are for convenience only and shall not be considered in the
construction and interpretation of any provision hereof.
11.06. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Agreement and
the Exhibits hereto contain all of the agreements of the parties hereto with
respect to any matter covered or mentioned in this Agreement, and all
preliminary negotiations, agreements or understandings pertaining to any such
matter, except those contained herein, shall not be effective for any purpose.
Meadows acknowledges that Company has made no representations, promises or
guarantees, either by verbal statement or by its conduct, upon which Meadows has
relied except for those that are expressly contained in this Agreement or in any
exhibit attached hereto. No person, firm or corporation has at any time had any
authority from Company to make any representations on behalf of Company. No
verbal agreement or implied covenant shall be held to vary the provisions
hereof, any statute, law or custom to the contrary notwithstanding. No provision
of this Agreement may be amended or added to except by an agreement in writing
signed by the parties hereto or their respective successors in interest.
11.07. NOTICES. Any notice, consent or approval ("notice") required or
permitted to be given hereunder shall be in writing and may be served personally
or by mail. If served by mail it shall be addressed to Meadows or Company, as
the case may be, as follows:
To Company: Irvine Industrial Company
c/o The Irvine Company
550 Newport Center Drive
Newport Beach, CA 92660
Attn: Vice President-Operations
With copy to: The Irvine Company
2 Park Plaza
Irvine, California
Attn: General Counsel
and: O'Melveny & Myers
Suite 1700
610 Newport Center Drive
Newport Beach, CA 92660
Attn: Lowell C. Martindale, Jr.
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To Meadows: Irvine Meadows Amphitheater
c/o The Koll Company
4343 Von Karman Avenue
Newport Beach, CA 92660
Attn: Mr. Syd Buck
With copy to: Audrey & Jane, Inc.
c/o Robert E. Geddes
Suite 206
17835 Venture Boulevard
Encino, CA 91336
Shelli Meadows, Inc.
c/o Irving Azoff
Suite 205
345 No. Maple Drive
Beverly Hills, CA 90210
Paul C. Hegness
Good, Wildman, Hegness & Walley
5000 Campus Drive
Newport Beach, CA 92660
Any notice which is personally served shall be effective upon service; any
notice given by mail shall be deemed effectively given three (3) days after
deposit in the United States mail, registered or certified, postage prepaid and
addressed as specified above. Either party may by written notice to the other
from time to time specify a different address for notice purposes.
11.08. BROKERS. Meadow warrants that it has had no dealings with any real
estate broker or agent in connection with the negotiation of this Agreement or
the Option contained herein, and hereby expressly agrees and covenants to hold
Company harmless and to defend Company from any claims, threatened or asserted,
by any broker, finder or agent claiming under or through Meadows in connection
with the negotiation and execution of this Agreement.
11.09. WAIVERS. No waiver of any provision of this Agreement shall be
deemed to be a waiver of any other provision hereof. Consent to or approval of
any act by one of the parties hereto shall not be deemed to render unnecessary
the obtaining of such party's consent to or approval of any subsequent act.
11.10. LIENS.
(a) Meadows shall do all things reasonably necessary to prevent the filing
of any mechanics' or other liens against the Subleased Premises or any part
thereof by reason of work, labor, services or materials supplied or claimed to
have been supplied to Meadows, or anyone holding the Subleased Premises, or any
part thereof, through or under Meadows. If any such lien shall at any time be
filed
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against the Subleased Premises, Meadows shall either cause the same to be
discharged of record within twenty (20) days after the date of filing of the
same or, if Meadows in its discretion and in good faith determines that such
lien should be contested, shall furnish such security as may be necessary or
required to (i) prevent any foreclosure proceedings against the Subleased
Premises during the pendency of such contest, and (ii) cause Ticor Title
Insurance Company or other mutually satisfactory title company to remove such
lien as a matter affecting title to the Subleased Premises on a preliminary
title report or title policy issued with respect to the Subleased Premises.
(b) Nothing contained herein shall imply any consent or agreement on the
part of Company to subject Company's estate to liability under any mechanics' or
other lien law. Meadows shall give Company adequate opportunity and Company
shall have the right to post such notices of non-responsibility as are provided
for in the mechanics' lien laws of California.
11.12. SUBORDINATION. This Agreement may, at Company's option, be
subordinate to any mortgage or deed of trust that may exist or hereafter be
placed upon the Subleased Premises or any part thereof and to any and all
advances to be made thereunder and to the interest thereon and to all renewals,
replacements and extensions thereof. Meadows shall, upon written demand by
Company, execute such instruments as may be required at any time and from time
to time to subordinate the rights and interests of Meadows under this Agreement
to the lien of any such mortgage or deed of trust, or if requested by Company,
to subordinate any such mortgage or deed of trust to this Agreement; provided,
however, that Meadows shall, in the event any proceedings are brought for the
foreclosure of any such mortgage or deed of trust, attorn to the purchaser upon
foreclosure sale or sale under power of sale, and shall recognize said purchaser
as the holder of Company's interests under this Agreement, and so long as
Meadows is not in default hereunder, such foreclosure shall not terminate this
Agreement or otherwise affect Meadows' rights hereunder. Upon the written
request of Meadows, Company shall use its best efforts to obtain from any such
encumbrancer an instrument in form reasonably required by such encumbrancer in
recordable form providing that so long as Meadows is not in default hereunder,
no foreclosure, sale under power of sale or deed in lieu of foreclosure under
such encumbrance shall terminate this Agreement or otherwise affect Meadows'
rights hereunder.
11.13. FORCE MAJEURE. Each party hereto shall be excused from performing
any of its respective obligations or undertakings provided in this Agreement for
so long as the performance of such obligation is prevented or delayed by an act
of God, fire, earthquake, flood, explosion, extraordinary actions of the
elements, war, invasion, insurrection, riot, mob violence, sabotage, general
shortage of materials in the open market, failure of transportation, strike or
lockout. The foregoing shall not, however, apply to any obligation of either
party to pay money under any provision of this Agreement.
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11.14. PARTNERSHIP AUTHORITY. Each individual executing this Agreement on
behalf of Meadows represents and warrants that the execution and delivery of
this Agreement on behalf of Meadows is duly authorized, is in accordance with
its partnership agreement and that this Agreement is binding upon Meadows in
accordance with its terms.
11.15. SAFETY AND HEALTH. Meadows covenants at all times during the term of
this Agreement to comply with the requirements of the Occupational Safety and
Health Act of 1970, 29 U.S.C. Section 651 et seq. and any analogous legislation
in California (collectively, the "Act"), to the extent that the Act applies to
the Subleased Premises and any activities thereon. Without limiting the
generality of the foregoing, Meadows covenants to maintain all working areas,
all machinery, structures, electrical facilities and the like upon the Subleased
Premises in a condition that fully complies with the requirements of the Act,
including such requirements as would be applicable with respect to agents,
employees or contractors of Company who may from time to time be present upon
the Subleased Premises. Meadows agrees to defend, indemnify and hold harmless
Company from any liabilities, claims or damages arising as a result of a breach
of the foregoing covenant and from all costs, expenses and charges arising
therefrom including, without limitation, attorneys' fees and court costs
incurred by Company in connection therewith.
11.16. HAZARDOUS MATERIALS. Meadows shall not engage in any activity on or
about the Subleased Premises that violates any environmental law, and shall
promptly, at Meadow's sole cost and expense, take all investigatory and/or
remedial action required or ordered by any governmental agency or environmental
law for clean-up and removal of any contamination involving any hazardous
materials created or caused directly or indirectly by Meadows. The term
"environmental law" shall mean any federal, state or local law, statute,
ordinance or regulation pertaining to health, industrial hygiene or the
environmental conditions on, under or about the Subleased Premises, including,
without limitation, (i) the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA"), 42 U.S.C., ss.9601 et seq.; (ii) the
Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C., ss.6901 et
seq.; (iii) California Health and Safety Code, ss.25100 et seq.; (iv) The Safe
Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety
Code, ss.25249.5 et seq.; (v) the Federal Water Pollution Control Act, 33
U.S.C., ss.1317 et seq.; (vi) California Water Code, ss.1300 et seq.; and
(vii) California Civil Code, ss.3479 et seq., as such laws are amended, and
the regulations and administrative codes applicable thereto. The term "hazardous
materials" includes, without limitation, any material or substance which is (i)
defined or listed as a "hazardous waste or "hazardous substance" or considered a
waste, condition of pollution or nuisance under the environmental laws; (ii)
petroleum or a petroleum product or fraction thereof; (iii) asbestos; and/or
(iv) substances declared by the State of California to cause cancer and/or
reproductive toxicity. It is the intent of the parties hereto to construe the
terms "hazardous materials" and "environmental laws" in their broadest sense.
Meadows shall provide all notices required pursuant to the Safe
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Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety
Code, ss.25249.5 et seq.
11.17. ENVIRONMENTAL INDEMNIFICATION. Meadows hereby agrees to indemnify,
protect, defend (with attorneys acceptable to Company), and hold harmless
Company, and any successors to all or any portion of Company's interest in the
Subleased Premises, and their respective directors, officers, partners,
employees, agents, representatives, affiliates, subsidiaries, and lenders, from
and against any and all liabilities, losses, damages (including, without
limitation, damages for loss or restriction on use of the Subleased Premises or
any improvements constructed thereon, and damages arising from any adverse
impact on marketing of the Subleased Premises, or any improvements thereon or
any space within such improvements, and diminution in the value of the Subleased
Premises, or any improvements located thereon), judgments, fines, demands,
claims, recoveries, deficiencies, costs and expenses (including, without
limitation, reasonable attorney's' fees, disbursements and charges, court costs
and other professional or consultant fees, charges and expenses), whether
foreseeable or unforeseeable, arising directly or indirectly out of the
presence, use, generation, storage, treatment, on or off site disposal or
transportation of hazardous or toxic materials, substances or wastes on, into,
from, under or about the Subleased Premises by Meadows, its agents, employees,
contractors, licensees or invitees, and specifically including the cost and
expense of any required, necessary or desirable repair, restoration, clean-up
(including, without limitation, the costs of investigation, study and removal of
such materials, substances or wastes), or detoxification of the Subleased
Premises, or any improvements located thereon, and the preparation of any
closure or other required plans, whether or not such action is required,
necessary or desirable during the term of this Agreement or after expiration
thereof, except to the extent (i) caused by the active negligence or willful
misconduct of Company, (ii) caused by the migration of such materials,
substances or wastes onto or under the Subleased Premises from off site
locations, or (iii) exist on the Subleased Premises as of the Original
commencement date of the Sublease.
11.18. SURVIVAL OF INDEMNITIES. The obligations of the indemnifying party
under each and every indemnification and hold harmless provision contained in
this Agreement shall survive the expiration or earlier termination of this
Agreement to and until the last to occur of (a) the last date permitted by law
for the bringing of any claim or action with respect to which indemnification
may be claimed by the indemnified party against the indemnifying party under
such provision or (b) the date on which any claim or action for which
indemnification may be claimed under such provision is fully and finally
resolved and, if applicable, any compromise thereof or judgment or award thereon
is paid in full by we indemnifying party and the indemnified party is reimbursed
by the indemnifying party for any amounts paid by the indemnifying party in
compromise thereof or upon a judgment or award thereon and in defense of such
action or claim, including reasonable attorneys' fees incurred.
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11.19. ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement or any document, instrument or agreement
incorporated herein by reference, or to seek damages for the breach of any
provision thereof, or where any provision of this Agreement is validly asserted
as a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
11.20. NO PARTNERSHIP. Nothing contained in this Agreement is intended to
be, nor shall it be construed to be, the formation of a partnership or joint
venture between Company and Meadows.
11.21. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together constitute one and the same instrument.
11.22. CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
11.23. PAYMENT OF COSTS. Concurrently with the execution hereof, Meadows
agrees to pay Company a sum equal to Company's attorneys' fees and charges
incurred in connection with the preparation and negotiation of this Agreement.
20
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
IRVINE MEADOWS, THE IRVINE COMPANY,
a California general partnership a Michigan corporation
By: IMA Investment Corporation, By:
a California corporation --------------------------------
General Partner Richard G. Sim
Vice President
By: /s/ Donald M. Koll By:
------------------------ --------------------------------
Donald M. Koll Robert E. Williams, Jr.
President Assistant Secretary
By: Audrey & Jane, Inc.,
a California corporation
General Partner
By: /s/ Robert E. Geddes
------------------------
Robert E. Geddes
President
By: Shelli Meadows, Inc.,
a California corporation
General Partner
By: /s/ Irving Azoff
------------------------
Irving Azoff
President
By: /s/ Paul C. Hegness
----------------------------------
Paul C. Hegness
General Partner
21
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
"EXCLUSIVE AREA"
----------
A portion of Block 157 of the Irvine Subdivision per map filed in Book 1, Page
88 of Miscellaneous Record Maps of Orange County, California, also being a
portion of Parcel 2 of Parcel Map filed in Parcel Map Book 102, pages 30 and 31
of Parcel Maps of Orange County, being described as follows:
Beginning at the most easterly corner of said Parcel 2, said point also being on
the existing right-of-way of Irvine Center Drive; thence along said Parcel's
southeasterly boundary line South 40(degrees) 37' 51" West 1413.02 feet to the
True Point of Beginning; thence along the following courses and distances:
North 42(degrees) 59' 03" West 584.64 feet;
South 48(degrees) 58' 37" West 574.67 feet;
North 42(degrees) 54' 20" West 134.68 feet;
North 61(degrees) 19' 01" West 229.44 feet;
North 64(degrees) 24' 06" West 151.07 feet;
North 46(degrees) 55' 41" West 81.73 feet;
North 34(degrees) 57' 58" West 147.20 feet;
North 75(degrees) 05' 05" West 480.32 feet;
South 02(degrees) 12' 32" West 282.77 feet;
South 42(degrees) 12' 16" East 1073.44 feet;
to the beginning of a curve being concave to the southwest and having a radius
of 1450 feet, a radial to said point bears North 26(degrees) 20' 41" East;
thence along the arc of said curve through a central angle of 21(degrees) 03'
20" a distance of 532.86 feet; thence South 42(degrees) 35' 59" East 56.46 feet
to the southeasterly boundary line of said Parcel 2; thence along said line
North 40(degrees) 37' 51" East 1070.75 feet to the True Point of Beginning.
Said property contains 27.73 acres.
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EXHIBIT A
To Amended And Restated Agreement Re Ground Lease
Page l of 2
<PAGE>
LEGAL DESCRIPTION
"COMMON AREA"
----------
A portion of Block 157 of the Irvine Subdivision per map filed in Book 1, Page
88 of Miscellaneous Record Maps of Orange County, California, also being a
portion of Parcel 2 of Parcel Map filed in Parcel Map Book 102, pages 30 and 31
of Parcel Maps of Orange County, being described as and bounded by the following
courses:
Beginning at the most easterly corner of said Parcel 2, said point also being on
the existing westerly right-of-way of Irvine Center Drive; thence
North 24(degrees) 49' 27" West 392.61 feet;
South 13(degrees) 09' 39" Last 158.21 feet;
to the beginning of a curve concave westerly and having a radius of 110.00 feet;
thence &lons the are of said curve through a central angle 600 45' 23" a
distance of 116.64 feet; thence South 47(degrees) 35' 44" West 175.24 feet, to
the beginning of a curve concave Northerly having a radius of 85.00 feet thence
along the arc of said curve through a central angle of 112(degrees) 29' 09" a
distance of 166.88 feet; thence North 19(degrees) 55' 07" West 726.21 feet;
thence
South 70(degrees) 04' 53" West 239.09 feet;
North 43(degrees) 01' 39" West 527.07 feet;
South 47(degrees) 04' 52" West 855.98 feet;
South 42(degrees) 55' 08" East 225.75 feet;
South 24(degrees) 51' 44" East 986.12 feet;
South 42(degrees) 59' 03" East 584.64 feet to
the southeast boundary line of said Parcel 2; thence along said line North
40(degrees) 37' 51" East 1413.02 feet to the Point of Beginning.
Said property is the lease ground known as the "Common Area" and contains 42.62
acres.
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EXHIBIT A
To Amended And Restated Agreement Re Ground Lease
Page 2 of 2
<PAGE>
EXHIBIT C
GROUND LEASE
by and between
THE IRVINE COMPANY
as Landlord
and
IRVINE MEADOWS
as Tenant
_____________, 199__
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EXHIBIT C
To Amended And Restated Agreement Re Ground Lease
<PAGE>
GROUND LEASE
SUMMARY OF BASIC LEASE PROVISIONS
1. PREMISES: A portion of Block 157 in the Irvine
Subdivision, County of Orange, State of
California, commonly known as the "Irvine
Meadows Amphitheater" and more particularly
described and depicted in Exhibit A and
Exhibit B of this Ground Lease.
2. USE OF PREMISES: Occupancy and operation of an amphitheater
under the trade name "Irvine Meadows
Amphitheater" for the purposes of presenting
musical and other entertainment events,
together with related concession food and
beverage services (including sale of
alcoholic beverages), and the sale of
merchandise associated with use of the
amphitheater.
3. LEASE TERM: Twenty (20) years or 240 months, plus any
period between the Commencement Date and
March 1, 1997.
4. COMMENCEMENT DATE: __________________________(determined in
accordance with Section 7.01 of the Amended
and Restated Agreement re Ground Lease dated
October 1, 1991)
5. EXPIRATION DATE: February 28, 2017
6. MINIMUM RENT: $58,333.33 per month payable in advance on
the first day of each month, except for any
period from the Commencement Date to March
1, 1997 when the rent shall be five percent
(5%) of Ticket Sales.
7. PERCENTAGE RENT: From and after March 1, 1997, to the extent
greater than Minimum Rent, the greater of
(a) five percent (5%) of Gross Sales from
Amphitheater operations (including ticket
sales, parking, food and beverage sales, and
merchandise sales); or
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(b) twenty-five percent (25%) of Net
Cash Flow from all Amphitheater
operations computed before debt
service or ground rent.
8. RENTAL ADJUSTMENT: Minimum Rent adjusted each five (5) years,
commencing with the first such adjustment on
March 1, 2002 for the immediately preceding
five (5) year period, to reflect CPI
increases or decreases, subject to an annual
floor of 3% and an annual ceiling of 5%.
9. PREMISES SIZE: 70.35 acres total
Exclusive Area: 27.73 acres
Common Area: 42.62 acres
10. BROKERS: None
11. ADDRESS FOR PAYMENTS AND NOTICES:
Irvine Industrial Company
c/o THE IRVINE COMPANY
550 Newport Center Drive
P.O. Box 1
Newport Beach, CA 92663
Attention: Vice President-Operations
Irvine Industrial Company
c/o THE IRVINE COMPANY
P.O. Box 1
Newport Beach, CA 92663
Attention: General Counsel
In the event of any conflict or ambiguity between this Summary of Basic Lease
Provisions and the Ground Lease to which it is attached, the provisions of the
Ground Lease shall govern.
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<PAGE>
GROUND LEASE
This GROUND LEASE (the "Lease") is made this ______ day of __________,
199__, between THE IRVINE COMPANY, a Michigan corporation ("Landlord"), and
IRVINE MEADOWS, a California general partnership ("Tenant"). Landlord hereby
leases to Tenant and Tenant hereby rents from Landlord the following described
premises (the "Premises"), subject to all matters of record or apparent, upon
the following terms and conditions.
1. LEASED PREMISES.
(a) For and in consideration of the rents to be paid and the covenants
and conditions to be kept and performed by Tenant, Landlord leases to
Tenant, and Tenant hires from Landlord, that certain real property
described in Exhibit A and depicted on Exhibit B, each attached hereto and
incorporated herein by this reference (said real property and all
improvements from time to time constructed thereon being hereinafter
referred to as the "Premises"). The Premises totals approximately 70.35 net
acres and is composed of two portions designated in Exhibit A and B as the
"Exclusive Area" (approximately 27.73 acres) and the "Common Area"
(approximately 42.62 acres).
(b) Tenant's right, title and interest in the Common Area shall
consist of the right to use said portion Of the Premises for the sole
purpose of (i) providing to Tenant and its customers, licensees and
business invitees vehicular and pedestrian ingress to and egress from the
parking area over the existing driveway from Irvine Center Drive, (ii)
establishing, maintaining and operating parking toll booths for the
collection of fees charged by Tenant to its customers, licensees and
business invitees for use of the parking area, and (iii) use of the
existing parking area. Tenant shall have no right to charge any fee to any
person utilizing the driveway or parking area other than in connection
with the Amphitheater, and shall have no right to charge any fee to any
customer, licensee or business invitee of any person or entity to which
Landlord has or will in the future grant any right or license to
non-exclusive use of the Common Area.
(c) Tenant acknowledges that Landlord has granted and conveyed to The
Splash, a California limited partnership, certain non-exclusive rights to
use portions of the Common Area for parking, ingress and egress in
connection with the operation of a water theme amusement park, and that
such right and license in not inconsistent with the rights granted Tenant
herein.
2. RESERVATIONS. Landlord hereby reserves the following interests in
the Premises:
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<PAGE>
(a) Nonexclusive easements on, over, under or across those portions of
the Premises not improved with buildings or other structures in existence
on the date of this Lease or thereafter constructed in conformity with site
plans duly submitted by Tenant and approved by Landlord as provided herein,
for the installation, emplacement and maintenance of electric, gas,
telephone, data transmission, cable television, water, sanitary sewer
lines, drainage facilities or any other utilities, together with the right
to enter upon the Premises (without unreasonably interfering with Tenant's
reasonable use and enjoyment thereof) in order to service, maintain,
repair, reconstruct, relocate or replace any of such utilities, lines or
other facilities.
(b) Nonexclusive easements on, over, under or across the Premises
within twenty (20) feet from all property lines bordering on and parallel
to any public or private street for the installation, emplacement,
replacement, repair, operation and maintenance of any such utilities, lines
or other facilities.
(c) Landlord reserves the right to grant and convey to other persons
or entities non-exclusive easements or licenses for use of the Common Area
for parking and ingress to and egress from the parking area from Irvine
Center Drive; provided, however, that no right or license shall be granted
to any other person or entity by Landlord which is inconsistent with the
rights granted to Tenant herein.
3. TERM. As used in this Lease the word "term" shall mean the entire
period of time this Lease is in effect, including, but not limited to, any
permitted or agreed extension of the original term of the Lease. The term of
this Lease shall commence on the Commencement Date as set forth in Item 4 of the
Basic Lease Provisions, and end on the Expiration Date, subject, however, to
earlier termination as provided in this Lease. The parties shall execute and
Landlord shall record a Ground Lease (Short Form Memorandum) in the form
attached hereto as Exhibit C or a substantially similar form as is in common use
by Landlord at the time of the Commencement Date.
4. COMMENCEMENT OF RENTAL AND TAXES. Tenant's obligation for the
payment of rental as set forth in Paragraph 5 below, and taxes as provided in
Article 3 of the General Conditions to Ground Lease attached hereto and made a
part hereof (the "General Conditions"), and all other payments required
hereunder, shall commence on the Commencement Date.
5. RENTAL. Tenant agrees to pay (in lawful money of the United States
of America) to Landlord at the address set forth in the Summary of Basic Lease
Provisions (or to such other person or entity, or at such other place, as may
from time to time be designated by Landlord in writing), without deduction or
offset and without prior demand therefore, at the times and in the manner as
hereinafter
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<PAGE>
provided, as rental for the use and occupancy of the Premises during the term of
this Lease, the following sums:
(a) MINIMUM RENT.
(i) Amount. From and after the Commencement Date until February
28, 1997, Minimum Rent shall be five percent (5%) of Ticket Sales (defined
below), payable on or before the fifteenth (15th) day following each calendar
month during said period. From and after March 1,1997 for the balance of the
Lease Term, Tenant shall pay to Landlord, in advance, for each month during the
Lease term as "Minimum Rent' the sum of Fifty-Eight Thousand Three Hundred
Thirty-Three and 33/100 Dollars ($58,333.33).
(ii) Payment. Minimum Rent shall be payable on or before the
first day of each calendar month. Minimum Rent for any fractional part of a
calendar month at the beginning or end of the Lease term shall be a
proportionate part of the Minimum Rent for a full calendar month and shall be
payable, with respect to any fractional month at the beginning of the term, upon
execution of this Lease by Tenant and, with respect to any fractional month at
the end of the term, upon the first day of such month.
(b) PERCENTAGE RENT.
(i) Amount. In addition to the Minimum Rent, from and after March
1, 1997 Tenant shall pay to Landlord, for each calendar year or partial calendar
year during the Lease Term, as "Percentage Rent", the amount, if any, by which
the greater of the following exceeds Minimum Rent paid by Tenant during such
period:
(A) Five percent (5%) of Tenant's Gross Sales (as
hereinafter defined) ("Gross Sales Participation"); or
(B) Twenty-five percent (25%) of Tenants Net Cash Flow (as
hereinafter defined) ("Net Cash Flow Participation").
(ii) Payment. On or before the fifteenth (15th) day following
each calendar month during the Lease term, Tenant shall pay to Landlord, on
account of such Percentage Rent, the amount, if any, by which the greater Of (A)
Gross Sales Participation, or (B) Net Cash Flow Participation for the preceding
calendar month, exceeds the Minimum Rent paid by Tenant for such calendar month.
Promptly upon Tenant's submission pursuant to Paragraph 8(b) of its annual
certified report of Gross Sales and Net Cash Flow, the parties shall make any
adjustment necessary to place the Percentage Rent on a calendar year basis, with
Tenant paying any additional amount due to Landlord concurrently with delivery
of such report or with Landlord crediting first to Minimum Rent and then to
Percentage Rent thereafter becoming due from Tenant, the amount by which
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<PAGE>
sums actually paid by Tenant hereunder exceed the amount of Percentage Rent due
from Tenant for such calendar year or partial calendar year.
(iii) Definition of Gross Sales.
(A) The term Gross Sales as used herein means the entire
amount collected by Tenant, or any entity affiliated with, controlled
by or under common control with Tenant, directly or indirectly, or in
which Tenant, or any of its partners, or any entity affiliated with,
controlled by or under common control with Tenant, own any interest
therein of any nature (whether wholly or partly for cash or on credit,
for barter or other disposition of value) for all food and beverage
sales, merchandise sold, services performed, or for licenses, tickets
of admission, parking charges, or other privileges of attendance or
use of the Premises, or for the extension of credit therefor
(collectively, "Products") in, at or from any part of the Premises, or
through the substantial use of the Premises, by Tenant or anyone
acting on Tenant's behalf or under a sublease, license or concession
from Tenant, including, without limiting the generality of the
foregoing, the amount allowed upon any returns, refunds, exchanges or
"trade-ins," the retail price of any Product delivered on redemption
of trading stamps or other promotional consideration issued by or on
behalf of Tenant or its sublessees, licensees or concessionaires, and
all deposits not refunded to purchasers, all without deduction in any
case for uncollected or uncollectible credit accounts. There shall
also be included in Gross Sales the gross receipts from all
electronic, mechanical or other vending devices which are engaged in
the sale of Products. Every transaction on a deferred payment basis
shall be treated as a sale for the full price at the time such
transaction is entered into, irrespective of the time for payment or
the time when title passes.
(B) The term Gross Sales as used herein shall not include
(or, if included, there shall be deducted to the extent of such
inclusion) the following: (1) the amount of any cash or credit refund
in fact made upon sales of Products, where the Products sold or some
part thereof is returned by the purchaser and accepted by Tenant, (2)
sales of fixtures or equipment after their substantial use in the
conduct of Tenant's business on the Premises, or (3) the amount of
any sales, luxury or excise taxes on sales of Products, where such
taxes are both added to the selling price (or absorbed therein) and
paid to the taxing authorities by Tenant (but not by any vendor of
Tenant).
(C) If Tenant's Gross Sales are required to be reported on
any federal, state or municipal sales tax return or any other similar
form of return, and Gross Sales as so reported on any of said returns
(adjusted to the Lease definition of Gross Sales) shall exceed the
Gross Sales as reported by Tenant, as herein provided, then the Gross
Sales shall be taken at the highest figure so reported (adjusted to
the Lease definition of Gross Sales). If any governmental authority
shall increase the Gross Sales
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<PAGE>
reported by Tenant on any such tax return, after audit, for any
calendar year or partial calendar year for which such sales have been
reported, then Tenant shall promptly notify Landlord of such increase
and pay any additional Percentage Rent due at that time. Tenant shall
also pay at that time interest on any such additional Percentage Rent
at the rate determined under Section 21.3 of the General Conditions,
accurring from the date when the full payment should originally have
been made. For purposes of this subparagraph, Gross Sales shall mean,
if Tenant reports sales from more than one location on any such
return, only that portion of the Gross Sales reported as relate to the
Premises, adjusted to the Lease definition of Gross Sales.
(iv) Definition of Net Cash Flow. The term Net Cash Flow shall be
calculated on a Lease Year basis and shall be defined as:
(A) The total calendar year Gross Sales of Tenant, excluding
receipts which are (1) ownership capital contributions to Tenant, and
(2) proceeds of loans obtained by Tenant, less the sum of:
(B) All cash operating expenses of Tenant incurred and paid
in such calendar year, excluding (1) any expense not involving a cash
expenditure, such as depreciation, (2) principal and interest payments
made or accrued by Tenant ("Debt Payments") in such calendar year on
account of loans of any kind or nature obtained by or on behalf of
Tenant, and (3) payments of Percentage Rent.
(C) In no event shall Net Cash Flow for any period be a
negative number which might be offset against earlier or later
positive Net Cash Flow or require an offsetting payment by Landlord to
Tenant.
(v) Definition of Ticket Sales. All gross receipts derived from
the sale of tickets of admission to the Amphitheater (whether made by Tenant or
any of its subtenants, licensees or concessionaires.
6. RECORDS. Tenant shall keep and maintain, and shall require its
subtenants, licensees and concessionaires, if any, to keep and maintain, at the
Premises or at such other place as Landlord may approve in writing complete and
accurate books of account and records of all trade or business activity
conducted on, at or from the Premises. Such records shall be kept in accordance
with generally accepted accounting principles (GAAP) consistently applied, and
shall include, but not be limited to, all purchases and receipts of merchandise,
services, fees and expenses paid for or on account of performing artists or
acts, inventories, goods, services, and all sales and other transactions from
which Tenant's gross sales, expenditures, net operating profit or loss and Net
Spendable Cash Flow can be determined. Such records shall also include complete
internal accounting controls and written documentation of such internal control
procedures. Tenant agrees to document and record all sales, purchases, loans,
borrowings, and
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<PAGE>
business transactions of any kind, at the time each such transaction is made.
Tenant shall keep for at least three (3) years following the end of each Lease
Year or partial Lease Year all original books and records relating to
transactions taking place in such Lease Year which records shall include, but
not be limited to, (i) daily dated register tapes, (ii) serially numbered sales
slips, (iii) mail orders; (iv) settlement report sheets of transactions with,
sublessees, concessionaires, licensees, and performing acts, (v) receipts or
other records of all leases, licenses, tickets of admission, contracts,
documents, and instruments entered into by Tenant with respect to any activity
on the Premises, (vi) duplicate bank deposit slips and bank statements, (vii)
all state and federal sales and occupation tax returns, and (viii) such other
records as would normally be required to be kept and examined by an independent
accountant in accordance with accepted auditing practices in performing an audit
of Tenant' Gross Sales, net operating profit and loss, and Net Cash Flow.
7. LANDLORD'S INSPECTION RIGHTS. All books, records and documents
maintained by Tenant pursuant to Paragraph 6 above shall be available for
inspection and copying by Landlord at any time during normal business hours.
8. STATEMENTS OF GROSS SALES.
(a) Monthly Statements. Tenant shall submit to Landlord, on or before
the 15th day of each month, a written statement showing in reasonable
detail the Gross Sales in, at or from the Premises for the preceding
calendar month.
(b) Annual Statements. Tenant shall submit to Landlord on or before
sixty (60) days following the close of each calendar year a written
statement certified by an officer of Tenant and showing in reasonable
detail the Gross Sales in, at or from the Premises for the preceding
calendar year or partial calendar year.
9. STATEMENTS OF NET CASH FLOW.
(a) Annual Projections. On or before March 31 of each calendar year,
Tenant shall prepare and deliver to Landlord, a pro forma and operating
plan for all activities conducted on the Premises during said calendar year
(the "Annual Projection"). The Annual Projection shall set forth Tenant's
analysis of anticipated Gross Sales, expenditures, net operating profit and
loss, and Net Cash Flow for each quarter of the ensuing calendar year. The
parties anticipate that due to the seasonal nature of amphitheater
operations there will be little, if any, activity during the first quarter
of each calendar year.
(b) Quarterly Updates. On July 31 and October 31 of each year, Tenant
shall submit to Landlord a "Quarterly Update" consisting of a revised
Annual Projection for the current calendar year which shall include actual
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financial performance, including Gross Sales, net operating profit or loss,
and Net Cash Flow through the close of the preceding calendar quarter.
(c) Closing Annual Report. On January 31 of each calendar year, Tenant
shall submit to Landlord a Closing Annual Report of its actual financial
performance during the preceding calendar year which shall show the actual
totals of Gross Sales, net operating profit or loss, and Net Cash Flow for
that preceding year.
10. AUDIT.
(a) The acceptance by Landlord of payments of Percentage Rent shall be
without prejudice to Landlord's right to examine Tenant's books and records
in order to verify the amount of Tenant's Gross Sales, expenditures, net
operating profit or loss and Net Cash Flow.
(b) At any reasonable time within three (3) years after receipt of any
statement of Gross Sales, Annual Projection, Quarterly Update or Closing
Annual Report (a "Report") furnished to it by Tenant, and upon five (5)
days' prior written notice to Tenant, Landlord may cause a special audit to
be made of Tenant's business affairs and records relating to the Premises
for the period covered by such Report. Except as provided in (c) below, the
cost of such audit shall be paid by Landlord. Any such special audit
performed by a certified public accountant selected by Landlord shall be
binding upon Landlord and Tenant.
(c) If it shall be determined as a result of such audit that there has
been a deficiency in the payment of Percentage Rent, then such deficiency
shall become immediately due and payable to Landlord with interest from the
date when said payment should have been made to the date of payment at the
rate provided in Section 21.3 of the General Conditions. If the
aforementioned deficiency is in excess of three percent (3%) of the
Percentage Rent, theretofore computed and paid by Tenant for the period
covered by the audit, Tenant shall also pay to Landlord the cost of the
audit.
(d) Each Report submitted by Tenant shall become binding upon Landlord
three (3) years after delivery thereof to Landlord unless within such three
(3) year period Landlord shall cause such special audit to be commenced.
11. USE. Tenant shall use the Premises only for the operation of the
facilities described in Item 2 of the Basic Lease Provisions, and for no other
use or purpose whatsoever without the prior written consent of Landlord, which
consent may be withheld by Landlord in its sole discretion. In particular
Tenant, on behalf of itself and its approved successors or assigns, agrees to
comply with governmental regulations of the City of Irvine and any other
governmental body, authority or special district having jurisdiction over all or
any portion of the
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Premises. A violation of any such provision shall constitute a breach or default
hereunder and, subject to the notice and cure provisions of Section 13.1(c)
hereof, shall entitle Landlord to exercise the remedies set forth herein or in
the General Conditions.
12. SPECIFIC USE RESTRICTIONS. Unless expressly prior approved in
writing by Landlord, which approval may be withheld by Landlord in its sole
discretion, Tenant agrees that:
(a) Noncomplying Uses. Tenant shall not use, develop or attempt to use
or develop the Premises or any portion thereof for any purpose other than
those purposes expressly permitted under this Lease or expressly allowed
(without the benefit of a conditional use permit, zone variance, exception
or amendment) under the zoning ordinances of the City of Irvine in effect
as of September 15, 1990;
(b) Zone Changes. Tenant shall not change or attempt any change in
zoning, or the obtaining of or application for a conditional use permit,
zoning variance or exception or other similar approval with respect to the
use or development of the Premises or any portion thereof not expressly
allowed under such existing zoning ordinances or expressly permitted under
this Lease;
(C) Noncomplying Structures. Tenant shall not construct or maintain
any structure or improvements on the Premises not in full compliance with
all requirements of law or as contained herein or in any recorded
covenants, conditions and restrictions existing from time to time covering
the Premises; or
(d) Resubdivisions. Tenant shall not effect any change or amendment to
any parcel or final map covering the Premises or record any further parcel
or final map of the Premises or any portion thereof or facilities thereon,
pursuant to California Government Code Sections 66410 et seq., or any
similar statute hereafter enacted, and any local ordinances adopted
pursuant thereto, or file any applications with any governmental agency
with respect thereto.
(e) Amphitheater Operations.
(i) the Amphitheater shall have a fixed seating capacity of no
more than 16,300 seats. In determining whether to grant or withhold
such consent, Landlord may consider the effect of such expanded
operations on other property owned by Landlord in the vicinity of the
Premises;
(ii) total ticketed attendance at the Amphitheater shall not
exceed 16,300 persons for each performance unless an increase in
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seating capacity is approved by Landlord, in which event the total
ticketed attendance at the Amphitheater shall not exceed the number of
fixed seats as so approved by Landlord;
(iii) performances of any kind at the Amphitheater on any day
other than Friday, Saturday or Sunday evenings or holidays shall
commence no earlier than 8:00 p.m. and will terminate no later than
12:00 midnight. For purposes of this subpart (c), holidays shall refer
to any day when state and national banks and governmental offices are
closed in California;
(iv) all operations at the Amphitheater shall at all times comply
with applicable state and local ordinances, laws and regulations,
including, without limitation, all such ordinances, laws and
regulations pertaining to noise, and shall be compatible with vacant
land use designations of governmental agencies having jurisdiction
over such land uses; and
(v) all site plans, grading plans, working drawings and
construction plans for any work to be performed at the Amphitheater
shall be submitted to Landlord for its approval prior to the
commencement of any work on the Premises.
13. MAINTENANCE OF COMMON AREA. Landlord shall be responsible for
reasonable maintenance and upkeep of the Common Area, including, without
limitation, paving, striping and sweeping when and as deemed reasonably
necessary or desirable by Landlord, maintaining in effect liability insurance in
reasonable form and coverage, and payment of property taxes, assessments and
utility charges as same become due. Landlord may delegate all or any portion of
its maintenance and upkeep responsibilities to any third party, including to any
person or entity having the right or license to use the Common Area. Tenant
shall reimburse Landlord, at the times and in the manner hereinafter set forth,
all costs, charges, fees and expenses paid or incurred by Landlord in connection
with the aforementioned maintenance and upkeep (collectively, the "Parking
Maintenance Charges"). The Parking Maintenance Charges shall be allocated by
Landlord among the persons or entities having the right or license to use the
Common Area based upon Landlord's reasonable determination of the relative use
of the Common Area by such persons or entities. Landlord shall deliver to
Tenant, not later than thirty (30) days prior to the commencement of each
calendar year, Landlord's good faith estimate of the Parking Maintenance Charges
for the ensuing year and the portion thereof allocated to Tenant. Tenant shall
pay such estimated amount of its portion of such charges to Landlord in
quarterly installments in advance on the first day of each calendar quarter,
commencing on January 1 Of each year. Landlord shall submit to Tenant on or
before January 31 following the end of the calendar year a written statement
certified by an officer of Landlord and showing in reasonable detail the actual
Parking Maintenance Charges for the preceding calendar year or partial calendar
C-12
<PAGE>
year, and the basis of the allocation to Tenant of its portion of such charges.
Within thirty (30) days thereafter, Tenant shall pay any sum owing for Parking
Maintenance Charges. If the aggregate of the quarterly estimated payments made
by Tenant exceed the sum owed by Tenant for such calendar year, Landlord shall
reimburse such excess to Tenant within thirty (30) days following delivery Of
the annual accounting of Parking Maintenance Charges. Notwithstanding anything
to the contrary contained herein, Tenant shall not be liable for payment of any
increase in the Parking Maintenance Charges attributable to an increase in the
size or change in the design of the parking areas maintained on the Common Area
unless such increase in size or change in design (i) is requested by Tenant or
(ii) is required by rules, regulations or ordinances of governmental authorities
having jurisdiction over the development and/or use of the Premises; provided,
however, that Tenant shall not be liable for payment of any increase in the
Parking Maintenance Charges if such change in design or size results from
Landlord's change in the use of the Common Area.
14. GENERAL CONDITIONS. The General Conditions attached hereto are
made a part of this Lease and are fully incorporated herein by this reference.
In the event of any conflict between the typed portions of this Lease and the
General Conditions attached hereto, the typed portions hereof shall prevail. In
the event of any conflict between the General Conditions and are recorded
covenants, conditions and restrictions existing from time to time covering the
Premises, the General Conditions shall prevail.
15. BROKER COMMISSIONS. Landlord and Tenant each represents to the
other that to the best knowledge of each, respectively, no brokerage commission,
finder's fee or other compensation of any kind is due or owing to any person or
entity in connection with this Lease. Each party agrees to and does hereby
indemnify and hold the other free and harmless from and against any and all
costs, liabilities or causes of action or proceedings which may be instituted by
any other broker, agent or finder, licensed or otherwise, claiming through,
under or by reason of the conduct of the Indemnifying party in connection with
this Lease.
16. INTERSTATE LAND SALES FULL DISCLOSURE ACT. Tenant recognizes that
the Premises are presently zoned by the appropriate governmental authority for
Industrial or commercial development; that the appropriate local authorities
have approved access from the Premises to a public street or highway; and that
Landlord intends that this Lease qualify for the developer's exemption from the
Interstate Land Sales Full Disclosure Act (the "Act") as provided by paragraph
1403(a)(7) thereof contained in 15 United States Code 1702(a)(7). Accordingly,
Tenant hereby represents and warrants to Landlord as follows, and agrees to
indemnify and hold Landlord entirely free and harmless from all liability for
any loss, damage or injury and all costs and expenses (including legal fees)
arising from any misstatement contained in the following representation: Tenant
is leasing the Premises for the purpose of engaging in the business of
C-13
<PAGE>
constructing commercial or industrial buildings thereon or for the resale or
lease thereof to persons or entities engaged in such business.
----------------------------------
Tenant's Initials
17. UTILITY CONNECTION FEES AND ASSESSMENTS. Tenant shall be
responsible for all connection charges, metering fees and all other assessments
or charges of every type whatsoever associated with utility services, except
that Landlord shall pay the acreage assessment fees of the Irvine Ranch Water
District (the "District') having jurisdiction over the Premises, in effect upon
the Commencement Date of the term of this Lease. In the event that such acreage
assessment fees payable by Landlord are increased by the District after the
Commencement Date, Tenant shall be responsible for paying such increases to the
District, but in no event shall Landlord owe any amount to Tenant in the event
that such acreage assessment fees are decreased.
C-14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Ground Lease
as of the day and year first above written.
"Landlord "Tenant"
THE IRVINE COMPANY, IRVINE MEADOWS,
a Michigan corporation a California general partnership
By: ___________________________ By: IMA investment Corporation,
Its:___________________________ a California corporation
General Partner
By: ___________________________ By:_________________________
Its:___________________________ Donald M. Koll
President
By: Audrey & Jane, Inc.,
a California corporation
General Partner
By:_________________________
Robert E. Geddes
President
By: Shelli Meadows, Inc.,
a California corporation
General Partner
By:________________________
Irving Azoff
President
By:___________________________
Paul C. Hegness
General Partner
C-15
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
"EXCLUSIVE AREA"
----------
A portion of Block 157 of the Irvine Subdivision per map filed in Book 1, Page
88 of Miscellaneous Record Maps of Orange County, California, also being a
portion of Parcel 2 of Parcel Map filed In Parcel Map Book 102, pages 30 and 31
of Parcel Maps of Orange County, being described as follows:
Beginning at the most easterly corner of said Parcel 2, said point also being on
the existing right-of-way of Irvine Center Drive; thence along said Parcel's
southeasterly boundary line South 40(degrees) 37' 51" West 1413.02 feet to the
True Point of Beginning; thence along the following courses and distances:
North 42(degrees) 59' 03" West 584.64 feet;
South 48(degrees) 58' 37" West 574.67 feet;
North 42(degrees) 54' 20" West 134.66 feet;
North 61(degrees) 19' 01" West 229.44 feet;
North 64(degrees) 24' 06" West 151.07 feet;
North 46(degrees) 55' 41" West 81.73 feet;
North 34(degrees) 57' 58" West 147.20 feet;
North 75(degrees) 05' 05" West 480.32 feet;
South 02(degrees) 12' 32" West 282.77 feet;
South 42(degrees) 12' 16" East 1073.44 feet;
to the beginning of a curve being concave to the southwest and having a radius
of 1450 feet, a radial to said point bears North 26(degrees) 20' 41" East;
thence along the arc of said curve through a central angle of 21(degrees) 03'
20" a distance of 532.86 feet; thence South 42(degrees) 35' 59" East 56.46 feet
to the southeasterly boundary line of said Parcel 2; thence along said line
North 40(degrees) 37' 51" East 1070.75 feet to the True Point of Beginning.
Said property contains 27.73 acres.
C-16
EXHIBIT A
To Ground Lease
Page 1 of 2
<PAGE>
LEGAL DESCRIPTION
"COMMON AREA"
----------
A portion of Block 157 of the Irvine Subdivision per map filed in Book 1, Page
88 of Miscellaneous Record Maps of Orange County, California, also being a
portion of Parcel 2 of Parcel Map filed in Parcel Map Book 102, pages 30 and 31
of Parcel Maps of Orange County, being described as and bounded by the following
courses:
Beginning at the most easterly corner of said Parcel 2, said point also being on
the existing westerly right-of-way of Irvine Center Drive; thence
North 24(degrees) 49' 27" West 392.61 feet;
South 13(degrees) 09' 39" Last 158.21 feet;
to the beginning of a curve concave westerly and having a radius of 110.00 feet;
thence &lons the are of said curve through a central angle 600 45' 230" a
distance of 116.64 feet; thence South 47(degrees) 35' 44" West 175.24 feet, to
the beginning of a curve concave Northerly having a radius of 85.00 feet; thence
along the arc of said curve through a central angle of 112(degrees) 29' 09" a
distance of 166.88 feet; thence North 19(degrees) 55' 07" West 726.21 feet;
thence
South 70(degrees) 04' 53" West 239.09 feet;
North 43(degrees) 01' 39" West 527.07 feet;
South 47(degrees) 04' 52" West 855.98 feet;
South 42(degrees) 55' 08" East 225.75 feet;
South 24(degrees) 51' 44" East 986.12 feet;
South 42(degrees) 59' 03" East 584.64 feet to
the southeast boundary line of said Parcel 2; thence along said line North
40(degrees) 37' 51" East 1413.02 feet to the Point of Beginning.
Said property is the lease ground known as the "Common Area" and contains 42.62
acres.
C-17
EXHIBIT A
To Ground Lease
Page 1 of 2
<PAGE>
[MAP]
<PAGE>
EXHIBIT C
WHEN RECORDED RETURN TO:
THE IRVINE COMPANY
550 Newport Center Drive
Post Office Box 1
Newport Beach, CA 92660-0015
Attn: Lease Administration:
Community Development Commission
MAIL TAX STATEMENTS TO:
Irvine Meadows
c/o The Koll Company
4343 Von Karman Avenue
Newport Beach, CA 92660
Attention: Mr. Syd Buck
APN No. 588-011-19
- --------------------------------------------------------------------------------
Space above this line for Recorder's use only
GROUND LEASE
(Short Form Memorandum)
1. DATE AND PARTIES. This GROUND LEASE (Short Form Memorandum) is
dated as of the _________ day of _______, 199__, and is by and between THE
IRVINE COMPANY Michigan corporation ("Landlord"), with its principal office
located at 550 Newport Center Drive, Newport Beach, California 92660-0015, and
IRVINE MEADOWS, a California general Partnership ("Tenant"), whose address is
c/o The Koll Company, 4343 Von Karman Avenue, Newport Beach, California 92660.
2. PROPERTY AND RENT. Landlord hereby leases to Tenant and Tenant
leases from Landlord, at the rental and upon all of the terms and conditions set
forth in that certain Ground Lease of even date herewith, between Landlord and
Tenant, which is incorporated herein by this reference, that certain real
property (the "Premises") located in the County of Orange. State of California,
and consisting of an "Exclusive Area" and "Common Area" as more particularly
described in Exhibit A and depicted in Exhibit B, each attached hereto and
incorporated herein by this reference.
C-19
EXHIBIT C
To Ground Lease
<PAGE>
3. TERM. The Premises is leased for a term (the "Term") of twenty (20)
years commencing on the date hereof, and ending on February 28, 2017, subject to
earlier termination as provided in the Lease.
4. USE OF PREMISES. The Lease provides, among other things, that (i)
the Exclusive Area is demised for the exclusive use of Tenant to operate on
amphitheater in the manner and subject to the limitations more particularly
described in the Lease, and (ii) the Common Area is demised for the nonexclusive
use of Tenant to park automobiles thereon and is subject to redesignation by
Landlord, all as more particularly provided in the Lease.
5. TAXES. The Lease provides among other things, that Tenant shall pay
all or some portion of all taxes, general and special assessments and other
charges of every description which during the Term may be levied upon or
assessed against the Premises and all interest therein and all improvements and
other property thereon, whether belonging to Landlord or Tenant.
6. ENCUMBRANCES AND TRANSFERS. The Lease provides among other things,
that Tenant shall not encumber, assign or otherwise transfer this Lease, or any
right or interest hereunder, without the prior written consent and approval of
the Landlord, the giving of which consent is subject to certain standards set
forth in the Lease. Any such encumbrance, assignment or other transfer without
such prior written consent and approval shall be void and shall confer no rights
whatsoever.
7. INCONSISTENCY. Should there be any inconsistency between the terms
of this Short Form Memorandum and the Lease incorporated herein, the terms of
the incorporated Lease shall prevail.
C-20
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Ground Lease (Short Form Memorandum), as of the day and year first above
written.
THE IRVINE COMPANY, IRVINE MEADOWS,
a Michigan corporation a California general partnership
By: ___________________________ By: IMA investment Corporation,
President a California corporation
General Partner
By: ___________________________ By:_________________________
Vice President Donald M. Koll
President
By: Audrey & Jane, Inc.,
a California corporation
General Partner
By:_________________________
Robert E. Geddes
President
By: Shelli Meadows, Inc.,
a California corporation
General Partner
By:________________________
Irving Azoff
President
By:___________________________
Paul C. Hegness
General Partner
"Tenant"
C-21
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On this ________ day of ___________,in the year 199__, before me, the
undersigned, a Notary Public in and for said State, personally appeared
__________________________ and ____________________________ personally known to
me (or proved to me on the basis of satisfactory evidence) to be the persons who
executed the within instrument as President and Vice President, respectively, on
behalf of the corporation therein named and acknowledged to me that the
corporation executed it.
WITNESS my hand and official seal.
------------------------------
Notary Public in and for
said County and State
C-22
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On this __ day of _________________, in the year 199__, before me, the
undersigned, a Notary Public in and for said State, personally appeared Donald
M. Koll personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed the within instrument as President, on
behalf of IMA Investment Corporation, a California corporation, being known to
me to be a general partner in Irvine Meadows, a California general partnership,
the partnership that executed the within instrument and acknowledged to me that
IMA Investment Corporation executed the same pursuant to its bylaws or a
resolution of its board of directors as such general partner and that Irvine
Meadows executed the same.
WITNESS my hand and official seal.
------------------------------
Notary Public in and for
said County and State
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On this __ day of _________________, in the year 199__, before me, the
undersigned, a Notary Public in and for said State, personally appeared Robert
E. Geddes personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed the within instrument as President, on
behalf of Audrey & Jane, Inc., a California corporation, being known to me to be
a general partner an Irvine Meadows, a California general partnership, the
partnership that executed the within instrument and acknowledged to me that
Audrey & Jane, Inc. executed the same pursuant to its bylaws or a resolution of
its board of directors as such general partner and that Irvine Meadows executed
the same.
WITNESS my hand and official seal.
------------------------------
Notary Public in and for
said County and State
C-23
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On this __ day of __________, in the year 199__, before me, the
undersigned, a Notary Public in and for said State, personally appeared Irving
Azoff personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed the within instrument as President, on
behalf of Shelli Meadows, Inc., a California corporation, being known to me to
be a general partner in Irvine Meadows, a California general partnership, the
partnership that executed the within instrument and acknowledged to me that
Shelli Meadows Inc. executed the same pursuant to its bylaws or a resolution of
its board of directors as such general partner and that Irvine Meadows executed
the same.
WITNESS my hand and official seal.
------------------------------
Notary Public in and for
said County and State
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On this __ day of __________, in the year 199__, before me, the
undersigned, a Notary Public in and for said State, personally appeared Paul C.
Hegness, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the persons who executed this instrument as a general partner,
on behalf of the partnership, and acknowledged to me that the partnership
executed it.
WITNESS my hand and official seal.
------------------------------
Notary Public in and for
said County and State
C-24
<PAGE>
EXHIBIT D
GENERAL CONDITIONS
TO GROUND LEASE
The following General Conditions To Ground Lease are incorporated in
and made a part of that certain Ground Lease dated____________, 199_, by and
between THE IRVINE COMPANY, a Michigan corporation, as `Landlord", and IRVINE
MEADOWS, a California general partnership, as "Tenant", (the "Lease") as though
fully set forth at length therein.
ARTICLE 1
TENANT'S OPERATIONS
The Premises and all improvements constructed and maintained thereon
shall be used by Tenant for the use or uses specified in the Lease and for no
other use or purpose. Tenant shall not itself use or permit any other person or
entity to use the Premises, or any part thereof, for any purposes tending to
damage or harm the Premises or any improvements on or adjacent thereto, or the
image or attractiveness thereof, or for any improper, offensive or immoral use
or purpose, or in any manner which shall constitute waste, nuisance or public
annoyance; and Tenant shall conform to, and cause all persons using or occupying
any part of the Premises to comply with, all public laws, ordinances and
regulations from time to time applicable thereto and to all operations thereon.
ARTICLE 2
REQUIREMENTS AS TO IMPROVEMENTS
2.1 LANDLORD APPROVAL OF IMPROVEMENTS. As used herein, the terms
"Improvements" or "structures" shall mean and include without limitation all
buildings, outbuildings, seating, lighting and acoustic structures, amphitheater
structures, parking or loading areas, roadways or walkways, separate display or
storage areas, trackage, fences, walls, poles, signs, exterior lighting,
canopies, awnings, antennas, billboards, marquees, hedges, mass or large
plantings, and all other structures of any kind located above or below the
ground level of any site, and any replacements, additions, repairs or
alterations thereto of any kind whatsoever. No Improvement of any nature
whatsoever (including but not limited to any alteration or addition to any
Improvements existing from time to time) exceeding $25,000 in cost shall be
constructed, placed or assembled and maintained on the Premises until Landlord
has first approved the exterior design, density, size, appearance and location
thereof. For purposes hereof, a work of Improvement shall be deemed to exceed
$25,000 in cost, without regard to the actual cost of such work to Tenant, if
the full replacement cost of such work on the date the work
C-25
EXHIBIT D
To Ground Lease
<PAGE>
commences would exceed $25,000 if undertaken by Landlord through independent
contractors and/or suppliers. Further, the cost of a proposed work of
Improvement shall include all work undertaken or in any manner related to each
other, it being the intent of the parties that, for purposes of determining
whether Landlord's approval is required under the terms of this Section 2.1, the
cost of separate components of related work shall not be separately determined,
but the cost of the work shall be estimated as a whole. For example, if Tenant
proposes to construct an asphalt parking area with lighting and fencing, the
cost of the lighting and fencing shall not be considered separately from the
cost of the asphalt parking area. Landlord hereby confirms its approval of the
improvements constructed on the Premises and existing as of January 1, 1991.
Before commencing any work of Improvement or applying for any governmental
permit or approval with respect thereto, Tenant shall first deliver or cause to
be delivered to Landlord for approval as provided below, two (2) sets of
schematic plans and preliminary specifications including at least grading and
drainage plans, exterior elevations, roof plans and site plans, showing in
reasonable detail existing topography and proposed type of use, size, land
coverage, shape, height, location, material, color scheme and elevation of each
proposed Improvement, all proposed ingress and egress to public or private
streets or roads, all utilities and service connections, and all proposed
landscaping, parking, exterior lighting, signs, cut and fill, finished grade,
run-off and concentration points. After such approval by Landlord but prior to
commencing any such work, Tenant shall also submit final plans and
specifications for any proposed Improvements in the same manner as provided in
this paragraph with respect to schematic plans and preliminary specifications.
All plans and specifications for grading or Improvements to be submitted to
Landlord here under shall be prepared by a duly licensed or registered architect
or engineer, as the case may be. Landlord shall not unreasonably withhold its
approval of any such plans or specifications. Landlord shall be conclusively
deemed to have given its approval therefor unless, within thirty (30) days after
all such plans and specifications have been received, Landlord shall give Tenant
written notice specifying in reasonable detail each item which Landlord
disapproves. Unless so disapproved, Landlord shall endorse its approval on at
least one set of plans and return the same to Tenant. Without limiting the
generality of the foregoing, Landlord may disapprove any plans which are not in
harmony or conformity with other existing or proposed Improvements on or in the
vicinity of the Premises, or with Landlord's then existent master utility,
circulation or general aesthetic or architectural plans and criteria for the
Premises and the general area in which the Premises are located, including but
not limited to such matters as adequacy of site and Improvement dimensions,
external appearance, relation of topography, grade and elevation of the site
being improved with neighboring sites and nearby streets, and the effect of
location and use of Improvements on neighboring sites, improvements or
operations. Notwithstanding the foregoing, Tenant may repair, replace, alter or
reconstruct any Improvement on the Premises for which plans were previously
approved by Landlord as provided above, but only if such repair, replacement,
alteration or reconstruction is substantially identical to the Improvement
previously so approved.
C-26
<PAGE>
2.2 LANDLORD EXCULPATION. Landlord shall not be liable in damages to
anyone submitting plans and specifications for approval as provided herein, or
to any owner, occupant, lessee, licensee or other person subject to or affected
by this Lease, on account of (i) Landlord's approval or disapproval of any plans
or specifications, whether or not defective; (ii) any construction, performance
or non-performance by Tenant of any work on the Premises or Improvements,
whether or not pursuant to approved plans or specifications; (iii) any mistake
in judgment, negligence, action or omission in exercising Landlord's rights,
powers and responsibilities hereunder; or (iv) the enforcement or failure to
enforce any of the provisions contained herein. Every person who submits plans
or specifications to Landlord for approval agrees by submission of such plans or
specifications -and every owner, lessee, licensee or other occupant of the
Premises, Improvements or any portion thereof agrees by acquiring its interest
therein -not to bring any suit or action against Landlord seeking to recover any
such damages. Landlord's approval of such plans and specifications shall not
constitute the assumption of any responsibility by Landlord or its
representatives for the accuracy, efficacy or sufficiency thereof, and Tenant
shall be solely responsible therefor.
2.3 INSPECTION RIGHTS. Landlord or its authorized representatives may
from time to time, at any reasonable hour, enter upon and inspect the Premises,
site or any portion thereof or Improvements thereon to ascertain compliance with
this Lease, but without obligation to do so or liability therefor.
2.4 CERTIFICATES OF COMPLIANCE AND PRESUMPTION. Prior to commencement
of any such work of Improvements, Tenant shall supply to Landlord a certificate
from a licensed civil engineer or land surveyor verifying that the proposed
Improvements will be located on the correct parcel of land and in accordance
with plans previously approved by Landlord, Upon completion of any such
Improvements, Tenant shall supply to Landlord a further certification by
Tenant's architect (including the landscape architect in the case of
Improvements consisting of landscaping) that the Improvements as designed by the
architect have been completed in accordance with the plans previously approved
by Landlord. Tenant shall also supply to Landlord one (i) set of as-built
grading plans showing all underground installations. Notwithstanding anything to
the contrary herein contained, after the expiration of one year from the date of
issuance of a building permit by municipal or other governmental authority for
any Improvement, said Improvement shall, in favor of purchasers and
encumbrancers in good faith and for value, be deemed to be in compliance with
all provisions of Section 2.1 above, unless actual notice of such noncompliance
or noncompletion, executed by Landlord, shall appear of record in the office of
the County Recorder of Orange County, California, or unless legal proceedings
shall have been instituted to enforce compliance with these provisions.
2.5 DILIGENT COMPLETION AND COMPLIANCE. After commencement of
construction of any Improvements, the same shall be diligently prosecuted to
completion, to the end that such Improvement shall not remain in a partly
finished condition any longer than reasonably necessary for completion
C-27
<PAGE>
thereof, and shall comply with all applicable governmental laws, ordinances and
other requirements and with any and all recorded covenants, conditions and
restrictions affecting the Premises, all at the sole cost and expense of Tenant
and without any cost, expense or liability whatsoever to Landlord. Tenant shall
provide Landlord with copies of any Notice of Completion issued in connection
with said Improvements not later than ten (10) days after its date of issue.
2.6 EXTERIOR MATERIALS AND FENCES. Without limiting the generality of
the foregoing provisions, all exterior walls shall be painted or suitably
treated in a manner acceptable to Landlord, and no exterior walls of sheet or
corrugated iron, steel or other metal or asbestos shall be permitted. No fence
or wall shall be made of any such material, and no fence or wall shall exceed
six (6) feet in height without the prior approval of Landlord. Landlord
acknowledges that the Premises are currently bounded by a chain link fence, and
that portions of said fence have been screened by landscaping, as depicted on
the aerial photograph attached hereto as Exhibit E and incorporated herein by
reference. Tenant hereby agrees that, from time to time during the term of this
Lease, in the event Landlord undertakes the sale, lease or development of
property in the vicinity of the Premises, Landlord shall have the right to
require that Tenant plant suitable and adequate additional landscape screening
of said fence in locations where such fence is not currently landscaped and
which are visible from such development on property owned by Landlord as of the
date hereof. In addition, in the event Landlord undertakes the sale, lease or
development of property adjacent to the Premises, Landlord shall have the right
to construct fencing or walls between the Premises and the adjacent property
(such as, block wall, stucco, brick or other architectural fencing), and, in
such event, Tenant agrees to pay Landlord one-half (1/2) of the costs and
expenses incurred in the design and construction of such walls or fencing within
thirty (30) days following written demand therefor from Landlord, accompanied by
reasonable supporting documentation for the costs and expenses incurred by
Landlord; provided, however, that the cost of such fencing to be borne by Tenant
shall not exceed Twenty-Five Thousand Dollars ($25,000) unless Landlord shall
agree to pay for any cost in excess thereof. Said limitation on the costs to be
incurred by Tenant hereunder shall be increased annually from August 31, 1991
by any percentage increase in the Consumer Price Index, All Urban Consumers, All
Items, Los Angeles-Long Beach-Anaheim, California Area, 1982-84 = 100.
2.7 SIGNS.
(a) Tenant shall not construct, install or maintain upon the Premises or
upon the exterior walls of any structure, any billboard, signboard, sign post or
other advertising medium except such signs, advertising placards, names,
insignia, trademarks and descriptive words or materials (collectively the
"signs") as shall have first received the written approval of Landlord as to
size, type, color, location, copy, nature and display qualities. No signs
readily visible from off the Premises shall be permitted on or within the
Premises or Improvements other than those:
C-28
<PAGE>
(i) Identifying the name, business or products of the person or entity
using or occupying any site, Improvements thereon or any portion thereof;
or
(ii) Identifying any performing artist(s) or entertainment scheduled
to appear at or be conducted upon the Premises together with such other
information (such as the date and time of performance and the availability
of tickets) as is reasonably required to announce such performances to the
public;
(iii) Offering all or any portion of such site or Improvements for
lease or sale; or
(iv) Identifying the construction lender(s) and/or general
contractor(s), but only during the course of the construction.
(b) The parties acknowledge that Landlord is currently providing two
signage locations off the Premises for identification by Tenant of Amphitheater
attractions. Tenant acknowledges that Landlord may develop or otherwise utilize
property which it owns in the vicinity of the Premises in a manner which makes
it necessary or desirable, in Landlord's sole judgment, to remove such signs
from their present locations. Therefore, from time to time during the term of
this Lease, Landlord shall have the right to cause Tenant to relocate such
signage to other locations to be provided by Landlord, at no cost or expense to
Landlord. Furthermore, Tenant shall make no changes in the present signs without
first obtaining Landlord's prior written consent. Any new signs, or signs to be
relocated as aforementioned, shall be subject to Landlord's prior written
approval as to size, design, location, and esthetics, and Tenant shall be
responsible for obtaining any and all zoning or other land use entitlements
necessary in order to maintain or relocate such signs, at no cost or expense to
Landlord.
2.8 GRADING AND EXCAVATION. No excavation shall be made on the
Premises except in connection with construction of an Improvement pursuant to
grading and drainage plans approved by Landlord as provided in Section 2.1
above. In addition thereto, Tenant shall cause a soils investigation and report
to be prepared by a licensed soils engineer or geologist, and Landlord at its
election may require that the same be submitted to Landlord for its information;
provided, however, that Landlord shall not have any responsibility or liability
for any matters relating to said investigation or report. All grading work must
be conducted under the supervision of a licensed soils engineer. A final
certification of grading operations by a licensed soils engineer or geologist
must be filed with the Landlord upon completion of the grading work. Upon such
completion, all exposed openings shall be backfilled and disturbed ground shall
be restored to its original condition.
2.9 DRAINAGE. Tenant shall not drain or discharge water from the
Premises or Improvements thereon, and shall not interfere with the drainage
established as of the date of this Lease, in or over any other property adjacent
to
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the Premises, except in accordance with plans therefor approved by all public
agencies having jurisdiction; provided, that Tenant shall not drain or discharge
water onto or divert water from any adjacent lands owned by Landlord, except
through established drainage channels or new drainage improvements approved by
Landlord. Tenant acknowledges that portions of the Premises, or the Premises in
their entirety, may lie within a Drainage Assessment Area which may or may not
require an acreage assessment at present or during the term of the Lease. Tenant
agrees to pay any and all such charges which may be levied by applicable public
agencies or municipalities, as may be required.
2.10 UTILITY INSTALLATIONS. Tenant, at its sole cost and expense,
shall determine the availability of, and shall cause to be installed in, on, and
about the Premises, all facilities necessary to supply thereto all water,
sewage, gas, electricity, telephone and other like services required in Tenant's
operations hereunder. All such utility lines shall be installed underground,
except that transformer or terminal equipment related thereto may be installed
above ground if screened from view of adjacent streets and properties. Tenant
agrees to pay all connection or acreage assessments or charges levied by any
public utilities, agencies or municipalities with respect to their services.
Notwithstanding the foregoing, Tenant shall not enter into any contract or
agreement with any city, county or other governmental agency or body or public
utility with reference to sewer lines or connections, water lines or
connections, or street improvements (including but not limited to curbs,
gutters, parkways, street lighting or other utility connections, lines or
easements) relating to the Premises, without the prior written consent of
Landlord, which consent shall not unreasonably be withheld.
2.11 LANDSCAPING. Every site improved with a building or other
substantial structure shall be landscaped as approved by Landlord within ninety
(90) days of Tenant's occupancy or completion of such structure, whichever
occurs first, and maintained thereafter in a sightly and well-kept condition. In
particular, all improved areas within setback lines shall be fully and
adequately landscaped. Tenant shall provide hose bibs, sprinklers and other
reasonable and adequate landscape maintenance facilities in the vicinity of all
landscaped areas. Tenant hereby agrees that, in the event Landlord undertakes
the sale, lease or development of property in the vicinity of the Premises,
Landlord shall have the right to require that Tenant plant suitable and adequate
additional landscape screening of any fence bounding the Premises in locations
where such fence is visible from such development on property owned by Landlord
as of the date hereof; provided, however, that such landscaping shall not exceed
Ten Thousand Dollars ($10,000) unless Landlord shall agree to pay for any cost
in excess thereof. Said sum of Ten Thousand Dollars ($10,000) shall be increased
annually from August 31, 1991 by any percentage increase in the Consumer Price
Index, All Urban Consumers, All Items, Los Angeles-Long Beach-Anaheim,
California Area, 1982-84 = 100.
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ARTICLE 3
TAXES AND ASSESSMENTS
3.1 TAXES. Tenant shall be responsible for, and agrees to pay, not
later than ten (10) days prior to delinquency, any and all taxes, assessments,
levies, fees and other governmental charges of every kind or nature (hereinafter
collectively called "taxes") levied or assessed by any municipal, county, state,
federal or other taxing or assessing authority upon, against or with respect to
(i) the Premises, (ii) all furniture, fixtures, equipment and any other personal
property of any kind placed, installed or located within, upon or about the
Premises, (iii) all alterations, additions or improvements of whatsoever kind or
nature, if any, made to the Premises, and (iv) rentals or other charges payable
by Tenant to Landlord, irrespective of whether any of the items described in
clauses (i) through (iv) above are assessed as real or personal property, and
irrespective of whether any of such items are assessed to or against Landlord or
Tenant, but expressly excluding any general net income, franchise, inheritance
or ad valorem tax levied upon or payable by Landlord. Tenant shall, not later
than the 10 day period described above, or upon written request of the Landlord
if payment is made earlier, furnish to the Landlord a copy of the receipted tax
bill or other proof of said payment. Tenant hereby agrees to protect and hold
harmless Landlord and the Premises and all improvements in, on, or about the
same from all liability for any and all such taxes, together with any interest,
penalties or other sums thereby imposed, and from any sale or other proceeding
to enforce payment thereof. Tenant shall cause all taxes imposed upon any
personal property situated in, on, or about the Premises to be levied or
assessed separately from said Premises and not as a lien thereunder. Tenant
hereby, appoints Landlord as its attorney-in-fact for the limited purpose of
performing, at Tenant's sole cost and expense, all acts necessary to cause the
Premises to be separately assessed from other lands of Landlord, and Tenant
agrees to pay to Landlord, within thirty (30) days of the date of billing, any
and all costs reasonably incurred by Landlord in performing such acts. If at any
time during the term of this lease any of such taxes are not so levied and
assessed separately and directly to Tenant, Tenant shall pay to Landlord its
proportionate share thereof, being that portion of such taxes that the area of
the Premises bears to the total area of all land within the entire tax
assessment parcel, as determined by Landlord.
3.2 TAXES ON RENTALS. Should the State of California or any political
subdivision thereof or any governmental authority having jurisdiction (by way of
substitution for all or any part of the "taxes" otherwise required to be paid in
whole or in part by Tenant pursuant to Section 3.1, or in addition thereto),
impose a capital levy or a tax, assessment and/or surcharge of any kind or
nature whatsoever (including but not limited to a value added tax) upon,
against, in connection with or with respect to the rentals or other charges
payable to Landlord by Tenant or on the income of Landlord derived from the
Premises or on Landlord's ownership of the Premises or any portion thereof or
interest therein, or otherwise, then, in any such case, such tax, assessment
and/or surcharge shall
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be deemed to constitute a tax and/or assessment against the Premises and Tenant
shall pay to Landlord its proportionate share thereof as defined in Section 3.1,
as billed by Landlord.
3.3. PRORATIONS. All such taxes and assessments for the first and last
year of this Lease shall be prorated between Landlord and Tenant on the basis of
the fiscal year of the appropriate governmental authority or authorities.
3.4. BONDS. With respect to any assessment which may be levied upon
the Premises and which under any applicable law then in force may be evidenced
by bond or bonds payable in annual installments, the taxes payable by Tenant
hereunder shall be limited to such installments (including interest) as may be
due and payable during each such year and the same shall be prorated as of the
end of the term with respect to the last year of the term hereof.
ARTICLE 4
UTILITY CHARGES
Tenant shall pay all charges for gas, water, sewer, electricity,
telephone, data transmission, cable television and other utility services used
on the Premises during the lease term, and shall indemnify Landlord and the
Premises from and against any such charges or liens arising therefrom. If any
such charges are not paid when due, Landlord may pay the same, and any amount so
paid by Landlord shall thereupon become due to Landlord from Tenant as
additional rent, together with interest thereon as provided in Article 10 below.
ARTICLE 5
REPAIRS AND UPKEEP
5.1 NO OBLIGATION OF LANDLORD. Landlord shall not be required or
obligated to make changes, alterations, additions, improvements or repairs in,
on, or about the Premises, or any part thereof, during the term of this Lease.
5.2 TENANT OBLIGATIONS. At all times during said term Tenant shall, at
its sole cost and expense, keep and maintain the Premises and all improvements
thereon and all facilities appurtenant thereto in first-class condition, order
and repair similar to that maintained by Landlord and other owners of high-class
properties of similar class and condition in Orange County and Southern
California, and the entire Premises, improvements thereto and all landscaping
and undeveloped areas thereon, in a clean, sanitary, orderly and attractive
condition, free from weeds, rubbish and debris. Tenant agrees to keep in full
force and effect throughout the term hereof a contract or other arrangement
satisfactory to Landlord in its sole discretion for maintenance of all
landscaping on those portions of the Premises as to which Tenant is responsible
for such landscaping, which contract shall be maintained with such company or
companies, person(s) or
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entities as Landlord shall approve and in compliance with such requirements as
are imposed therewith by any insurance company as provided in Article 7 hereof.
All repairs, alterations, replacements or additions to Improvements shall be at
least equal to the original work in class and quality. The necessity and
adequacy of such repairs and other work shall be measured by the same standard
as set forth above for the original construction and maintenance. Tenant shall
also be responsible at all times for determining that all Improvements and the
plans and specifications therefor conform and comply in all respects with these
provisions, all matters of record, all applicable governmental requirements, and
all exterior architectural design, location and color criteria as may be
approved by Landlord. Tenant shall also adopt and maintain such standards of
property space maintenance, appearance and housekeeping as shall be reasonable
and customary for similar operations or enterprises and shall enforce compliance
by all such tenants or users with such standards. Tenant shall indemnify and
save harmless Landlord against all actions, claims and damages by reason of
Tenant's failure to comply with any of the foregoing provisions.
5.3 CURE BY LANDLORD. Notwithstanding Section 5.1 and 5.2 above, in
the event Tenant fails, within fifteen (15) days after the date of a notice in
writing from Landlord so to do, to comply with the provisions of Section 5.2
above, Landlord shall be entitled, but shall not be obligated, to enter the
Premises and perform such work as may be necessary to restore the Premises and
improvements to the condition required by Section 5.2 above, and all of
Landlord's expenses in connection with such work shall be paid by Tenant to
Landlord upon demand, together with interest thereon as provided in Article 10
below.
ARTICLE 6
LANDLORD'S NONLIABILITY AND INDEMNITY
6.1 LANDLORD'S NONLIABILITY. Landlord shall not be liable for any
loss, damage or injury of any kind or character to any person or property (a)
arising from any use of the Premises, or any part thereof, (b) caused by any
defect in any building, structure or other Improvement thereon or in any
equipment or other facility located therein, (c) caused by or arising from any
act or omission of Tenant, or of any of its agents, employees, licensees or
invitees, (d) arising from any accident on the Premises or any fire or other
casualty thereon, (e) occasioned by the failure of Tenant to maintain the
Premises in safe condition, or (f) arising from any other cause whatsoever,
except as occasioned by the act or omission or neglect of any duty by Landlord
or its employees. Tenant, as a material part of the consideration of this Lease,
hereby waives on its behalf all claims and demands against Landlord for any such
loss, damage or injury of Tenant.
6.2 INDEMNITY BY TENANT. Tenant shall indemnify Landlord and save it
harmless from and against any and all claims, actions, damages, liability and
expenses, including attorneys' fees, in connection with loss of life, personal
injury and/or damage to property arising from or out of any occurrence in, upon
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or at the Premises, or the occupancy or use by Tenant of the Premises or any
part thereof, or any "common facilities" (as defined in the Lease, if
applicable), or arising from or out of Tenant's failure to comply with any
provision of this lease, or otherwise occasioned wholly or in part by any act or
omission of Tenant, its agents, representatives, contractors, employees,
servants, customers or licensees. In case Landlord shall, without fault on its
part, be made a party to any litigation commenced by or against Tenant, then
Tenant shall protect and hold it harmless and shall pay all costs, expenses and
reasonable attorneys' fees incurred or paid by Landlord in connection with any
such litigation. Landlord may, at its option, require Tenant to assume
Landlord's defense in any action covered by this Section through counsel
satisfactory to Landlord.
ARTICLE 7
INSURANCE
7.1 POLICY FORM AND EVIDENCE OF COVERAGE. All policies of insurance
provided for herein shall be written as primary policies (without "contribution"
or "solely in excess of coverage carried by Landlord" provisions) with
responsible and solvent insurance companies authorized to do business in
California with a policyholder's rating of "A" (Excellent) or better and a
financial rating of "X" or better in Bests' Insurance Reports-Fire and
Casualty. Prior to the commencement of the term hereof, Tenant shall supply
Landlord (and at all times during the term of the Lease keep on file with
Landlord) a true and correct copy of all such policies or a certificate of
insurance accurately reflecting the coverage required hereby together with
satisfactory evidence showing that all premiums thereon have been paid, and
thereafter, as additional premiums become due, Tenant shall supply Landlord with
satisfactory evidence that said premiums have been paid. Notwithstanding
anything to the contrary contained within this provision, Tenant's obligations
to carry insurance as provided herein may be brought within the coverage of a
so-called "blanket" policy or policies of insurance carried and maintained by
Tenant, so long as such policy or policies segregates the amount of coverage
applicable to the Premises. In the event that Tenant fails to procure, maintain
and/or pay for at the times and for the durations specified in this Lease, any
insurance required by this Lease, or fails to carry insurance required by law or
governmental regulation, Landlord may (but without obligation to do so) at any
time or from time to time, and without notice, procure such insurance and pay
the premiums therefor, in which event Tenant shall repay the Landlord all sums
so paid by Landlord, together with interest thereon as provided in Article 10
below and any costs or expenses incurred by Landlord in connection therewith,
within ten (10) days following Landlord's written demand to Tenant for such
payment.
7.2 TYPES AND LIMITS OF COVERAGE. Tenant, at its sole cost and
expense, shall, during the entire term hereof, procure, pay for and keep in full
force and effect: (i) comprehensive public liability and property damage
insurance
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with respect to the Premises and the operations of Tenant in, on or about the
Premises, including personal injury, blanket contractual, broad form property
damage and product liability coverage (including, without limitation [liquor
liability coverage and coverage for liability arising out of the consumption of
food and/or alcoholic beverages on or obtained at the Premises to the extent
obtainable), for not less than Five Million Dollars ($5,000,000) combined limit
per occurrence for bodily injury, death, and property damage liability; (ii)
worker's compensation coverage as required by law, together with employers
liability coverage; (iii) business interruption insurance, in amounts
satisfactory to Landlord; (iv) with respect to improvements, alterations, and
the like required or permitted to be made by Tenant hereunder, contingent
liability and builder's all-risk insurance, in amounts satisfactory to Landlord;
and (v) insurance against fire, vandalism, malicious mischief and such other
additional perils as now are or hereafter may be included in a standard fire,
extended coverage and special extended coverage endorsement from time to time in
general use in Orange County, California, insuring Tenant's leasehold
improvements, merchandise, trade fixtures, furnishings, equipment and other
items of personal property of Tenant located on or in the Premises, in an amount
equal to not less than ninety percent (90%) of the actual replacement cost
thereof.
7.3 SPECIFIC PROVISIONS. Each policy evidencing insurance required to
be carried by Tenant pursuant to this Article shall contain the following
provisions and/or clauses: (i) a cross-liability clause; (ii) a provision that
such policy and the coverage evidenced thereby shall be primary and
non-contributing with respect to any policies carried by Landlord and that any
coverage carried by Landlord shall be excess insurance; (iii) a provision
including Landlord and any other parties in interest designated by Landlord as
an additional insured; (iv) a waiver by the, insurer of any right to subrogation
against Landlord, its agents, employers and representatives which arises or
might arise by reason of any payment under such policy or by reason of any act
or omission of Landlord, its agents, employees or representatives, (v) a
severability clause; (vi) a provision that the insurer will not cancel or change
the coverage provided by such policy without first giving Landlord thirty (30)
days prior written notice; (vii) to the extent obtainable, a provision to the
effect that any amounts payable by virtue of loss of rentals or business
interruption shall be computed and stated separately in any settlement entered
into by the insurer under the policy involved. All net insurance proceeds may be
paid to an applicable "Lender" (as defined in Article l2 of the General
Conditions), so long as adequate provision reasonably satisfactory to Landlord
has been made in each case for the use of all such proceeds for the repair or
restoration of damaged or destroyed improvements on the Premises.
ARTICLE 8
RESTORATION
8.1 TENANT'S OBLIGATIONS. If any building or improvement erected by
Tenant on the Premises, or any part thereof, shall be damaged or
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destroyed by fire or other casualty during the term of this Lease, Tenant shall,
at its own cost and expense, repair or restore the same according to the
original plans thereof or according to such modified plans as shall be
previously approved in writing by Landlord, and such work of repair or
restoration shall be commenced within one hundred eighty (180) days after the
damage or loss occurs and shall be completed with due diligence but not longer
than one (1) year after such work is commenced, and such work shall be otherwise
done in accordance with the requirements of the provisions hereof pertaining to
the construction of improvements upon the Premises, and all insurance proceeds
collected for such damage or destruction shall be applied to the cost of such
repairs or restoration, and if (i) there are no insurance proceeds or (ii) the
same shall be insufficient for said purpose, Tenant shall make up the deficiency
out of its own funds. Should Tenant fail or refuse to make the repairs or
restoration as hereinabove provided, then in such event said failure or refusal
shall constitute a default under the covenants and conditions hereof and all
insurance proceeds so collected shall be forthwith paid over to and be retained
by Landlord on its own account and Landlord may, but shall not be required to,
use and apply the same for and to the repair or restoration of said Premises
and/or improvements, and Landlord may, at its option, terminate this Lease as
elsewhere provided herein.
8.2 TENANT'S OPTION TO TERMINATE. Notwithstanding anything to the
contrary contained in the preceding paragraph, if during the last five (5) years
of the term hereof any building or Improvement erected on said Premises shall be
damaged by fire or other casualty and the cost of repairing or restoring the
same shall exceed the insurance proceeds payable for such damage, then Tenant
shall have the option, to be exercised within thirty (30) days after such event,
to repair or restore said building as hereinabove provided, or to terminate this
Lease by written notice thereof to Landlord (subject to obtaining the prior
consent of any Lender provided for in Article 12 hereof, if said Lender's
consent is required), which option to terminate shall be conditioned as follows:
(a) Tenant shall, at its expense, within ninety (90) days after the
damage occurs, tear down and remove all parts of said building and other
Improvements then remaining and the debris resulting from such fire or
other casualty and otherwise clean up and restore the Premises, as far as
practicable, to its original condition, free and clear of liens; and
(b) Within ten (10) days after completion of said clean-up and
restoration Tenant shall surrender to Landlord possession of the Premises,
cleaned up and restored as aforesaid, and shall pay to Landlord (i) any
rent accruing to the date of said surrender, (ii) Tenant's pro rata share
of all unpaid taxes and assessments that then shall have become a lien upon
said Premises, and (iii) any other charges properly owing Landlord; and
(c) Upon surrender of possession of the Premises to Landlord, but not
before, said Lease shall terminate. The insurance proceeds collected and
paid for such damage, to the extent available for said purposes, shall be
applied
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first to pay the then balance due any authorized encumbrancer, if any,
second to the cost of such clean-up and restoration, and the unexpended
balance thereof, if any, shall be paid to Landlord.
ARTICLE 9
LIENS AND CLAIMS
9.1 MECHANICS' LIENS. Tenant shall not suffer or permit to be enforced
against the Premises, or any part thereof, or any Improvements thereon, any
mechanics', materialmen's, contractors' or subcontractors' liens ensuing from or
any claim for damage growing out of the work of any construction, repair,
restoration, replacement or improvement, or any other claim or demand howsoever
the same may arise, but Tenant shall pay or cause to be paid all of said liens,
claims or demands before any action is brought to enforce the same against said
Premises or Improvements. Tenant agrees to indemnify and hold Landlord and
Premises free and harmless from all liability for any and all such liens,
claims, demands and actions (collectively, the "Liens"), together with
reasonable attorneys' fees and all costs and expenses in connection therewith.
9.2 RIGHT TO CONTEST. Notwithstanding the foregoing, if Tenant shall
in good faith contest the validity of any such Lien, then Tenant shall at its
sole expense defend itself and Landlord against the same and shall pay and
satisfy any adverse expense or cost or any adverse judgment that may be rendered
thereon before the enforcement thereof against Landlord or the Premises, upon
the condition that if Landlord shall require, Tenant shall furnish to Landlord a
surety bond satisfactory to Landlord in an amount at least equal to such
contested Lien indemnifying Landlord against liability for the same, and holding
the Premises free from the effect of such Lien or if Landlord shall request,
Tenant shall procure and record the bond provided for in the California Civil
Code, or any comparable statute hereinafter enacted providing for a bond freeing
the Premises from the effect of such Lien.
9.3 BONDING AND NOTICES. Before the commencement of any work of
Improvement on the Premises, in addition to its other obligations herein
provided, Tenant shall give to Landlord thirty (30) days prior written notice
thereof, specifying as precisely as possible the expected date of commencement
thereof or any change thereof. Landlord reserves the right at any time and from
time to time to post and maintain on the Premises such notices of
non-responsibility or other notices as may be necessary to protect Landlord
against liability for all such liens and claims. At the request of Landlord, in
connection with any work of Improvement on the Premises exceeding Twenty-Five
Thousand Dollars ($25,000), Tenant shall also deposit with Landlord a
certificate or other evidence satisfactory to Landlord showing that Tenant has
furnished a bond or that Tenant's building contractor, if any, has furnished a
bond in favor of Landlord, with a surety approved by Landlord, guaranteeing the
completion of said work free and clear of all Liens.
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ARTICLE 10
SUBSTITUTE PERFORMANCE OR PAYMENT BY LANDLORD
In the event Tenant shall fail to pay and discharge or cause to be
paid and discharged, when due and payable, any tax, assessment, or other charge
upon or in connection with the Premises, or any lien or claim for labor or
material employed or used in, or any claim for damages arising out of the
construction, repair, restoration, replacement, maintenance and use of the
Premises and the improvements thereon, or any judgment on any contested lien or
claim, or any insurance premium or expense in connection with the Premises and
improvements, or any other claim, charge or demand which Tenant has agreed to
pay or cause to be paid under the covenants and conditions of this Lease, and
such failure continues for thirty (30) days following written notice from
Landlord so to do, then, in addition to any other remedies specified herein,
Landlord may at its option pay any of the aforementioned sums, or settle or
discharge any action therefor, or judgment thereon. All costs, expenses and
other sums incurred or paid by Landlord in connection with any of the foregoing
shall be paid by Tenant to Landlord within ten (10) days following demand
therefor, together with interest thereon at the rate of ten percent (10%) per
annum from the date incurred or paid, and failure to make such payment within
such ten (10) day period shall constitute a breach of the covenants and
conditions of this Lease in the same manner as failure to pay rent when due.
ARTICLE 11
ASSIGNMENTS AND SUBLETTING
11.1 PROHIBITION. Neither Tenant, nor any trustee, receiver or other
successor to Tenant shall, either voluntarily or by operation of law, assign,
sell, encumber, pledge or otherwise transfer all or any part of Tenant's
leasehold estate hereunder, or permit the Premises to be occupied by anyone
other than Tenant or Tenant's employees, or sublet the Premises or any portion
thereof, without Landlord's prior written consent in each instance.
Notwithstanding the above, Landlord's consent shall not be required for any
subletting of space or granting of concessions within any Improvement
constructed by Tenant on the Premises in accordance with the terms of this
Lease, provided such sublease or concession is for the uses permitted hereunder,
is made in the ordinary course of Tenant's business and is on a standard form
sublease or concession agreement approved in advance by Landlord in writing.
Consent by Landlord to one or more assignments of this Lease or to one or more
sublettings of the Premises, or the granting of concessions in connection
therewith, shall not operate to limit Landlord's rights under this paragraph in
any way. If Tenant is a corporation which, under the then current guidelines
published by the Commissioner of Corporations of the State of California, is not
deemed a pubic corporation, or is an unincorporated association or partnership,
the transfer, assignment or
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hypothecation, whether in one transaction or a series of transactions, of any
stock or interest in such corporation, association or partnership in the
aggregate in excess of twenty-five percent (25%), or the transfer of any
interest of Donald M. Koll in IMA Investment Corporation, a California
corporation, other than as a result of the death of Donald M. Koll, shall be
deemed an assignment within the meaning and provisions of this Article.
11.2 REQUIRED INFORMATION. In connection with requesting Landlord's
consent to an assignment of this Lease or a subletting of the Premises or any
portion thereof for which Landlord's consent is required, Tenant shall submit in
writing to Landlord: (i) the name of the proposed subtenant or assignee; (ii)
the nature of the proposed subtenant's or assignee's business to be carried on
in the Premises; (iii) the terms and provisions of the proposed sublease or
assignment; and (iv) such reasonable information as Landlord may request
concerning the proposed subtenant or assignee, including but not limited to a
balance sheet of the proposed subtenant or assignee as of a date within ninety
(90) days of the request for Landlord's consent, statements of income or profit
and loss of the proposed subtenant or assignee for the two year period preceding
the request for Landlord's consent and a written statement in reasonable detail
as to the business experience of the proposed subtenant or assignee during the
five years preceding the request for Landlord's consent.
11.3 LANDLORD'S OPTIONS. At any time within thirty (30) days after
Landlord's receipt of the information specified in Section 11.2 above, Landlord
may by written notice to Tenant elect to (i) consent to the subletting or
assignment upon the terms and to the subtenant or assignee proposed; (ii)
condition such consent upon the assumption by such assignee or sublessee of all
obligations hereunder and such other reasonable conditions as Landlord may
impose, including but not limited to adjustment of the rental payable hereunder
(based on use restrictions as to the Premises set forth in this Lease); or (iii)
refuse to give its consent. Tenant agrees that Landlord may refuse to consent to
any proposed assignment or subletting for any reason or reasons deemed
sufficient by Landlord without regard to any objective standard of
reasonableness and may consent to a proposed subletting or assignment subject to
such conditions as Landlord, in its sole discretion, deems appropriate. Tenant
further agrees that no assignment or subletting consented to by Landlord shall
impair or diminish any covenant, condition or obligation imposed upon Tenant by
this Lease or any right, remedy or benefit afforded Landlord by this Lease. If
Landlord consents to such assignment or subletting, Tenant may thereafter within
ninety (90) days after the expiration of said thirty (30) day period enter into
a valid assignment or sublease of the Premises or portion thereof, upon the
terms and conditions described in the information required to be furnished by
Tenant to Landlord pursuant to Section 11.2 above or other terms not less
favorable to Tenant, provided, however, that any material change in the terms of
such subletting or assignment from those approved by Landlord shall be subject
to Landlord's consent as provided in this Article.
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11.4 INVALIDITY. No transfer or assignment, whether voluntary or
involuntary, by operation of law, under legal process or proceedings, or
otherwise, shall be valid or effective without the prior written consent and
approval of Landlord as and in the manner required by this Article 11. Should
Tenant attempt to make or suffer to be made any such transfer, assignment or
subletting, except as aforesaid, or should any of Tenant's rights under this
Lease be sold or otherwise transferred by or under court order or legal process
or otherwise, or should Tenant be adjudged insolvent or bankrupt, then and in
any of the foregoing events Landlord may, at its option, terminate this Lease
forthwith by written notice thereof to Tenant. Should Landlord consent to any
such transfer, assignment or subletting, such consent shall not constitute a
waiver of any of the restrictions of this Article, and the same shall apply to
each successive transfer, assignment or subletting hereunder, if any. If the
above limitation on Tenant's right to assign any interest hereunder is declared
or rendered unenforceable or invalid for any reason or to any extent, then the
parties agree that Section 5(b)(i) shall be deemed amended to provide for the
payment of Percentage Rent in the amount, if any, by which fifteen percent (15%)
of Tenant's Gross Sales during a Lease Year exceeds the Minimum Rent paid by
Tenant for such period.
11.5 TENANT'S LIABILITY. Unless otherwise agreed in writing by
Landlord and Tenant, no subletting or assignment, even with the consent of
Landlord, shall relieve Tenant of its rental or other obligations to be
performed by Tenant hereunder. The acceptance by Landlord of any payment due
hereunder from any other person shall not be deemed to be a waiver by Landlord
of any provision of this Lease or to be a consent to any assignment or
subletting.
11.6. TRANSFER FEE. If Landlord consents to any transfer or assignment
by Tenant pursuant to Section 11.1 above, Tenant shall pay a transfer fee to
Landlord of $5,000 (except as provided in Section 12.4 below) in connection with
the processing and documentation thereof.
ARTICLE 12
ENCUMBRANCES BY TENANT
12.1 DEFINITIONS. As used in this Lease, "Lender" shall mean any bank,
savings and loan association, insurance company, trustees of a pension trust, or
any other person or entity approved by Landlord in writing and making a loan to
Tenant secured, in whole or in part, by a Trust Deed; and "Trust Deed" shall
mean any deed of trust, mortgage or other security instrument imposing a first
lien on Tenant's leasehold estate and securing such loan advanced solely for the
construction of Improvements on the Premises as provided herein or as a
permanent loan following completion of such Improvements (including but not
limited to such so-called "soft costs" as loan interest, taxes, assessments,
broker's commissions, insurance premiums, amounts payable to or on behalf of
Landlord pursuant to the terms of this Lease, lender's fees and interim and
permanent financing including, without limitation, takeout and standby fees with
respect to
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permanent financing, legal and accounting fees, premiums for performance bonds,
contingencies and the like).
12.2 CONDITIONS TO ENCUMBRANCE. Notwithstanding the provisions of
Article 11 above, if requested by Tenant in writing, Landlord shall execute its
written consent to an assignment or hypothecation of this Lease under a Trust
Deed for the benefit of a Lender upon and subject to the following covenants and
conditions:
(a) The Trust Deed and all rights acquired thereunder shall be
subject to each and all of the covenants, conditions, restrictions and
provisions set forth in this Lease and to all rights and interest of
Landlord hereunder, except as herein otherwise provided. Landlord may
condition such consent upon receipt from Tenant and said Lender of written
documents satisfactory to Landlord by which Tenant and Lender expressly
agree to be so bound and subject to such matters as to themselves and their
respective successors and assigns. In the event of any conflict between the
provisions of this Lease and any provisions of any Trust Deed, the
provisions of this Lease shall control. Any notice to Lender of Tenant's
default or of termination of this Lease provided for in this Article may be
given concurrently with or after Landlord's notice of default to Tenant as
provided in Article 13.
(b) Immediately after the recording of the Trust Deed, Tenant, at
Tenant's expense, shall cause to be recorded in the office of the Recorder
of Orange County, California, a written request executed and acknowledged
by Landlord for a copy of any notice of default and of any notice of sale
under the Trust Deed as provided by the statutes of the State of
California. Concurrently with the execution of said consent, Tenant shall
furnish to Landlord a complete copy of the Trust Deed and note secured
thereby, and all other instruments evidencing or securing the indebtedness
secured thereby, together with the name and address of the holder thereof.
No such encumbrance shall be valid or effective unless and until Landlord
shall execute its written consent thereto.
12.3 LENDER RIGHTS ON DEFAULT. If Landlord elects to declare a default
by Tenant or to terminate the Lease as to Tenant because of any default, breach
or event of bankruptcy or insolvency described in Section 13.1(d) below
(collectively herein, the "default") hereunder on the part of Tenant, any
permitted Lender may nonetheless have the following rights within sixty (60)
days after service of written notice on Lender by Landlord of any such default
and/or termination:
(a) Lender may cure such default and either have the Lease continue in
effect with respect to such Lender (but not with respect to Tenant) or
enter into a new lease with Landlord on the same terms, conditions and
provisions contained herein (effective as of the date of Landlord's
termination of this Lease), but only if (i) Lender has served on Landlord a
request for written notice from Landlord of lease termination for Tenant's
default; and (ii) Lender
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has, within such sixty (60) day period, either cured such default (other
than the bankruptcy or insolvency of Tenant), if the same can be cured by
the payment of money, or if the default is otherwise curable but cannot be
remedied within the sixty (60) day period, then such Lender shall have
commenced in good faith to cure such default or breach and thereafter
diligently prosecuted the same to completion, or
(b) If such default is not so curable, Lender may cause in good faith
the trustee under the Trust Deed to commence and thereafter to diligently
pursue to completion all appropriate steps and proceedings for Judicial
foreclosure, the exercise of the power of sale under and pursuant to the
Trust Deed in the manner provided by law, or the obtaining from Tenant of
an assignment of this Lease in lieu of foreclosure (collectively the
"foreclosure remedies"); provided, that
(c) Subject to the foregoing provisions, Lender shall keep and perform
all of the covenants, conditions and provisions of this Lease herein
required to be kept and performed by Tenant until such time as the
leasehold created by this Lease shall be sold upon exercise of any of the
foreclosure remedies; provided further, that should trustee under the Trust
Deed or Lender be precluded by the bankruptcy laws of the United States or
by process or issue of any court having jurisdiction in connection with any
bankruptcy or insolvency proceeding involving Tenant during the above sixty
(60) day period from commencing and pursuing to completion steps and
proceedings for any such foreclosure remedies, then Landlord shall extend
said period for the pursuing of such foreclosure remedies, provided that
Lender is diligently and in good faith exerting all reasonable efforts to
obtain an appropriate release from any court order or restraint with
respect to such proceeding involving Tenant, and further provided that upon
such release, Lender shall in good faith immediately cause to have
commenced and to diligently pursue to completion all steps and proceedings
for consummation of such foreclosure remedies.
(d) If the leasehold estate hereunder shall be transferred by
exercise of any of such foreclosure remedies, the transferee or transferees
thereof shall thereupon and thereby assume the performance of and be bound
by each and all of the covenants, conditions, restrictions, obligations and
provisions herein provided to be kept and performed by Tenant during the
period such transferee or transferees shall hold title to said leasehold
estate.
Notwithstanding the foregoing provisions, if any Lender shall fail or
refuse at any time to comply with any and all of the applicable provisions of
this Section, then and thereupon Landlord shall be released from any covenant
not to terminate the Lease with respect to such Lender.
12.4 TRANSFER FEE. The prior written consent of Landlord shall not be
required for transfer of the leasehold estate created by this Lease to a
purchaser at a foreclosure sale or to the Lender's immediate transferee should
the
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Lender be the successful bidder at the foreclosure sale for a bid not in excess
of the sum of all amounts then secured by its Trust Deed or otherwise specified
in Calif. Civil Code Section 2924(c), or should the Lender receive the leasehold
estate created by this Lease by assignment in lieu of foreclosure, provided
that the Lender forthwith gives notice to Landlord in writing of any such
transfer setting forth the name and address of the transferee, the effective
date of such transfer and the express agreement of the transferee assuming and
agreeing to perform all of the obligations under this Lease, together with a
copy of the document by which such transfer was made and the payment to Landlord
of a transfer fee of $100 in lieu of the transfer fee as provided under Article
11. Any subsequent transfer of the leasehold estate created by this Lease shall
not be made without the prior written consent of Landlord and shall be subject
to the conditions relating thereto as set forth in Article 11 above.
ARTICLE 13
DEFAULTS AND REMEDIES
13.1 DEFAULTS. The occurrence of any one or more of the following
events shall constitute a default hereunder by Tenant:
(a) Abandonment of the Premises which shall include but not be limited
to, any absence by Tenant from the Premises for five (5) consecutive days
or longer while in default of any provision of this lease.
(b) Failure by Tenant to make any payment of rent or other payment or
charge required to be made by Tenant hereunder, as and when due, where
such failure shall continue for a period of ten (10) days after written
notice thereof from Landlord to Tenant; provided, however, that any such
notice provided above or in (c) below shall be in lieu of, and not in
addition to, any notice required under California Code of Civil Procedure
Sec. 1161, as amended.
(c) Failure by Tenant to perform any other express or implied
covenants or provisions herein contained (other than any breach under the
Article entitled "Assignment and Subletting" for which immediate notice of
termination may be given) and should such failure continue for thirty (30)
days after written notice thereof from Landlord to Tenant specifying the
particulars of such default; provided, further, that if the nature of
Tenant's default is such that more than thirty (30) days are reasonably
required for its cure, then Tenant shall not be deemed to be in default if
Tenant shall commence such cure within said thirty (30) day period and
thereafter diligently prosecute such cure to completion.
(d) Tenant's (i) application for, consent to, or suffering of the
appointment of a receiver, trustee or liquidator for all or for a
substantial portion of, its assets; (ii) making a general assignment for
the benefit of
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creditors; (iii) admitting in writing its inability to pay its debts or its
willingness to be adjudged a bankrupt; (iv) becoming unable to or failing
to pay its debts as they mature; (v) being adjudged a bankrupt; (vi) filing
a voluntary petition or suffering an involuntary petition under any
bankruptcy, arrangement, reorganization or insolvency law (unless in the
case of an involuntary petition, the same is dismissed within thirty (30)
days of such filing); (vii) convening a meeting of its creditors or any
class thereof for purposes of effecting a moratorium, extension or
composition of its debts; or (viii) suffering or permitting to continue
unstayed and in effect for ten (10) consecutive days any attachment, levy,
execution or seizure of all or a substantial portion of Tenant's assets or
of Tenant's interest in this lease.
13.2 REMEDIES. In any of such events of default and in addition to any
or all other rights or remedies of the Landlord hereunder or by the law
provided, Landlord may exercise the following remedies at its sole option:
(a) TERMINATION. Terminate Tenant's right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord.
In such event Landlord shall be entitled to recover from Tenant:
(i) The worth at the time of award of the unpaid rent which had
been earned at the time of termination;
(ii) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such loss that Tenant proves could
have been reasonably avoided;
(iii) The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award
exceeds the amount of such loss that Tenant proves could have been
reasonably avoided;
(iv) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, including, but not limited to,
the cost of recovering possession of the Premises, expenses of
reletting, including necessary repair, renovation and alteration of
the Premises, reasonable attorneys' fees, and any other reasonable
costs.
The "worth at the time of award" of the amounts referred to in
subparagraphs (i) and (ii) above shall be computed by allowing
interest at ten percent (10%) per annum from the dates such amounts
accrued to Landlord. The worth at the time of award of the amount
referred to in subparagraph (iii) above shall be computed by
discounting such amount
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at one (1) percentage point above the discount rate of the Federal
Reserve Bank of San Francisco at the time of award.
(b) RELETTING. Without terminating or effecting a forfeiture of this
Lease or otherwise relieving Tenant of any obligation hereunder in the
absence of express written notice of Landlord's election to do so, Landlord
may, but need not, relet the Premises or any portion thereof at any time or
from time to time and for such terms and upon such conditions and rental as
Landlord in its sole discretion may deem proper. Whether or not the
Premises are relet, Tenant shall pay to Landlord all amounts required by
Tenant hereunder up to the date that Landlord terminates Tenant's right to
possession of the Premises; provided, however, that following a default,
Landlord shall not unreasonably withhold its consent to an assignment of
this Lease or a subletting of the Premises requested by Tenant, unless
Landlord shall also elect to terminate this Lease and Tenant's right to
possession of the Premises as provided in Section 13.2(a) above. Such
payments by Tenant shall be due at the times provided in this Lease, and
Landlord need not wait until the termination of this Lease to recover them
by legal action or in any other manner. If Landlord relets the Premises or
any portion thereof, such reletting shall not relieve Tenant of any
obligation hereunder, except that Landlord shall apply the rent or other
proceeds actually collected by it for such reletting against amounts due
from Tenant hereunder to the extent such proceeds compensate Landlord for
non-performance of any obligation of Tenant hereunder. Landlord may execute
any lease made pursuant hereto in its own name, and the lessee thereunder
shall be under no obligation to see to the application by Landlord of any
proceeds to Tenant, nor shall Tenant have any right to collect any such
proceeds. Landlord shall not by any re-entry or other act be deemed to have
accepted any surrender by Tenant of the Premises or Tenant's interest
therein, or be deemed to have terminated this Lease, or to have relieved
Tenant of any obligation hereunder, unless Landlord shall have given Tenant
express written notice of Landlord's election to do so as set forth herein.
13.3 NO OBLIGATION OR LIABILITY OF LANDLORD. Landlord shall be under
no obligation to observe or perform any covenant of this Lease on its part to be
observed or performed which accrues after the date of any default by Tenant
thereunder. If Landlord shall elect to re-enter the Premises, Landlord shall not
be liable for any damages by reason of such re-entry.
13.4 RENT DURING UNLAWFUL DETAINER. In any action for unlawful
detainer commenced by Landlord against Tenant by reason of any default
hereunder, the reasonable rental value of the Premises for the period of the
unlawful detainer shall be deemed to be the amount of rent, additional rent and
other charges or payments to be made by Tenant under this lease for such period,
unless Tenant shall prove to the contrary by competent evidence.
13.5 CUMULATIVE RIGHTS. The rights and remedies reserved to Landlord
hereunder, including those not specifically described, shall be cumulative,
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and, except as otherwise may be provided by California statutory law in effect
at the time, Landlord may pursue any or all of such rights and remedies, at the
same time or separately.
13.6 NO WAIVER. No delay or omission of Landlord to exercise any right
or remedy shall be construed as a waiver of any such right or remedy or of any
default by Tenant hereunder. The acceptance by Landlord of rent or any other
payments hereunder shall not be a waiver of any preceding breach or default by
Tenant of any provision hereof, other than the failure of Tenant to pay the
particular rent or any other payments accepted, regardless of Landlord's
knowledge of such preceding breach or default at the time of acceptance of such
rent or any other payments, or a waiver of Landlord's right to exercise any
remedy available to Landlord by virtue of such breach or default.
13.7 EXPENSES AND LEGAL FEES. If either party incurs any expense,
including reasonable attorneys' fees, in connection with any action or
proceeding instituted by either party by reason of any default or alleged
default of the other party hereunder, the party prevailing in such action or
proceeding shall be entitled to recover its said reasonable expenses from the
other party. For purposes of this provision, in any unlawful detainer or other
action or proceeding instituted by Landlord based upon any default or alleged
default by Tenant hereunder, Landlord shall be deemed the prevailing party if in
any action or proceeding arising in connection with any default or alleged
default by Tenant hereunder: (a) judgment is entered in favor of Landlord; or
(b) prior to trial or Judgment Tenant shall pay all or any portion of the rent
and charges claimed by Landlord, eliminate the condition, cease the act, or
otherwise cure the omission claimed by Landlord to constitute a default by
Tenant hereunder.
ARTICLE 14
TRANSFERS AND FINANCING BY LANDLORD
14.1 TRANSFERS. The term "Landlord" as used in this Lease, so far as
covenants or obligations on the part of Landlord are concerned, shall mean and
include only the fee owner or owners of the Premises at the time in question,
and in the event of any transfer or transfers of the title to said land,
Landlord (and in the case of any subsequent transfers or conveyances, the then
grantor), except as hereinafter provided, shall be automatically freed and
relieved, from and after the date of such transfer or conveyance, of all
covenants or obligations on the part of Landlord contained in the Lease
thereafter to be performed; provided, however, that any funds in which Tenant
has an interest which are in the hands of such Landlord or the then grantor at
the time of such transfer shall be turned over to the grantee, and any amount
then due and payable to Tenant by Landlord or the then grantor under any
provisions of this Lease shall be paid to Tenant. The covenants and obligations
contained in this Lease on the part of Landlord shall, subject to the foregoing,
be binding on Landlord, its successors and assigns, only during and in respect
to their respective successive periods of ownership. No holder of a
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mortgage and/or deed of trust to which this lease is or may be subordinate, and
no lessor under a so-called sale-leaseback, shall be responsible in connection
with any security deposited hereunder, unless such mortgagee or holder of such
deed of trust or lessor shall have actually received the security deposited
hereunder.
14.2 ATTORNMENT. In the event any proceedings are brought for the
foreclosure of, or in the event of the conveyance by deed in lieu of
foreclosure of, or in the event of exercise of the power of sale under, any
mortgage and/or deed of trust made by Landlord covering the Premises, or in the
event Landlord sells, conveys or otherwise transfers its interest in the
Premises, Tenant hereby attorns to, and covenants and agrees to execute an
instrument in writing reasonably satisfactory to the new owner whereby Tenant
attorns to such successor in interest and recognizes such successor as the
Landlord under this Lease.
14.3 SUBORDINATION. Tenant agrees that this Lease shall, at the
request of the Landlord, be subordinate to any mortgages or deeds of trust that
may hereafter be placed by Landlord upon the Premises and to any and all
advances to be made thereunder, and to the interest thereon, and all renewals,
replacements and extensions thereof; provided, that the mortgagees or
beneficiaries named in said mortgages or trust deeds shall agree to recognize
the interest of Tenant and any applicable Lender under this Lease in the event
of foreclosure, if Tenant is not then in default. Tenant also agrees that any
mortgagee or beneficiary may elect to have this Lease constitute a prior lien to
its mortgage or deed of trust, and in the event of such election and upon
notification by such mortgagee or beneficiary to Tenant to that effect, this
Lease shall be deemed prior in lien to such mortgage or deed of trust, whether
this Lease is dated prior to or subsequent to the date of said mortgage or deed
of trust. Tenant agrees that upon the request of Landlord, or any mortgagee or
beneficiary, Tenant shall execute whatever instruments may be required to carry
out the intent of this Section.
ARTICLE 15
SURRENDER, REMOVAL AND TITLE TO IMPROVEMENTS
15.1 REMOVAL OR DEMOLITION. Within ninety (90) days after the
expiration or earlier termination of this Lease, Landlord, at its option, may
require Tenant, at its expense, to promptly and diligently remove, demolish
and/or clear off from the Premises all or any designated portion of the
Improvements and other property of whatsoever nature placed or owned by Tenant
or any successors in interest thereon, whether or not affixed to the Premises or
to any improvement thereon, and after such removal or clearance Tenant shall
restore the surface of the ground to a graded, properly filled, level and
uniform condition, free from all excavations and debris; provided, however, that
if Tenant at such time shall be in default in the payment of rents or any other
charges hereunder, Landlord shall have a lien on said Improvements to secure
payment of such rents or charges.
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If Landlord exercises such option, Tenant shall promptly commence and diligently
complete such demolition and clearing, which work shall be done in accordance
with all provisions of this Lease governing the performance of changes,
alterations or other such work to the Premises and Improvements.
15.2 CONVEYANCE OR RELEASE OF IMPROVEMENTS. Should Landlord not
require Tenant to remove or demolish any such Improvements as provided in
Section 15.1, then title to the same shall automatically pass to Landlord, free
of any right, title, interest or estate of Tenant therein, or its successors or
assigns, without the necessity of executing any further instrument and without
the necessity of any allowance, compensation, consideration or payment by
Landlord therefor. Tenant hereby grants, releases, transfers, sets over, assigns
and conveys to Landlord all of its right, title and interest in and to all such
Improvements, to be effective for all purposes upon any such termination of this
Lease. Notwithstanding the foregoing, Tenant agrees to execute, acknowledge and
deliver to Landlord upon the expiration of such 90-day period a proper
recordable instrument quitclaiming and releasing to Landlord any right, title
and interest of Tenant in and to the Premises and all Improvements remaining
thereon, and giving such further assurances of title as may be required by
Landlord or its successors, assigns or title insurers. Nothing herein contained,
however, shall adversely affect any right that Tenant may have to quiet
enjoyment and possession so long as the Lease-shall continue in force and effect
and Tenant shall not be in default hereunder. Tenant shall upon such lease
termination surrender and deliver the Premises and all remaining Improvements
not removed as provided above to the possession and use of Landlord, without
delay and in good order, condition and repair, ordinary wear and tear excepted,
and in a neat and clean condition, excepting only Tenant's or any subtenant's
movable trade fixtures, machinery, equipment and personal property. Tenant shall
also deliver to Landlord all leases, lease files, plans, books, records,
registers and other documents necessary or appropriate for the proper operation,
maintenance and management of the Premises and Improvements.
ARTICLE 16
HOLDING OVER
This Lease shall terminate and become null and void without further
notice upon the expiration of the term herein specified, and any holding over by
Tenant after such expiration shall not constitute a renewal hereof or give
Tenant any rights hereunder or in or to the Premises, except as otherwise
herein provided, it being understood and agreed that this Lease cannot be
renewed, extended or in any manner modified except by a writing signed by both
parties hereto. If Tenant shall hold over for any period after the expiration of
said term, Landlord may, at its option, exercised by written notice to Tenant,
treat Tenant as a tenant from month-to-month commencing on the first day
following the expiration of this Lease and subject to the terms and conditions
herein contained except that the monthly rental, which shall be payable in
advance, shall be one hundred and fifty percent
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(150%) of the monthly rental applicable at the said expiration date plus any
prorated Percentage Rent or additional rent if provided herein. If Tenant fails
to surrender said Premises upon expiration of this Lease despite demand to do so
by Landlord, Tenant shall indemnify and hold Landlord harmless from all loss or
liability, including without limitation any claims made by any succeeding
lessee, founded on or resulting from such failure to surrender, and Landlord
shall be entitled to the benefit of all provisions of law respecting summary
recovery of possession to the same extent as if such statutory or other notice
had been given.
ARTICLE 17
EMINENT DOMAIN
17.1 DEFINITION OF TERMS. The term "total taking" as used in this
Article means the taking of the entire Premises under the power of eminent
domain or a taking of so much of said Premises as to prevent or substantially
impair the conduct of Tenant's business thereon. The term "partial taking" means
the taking of a portion only of said Premises which does not constitute a total
taking as above defined.
17.2 TOTAL TAKING. If during the term hereof there shall be a total
taking by public authority under the power of eminent domain, then the leasehold
estate of Tenant in and to the Premises shall cease and terminate as of the date
the actual physical possession thereof shall be taken.
17.3 PARTIAL TAKING. If during said term there shall be a partial
taking of the Premises, this Lease shall terminate as to the portion of said
Premises taken upon the date upon which actual possession is taken pursuant to
said eminent domain proceedings, but said Lease shall continue in force and
effect as to the remainder of said Premises. The basic rental payable by Tenant
for the balance of said term shall be abated in the ratio that the square
footage ground area of the Premises taken bears to the total ground area of said
Premises at the time of such taking.
17.4 ALLOCATION OF AWARD. All compensation and damages awarded for the
taking of the Premises or any portion thereof shall, except as otherwise herein
provided, belong to and be the sole property of Landlord, and Tenant shall not
have any claim or be entitled to any award for diminution in value of its
leasehold hereunder or for the value of any unexpired term of this Lease;
provided, however, that Tenant shall be entitled to any award that may be made
for the taking of or injury to any Improvements installed or constructed on the
Premises at the expense of Tenant, or on account of any cost or loss Tenant may
sustain in the removal of Tenant's fixtures, equipment and furnishings, or as a
result of any alterations, modifications or repairs which may be reasonably
required by Tenant in order to place the remaining portion of the Premises not
so condemned in a suitable condition for the continuance of Tenant's tenancy.
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17.5 EFFECT OF TERMINATION. If this Lease is terminated, in whole or
in part, pursuant to any of the provisions of this Article, all rentals and
other charges payable by Tenant to Landlord hereunder and attributable to the
Premises taken, shall be paid up to the date upon which actual physical
possession shall be taken by the condemnor, and the parties shall thereupon be
released from all further liability in relation thereto.
17.6 VOLUNTARY CONVEYANCE. A voluntary conveyance by Landlord to a
public utility, agency or authority under threat of a taking under the power of
eminent domain in lieu of formal proceedings shall be deemed a taking within
the meaning of this Article 17.
ARTICLE 18
MINERAL AND WATER RIGHTS RESERVATIONS
Landlord reserves and excepts from all property leased hereunder unto
itself, its successors and assigns, together with the exclusive right to grant
and transfer all or a portion of the same:
(a) Any and all oil, oil rights, petroleum, minerals, mineral rights,
natural gas rights, and other hydrocarbon substances by whatsoever name
known, geothermal steam, and all products derived from any of the
foregoing, that may be within or under the land, together with the
perpetual right of drilling, mining, exploring, prospecting and operating
therefor and storing in and removing the same from the Premises or any
other land, including the right to whipstock or directionally drill and
mine from lands other than those conveyed hereby, oil or gas wells, tunnels
and shafts into, through or across the subsurface of the Premises, and to
bottom such whipstocked or directionally drilled wells, tunnels and shafts
under and beneath or beyond the exterior limits thereof, and to redrill,
retunnel, equip, maintain, repair, deepen and operate any such wells or
mines; without, however, the right to enter, drill, mine, store, explore
and operate on or through the surface or the upper 500 feet of the
subsurface of the Premises.
(b) Any and all water, rights or interests therein, no matter how
acquired by Landlord, and owned or used by Landlord in connection with or
with respect to the Premises, together with the right and power to explore,
drill, redrill, remove and store the same from the Land or to divert or
otherwise utilize such water, rights or interests on any other property
owned or leased by Landlord, whether such water rights shall be riparian,
overlying, appropriative, percolating, littoral, prescriptive, adjudicated,
statutory or contractual; but without, however, any right to enter upon the
surface of the Premises in the exercise of such rights.
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ARTICLE 19
SAFETY AND HEALTH
Tenant shall comply with all laws and regulations promulgated by all
relevant governmental authorities, including but not limited to the requirements
of the Occupational Safety and Health Act of 1970, 29 U.S.C. Section 661 et seq.
and any analogous legislation in California (collectively, "OSHA") to the extent
that OSHA applies to the Premises and any activities thereon. Without limiting
the generality of the foregoing, Tenant shall maintain all working areas, all
machinery, structures, electrical facilities and the like upon the Premises in a
condition that fully complies with the requirements of OSHA, including such
requirements as would be applicable with respect to agents, employees or
contractors of Landlord who may from time to time be present upon the Premises.
Tenant shall indemnify and hold harmless Landlord from any liability, claims or
damages arising as a result of a breach of the covenants of this Article and
from all costs, expenses and charges arising therefrom including, without
limitation, attorneys' fees and court costs incurred by Tenant in connection
therewith, which indemnity shall survive the expiration or termination of this
Lease.
ARTICLE 20
STATEMENT OF TENANT
20.1 CONTENTS AND EFFECT. Tenant shall, at any time and from time to
time, upon not less than ten (10) days prior written notice by Landlord,
execute, acknowledge and deliver to Landlord a statement in writing certifying
that this Lease is unmodified and in full force and effect (or, if there has
been any modification thereof, that the same is in full force and effect as
modified and stating the modification or modifications) and that Landlord is not
in default, except as specified in such statement, in regard to any of its
covenants or obligations under this Lease, and further setting forth the dates
to which all sums payable as rental hereunder have been paid in advance, if any,
and such other statements relating to delivery and acceptance of the Premises as
Landlord's lender, lienor, encumbrancer or purchaser may require. Tenant
represents and warrants that any such statement delivered pursuant to this
Article will be accurate and binding upon Tenant and may be relied upon by any
such person. Tenant shall be taken to have waived any defaults by Landlord
occurring before the date of such statement and not set forth therein.
20.2 EFFECT OF TENANT'S FAILURE. Tenant's failure to execute and
deliver such statement within such time shall be conclusive evidence (i) that
this Lease is in full force and effect without modification except as may be
represented by Landlord, (ii) that there are no uncured defaults in
Landlord's performance, and (iii) that not more than one installment of minimum
rent has been paid in advance; provided, however, that at Landlord's option
Tenant's failure to execute and deliver any statements or instruments necessary
or desirable to
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<PAGE>
effectuate the foregoing provisions of this Article or Sections 14.2 or 14.3
above, within ten (10) days after written request so to do by Landlord, shall
constitute a breach of this Lease. In the event of such failure, Landlord in
addition to any other rights or remedies it might have, shall have the right by
not less than ten (10) days notice to Tenant to declare this Lease terminated
and the term ended, in which event this Lease shall cease and terminate on the
date specified in such notice; upon such termination Tenant shall vacate and
surrender the Premises, but shall remain liable as provided in this Lease by
reason of said breach.
ARTICLE 21
MISCELLANEOUS PROVISIONS
21.1 NOTICES. Any notice, election, demand or other communication to
be given by either party to the other hereunder may be delivered in person to an
authorized representative of the other party, or may be deposited in the United
States mail, duly registered or certified, with postage prepaid, and addressed
to the party for whom intended as follows: To Landlord at its designated
business office, and to Tenant at the Premises or at such other address set
forth beneath its signature in the attached Lease. Either of the parties hereto
may hereafter respectively designate another address as provided above. Service
of any such written notice shall be deemed complete at the time of such personal
delivery or within two (2) days after the mailing thereof as hereinabove
provided. If more than one lessee is named under this Lease, service of any
notice upon any one of said lessees as herein provided shall be deemed as
service upon all of said lessees.
21.2 PRORATIONS. All payments required to be made under the terms of
this Lease which require proration shall be prorated on the basis of one-twelfth
(1/12th) of the amount for each full month and one-three hundred and sixtieth
(1/360th) of the amount for each day to be prorated.
21.3 INTEREST ON LATE PAYMENTS. Any installment of rent accruing under
the provisions of this Lease or any other payment which shall not be paid when
due, shall bear simple interest at the lesser of (i) 4% per annum above the
prime rate (expressed as an annual rate of interest) then charged by a bank
designated by Landlord from time to time as its correspondent bank, or (ii) the
maximum rate of interest then permitted by applicable law, accruing from the
date when such payment was due until the date such amount is fully paid.
21.4 ACCORD AND SATISFACTION. No payment by Tenant or receipt by
Landlord of a lesser amount than the rent and other payments herein stipulated
shall be deemed to be other than on account of the earliest due stipulated rent,
nor shall any endorsement or statement on any check or any letter accompanying
any check or payment as rent be deemed an accord and satisfaction, and Landlord
shall accept such check or payment without prejudice to Landlord's right to
recover the balance of such rent or pursue any other remedy in this Lease
provided.
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21.5 WAIVER. One or more wavers of any covenant or condition by
Landlord shall not be construed as a waiver of a subsequent breach of the same
covenant or condition, and the consent or approval by Landlord to or of any act
by Tenant requiring Landlord's consent or approval shall not be deemed to render
unnecessary Landlord's consent or approval to or any subsequent similar act by
Tenant. No breach by Tenant of a covenant or condition of this Lease shall be
deemed to have been waived by Landlord unless such waiver is in a writing signed
by Landlord. The rights and remedies of Landlord under this Lease shall be
cumulative and in addition to any and all other rights and remedies which
Landlord has or may have.
21.6 SURRENDER OR CANCELLATION. The voluntary or other surrender of
this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger,
but shall terminate all or any existing subleases unless Landlord expressly
elects to treat such surrender or cancellation as an assignment to Landlord of
any or all of such subleases.
21.7 BROKER'S COMMISSION. Tenant warrants that it has had no dealings
with any real estate broker or agent in connection with the negotiation of this
Lease except as may otherwise be specifically stated in this Lease. Tenant
agrees to indemnify Landlord and hold Landlord harmless from all liabilities
arising from any claim by any other broker or finder allegedly representing
Tenant, including, without limitation, the cost of attorneys' fees in connection
therewith. Such agreement shall survive the termination of this Lease.
21.8 RECORDING. Tenant shall not record this Lease without the prior
written consent of Landlord. Landlord, upon the request of Tenant, shall execute
and acknowledge a "short form" memorandum of this Lease, in form and substance
satisfactory to Landlord, for recording purposes.
21.9 CORPORATE AUTHORITY. If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms. Tenant shall, at Landlord's request, deliver a certified copy of
its Board of Directors' resolution authorizing such execution.
21.10 NONDISCLOSURE OF LEASE TERMS. Landlord and Tenant acknowledge
and agree that the terms of this Lease are confidential and constitute
proprietary information of Landlord and Tenant. Disclosure of the terms hereof
could adversely affect the ability of Landlord to negotiate other leases and
impair Landlord's relationship with other tenants in the vicinity of the
Premises. Landlord and Tenant each agree that they, and their respective
partners, officers, directors, employees and attorneys, shall not disclose the
terms or conditions of this Lease to any other person without the prior written
consent of the other party hereto; provided, however, that the foregoing shall
not extend to disclosure by either party
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<PAGE>
to its Lenders or to the independent accountants who may audit their respective
financial statements. It is understood and agreed that damages would be an
inadequate remedy for the breach of this provision by any party hereto, and each
of the parties hereto shall have the right to specific performance of this
provision and to injunctive relief to prevent its breach or continued breach.
21.11 ENTIRE AGREEMENT. This Lease and the exhibits hereto cover in
full each and every agreement of every kind or nature whatsoever between the
parties hereto concerning the Premises, and all preliminary negotiations and
agreements of whatsoever kind with respect to the Premises, except those
contained herein, are superseded and of no further force or effect. No person,
firm or corporation has at any time had any authority from Landlord to make any
representations or promises on behalf of Landlord, and Tenant expressly agrees
that if any such representations or promises have been made by Landlord or
others, Tenant hereby waives all right to rely thereon. No verbal agreement or
implied covenant shall be held to vary the provisions hereof, notwithstanding
any statute, law, or custom to the contrary.
21.12 AMENDMENT OF LEASE. No amendment or other ratification of this
Lease shall be effective unless in writing signed by two authorized agents of
Landlord, who shall be the President or a Vice-President, and either another
Vice-President, the Secretary or an Assistant Secretary, and by the Tenant, or
by their respective successors in interest.
21.13 CERTAIN RULES OF CONSTRUCTION. Time is of the essence of this
Lease. Notwithstanding the fact that certain references elsewhere in this Lease
to acts required to be performed by Tenant hereunder omit to state that such
acts shall be performed at Tenant's sole cost and expense, unless the context
clearly implies to the contrary each and every act to be performed or obligation
to be fulfilled by Tenant pursuant to this Lease shall be performed or fulfilled
at Tenant's sole cost and expense. The captions, section numbers, article
numbers, and index appearing in this Lease are inserted only as a matter of
convenience and in no way define, limit, construe, or describe the scope or
intent of such sections or articles of this Lease nor in any way affect this
Lease. Each and all of the obligations, covenants, conditions and restrictions
of this Lease shall inure to the benefit of and be binding upon and enforceable
against, as the case may require, the successors and assigns of Landlord, and,
subject to the restrictions of Article 11 above entitled "Assignments and
Subletting," any authorized assignee, transferee, sublessee and other successors
in interest of Tenant. In this Lease each of the neuter, feminine or masculine
gender(s) includes the other or others, and the singular number includes the
plural, wherever the context so requires. If more than one lessee is named
above, the obligation of each of such lessees hereunder shall be and is joint
and several.
21.14 SPECIFIC PERFORMANCE. Nothing contained in this Lease shall be
construed as or shall have the effect of abridging the right of Landlord to
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obtain specific performance of any and all of the covenants or obligations of
Tenant under this Lease.
21.15 EXECUTION OF LEASE. Execution of this Lease by Tenant and return
to Landlord shall not be binding upon Landlord, notwithstanding any time
interval, until Landlord has in fact executed and delivered this Lease to
Tenant.
21.16 CONTROLLING LAW. This Lease shall be governed by and construed
in accordance with the laws of the State of California. If any provision of this
Lease or the application thereof to any person or circumstances shall, to any
extent, be invalid or unenforceable, the remainder of this Lease shall not be
affected thereby and each provision of the Lease shall be valid and enforceable
to the fullest extent permitted by the law.
21.17 CHANGES REQUESTED BY LENDER. Neither Landlord nor Tenant shall
unreasonably withhold its consent to changes or amendments to this Lease by the
Lender on Landlord's fee interest or on Tenant's leasehold interest, as the case
may be, so long as such changes do not alter the basic business terms of this
Lease or otherwise materially diminish the rights or materially increase the
obligations of the party from whom consent to such change or amendment is
requested.
END OF GENERAL CONDITIONS TO GROUND LEASE
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<PAGE>
EXHIBIT D
GUARANTY
THIS GUARANTY (the "Guaranty") is made as of August __, 1991, by
DONALD M. KOLL, IRVING AZOFF, ROBERT E. GEDDES and PAUL C. HEGNESS
(individually, a "Guarantor" and collectively, the "Guarantors"), in favor of
THE IRVINE COMPANY, a Michigan corporation ("Landlord").
1. Except as otherwise provided in this Guaranty, all terms defined in that
certain Amended and Restated Agreement Re Ground Lease of even date
herewith by and between Irvine Meadows, a California general partnership
("Tenant"), and Landlord (the "Agreement") shall have the same meaning when
used in this Guaranty. Such defined terms are denoted in the Agreement and
in this Guaranty by initial capital letters.
2. In order to induce Landlord to enter into the Agreement, Guarantors hereby,
jointly and severally, unconditionally and irrevocably guarantee to
Landlord, and to its successors and/or assigns, the prompt and complete
performance of Tenant's obligations under Sections 4.01 and 4.02 of the
Agreement (the "Guaranteed Obligations").
3. Each Guarantor is either a general partner in Tenant or the principal
shareholder of a corporate general partner of Tenant. Accordingly, each
Guarantor agrees that Landlord's entering into the Agreement is of
substantial and material benefit to such Guarantor and further agrees as
follows:
(a) Each Guarantor shall continue to be liable under this Guaranty and the
provisions hereof shall remain in full force and effect
notwithstanding (i) any modification, agreement or stipulation between
any Guarantor and Landlord, or their respective successors and
assigns, with respect to the Agreement, the Sublease, the New Lease,
or the obligations encompassed in any of said instruments, including,
without limitation, the Guaranteed Obligations; (ii) Landlord's waiver
of or failure to enforce any of the terms, covenants or conditions
contained in the Agreement, the Sublease, the New Lease, or in any
modification thereof; (iii) any release of any other guarantor from
any liability with respect to the Guaranteed Obligations; or (iv) any
transfer, assignment or other conveyance of any interest under the
Agreement, the Sublease, the New Lease, or in the Subleased Premises
by either Landlord or Tenant thereunder.
(b) Guarantors' liability under this Guaranty shall continue until all
Guaranteed Obligations to Landlord have been satisfied.
D-1
EXHIBIT D
To Amended And Restated Agreement Re Ground Lease
<PAGE>
(c) Each Guarantor hereby warrants and represents to Landlord that he now
has and will continue to have full and complete access to any and all
information concerning the transactions contemplated by the Agreement
or referred to therein, the value of the assets owned or to be
acquired by Tenant, Tenant's financial status and its ability to pay
and perform the Guaranteed Obligations owed to Landlord. Each
Guarantor further warrants and represents that he has reviewed and
approved the Agreement and is fully informed of the remedies Landlord
may pursue, with or without notice to Tenant, in the event of default
by Tenant under the Agreement. So long as any of the Guaranteed
Obligations hereunder remains unsatisfied or owing to Landlord,
Guarantors shall keep fully informed as to all aspects of Tenant's
financial condition and the performance of the Guaranteed Obligations.
(d) Each Guarantor hereby acknowledges and agrees that he may be required
to perform the Guaranteed Obligations in accordance with the terms
hereof notwithstanding the fact that Tenant is in default of its
obligations under the Agreement, the Sublease, the New Lease, or any
other obligation referred to therein.
(e) Each Guarantor hereby acknowledges and agrees that he shall be
required to perform the Guaranteed Obligations in accordance with the
terms hereof notwithstanding any termination of the Agreement, the
Sublease or the New Lease.
4. The liability of Guarantors under this Guaranty is a guaranty of payment
and performance and not of collectibility, and is not conditioned or
contingent upon the genuineness, validity, regularity or enforceability of
the Agreement, the Sublease, the New Lease or other instruments relating to
the creation or performance of the Guaranteed Obligations or the pursuit by
Landlord of any remedies which it now has or may hereafter have with
respect thereto under the Agreement, the Sublease, or the New Lease, at
law, in equity or otherwise.
5. Each Guarantor hereby waives to the extent permitted by law: (i) all
notices to Guarantors, to Tenant, or to any other person, including but not
limited to, notices of the acceptance of this Guaranty or the creation,
renewal, extension, modification, accrual of any of the Guaranteed
Obligations owed to Landlord and, except to the extent set forth in
Paragraph 7 hereof, enforcement of any right or remedy with respect
thereto, and notice of any other matters relating thereto; (ii) diligence
and demand of payment, presentment, protest, dishonor and notice of
dishonor; (iii) any statute of limitations affecting Guarantors' liability
hereunder or the enforcement thereof; and (iv) all principles or provisions
of law which conflict with the terms of this Guaranty. Guarantors further
agree that
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<PAGE>
Landlord may enforce the Guaranty upon this occurrence of an event of
default under the Agreement (as event of default is defined therein) with
respect to Tenant's performance of any Guaranteed Obligation. Moreover,
Guarantors agree that Guarantors' obligations shall not be affected by any
circumstances which constitute a legal or equitable discharge of a
guarantor or surety.
6. Guarantors agree that Landlord may enforce this Guaranty without the
necessity of resorting to or exhausting any security or collateral and
without the necessity of proceeding against Tenant or any other guarantor.
Each Guarantor hereby waives the right to require Landlord to proceed
against Tenant, to proceed against any other guarantor, to foreclose any
lien on any real or personal property, to exercise any right or remedy
under the Agreement, to draw upon any letter of credit issued in connection
herewith, or to pursue any other remedy or to enforce any other right.
7. (a) Guarantors agree that nothing contained herein shall prevent
Landlord from exercising any rights available to it under the
Agreement and that the exercise of any of the aforesaid rights shall
not constitute a legal or equitable discharge of any Guarantor.
Guarantors hereby authorize and empower Landlord to exercise, in its
sole discretion, any rights and remedies, or any combination thereof,
which may then be available to Landlord, since it is the intent and
purpose of Guarantors that the obligations hereunder shall be
absolute, independent and unconditional under any and all
circumstances. Without limiting the generality of the foregoing, each
Guarantor hereby expressly waives any and all benefits under
California Civil Code ss.ss.2809, 2810, 2819, 2845, 2847, 2848, 2849
and 2850 and California Code of Civil Procedure ss.ss. 580a, 580d and
726. Notwithstanding any foreclosure of the lien of any security
agreement with respect to any or all of the real or personal property
secured thereby, whether by the exercise of the power of sale
contained therein, by an action for judicial foreclosure or by an
acceptance of a deed in lieu of foreclosure, Guarantors shall remain
bound under this Guaranty.
(b) Each Guarantor agrees that he shall have no right of subrogation
against Tenant or against any collateral or any right of contribution
against any other guarantor unless and until all Guaranteed
Obligations have been indefeasibly satisfied, and Landlord has
released, transferred or disposed of all of its rights, title and
interest in any collateral or security now or hereafter given to
Landlord as security for the Guaranteed Obligations. Guarantors
further agree that, to the extent the waiver of Guarantors' rights of
subrogation and contribution as set forth herein is found by a court
of competent
D-3
<PAGE>
jurisdiction to be void or voidable for any reason, any rights of
subrogation and contribution Guarantors may have against Tenant or
against any collateral or security, and any rights of contribution
Guarantors may have against any other guarantor, including, without
limitation, any of the other Guarantors, shall be junior and
subordinate to any rights Landlord may have against such other
guarantor. Landlord may use, sell or dispose of any item of collateral
or security as it sees fit without regard to any subrogation and
contribution rights Guarantors may have, and upon disposition or sale,
any rights of subrogation and contribution Guarantors may have shall
terminate.
(c) Notwithstanding anything to the contrary contained herein, no
provision of this Guaranty shall be deemed to limit, decrease, or in
any way to diminish any rights of set-off Landlord may have with
respect to any cash, cash equivalents, certificates of deposit,
letters of credit or the like which may now or hereafter be deposited
with Landlord by Tenant.
(d) To the extent any dispute exists at any time between any Guarantor and
any other guarantor, including, without limitation, any of the
Guarantors, as to such Guarantor's right to contribution or otherwise,
Guarantors agree to indemnify, defend and hold Landlord harmless from
and against any loss, damage, claim, demand, cost or any other
liability (including reasonable attorneys' fees and costs) Landlord
may suffer as a result of such dispute.
(e) Guarantors shall not, without the prior written consent of Landlord,
commence or join with any other party in commencing any bankruptcy,
reorganization or insolvency proceedings of or against any Tenant. The
obligations of Guarantors under this Guaranty shall not be altered,
limited or affected by any case, voluntary or involuntary, involving
the bankruptcy, insolvency, receivership, reorganization, liquidation
or arrangement of any Tenant or by any defense which any Tenant may
have by reason of the order, decree or decision of any court or
administrative body resulting from any such case. Landlord shall have
the sole right to accept or reject any plan on behalf of any Guarantor
proposed in such case and to take any other action which such
Guarantor would be entitled to take, including, without limitation,
the decision to file or not file a claim. Guarantors acknowledge and
agree that any interest on the Guaranteed Obligations which accrues
after the commencement of any such proceeding (or, interest on any
portion of the Guaranteed Obligations ceases to accrue by operation of
law by reason of the commencement of said proceeding, such interest as
would have accrued on any such portion of the Guaranteed Obligations
if said proceedings had not been commenced) shall
D-4
<PAGE>
be included in the Guaranteed Obligations because it is the intention
of the parties that the Guaranteed Obligations should be determined
without regard to any rule or law or order which may relieve any
Tenant of any portion of such Guaranteed Obligations. Guarantors
hereby permit any trustee in bankruptcy, receiver, debtor in
possession, assignee for the benefit of creditors or similar person to
pay Landlord, or allow the claim of Landlord in respect of, any such
interest accruing after the date on which such proceeding is
commenced. Guarantors each hereby assign to Landlord such Guarantor's
right to receive any payments from any trustee in bankruptcy,
receiver, debtor in possession, assignee for the benefit of creditors
or similar person by way of dividend, adequate protection payment or
otherwise. If all or any portion of the Guaranteed Obligations is paid
or performed by any Guarantor, the obligations of Guarantors hereunder
shall continue and remain in full force and effect in the event that
all or any part of such payment(s) or performance(s) is avoided or
recovered directly or indirectly from Landlord as a preference,
fraudulent transfer or otherwise in such case.
8. All notices, requests and demands to be made hereunder to the parties
hereto shall be in writing (at the addresses set forth below) and shall be
given by any of the following means: (a) personal service (b) electronic
communication, whether by telex, telegram or telecopying (if confirmed in
writing sent by registered or certified, first class mail, return receipt
requested); or (c) registered or certified, first class mail, return
receipt requested. Such addresses may be changed by notice to the other
parties given in the same manner as provided above. Any notice, demand or
request sent pursuant to either subsection (a) or (b) hereof shall be
deemed received upon such personal service or upon dispatch by electronic
means, and, if sent pursuant to subsection (c) shall be deemed received
five (5) days following deposit in the mail.
To Guarantors: Mr. Donald M. Koll
c/o The Koll Company
4343 Von Karman Avenue
Newport Beach, CA 92660
Mr. Irving Azoff
345 No. Maple Drive, Suite 205
Beverly Hills, CA 9021O
Mr. Robert E. Geddes
17835 Ventura Boulevard, Suite 206
Encino, CA 91336
D-5
<PAGE>
Mr. Paul C. Hegness
5000 Campus Drive
Newport Beach, CA 92660
To Landlord: Irvine Industrial Company
c/o The Irvine Company
550 Newport Center Drive, Suite 730
Newport Beach, California 92660
Attn: Vice President-Operations
With copies to: The Irvine Company
2 Park Plaza
Irvine, California 92714
Attn: General Counsel
O'Melveny & Myers
610 Newport Center Drive, Suite 1700
Newport Beach, California 92660-6429
Attn: Lowell C. Martindale, Jr., Esq.
9. Each Guarantor represents and warrants to Landlord as follows:
(a) No consent of any other person, including, without limitation, any
creditors of such Guarantor, and no license, permit, approval or
authorization of, exemption by, notice or report to, or registration,
filing or declaration with, any governmental authority is required by
such Guarantor in connection with this Guaranty or the execution,
delivery, performance, validity or enforceability of this Guaranty and
all obligations required hereunder. This Guaranty has been duly
executed and delivered by such Guarantor, and constitutes the legally
valid and binding obligation of such Guarantor enforceable against
such Guarantor in accordance with its terms.
(b) The execution, delivery and performance of this Guaranty will not
violate any provision of any existing law or regulation binding on
such Guarantor, or any order, judgment, award or decree of any court,
arbitrator or governmental authority binding on such Guarantor, or of
any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which such Guarantor is a party or by
with such Guarantor or any of such Guarantor's assets may be bound the
penalty or remedy for which violation would impair such Guarantor's
ability to perform its obligations under this Guaranty, and will not
result in, or require, the creation or imposition of any lien on any
of such Guarantor's property,
D-6
<PAGE>
assets or revenues pursuant to the provisions of any such mortgage,
indenture, lease, contract or other agreement, instrument or
undertaking.
10. This Guaranty shall be binding upon Guarantors, Guarantors' heirs,
representatives, administrators, executors, successors and assigns and
shall inure to the benefit of and shall be enforceable by Landlord, its
successors and assigns.
11. As used herein, the singular shall include the plural, and the masculine
shall include the feminine and neuter and vice versa, if the context so
requires.
12. If any Guarantor or Landlord incurs any expense, including reasonable
attorneys' fees and expenses in connection with any action or proceeding
against the other, arising out of or in connection with this Guaranty,
whether or not such action proceeds to trial, the sums so paid by the
prevailing party shall be due from and be paid by the nonprevailing party
on demand.
13. This Guaranty shall be governed by and construed in accordance with the
laws of the State of California.
14. Every provision of this Guaranty is intended to be severable. In the event
any term or provision hereof is declared to be illegal or invalid for any
reason whatsoever by a court of competent jurisdiction, such illegality or
invalidity shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable.
15. No failure or delay on the part of Landlord to exercise any power, right or
privilege under this Guaranty shall impair any such power, right or
privilege, or be construed to be a waiver of any default or an acquiescence
therein, nor shall any single or partial exercise of such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.
D-7
<PAGE>
IN WITNESS WHEREOF, Guarantors have executed this Guaranty as of the
day and year first above written.
/s/ DONALD M. KOLL
------------------------------
DONALD M. KOLL
/s/ IRVINE AZOFF
------------------------------
IRVINE AZOFF
/s/ ROBERT E. GEDDES
------------------------------
ROBERT E. GEDDES
/s/ PAUL C. HEGNESS
------------------------------
PAUL C. HEGNESS
D-8
<PAGE>
[MAP]
<PAGE>
- --------------------------------------------------------------------------------
[STATE SEAL]
COUNTY OF SAN BERNARDINO
REGIONAL PARKS DEPARTMENT
AND
AMPHITHEATER ENTERTAINMENT CORPORATION
LEASE FOR
THE GLEN HELEN BL0CKBUSTER AMPHITHEATER
OCTOBER 19, 1992
SAN BERNARDINO COUNTY BOARD OF SUPERVISORS
Marsha Turoci, First District Barbara Cram Riordan, Third District
Jon D. Mikels, Second District Larry Walker, Chairman, Fourth District
Robert L. Hammock, Fifth District
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
RECITALS .................................................................... 1
1. AREA TO BE LEASED ..................................................... 1
1.1 Premises .......................................................... 1
1.2 Use of Park Outside of Premises ................................... 2
2. TERM ................................................................... 2
2.1 Initial Term ...................................................... 2
2.2 Extended Term ..................................................... 3
3. CONCESSION RIGHTS GRANTED ............................................. 5
3.1 OPERATOR's Use of Premises ........................................ 5
3.2 Programming ....................................................... 5
3.3 Notice to County .................................................. 6
3.4 Limitation on Hours of Operation .................................. 7
3.5 County Use of Premises ............................................ 8
3.6 Non-Discrimination ................................................ 9
3.7 Non-Disturbance; Quiet Enjoyment .................................. 10
3.8 Liquor License .................................................... 10
3.9 Limitations on Use of Premises .................................... 10
3.10 OPERATOR's Fiscal Obligations ..................................... 10
3.11 Security for Fiscal Obligations of OPERATOR ....................... 11
3.12 Credit and/or Reimbursement for Costs ............................. 12
4. RENTAL ................................................................. 12
4.1 Fixed Minimum Rent ................................................ 12
4.2 Percentage of Net Ticket Sales Rent ............................... 13
4.3 Park Amphitheater Fee ............................................. 14
4.4 Percentage of Excess Total Other Revenue .......................... 15
4.5 Late Payment Charges .............................................. 15
4.6 COUNTY Tickets .................................................... 16
4.7 Utilities ......................................................... 16
4.8 Termination by OPERATOR ........................................... 17
4.9 Security Deposit .................................................. 18
5. CONSTRUCTION OF PROJECT, IMPROVEMENTS AND ALTERATIONS .................. 19
5.1 Construction of Project ........................................... 19
5.2 Improvements and Alterations ...................................... 19
5.3 Improvement Fund .................................................. 22
6. MANAGEMENT REQUIREMENTS ................................................ 22
6.1 General Requirements .............................................. 22
6.2 OPERATOR Employees ................................................ 23
6.3 Merchandise ....................................................... 23
6.4 Subconcession Agreements .......................................... 24
6.5 Continued Occupancy ............................................... 24
i
<PAGE>
6.6 Security, Traffic Management, Waste, and
Miscellaneous Plans ............................................... 24
6.7 Disorderly Persons ................................................ 25
6.8 Affirmative Action ................................................ 26
6.9 Environmental Requirements ........................................ 26
6.10 Security .......................................................... 26
6.11 Emergency Aid ..................................................... 27
6.12 Damage Provisions ................................................. 27
7. RECORDS AND ACCOUNTS
7.1 Records and Accounts .............................................. 27
7.2 Reports ........................................................... 27
7.3 Audit ............................................................. 28
7.4 Compliance Covenant ............................................... 28
7.5 Release of Information ............................................ 28
8. TAXES, ASSESSMENTS AND OTHER CHARGES ................................... 29
8.1 Payment of Impositions ............................................ 29
8.2 Payment of Impositions in Installments ............................ 30
8.3 Tax Receipts ...................................................... 30
8.4 Limits of Tax Liability ........................................... 30
8.5 Permitted Contests ................................................ 31
8.6 Liens; COUNTY Right to Cure ....................................... 31
9. REPAIRS AND MAINTENANCE ................................................ 32
9.1 Premises Repair and Maintenance ................................... 32
9.2 Return of Premises ................................................ 33
10. INSPECTION/EVALUATION .................................................. 34
10.1 Inspection ........................................................ 34
11. CLEANING PREMISES ...................................................... 34
11.1 OPERATOR's Responsibilities ....................................... 34
11.2 COUNTY's Responsibilities ......................................... 34
12. INDEMNITY AND INSURANCE ................................................ 34
12.1 Liability ........................................................ 34
12.2 Hold Harmless Agreement .......................................... 34
12.3 Liability Insurance .............................................. 35
12.4 Workers' Compensation ............................................ 35
12.5 Evidence of Coverage ............................................. 35
12.6 Premium Payments ................................................. 35
12.7 Additional Named Insured ......................................... 36
12.6 Cancellations of Insurance ....................................... 36
12.9 General Insurance Provisions ..................................... 36
12.10 Disposition of Insurance Proceeds Resulting from
Loss or Damage to Improvement .................................... 37
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13. EMINENT DOMAIN ......................................................... 37
13.1 Takings .......................................................... 37
13.2 Total Taking ..................................................... 38
13.3 Partial Taking ................................................... 38
14. ASSIGNMENT AND SUBLETTING .............................................. 40
14.1 Assignment & Subletting .......................................... 40
14.2 Assignment of Rents .............................................. 40
14.3 Payments to COUNTY ............................................... 40
14.4 Requesting Consent ............................................... 41
14.5 No Assignment by Operation of Law ................................ 41
15. INCORPORATION OF PRIOR AGREEMENT ....................................... 42
15.1 Entire Agreement ................................................. 42
16. AMENDMENTS ............................................................. 42
16.1 Amendments ....................................................... 42
17. VIOLATION OF AGREEMENT ................................................. 42
17.1 Default and Right to Terminate ................................... 42
17.2 Termination for Criminal Conviction .............................. 44
17.3 Liability for Breach ............................................. 44
17.4 Entry for Mitigation ............................................. 44
17.5 COUNTY Defaults .................................................. 44
18. CONDITIONS AND SURRENDER OF PROPERTY AND TERMINATION
AGREEMENT .............................................................. 44
18.1 County Property .................................................. 44
18.2 Operator Property ................................................ 45
19. NOTICES ................................................................ 45
19.1 Notices .......................................................... 45
20. EASEMENTS, TRUSTS AND WARRANTIES ....................................... 46
20.1 Existing Encumbrances ............................................ 46
21. MISCELLANEOUS .......................................................... 46
21.1 Use of Name ...................................................... 46
21.2 Signs ............................................................ 47
21.3 No Partnership ................................................... 47
21.4 Binding Effect ................................................... 47
21.5 Captions ......................................................... 47
21.6 No Waiver ........................................................ 47
21.7 Regulations and Permits .......................................... 48
21.8 Common Areas ..................................................... 48
21.9 Parking .......................................................... 48
21.10 Renaissance Pleasure Faire ....................................... 49
21.11 Lakeside Area .................................................... 50
21.12 Health Certificate ............................................... 51
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21.13 Designee ......................................................... 51
21.14 Time of Essence .................................................. 51
21.15 Provisions are Covenants and Conditions .......................... 51
21.16 Exhibits ......................................................... 52
21.17 Consent .......................................................... 52
21.18 Lease Interpretation ............................................. 52
21.19 Jury Trial Waiver ................................................ 52
21.20 Attorneys' Fees .................................................. 52
21.21 Arbitration ...................................................... 53
21.22 Law .............................................................. 53
21.23 Severance ........................................................ 53
21.24 Survival ......................................................... 54
iv
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SAN BERNARDINO COUNTY
REGIONAL PARKS DEPARTMENT
GLEN HELEN REGIONAL PARK AMPHITHEATER
CONCESSION LEASE
THIS CONCESSION LEASE ("Lease") is made and entered into by and between the
COUNTY OF SAN BERNARDINO, a political subdivision of the State of California,
hereinafter referred to as the "COUNTY," and AMPHITHEATER ENTERTAINMENT
CORPORATION, a Florida corporation, hereinafter referred to as "OPERATOR,"
(hereinafter collectively referred to as the "Parties", or singularly as a
"Party").
RECITALS
A. Whereas, the COUNTY has previously determined that the presence of a
permanent major amphitheater in the County will substantially enhance the
recreational, entertainment, artistic and cultural quality of life in the
County; and
B. Whereas, the COUNTY, through its Regional Parks Department (the
"Department"), issued a Request for Proposals (the "RFP") in October, 1990 for
the construction and operation of such an amphitheater at Glen Helen Regional
Park (the "Park"), a facility owned by the COUNTY and operated by the
Department; and
C. Whereas, on April 13, 1992, the Board of Supervisors of the COUNTY, at a
meeting regularly called and held, unanimously selected the OPERATOR as the sole
successful respondent to such request for proposals; and
D. Whereas, the COUNTY and OPERATOR now desire to enter into this Lease to
provide the terms and conditions upon which an amphitheater will be constructed
and operated at the Park, and to otherwise provide the terms to govern the
relationship of the Parties with respect to the design, construction and
operation of such amphitheater and related facilities.
NOW, THEREFORE, in consideration of the above Recitals, and of the mutual
covenants, conditions, and undertakings set forth herein, the Parties hereto
agree as follows:
1.
AREA TO BE LEASED
1.1 Premises. COUNTY hereby lets to OPERATOR and OPERATOR hereby leases
from COUNTY the real property, hereinafter referred to as the "Premises",
described on Exhibit "A", Legal Description and Layout Plan of Premises, on the
terms and conditions and for the uses hereinafter specified including, without
limitation, the exercise by OPERATOR of
<PAGE>
the concession rights granted in Article 3, CONCESSION RIGHTS GRANTED. The
Premises leased hereunder are located in the Park. OPERATOR shall, except as
expressly set forth to the contrary herein, have full and exclusive year round
use of the Premises and all improvements thereon. Further, in conjunction with
all events presented at the amphitheater, OPERATOR is granted a license (the
"License") to use the parking areas (the "Parking Areas") described on Exhibit
"B", Areas Under License, pursuant to Section 21.9, Parking, and to use the
lakeside area (the "Lakeside Area") also described on Exhibit "B", Areas Under
License, pursuant to Section 21.11, Lakeside Area (jointly referred to as the
"License Areas"). COUNTY and OPERATOR specifically acknowledge and agree that
OPERATOR's exclusive right to use of the Premises pursuant hereto shall include
the amphitheater as it is expanded and as completed as required by Section 5.1,
Construction of Project.
1.2 Use of Park Outside of Premises.
(a) OPERATOR may request in writing, to the Director of Regional Parks
or his/her designee (the "Director"), the use of any area of the Park not
included in the Premises or License Areas. The Director will consider issuing an
interim use permit to the OPERATOR when the area requested is not already leased
to or reserved for use by other individuals or groups, and if the Department
does not have it reserved for its own programmed event, and the proposed event
is not in conflict with similar events in the Park. The written request should
include the proposed area to be used, the proposed programmed use, the proposed
number of Park users, the proposed entrance and control of the area, any fees to
be charged, and any proposed mitigation for damage to the Park that may occur as
a result of the use. The fees charged by Department for the use of the request
area will be negotiated in good faith, and if an agreement cannot be reached,
shall be subject to arbitration under Article 21.21, Arbitration. The Director
will respond to the use request within five (5) days.
(b) Any person attending an OPERATOR event may use areas of the Park
outside of the Premises and License Areas upon payment of the appropriate fees
as set forth in the COUNTY Schedule of Fees, San Bernardino County Code, Section
16.0223, Regional Parks.
2.
TERM
2.1. Initial Term.
(a) The term of this Lease shall be for a period of twenty-five (25)
years (the "Initial Term") commencing on the first date that both of the
following events have occurred: (i) a certificate of occupancy for the Premises
has been issued and (ii) all of the improvements required in Phase I of the
construction has been completed or OPERATOR has its first scheduled paid event
on the Premises, whichever comes first.
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(1) Notwithstanding the above, if the OPERATOR is the proximate cause
of any delays in construction which prevent the Initial Term from commencing
under Subsection 2.1(a), above, by July 1, 1993, then the Initial Term of this
Lease shall commence on July 1, 1993.
(2) Notwithstanding the above, if there are delays in construction
(which are not the proximate cause of the OPERATOR) which prevent the Initial
Term from commencing under Subsection 2.1(a), above, on or before August 31,
1993, then (except as provided below) the Initial Term of this Lease and the
rental provisions of Article 4, RENTAL, shall not commence until April 1, 1994
but the OPERATOR shall have access to the Premises once a certificate of
occupancy for the Premises has been issued and all other provisions of this
Lease shall be operative during such occupancy. Provided, however, if the
requirements of Subsection 2.1(a) are met between August 31, 1993 and April 1,
1994 and the OPERATOR has its first scheduled paid event on the Premises, then
the Initial Term of this Lease and the rental provisions of Article 4, RENTAL,
shall commence on the date the OPERATOR has its first scheduled paid event on
the Premises and the Initial Term shall be extended by the number of days from
commencement of the Initial Term to April 1, 1994.
2.2 Extended Term. The COUNTY agrees to enter into good faith negotiations
with OPERATOR for two-five (5) year extensions (the "Extended Term(s)") of the
Initial Term of this Lease, if OPERATOR gives written notice of its request to
negotiate the first of such extensions (the "Extension Notice") to COUNTY at
least nine (9) months but not more than one (1) year before the expiration of
the Initial Term. The OPERATOR shall have the right to extend the Lease for the
second five (5) year Extended Term only in the event that the OPERATOR has
extended the term of the Lease for the first Extended Term and only if OPERATOR
gives written notice of its request to negotiate the second of such extensions
(also called the "Extension Notice") to COUNTY at least nine (9) months but not
more than one (1) year before the expiration of the first Extended Term.
Provided that, if OPERATOR is in Material Default, beyond all applicable notice
and cure periods, as defined in Article 17, VIOLATION OF AGREEMENT, on the date
of giving either Extension Notice, the Extension Notice shall be totally
ineffective, or if OPERATOR is in Material Default, beyond all applicable notice
and cure periods, on the date either Extended Term is to commence, the Extended
Term shall not commence and this Lease shall expire at the end of the then
existing term. The terms and conditions for each Extended Term shall be
substantially the same as contained herein, except that the Fixed Minimum Rent
as defined in Article 4, RENTAL, for each of the years of any Extended Term(s)
shall not be less than the amounts set forth in Section 4.1, Fixed Minimum Rent.
Furthermore, in the event that there is a material change in the make up of the
Total Gross Revenue such that the Net Ticket Sales is increased or reduced
substantially in relation to the Total Gross Revenue of the Premises, the
percentage used to calculate Percentage of Net Ticket Sales Rent shall be
increased or reduced to a percent which would give substantially the same
revenue to the COUNTY that the COUNTY would have received if the make up of the
Total Gross Revenue had not
3
<PAGE>
changed substantially. For the purposes of negotiating the Percentage of Net
Ticket Sales Rent only, the Parties agree that during the Initial Term of the
Lease, the Net Ticket Sales averaged seventy-five percent (75%) or the Total
Gross Revenue. Therefore, if at the time of the first or second Extended Term
negotiations, the Net Ticket Sales is estimated to be less than seventy percent
(70%) or more than eighty percent (80%) of the Total Gross Revenue, then the
Parties shall negotiate a Percentage of Net Ticket Sales Rent at a percent of
the Net Ticket Sales expected during the Extended Term which would provide the
COUNTY substantially the same revenue as the COUNTY would have received had Net
Ticket Sales remained at 75% of Total Gross Revenue during the Extended Term.
The term "Total Gross Revenue", as used in this Lease, is defined as Net Ticket
Sales and all other money, cash, receipts, assets, property or other things of
value, including but not limited to gross charges, sales, rentals, wholesale and
consignment fees and commissions made, or earned, and all gross sums received by
OPERATOR from its own operations and/or from its concessions, subtenants,
subconcessions, assignees, or successors in interest, when collected or accrued,
from any business, use or occupation, or any combination thereof, originating,
transacted or performed, in whole or in part, on the Premises including, but not
limited to, rental, the rendition or supplying of services, and the sale of
goods, wares or merchandise, coin machines or devices of any nature. All gross
sums received by a concession, subtenant or subconcession shall be considered to
be considered part of the OPERATOR's Total Gross Revenue unless the OPERATOR
establishes that the concession, subtenant or subconcession is not a related
organization of the OPERATOR or anyone substantially controlling the OPERATOR.
(a) There shall be no deduction from Total Gross Revenue of any
overhead or expense of operation, such as, but without limitation to, salaries,
wages, cost of goods, advertising, interest, debt amortization, discount,
collection, credit card and bad debt charges, insurance and taxes, except as
specifically provided for herein.
(b) Total Gross Revenue shall include the amount of any manufacturer's
or importer's excise tax included in the prices of any property or material
sold, even though the manufacturer or importer is also the retailer thereof; and
it is immaterial whether the amount of such excise tax is stated as a separate
charge.
(c) Total Gross Revenue shall not include Federal, State, Municipal or
other taxes collected from the consumer (regardless of whether the amount
thereof is stated to the consumer as a separate charge) and paid periodically by
OPERATOR, its concessions, subtenants, subconcessions, assignees or successors
in interest to a governmental agency, accompanied by a tax return or statement;
but the amount of such taxes shall be shown on the books and records elsewhere
herein required to be maintained.
(d) Total Gross Revenue shall not include the Park Amphitheater Fee
and/or the Business License Tax, if any, as they are defined in Section 4.3,
Park Amphitheater Fee; but the amount of such Park Amphitheater Fee and/or
Business License Tax shall be shown on the
4
<PAGE>
books and records elsewhere herein required to be maintained. In the event the
Parties reach an agreement on the terms and conditions for an Extended Term
prior to the expiration of the Initial Term/first Extended Term, the COUNTY
shall forthwith prepare an amendment to this Lease setting forth the agreed upon
terms and conditions for the Extended Term and submit same for approval and
execution by OPERATOR and the COUNTY. In the event the Parties are not able to
reach an agreement on the terms and conditions for an Extended Term prior to the
expiration of the Initial Term/first Extended Term, this Lease shall terminate
at the end of the Initial Term/first Extended Term.
3.
CONCESSION RIGHTS GRANTED
3.1 OPERATOR's Use of Premises. Except as specifically provided hereinafter
to the contrary, OPERATOR shall have the exclusive right and obligation to use
the Premises for recreational, entertainment, artistic and cultural activities,
and the reasonably necessary office and storage purposes connected therewith.
OPERATOR shall not use the Premises for any other purpose without the prior
consent of the COUNTY.
3.2 Programming. All attractions being offered by OPERATOR at the
Amphitheater shall be subject to the following guidelines with respect to
performances:
(a) All programs shall be similar to the same types of programs then
being or having been offered at any of the following facilities ("Other Venues")
in Southern California:
1. Music Center, Los Angeles;
2. Shubert Theater, Los Angeles;
3. Universal Amphitheater, Los Angeles;
4. Greek Theater, Los Angeles;
5. Hollywood Bowl, Los Angeles;
6. Pacific Amphitheater, Orange County;
7. Irvine Meadows Amphitheater, Orange County;
8. The Forum, Los Angeles;
9. The L.A. Coliseum, Los Angeles;
10. Dodger Stadium, Los Angeles; and,
11. Anaheim Stadium, Orange County.
(b) All admission ticket prices (not including fees and Impositions,
as defined in Section 8.2, Payment of Impositions) (the "Ticket Price") shall be
comparable to similar events at the Other Venues.
(c) All food and other items or services with prices for
5
<PAGE>
sale or rent shall be of comparable quality and price for such items at the
Other Venues.
(d) OPERATOR shall use its best efforts to present Cultural Events at
least twice yearly. Cultural Events are defined as:
1. Opera or operetta;
2. Dance;
3. Symphonic and classical musical presentations;
4. Musical productions;
5. Stage play;
6. Cultural exchange presentations;
7. Festivals; and
8. Holiday and musical celebrations; and
9. Educational programs.
(e) It is the intent and policy of the Parties that cultural events
may include some performances of widely accepted national or international
reputation in addition to local symphonies, opera, and broadway-type
performances.
(f) OPERATOR shall attempt to broaden the base of support for the
amphitheater to include all segments of the community, through sponsoring a
season ticket subscription drive. Also, out-reach programs, group sales, theater
parties, chartered busses to the amphitheater and non-political fund-raising
benefits shall be encouraged.
(g) Any exception to the above programming and pricing guidelines must
have the prior approval of the COUNTY.
3.3 Notice to County.
(a) Not later than thirty (30) calendar days before OPERATOR's first
scheduled event, and twice annually thereafter not later than: (i) the first day
in January; and (ii) the first day in July, OPERATOR shall meet with the
Director and provide the Director a schedule (the "Schedule of Performances") of
all reserved dates, all dates of contracted for performances (including all
take-in and set-up days) and their tentative Ticket Price, then scheduled for
the next six-month period (the "Season") following such notice. The "Summer
Season" shall be the months of March through August, and the "Winter Season"
shall be the months of September through February. Further, OPERATOR shall
promptly advise the Director of all changes and additions to such schedule.
Should the Director object to such schedule, any portion thereof, or any
changes/additions thereto, for failure to comply with Section 3.2, Programming,
above, the Director shall, within ten (10) days, notify OPERATOR of such
objection(s) and
6
<PAGE>
the reasons therefor. OPERATOR shall promptly respond to the Director's
objections and set forth a plan to mitigate and/or resolve the objections to the
satisfaction of the Director. COUNTY acknowledges that the Schedule of
Performances constitutes confidential, proprietary information of OPERATOR and
that substantial damage may be caused to OPERATOR should such schedule, or
portions thereof, be disclosed by COUNTY prior to the public announcement
thereof by OPERATOR. COUNTY therefore, for itself and all of its employees and
agents, covenants to use its best efforts to maintain such Schedule of
Performances, and all portions thereof, confidential until each specific
performance is publicly disclosed by OPERATOR. In no event shall the COUNTY's
failure to maintain the confidentiality of the Schedule of Performances be the
basis of a cause of action for damages.
(b) Not later than thirty (30) calendar days before OPERATOR's first
scheduled event, and twice annually thereafter not later than: (i) the first day
in January; and (ii) the first day in July, OPERATOR shall meet with the
Director and provide the Director a schedule (the "Schedule of Prices") of all
food and other items or services with prices for sale or rent by OPERATOR or any
of its concessions for the Season following such notice. Further, OPERATOR shall
promptly advise the Director of all changes and additions to such schedule.
Should the Director object to such schedule, any portion thereof, or any
changes/additions thereto, for failure to comply with Section 3.2, Programming,
above, the Director shall, within ten (10) days, notify OPERATOR of such
objection(s) and the reasons therefor. OPERATOR shall promptly respond to the
Director's objections and set forth a plan to mitigate and/or resolve the
objections to the reasonable satisfaction of the Director.
3.4 Limitation on Hours of Operation. No event held at the Premises shall
be scheduled to end later than 11:00 p.m. The occasional, unintentional and
uncontrollable (by OPERATOR) late completion of an event shall not be deemed to
be a default hereunder, provided that no event shall end after midnight except
for safety reasons and with the prior oral approval of the Director.
(a) Any OPERATOR event which ends later than 11:00 p.m. shall be
considered a "Late Performance" unless the proximate cause for the event ending
after 11:00 p.m. is beyond the OPERATOR's reasonable control. The refusal of a
performer to end his/her performance shall not be considered to be beyond the
reasonable control of the OPERATOR. Should the cumulative time of Late
Performances exceed 240 minutes in any Season (the "Grace Period"), the OPERATOR
shall pay to COUNTY a "Late Performance Fee" in the amount of $250.00 for each
Late Performance which ends after the Grace Period has been used. For purposes
of this section, an event shall be deemed to end when the
7
<PAGE>
performer(s) complete their performance, whether or not the audience has left
the Premises.
(b) In addition to any Late Performance Fee due, and even in those
cases when a Late Performance Fee is not due, CONCESSIONAIRE shall pay COUNTY a
"Late Ending Fee" of $500.00 for any performance which ends after midnight.
(c) Late Performance Fees and Late Ending Fees shall be paid within
ten (10) days of the event for which charged.
(d) It is the intent of the Parties that the above compensation due to
the COUNTY for performances ending late is to encourage the OPERATOR to insure
that performances do not end late on a regular or recurring basis, and not to
allow the OPERATOR to buy the ability to have performances end late. Therefore,
OPERATOR shall be in Material Default of this Lease if there is a discernable
pattern or trend of performances intentionally ending late and beyond the Grace
Period. COUNTY shall have the burden of proof to establish a discernable pattern
or trend of performances intentionally ending late.
3.5 County Use of Premises. The COUNTY shall have the right to use or
permit other public entities or non-profit organizations to use the Premises for
COUNTY approved events as set forth in this section.
(a) Except for the calendar days which OPERATOR has listed on its
Schedule of Performances provided under Section 3.3, Notice to COUNTY, the
COUNTY may reserve the Premises for use on up to five (5) calendar days during
each Season by giving OPERATOR notice of the COUNTY's reserved days not more
than thirty (30) calendar days in advance of each Season.
(b) In addition, COUNTY shall have the right to reserve the Premises
on twenty (20) additional dates during each Season, by giving notice to OPERATOR
not more than forty-five (45) calendar days in advance of the date or dates
requested. Such additional twenty (20) calendar days shall be available only if
such use does not conflict with or interfere with OPERATOR'S Schedule of
Performance.
(c) In addition, COUNTY shall have the right to reserve the Premises
any calendar day during each Season, by giving notice to OPERATOR not more than
thirty (30) calendar days in advance of the date or dates requested. Such
additional days shall be available only if such use does not conflict with or
interfere with OPERATOR's Schedule of Performance.
(d) COUNTY's use and COUNTY permitted use of the Premises as described
above shall be at no rental or admission charge to the COUNTY
8
<PAGE>
or the user other than reimbursement to the OPERATOR of the OPERATOR's actual
expenses for the operation and management of the Premises for each such event,
which expenses may include, without limitation, the OPERATOR's cost of liability
insurance for such event. The COUNTY or the user shall pay such amount to the
OPERATOR within twenty (20) days of the OPERATOR's presentation of a statement
of reimbursable amounts to the COUNTY, accompanied by reasonable documentation.
(e) All notices of reservations for use of the Premises by the COUNTY
shall include a description of the event, any concession services and items
desired, estimated attendance, and the date(s) desired.
(f) Notwithstanding anything contained herein to the contrary, COUNTY
use of the Premises shall be permitted only for uses which are non-professional
in nature, do not compete with OPERATOR's use and are not otherwise of a type of
event which OPERATOR generally presents. By way of example, presentations of
popular commercial concerts and similar events would be deemed competing with
OPERATOR's use.
(g) The OPERATOR shall determine if its concessionaires will provide
services and items as requested by COUNTY, and if so, the OPERATOR or its
concessionaires shall retain all food, beverage, souvenir and like concession
revenues, but excluding parking revenues generated by such COUNTY events if the
parking is not run by OPERATOR. If the OPERATOR's concessionaires will not
provide a service or item requested by COUNTY, COUNTY may provide the service or
item itself or through another concessionaire, but may not use the OPERATOR's
concession buildings.
(h) All uses of the Premises and License Areas under this Section by
the COUNTY shall further be subject to such reasonable rules and regulations as
may be adopted by OPERATOR and with which OPERATOR complies in its own use.
(i) The COUNTY shall repair any damages caused by its use, and shall
indemnify and hold harmless (but not defend) the OPERATOR for any claim, loss or
liability (including the reasonable cost of defense) arising out of COUNTY's use
of the Premises, except if such claim, loss or liability arises out of any act
or omission of the OPERATOR, its concessionaires or other contractors, employees
or agents.
3.6 Non-Discrimination. There shall be no discrimination against or
segregation, in the use of the Premises, of any person or group of persons on
account of sex, marital status, race, creed, color, religion, national origin or
ancestry in the sale, lease, sublease, transfer, use, occupancy, admission, or
enjoyment of the Premises, and
9
<PAGE>
the OPERATOR itself or any person claiming under or through it shall not
establish or permit any such practice or practices of discrimination, or
segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, sublicensees, sublessees or vendees of the Premises or any
portion thereof, and the COUNTY shall be the beneficiary of this provision and
entitled, but not required, to enforce it in all respects.
3.7 Non-Disturbance; Quiet Enjoyment. The COUNTY hereby covenants and
agrees that the OPERATOR shall have the right of quiet enjoyment and shall be
entitled during the entire term hereof, including any Extended Term(s), to have,
hold and enjoy the Premises without disturbance by the COUNTY, its successors,
assigns, agents and/or employees. COUNTY covenants that OPERATOR paying the rent
herein reserved, and observing, performing and keeping all and singular the
provisions hereof to be kept or observed by OPERATOR, shall and may lawfully,
peacefully and quietly, have, hold, use, occupy, possess and enjoy the Premises,
for all uses as herein contemplated including, but not limited to, live and
prerecorded entertainment of all kinds, food, beverage, and merchandise sales,
and special entertainment and attractions, for and during the entire term
hereof, as such term may be extended, without any hinderance, eviction,
ejection, molestation or interruption whatsoever, of or by COUNTY or of or by
any other person or persons lawfully claiming or claimed by, from or under
COUNTY.
3.8 Liquor License. The COUNTY shall cooperate and take all reasonable
actions to allow OPERATOR and/or OPERATOR'S subtenant or contract vendor to
obtain an on-sale beer, wine and spirits license for the Premises. The Parties
will use their best efforts to assure that such license is in place on the
commencement date of this Lease, and shall remain in place throughout the entire
term, including extensions, hereof.
(a) Notwithstanding the above, only beer and wine may be sold on the
Premises to the general public during public events. Other spirits may be sold
or made available only in the hospitality areas and in the corporate boxes set
forth on the Layout Plan of the Premises, and shall not be sold to or made
available to the general public.
3.9 Limitations on Use of Premises. OPERATOR shall not interfere with the
public's enjoyment and use of the portion of the Park outside of the Premises or
surrounding public property for the purposes for which they were intended.
OPERATOR shall not use the Premises for any purpose which is not appropriate,
usual, and customary for an amphitheater's operations. OPERATOR shall not rent,
sell, lease or offer any space for office purposes or the storing of any article
or
10
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articles whatsoever within or on the Premises other than its own, its
subtenants' or its performers' equipment which is reasonably necessary for that
person's use of the Premises, without the consent of the Director.
3.10 OPERATOR's Fiscal Obligations. As consideration for COUNTY's granting
the OPERATOR this Lease and its rights to operate on the Premises, the OPERATOR
shall pay the COUNTY the total sum of Four Million Dollars ($4,000,000.00). Such
sum shall be paid as follows:
(i) Two Million Dollars ($2,000,000.00), due one hundred thirty-five
(135) calendar days after execution of this Lease, except that
One Million Dollars ($1,000,000.00) of said monies will be
accelerated and due upon the effective date of the ordinance
adopting a Park Amphitheater Fee or Business License Tax, if the
COUNTY adopts such a fee or tax; and
(ii) Two Million Dollars ($2,000,000.00), due ten (10) days after the
Notice to Proceed is given for the construction contract for the
Devore Road and I-15 interchange, or when the Alternate Plan, as
defined in Section 4.8, Termination by OPERATOR, is completed.
3.11 Security for Fiscal Obligations of OPERATOR. In order to secure the
obligations of OPERATOR to pay $4,000,000.00 to the COUNTY as set forth above,
OPERATOR shall, concurrently with the execution of this Lease, deposit with the
COUNTY a letter of credit in the amount of Four Million Dollars $4,000,000.00
(the "Letter of Credit"), substantially in the form of Exhibit "C", Letter of
Credit. The Letter of Credit shall be issued by a bank satisfactory to the
COUNTY and shall provide for draws thereupon upon the occurrence of a default of
the obligations of OPERATOR to pay the monies as set forth in Section 3.10,
OPERATOR's Fiscal Obligations, above. Such Letter of Credit may be for a term
less than the anticipated period during which OPERATOR will perform its fiscal
obligations as set forth in Section 3.10, OPERATOR's Fiscal Obligations,
above. In such event, it shall constitute a default of OPERATOR'S obligations
hereunder, entitling the COUNTY to draw upon such Letter of Credit, in the event
OPERATOR fails to obtain a renewal of such Letter of Credit or to deposit a new
Letter of Credit on or before the fifteenth (15th) day preceding the expiration
of the Letter of Credit previously deposited with the COUNTY. In addition,
OPERATOR may, at any time during the term hereof, deposit a new Letter of Credit
in an amount not less than the difference between $4,000,000.00 and the amount
already paid by
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OPERATOR, pursuant hereto. In such event, the COUNTY shall immediately return
the previously deposited Letter of Credit in its possession to OPERATOR.
3.12 Credit and/or Reimbursement for Costs. OPERATOR and COUNTY agree and
acknowledge that OPERATOR has, prior to the date of execution hereof, incurred
certain costs reasonably and necessarily toward the development and construction
of the Project (herein the "Prepaid Necessary Costs"). OPERATOR will submit to
the COUNTY an itemization of such Prepaid Necessary Costs, attached hereto as
Exhibit "D", and proof of the occurrence of such Prepaid Necessary Costs as the
COUNTY reasonably requests. The Prepaid Necessary Costs are included in the
Construction Budget which is Attachment "2", Construction Budget, to Exhibit
"E", Construction of Project, and the COUNTY agrees to reimburse OPERATOR for
the Prepaid Necessary Costs within thirty (30) days of receipt of proof of the
occurrence of such items. No interest, carrying charges or similar costs shall
be added to the approved Prepaid Necessary Costs if timely paid to OPERATOR.
4.
RENTAL
4.1 Fixed Minimum Rent. OPERATOR covenants to pay to COUNTY as annual rent
(the "Annual Rent"), in currency of the United States, the greater of the
following Fixed Minimum Rent or the Percentage of Net Ticket Sales Rent set
forth in Section 4.2, Percentage of Net Ticket Sales Rent:
LEASE YEAR FIXED MINIMUM RENT
---------- ------------------
1 $ 300,000.00
2 350,000.00
3 400,000.00
4 450,000.00
5 500,000.00
6 700,000.00
7 750,000.00
8 800,000.00
9 850,000.00
10 900,000.00
11 1,000,000.00
12 1,050,000.00
13 1,100,000.00
14 1,150,000.00
15 1,200,000.00
16 1,250,000.00
17 1,300,000.00
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18 1,350,000.00
19 1,400,000.00
20 1,400,000.00
21 1,400,000.00
22 1,400,000.00
23 1,400,000.00
24 1,400,000.00
25 1,400,000.00
Extended Term Lease Years Not Less Than
26 1,400,000.00
27 1,400,000.00
28 1,400,000.00
29 1,400,000.00
30 1,400,000.00
31 1,400,000.00
32 1,400,000.00
33 1,400,000.00
34 1,400,000.00
30 1,400,000.00
For purposes of the foregoing schedule, Lease Year 1 shall commence as of the
commencement date of this Lease as set forth hereinabove. The Fixed Minimum Rent
or Percentage of Net Ticket Sales Rent, whichever is greater, will be due and
payable semi-annually (the "six month payment cycle"), in arrears, as follows:
(i) One-half of the Lease Year's Fixed Minimum Rent shall be paid on the tenth
day after each sixth month anniversary of the commencement date, and (ii) Either
the remaining one-half of the Lease Year's Fixed Minimum Rent or the Lease
Year's Percentage of Net Ticket Sales (after taking credit for the one-half
Lease Year's Fixed Minimum Rent paid under (i), above) on the tenth day after
each anniversary of the commencement date.
4.2 Percentage of Net Ticket Sales Rent. In lieu of the Fixed Minimum Rent
set forth hereinabove, OPERATOR shall pay to COUNTY a Percentage of Net Ticket
Sales Rent, which may be set forth on the face of the ticket, equal to seven and
three-quarters percent (7.75%) of the Net Ticket Sales (as that term is herein
defined) if such Percentage of Net Ticket Sales Rent exceeds the Fixed Minimum
Rent for any Lease Year. For purposes of this Lease, "Net Ticket Sales" shall
mean the proceeds of the sale of all admission tickets for events held on the
Premises during each Lease Year, except that the following items may be deducted
and excluded from Net Ticket Sales for the purpose of computing Percentage of
Net Ticket Sales Rent: (i) any discounts, refunds or rebates; (ii) credit card
commissions, group sales or other ticket commissions; (iii) any taxes or
assessments levied on the price of an admission ticket, including the Park
Amphitheater Fee and/or the Business License Tax; and (iv) the reimbursement of
operation and
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management costs for events on the Premises scheduled by the COUNTY or any party
acting pursuant to Section 3.5 hereinabove. Furthermore, in the event the Ticket
Price includes any food or other item or service (including parking fees), then
the fair retail market value of those other items/services shall not be included
or reported as part of Net Ticket Sales but shall be included as part of the
Total Other Revenue as defined in Section 4.4.
4.3 Park Amphitheater Fee. It is contemplated that the Department will
recommend to the COUNTY's Board of Supervisors that the COUNTY adopt a business
license tax and/or a fee so that the COUNTY's cost of constructing and operating
the amphitheater and other facilities required under this Lease will not be born
by the general population of the County but only by those paying to attend
events held on the Premises. In the event the COUNTY does adopt such a fee (the
"Park Amphitheater Fee") and/or a business license tax (the "Business License
Tax"), the OPERATOR agrees to collect the Park Amphitheater Fee and/or the
Business License Tax at no cost to the COUNTY and to remit all amounts collected
to the COUNTY on the same schedule that the Annual Rent is due and payable. In
the event the COUNTY does adopt such a Park Amphitheater Fee and/or Business
License Tax, the COUNTY agrees that the OPERATOR may deduct from the Annual Rent
due and payable under this Lease an amount equal to the Park Amphitheater Fee
and/or Business License Tax collected and remitted to the COUNTY at the time the
Annual Rent is due and payable. If the Park Amphitheater Fee and/or Business
License Tax collected by the OPERATOR and remitted to the COUNTY for any six
month payment cycle of a Lease Year is greater than the Annual Rent due and
payable for the same six month payment cycle, the OPERATOR shall be entitled to
carry forward and/or deduct the difference in only the next succeeding six month
payment cycle of the same Lease Year. The OPERATOR shall not be entitled to
carry forward and/or deduct the difference in any six month payment cycle of any
succeeding Lease Year. If the COUNTY does adopt such a Park Amphitheater Fee
and/or Business License Tax, the OPERATOR agrees to defend the COUNTY, with
counsel acceptable to the COUNTY, in any action or proceeding brought
challenging the validity of the Park Amphitheater Fee and/or Business License
Tax. If the Park Amphitheater Fee and/or Business License Tax is declared
totally or partially invalid for any reason and the COUNTY is required to refund
any portion of the Park Amphitheater Fee and/or Business License Tax collected,
the OPERATOR shall pay to the COUNTY an amount equal to the amount which the
COUNTY is required to refund. In no event shall the OPERATOR be required to pay
the COUNTY any amount greater than the total amount OPERATOR has deducted from
its Annual Rent payments. Notwithstanding anything expressed or implied to the
contrary in the RFP, the OPERATOR's proposal, the negotiations leading to this
Lease, or this Lease, the COUNTY is not required to adopt a Business License
Tax, Park Amphitheater Fee or any similar tax and/or fee, and the OPERATOR
agrees
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it is not relying on the COUNTY to adopt any such tax and/or fee.
4.4 Percentage of Excess Total Other Revenue. In addition to the Annual
Rent due under Sections 4.1, Fixed Minimum Rent or 4.2, Percentage of Net Ticket
Sales Rent, above, but not subject to the deduction of any tax and/or fee
collected and remitted under Section 4.3, Park Amphitheater Fee, above, the
OPERATOR shall pay to the COUNTY, on the tenth (10th) day after each anniversary
date of this Lease, twenty-five percent (25%) of the amount by which the
OPERATOR's actual Total Other Revenue for any Lease Year exceeds the estimated
Total Other Revenue for that Lease Year as set forth below:
LEASE YEAR ESTIMATED TOTAL OTHER REVENUE
---------- -----------------------------
1 $ 1,600,000
2 1,930,000
3 2,370,000
4 2,790,000
5 3,230,000
6 3,350,000
7 3,450,000
8 3,550,000
9 3,660,000
10 3,730,000
11 3,790,000
12 3,870,000
13 3,940,000
14 4,020,000
15 4,090,000
16 4,170,000
17 4,250,000
18 4,330,000
19 4,420,000
20 4,510,000
21 4,590,000
22 4,690,000
23 4,790,000
24 4,870,000
25 4,970,000
26-30 5,000,000
31-35 5,500,000
(a) Total Other Revenue is defined as Total Gross Revenue minus Net Ticket
Sales.
4.5 Late Payment Charges. If any Annual Rent (Fixed Minimum Rent or
Percentage of Net Ticket Sales Rent), Percentage of Excess Total Other Revenue,
Park Amphitheater Fee, or Business License Tax payment is not paid when due and
payable, OPERATOR shall pay to COUNTY an
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additional Two Hundred and 00/100 dollars ($200.00) as an administrative
processing charge. The Parties agree that this late payment charge represents a
fair and reasonable estimate of the costs that COUNTY will incur by reason of
late payment by OPERATOR. Acceptance of any late charge shall not constitute a
waiver of OPERATOR's default with respect to the overdue amount or prevent
COUNTY from exercising any of the other rights and remedies available to COUNTY.
Annual Rent (Fixed Minimum Rent or Percentage of Net Ticket Sales Rent),
Percentage of Excess Total Other Revenue, Park Amphitheater Fee, or Business
License Tax not paid when due shall bear interest at the interest rate the
COUNTY earns on COUNTY pooled funds, from date due until paid in full.
4.6 COUNTY Tickets. As additional consideration for this Lease, OPERATOR
agrees to provide COUNTY with fifty (50) complimentary reserved tickets for each
event conducted by OPERATOR and one (1) complimentary reserved Season Box (with
tickets) with five (5) VIP parking passes for each Season which shall be good
for admission to every event conducted by OPERATOR during each Season. The
location of the reserved tickets and the Box shall be determined by OPERATOR.
All complimentary tickets, Season Box tickets and VIP parking passes will be
issued by COUNTY in accordance with COUNTY policy. Control over the distribution
of such complimentary tickets and parking passes shall be exercised entirely by
COUNTY. In the event OPERATOR must, pursuant to its agreement(s) with
performer(s), pay any amount to such performers for or by reason of the
complimentary tickets provided to COUNTY, OPERATOR shall provide COUNTY with
documentation of such fact and shall deduct from the Annual Rent due (but not
from the Park Amphitheater Fee and/or Business License Tax) an amount equal to
seventy-five percent (75%) of such payment(s) to the performer(s).
4.7 Utilities.
(a) As part of the construction for the amphitheater project under
Section 5.1, Construction of Project, the COUNTY shall construct and provide to
the Premises all utilities set forth in the approved construction plans and
specifications. Any additional utilities or services shall be the responsibility
of the OPERATOR and the OPERATOR shall coordinate all such connections with the
COUNTY.
(b) Except as provided in Section 4.7(c), below, the OPERATOR shall
thereafter be responsible for and shall pay all service charges, user fees and
related taxes for electrical, gas, telephone, water, sewage disposal, trash and
refuse disposal, and all other utility and communication services rendered or
used in or about the Premises at all times during the term of this Lease. If the
designed and built permanent capacity of any utilities or services are not
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sufficient to handle any OPERATOR planned event on the Premises, the OPERATOR,
at its cost, shall provide sufficient temporary utilities or services for the
event.
(c) OPERATOR agrees to pay to COUNTY the COUNTY's cost of providing
sewer service and non-potable water for irrigation, and One and 15/100 Dollars
($1.15) per hundred cubic feet of potable water delivered to the Premises.
(1) The monthly fee for water and/or sewer services shall
automatically be modified by any addition or change to the COUNTY Schedule of
Fees, San Bernardino County Code, Section 16.0223, Regional Parks, which sets a
fee for such items.
4.8 Termination by OPERATOR.
(a) COUNTY acknowledges that the contemplated increased capacity of
the amphitheater in a timely manner, is of the essence of this agreement. COUNTY
agrees that it shall, as soon as possible after the execution of this agreement,
begin the California Department of Transportation Project Study Report ("PSR")
process and all other steps necessary for the approval of an interchange at I-15
and Devore Road, (the "Interchange"). COUNTY agrees that if it becomes apparent
that the necessary approvals for construction of the Interchange will not be
forthcoming in sufficient time for completion by July 1, 1996, or that the cost
of constructing the Interchange will substantially exceed the Construction
Budget (Attachment 2 to Exhibit "E"), it will immediately commence
implementation of the following described "Alternate Plan." The "Alternate Plan"
being the widening of Devore Road to not less than four lanes from the
amphitheater entrance to its intersection with Lytle Creek Road/Sierra Avenue,
and the widening, repaving and striping of all on and off ramps of the existing
I-15 and Sierra Avenue interchange, as well as the securing of all necessary
permits, approvals and modifications of the EIR (as defined in Article 6.9,
Environmental Requirements) to allow occupancy by up to 65,000 persons, but in
no event less than 50,000 persons per event.
(b) If for any reason the Interchange, or alternatively the Alternate
Plan, is not completed and open to traffic by July 1, 1996, then in such event,
OPERATOR shall have the option to:
(1) Continue to operate the Premises under the Lease, with the
Fixed Minimum Rent frozen and prorated at $400,000 from the
date COUNTY receives OPERATOR's Notice of Continued
Operation until ninety (90) calendar days following the
opening of the Interchange or completion of the Alternate
Plan; or
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(2) Terminate the Lease as of December 31 of any subsequent year
by giving COUNTY a Notice of Termination no sooner than
October 1 and no later than October 31 of the same year. The
OPERATOR'S option to terminate the Lease under this
Subsection shall cease to exist upon completion of the
Interchange or the Alternate Plan, or its operation of the
Premises pursuant Subsection 4.8(b)(1), above, until June
30, 2000, without giving the Notice of Termination
(3) Terminate the Lease after June 30, 2000, upon forfeiture of
OPERATOR's entire investment and all rights to the
amphitheater. The OPERATOR's option to terminate the Lease
under this Subsection shall cease to exist upon completion
of the Interchange or the Alternate Plan.
(c) In the event the Alternate Plan is put into effect but fewer than
65,000 persons per event are authorized (but in no event less than 50,000
persons) the Fixed Minimum Rent described in Section 4.1 hereof shall be reduced
proportionally for each year after the Alternate Plan has become effective by
applying the ratio of permitted patrons to 65,000, times the Fixed Minimum rent
for each year that the authorized capacity is less than 65,000 patrons.
(d) In the event of termination under Subsection 4.8(b)(2), above,
the COUNTY shall pay to the OPERATOR a termination fee equal to the
consideration paid by OPERATOR pursuant to Section 3.9, OPERATOR's Fiscal
Obligation. OPERATOR shall not be entitled to nor have any other damages of any
kind for such a termination.
4.9 Security Deposit. There shall be no security deposit required for this
Lease unless the OPERATOR commits a Material Default as defined in Section
17.1(a), in which case the COUNTY may give OPERATOR notice to provide a security
deposit on the following terms and conditions.
(a) Within ten (10) days of receiving COUNTY's notice to provide a
security deposit, OPERATOR shall deposit in a local bank, or savings and loan
company having F.D.I.C., F.S.L.I.C. or R.T.C. approval, in favor of the County
of San Bernardino, an amount equal to the amount due as the next installment of
Fixed Minimum Rent. The Director is authorized, but not required, to accept
substitute security under such terms and conditions as the Director determines
in lieu of the above deposit in a local bank or savings and loan company.
(b) If OPERATOR defaults in payment of rent or any of the
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terms, provisions, covenants and conditions of this Lease, COUNTY may use,
apply, or retain the whole or any part of this security for the payment of any
rent in default or for any other sum which the COUNTY may spend or be required
to spend by reason of OPERATOR's default.
(c) In the event a security deposit is required under this section,
should OPERATOR pay the next installment of Annual Rent prior to being in
default for that payment, the security or any balance of the security shall be
returned to OPERATOR. If the security is cash or its equivalent, the OPERATOR
may instruct the COUNTY to retain the security as part of and in lieu of an
equivalent amount of any installment of Annual Rent.
(d) In the event COUNTY uses part or all of the security deposit as
provided herein, OPERATOR shall replenish the security deposit in the amount
used within ten (10) days of notice from COUNTY.
5.
CONSTRUCTION OF PROJECT,
IMPROVEMENTS AND ALTERATIONS
5.1 Construction of Project. COUNTY agrees to construct the amphitheater
project (the "Project") as described and on the time schedule and other terms
and conditions of Exhibit "E", Construction of Project. In the event any portion
of the Project is not completed on the time schedule set forth as Attachment 1,
Work Schedule, the OPERATOR waives any and all claims for any loss, liability or
damages against the COUNTY, and agrees to pursue, with COUNTY cooperation, any
and all such claims only against the construction contractor or other third
party for the Project portion which OPERATOR contends caused the loss, liability
or damage to the OPERATOR. The COUNTY further agrees to pursue or allow OPERATOR
to pursue any and all contractual remedies it may have against the contractor or
any third party responsible for construction work which results in a structural
failure, results in a construction delay, or is otherwise constituted as breach
of professional duty by such contractor or third party.
5.2 Improvements and Alterations. OPERATOR agrees that it will make no
improvements and/or alterations (hereinafter referred to as "improvement(s)") to
the Premises or its facilities without, in each case, the prior consent of
COUNTY.
(a) For any proposed improvement which requires a building permit or
are estimated to cost in excess of Ten Thousand Dollars ($10,000.00), OPERATOR
shall prepare a detailed site plan showing the location and layout of all
proposed improvements. The site plan shall
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be submitted to the Department for review and approval prior to OPERATOR's
taking any necessary actions to obtain all required approvals and permits from
other COUNTY departments, state, local or federal agencies having authority over
the improvement project. OPERATOR shall also prepare detailed plans and
specifications for construction of the proposed improvements. The detailed plans
and specifications shall be submitted to the Department for review and approval
prior to OPERATOR taking any necessary actions to obtain all required approvals
and permits from other County departments, state, local, or federal agencies
having jurisdiction over the improvement project.
(b) Within fifteen (15) days after issuance of the building permit,
OPERATOR shall initiate construction of any improvements approved by COUNTY and
shall thereafter diligently pursue completion of the improvement construction.
(c) Except as specifically provided below in Section 5.3, Improvement
Fund, OPERATOR shall, at its own expense, construct and complete all
improvements approved by COUNTY in a good and workmanlike manner and with high
quality materials, and shall furnish all tools, equipment, labor and material
necessary to perform and complete the same, and hereby expressly warrants that
all said materials and workmanship will be free from defects. OPERATOR
understands and agrees that all site approvals and any environmental approvals
necessary for the improvement project will be the responsibility of OPERATOR.
(d) All construction shall meet the building code requirements of the
County of San Bernardino and shall be carried out and completed in strict
compliance with the plans and specifications approved by the Department and in
accordance with the schedule for commencement and completion of such
construction agreed to by the Department and OPERATOR. OPERATOR is solely
liable, at its own expense, for procurement of all permits necessary for the
development and operation of improvements constructed under this Section.
(e) OPERATOR agrees that the Department may have on the site at any
time during the construction period an inspector who shall have the right of
access to the Premises and the construction work. OPERATOR understands that the
Department's inspector's presence on site in no way constitutes approval of
improvements being constructed. OPERATOR shall, at the commencement of the
construction work notify the Department of the identity, place of business, and
telephone number of OPERATOR's on-the-job representative. Said representative
shall be OPERATOR's prime consultant for the Department's inspector and all
other governmental inspectors. OPERATOR is aware that the inspector for the
Department is in addition to other COUNTY inspectors and not in lieu of any
other inspector(s) required by COUNTY for the construction work.
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(f) OPERATOR shall purchase performance and payment bonds from
corporations duly authorized to issue surety bonds by the State of California
("State") before constructing any works of improvement upon the Premises. Each
bond shall name OPERATOR as principal, corporation as surety, and COUNTY as
obligee thereon. The payment bond shall also inure to the benefit of all
claimants, as said term is presently defined by Section 3085 of the State Civil
Code, or may hereafter be amended, so as to give such persons a right of action
to recover thereon in any suit brought to foreclose the liens provided for in
Title 15 of Part of Division 3 of said Civil Code or in a separate suit brought
upon the bond. Each bond shall be in a sum equal to one-hundred percent (100%)
of the costs for construction of the works of improvement to be located upon the
Premises, as estimated by COUNTY. The condition of the performance bond shall be
such that if the principal shall well and truly perform the construction herein
required, pursuant to the approved plans and specifications therefor, then
surety shall no longer be bound thereon. The condition of the payment bond shall
be such that if the principal shall well and truly pay, or cause to be paid, all
claims for labor, material, appliances teams, or power, or either or all,
performed, furnished, or contributed in connection with said works of
improvement, then surety shall no longer be bound thereon. Said bonds shall be
subject to approval by the COUNTY as to sufficiency and liability of sureties
named thereon. Said bonds shall be maintained in full force and effect by
OPERATOR until said works of improvement have been completed and claims for
labor and materials have been paid. Performance and payment bonds will only be
required for works of improvement upon the Premises in excess of $10,000.00.
(g) All improvements made pursuant to this Article shall become the
property of the COUNTY upon completion, unless otherwise agreed prior to
construction.
(h) OPERATOR shall keep the Premises and the improvements located
thereon free and clear of any and all claims and liens arising out of the
performance of work or furnishing of materials.
(i) COUNTY shall have at all times the right to post and keep posted
on the Premises such notices as may be provided for under and by virtue of the
laws of the State of California for the protection of the Premises from
mechanics liens or liens of similar nature.
(j) In the event Operator makes any improvements to the Premises,
Operator shall comply with all applicable portions of the California Public
Contract Code, including but not limited to Article 3.5, COUNTIES, and all
applicable portions of the California Labor Code, including but not limited to
Chapter 1, PUBLIC WORKS.
(k) The OPERATOR further agrees to pursue any contractual
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remedies it may have against the contractor responsible for construction work
which results in a structural failure, or is otherwise constituted as breach of
professional duty by such contractor.
5.3 Improvement Fund. The Parties agree that they will establish and fund
an improvement fund (the "Improvement Fund").
(a) The Improvement Fund is for the purpose of paying for
modernization and improvements to the Premises and its facilities which are
designed to keep the amphitheater and other facilities on the Premises at the
state of the art. Except for expenditures requiring, under applicable law,
competing bids, either of the Parties may propose to the other the expenditure
of monies from the Improvement Fund. Such proposal shall detail: (i) the
proposed use of the monies; (ii) the party(ies) to whom such monies are proposed
to be paid; and (iii) the proposer's best estimate of the total cost of the
proposed improvement. Unless the other Party reasonably objects within fifteen
(15) days of its receipt of the proposal, such proposal shall be deemed approved
and the actual cost of the proposal or up to 125% of the estimated cost of the
proposal, whichever is less, shall be paid for from the Improvement Fund. The
proposing Party shall pay any amount of the actual cost of an improvement which
exceeds 125% of the estimated cost for the improvement.
(b) The Parties agree that they shall jointly fund the Improvement
Fund as follows: (i) At the commencement of the Lease and on each anniversary
date for Lease Years 1 through 4 each Party shall deposit Five Thousand Dollars
($5,000.00) into the Improvement Fund; (ii) On each anniversary date for Lease
Years 5 through 14 each Party shall deposit Twelve Thousand Five Hundred Dollars
($12,500.00) into the Improvement Fund; and (iii) On each anniversary date for
Lease Years 15 through the Initial and all Extended Terms each Party shall
deposit Twenty Five Thousand Dollars ($25,000.00) into the Improvement Fund.
(c) The Improvement Fund shall be maintained by the COUNTY as a
separate interest bearing fund. All interest earned shall become part of the
Improvement Fund. Any monies remaining in the Improvement Fund upon any
termination of this Lease shall be divided equally among the OPERATOR and
COUNTY.
6.
MANAGEMENT REQUIREMENTS
6.1 General Requirements. OPERATOR agrees to operate and manage the
services and facilities offered in a professional, business-
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like manner. OPERATOR shall appoint an Operating Manager who shall be the person
with whom the COUNTY, through the Director, shall deal on a regular basis
regarding the use and operation of the Premises by the OPERATOR. Any person
selected by OPERATOR as its Operating Manager shall be skilled in management of
businesses similar to the amphitheater. In the event the Operating Manager shall
fail, to any material degree, to meet the reasonable expectations of COUNTY with
respect to this Lease, COUNTY shall notify OPERATOR of such shortfalls and
OPERATOR shall take reasonable action to remedy such shortfalls.
(a) The Operating Manager shall devote the greater part of his or her
personal time and attention to the operation of the amphitheater and shall
promote, increase and develop the business and render every possible service and
convenience to the public. The Operating Manager shall be fully acquainted with
OPERATOR's procedures and contract obligations, and authorized by OPERATOR to
act in its behalf and fulfill its obligations in the day-to-day operations of
the amphitheater. During the calendar days and hours established for the
operation of the amphitheater, the Operating Manager's personal attention shall
not be directed toward the operation of any other business activity.
6.2 OPERATOR Employees. OPERATOR will use its best efforts to ensure that
its employees shall at all items conduct themselves in a professional manner,
and that they will conform to all applicable rules and regulations now in force
in the Park, a copy of which is attached hereto as Exhibit "F", Park
Regulations, as well as all rules and regulations as hereafter may be
promulgated or put into operation by the COUNTY. In the event of any conflict
between this Lease and the Park Regulations, this Lease shall control. OPERATOR
shall maintain a staff adequate to operate and administer all facilities located
on said Premises in a safe and orderly manner. OPERATOR agrees, upon due cause
being shown, to take reasonable action against its employees. Employees of
OPERATOR shall be required to wear an easily identifiable visual uniform,
t-shirt, vest, hat or name tag so the public can recognize this person as
associated with OPERATOR. The prior approval of the Director must be obtained to
meet this requirement.
6.3 Merchandise. OPERATOR agrees to sell merchandise and provide services
that are of good quality and condition. COUNTY retains the right to require
OPERATOR to discontinue sale or use of those items COUNTY reasonably determines
are not acceptable, upon five (5) days notice by COUNTY. Unacceptable
merchandise, for purposes of this section, shall be merchandise which does not
comply with the guidelines of Subsection 3.2(c) hereinabove. For sales tax
purposes, the point of sale for all food, merchandise, admission tickets and
services shall be the Park.
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6.4 Subconcession Agreements. OPERATOR may, in conjunction with operation
of the Premises, enter into agreements, some of which may be long-term and/or
exclusive, with third parties concerning, among other things, advertising and
signage at the Premises, operation of concessions, and sale of food, beverage
and concession items at the Premises. Except as provided in Subsection 3.5(g),
COUNTY agrees that all COUNTY events at the Premises under Section 3.5, COUNTY
Use of Premises, will be subject to, and will be presented in conformity with,
such agreements. COUNTY reserves the right to review any and all such agreements
entered into by OPERATOR for compliance with the terms of this Lease. All
contracts with such third parties shall clearly spell out that this Lease
controls all activities of such persons on the Premises, including, but not
limited to, review of prices, merchandise and employees. Additionally, all
contracts with such third parties shall contain insurance and indemnification
provisions to protect the COUNTY which are acceptable to the COUNTY and which
are substantially similar to the provisions of Article 12, INDEMNITY AND
INSURANCE.
6.5 Continued Occupancy. OPERATOR covenants and agrees to, and it is the
intent of this Lease that the OPERATOR shall, during the entire term of this
Lease, occupy the Premises for the purpose hereinabove specified, except while
such Premises are untenantable by reason of fire or other unavoidable casualty.
Any violation of this paragraph shall make OPERATOR subject to Article 17,
VIOLATION OF AGREEMENT, of this Lease.
6.6 Security, Traffic Management, Waste, and Miscellaneous Plans.
(a) OPERATOR shall be responsible for providing security in all the
areas of the Premises under its exclusive control, and all License Areas during
such periods of exclusive control. COUNTY shall provide security in all other
areas of the Park and at all other times including, but not limited to, during
COUNTY sponsored events.
(b) OPERATOR shall prepare a traffic management plan ("Traffic
Management Plan") setting forth the parking and traffic plans to be used to hold
any authorized event at the Premises. The Traffic Management Plan shall be
prepared and delivered to COUNTY not later than April 30, 1993, for COUNTY
review. The Traffic Management Plan may provide for temporary event parking for
approximately 1,300 vehicles in the area west of the Premises shown on Exhibit
"B", Areas Under License, as "Unimproved Temporary Parking Area," for
approximately 400 vehicles in the area west of the Premises shown on Exhibit
"B", Areas Under License, as "Unimproved Parking ( License Area)," and for
approximately 500 vehicles in the area of the Premises shown on Exhibit "B",
Areas Under License, as "Unimproved Parking."
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The Traffic Management Plan shall have a separate section setting forth the
parking and traffic plans to be used on those dates when there are events
scheduled by the OPERATOR and by the FAIRE (as defined in Section 21.10,
Renaissance Pleasure Faire). In operating the Premises, OPERATOR shall use its
best efforts to comply with such plan or any amendments thereto which may be
necessitated from time to time by reason of changes in traffic patterns in order
to minimize congestion in and surrounding the Premises and Park. OPERATOR shall
not be responsible for the cost of nor for the installation or maintenance of
any traffic lights required by the Traffic Management Plan.
(c) OPERATOR shall be responsible to properly handling all waste
produced during any and all events on the Premises unless otherwise agreed.
(d) OPERATOR shall submit to the Director, for review prior to
submitting to any other agency or authority, the Traffic Management Plan and a
plan covering all aspects of security management and waste management for all
events. If, after the Director's review and comments, any other agency or
authority requires or desires any changes to any such plan, the plan shall be
resubmitted to the Director for further review.
(e) The Director shall notify the OPERATOR of the Department's
comments with respect to all plans within fifteen (15) days of the Director's
receipt of the OPERATOR's plan or the plan shall be deemed to be in compliance
herewith. Should the Director object to such plan, any portion thereof, or the
changes/additions thereto, the Director shall, within fifteen (15) days, notify
OPERATOR of such objection(s) and the reasons therefor. OPERATOR shall promptly
respond to the Director's objections and set forth a plan to mitigate and/or
resolve the objections to the reasonable satisfaction of the Director. The
OPERATOR shall, after review by the Director, coordinate with the Director all
meetings with any other agency or authority who has to review any such plan.
Where, in its operations at the Premises, OPERATOR is not reasonably able to
comply with any such plan, it shall notify the Director and the Parties shall
cooperate to reach a reasonable accommodation with respect to such non-complying
operations.
6.7 Disorderly Persons. OPERATOR shall use its best efforts to permit no
apparently intoxicated person or persons, profane or indecent language, or
boisterous or loud conduct in or about the Premises and will call upon the aid
of peace officers to assist in maintaining peaceful conditions. OPERATOR's
determination as to loud, or otherwise improper conduct shall be made in
consideration of the nature of and the type of audience attending the event at
which the conduct occurs.
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6.8 Affirmative Action. OPERATOR shall use its best efforts to provide such
employees as are required to render good service. Such employees shall include
but not be limited to office force, accounting, ushers and parking lot
attendants. In the event an employee is not satisfactory, as herein defined, the
Director may direct OPERATOR to correct the cause of said dissatisfaction to the
best of OPERATOR'S ability, within a reasonable time after written notice is
received by OPERATOR, consistent with any labor contract, administrative or
legal remedy available to said employee.
(a) OPERATOR agrees and obligates itself not to discriminate during
the term of this Lease against any employee or applicant for employment because
of employee's or applicant's race, religion, natural origin, ancestry, sex, age
or physical handicap. Certification by OPERATOR of adherence to an Affirmative
Action Program is herein attached as EXHIBIT "G", Affirmative Action Program
Compliance Certification. OPERATOR has signed and submitted the San Bernardino
County Affirmative Action Plan attached hereto as EXHIBIT "H", San Bernardino
County Affirmative Action Plan. OPERATOR shall not knowingly employ any person
who shall use improper language, act in a loud or boisterous manner, use or
possess marijuana on the site or violate narcotics laws. OPERATOR shall promptly
discipline, in such manner as is appropriate, any employee found to be doing so,
consistent with due process of law and the terms of the appropriate labor
contract, if any.
(b) The Director shall have the right to observe and inspect
OPERATOR's and all concessions' employees at any reasonable time during the
course of business. In doing so, the Director shall use his/her best efforts to
not interfere with OPERATOR's, and OPERATOR's concessions' business activities
at the Premises.
6.9 Environmental Requirements. The OPERATOR shall comply with the current
Glen Helen Regional Park Master Plan (the "Master Plan"), the Environmental
Impact Report (the "EIR") relative thereto, and the Conditions of Approval (the
"Conditions") relating thereto in Resolution No. 86-307 approving the Master
Plan, as approved by the COUNTY's Board of Supervisors (the "Board") on or about
July 14, 1986, and/or as they may be revised, amended or supplemented from time
to time. Among other things, the foregoing documents include an attendance
limitation of 16,800 persons per calendar day at the amphitheater until a
freeway interchange at Devore Road and Interstate 15 is operational. The
OPERATOR shall also comply with the Conditional Use Permit (the "CUP"), No.
745EVL92008379CCUC01, approved on or about August 31, 1992, or as amended.
Copies of all of the foregoing documents are available for the OPERATOR's review
at the Department. The OPERATOR shall use the special event permitting process
of the San Bernardino County Code, Chapter 15, TEMPORARY SPECIAL EVENT PERMIT,
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Section 41.151 et seq. for any event on the Premises and/or Park which may
exceed the above limitations.
6.10 Security. OPERATOR shall, at its cost, provide adequate security for
all facilities and equipment leased hereunder and personal property on the
Premise. OPERATOR shall also provide additional security consistent with the
size of the crowds for all of OPERATOR's events on the Premises.
6.11 Emergency Aid. OPERATOR shall provide and staff an emergency aid
station consistent with the size of the crowds for all of OPERATOR's events on
the Premises to provide emergency medical aid to all persons on the Premises.
All persons staffing the emergency aid station shall, at a minimum, be currently
certified in first aid and CPR.
6.12 Damage Provisions. OPERATOR shall pay for the repair and/or
replacement of all damaged structures, equipment and facilities in areas
occupied or used by OPERATOR which is damaged through any act of OPERATOR, its
employees, agents, subconcessions, persons attending or participating in any
OPERATOR event. This Section applies to, but is not limited to such items as
exterior fencing, structures, drinking fountains, water spigots, irrigation
equipment, trash cans, landscaping, including turf, trees, shrubs, and any other
facilities or equipment on the Premises and License Areas.
7.
RECORDS AND ACCOUNTS
7.1 Records and Accounts. The OPERATOR shall keep, on the Premises, full
and accurate books and accounts, records, cash receipts, and other pertinent
data showing its financial operations relative to the Premises. Such books of
account, records, cash receipts and other pertinent data shall be kept for a
period of three (3) years after the end of the rental year to which such items
pertain. The COUNTY shall be entitled during such three (3) years to inspect,
examine and to copy, at the COUNTY'S expense, the operator's books of accounts,
records, cash receipts and other pertinent data as necessary or appropriate to
determine Percentage of Net Ticket Sales Rent, Percentage of Excess Total Other
Revenue, Park Amphitheater Fee, and/or Business License Tax due hereunder. The
OPERATOR shall cooperate fully with the COUNTY in permitting such inspection.
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7.2 Reports.
(a) OPERATOR shall deliver to COUNTY, no later than the tenth (10th)
calendar day of each month, a true and correct statement, certified by the
Operating Manager, of Total Gross Revenue for the preceding calendar month,
substantially in the form set forth as Exhibit "I", Revenue Report.
(b) OPERATOR shall deliver to COUNTY, along with its rental payment
for each six month payment cycle, a true and correct statement, certified by the
Operating Manager, of Total Gross Revenue for the preceding six month payment
cycle, also substantially in the form set forth as Exhibit "I", Revenue Report.
(c) An annual report, also substantially in the form of Exhibit "I",
Revenue Report, shall be delivered to the COUNTY within ninety (90) calendar
days of the close of business for OPERATOR's fiscal year end. The annual report
shall be certified by the OPERATOR's chief financial officer.
7.3 Audit. COUNTY shall have the right to audit any or all books, records,
and accounts maintained by OPERATOR for the purpose of verifying the payments
required to be paid to COUNTY hereunder. In the event that such audit shows that
the payment due to COUNTY is greater than the amount reported or paid by
OPERATOR, by 5% or more, COUNTY may conduct a special audit by an independent
certified public accountant, the cost of which special audit shall be borne by
OPERATOR if it confirms that a greater payment, by 5% or more, is due to COUNTY
than was paid or reported by OPERATOR for the period covered by the audit.
Within ten (10) days after the special audit report is furnished to OPERATOR it
shall pay to COUNTY the full amount of any underpayment demonstrated by such
audit, together with interest on the amount of such underpayment at the interest
rate the COUNTY earns on COUNTY pooled funds, from date due until paid in full.
7.4 Compliance Covenant. OPERATOR covenants that it will comply with, and
require all its agents, employees, and sub-concessionaires to comply with the
foregoing requirements.
7.5 Release of Information. Except as provided in this Section, all
information received by the COUNTY from any source concerning this LEASE may be
treated by the COUNTY as public information subject to disclosure under the
provisions of the California Public Records Act, Government Code Section 6250 et
seq. (the "Public Records Act"). All information obtained in connection with
COUNTY'S inspections of records
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or audits, rental percentages, and/or minimum annual guarantees, shall be
received and maintained in confidence by COUNTY, with the information contained
therein available only to authorized persons directly connected with the
official business of COUNTY, or as may be required by law. OPERATOR understands
that although all materials submitted in connection with any inspection or audit
are for the exclusive use of the COUNTY, they are potentially subject to
disclosure under the provisions of the Public Records Act. In the event a
request for disclosure of any part or all of any information which the COUNTY
has agreed to hold in confidence is made to the COUNTY, the COUNTY shall notify
the OPERATOR of the request and shall thereafter disclose the requested
information unless the OPERATOR, within five (5) days of receiving notice of the
disclosure request, requests nondisclosure and agrees to indemnify, defend, and
hold the COUNTY harmless in any/all actions brought to require disclosure. The
OPERATOR waives any and all claims for damages, lost profits, or other injuries
of any and all kinds in the event COUNTY fails to notify OPERATOR of any such
disclosure request and/or releases any information received from the OPERATOR.
8.
TAXES, ASSESSMENTS AND OTHER CHARGES
8.1 Payment of Impositions. Except as otherwise set forth herein, and
subject to Section 4.3, Park Amphitheater Fee, OPERATOR agrees to pay or cause
to be paid, 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, all personal property taxes,
assessments, franchises, excise, license and permit fees, and other governmental
levies and charges, general and special, ordinary and extraordinary, unforeseen
and foreseen, of any kind and nature whatsoever (except real property taxes)
which at any time during the term of this Lease 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: (i) the Premises or any part thereof or any
appurtenance thereto; (ii) the fees and income received by the OPERATOR from
sublessees, guests or others for the use or occupation of the Premises; or (iii)
this transaction or any document to which the OPERATOR is a party, creating or
transferring an interest or estate in the Premises.
(a) All such taxes, franchises, excises, license and permit fees, and
other governmental levies and charges to be paid by the OPERATOR shall
hereinafter be referred to as "Impositions," and any of the same shall
hereinafter be referred to as an "Imposition." Any Imposition relating to a
fiscal period of the taxing authority, a part of which period is included within
the term and a part of which is
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included in a period of time before commencement or after the expiration of the
term, shall (whether or not such Imposition shall be assessed, levied,
confirmed, imposed upon, become a lien upon the Premises, or shall become
payable, during the term) be adjusted between the COUNTY and the OPERATOR as of
the commencement or expiration of the term as applicable, so that the OPERATOR
shall pay that portion of such Imposition which that part of such fiscal period
included in the period of time before the expiration or termination of the term
bears to such fiscal period, and the COUNTY shall pay the remainder thereof; the
OPERATOR shall not be entitled to receive any apportionment, if the OPERATOR
shall be in default in the performance of any of the OPERATOR's covenants and
agreements as provided in this Lease.
(b) Notwithstanding the above, OPERATOR recognizes and understands
that this Lease may create a possessory interest subject to property taxation
and that the OPERATOR may be subject to the payment and agrees to pay any
property taxes levied on such interest.
8.2 Payment of Impositions in Installments. If, by law, any Imposition may
at the option of the payer be paid in installments (whether or not interest
shall accrue on the unpaid balance of such Imposition), the OPERATOR may
exercise the option to pay the same (and any accrued interest on the unpaid
balance of such Imposition) in installments and, in such event, shall pay such
installments as may become due during the term as the same respectively become
due and before any fine, penalty, further interest or cost may be added thereto;
provided, however, that the amount of all installments of any such Imposition
which will be the responsibility of the OPERATOR pursuant to Section 8.1,
Payment of Impositions, and which are to become due and payable after the
expiration of the term, shall be deposited with the COUNTY for such payment on
the date which shall be one (1) year immediately prior to the date of such
expiration.
8.3 Tax Receipts. The OPERATOR shall furnish to the COUNTY, within
forty-five (45) calendar days after the date when any Imposition would become
delinquent, official receipts of the appropriate taxing authority or other
evidence satisfactory to the COUNTY evidencing payment thereof.
8.4 Limits of Tax Liability. The provisions of this Lease shall not be
deemed to require the OPERATOR to pay taxes assessed against the COUNTY or
municipal, county, state or federal capital levy, estate, succession,
inheritance, gift, or transfer taxes of the COUNTY; except, however, that the
OPERATOR shall pay all taxes assessed by any governmental authority by virtue of
any operation by the OPERATOR conducted on or out of the Premises.
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8.5 Permitted Contests.
(a) The OPERATOR shall have the right to contest the validity or the
amount in part or in full, of any Imposition which it is obligated to pay under
the provisions of this Lease. The OPERATOR agrees that all such proceedings
shall be begun without undue delay after any contested item is imposed and shall
be prosecuted to final adjudication with reasonable dispatch.
(b) The OPERATOR shall give the COUNTY prompt notice in writing of any
such contest at least ten (10) days before any delinquency occurs. The OPERATOR
may only exercise its right to contest an Imposition hereunder if the subject
legal proceedings shall operate to prevent the collection of the Imposition so
contested, or the sale of the Premises, or any part thereof, to satisfy the
same, and only if the OPERATOR shall, prior to the date such Imposition is due
and payable, have given such reasonable security as may be required by the
COUNTY from time to time in order to insure the payment of such Imposition to
prevent any sale, foreclosure or forfeiture of the Premises or any part thereof,
by reason of such nonpayment. In the event of any such contest and the final
determination thereof adversely to the OPERATOR, the OPERATOR, shall, before any
fine, interest, penalty or cost may be added thereto for nonpayment thereof, pay
fully and discharge the amounts involved in or affected by such contest,
together with any penalties, fines, interest, costs and expenses that may have
accrued thereon or that may result from any such contest by the OPERATOR and,
after such payment and discharge by the OPERATOR, the COUNTY will promptly
return to the OPERATOR such security as the COUNTY shall have received in
connection with such contest.
(c) Except when prohibited by law or where the COUNTY is the taxing
agency or receives any part of the Imposition from the taxing agency, the COUNTY
shall cooperate reasonably in any such contest permitted by this Section and
shall execute any documents or pleadings reasonably required for such purpose.
Any such proceedings to contest the validity or amount of an Imposition or to
recover back any Imposition paid by the OPERATOR shall be prosecuted by the
OPERATOR at the OPERATOR'S sole cost and expense; and the OPERATOR shall
indemnify and save harmless the COUNTY against any and all loss, cost or expense
of any kind, including, but not limited to, reasonable attorneys' fees and
expenses, which may be imposed upon or incurred by the COUNTY in connection
therewith.
8.6 Liens; COUNTY Right to Cure.
(a) The OPERATOR shall not, directly or indirectly, create or permit
to be created or to remain, and will promptly discharge, at its expense, any
mortgage, lien, encumbrance or charge on or pledge of
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the Premises or fixtures and furnishings, or any part thereof, or the OPERATOR's
leasehold estate or other interest therein, or the Annual Rent, Percentage of
Excess Total Gross Revenue or other sums payable by the OPERATOR under this
Lease; provided, however, that the foregoing shall not be deemed to prohibit
purchase-money chattel mortgages, conditional sales agreements, or other
security interests on OPERATOR owned personal property and equipment used and/or
installed at the Premises. The OPERATOR shall notify the COUNTY promptly of any
lien or encumbrance which has been created on or attached to the Premises, or to
the OPERATOR's leasehold estate or other interest therein, whether by act of the
OPERATOR or otherwise.
(b) If the OPERATOR, in violation of the provisions of this Lease,
shall fail to pay and to discharge any Imposition, mortgage, lien, encumbrance,
charge or pledge, the COUNTY may (but shall not be obligated to) pay or
discharge it, and the amount paid by the COUNTY and the amount of all costs,
expenses, interest and penalties connected therewith, including attorneys' fees,
together with interest at the default rate, shall be deemed to be and shall be
payable by the OPERATOR as additional fees (not subject to the credit for any
Park Amphitheater Fee and/or Business License Tax paid) and shall be reimbursed
to the COUNTY by the OPERATOR on demand, provided that the OPERATOR shall have
failed to pay such Imposition within five (5) days after written notice from the
COUNTY of its intention to pay. The existence of any mechanic's, laborer's,
materialman's, supplier's or vendor's lien, or any right in respect thereof,
shall not constitute a violation of this Section if payment is not yet due upon
the contract or for the goods or services in respect of which any such lien has
arisen. Nothing in this Section is intended to create any obligation or
liability on the part of the OPERATOR for liens arising from or created by the
COUNTY's act or failure to act.
9.
REPAIRS AND MAINTENANCE
9.1 Premises Repair and Maintenance.
(a) COUNTY, at its sole cost, shall maintain and repair all structural
elements of the Premises, including but not limited to the roofs, bearing and
exterior walls (excluding cosmetic surface coverings, glass and doors),
foundations, subflooring, plazas, and sidewalks. In addition COUNTY shall be
responsible for the repair and maintenance of all COUNTY owned water & sewer
lines and pumps, and utility lines and facilities or lying outside of the
Premises which serve the Premises and all COUNTY owned water & sewer main lines
and pumps inside the Premises, except for damages caused by the negligence of
OPERATOR.
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(1) COUNTY shall be fully responsible for the repairs and
maintenance of all Parking Areas, including but not limited to lighting,
landscaping, fencing, and striping (if necessary), the Lakeside Area and all
access roads. In the event any portion of the Parking Area are damaged by flood,
earthquake, or other acts of nature which can cause sudden damage, the COUNTY
shall use reasonable efforts to provide to OPERATOR replacement Parking lots in
the Park and within 1/3 mile of the main entrance to the amphitheater.
(b) OPERATOR, at its sole cost and expense, shall repair and maintain
in good condition the electrical, plumbing and sewer system lying inside the
Premises, air conditioning heating and ventilating system serving the Premises
but not including the replacement thereof which is a COUNTY responsibility
except for damages caused by the negligence of OPERATOR, and all sidewalks and
landscaping and lighting within the Premises.
(1) OPERATOR further agrees that it will make no substantial
alterations or maintenance to said Premises without, in each case, the prior
consent of COUNTY, including, but not limited to, carpentry, electrical, sewer,
paving and painting. COUNTY reserve(s) the right to enter the Premises and the
improvements located hereon to inspect the same or any part thereof at any time
to attend or protect the COUNTY's interest under this Lease.
(c) A Party shall have ten (10) days after notice from the other Party
to commence to perform its obligations under this Section, except that the
obligated Party shall perform its obligations immediately if the nature of the
problem presents a hazard or emergency. The Parties shall diligently pursue all
repairs and maintenance to completion. Any notice or demand provided by this
Section may be made orally by telephone or otherwise, provided that written
confirmation is given within five (5) days after the oral notice or demand is
made. Such confirmation shall be made as provided in Article 19, NOTICES.
(1) Any dispute concerning the Parties obligations for repair and
maintenance shall be subject to arbitration as set forth in Article 21.22,
Arbitration, except that arbitration shall not be used for any dispute in excess
of Ten Thousand Dollars ($10,000.00).
9.2 Return of Premises. The OPERATOR agrees that it will, upon the
termination of this lease or any extension thereof, return the Premises in as
good condition and repair as the Premises now are or shall hereafter be put,
reasonable wear and tear excepted.
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10.
INSPECTION/EVALUATION
10.1 Inspection. COUNTY may make a detailed and formal inspection and
evaluation at any time to insure compliance with this Lease by OPERATOR. Each
such inspection will be followed by a report, with a copy given to OPERATOR.
Satisfactory inspections/evaluations will be an integral part of the
negotiations for the Lease extensions. All such reports shall be substantially
in the form of Exhibit "J", Inspection Report, attached hereto.
11.
CLEANING PREMISES
11.1 OPERATOR's Responsibilities. OPERATOR shall furnish all labor,
services, materials, supplies, and equipment necessary to maintain in a clean,
orderly, and inviting condition satisfactory to COUNTY, all portions of the
Premises, including but not limited to, the fixed seating, stage house, and, if
used in conjunction with an OPERATOR event, the Parking Areas of the Park.
OPERATOR will provide or obtain sufficient and regular trash removal services
for all portions of the Premises throughout the term of this Lease.
11.2 COUNTY's Responsibilities. COUNTY shall be responsible for cleaning
all remaining portions of the Park, and for removal of trash therefrom, as well
as being responsible for cleaning all areas of the Premises after each County
event or use thereof.
12.
INDEMNITY AND INSURANCE
12.1 Liability. COUNTY shall not be liable at any time for loss, damages,
or injury to the person or property of any person whomsoever at any time,
occasioned by or arising out of any act of OPERATOR or of anyone holding under
OPERATOR; nor the occupancy or use of the Premises or any part thereof by or
under the OPERATOR; nor directly or indirectly from any state or condition of
said Premises or any part thereof during the term of this Lease.
12.2 Ho1d Harmless Agreement. Notwithstanding anything to the contrary
herein contained, and irrespective of any insurance carried by OPERATOR for the
benefit of COUNTY, OPERATOR agrees to defend, indemnify, and hold COUNTY and its
officers, agents, volunteers, and
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employees harmless from any and all damages arising out of any act or omission
of OPERATOR, its employees, agents, subcontractors, and persons attending
OPERATOR events on the Premises, except as the same may arise, in whole, by
reason of the COUNTY's negligence, gross negligence, recklessness, or
intentional misconduct (or that of COUNTY's agents or employees).
12.3 Liability Insurance. OPERATOR agrees to procure and maintain a policy
or policies of comprehensive general liability and property damage insurance for
the benefit of OPERATOR and COUNTY, in amounts no less than that set forth
below; and under and by the terms of which, COUNTY and its respective officers,
agents, volunteers, and employees are protected from and insured against any and
all loss, damage or liability of whatsoever nature, arising out of any act or
omission of OPERATOR, its employees, agents, subcontractors, and persons
attending OPERATOR events on the Premises. The limits of liability on any policy
of public liability and property damage shall be at least Twenty-Five Million
Dollars ($25,000,000.00) combined single limit for bodily injury and property
damage, including Liquor Liability. Additionally, OPERATOR shall carry
sufficient Fire Legal Liability insurance for the benefit of COUNTY to cover the
permanent structures within the Premises as well as COUNTY owned contents
thereof. Such insurance shall be in such amounts and shall contain such terms as
the COUNTY may reasonably require.
12.4 Workers' Compensation. A program of workers' compensation insurance or
a State-approved Self Insurance Program in an amount and form to meet all
applicable requirements of the Labor Code of the State of California, including
Employer's Liability with $250,000 limits, covering all persons providing
services on behalf of the OPERATOR and all risks to such persons under this
Lease.
12.5 Evidence of Coverage. OPERATOR shall deliver to COUNTY within sixty
(60) calendar days of occupying the Premises, or any part of it, a certified
copy of the insurance policy or policies and all endorsements procured by
OPERATOR under the terms hereof. Prior to occupying the Premises, or any part
of it, OPERATOR shall deliver certificates of the coverage from the insurance
company or companies writing said policy or policies of insurance, which
certificates shall, among other things, name the company writing the same, and
list the policy number, amount of coverage, and provisions thereof.
12.6 Premium Payments. OPERATOR shall pay any and all premiums or other
expenses arising in connection with the furnishing of the insurance required of
OPERATOR as herein provided.
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12.7 Additional Named Insured. Except for Workers' Compensation Insurance,
COUNTY shall be an additional named insured under said policy or policies of
insurance. All insurance required hereunder shall be maintained in full force at
all times during this Lease by OPERATOR. OPERATOR shall be required to inform
COUNTY in of any change, expiration or renewal of any insurance policy or
policies at least thirty (30) calendar days prior to the effective date of
change. Further, each policy shall provide that same shall not be canceled until
a thirty (30) calendar day written notice of cancellation has been mailed to
EPWA-Regional Parks Department, 825 East Third Street, San Bernardino,
California 92415-0833. All insurance policies required hereunder shall contain
language to the effect that (i) the insurer waives the right of subrogation
against COUNTY and against any and all of the COUNTY's officers, agents,
volunteers, and employees, and (ii) the policies are primary and
non-contributing with any insurance that may be carried by COUNTY.
12.8 Cancellations of Insurance. In the event COUNTY receives a thirty (30)
calendar day written notice of cancellation concerning any of the required
policies, or should OPERATOR fail to have in effect the required coverage at any
time during this Lease, COUNTY may give notice to OPERATOR to reinstate or
acquire the affected coverage, and OPERATOR shall not conduct any events on the
Premises until all required insurance is in effect. Should OPERATOR fail to
reinstate or acquire the affected coverage within five (5) days of COUNTY's
notice to reinstate or acquire such coverage, COUNTY may reinstate or acquire
the affected coverage, and OPERATOR shall reimburse COUNTY for the necessary
cost. If OPERATOR does not reimburse COUNTY within ten (10) days after demand by
COUNTY, COUNTY shall have the right to invoice OPERATOR and OPERATOR shall be
responsible for paying said amount.
12.9 General Insurance Provisions.
(a) All insurance provided for under this Article shall be
periodically reviewed by the Parties from time to time, but at least every five
(5) years, for the purpose of mutually increasing or decreasing the minimum
limits of such insurance to amounts which may be reasonable and customary for
similar facilities of like size and operation.
(b) All insurance herein provided for under this Article shall be
effected under policies issued by insurers of recognized responsibility licensed
or permitted to do business in the State, rated by Best's at A-7 or better, and
approved by the COUNTY.
(c) Any insurance required to be maintained by OPERATOR pursuant to
this Article may be taken out under a blanket insurance
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policy or policies covering other premises or properties, and other insureds in
addition to the Parties hereto; provided, however, that any such policy or
policies of blanket insurance shall specify therein, or supplemental written
certification from the insurers under such policies shall specify, the amount of
insurance allocated to the coverage to be provided under this Article and
provided further, that in all other respects, any such blanket policy shall
comply with the other provisions of this Article.
12.10 Disposition of Insurance Proceeds Resulting from Loss or Damage to
Improvements. All proceeds of insurance with respect to loss or damage to the
Premises to be maintained and repaired by OPERATOR or COUNTY during the term of
this Lease shall be payable, under the provisions of the policy of insurance,
jointly to OPERATOR and COUNTY, and deposited in a special trust account held by
the COUNTY. Said proceeds shall be used to repair the Premises unless
specifically agreed otherwise by COUNTY and OPERATOR, and shall constitute a
trust fund to be used for the repair, restoration or reconstruction of the
Premises in accordance with plans and specifications approved in writing by
COUNTY and OPERATOR. To the extent that such proceeds exceed the cost of such
repair, restoration or reconstruction, such excess shall be equally distributed
to and retained by OPERATOR and COUNTY. If COUNTY and OPERATOR mutually agree
not to undertake such repair, restoration or reconstruction, then such proceeds
shall be deposited into the Improvement Fund. During any period of repair or
construction, Fixed Minimum Rent due hereunder shall be: (i) tolled if use of
the Premises is materially interfered with; or (ii) reduced proportionately with
the audience capacity if the Premises are only partially usable.
13.
EMINENT DOMAIN
13.1 Takings. Any taking of any part of the Premises by any public
authority under the power of eminent domain, condemnation, or by conveyance in
lieu of such taking, shall be deemed to be either a "total taking" or a "partial
taking" as follows:
(a) A total taking shall be a taking of all or substantially all of
the Premises comprising the amphitheater, or a taking of such portion of the
Premises or Parking Areas which, in the reasonable determination of the
OPERATOR, makes the Premises untenantable for the purposes herein contemplated
or makes operation of the Premises, for the purposes herein contemplated, not
economically feasible.
(b) A partial taking shall be a taking of any portion of the
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Premises which does not constitute a total taking.
13.2 Total Taking. In the event of a total taking, as defined in
Section 13.1, Takings, OPERATOR shall give notice to the COUNTY of its
determination that such taking constitutes a total taking within sixty (60)
calendar days of the date upon which both of the following events have occurred:
(i) the physical taking of the property, constituting the deprivation of the use
thereof by OPERATOR has occurred; and (ii) the OPERATOR knows, or reasonably
should know, that the extent of such taking constitutes a total taking. In such
event, all rent, including Fixed Minimum Rent and Percentage of Net Ticket Sales
Rent, shall cease as of the date of such taking and all unpaid portion thereof
shall be apportioned as of the date of the taking. OPERATOR will promptly
surrender the Premises and all of its interests under this Lease to COUNTY. In
such event, all proceeds of the award or awards of damages, and all compensation
for such taking, shall be paid and distributed among OPERATOR and COUNTY as
follows:
First, to the OPERATOR, to compensate OPERATOR for its contribution to
the cost of the construction and development of the Premises, the product
obtained when the sum of any amounts actually paid to COUNTY pursuant to Section
3.9, OPERATOR's Fiscal Obligations, plus the cost of any approved additional
leasehold improvements paid by OPERATOR is multiplied by a fraction, the
denominator of which is 300, the numerator of which is the remaining term, in
months, of this Lease following the date of such total taking.
Second, to the OPERATOR, any unamortized startup costs (as shown of
OPERATOR'S books) and any amount specifically determined to be compensation for
loss of goodwill.
Third, to the COUNTY, in the amount of the fair market value of the
COUNTY'S interest in the Lease had such taking not occurred.
Fourth, to the OPERATOR, in the amount of the fair market value of the
OPERATOR's interest in the Lease had such taking not occurred.
Fifth, to the COUNTY, to the extent of the remainder of such award
and/or compensation.
13.3 Partial Taking.
(a) In the event of any taking of any portion of the Premises which
does not constitute a total taking, then this Lease and all provisions hereof
shall remain in full force and effect except as to rent abatement as set forth
below. Upon any such partial taking,
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the award and/or compensation for such taking shall be applied as follows:
First, to the cost of such repairs, restorations, and/or rebuilding of
the Premises as the OPERATOR reasonably determines is necessary for continued
operation of the Premises.
Second, to the OPERATOR in an amount equal to the product obtained
when the sum of all amounts actually paid by the OPERATOR to COUNTY under
Section 3.9, OPERATOR's Fiscal Obligations, is multiplied by a fraction, the
denominator of which is the audience capacity of the Premises on the date
immediately prior to the partial taking, and the numerator of which is the
audience capacity which was lost to the partial taking. The calculation of
audience capacity after the taking shall take into account not only the ability
to physically seat persons in the portion of the Premises constituting the
amphitheater but also taking into account any reduction in audience capacity due
to the loss of parking and support facilities affected by such taking which
cannot reasonably be replaced.
Third, to the OPERATOR, any unamortized startup costs (as shown of
OPERATOR's books) and any amount specifically determined to be compensation for
loss of goodwill.
Fourth, to the COUNTY to the extent of the reduction in the fair
market value of COUNTY's interest in this Lease for the remaining term thereof
after the date of such taking.
Fifth, to the OPERATOR to the extent of the reduction in the fair
market value of OPERATOR's interest in this Lease for the remaining term thereof
after the date of such taking.
Sixth, the remainder of such reward or compensation shall be paid to
the COUNTY.
(b) In the event of such a partial taking, Fixed Minimum Rent due
shall be reduced for the remainder of the term of this Lease. For all years, and
partial years, following the date of such taking, the Fixed Minimum Rent shall
be reduced by multiplying the rent due pursuant to Section 4.1, Fixed Minimum
Rent, by a fraction, the denominator of which is the capacity of the
amphitheater immediately prior to the taking, the numerator of which is the
capacity of the amphitheater after the taking. The calculation of audience
capacity after the taking shall take into account not only the ability to
physically seat persons in the portion of the Premises constituting the
amphitheater but also taking into account any reduction in audience capacity due
to the loss of parking and support facilities affected by such taking which
cannot reasonably be replaced.
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14.
ASSIGNMENT AND SUBLETTING
14.1 Assignment and Subletting. OPERATOR shall not voluntarily assign its
interest in this Lease or in the Premises, or any options contained in this
Lease, or sublease all or any part of the Premises, or allow any other person or
entity (except OPERATOR's authorized representatives) to occupy or use all or
any part of the Premises, without first obtaining COUNTY's consent. Any
assignment or sublease without COUNTY's consent shall be voidable and, at
COUNTY's election, shall constitute a default. No consent to any assignment or
sublease shall constitute a further waiver of the provisions of this Section. No
consent of the COUNTY shall be required for agreements with: (i) vendors and
concessionaires; (ii) advertisers at the Premises; and (iii) booking and/or
performance agreements with other presenters and/or entertainers. Further,
OPERATOR may mortgage or encumber its interest in this Lease so long as the
financing thereby secured is on commercially reasonable terms. Any transfer or
change in ownership in a controlling interest in OPERATOR (constituting more
than 50% of the outstanding capital stock of OPERATOR) shall constitute an
assignment hereof unless such transfer is to another entity under the control of
Zev Bufman and/or Blockbuster Entertainment Corporation. For purposes of this
paragraph, Zev Bufman and/or Blockbuster Entertainment Corporation shall be
deemed to be in control of another entity if either or both owns more than 50%
of the voting equity interest in such entity. Notwithstanding the foregoing,
OPERATOR shall have the right, without the COUNTY's consent, to assign this
Lease to any parent, subsidiary, or affiliated corporation of OPERATOR, to any
entity into which OPERATOR is merged or consolidated, or to any entity which
acquires ownership or control of all or substantially all of the amphitheaters
owned by Amphitheater Entertainment Corporation.
14.2 Assignment of Rents. OPERATOR immediately and irrevocably assigns to
COUNTY, as security for OPERATOR's obligations under this Lease, all rent from
any subletting of all or a part of the Premises as permitted by this Lease, and
COUNTY, as assignee of OPERATOR, or a receiver for OPERATOR appointed on
COUNTY's application, may collect such rent and apply it toward OPERATOR's
obligations under this Lease; except that, until the occurrence of an act of
default by OPERATOR, OPERATOR shall have the right to collect such rent.
14.3 Payments to COUNTY.
(a) In the event OPERATOR assigns this Lease, or any option herein,
fifty percent (50%) of any sums to be paid by an assignee to OPERATOR in
consideration of the assignment of this Lease or any option herein shall be paid
to COUNTY.
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(b) In the event OPERATOR subleases all or substantially all of the
Premises for all or substantially all of the remaining term of this Lease, fifty
percent (50%) of all rent received by OPERATOR from its subtenants in excess of
the rent payable by OPERATOR to COUNTY under this Lease shall be paid to COUNTY.
It is the intent of the parties in interpreting this subsection, that OPERATOR
may enter into subleases and concession agreements with other parties to provide
food, drink and other services and similar items without being subject to this
subsection, but that OPERATOR is to remain the operator of the facility. Any
subleases or concession agreements which, by themselves or in conjunction with
other subleases or concession agreements, would effect a substantial change in
the operator of the facility would be subject to this subsection.
(c) In the event of such a sublease or assignment, any amount of the
rent or assignment consideration which the OPERATOR reasonably proves is being
paid as the return of capital expended by OPERATOR (e.g., the undepreciated
portion of the value of any equipment or the unamortized portion of the
OPERATOR's Fiscal Obligation actually paid to COUNTY under Section 3.9,
OPERATOR'S Fiscal Obligation) shall not be counted as rent received or sums paid
for the assignment of this Lease or any option. It is the intent of this Section
to allow the COUNTY to share in the proceeds of any increase in value of the
rights under the Lease itself and its options, and not to share in the
OPERATOR's return of its capital. In any sublease or assignment of such Lease
rights, the OPERATOR agrees to set a reasonable value on such rights under the
Lease and its options.
14.4 Requesting Consent. If OPERATOR requests COUNTY to consent to a
proposed assignment or subletting for which consent of COUNTY is required
pursuant to Section 14.1, OPERATOR shall pay to COUNTY, whether or not consent
is ultimately given, COUNTY's reasonable costs incurred in connection with each
such request, including, but not limited to, reasonable attorneys' fees.
14.5 No Assignment by Operation of Law. No interest of OPERATOR in this
Lease shall be assignable by operation of law (except that the transfer of this
Lease by testacy or intestacy shall be considered a voluntary assignment). Each
of the following acts shall be considered an involuntary assignment:
(a) If OPERATOR is or becomes bankrupt or insolvent as defined in
California Uniform Commercial Code Section 1201, makes an assignment for the
benefit of creditors, or institutes a proceeding under the Bankruptcy Act in
which OPERATOR is the bankrupt Party and such proceeding is not dismissed within
ninety (90) calendar days;
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(b) If a writ of attachment or execution is levied on this Lease and
remains undischarged and unbonded for a period of ninety (90) calendar days;
(c) If, in any proceeding or action to which OPERATOR is a party, a
receiver is appointed with authority to take possession of the Premises and such
receiver remains undischarged and unbonded for a period of ninety (90) calendar
days.
15.
INCORPORATION OF PRIOR AGREEMENT
15.1 Entire Agreement. This Lease, and the documents attached hereto or
mentioned herein, contain all of the agreements of the Parties hereto with
respect to any matter covered or mentioned in this Lease, and no prior agreement
or understanding pertaining to any such matter shall be effective for any
purpose.
16.
AMENDMENTS
16.1 Amendments. No provision of this Lease may be amended or added to
except by an agreement in writing signed by the Parties hereto or their
respective successor in interest, expressing by its terms an intention to modify
this Lease.
17.
VIOLATION OF AGREEMENT
17.1 Default and Right to Terminate.
(a) If there should be any failure in payment by OPERATOR of the
Annual Rent (Fixed Minimum Rent or Percentage of Net Ticket Sales Rent)
Percentage of Excess Total Other Revenue, Park Amphitheater Fee, or Business
License Tax provided herein, or in maintaining required insurance, COUNTY shall
give OPERATOR notice to correct the insurance failure and/or pay within ten (10)
days all sums due, owing and unpaid, and if such action is not made by OPERATOR
within said ten (10) day period, the OPERATOR shall be in default and this Lease
and the OPERATOR's rights hereunder shall at the option of the COUNTY forthwith
be terminated and forfeited. Such election to terminate shall not be construed
as a waiver of any claim the COUNTY may have against OPERATOR, consistent with
such termination. If such a default shall continue for thirty (30) days, whether
or not the COUNTY has taken any
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action to remove OPERATOR from the Premises, the default shall be considered a
material default ("Material Default").
(b) If OPERATOR should fail to perform, keep or observe any of the
terms, conditions or covenants as set forth in this Lease, other than payments
of rental and percentages as provided in Section 17.1(a), above, COUNTY shall
give OPERATOR notice to correct the failure within thirty (30) days, and if such
action is not made by OPERATOR within said thirty (30) day period, the OPERATOR
shall be in default and this Lease and the OPERATOR's rights hereunder shall at
the option of the COUNTY forthwith be terminated and forfeited. Such election to
terminate shall not be construed as a waiver of any claim the COUNTY may have
against OPERATOR, consistent with such termination. Except as provided in
Section 17.1(b)(1), below, if such a default shall continue for sixty (60)
days, whether or not the COUNTY has taken any action to remove OPERATOR from the
Premises, the default shall be considered a material default ("Material
Default")
(1) If, however, any failure is of such nature that it cannot be
physically remedied within thirty (30) days, and if OPERATOR shall have
commenced the elimination of such failure promptly after the receipt of such
notice, and shall continuously and diligently proceed in good faith to eliminate
such default, then the period for correction shall be extended for such length
of time as is reasonably necessary to complete such correction.
(c) Upon any termination of this Lease, OPERATOR covenants and agrees
to surrender and to forfeit this Lease, and deliver up the Premises peaceably to
the COUNTY immediately upon any such termination. If said OPERATOR shall remain
in possession of said Premises after any termination of this Lease, said
OPERATOR shall be deemed guilty of an unlawful detention of the Premises.
(d) The receipt by the COUNTY of any rent or of any other sum of money
paid by OPERATOR after any default, the termination and forfeiture of this Lease
for any reason, or after the giving by COUNTY of any notice to effect such
termination, shall not waive the default, reinstate, continue or extend the term
of this Lease, or destroy, or in any manner impair the efficacy of any such
notice of termination as may have been given hereunder by COUNTY to the OPERATOR
prior to the receipt of any such sum of money or other consideration, unless so
agreed to in writing and signed by COUNTY. Neither acceptance of the keys nor
any other act of the COUNTY or its agents or employees during the term of this
Lease shall be deemed to be an acceptance or a surrender of said Premises,
excepting an agreement in writing signed by the COUNTY agreeing to accept such
surrender.
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17.2 Termination for Criminal Conviction. COUNTY may give OPERATOR notice
of termination of this Lease which maybe effective immediately and the COUNTY
may pursue any and all avenues provided by law to obtain proper compensation for
losses incurred or damages received should OPERATOR be found guilty of any
felony criminal activity or other crime involving moral turpitude related
directly or indirectly to the use of facilities or opportunities provided by
this Lease; provided, however, that such termination shall not occur so long as
OPERATOR may be appealing such conviction. In addition, County may terminate
this Lease should any executive officer of OPERATOR be convicted of any felony
or crime involving moral turpitude related, directly or indirectly, to the use
of the facilities or opportunities provided hereunder unless, within 60 calendar
days of learning of such conviction, OPERATOR terminates such officer or
otherwise relieves him or her of all duties in connection herewith.
17.3 Liability for Breach. Termination for default shall not excuse
OPERATOR from any liability for breach of contract.
17.4 Entry for Mitigation. In the event of default by OPERATOR occasioning
subsequent entry by COUNTY, but with the intent that this Lease not be
terminated, and after written notice of such entry and intent has been posted in
or on the Premises, COUNTY's entry shall be deemed to be for the purpose of
mitigating damages, and OPERATOR shall remain liable for the covenants and
conditions of this Lease for the balance of the term hereof.
17.5 COUNTY Defaults. Notwithstanding any other provision of this Lease to
the contrary, the COUNTY shall not be deemed to be in default until thirty (30)
days after notice of default is given by the OPERATOR to the COUNTY. If such
default is a non-monetary default which cannot be cured within such thirty day
period, the COUNTY shall not be deemed to be in default provided that, within
such thirty (30) day period, the COUNTY shall commence and thereafter diligently
prosecute efforts to cure the default.
18.
CONDITIONS AND SURRENDER OF PROPERTY
AND TERMINATION OF AGREEMENT
18.1 County Property. OPERATOR shall, upon termination for any reason,
surrender the Premises and all fixed improvements in a condition equal to that
described in the last inspection made prior to termination, reasonable wear and
tear and damages from casualty and
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acts of God excepted.
18.2 OPERATOR Property. OPERATOR further agrees, in addition to the above,
upon termination for any reason, to remove all goods, chattels, fixtures and
equipment belonging to OPERATOR from the Premises. Following the removal of such
goods, chattels, fixtures, and equipment belonging to OPERATOR, OPERATOR shall
repair any damage or injury to the said Premises or to any building, structure,
or improvement located thereon, occasioned by installation or removal thereof.
In the event that said goods, chattels, fixtures, and equipment are not removed
within sixty (60) calendar days after the expiration of this Lease or its
termination for any other reason, OPERATOR shall be deemed to have abandoned to
COUNTY the facilities, equipment, fixtures, goods, chattels, and any other
property not so removed, at option of COUNTY. If COUNTY enters the Premises but
elects not to exercise its option of having said, property revert to COUNTY,
COUNTY may remove the unclaimed property and dispose of it. OPERATOR shall pay
to COUNTY the cost of such removal and disposal.
19.
NOTICES
19.1 Notices. Any and all notices, demands, requests, consents, approvals,
or other communications required or permitted to be given under this Lease or
under the unlawful detainer statutes of California shall be given to the
respective Parties in writing, personally or by registered or certified mail,
postage prepaid or otherwise delivered as follows:
(a) If to COUNTY: E. Jay Ellington, Director
Regional Parks Department
825 East Third Street
San Bernardino, CA 92415-0833
Copy to: Rex A. Hinesley
Deputy County Counsel
385 North Arrowhead Ave., 4th Floor
San Bernardino, CA 92415-0140
(b) If to OPERATOR: Operating Manager
Glen Helen Blockbuster Amphitheater
Glen Helen Regional Park
2555 Devore Road
Devore, CA 92407
Copies to: Amphitheater Entertainment Corp.
Attn: Zev Bufman
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And Attn: Joel Arnold, General Counsel
2980 McFarlane Road
Miami, FL 33133
And: Reid & Hellyer
Attn: Mark C. Edwards
P.O. Box 6086
San Bernardino, CA 92412
And: Blockbuster Entertainment Corporation
200 S. Andrews Ave.
Fort Lauderdale, FL 33301
Attn: Thomas W. Hawkins
Associate General Counsel
or at such other address or to such other persons as either of the Parties may
from time to time designate by written notice given as herein provided. The
failure of either Party to give copies of any notices, etc., shall not
invalidate a notice, etc., which is properly given to the Party's primary
addressee. Any such notice shall be deemed to be given upon actual delivery to
the Party to whom addressed, and the risk of non-delivery of such notice shall,
at all times, rest with the Party giving notice.
20.
EASEMENTS, TRUSTS AND WARRANTIES
20.1 Existing Encumbrances. It is expressly understood and agreed that
this Lease and all rights and privileges hereunder granted are subject to all
easements and rights-of-way now existing in, to, under, or over the Premises for
any purposes whatsoever. A full and complete list of all such easements and
rights-of-way are set forth on Exhibit "K", Easements, Trusts and Warranties,
attached hereto. OPERATOR covenants and agrees, any provision in this Lease to
the contrary notwithstanding, that it will not use or permit the Premises to be
used for any purpose inconsistent with any such grant, reservation, condition,
lease, restriction and trust upon or under which said lands are held by COUNTY,
the terms of which are hereby incorporated into this Lease as if set forth in
full.
21.
MISCELLANEOUS
21.1 Use of Name. The Premises shall be operated under the name: THE GLEN
HELEN BLOCKBUSTER AMPHITHEATER. In the event the COUNTY
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determines any advertising, promotion, notices, or other forms of publicity with
regard to operation of the Premises are in the reasonable determination of
COUNTY, objectionable, COUNTY shall give notice to the OPERATOR. OPERATOR shall
cease use of any such advertisements as soon as practicable after such notice.
Such advertisements shall be deemed objectionable only if they vary materially
in content and/or format from advertising and promotion for similar events
presented at the Other Venues.
21.2 Signs. County will permit, and will take all necessary actions to
assist in obtaining applicable permits to place primary signs for the Premises
at three locations: (a) The intersection of Devore Road and I-15; (b) The
intersection of Devore Road and I-215; and (c) the main entrance to the Park on
Devore Road. All such signs shall be easily visible to traffic on the adjacent
roadway(s). Such signs, and all other signs placed on the Premises, must meet
all applicable COUNTY sign ordinances. The main sign for the Premises at the
entrance to the Park shall contain the following information in such lettering
and of such size as to not interfere with the primary message of such sign: "An
approved concession of the San Bernardino County Regional Parks Department."
These signs shall include the Regional Parks Department logo. Notwithstanding
the above, the COUNTY shall not be required to waive any rule or regulation to
permit any sign.
21.3 No Partnership. It is expressly understood and agreed that COUNTY
does not, in any way nor for any purpose, become a partner, agent, principle of,
or a joint venturer with OPERATOR by reason of any provision of this Lease.
21.4 Binding Effect. Each and all of the covenants, conditions, and
agreements herein contained shall, in accordance with the context, inure to the
benefit of COUNTY and OPERATOR and apply to and bind COUNTY and OPERATOR, their
respective heirs, legatees, devisees, executors, administrators, successors,
agents, assignees, subtenants, concessionaires and licensees.
21.5. Captions. The captions of articles and paragraphs of this Lease are
for convenience only and do not in any way limit or amplify terms and provisions
hereof.
21.6 No Waiver. No wavier by COUNTY or OPERATOR at any time of any of the
terms and conditions of this Lease shall be deemed to operate as a wavier at any
time thereafter of the same or of any other
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terms or conditions contained herein or of the strict and timely performance of
such terms and conditions.
21.7 Regulations and Permits. OPERATOR shall conform to and abide by all
rules and regulations relating to the operation herein authorized and shall be
subject at all times to applicable rules, regulations, resolutions, ordinances,
and statutes of the County of San Bernardino, State of California, the federal
government, and all other governmental agencies where applicable; and where
permits are required for such operations, the same must first be had and
obtained from the regulating body having jurisdiction thereof, before such
operation is undertaken. Except where specifically provided, OPERATOR
understands and agrees that approval by COUNTY of this Lease does not in any way
indicate that the COUNTY approves or shall be required to approve any license,
permit or other approval, however denominated, required or desired by OPERATOR
in order to perform under this Lease. In reviewing any such license, permit or
other approval the COUNTY shall treat the OPERATOR the same as any similarly
situated person.
21.8 Common Areas. COUNTY, during the term of this Lease and any extension
or renewals thereof, agrees to operate, maintain, and manage all roads,
sidewalks, landscaping, drainage and lighting fixtures, restrooms, and common
areas located in Glen Helen Regional Park in a first-class manner and to provide
adequate security therefor. Such areas and facilities shall be maintained in
reasonably good condition, however, the manner in which such areas and
facilities shall be maintained, and the expenditures therefor shall be at the
sole discretion of COUNTY; and the use of such areas and facilities shall be
subject to such reasonable regulations as COUNTY shall make from time to time.
21.9 Parking.
(a) During its hours of operation, OPERATOR shall park its personal
vehicles only in a designated parking lot or area on the Premises. All vehicles
in the Park which are directed, controlled, driven or invited by OPERATOR shall
travel, stop or park only on public roads or approved parking lots or areas
except for the purpose of merchandise delivery during the hours of operation.
(b) The Parking Areas under license shall include the parking areas
to the west of the Premises designated as Unimproved Temporary Parking Area" and
"Unimproved Parking (License Area)" on Exhibit "B", Areas Under License, under
the following conditions:
(1) The two areas may not be used to park vehicles
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until two (2) hours prior to an event's published starting time.
(2) The Unimproved Temporary Parking Area may be used only on
weekend dates (and Memorial Day) that the FAIRE, as defined in Section 21.10,
Renaissance Pleasure Faire, is open to the public, and additionally for those
OPERATOR events which are scheduled to be major events with over 40,000 expected
attendance.
(3) The Unimproved Parking (License Area) may be used only
until the FAIRE, as defined in Section 21.10, Renaissance Pleasure Faire, has
completed its take down activities for the 1996 FAIRE, and additionally for
those OPERATOR events which are scheduled to be major events with over 40,000
expected attendance.
(c) Except as provided above in Subsection (b) and in Section 21.10,
Renaissance Pleasure Faire, below, OPERATOR shall solely manage all Parking
Areas during the period from five (5) hours preceding all events presented at
the Premises by OPERATOR to three (3) hours following the end of such events.
COUNTY shall be responsible for assuring that all Parking Areas are at least
ninety-nine percent (99%) empty immediately prior to such periods of exclusive
operation by OPERATOR. For any calendar day on which OPERATOR is conducting an
event at the Premises, the OPERATOR shall be responsible for performing any dust
control measures required by the CUP. The OPERATOR may charge and retain a
reasonable parking fee for parking in the Parking Areas for all events presented
at the Premises by OPERATOR.
21.10 Renaissance Pleasure Faire.
(a) OPERATOR acknowledges that COUNTY is a party to a license, dated
January 22, 1990 with the Living History Centre on behalf of the Renaissance
Pleasure Faire ("FAIRE"), which expires on or about June 30, 1996, a copy of
which is attached hereto as Exhibit "L", Living History Centre-Renaissance
Pleasure Faire License, and pursuant to which COUNTY has granted to the FAIRE
certain specific rights with respect to hours of operation and parking
facilities at the Park. OPERATOR acknowledges that from the commencement date
hereof through the term of said license, COUNTY is obligated to honor the terms
and conditions of said license. COUNTY represents that the FAIRE license has
been or will be modified so as to require all FAIRE events open to the general
public to end no later than 6 PM on OPERATOR event dates.
(b) OPERATOR agrees that it shall:
(1) Take no action which OPERATOR knows or has reason to
believe will violate the terms of the FAIRE license.
(2) Schedule no event to start before 8 PM on any
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weekend date and Memorial Day when the FAIRE is open to the public.
(3) Schedule no event on any weekend date and Memorial Day
when the FAIRE is open to the public which would be in conflict with the
attendance limitation requirements of Section 6.9, Environmental Requirements.
(4) Make no use of the Lakeside Area during the time the
Lakeside Area is being used by the FAIRE or which is in conflict with the use of
the Lakeside Area by the FAIRE.
(5) The OPERATOR shall coordinate the section of the Traffic
Management Plan concerning the FAIRE with and obtain the agreement of the FAIRE
to said section no later than January 1, 1994 or such later date (as determined
by the FAIRE) which is in sufficient time for the 1994 FAIRE schedule of
operations. The COUNTY agrees to use its best efforts to facilitate the
agreement of the FAIRE to said section of the Traffic Management Plan. The
COUNTY also agrees to use its best efforts to enforce the FAIRE's agreement not
to unreasonably withhold, condition or delay its approval of the section of the
Traffic Management Plan concerning the FAIRE in the event the COUNTY determines
the FAIRE is unreasonably withholding, conditioning or delaying its approval of
the section of the Traffic Management Plan concerning the FAIRE and the OPERATOR
has been reasonable in its attempts to obtain the FAIRE's approval.
(6) Allow up to four (4) FAIRE campsites (which will use less
than twenty (20) parking spaces) in each of Parking Lots 3 & 4, as shown on
Exhibit "B", Areas Under License.
(c) Except as required by Paragraph 25, NONCOMPETITION AND
SCHEDULING OF OTHER EVENTS, of Exhibit "L", Living History Centre-Renaissance
Pleasure Faire License, COUNTY agrees that upon termination of the FAIRE
license, which will not be extended beyond its current term without the consent
of OPERATOR, the COUNTY shall request OPERATOR input for any extension, renewal
or new license with the FAIRE, or any successor thereto, or any other operator
with a similar or related business desiring to operate in any area of the Park
contiguous to the Premises or any of the Parking Areas, or any activity that
would reduce the OPERATOR's maximum permitted capacity per any event.
21.11 Lakeside Area. The OPERATOR's license to use the Lakeside Area is
subject to the conditions set forth in this Section and in Section 21.10,
Renaissance Pleasure Faire, above. On the date the FAIRE has completed its take
down activities for the 1996 FAIRE, the OPERATOR's license to use the Lakeside
Area shall expire. After the OPERATOR's license has expired, the OPERATOR may
request in writing to the Director to use the Lakeside Area for not more than
three (3) days
50
<PAGE>
at a time. The Director will grant the OPERATOR permission to use the Lakeside
Area for not more than said three (3) days unless the FAIRE has obtained the
right to use the Lakeside Area under the provisions of Paragraph 25,
NONCOMPETITION AND SCHEDULING OF OTHER EVENTS, of Exhibit "L", Living History
Centre-Renaissance Pleasure Faire License. In the event permission to use the
Lakeside Area is granted to OPERATOR, the Lakeside Area must remain open to the
general public except from five (5) hours before the scheduled starting time to
three (3) hours after the end of an OPERATOR event on the Premises.
Additionally, on January 1, 1998, the Parties agree that portion of the Lakeside
Area shown on Exhibit "B" as "Lakeside Premises Area" shall be added to the
Premises under this Lease. After the Lakeside Premises Area is added to the
Premises, the remaining area of the Lakeside Area shall come under license to
the OPERATOR, and the remaining Lakeside Area must continue to remain open to
the general public except as set forth above.
21.12 Health Certificate. OPERATOR shall employ no person in a position
involving preparation or serving of food or direct contact with members of the
public unless such person has a current Food Industry Retail Training (FIRST)
card on file with the Regional Parks Department. OPERATOR shall provide the
Director with certificates on each employee indicating freedom from communicable
tuberculosis as required by Section 5163 of the Public Resources Code.
21.13 Designee. The Director of the Regional Parks Department or its
designee shall be responsible for the enforcement of this Lease on behalf of
COUNTY, which responsibilities include, but are not limited to, the approval of
the plans and specifications for the Regional Parks Department (does not
eliminate approval by other governmental agencies), and other duties set forth
in this Lease.
21.14 Time of Essence. Except as otherwise specifically provided, time is
of the essence of each provision of this Lease which specifies a time within
which performance is to occur. In the absence of any specified time for
performance, performance may be made within a reasonable time. Additionally,
except as otherwise specifically provided, anytime a provision states a time in
days, the days shall be COUNTY business days and not calendar days.
21.1 Provisions are Covenants and Conditions. All provisions, whether
covenants or conditions, on the part of either Party shall be deemed to be both
covenants and conditions.
51
<PAGE>
21.16 Exhibits. The following exhibits (and the Attachments to the
exhibits) referred to elsewhere in the Lease are attached to this Lease and
incorporated by this reference:
Exhibit "A" - Legal Description and Layout Plan of Premises.
Exhibit "B" - Areas Under License
Exhibit "C" - Letter of Credit
Exhibit "D" - Prepaid Necessary Costs
Exhibit "E" - Construction of Project
Attachment "1" - Work Schedule
Attachment "2" - Construction Budget
Exhibit "F" - Park Regulations
Exhibit "G" - Affirmative Action Program Compliance
Certification
Exhibit "H" - San Bernardino County Affirmative Action
Plan
Exhibit "I" - Revenue Report
Exhibit "J" - Inspection Report
Exhibit "K" - Easements, Trusts and Warranties
Exhibit "L" - Living History Centre-Renaissance Pleasure
Faire License
21.17 Consent. Whenever consent or approval of either Party is required,
except where expressly stated otherwise, the consent or approval of that Party
shall be in writing and shall not be unreasonably withheld, conditioned or
delayed.
21.18 Lease Interpretation. The language of this Lease has been reviewed
and approved by representatives and counsel for each Party to this Lease. The
language contained herein shall be construed as a whole according to its fair
meaning, and neither Party nor its representatives or counsel shall be deemed
the drafter of this Lease or any part hereof for the purposes of any litigation
which may arise hereafter between the Parties.
21.19 Jury Trial Waiver. OPERATOR and COUNTY hereby waive their respective
right to trial by jury or any cause of action, claim, counterclaim or
cross-complaint in any action, proceeding, and/or hearing brought by either
OPERATOR against COUNTY or COUNTY against OPERATOR or any matter whatsoever
arising out of, or in any way connected with, this Lease, the relationship of
OPERATOR and COUNTY, OPERATOR'S use of occupancy of the Premises or any part of
the Park, or any claim or injury or damage or the enforcement of any remedy
under any law, statute, or regulation, emergency or otherwise, now or hereafter
in effect.
52
<PAGE>
21.20 Attorneys' Fees. If any legal action is instituted to enforce or
declare any Party's rights hereunder, each Party shall bear its own costs or
attorneys' fees.
21.21 Arbitration. Except for those limited areas where specifically
provided in the Lease, arbitration shall not be used to decide any point or
controversy between the Parties to this Lease.
(a) When arbitration is specifically provided for in this Lease, the
arbitration shall be binding and shall be conducted pursuant to the California
Arbitration Act, California Code of Civil Procedure Section 1290 et seq. Such
arbitration shall be conducted in the City of San Bernardino, State of
California. Notwithstanding anything in the California Arbitration Act to the
contrary, each Party shall bear its own costs, including attorney's fees, for
any arbitration.
21.22 Law. This Lease shall be construed and interpreted in accordance
with the laws of the State of California.
21.23 Severance. If any provision of this lease is determined to be void
by any court of competent jurisdiction, then such determination shall not
affect any other provision of this lease, and all such other provisions shall
remain in full force and effect. It is the intention of the parties hereto that
if any provision of this lease is capable of two constructions, one of which
would render the provision void and the other of which would render the
provision valid, then the provision shall have the meaning which renders it
valid.
53
<PAGE>
21.24 Survival. The obligations of the parties which, by their nature,
continue beyond the term of this lease, will survive the termination of this
lease.
IN WITNESS WHEREOF, the Parties hereto have caused their respective names
to be hereunto subscribed by their respective proper officer thereunto duly
authorized.
"COUNTY" "OPERATOR"
COUNTY OF SAN BERNARDINO, AMPHITHEATER ENTERTAINMENT CORP.,
a political subdivision of a Florida corporation
the State of California
By: /s/ Larry Walker By: /s/ Zev Bufman
---------------------------- ----------------------------
Chairman, Board of Zev Bufman, President
Supervisors
Date: OCT 19 1992 And: /s/ [Illegible]
-------------------------- ----------------------------
92-1023 Secretary
Date: OCT 19 1992
--------------------------
Signed and certified that a copy
of this document has been
delivered to the
Chairman of the Board.
EARLENE SPROAT
Clerk of the Board of Supervisors [SEAL]
of the County of San Bernardino
By: /s/ Mary Louise Levasio
----------------------------
Deputy
Date: OCT 19 1992
--------------------------
APPROVED AS TO FORM
ALAN K. MARKS, County Counsel
San Bernardino County, California
By: /s/ [Illegible]
----------------------------
Deputy
Date: [Illegible]
--------------------------
54
<PAGE>
[GRAPHIC OMITTED]
LEGAL DESCRIPTION
AND
LAYOUT OF PLAN OF PREMISES
EXHIBIT A
NOTES:
BASIS OF BEARINGS IS BETWEEN RANCHO
CORNERS M-8 AND M-9 AS SHOWN
ON RS 25/17. SAID BEARNG BEING N'13'15"E
<PAGE>
[GRAPHIC OMITTED]
AREAS UNDER LICENSE
EXHIBIT B
PAGE 1 OF 3
NOTE: THERE IS NO PARKING LOT 5
<PAGE>
[GRAPHIC OMITTED]
TEMPORARY PARKING AREA
AND UNIMPROVED PARKING
UNDER LICENSE
EXHIBIT B - PAGE 2 OF 3
<PAGE>
[GRAPHIC OMITTED]
LAKESIDE AREA
EXHIBIT B - PAGE 3 OF 3
<PAGE>
EXHIBIT "C"
_____________________, 1992
IRREVOCABLE STANDBY LETTER OF CREDIT NO. ___________________
BENEFICIARY: County of San Bernardino
PRINCIPAL
APPLICANT: Amphitheater Entertainment Corporation
("Principal")
AMOUNT: $4,000,000.00
Ladies and Gentlemen:
We open and establish this, our Irrevocable Standby Letter of Credit, at the
request of Principal and for the benefit of the Beneficiary, for a sum not
exceeding Four Million Dollars ($4,000,000.00) in the aggregate, which is
available by one or more sight drafts drawn by the Beneficiary on Continental
Bank ("Bank") bearing the notation "Draws Under Continental Bank Irrevocable
Standby Letter of Credit Number ___________ " ("Draft") and upon compliance with
all the terms and conditions of this Letter of Credit.
This Letter of Credit can be drawn upon during the time period commencing on the
date hereof and expiring on May 1, 1993.
We hereby irrevocably authorize you to draw on us by one or more Drafts,
accompanied by:
1. The original of this Letter of Credit; and
2. The Beneficiary's written statement, signed by the Director of the
Beneficiary's Regional Parks Department, certifying that: (i) Amphitheater
Entertainment Corporation is in breach of its obligations under Section 3.10,
OPERATOR's Fiscal Obligations, of that certain Lease dated October 19, 1992, and
entered into by and between the Principal and the Beneficiary (the "Lease") to
contribute an aggregate sum of $4,000,000.00 toward the cost of the Project (as
that term is defined in the Lease); (ii) demand for performance has been made;
and (iii) after such demand, Amphitheater Entertainment Corporation remains in
breach of such obligation. Such statement shall further set forth the dollar
amount of the obligation to which Amphitheater Entertainment Corporation is in
breach, which amount shall be equal to or in excess of the amount of the Draft
accompanying such statement.
<PAGE>
Letter of Credit
_____________________, 1992
Page 2
We hereby agree that one or more Drafts, accompanied by the requisite
documents, drawn under and in strict compliance with the terms of this Letter of
Credit and in an aggregate amount not exceeding the amount of this Letter of
Credit set forth above will be duly honored prior to the close of business on or
before the third banking day following delivery of such Drafts and documents
during our regular business hours to our corporate headquarters in Chicago,
Illinois, or at such other address as we have designated in a writing delivered
to you on or before the date of such delivery.
If requested by you, payment under this Letter of Credit may be made at
your expense by wire transfer to an account designated by you or by deposit into
an account designated by you.
This Letter of Credit shall have the term set forth above. Notwithstanding
the preceding sentence, however, this Letter of Credit will expire on the date
we pay a Draft which, combined with Drafts previously paid by us pursuant
hereto, equals the amount of this Letter of Credit or, if sooner, the expiry
date set forth above.
This Letter of Credit is non-transferable.
This Letter of Credit sets forth our full understanding and shall not in
any way be modified, amended, amplified, or limited by any document, instrument
or agreement referred to herein. We are not a party to, nor bound by, the terms
of any other agreement between the Beneficiary and the Principal, alone or
together with any other parties.
This credit is issued subject to, and shall be governed by, the Uniform
Commercial Code of the State of California and, unless in conflict therewith,
the Uniform Customs and Practices for Documentary Credits (1983 Revision), the
International Chamber of Commerce Publication No. 400.
CONTINENTAL BANK N.A.
By:_________________________________
Name:_______________________________
Title:______________________________
a:credit.eje
<PAGE>
Exhibit "D"
PREPAID NECESSARY COSTS
1. TOM DODSON & ASSOCIATES - ENVIRONMENTAL
2. BARTON-ASCHMAN - TRAFFIC
3. GARY RASSMUSSEN & ASSOC. - GEOTECHNICAL
4. LUDWIG ENGINEERING - CIVIL ENGINEERING
5. REID & HELLYER - LEGAL
6. DROWN-BUNTIN/JAFFE - ACOUSTICAL
7. TIERRA MADRE - BIOLOGICAL
8. PRICE WATERHOUSE - FEASIBILITY STUDY
9. A.E.C. - SCOPE DOCUMENTS, PRE DESIGN,
ARCHITECTURAL,
SITE PLANNING, ETC.
OUTSIDE CONSULTING
EJE:RD
A:EXHIBITD.EJE
<PAGE>
EXHIBIT "E"
Construction of Project
I. GENERAL TERMS
1.1 Project. The "Project" is comprised of an amphitheater, which will be
built in two stages as herein described, and all on and offsite improvements to
the Park to allow and/or aid in the construction and/or operation of the
amphitheater, including water, sewer and sanitary service, and the parking,
street and freeway access improvements described as "Infrastructure" in Section
2.6.4 herein.
(a) The Project shall otherwise be constructed in accordance with
the scope of development of each phase as set forth herein. COUNTY covenants to
commence and thereafter diligently proceed with construction of the Project in
order to meet the time schedule of work performance attached hereto as
Attachment "1" (the "Work Schedule").
1.2 Site. The amphitheater will be built on the Premises. The site of the
facility within the Park is generally set forth on Exhibit "A", Legal
Description and Layout Plan of Premises, of the Lease.
II. PROJECT CONSTRUCTION
2.1 Project Construction. The COUNTY shall construct the Project in two
phases. Those phases are described as follows:
(a) Phase I. Phase I shall involve the construction of the
amphitheater on the Premises with a maximum audience capacity of 16,800 (10,060
fixed seats, 6,740 lawn seating) including the stage, stage building, entrance,
and patio facilities, and restroom, concession, and related facilities, as well
as all related furniture, fixtures and equipment including, but not limited to,
signs, seats and lighting, sound and stage equipment. Phase I shall additionally
include all sewer, sanitary, water, electrical, telephone, and gas service
improvements as are necessary to service the Project after completion of all
phases of improvements. Phase I shall also include all CUP requirements for
Phase I of the CUP.
(b) Phase II. Phase II shall involve the construction of an
interchange at I-15 and Devore Road, expansion of the amphitheater to a total
audience capacity of 65,000 (10,060 fixed seats; 54,940 lawn seating), along
with expansion of sites for OPERATOR to locate its portable restrooms,
concession and parking areas, and other facilities to accommodate the increased
capacity, and shall include all CUP requirements for Phase II of the CUP.
1
<PAGE>
2.2 Design. COUNTY recognizes and acknowledges OPERATOR's expertise and
experience with respect to the development, construction and operation of
amphitheaters and like facilities. Accordingly, it is agreed that OPERATOR will
provide input to and advise the COUNTY with respect to all design concepts,
plans and specifications, utilization of site and parking facilities, selection
of consultants, materials and equipment, and all other decisions necessary to
achieve completion of a fully functional amphitheater within the Construction
Budget and Schedule of Performance. Where COUNTY determines not to comply with
the recommendations of OPERATOR, COUNTY shall so advise OPERATOR with respect
thereto.
2.3 Project Construction Budget. COUNTY and OPERATOR have jointly prepared
a budget for construction of both phases of the Project, attached hereto as
Attachment "2", (the "Construction Budget"). Such Construction Budget was
prepared in order to keep construction costs within the Fifteen Million Dollars
($15,O00,000.OO) funding available to the COUNTY for the Project. The
Construction Budget includes all costs associated with the design, Premises
preparation, and construction of the Project including all costs for such items
as fees, consultants, studies, permits and other soft costs as well as all hard
costs of construction of the Project, furniture, fixtures and equipment costs,
as set forth in the Construction Budget. The Construction Budget additionally
contains a reserve for contingencies and additions of not less than five percent
(5%).
2.4 Construction Administration.
2.4.1 The COUNTY shall deliver or cause the Contractor to deliver
copies of all plans, specifications, all change orders and all other material
documents regarding the Project to both OPERATOR and COUNTY. The COUNTY and
OPERATOR shall review such documents and after input by OPERATOR, COUNTY shall
approve such documents and/or all changes thereto.
2.4.2 The COUNTY shall, based upon the approved design plans and
specifications, "fast track" bids for construction of the Project whenever
possible; provided, however, that separate bids may be sought for each phase of
the Project as described in Section 2.1 above, and/or for separate portions of a
single phase. All bidding procedures shall be conducted in conformity with
applicable State law and COUNTY ordinances. The COUNTY shall, after notice to
OPERATOR, award a construction contract or contracts to the successful
bidder(s). All such procedures, as well as all other obligations of the parties
hereunder, shall be conducted pursuant to the Schedule of Performance.
2.4.3 The COUNTY shall establish a construction management team (the
"Construction Management Team"). The Construction Management Team shall be
composed of the "COUNTY" representatives from CAO, A&E, and Regional Parks and,
in addition, up to two (2) persons as OPERATOR shall determine to represent it
on such Team.
2
<PAGE>
2.4.4 The COUNTY shall, in consultation with OPERATOR as set forth
in Section 2.2 hereinabove, administer and supervise all construction activities
and authorize construction draws and other payment pursuant to the construction
contract(s) and in consideration of the Construction Budget. The COUNTY and
OPERATOR shall use their best efforts to provide for development and
construction of the Project on an accelerated basis. In conjunction therewith,
the COUNTY shall appoint an internal project coordinator to facilitate and
accelerate COUNTY processing and all other COUNTY aspects of development of the
Project.
2.4.5 During the construction of the Project, and all phases
thereof, OPERATOR shall have the right to:
(i) Except in emergencies, receive adequate notice of and
attend meetings of the COUNTY and the Contractor, contractors, engineers,
and consultants, as well as all meetings involving governmental agencies
having jurisdiction over the Premises and/or the Project;
(ii) Review the Premises during construction, provided,
however, that such review shall not constitute acceptance of any work by
OPERATOR, or subject OPERATOR to any liability relative to such work.
2.4.7 OPERATOR shall be responsible, pursuant to section 2.2
hereinabove, for the selection of all furniture, fixtures, signs, seats,
lighting, sound and stage and all other equipment for use on or with respect to
the Project. OPERATOR shall conduct its duties in selecting and approving such
equipment without compensation; provided, however, that the cost of purchase and
installation of all such furniture, fixtures and equipment shall be made out of
the Construction Budget, and OPERATOR shall not be responsible for the cost
thereof.
2.4.8 The COUNTY and OPERATOR shall meet and consult with each other
at least once each week during the term hereof. Such meetings shall be held,
without notice, on each Tuesday at 9:00 a.m. at Glen Helen Conference Center.
The parties recognize and acknowledge that during certain stages of
construction, meetings will be required with greater frequency. Therefore,
either party may schedule a special meeting for any purpose reasonably related
hereto by giving reasonable advance notice to the other party, which notice may
be given by telephone or fax.
2.5 Government Approvals. In connection with the development of the
Project on the Premises and as part of the cost of the Project included in the
Construction Budget, the COUNTY shall secure and maintain, in an expeditious
manner, all necessary governmental approvals, consents, permits, licenses,
authorizations, rights-of-way and easements as are reasonably necessary or
desirable for development and construction of the
3
<PAGE>
Project. COUNTY shall use its best efforts to obtain the foregoing in the most
expeditious manner possible and in compliance with the Schedule of Performance.
2.6 Change Orders.
2.6.1 All change orders or request for change orders shall be of two
types:
(i) Necessary Changes. Those changes which, although not
contemplated by the applicable construction contract, are required to
assure the structural or engineering strength and integrity of the
Project, or any portion thereof.
(ii) Elective Changes. All changes other than Necessary
Changes.
2.6.2 All requests for change orders for Necessary Changes shall be
submitted to COUNTY and OPERATOR for review and COUNTY approval.
2.6.3 Upon receipt of any requests for a change order for Elective
Changes, such request shall be delivered to OPERATOR and to COUNTY. COUNTY and
OPERATOR shall jointly meet within three (3) COUNTY business days of receipt and
determine whether or not to proceed with such Elective Change(s). Elective
Changes shall be made only upon the approval of COUNTY and OPERATOR and if
funding is provided for within the Construction Budget contingencies.
2.6.4 Notwithstanding anything contained herein to the contrary, in
the event of any change orders with regard to the (i) construction of the
interchange at I-15 and Devore Road; (ii) the construction of the two lane,
secondary, park-use only road; (iii) widening of Devore Road; (iv) bringing all
utility services to the Premises; or (v) improvement and expansion of parking
facilities at Glen Helen (collectively the "Infrastructure"), the COUNTY alone
shall have the authority to approve such change orders whether the change orders
constitute Necessary Changes or Elective Changes.
2.7 Ownership of Project. Notwithstanding anything contained herein to the
contrary, the Project and all portions thereof will be owned by the COUNTY.
OPERATOR's rights therein shall be limited to the rights specifically set forth
in the Lease.
III. FISCAL OBLIGATIONS
3.1 Total Project Cost. OPERATOR and COUNTY shall cooperate and use their
best efforts to limit the total cost of the Project, including the cost of all
Necessary and Elective Changes, at or below Fifteen Million Dollars
($15,000,O0O.O0).
3.2 COUNTY's Fiscal Contributions. (a) The COUNTY shall
4
<PAGE>
pay up to Fifteen Million Dollars ($15,000,OO0.O0) for the cost of development
and construction of the Project. Such $15,000,000.00 shall be disbursed by the
COUNTY at such times as are necessary to construct the Project in accordance
with the Schedule of Performance or sooner if needed to meet an accelerated
schedule of construction.
(b) In addition, The COUNTY will analyze, review, and research all
existing and approved COUNTY improvements and construction budgets and plans
relating to water, sewer, roads, park and other COUNTY departments to ascertain
the availability of funds and other resources that could be used or accelerated
for the benefit of, and without additional expenditures out of the Construction
Budget for the Project.
(c) Notwithstanding the foregoing, in the event that the cost of the
Project is less than $15,000,O00.0O, the COUNTY's obligation pursuant to this
Section shall be reduced by the difference between $15,000,000.00 and the actual
cost of the Project, and OPERATOR shall continue to be obligated to contribute
its entire fiscal obligation as set forth in Section 3.9 of the Lease.
5
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
EXHIBIT "E" Glen Helen Regional Park Amphitheater attachment 1
Design/Build - Proposed Schedule
County of San Bernardino - Architecture Engineering Department
- ------------------------------------------------------------------------------------------------------------------------------------
Qtr 4, 1992 Qtr 1, 1993 Qtr 2, 1993 Qtr 3, 1993 Qtr 4, 1993 Qtr 1, 19
ID Name Duration Start Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
<C> <S> <C> <C>
1 B.O.S. Approval Od 10/19/92
2 Pre Con. Meeting Od 10/23/92
3 Notice to Proceed Od 10/23/92
4 Completion 253.38ed 10/23/92
5 C.D. Prep 10w 10/23/92 [GRAPHIC OMITTED]
6 Plan check 5w 1/1/93
7 Construction 20w 2/5/93
8 Fine Grading 173ed 10/23/92
9 Beverage Concession 222ed 10/23/92
10 Substantial Completion Od 6/24/93
11 Punch List 2w 6/21/93
12 Project Completion Od 7/3/93
13 B.O.S. Acceptance Od 7/12/93
- ------------------------------------------------------------------------------------------------------------------------------------
Date: 9/30/92 Critical --------- Progress --------- Summary ---------
Project#: 20450 Noncritical --------- Milestone
====================================================================================================================================
</TABLE>
<PAGE>
EXHIBIT "E"
ATTACHMENT 2
CONSTRUCTION BUDGET
GLEN HELEN REGIONAL PARK AMPHITHEATER
COST ESTIMATES
<TABLE>
<S> <C> <C>
Amphitheater ................... 5,900,000
F, F & E ....................... 2,169,000
Landscaping & Irrigation ....... 300,000
Geo Tech ........................ 40,000
Inspection & Testing ........... 100,000
Project Admin .................. 100,000
Contingency .................... 500,000
---------
9,109,000
Site Paving .................... 70,000
Backroad ....................... 250,000
Electrical ..................... 50,000
Sewer & Water .................. 350,000
Signage ........................ 168,000
Lighting ....................... 300,000
Freeway Interchange ............ 1,600,000
Devore Road .................... 1,775,000
Contingency .................... 735,000
---------
5,298,000
Fencing ........................ 43,000
Sound System ................... 50,000
---------
93,000
Project Prepaid Necessary Cost 500,000
----------
15,000,000
==========
</TABLE>
<PAGE>
EXHIBIT "F"
San Bernardino County
[LOGO] Regional Parks Department [LOGO]
PARK RULES
In accordance with Ordinance No. 3254, Chapter 3, Section 28.033(a) of the
County of San Bernardino, the following rules have been established for your
safe, healthful, and convenient use of the County's Regional Parks.
1. To gain entrance into the park, all entrance fees shall be paid by park
visitor.
2. No person may enter the park after having been denied entry or having
their permit revoked by Regional Parks staff.
3. Dogs must be on a 6' leash or confined at all times. Leashes shall not be
tied or attached to any tree or shrub. Proof of current vaccinations may
be required.
4. Vicious animals are not allowed on any park.
5. All vehicles and drivers must be legally licensed and have liability
insurance in amounts specified by California Law. Proof of insurance may
be required before admittance to the park.
6. All motor driven vehicles and bicycles must observe posted speed limits,
remain on roadway or designated bicycle pathways, and park only in
designated areas.
7. Camping, fishing, swimming, horseback riding, and picnicking are permitted
in designated areas only.
8. Campfires are permitted only in stoves or provided barbecues and campfire
rings.
9. Checkout time for campers is 3:00 p.m.
10. There is a fourteen (14) day limit for overnight camping in any thirty
(30) day period at any Regional Park, except designated areas. At least
one person in a camp site must be 16 years of age or older.
11. Quiet time for the campground is from 10:00 p.m. to 7:00 a.m., however, no
loud noises, loud talking, generators, radio or television capable of
disturbing other campers in any manner, shall be permitted at any time.
12. Persons shall not remove, destroy, or mutilate any park property.
13. Trash receptacles must be used at all times.
<PAGE>
14. A California State fishing license is required for all fishing and must be
shown to a Park employee upon request. A five (5) fish limit is imposed on
all species of fish except crappie, bullhead catfish, carp, and blue gill
on which there is no limit. Fishing is allowed in designated areas and
only during the established park hours.
l5. Fireworks and firearms are prohibited on all parks except as permitted
under the rules for the Prado Tiro Shooting Range.
16. Private boats meeting departmental policies and rafts may be launched at
Moabi Regional Park, Lake Gregory Regional Park, and Prado Regional Park
only. Private boats must meet Coast Guard regulations and have flotation
devices for each occupant (Type II or III).
17. Personal flotation devices will be available for use by the public at no
charge every day designated lifeguarded swimming facilities or Regional
Parks operated boat rental areas are in operation. No other privately
owned flotation device or life jacket will be allowed to be used in these
facilities.
18. Children, eight (8) years of age and under, must be accompanied by a
person sixteen (16) years of age or older, at all times.
19. Soliciting, selling, peddling of goods or a distribution of circulars is
not permitted.
20. Radio and remote controlled boats are allowed in designated areas only and
operators must have liability insurance in the amount established by
County. A boat capable of retrieving broken boats is necessary when
operating this type of equipment.
21. All rental boats must be operated in a safe manner and in accordance with
posted and/or written rules. Flotation devices, as provided by County for
rental boats, must be used by all persons twelve (12) years of age and
under. All persons over twelve (12) years of age shall have a Coast Guard
approved personal flotation device at all times while using pedalboats,
aquacycles, rowboats, motorized boats, or other water crafts on any
Regional Park lake or waterway.
NOTE: The County reserves the right to make such other and further
reasonable rules as in its judgment may from time to time be
necessary for the safety, care and cleanliness of the premises, and
for the preservation of good order. Any breach of the above rules
may result in your removal from the park.
APPROVED:
San Bernardino County Board of Supervisors - July 18, 1988
<PAGE>
ORDINANCE NO. 3254
AN ORDINANCE OF THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AMENDING
CHAPTER 3 OF DIVISION 8 OF TITLE 2 OF THE SAN BERNARDINO COUNTY CODE RELATING
TO THE USE OF REGIONAL PARKS.
The Board of Supervisors of the County of San Bernardino, State of
California, ordains as follows:
SECTION 1. Chapter 3 of Division 8 of Title 2 of the San Bernardino County
Code is hereby amended in its entirety to read as follows:
Chapter 3
SAN BERNARDINO COUNTY REGIONAL PARKS
Sections:
28.031 Scope.
28.032 Definitions.
28.033 Authority of Director and Park Rangers.
28.034 Boating and Waterways.
28.035 Permit Required.
28.036 Vehicle Use.
28.037 General Use Regulations.
28.038 Denial of Entry.
28.031 Scope.
(a) The provisions of this Chapter shall be applicable to all Regional
Parks owned or operated by the County of San Bernardino. Each Regional Park
shall be conducted as a public facility for recreational use and associated
activities, and shall be open for public use between the hours of daybreak and
dusk, or as posted, unless otherwise restricted by the Director or as specified
by an agreement approved by the Board of Supervisors.
(b) These provisions are not intended to amend, modify, or supersede any
provisions of federal or state law, or any specific contractual agreement of the
County with which they may conflict, provided that these provisions shall be
interpreted, insofar as is possible, in such manner that no conflict shall
exist.
(c) Nothing contained in this Chapter shall make it a violation for County
employees to perform work on Regional Parks at the time and in the manner
assigned by the Director.
28.032 Definitions.
As used in this chapter, the following definitions apply:
(a) "Park" or "Regional Park" means each Regional Park owned or operated
by the County of San Bernardino, except when otherwise specifically noted. It
includes all property within the boundaries of the park.
(b) "Board" means the Board of Supervisors of the County of San
Bernardino.
(c) ""Director" means the Director of the Regional Parks Department of the
Environmental Public Works Agency of the County of San Bernardino.
(d) "Person" means any individual, firm, co-partnership, corporation,
company, association, organization, joint stock association or body politic; and
includes any trustee, receiver, assignee or other similar representative
thereof.
(e) "Park Ranger" or "Ranger" shall be deemed to mean and include the
Director and any Regional Parks Department employee or appointed by the
Director.
(f) "Department" means the Regional Parks Department of the Environmental
Public Works Agency of the County of San Bernardino.
(g) "Alcoholic Beverage" includes alcohol, spirits, liquor, wine, beer and
every liquid or solid which contains one-half of one percent or more of alcohol
by volume and which may be consumed either alone or when mixed, diluted or
combined with other substances.
28.033 Authority of Director and Park Rangers.
(a) The Director shall have the authority to establish policies, rules,
orders and directives which are not inconsistent with this Chapter. The
Director is empowered to post signs or employ other markings at any Park which
state or apply this chapter and any policies, rules, orders, or directives
adopted pursuant to this chapter.
(b) The Director and any Park Ranger is empowered to revoke the permit of
any person who violates any provision of this chapter, orders, or any rules or
directives adopted pursuant to this chapter.
28.034 Boating and Waterways.
(a) Inflatable boats, inner tubes, or rubber rafts are not allowed on
Regional Park lakes, except as designated.
(b) Boats shall be operated and docked only in designated areas. Motorized
boats with gas engines are not permitted at any Regional Park lake, except
within the Moabi Regional Park marina. Motorized boats shall not exceed speed in
excess of five (5) miles per hour.
(c) All persons twelve (12) years of age and under shall wear a Coast
Guard-approved vest-type personal flotation device at all times while using
pedalboats, aquacycles, rowboats, motorized boats or other water crafts on any
Regional Park lake or waterway. All persons over twelve (12) years of age shall
have a Coast Guard-approved personal flotation device at all times while using
pedalboats, aquacycles, rowboats, motorized boats, or other water crafts on any
Regional Park lake or waterway.
28.035 Permit Required.
(a) No person shall enter any Regional Park, operate any boat or vehicle
therein, camp, picnic, ride horseback, swim, hike, or build or maintain a
campfire therein, without first obtaining from the County a permit to do so and
paying any fee as may be established from time to time by the Board of
Supervisors.
(b) Any permit issued pursuant to subsection (a) of this section may be
revoked at any time without refund of any fee paid, for any violation of this
chapter, any rules, orders or directives adopted pursuant to this chapter, or of
other applicable local, State, or Federal law.
(c) Any person whose permit has been revoked by the Director or any Park
Ranger shall immediately leave the Park and shall not return to the same Park
for the remainder of the calendar day.
28.036 Vehicle Use.
No person shall, within any Regional Park:
(a) Operate any vehicle at a speed in excess of the posted speed limit, or
operate any vehicle except upon established public roads and within parking
lots, unless otherwise approved by the Director.
(b) Operate any motor vehicle without a muffler system conforming to the
provisions of the California Vehicle Code.
(c) Cause or permit any vehicle to occupy or be parked in a campsite
except as authorized by the Director.
(d) Park and leave unattended any vehicle in areas that those designated
for parking. Vehicles left unattended in areas not so designated, or in other
areas without permission, may be towed away and stored by the County and said
removal and storage costs shall be charged to and paid by the owner prior to
release.
(e) Operate an off-road vehicle except in designated areas established by
the Director.
(f) Ride a bicycle except on the designated roadways, parking lots, or
bicycle paths within the park.
23.037 General Use Regulations.
No person shall, without permission of the County, within a Region Park:
(a) Camp, picnic, hike, fish, swim, or build or maintain a fire, campfire,
flame burning device used for any reason whatsoever, or engage in any activity
except in areas specifically designed for that purpose.
(b) Camp or occupy a campsite for more than fourteen (14) days in any
thirty (30) day calendar period at any Regional Park, except designated areas.
(c) Occupy any designated campsite with the occupants of more than one (1)
vehicle, which in no circumstances shall exceed a total of six (6) persons at
any campsite without an additional permit, except designated group camp sites.
(d) Occupy any designated campsite unless at least one person in the
campsite group is 18 years of age or older.
(e) Fish, without possessing and displaying to any Park Ranger upon
request, a valid California State fishing license.
(f) Fish, except in designated areas and only during the established park
hours.
(g) Leave unattended any child, eight (8) years of age or under, unless
such child is accompanied by a person sixteen (16) years of age or older.
(h) Pick flowers, foliage, berries or fruits, or cut, break, dig up, or in
any way mutilate or injury any tree, shrub, plant, fern, grass, turf, fence,
structure or any other object.
(i) Cut, carve, paint, mark, paste or fasten on any tree, fence, wall,
building, monument or other object, any bill, advertisement, or inscription.
<PAGE>
(j) Dig up or remove any dirt, stones, rocks, or other substance whatever,
make any excavation, quarry any stone, or lay or set off any blast or cause or
assist in doing any of said things.
(k) Molest, injure, or kill any bird or mammal, or disturb its habitat.
(l) Despoil, place or leave any broken glass, ashes, wastepaper, cans or
other rubbish or polluted matter, except in a receptacle provided for that
purpose.
(m) Bring into any Park any broken glass, ashes, wastepaper, cans, or
other rubbish or polluted matter.
(n) Possess, discharge, or set off, over, onto, or through any Regional
Park any firearms, firecrackers, torpedoes, rockets, air guns, slingshots, BB
guns, or other explosives or fireworks, except as permitted under the rules for
the Prado Tiro Shooting Range.
(o) Permit any animal to enter, swim, or bathe in any lake, pond, or swim
area located within a Regional Park.
(p) Ride, lead, or tie any horse, or other large animal, except in areas
designated for such use.
(q) Engage in soliciting, selling, or peddling any goods or services or to
distribute any circulars.
(r) Bring into a designated swim area any object including, but not
limited to, glass, which, if broken, could cause injury.
(s) Use any personal flotation device which is not Coast Guard-approved,
except at Moabi Regional Park.
(t) Possess or consume alcoholic beverages within designated swim areas or
on the Main Street of Calico Ghost Town Regional Park.
(u) Operate a radio or remote controlled boat or airplane except in
designated areas, with liability insurance in the amounts established by the
Director, and with a retrieval boat during any operation of radio or remote
controlled boats.
28.038 Denial of Entry.
Any person who in the course of any calendar year has any permit(s)
revoked and/or is convicted of violating any provision(s) of this Chapter a
total of three (3) or more times, shall be denied entry to and use of all Parks
for the remainder of the same calendar year.
SECTION 2. This ordinance shall take effect thirty (30) days from the date
of adoption.
JOHN JOYNER, Chairman
Board of Supervisors
SIGNED AND CERTIFIED THAT A COPY OF THIS DOCUMENT HAS BEEN DELIVERED TO THE
CHAIRMAN OF THE BOARD.
MARTHA M. SCUDDER
Clerk of the Board of Supervisors
of the County of San Bernardino
STATE OF CALIFORNIA ) ss.
COUNTY OF SAN BERNARDINO )
I, MARTHA M. SCUDDER, Clerk of the Board of Supervisors of the County of
San Bernardino, State of California, hereby certify that at a regular meeting of
the Board of Supervisors of said County and State, held on the 18th day of July,
1988, at which meeting were present Supervisors John Joyner; Jon D. Mikels;
Barbara Cram Riordan; Larry Walker; Robert L. Hammock; and the Clerk, the
foregoing ordinance was passed and adopted by the following vote, to wit:
AYES: Supervisors Joyner, Mikels, Riordan, Walker, Hammock.
NOES: None.
ABSENT: None.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official
seal of the Board of Supervisors this 18th day of July, 1988.
MARTHA M. SCUDDER,
Clerk of the Board of Supervisors
of the County of San Bernardino,
State of California.
<PAGE>
EXHIBIT "G"
COUNTY OF SAN BERNARDINO
PURCHASING DEPARTMENT [LOGO] GENERAL SERVICES GROUP
- --------------------------------------------------------------------------------
777 East Rialto Avenue o San Bernardino, AURELIO W. DE LA TORRE
CA 92415-0760 o (714) 387-2060 Director
The County of San Bernardino welcomes your interest in doing business with
County Departments and Special Districts. As you may be aware, county
governments are among the largest procurers of materials and services. Our
County alone processes nearly $80 million in orders and contracts annually.
The Purchasing Department has the responsibility of matching the needs of the
County with high quality materials and services which are available at a
competitive price, and delivered on a timely basis. We actively encourage
participation from all businesses, large or small.
BOARD OF SUPERVISORS POLICY - The County has a commitment to encourage maximum
contracting opportunities with small, Minority-owned, Women-owned, and other
Disadvantaged Business Enterprises (MBE, WBE, and DE). Therefore, the County of
San Bernardino has established contracting goals that at least 15 percent of its
procurement agreements be awarded to Minority-owned Business Enterprises and at
least five percent of its purchasing agreements be awarded to Women-owned
Business Enterprises.
If your firm is owned and managed by MBE, WBE, or DBE, be sure to indicate
on the enclosed "Contract Compliance Qualifying Report" - Item Six.
For Item Nine, we follow federal guidelines (Standard Industrial Codes) to
determine your firm's size.
Leave Item Ten blank; for County use only.
If you have any questions regarding the "Contract Compliance Qualifying
Report", contact Zenaida Lizardo at 387-8894.
After completing the enclosed forms, please feel free to contact the
Purchasing Department and speak to the Buyer who is responsible for
procuring the commodity your firm provides.
Thank you for your interest in providing services to San Bernardino.
/s/ AURELIO W. DE LA TORRE
- ------------------------------
AURELIO W. DE LA TORRE,
Director Purchasing Department
/vp
Enclosures
<PAGE>
County of San Bernardino
AFFIRMATIVE ACTION POLICY FOR CONTRACTORS AND VENDORS
Name of Contractor
adopts this plan to affirm its support of a program of equal employment
opportunity, and to assure compliance with Executive Orders 11246 and 11375,
Title VII of the Civil Rights Act of 1964, Section 503 of the Rehabilitation Act
of 1973, the California Fair Employment Practice Act, and the San Bernardino
County Affirmative Action Compliance Program. This contractor agrees to assert
leadership within the community and to put forth good faith efforts to achieve
full employment and utilization of the capabilities and productivity of all our
citizens without regard to race, age, color, sex, religion, ancestry, national
origin, marital status, or handicap.
This contractor further recognizes that the effective application of a policy of
equal employment opportunity involves more than just a policy statement and
will, therefore, undertake affirmative action to make known that equal
opportunities are available on the basis of individual merit, and to encourage
advancement on this basis.
The following Affirmative Action Program is hereby established as the policy and
practices of our company:
Instructions: Indicate your policy by circling the applicable letter to
the left of each item below. The letters are to be interpreted as follows:
A. This is now a practice of our company.
B. Our company will adopt this policy.
C. Our company cannot or will not adopt this policy.
If "C" is circled, explain reason. Use separate sheet if additional space
is needed.
================================================================================
Circle
One Items
- --------------------------------------------------------------------------------
A 1. Our company shall recruit and hire all employees without regard to
race, age, color, sex, religion, ancestry, national origin, marital
status or handicap, and will treat all employees equally in respect
B to compensation and opportunities for advancement, including
upgrading and promotion.
-----------------------------------------------------------------------
C Explain "C"
- --------------------------------------------------------------------------------
A 2. Our company will actively use recruitment sources such as employment
agencies, unions, and schools which have a policy of referring
B applicants on a nondiscriminatory basis.
-----------------------------------------------------------------------
C Explain "C"
- --------------------------------------------------------------------------------
A 3. Our company will disseminate its affirmative action policy
externally by informing and discussing it with all recruitment
sources, by advertising in news media, specifically including
minority news media, and by notifying and discussing the policy with
B all local minority, handicapped and women's organizations and
subcontractors and shall maintain records of the organization's
responses.
-----------------------------------------------------------------------
C Explain "C"
- --------------------------------------------------------------------------------
A 4. Our company shall make specific and constant personal, written, and
oral recruitment efforts directed at all local minority, handicapped,
B and women's organizations, including schools, recruitment and training
organizations.
-----------------------------------------------------------------------
C Explain "C"
- --------------------------------------------------------------------------------
<PAGE>
COUNTY OF SAN BERNARDINO CONTRACT COMPLIANCE QUALIFYING REPORT PURCHASING
DEPARTMENT
FEDERAL ID/SOCIAL SECURITY NO.__________________ DATE _____/_________/_________
A. 1. Name of Contractor's Business ___________________________________________
__________________________________________________________________________
2. Address
__________________________________________________________________________
3. City State Zip Code
_____________________________ ______________ _______________
4. Telephone Number
(______)____________________________________________________
5. Type of Business _________________________________________________________
__________________________________________________________________________
6. The contractor has appointed Affirmative Action Designee
_____________________
M/WBE
___ Black ___ Native American ___ Woman Owned
___ Hispanic ___ Eskimo/Aluet ___ Handicapped
___ Asian Pacific ___ Other
Telephone Number (______)______________________________concerning matters
relating to any Affirmative Actions taken by this contractor.
7. Do you presently employ any Vietnam-era veterans?
__ Yes __ No How Many?_______
8. Do you presently employ any handicapped persons?
__ Yes __ No How Many?________
9. Do you consider your business __ Small ___ Large
10. Affirmative Action Expiration Date
____________________________________________________
11. Average Annual Sales or Receipts for preceding three years
$___________________
B. Contractor agrees to comply with the provisions of the Affirmative Action
Compliance Program of the County of San Bernardino and rules and
regulations adopted pursuant thereto. Executive Orders 11246, 11375,
11625, 12138, 12432, 12250, Title VII of the Civil Rights Act of 1964, the
California Fair Employment Practice Act, California Pubic Contracts Code
Section 2000 and the San Bernardino County M/WBE Policy No. 11-15, and
other applicable Federal, State and County laws, regulations and policies
relating to equal employment opportunity, including laws and regulations
hereafter enacted.
Attached is the statement of contractor's Affirmative Action Policy. The
contractor agrees to make a good faith effort to meet the goals of the
plan as part of these contract obligations.
Contractor understands that this plan will became a part of contractor's
comprehensive management policy.
Contractor agrees to insert in all subcontracts on the project bid
herewith a provision that said subcontractors will comply with the
provisions of the San Bernardino County Affirmative Action Compliance
Program and rules and regulations adopted pursuant thereto, Executive
Orders 11246, 11375, 11625, 12138, 12432, 12250, Title VII of the Civil
Rights Act of 1964, the California Fair Employment Practice Act, and other
applicable Federal and State laws and regulations relating to equal
employment opportunity, including laws and regulations hereafter enacted.
Contractor agrees to furnish to the Contract Compliance Office the name of
each subcontractor who furnished supplies, goods or services in excess of
$10,000.00 individually or cumulatively. Said names shall be furnished
prior to the time the subcontractor commences work.
Contractor also hereby agrees to provide to the San Bernardino County
Contract Compliance Office any access and information that they may
respect to assist in determining compliance with the Program.
I declare under penalty of perjury that the following is true and correct.
/ /
-------------- --------------------------------------------------
DATE SIGNATURE
-------------------------------------------------
TITLE
<TABLE>
<CAPTION>
CURRENT WORK FORCE
====================================================================================================================================
ALL EMPLOYEES MINORITY EMPLOYEES
----------------------------------------------------------------------------------------------
OCCUPATIONAL MALE FEMALE TOTAL
------------------------------------------------------------------------
American American MINORITIES
CATEGORY TOTAL MALE FEMALE Asian or Indian or Asian Indian or
Black Hispanic Pacific Alaskan Black Hispanic Pacific Alaskan
Islander Native Islander Native
- ----------------------- ----- ---- ------ ----- -------- -------- --------- ----- -------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Administrators
Professional
Technical
Sales
Clerical
Skilled
Operatives (Semiskilled)
Laborer (Unskilled)
Service Workers
TOTAL
====================================================================================================================================
</TABLE>
UNDERUTILIZATION ANTICIPATED
---------------- HIRING GOALS
OCCUPATIONAL MINORITY FEMALE FOR TERM OF PROJECT
---------------- --------------------------
CATEGORY YES NO YES NO Minority Total New Hires
M F M F
- ----------------------- --- -- --- -- -------- ---------------
Administrators
Professional
Technical
Sales
Clerical
Skilled
Operatives (Semiskilled)
Laborer (Unskilled)
Service Workers
TOTAL
<PAGE>
- --------------------------------------------------------------------------------
Circle Items
One
- --------------------------------------------------------------------------------
5. Our Company shall make specific efforts to encourage present
A minority, handicapped and women employees to recruit their
friends and relatives whose status also comes under that of
minority, handicapped or women.
B
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
A 6. Our company will maintain a file of the names and addresses of
each minority applicant and female applicant referred to the
company for hiring, and if the applicant is not considered for
employment or was not employed, the company's file should
document this and the reasons therefor.
B
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
A 7. Our company shall notify the County's Contract Compliance
Officer when the union or unions with whom our company has a
collective bargaining agreement have not referred to the
B company a minority, handicapped, or female worker sent for by
the company or the company has other information that the
union referral process has impeded the company's effort to
meet the established goals of affirmative action.
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
A 8. Our company will actively take steps to integrate any
positions, departments or plant locations which have no women
or minorities or are almost staffed with one particular group.
B
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
A 9. Our company shall insure that all employee specifications,
selection requirements, tests, and other employee recruitment
or evaluation procedures do not discriminate against
minorities, handicapped or women.
B
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
A 10. Where reasonable, our company shall develop or finance
on-the-job training opportunities and participate and assist
in any association or employee group training program relevant
to the company's employee needs.
B
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
A 11. Our company shall continually inventory and evaluate all
minority, handicapped, and female personnel for promotion
opportunities and encourage minority and female employees to
seek such opportunities.
B
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Circle Items
One
- --------------------------------------------------------------------------------
A 12. Our company shall make sure that seniority practices, job
classifications, rates of pay, and other forms of
compensation, and other employee practices and classifications
B do not have an unlawfully discriminatory effect on
handicapped, minority or female employees.
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
A 13. Our company will make certain that all facilities normally
used concurrently by all company activities are nonsegregated.
B
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
A 14. Our company shall make certain that all subcontractors are in
compliance with the Affirmative Action Compliance Plan of
San Bernardino County, and that all project subcontractors
have an approved Affirmative Action Plan.
B
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
A 15. Our company shall solicit bids for subcontracts from minority
subcontractors and female subcontractors subject to
availability.
B
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
A 16. Our company shall make every effort to provide after school,
summer and vacation employment to minority youths.
B
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
A 17. Our company shall continually monitor all personnel activities
to insure that the San Bernardino County Affirmative Action
Policy for Contractors and Vendors is carried out.
B
C -----------------------------------------------------------------------
Explain "C"
- --------------------------------------------------------------------------------
- ------------------------------- ------------------------------------
Date Signature
------------------------------------
Title
Executed at_____________________________________________________________________
City/Town State
<PAGE>
1853 County of San Bernardino
[LOGO] PURCHASING DEPARTMENT
County of San Bernardino 777 East Rialto Avenue
San Bernardino, CA 92415-0760
VENDORS' APPLICATION
Contract Compliance Rating____________________
Date of Application_____/____/________________
|_| Initial Application |_| Minority Owned
|_| Revision/Update |_| Women Owned
- --------------------------------------------------------------------------------
Name of Applicant
- --------------------------------------------------------------------------------
Address to which quote forms are to be mailed
- --------------------------------------------------------------------------------
Address to which Purchase Orders are to be mailed
- --------------------------------------------------------------------------------
How long in present business?
- --------------------------------------------------------------------------------
Federal ID/Social Security Number
- --------------------------------------------------------------------------------
Type of Organization (Check one)
|_| Sole Proprietorship |_| Partnership
|_| Corporation-Indicate which state__________
- --------------------------------------------------------------------------------
Names of Officers, Members or Owners of Concern, Partnership, etc.
(A) President:
- --------------------------------------------------------------------------------
(B) Vice President:
- --------------------------------------------------------------------------------
(C) Owners or Partners:
- --------------------------------------------------------------------------------
Persons authorized to sign bids and contracts in your name
(if agent, so specify)
Name Official Capacity Telephone Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Persons to contact concerning bids, contracts and telephone quotes
Name Official Capacity Telephone Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Indicate types of services or supplies you would be providing the County.
(Attachments are not sufficient information)
Failure to complete this section will result in NO ACTION.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Category (Check below the category which applies to the applicant)
|_| (A) Manufacturer/Producer (Agent) |_| (D) Distributor
|_| (B) Wholesaler |_| (E) Service Establishment
|_| (C) Retailer |_| (F) Construction
- --------------------------------------------------------------------------------
Manufacturing Location Storage Location
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Other Public Agencies with whom you do business
Agency Name Person to Contact Telephone Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Financial - Bank or Credit References
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INSURANCE: Vendors making delivery or providing services on County premises
shall provide Certificates of Insurance per "Applicant's
Instructions" when requested by the Purchasing Department.
- --------------------------------------------------------------------------------
If M/WBE Contractor certifies that the ownership and management of the
aforementioned business a 51% ownership or more.
I certify that the information supplied herein (including all pages attached) is
correct and that neither the applicant nor any person (or concern) is in any
connection with the applicant as a principal or officer, so far as is known, is
now debarred or otherwise declared ineligible by any public agency from quoting
or furnishing materials, supplies or services to any agency thereof.
- -----------------------------------------------------------
Signature of person authorized to sign this application
- -----------------------------------------------------------
(PLEASE TYPE/PRINT) Name and Title of person signing
Revo. 2/89
03-18054-130
<PAGE>
COUNTY OF SAN BERNARDINO
1853
[LOGO]
AFFIRMATIVE
ACTION PLAN
1988
EXHIBIT "H"
<PAGE>
SAN BERNARDINO COUNTY
AFFIRMATIVE ACTION PLAN
Adopted on June 13, 1988
by the
SAN BERNARDINO COUNTY
Board of Supervisors
JOHN JOYNER
Chairman - First District
JON D. MIKELS BARBARA CRAM RIORDAN
Supervisor - Second District Supervisor - Third District
LARRY WALKER ROBERT L. HAMMOCK
Supervisor - Fourth District Supervisor - Fifth District
HARRY M. MAYS
County Administrative Officer
<PAGE>
TABLE OF CONTENTS
AFFIRMATIVE ACTION PLAN - 1988
Page
I. EQUAL EMPLOYMENT OPPORTUNITY
GENERAL POLICY STATEMENT
A. POLICY ............................................................ 1
B. GENERAL OBJECTIVES OF THE COUNTY
AFFIRMATIVE ACTION PLAN ........................................... 2
C. COMMENTS .......................................................... 2
II. DISSEMINATION OF POLICY
A. PRIOR ACTIVITY .................................................... 2
B. CURRENT ACTIVITY AND ACCOMPLISHMENTS
SINCE 1975 PLAN ................................................... 4
III. RESPONSIBILITY FOR IMPLEMENTATION
A. COUNTY AFFIRMATIVE ACTION OFFICER ................................. 7
B. AFFIRMATIVE ACTION UNIT ........................................... 7
C. AGENCY/DEPARTMENTAL AFFIRMATIVE
ACTION REPRESENTATIVES ............................................ 8
D. CAO/PERSONNEL EMPLOYMENT DIVISION ................................. 9
E. CAO/PERSONNEL CLASSIFICATION SECTION .............................. 13
F. CAO/PERSONNEL EDUCATION AND INFORMATION
SERVICES DIVISION ................................................. 15
G. CAO/PERSONNEL EMPLOYEE RELATIONS DIVISION ......................... 18
IV. UTILIZATION ANALYSIS
A. EEO CURRENT UTILIZATION ANALYSIS .................................. 19
B. COMPARISON OF COUNTY WORK FORCE --
APRIL 4, 1980 AND MARCH 27, 1987 .................................. 43
C. AVAILABILITY ANALYSIS ............................................. 45
V. STATISTICAL ANALYSIS
A. WORK FORCE COMPOSITION BY JOB GROUP ............................... 49
B. PARTICIPATION RATES ............................................... 57
i
<PAGE>
VI. FACTORED AVAILABILITY ANALYSIS
A. AVAILABILITY ANALYSIS -- FACT SHEET ............................ 65
VII. GOALS AND TIMETABLES ............................................... 97
VIII. GOAL PLANS ......................................................... 97
IX. COMPLIANCE WITH EEOC, OFCCP, AND CALIFORNIA
DFEH SEX DISCRIMINATION GUIDELINES
A. RECRUITMENT .................................................... 103
B. EXAMINATION .................................................... 103
C. PROMOTIONS ..................................................... 103
D. CERTIFICATION .................................................. 103
E. MATERNITY LEAVE ................................................ 103
F. MEDICALS ....................................................... 103
G. DRESS OR APPEARANCE CODES ...................................... 104
H. SALARY AND BENEFITS ............................................ 104
I. SCOPE OF AUTHORITY ............................................. 104
J. TRAINING ....................................................... 104
X. INTERNAL AUDIT AND REPORTING ....................................... 104
XI. COMMUNITY PROGRAMS ................................................. 105
XII. COMPLAINT RESOLUTION PROCEDURE
A. EQUAL EMPLOYMENT OPPORTUNITY COUNCIL ........................... 106
B. SYNOPSIS OF COMPLAINT RESOLUTION PROCEDURE ..................... 107
C. RESOLUTION OF DISCRIMINATION COMPLAINTS ........................ 107
XIII. BILINGUAL SKILLS UTILIZATION ....................................... 108
XIV. MEDICAL STANDARDS .................................................. 108
XV. EMPLOYMENT OF PERSONS WITH ARREST
OR CONVICTION RECORDS .............................................. 108
XVI. CONTRACT COMPLIANCE ................................................ 109
XVII. EQUAL EMPLOYMENT OPPORTUNITY POLICY STATEMENT
VIETNAM ERA VETERANS ............................................... 109
ii
<PAGE>
TABLE OF CONTENTS
EXHIBITS
Page
EXHIBIT A
Excerpt From the Handbook
"Your Role in Affirmative Action" ........................... E-1
EXHIBIT B
Protected Class Report ...................................... E-2
EXHIBIT C
Handicap Identification Form ................................ E-4
EXHIBIT D
Affirmative Action Complaint Processing ..................... E-4
EXHIBIT E
Recruitment (Partial Mailing List) .......................... E-6
EXHIBIT F
Complaint Resolution Procedure .............................. E-8
EXHIBIT G
County Guidelines for Employment of Persons
With Records of Arrest or Convictions ....................... E-17
EXHIBIT H
Sexual Harassment Policy .................................... E-19
EXHIBIT I
Affirmative Action Commission ............................... E-21
iii
<PAGE>
Exhibit I
[LOGO]
SAN BERNARDINO COUNTY
GLEN HELEN REGIONAL PARK
GLEN HELEN BLOCKBUSTER AMPHITHEATHER
REVENUE REPORT
================================================================================
CONCESSIONER: MONTH/6 MONTHS/YEAR_____
AMPHITHEATER ENTERTAINMENT CORP. Report due County no
dba Glen Helen Amphitheater Corp. later than 10th day
____ Devore Rd. following month which
San Bernardino, Ca. 92____ information is being
reported.
- --------------------------------------------------------------------------------
Annual Rent Due
(the greater of 4.1 or 4.2)
================================================================================
(4.2) Gross Event Ticket Sales: Amount Date
(4.1) Fixed Minimum Rent: $ _____ _____
_____ _____
@$ _____ _____
_____ _____
_____ _____
_____ _____
_____ _____
_____ _____
_____ _____
_____ _____
(4.2) Total Gross Event Ticket Sales: $
_____________
Adjustments:
Discounts $______________
Refunds/Rebates $______________
Credit Card Commissions $______________
Group Sales Commissions $______________
Other Ticket Commissions $______________
Ampitheather Fee/Bus License Tax $______________
Other Taxes $______________
Assessments $______________
sub-total adjustments: $ ( )
--------------
Net Ticket Sales: $
==============
x7.75%
Net Ticket Sales Rent (4.2) = $______________
================================================================================
4.1 or 4.2 whichever is greater: $
---------------------
less County Comp sales @ 75%: ($ )
- --------------------------------------------------------------------------------
I. Total Semi-Annual/Annual Rent Due: $
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
II. (4.3) Park Amphitheater Fee/Business License Tax: $
- --------------------------------------------------------------------------------
- -----------------------------------------------------------
III. Total Annual Rent $
-------------------
Amphitheater Fee/Business License Tax $
-------------------
Total Semi-Annual/Annual Rent Payable $
- -----------------------------------------------------------
- --------------------------------------------------------------------------------
(4.4) Percentage of Excess Total Other Revenue
================================================================================
Actual Total Other Revenue: $
-----------------
less Est/or Actual Total Other Revenue: ($ )
-----------------
less County Events Operator Costs: ($ )
-----------------
Balance +/- $
-----------------
+ balance @ $ x25% = $
- --------------------------------------------------------------------------------
IV. Percentage Excess Total Other Revenue Due: $
- --------------------------------------------------------------------------------
- --------------------------------------------------------------
Total Fees Due
- --------------------------------------------------------------
I. Total Semi-Annual/Annual Rent: $
-----------------
II. Amphitheater Fee/Business License Tax $
-----------------
III. Percentage Excess Total Other Revenue $
- --------------------------------------------------------------
TOTAL AMOUNT DUE COUNTY: $
- --------------------------------------------------------------
- --------------------------------------------------------------------------------
I declare under penalty of perjury SBCRPD-DEPT USE ONLY-
that the information contained in ---------------------------------
this report is true and correct. Received Date:
---------------------------------
By Whom:
SIGNED: ---------------------------------
- ---------------------------------------------- Amount: $
Title: ---------------------------------
- ---------------------------------------------- NOTE:
Date:
CHECK #: Amt Enclosed: $ Copies of all documentation to
- ---------------------------------------------- support calculations/computations
to be attached with submittal.
- --------------------------------------------------------------------------------
<PAGE>
Exhibit J
SAN BERNARDINO COUNTY
REGIONAL PARKS DEPARTMENT ----------------
CONCESSION INSPECTION REPORT Park:
----------------
Concession:
- --------------------------------------------------------------------------------
NOTICE TO CONCESSIONER: the elements checked () below were found DEFICIENT this
date and must must be corrected by date(s) indicated. Failure to comply will
result in reduced rating and may effect your contract/permit to operate.
Follow-up inspections will be conducted to determine corrective action taken,
(if any).
- --------------------------------------------------------------------------------
================================================================================
ELEMENTS/CLASSIFICATION
================================================================================
Item Element Item Element Item Element
No. No. No.
================================================================================
Facility Exterior Operational
1. Structure Condition 10. Employee Performance 17. Regulations & Permits
2. Grounds 11. Employee Attitude 18. Novelty Stand
3. Signage 12. Employee Appearance 19. Walkways & Plazas
4. Refuse 13. Operating Hours
5. Recycling Misc.
14. Staffing Levels 20. Beverage container
Program
Facility Interior 21. Concession Stands
Rates 22. Others
5. Public Restrooms 23.
6. Signage 15. Authorized Rates & 24.
Fees
7. Public areas 16. Posting of Rates & 25.
Fees
8. Office areas 26.
9. Dressing areas 27.
28.
29.
30.
================================================================================
================================================================================
Item EVALUATION OBSERVATIONS Observed By Date
No. Corrected
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
- --------------------------------------------------------------------------------
Initial Regional Parks Rep. Concessioner Rep.
================================================================================
Inspection
Date
================================================================================
Follow-up
Date
- --------------------------------------------------------------------------------
Additional Remarks:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
CORPORATION GRANT DEED
EXHIBIT "K"
In consideration of $10.00, receipt of which is acknowledged, MUSCOY WATER
COMPANY, a corporation organized and existing under the laws of the State of
California, and having its principal place of business at 353 Sacramento Street,
San Francisco, California, does hereby GRANT to the COUNTY OF SAN BERNARDINO, a
body politic and corporate, the real property in the County of San Bernardino,
State of California, described as:
That portion of the RANCHO MUSCUPIABE, as per plat recorded in Book 7 of
Maps of Page 23, and of Lot "N" Block 12 MEYER AND BARCLAY SUBDIVISION, as
per plat recorded in Book 12 of Maps, page 18, in the County of San
Bernardino, State of California, described as follows:
BEGINNING at Station III as shown on Map showing Subdivision of Lands
belonging to the Semi-Tropic Land and Water Company, as per plat recorded
in Book 6 of Maps, Page 12, records of said County; thence East 990 feet;
thence North 5280 feet; thence North 22(degrees) 04' West 9551.72 feet,
more or less, to a point on the West line of Lot "N", Block 12, said Meyer
and Barclay Subdivision, which point is 660 feet North of the Southwest
corner of said Lot "N"; thence North 42(degrees) 15' 50" West 8609.80
feet; thence North 48(degrees) 19' 50" West 1197.81 feet, more or less, to
the Easterly extension of the South line of Section 29, Township 2 North,
Range 5 West, as extended across the Rancho Muscupiabe; thence North
89(degrees) 35' West 2321.51 feet, more or less, along said South line of
said Section 29 and its extension, to its intersection with the boundary
line of the said Rancho Muscupiabe, as per plat recorded in Book 7 of
Maps, Page 23, between Stations 16 and 11; thence South 40(degrees) East
to Station 10 of said Map; thence South 21(degrees) East 53 chains to
Station 9 of said Map; thence South 15(degrees) 55' East 20.52 chains to
Station VIII on Map showing Subdivision of Lands belonging to Semi-Tropic
Land and Water Company in Book 6 of Maps, Page 12, records of said County;
thence South 11(degrees) 35' East 6.72 chains to Station VII of said Map;
thence South 19(degrees) 45' East 41.77 chains to Station VI of said Map;
thence South l0(degrees) 30' West 30.50 chains to Station V of said Map;
thence South 44(degrees) 5' East 118.27 chains to Station IV of said Map;
thence South 30(degrees) 48' East 52.23 chains to Station III of said Map
and the point of beginning.
SAVING AND EXCEPTING therefrom all State and County Roads and Highways.
ALSO SAVING AND EXCEPTING that portion lying with the right of way of the
Atchison, Topeka and Santa Fe Railway Company.
ALSO SAVING AND EXCEPTING therefrom any portion of the above described
property which may lie within the description of the lands conveyed by
Union Bank and Trust Company of Los Angeles, as Trustee, to Farm Homes
Corporation, a corporation, by Trustee's Deed dated March 2, 1934, and
recorded October 13, 1934, in Book 1011 of Official Records, Page 114,
records of said County.
<PAGE>
SUBJECT to rights, rights of way, easements, conditions, reservations and
restrictions of record, and subject to second half l947-48 taxes.
Together with all and singular the tenements, hereditaments and
appurtenances thereunto belonging or in anywise appertaining.
The grantee and the grantee's successors in interest and assigns are
hereby prohibited restrained and enjoined from exporting any water
developed upon the premise herein described beyond the boundaries thereof
for any purposes whatsoever and this grant is made expressly subject to
such prohibition.
IN WITNESS WHEREOF, said grantor has caused its corporate name and seal to
be affixed hereto by its President and Secretary thereunto duly authorized, this
l5th day of June 1948.
MUSCOY WATER COMPANY
By /s/ [Illegible]
----------------------------------
President
By /s/ [Illegible]
----------------------------------
Secretary
SEAL
STATE OF CALIFORNIA )
City and : ss:
County of SAN BERNARDINO )
On this 15th day of June 1948, before me, [Illegible], a Notary Public in
and for said County, personally appeared G. S. TOWNE, known to me to be the
President, and Wm. S. TOWNE, known to me to be the Secretary of the Muscoy Water
Company, the corporation that executed the within and foregoing instrument and
known to me to be the persons who executed the within instrument on behalf of
the corporation therein named, and acknowledged that such corporation executed
the same.
WITNESS my hand and official seal the day and year in this certificate
first above written.
SEAL
/s/ [Illegible]
----------------------------------
Notary Public in and for said
County and State. [Illegible]
<PAGE>
BOOK 2268 PAGE 140
RESOLUTION OF THE BOARD 0F SUPERVISORS OF
SAN BERNARDINO COUNTY, CALIFORNIA
WHEREAS, the Board of Supervisors of San Bernardino County, California, on
June 28, 1948, adopted its resolution of intention to purchase from the Muscoy
Water Company, a corporation, the property described in said resolution,
consisting of approximately 2060 acres and more commonly known as the Glen Helen
Ranch; and
WHEREAS, said resolution of intention to purchase recited that said
purchase would be consummated at the regular meeting of said Board on July 19,
1948, at eleven o'clock A. M.; and
WHEREAS, it appears to said Board of Supervisors by affidavit of
publication on file with said Board that notice of said intention to purchase
said property has been given for the time and in the manner prescribed by law;
and
WHEREAS, this Board of Supervisors at this time hereby determines that no
objections, either orally or in writing, have been presented protesting said
purchase; now therefore,
BE IT HEREBY RESOLVED by the Board of Supervisors of San Bernardino
County, at eleven o'clock A.M., this July 19, 1948, that it is in the best
public interest of the people of San Bernardino County, that the County of San
Bernardino purchase from the Muscoy Water Company, a corporation, that said
property commonly known as the Glen Helen Ranch, more particularly described in
the grant deed which is herewith presented to the said Board of Supervisors for
acceptance; and
BE IT HEREBY FURTHER RESOLVED, by the Board of Supervisors of the County
of San Bernardino, State of California, that the deed, dated June 15, 1948,
executed by the Muscoy Water Company, granting to the County of San Bernardino
the real property consisting of a portion of the Rancho Muscupiabe described
therein; be, and it is hereby accepted for and on behalf of said County of
<PAGE>
BOOK 2268 PAGE 141
San Bernardino; and
BE IT FURTHER RESOLVED, that a copy of this resolution be attached to said
deed, and that the same be recorded in the office of the County Recorder of the
County of San Bernardino, State of California, and filed in the records of this
Board.
STATE OF CALIFORNIA )
( ss.
County of San Bernardino )
I, HARRY L. ALLISON, County Clerk and ex-officio Clerk of the Board of
Supervisors of San Bernardino County, California, hereby certify the foregoing
to be a full, true and correct copy of the minute entry on record in this office
on page 183 of Minute Book A-23 of Supervisors Minutes.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal this
July 23, 1948.
HARRY L. ALLISON, County Clerk and ex-officio
Clerk of the Board of Supervisors of San
Bernardino County, State of California.
SEAL By /s/ [Illegible]
-------------------------------
Deputy.
INDEXED
129
RECORDED AT REQUEST OF
PIONEER TITLE INS. & TRUST CO.
JUL 27 1948 [Illegible]
BOOK 2268 PAGE 138
OFFICIAL RECORDS
[Illegible]
<PAGE>
Por. Glen Helen Farm, M.B.15/29
[ILLEGIBLE]
San Bernardino Unified
Tax Rate Area
107062
[GRAPHIC OMITTED]
Assessor's Map
Book 348 Page 16
San Bernardino County
<PAGE>
[LOGO] COUNTY OF SAN BERNARDINO
CONTRACT TRANSMITTAL
FOR COUNTY USE ONLY
- --------------------------------------------------------------------------------
County Department Contract Number
EPWA - Regional Parks 90-118
- --------------------------------------------------------------------------------
County Department Contract Representative Contractor's License Number
Douglas R. Hawthorne Ph. Ext. 2591
- --------------------------------------------------------------------------------
Budget Unit No. Sub-Object No. Fund No. Job No. Amount of Contract
Varies
- --------------------------------------------------------------------------------
Project Name: If contract has more than one payment or receipt
complete the following:
Renaissance Pleasure Faire Payments Estimate: Varies
- --------------------------- ------------------------------
Approximate Amount Each: Varies
- --------------------------- ----------------------
- --------------------------------------------------------------------------------
Contractor: The Living History Centre, a California Not-For-Profit Corporation
--------------------------------------------------------------------
Birth Date ______________________ Federal ID No. or Social Security No._________
Contractors Representative: Phyllis Patterson
----------------------------------------------------
Address: P. 0. Box B, Novato, CA 94948 Phone: 415-892-0162
--------------------------------------- ----------------
Nature of Contract: (Briefly describe the general terms of the contract.)
License agreement for the right to use portions of Glen Helen Regional
Park to hold Renaissance Pleasure Faire for eight (8) weekends and
Memorial Day in 1990 and 1991, with options for five (5), one (1) year
terms beginning in 1992.
LICENSEE will pay COUNTY the following use fee for use of the park.
1990 or year 1 - 2.5% of gross revenues plus $20,000
1991 or year 2 - 3% of gross revenues, with a $150,000 ceiling
and a guaranteed minimum of
$100,000 on use fees paid to COUNTY
1992 or year 3 - 3.25% of gross revenues, with a $170,000
ceiling and a guaranteed minimum of
$100,000 on use fees paid to COUNTY
1993 or year 4 - 3.25% of gross revenues, with a $175,000
ceiling and a guaranteed minimum of
$100,000 on use fees paid to COUNTY
1994 or year 5 - 3.25% of gross revenues, with a $180,000
ceiling and a guaranteed minimum of
$100,000 on use fees paid to COUNTY
1995 or year 6 - 3.25% of gross revenues, with a $195,000
ceiling and a guaranteed minimum of
$100,000 on use fees paid to COUNTY
1996 or year 7 - 3.25% of gross revenues, with a $210,000
ceiling and a guaranteed minimum of
$100,000 on use fees paid to COUNTY
(Attach this transmittal to all contracts not prepared on the "Standard
Contract" form.)
- --------------------------------------------------------------------------------
Approved as to Legal Form Reviewed as to Affirmative Action
Reviewed for Processing
/s/ [Illegible]
- ------------------------- --------------------------- ----------------------
County Counsel Agency Administrator/ [Illegible]
Date 1-19-90 Date Date EXHIBIT "L"
-------------- -------------------- ---------------------
<PAGE>
TABLE OF CONTENTS
Page
----
Purpose 1
1. Term of License 1
2. Use Area 4
3. Use Fee 5
4. On-Site Coordinator 11
5. Walk Through Inspection 12
6. Permits and Approval 13
7. Concessions 14
8. Alcohol, Merchandise and Services 15
9. Public Hours of Operation 15
10. Utilities 15
11. Sanitation 16
12. Use Area Maintenance During Terms of Faire 16
13. Use of County Equipment and Labor 17
14. Insurance and Indemnification Clause 18
15. Advertising 20
16. Park Signage 21
17. Conduct 21
18. Damage Provisions 21
19. First Aid 22
20. Complimentary Tickets 22
21. Private Security 22
22. Off-Season Storage 22
23. Assignment and Transfer 23
i
<PAGE>
24. County Representation at Faire Staff 23
Meetings
25. Noncompetition and Scheduling of 24
Other Events
26. Modification of Use Area 25
27. Attorney's Fees 26
28. Termination 26
29. Notice 27
30. Designation 28
31. No Interest or Estate 28
32. Release of Information 28
33. License Interpretation 29
34. Captions 29
35. Provisions are Covenants and Conditions 29
36. Consent 29
37. Exhibits 29
38. Law 29
39. Date 30
Exhibit A
Exhibit B
Exhibit C
Exhibit Dl
Exhibit D2
Exhibit E
ii
<PAGE>
SAN BERNARDINO COUNTY
REGIONAL PARKS DEPARTMENT
GLEN HELEN REGIONAL PARK
SPECIAL EVENT LICENSE
LIVING HISTORY CENTRE
RENAISSANCE PLEASURE FAIRE
This is a license agreement ("LICENSE") between the County of San
Bernardino ("COUNTY") as licensor and LIVING HISTORY CENTRE, a California
not-for-profit corporation, ("LICENSEE") as licensee, whereby the COUNTY allows
LICENSEE the use of specified portions of Glen Helen Regional Park ("PARK") for
the following purpose:
PURPOSE
To allow the LICENSEE to hold a living history celebration called
"Renaissance Pleasure Faire", ("FAIRE"), described on attached Exhibit A, which
will be open to the general public for a fee. The FAIRE shall mean the
Renaissance Pleasure Faire to be held at Glen Helen Regional Park, a park in the
San Bernardino County Regional Parks system.
LICENSEE agrees to follow and adhere to the terms and conditions outlined
below:
1. TERM OF LICENSE: A. INITIAL TERMS: The initial terms of this LICENSE
shall be for eight (8) weekends and Memorial Day (open to the public) in 1990
and 1991 as follows: Saturday and Sunday, April 21 and 22, 1990; and April 20
and 21, 1991 through and including Sunday, June 10, 1990 and June 9, 1991.
Additionally LICENSEE shall, after notice to and approval by COUNTY, be allowed
to extend each initial term one (1) weekend each year at the end of the FAIRE in
case the FAIRE is closed for all or substantially all of any day due to rain,
vandalism, loss of utilities or other
1
<PAGE>
good cause as agreed upon by the COUNTY. The notice to extend for the additional
weekend must be given no later than 4:00 p.m. of the Monday after the last
regularly scheduled weekend.
B. OPTION FOR ADDITIONAL TERMS: LICENSEE shall be given the option
to extend the initial terms on all provisions contained in this LICENSE, except
for those noted in LICENSE following expiration of the initial terms for five
(5), one (1) year terms ("additional term(s)"). LICENSEE shall give COUNTY
notice of exercise of the option in writing ("Option Notice") not later than
October 15 of each year but not earlier than the expiration of the preceding
initial or additional term. In the event LICENSEE fails to give COUNTY the
Option Notice by October 15 of any year, COUNTY agrees to notify LICENSEE that
LICENSEE has not given the Option Notice. LICENSEE shall have five (5) calendar
days from receipt of the COUNTY notice to give the COUNTY the Option Notice or
LICENSEE shall lose any/all remaining options for additional terms and this
LICENSE shall automatically terminate. The dates of the additional term(s) shall
be for eight (8) weekends and Memorial Day (open to the public) in 1992, 1993,
1994, 1995 and 1996 as follows: April 18 and 19, 1992; April 17 and 18, 1993;
April 16 and 17, 1994; April 22 and 23, 1995; April 20 and 21, 1996, through and
including Sunday, June 7, 1992; June 6, 1993; June 5, 1994; June 11, 1995 and
June 9, 1996. LICENSEE shall be allowed, after notice to and approval by COUNTY,
to extend each additional term one (1) weekend each year at the end of the FAIRE
in case of rain, vandalism, loss of utilities or other good cause as agreed upon
by the COUNTY. The notice to extend for the additional weekend must be given no
later than 4:00 p.m. of the Monday after the last regularly scheduled weekend.
Provided, however, if LICENSEE is in default on the date of giving the Option
Notice, the Option Notice shall be totally ineffective, or, if LICENSEE is in
default on the date of the additional term is to commence, the additional term
shall not commence and this LICENSE shall expire at the end of the preceding
initial or additional term. LICENSEE shall have no other
2
<PAGE>
PARTNERSHIP FORMATION AGREEMENT
This Partnership Formation Agreement (such agreement, as amended,
supplemented or modified from time to time, herein called the "Agreement") is
entered into as of the 22nd day of January, 1988, by and among MCA Concerts II,
Inc., a California corporation ("MCA"), and PACE Entertainment Group, Inc., a
Delaware corporation ("PACE"), and evidences the following:
WHEREAS, PACE and MCA desire to investigate the feasibility of purchasing,
owning, constructing and operating Amphitheatres (as defined below) in the
Metropolitan areas in which following cities ("Optional Cities") are located:
Hartford, Connecticut, Miami, Florida, New York, New York, San Diego,
California, Tampa, Florida, Minneapolis, Minnesota, and Washington, D.C. and if
feasible, to form a limited partnership to purchase, own, construct and operate
an Amphitheatre in one or more such Optional Cities;
NOW THEREFORE, for and in consideration of the premises the parties hereto
agree as follows:
Section 1. Purposes of Agreement. MCA and PACE shall, subject to the terms
and conditions set forth herein, (i) during the EDP (as defined below), jointly
investigate the feasibility of purchasing, owning, constructing and operating
Amphitheatres in one or more of the Optional Cities, and (ii) if they should
mutually select a site and agree on the estimated costs of development,
acquisition and construction based upon preliminary plans and specifications,
enter into one or more limited partnership agreements, substantially in the form
of that Limited Partnership Agreement ("Existing Limited Partnership Agreement")
of even date herewith between MCA and PACE Amphitheatres, Inc., a wholly-owned
subsidiary of PACE (such agreement(s), if and when entered into pursuant to this
Agreement, are herein referred to as the "Venture Agreement" and, collectively,
as the "Venture Agreements"), and thereby form one or more limited partnerships
(a "Venture" and, collectively, the "Ventures"). Each of PACE and MCA will
cooperate in good faith to select a site on which to construct an Amphitheatre,
provided that nothing herein shall be construed to require the parties to so
agree on a site. The purpose of any such Venture will be to develop, acquire,
construct and operate an Amphitheatre in one or more of the Optional Cities. As
used herein, "Amphitheatre" shall be as defined in the Existing Limited
Partnership Agreement.
Section 2. Proposed Activities.
(a) During the EDP, as defined below, PACE and MCA will cooperate in
good faith to locate one or more available cites for the construction of an
Amphitheatre in each of the Optional Cities. Without limiting the generality of
the fore-
<PAGE>
going, the parties will negotiate with potential governmental jurisdictions,
property owners, architects, consultants, builders and others with the intent of
selecting an available site in each Optional City for purchase, lease or use by
a Venture and of acquiring favorable financing or other assistance in
constructing and operating the Amphitheatre in such Optional City. Based upon
such negotiations, the projections generated under Section 3 and the possible
financing arrangements (discussed under Section 4), the parties will cooperate
in good faith and use reasonable efforts to select and arrange for the purchase,
lease or use of a site for an Amphitheatre and to agree upon preliminary plans
and specifications for the construction of such Amphitheatres.
(b) Should the parties, during the EDP, agree upon a site that is
reasonably available for construction of an Amphitheatre based upon zoning,
noise ordinances, and other applicable considerations, and agree on estimated
project costs based upon mutually agreed upon preliminary plans and
specifications, then, at such time, the parties will form a limited partnership
pursuant to a Venture Agreement. PACE and MCA, or their affiliates, will be
general partners of the Venture, and the Funder (as defined in Section 4(b))
will be the limited partner. The parties will agree upon such changes, additions
or deletions to the form of Venture Agreement as are necessary to reflect the
negotiations and arrangements concerning the construction and ownership of the
Amphitheatre(s) in such Optional City(ies). Neither PACE nor MCA shall enter
into any contracts or agreements for the purchase or lease of property or
construction or operation of an Amphitheatre without the consent of the other.
All such contracts or agreements will be entered into by the Venture, in
accordance with the provisions of the Venture Agreement.
(c) If a Venture is formed, PACE and MCA will use reasonable efforts
to cause the Venture to be taxable as a partnership under the Internal Revenue
Code of 1986, as amended, ("Code"). Without limiting the generality of the
foregoing, if PACE or MCA forms or uses a corporate subsidiary to act as general
partner of the Venture, such subsidiary will have the net worth necessary to
satisfy the attribute of unlimited liability as provided in the Internal Revenue
Service's regulations.
Section 3. Projections. As soon as practicable, an accounting firm will be
selected by PACE and MCA to prepare an audited projection analysis relating to
the acquisition, construction and operation of Amphitheatres in those Optional
Cities the parties hereto may hereafter mutually designate. The cost of the
audit will be a Shared Cost (as hereinafter defined). The final audit will be
submitted to potential Funders and shall be owned by the Venture; provided, that
until such time as the Venture is formed, or if the Venture terminates, such
audited projections shall be jointly owned by PACE and MCA and may be utilized
by either of them for any and all purposes.
2.
<PAGE>
Section 4. Capital Contributions and Financing.
(a) Any Venture formed will require capital contributions and
financing for the development, acquisition and construction of its
Amphitheatre(s), including costs to purchase, lease or use property, prepare
plans and specifications for the Amphitheatre(s), and construct the
Amphitheatre(s) ("Required Financing"). Prior to the commencement of this
Agreement, PACE and MCA have individually undertaken certain tasks and expended
funds for the generation of various work product, goodwill plans, specifications
and ideas (collectively "Work Product") relating to the development of
Amphitheatres in the Optional Cities (such Work Product existing on the date
hereof is referred to as "Existing Work Product"). If a Venture is formed with
respect to one or more of the Optional Cities, each party shall contribute its
Existing Work Product with respect to such Optional City to such Venture. All
Work Product developed during the term of this Agreement ("Joint Work Product")
shall be jointly owned by PACE and MCA, and if a Venture is formed, shall be
contributed to the Venture and shall have an agreed value to be determined
jointly by PACE and MCA, one-half of which will be allocated to each of PACE's
and MCA's (or their respective affiliates') capital account. If, prior to the
expiration of this Agreement, a Venture is not formed to develop an Amphitheatre
in a particular Optional City, then all Work Product relating to such Optional
City will be owned jointly by the parties and either party may utilize it for
any purpose; provided, that, if following the termination of this Agreement,
either party individually acquires an Amphitheatre in an Optional City, it will
pay the other party one-half of the Shared Costs incurred under this Agreement.
Reference is hereby made to that certain Term Loan Agreement of even date (the
"Loan Agreement"), between MCA and PACE Amphitheatres, Inc. ("Borrower"). If (i)
at the time of Formation (as defined below) of the Venture formed to construct,
purchase, own and/or operate the first Amphitheatre contemplated hereunder
Borrower has paid or contemporaneously pays at least 50% of the aggregate
principal amounts loaned as of such date under the Loan Agreement (including all
accrued interest as of such date), then upon Formation of said Venture, PACE's
Existing Work Product with respect to said first Amphitheatre shall be
contributed to the capital of said Venture and shall be deemed to have an agreed
value of $590,000; (ii) the condition in (i) is met and at the time of Formation
of the Venture formed to construct, purchase, own or operate the second
Amphitheatre contemplated hereunder Borrower has paid or contemporaneously pays
100% of the aggregate principal amounts loaned as of such date under the Loan
Agreement (including all accrued interest as of such date), then upon Formation
of the said Venture, PACE's Existing Work Product with respect to said second
Amphitheatre shall be contributed to the capital of said Venture and shall be
deemed to have an agreed value of $590,000; and (iii) the conditions in (i) and
(ii) are met and at the time of Formation of the Venture formed to construct,
purchase, own or operate the third Amphitheatre contemplated hereunder Borrower
3.
<PAGE>
has paid or contemporaneously pays 100% of the aggregate principal amounts
loaned as of such date under the Loan Agreement (including all accrued interest
as of such date), then upon Formation of the said Venture, PACE's Existing Work
Product with respect to said third Amphitheatre shall be contributed to the
capital of said Venture and shall be deemed to have an agreed value of $750,000.
For purposes of this Section 4 and Section 10, "Formation" of a Venture with
respect to a particular Amphitheatre shall be the date of the funding of the
capital for said Venture. The agreed value of MCA's Existing Work Product to be
contributed to any Venture is zero, and, unless the conditions set forth in (i),
(ii) and/or (iii) above are met at the applicable time, PACE's Existing Work
Product to be contributed to any Venture will also have an agreed value of zero.
PACE and MCA, as the case may be, agree to contribute to each Venture cash in an
amount such that the amount of cash plus the agreed value of property (including
Work Product) contributed to the capital of any Venture by PACE and MCA are
equal.
(b) If a Venture is formed, MCA agrees to use its reasonable efforts
to acquire, for and on behalf of the Venture, non-recourse financing for 80% or
more of the Required Financing on terms similar to MCA's loan pursuant to the
Credit Agreement (as defined in the Existing Venture Agreement). The party
agreeing to provide such financing ("Funder") may be admitted as a limited
partner to the Venture, with a maximum interest of 35 percent thereof. MCA or an
affiliate of MCA may, but shall not be obligated to, act as Funder of one or
more Ventures, if MCA should, in its sole discretion, elect to act as Funder.
Nothing herein contained shall obligate MCA or any of its affiliates to make,
guarantee, secure, or pledge any assets as security for, any such financing. It
is the intent of the parties hereto that they obtain financing under terms as
close as possible to those described in this paragraph 4(b).
Section 5. Costs and Expenses.
(a) PACE and MCA agree to pay an equal amount of all "Shared Costs"
incurred in selecting a site, preparing the preliminary plans and
specifications, forming each Venture and otherwise acting under this Agreement.
As used herein, "Shared Costs" shall mean only out of pocket costs and expenses
paid to any third party reasonably incurred in connection with performing
pursuant to this Agreement, including without limitation, costs and expenses of
travel, lodging, meals, consultants and entertainment, and shall in each case be
mutually approved by the parties before incurred.
(b) Each party hereunder will maintain complete and accurate records
of any Shared Costs incurred by such party, and will provide copies of such
records to the other party at the end of each month. The party hereto which
incurred more Shared Costs than the other party during any month will be
reimbursed by
4.
<PAGE>
the party incurring less Shared Costs within 30 days of the end of such month so
that both parties pay Shared Costs equally.
(c) Either party hereto may notify the other that such party does
not believe that any further Shared Costs should be incurred in a particular
Optional City or with respect to a site or proposed activity in an Optional
City. Following such notification, neither party shall incur any additional
Shared Costs with respect to such Optional City, site or activity except as are
reasonably necessary to terminate existing contractual obligations with respect
to such Optional City, site or activity.
Section 6. Decisions. All decisions made under this Agreement shall be
made jointly by PACE and MCA. PACE and MCA shall cooperate and act in good faith
with the goal and purpose of forming a Venture and acquiring, constructing and
operating an Amphitheatre in one or more of the Optional Cities as contemplated
herein and in the Venture Agreement. Both parties will use reasonable efforts to
keep the other party hereunder apprised of such party's activities and plans
with regard to the subject matter hereof.
Section 7. Miami. If formed, the Venture will own 100% of all rights in
each Amphitheatre constructed in any Optional City, except, possibly, the
Amphitheatre to be constructed in Miami, if any. PACE represents that PACE and
Bufman ("Bufman") each currently own a 50% interest in the Amphitheatre intended
to be constructed in Miami. PACE will attempt to cause Bufman to sell his
interest, but such is not a condition of this agreement or any Venture
Agreement. However, PACE and MCA shall jointly determine how Bufman will absorb
his pro-rata share of the costs of developing, constructing and operating the
Miami Amphitheatre, and propose same to Bufman. PACE shall, immediately upon
request by MCA, deliver to MCA a complete and accurate description of the
principal terms of the agreement between PACE and Bufman with respect to an
Amphitheatre in Miami. If PACE fails to cause Bufman to sell his interest, and
provided Bufman agrees upon an equitable absorption of costs and expenses, the
Venture, if formed, shall own 50% of the Miami Amphitheatre, if any.
Section 8. Exclusive Development Period. The Exclusive Development Period
("EDP") and the term of this Agreement shall commence on the date hereof and
shall continue for the next succeeding two years.
Section 9. Non-Competition; Exclusivity.
(a) Except as otherwise provided herein, during the EDP, neither MCA
nor PACE nor any affiliate of MCA or PACE shall, directly or indirectly, through
an entity which it controls, construct, own, manage, control, operate, be
employed by or lend its name to an Amphitheatre within the lessor of 75 miles or
the applicable Metropolitan Statistical Area (as defined
5.
<PAGE>
by the Office of Management and Budget as of June 30, 1983) ("MSA") of any
Optional City, other than through a Venture formed hereunder for such purpose,
as herein provided. Unless the non-competition provisions contained in Section
10 hereof, or contained in any other agreement between the parties, have become
operative, if prior to the expiration of the EDP a site has not been mutually
selected for the purpose of constructing an Amphitheatre in a particular
Optional City, then following the expiration of the EDP, either party shall have
the right to independently acquire, construct and/or operate an Amphitheatre in
any such Optional Cities, without regard to this or any other agreement or any
Venture, and, accordingly, such city shall no longer be considered an Optional
City. PACE and MCA agree that monetary damages will not adequately compensate
either party for a violation by the other party or its affiliates of the
covenants set forth herein not to independently acquire, construct or operate an
Amphitheatre, and that specific performance and injunctive relief shall be
available for a violation of this Agreement, including without limitation the
provisions of Sections 9 and 10 hereof.
(b) Without limiting the foregoing, each party agrees that for so
long as this Agreement (or any Venture Agreement executed hereunder) is in
effect with respect to an Optional City, such party's services, and those of its
respective employees, shall be exclusive to each other (or any Venture formed
hereunder) only with respect to the development, construction and operation of
Amphitheatres (excluding the entertainment promotion business) in (or within the
greater of 75 miles or the applicable MSA of any such Optional City).
(c) Subject to exceptions and restrictions as may be included in any
Venture Agreement executed hereunder as a Venture is formed, or in that certain
Co-Promotion Agreement of even date herewith between PACE and MCA/PACE
Amphitheatres Group, L.P., a Delaware limited partnership, neither this Section
9 nor Section 10 shall prohibit a party hereto from engaging in all aspects of
the entertainment promotional business, or owning an interest in such a
business.
(d) As used in this Agreement, an "affiliate" of a party hereto
shall be any person, firm, corporation or other entity that, directly or
indirectly, controls, is controlled by, or is under common control with such
party, "control" meaning more than 50% of the voting or decisional power of the
party or entity in question.
Section 10. Termination Because of Disagreement. The following shall be
incorporated into any Venture Agreement between MCA and PACE relating to the
development, acquisition and/or construction of an Amphitheatre in any Optional
City, and shall also apply to "Type A Disagreements" and "Type B Disagreements"
(as defined herein) arising after a site with respect to an Amphitheatre in a
particular Optional City has been
6.
<PAGE>
mutually agreed upon by the parties (but before a Venture Agreement for such
Amphitheatre has been executed by the parties):
(a) If a Type A Disagreement occurs, then, subject to and as
provided in this subsection, the Proffering Party (as defined herein) shall have
the right to act outside and independently of the Venture and the Disagreeing
Party (as defined herein) to acquire, construct, own and operate an Amphitheatre
in the applicable Optional City. The Proffering Party shall promptly send notice
of the Type A Disagreement to the Disagreeing Party (outlining the areas of
disagreement). Within ten (10) days following the receipt of such notice, the
Disagreeing Party:
(i) if MCA, may (i) notify PACE that it agrees with the
position taken by PACE, in which event a Type A Disagreement shall
not exist, (ii) notify PACE that the Type A Disagreement is a Type B
Disagreement in which case the procedure set forth for resolution of
a Type B Disagreement shall be followed, or (iii) agree with PACE
that a Type A Disagreement exists; failure by MCA to respond shall
be deemed agreement that a Type A Disagreement exists;
(ii) if PACE, may (i) notify MCA that it agrees with the
position taken by MCA, in which event a Type A Disagreement shall
not exist; (ii) notify MCA the Type A Disagreement is a Type B
Disagreement in which case the procedure set forth for resolution of
a Type B Disagreement shall be followed, provided that PACE has
satisfied the condition in Section 10(d)(ii) hereof; or (iii) agree
with MCA that a Type A Disagreement exists; failure by PACE to
respond shall be deemed agreement that a Type A Disagreement exist;
If, following such ten (10) day period, a Type A Disagreement exists, the
Proffering Party shall immediately pay to the Disagreeing Party the Shared Costs
paid by the Disagreeing Party with respect to such Optional City, and neither
the Disagreeing Party nor any affiliate of the Disagreeing Party shall directly
or indirectly, through an entity which it controls, construct, own, manage,
control, operate, be employed by, or lend its name to any person or entity that
owns, operates or manages an Amphitheatre within the lesser of 75 miles or the
applicable MSA of such Optional City for a period of two years following the
date of such payment.
(b) If a Type B Disagreement occurs, then the Proffering Party shall
send notice ("Commencement Notice") to the Disagreeing Party that it desires to
purchase the right to develop the site independently of the Venture and the
Disagreeing
7.
<PAGE>
Party (outlining the areas of disagreement, but without obligation to disclose
the amount of the Proffering Party's offer). Ten days following the date of the
Commencement Notice, the Proffering Party and Disagreeing Party shall meet at
MCA's office at 10:00 a.m. and at such time and place, the Proffering Party
shall submit a written offer to the Disagreeing Party to purchase the
Disagreeing Party's interest under this Agreement in the site for a specified
dollar amount, all payable in cash. At any time prior to the meeting, the
Disagreeing Party shall have the right to acquiesce to the Proffering Party's
position with regard to the disagreements, in which case a Type B Disagreement
shall no longer exist. The Disagreeing Party shall have the right to refuse the
Proferring Party's offer if, but only if, the Disagreeing Party offers to
purchase the Proffering Party's interest in the Partnership for an amount that
exceeds the sum offered by the Proffering Party. Such procedure of offering to
purchase, refusing such offer and making a counter-offer shall continue until
such time as either Party fails to make a counter-offer, it being understood
that a failure to make a counter-offer shall be deemed to constitute an
acceptance by the last offeree of such last offer made. All offers and
counter-offers shall be limited to the purchase of the offeree's rights to the
site hereunder for a specific dollar amount, payable in cash within 30 days
following the acceptance of the offer. Any counter-offer must be made within 24
hours after receipt of the preceding offer. All offers and counter-offers shall
be in writing, delivered in person or by telefax or telex. The interest of the
Partner whose interest is purchased shall be deemed sold, assigned and
transferred to the Party purchasing such interest upon the payment of the
consideration as specified above. Neither the Party whose interest is purchased
nor any of its affiliates shall, directly or indirectly, through an entity which
it controls, construct, own, manage, control, operate, be employed by, or lend
its name to an Amphitheatre within the lesser of 75 miles or the applicable MSA
of such Optional City for two years following the date of purchase.
(c) As used herein, a Type A Disagreement shall be deemed to occur
if:
(i) one of the parties hereto ("Disagreeing Party") does not
agree with the position taken by the other party ("Proffering Party") in
connection with a material matter or matters relating to the acquisition and/or
construction of an Amphitheatre in an Optional City, including, without
limitation, matters relating to cost of site acquisition, cost of construction
and architectural plans and financing terms; and
(ii) the Disagreeing Party's opposition to the position taken
by the Proffering Party would, in the reasonable and good faith opinion of the
Proffering Party result in delays which, if not immediately terminated, preclude
the Venture or either of the parties hereto either from acquiring, leasing or
arranging for the use of the specific
8.
<PAGE>
mutually approved site in the applicable Optional City, which property has been
offered to the Venture or either of the parties hereto on specific terms
acceptable to the Proffering Party, and/or would preclude the Venture or either
of the parties hereto from obtaining available financing under specific terms
acceptable to the Proferring Party; and
(iii) if the Disagreeing Party is PACE, PACE has not received
a commitment for and on behalf of the Venture or either party hereto from a
financial institution or other third party capable of providing such financing
to provide financing, subject only to documentation and other normal and
reasonable conditions to similar commitments, adequate to construct the
Amphitheatre.
(d) As used herein, a Type B Disagreement shall be deemed to occur
if:
(i) the events set forth in Sections 10(c)(i) and (ii) occur;
and
(ii) if the Disagreeing Party is PACE, PACE has received a
commitment for and on behalf of the Venture or either party hereto from a
financial institution or other third party reasonably capable of providing such
financing to provide financing, subject only to documentation and other normal
and reasonable conditions to similar commitments, adequate to construct the
Amphitheatre.
Section 11. Severability. If any term, covenant or condition of 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 such
other documents, or the application of such term, covenant or condition to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term, covenant or
condition of this Agreement or such other documents shall be valid and shall be
enforced to the fullest extent permitted by law.
Section 12. No Partnership. Nothing herein shall be construed as making
PACE and MCA joint venturers or partners until the Formation of a Venture.
Section 13. Modification; Termination. Any amendment, modification,
termination or release hereof may be effected only by a written instrument
executed by PACE and MCA.
Section 14. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their successors and
permitted assigns. This Agreement cannot be assigned by PACE or MCA without the
express written consent of such other party.
9.
<PAGE>
Section 15. Total Agreement. This Agreement is a total and complete
integration of any and all undertakings existing between PACE and MCA with
respect to the subject matter hereof and supersedes any prior oral or written
agreements, promises or representations between them. Without limiting the
foregoing, this Agreement is separate and apart from the Existing Limited
Partnership Agreement.
Section 16. California Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO CONTRACTS ENTERED INTO AND TO BE WHOLLY-PERFORMED THEREIN,
EXCLUDING ANY LAWS RELATING TO THE CONFLICT OR CHOICE OF LAWS. Notwithstanding
the foregoing, the interpretation and enforcement of the non-competition
provisions of Sections 9 and 10 above shall be governed by the laws of the state
where the alleged violative conduct occurs, and the courts (state and federal)
of such state shall also have jurisdiction (along with the courts in Los
Angeles) over such issues.
Section 17. Notices. All notices or other communications required or
permitted to be given pursuant to this Agreement will be in writing and will be
considered as properly given if mailed by first class United States mail,
postage prepaid, by prepaid telegram, or by personal delivery. Notice shall be
deemed given on the date received. For purposes of notice, the address of each
party hereto shall be as set forth below their signatures below, unless changed
in a written notice to the other party in conformity with the foregoing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MCA CONCERTS II, INC. PACE ENTERTAINMENT GROUP, INC.
By:____________________________ By: /s/ [ILLEGIBLE]
----------------------------
100 Universal City Plaza President
Universal City, CA 91608 4543 Post Oak Place
Suite 200
Houston, TX 77027
10.
<PAGE>
LEASE AND USE AGREEMENT
By and Between
CITY OF DALLAS
By and Through
ITS
PARK AND RECREATION
BOARD
AND
PACE ENTERTAINMENT GROUP, INC.
DATED: December 9, 1987
<PAGE>
INDEX
PAGE
----
ARTICLE I - Grant of Lease and Access and Parking Rights
Section 1.01 Leasing Clause ............................. 4
Section 1.02 Grant of Rights in Parking Tract ........... 4
Section 1.03 Time of Use ................................ 7
ARTICLE II - Term
Section 2.01 Term ....................................... 7
Section 2.02 Commencement Date .......................... 7
ARTICLE III - Consideration
Section 3.01 Consideration .............................. 8
Section 3.02 Rental for Initial Lease Year .............. 8
Section 3.03 Rental for Remaining Lease Years ........... 10
Section 3.04 Ticket Sales Rental ........................ 13
Section 3.05 Payments and Accounting .................... 13
Section 3.06 CPI ........................................ 14
ARTICLE IV - Improvements
Section 4.01 Improvements by Pace ....................... 15
Section 4.02 City Improvements .......................... 16
Section 4.03 Approvals Required ......................... 17
Section 4.04 Recognition to the Parks and
Recreation Department ...................... 17
Section 4.05 No Liens ................................... 18
Section 4.06 City Cooperation ........................... 19
Section 4.07 Unforeseen Defects ......................... 19
Section 4.08 Alterations ................................ 20
ARTICLE V - Use of Amphitheatre Tract and Parking Tract
Section 5.01 Use ........................................ 20
Section 5.02 Compliance with Laws ....................... 22
Section 5.03 Repair ..................................... 23
Section 5.04 City's Right to Perform
Pace's Covenants ......................... 24
Section 5.05 Security ................................... 24
Section 5.06 Utilities .................................. 25
ARTICLE VI - Use of Parking Tract
(i)
<PAGE>
Section 6.01 Use ........................................ 25
Section 6.02 Maintenance and Repair of
Parking Improvements .................... 25
Section 6.03 Damage or Destruction ...................... 26
Section 6.04 Pace's Right to Perform
City's Covenants ........................ 26
ARTICLE VII - City Use of Amphitheatre
Section 7.01 City Use ................................... 27
Section 7.02 Third Party Use ............................ 28
Section 7.03 Non-Gated Use .............................. 28
Section 7.04 Rights of Subtenants; City
Obligations ............................. 28
ARTICLE VIII - Replacement Parking
Section 8.01 Designation ................................ 29
Section 8.02 Review by Pace ............................. 30
Section 8.03 Resolution ................................. 31
Section 8.04 Dispute as to Exercise of
Reasonable Discretion ..................... 32
Section 8.05 Costs and Expenses ......................... 32
ARTICLE IX - Insurance and Indemnity
Section 9.01 Liability Insurance ........................ 33
Section 9.02 Property Insurance ......................... 33
Section 9.03 Builder's Risk and Bonds ................... 34
Section 9.04 Policies ................................... 34
Section 9.05 Named Insureds; Adjustment
of Losses ................................ 34
Section 9.06 Indemnity of the City ...................... 35
Section 9.07 Indemnity of Pace .......................... 36
ARTICLE X - Assignment and Subletting
Section 10.01 Assignment ................................. 37
Section 10.02 Subletting ................................. 38
Section 10.03 Assumption of Liability .................... 38
Section 10.04 Permitted Mortgagee Provisions ............. 39
ARTICLE XI - Default of Pace
Section 11.01 Events of Default .......................... 44
Section 11.02 Events upon Termination .................... 46
ARTICLE XII - Default of the City
Section 12.01 Defaults ................................... 46
Section 12.02 Remedies ................................... 47
(ii)
<PAGE>
ARTICLE XIII - Condemnation and Casualty
Section 13.01 Definitions ................................ 47
Section 13.02 Entire Taking .............................. 48
Section 13.03 Partial Taking ............................. 48
Section 13.04 Temporary Taking ........................... 49
Section 13.05 Condemnation Award ......................... 49
Section 13.06 Consent of Pace and
Permitted Mortgagee ....................... 50
Section 13.07 Casualty ................................... 51
Section 13.08 Proceeds ................................... 51
ARTICLE XIV - Title and Other Warranties
Section 14.01 The City's Warranty of Title ............... 52
Section 14.02 Obligation to Provide Access
and Parking ....................... 52
Section 14.03 Quiet Enjoyment ............................ 53
Section 14.04 City Warranties ............................ 53
Section 14.05 Pace Warranties ............................ 53
ARTICLE XV - Taxes
Section 15.01 Exemption from Taxes ....................... 54
Section 15.02 Pace's Payment of Taxes
if Not Exempt ........................... 54
ARTICLE XVI - Miscellaneous
Section 16.01 Confirmation Letter ........................ 55
Section 16.02 Notices .................................... 55
Section 16.03 Modifications .............................. 56
Section 16.04 Descriptive Headings ....................... 56
Section 16.05 Unavoidable Delay .......................... 57
Section 16.06 Venue ...................................... 57
Section 16.07 Applicable Law ............................. 57
Section 16.08 Interpretation ............................. 57
Section 16.09 Circumstances Under which
Liens Permissible ........................ 58
Section 16.10 Waiver of Landlord's Lien .................. 58
Section 16.11 Conditions Precedent
to Commencement Date .................... 58
Section 16.12 Liaison Committee .......................... 59
Section 16.13 Coordination with Fair Park
General Manager .......................... 59
Section 16.14 Non-Discrimination ......................... 60
Section 16.15 Minority Business
Enterprise ............................... 60
Section 16.16 Partial Invalidity ......................... 60
(iii)
<PAGE>
EXHIBIT "A" - Amphitheatre Tract
EXHIBIT "B" - Site Plan
EXHIBIT "C" - Parking Tract
EXHIBIT "D" - Assigned Parking Area
EXHIBIT "E" - Coliseum Lots
<PAGE>
LEASE AND USE AGREEMENT
This Lease and Use Agreement (this "Agreement") is entered into as of the
9th day of December, 1987, by and between CITY OF DALLAS, a duly incorporated
and existing city, political subdivision and municipality of the State of
Texas, by and through its PARK AND RECREATION BOARD (collectively, the "City"),
and PACE ENTERTAINMENT GROUP, INC., a Delaware corporation duly authorized to
transact business in the State of Texas ("Pace"), sometimes collectively
referred to as the "Parties" or singularly the "Party."
RECITALS
A. The City is the fee simple owner of a 12.0258 acre tract of land
situated in Dallas County; Texas, being more particularly described on Exhibit
"A", attached hereto and made a part hereof for all purposes (the "Amphitheatre
Tract"), and being depicted on Exhibit "B", attached hereto and made a part
hereof for all purposes (the "Site Plan").
B. The City is the fee simple owner of an approximately 44.8041 acre tract
of land situated in Dallas County, Texas contiguous to the Amphitheatre Tract,
being more particularly described on Exhibit "C", attached hereto and made a
part hereof for all purposes (the "Parking Tract"), and being depicted on the
Site Plan.
C. The Amphitheatre Tract and the Parking Tract are adjacent to and are a
part of the tract of land owned by the City commonly known as "Fair Park", which
land has been the location of the annual State Fair of Texas exposition for many
years.
<PAGE>
D. The City and The State Fair of Texas, a Texas nonprofit corporation,
have heretofore entered into an agreement to provide for the enhanced year-round
utilization of Fair Park as an entertainment center, tourist attraction, park
and fair grounds and to provide a location for the annual State Fair of Texas
exposition.
E. The City desires to enhance the public enjoyment of Fair Park by the
creation of an outdoor amphitheatre for the performing arts.
F. The City has determined that such an outdoor amphitheatre for the
performing arts and related parking is an appropriate public park use and is
consistent with the purposes for which the land was acquired and has been used
as well as the present and future utilization of Fair Park as a year-round
entertainment center, tourist attraction, park and fair grounds for the
enjoyment and benefit of the general public.
G. The City has determined that the establishment of an amphitheatre at
Fair Park will benefit the public and increase cultural opportunities for all
residents of the City.
H. The City desires to lease the Amphitheatre Tract to Pace for the
construction of an amphitheatre and related improvements, buildings and
facilities (the "Amphitheatre") designed to accommodate approximately 7,000
persons in its enclosed seating area with lawn seating for an additional 13,000
persons in order to provide a facility for public performances
-2-
<PAGE>
that will offer the public such amenities as landscaped grounds, musicians'
dressing and lounge areas, concession stands and catering facilities.
I. Pace is willing to construct the Amphitheatre, at its sole cost and
expense, to pay the City a minimum guaranteed rental together with an
inflationary increase, to operate the Amphitheatre for its own use and to make
it available to the City for specified events with the net proceeds thereof
being paid to the City.
J. The City has further determined that additional and substantial
economic benefit will be derived by the South Dallas/Fair Park community through
Pace's additional rental payments to the City for its proposed South Dallas
Economic Development Fund.
K. The City has determined that the Amphitheatre Tract and the Parking
Tract are under the management and control of the Park and Recreation Board and
that the lease of the Amphitheatre Tract and the grant of certain rights in and
to the Parking Tract to Pace is an appropriate use of the property and are duly
authorized pursuant to the provisions of Ch. XVII 4(c)(11) and 4(c)(15) of the
CHARTER of the City of Dallas, Texas and Section 306.038(b) of the Texas Local
Government Code (Vernon 1988 Pamphlet).
L. Pace has agreed that Pace will use its best efforts to (1) have its
concessionaires utilize minority vendors and suppliers, (2) have its ticket
distribution sources utilize minority ticket distribution outlets, and (3)
develop an
-3-
<PAGE>
employment program designed to provide priority job opportunities for persons
residing adjacent to Fair Park during the periods of construction and
operations.
M. Pursuant to Resolution No. 87-3928, adopted by the City Council and the
Park and Recreation Board of the City of Dallas on December 9, 1987 and the
minutes thereof, the City is authorized to lease the Amphitheatre Tract and
grant certain rights in the Parking Tract for development and use as set forth
herein.
N. Pace desires to lease and take from the City the Amphitheatre Tract and
accept from the City the grant of rights in and to the Parking Tract.
ARTICLE I
Grant of Lease and Access and Parking Rights
Section 1.01. Leasing Clause. Upon and subject to the terms, provisions
and conditions hereinafter set forth, the City hereby leases and demises to
Pace, and Pace does hereby take and lease from the City, the Amphitheatre Tract
(hereinafter referred to as the "Leased Premises").
Section 1.02. Grant of Rights in Parking Tract. In order to assure that
adequate and sufficient access to the Amphitheatre and parking space is
available to Pace and the patrons attending events at the Amphitheatre, upon and
subject to the terms, provisions and conditions hereinafter set forth, the City
does hereby assign, create and establish in favor of Pace and its
-4-
<PAGE>
successors and assigns, for the purposes and uses set forth herein, the
following rights in and to the City owned and operated Parking Tract and certain
other surface parking lots:
(a) Access. A non-exclusive, irrevocable right to the use at all
times of the Parking Tract for the purpose of vehicular and pedestrian
access to and from the Leased Premises and/or the Assigned Parking Area
(as hereinafter defined) to Pennsylvania Avenue and/or public dedicated
roadways;
(b) Assigned Parking. An exclusive, irrevocable right to the use at
all times of the tract of land (the "Assigned Parking Area") within the
Parking Tract described on Exhibit "D", attached hereto and incorporated
herein by reference for all purposes, and being depicted on the Site Plan;
(c) Parking Tract. On such dates that (i) Pace has notified the Fair
Park General Manager pursuant to the provisions of Section 16.13 that an
entertainment, recreational, cultural or social event is scheduled at the
Amphitheatre and/or (ii) Pace or an Affiliate (as defined in Section
10.01) shall produce or sponsor such an event at the Cotton Bowl, an
exclusive, irrevocable right to use the Parking Tract for the purpose of
parking motor vehicles, together with an exclusive, irrevocable right to
the use of the portions of the Parking Tract designated as driveways,
ramps and accessways for the purposes of vehicular and pedestrian
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access from the Parking Tract to the Leased Premises, Fair Park and/or
other public dedicated roadways, as well as the uses permitted pursuant to
Section 5.01(a) hereof; provided, however, during the approximately
twenty-four (24) days during the month of October of each year that The
State Fair of Texas, Inc. conducts the annual State Fair of Texas
exposition at Fair Park (the "Period of the Fair"), the thirty (30) days
before and fourteen (14) days following the Period of the Fair and on
January 1 of each year, such right to use the Parking Tract shall be
subject to the rights of The State Fair of Texas, Inc. in that certain
Fair Park Contract dated April 20, 1987 by and between the City of Dallas
and The State Fair of Texas, Inc., as amended by that certain First
Amendment to Fair Park Contract executed by the City of Dallas and The
State Fair of Texas, Inc. on or before the Commencement Date (the Fair
Park Contract as amended by the First Amendment to Fair Park Contract
being hereinafter referred to as the "Fair Park Contract")
(d) Coliseum Lots. On such dates that Pace has notified the Fair
Park General Manager pursuant to the provisions of Section 16.13 that a
confirmed entertainment, recreational, cultural or social event is
scheduled at the Amphitheatre and provided that such surface parking lots
have not been theretofore reserved in writing by another Fair Park tenant
with the Fair
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Park General Manager for parking to the extent necessary in connection
with the then confirmed use of another Fair Park facility, an exclusive,
irrevocable right to use those surface parking lots depicted on Exhibit
"E", attached hereto and incorporated herein by reference for all purposes
(the "Coliseum Lots"), for the purpose of parking motor vehicles.
(e) Parking Tract Rights. The rights set forth in subsection (a),
(b), (c) and (d) are collectively hereinafter referred to as the "Parking
Tract Rights".
Section 1.03. Time of Use. On such dates that Pace is entitled to use the
Parking Tract and the Coliseum Lots pursuant to Sections 1.02(c) and (d), such
period of permitted use will be a twenty-four (24) hour period commencing at
6:00 a.m. on the day of the event.
ARTICLE II
Term
Section 2.01. Term. The term of this Agreement shall be for a period
commencing on the Commencement Date (as defined in Section 2.02) and ending on
December 31, 2028. The term of this Agreement is hereinafter referred to as the
"Term".
Section 2.02. Commencement Date. The Term of this Agreement shall commence
on the date on which the last of the conditions precedent set forth in Section
16.11 have been satisfied (the "Commencement Date"). The City and Pace shall
confirm by letter the Commencement Date.
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ARTICLE III
Consideration
Section 3.01. Consideration. In consideration of the mutual obligations
and undertakings described herein and the lease and demise by the City to Pace
of the Leased Premises and the assignment of the Parking Tract Rights, Pace
agrees to construct the Amphitheatre in accordance with the terms and conditions
hereof and to pay the rental hereinafter set forth.
Section 3.02. Rental for Initial Lease Year. Pace shall pay to the City
rental for the Leased Premises and the Parking Tract Rights for the initial
Lease Year (as hereinafter defined) in an amount calculated as follows:
(a) Minimum Guaranteed Rental (herein so called) for the initial
Lease Year shall be the applicable sum set forth below:
(i) if Commencement of Operations (as hereinafter defined)
occurred on or before June 15 of such Lease Year, One Hundred
Thousand and No/l00 Dollars ($100,000.00);
(ii) if Commencement of Operations occurred after June 15 but
on or before July 15 of such Lease Year, Seventy-Five Thousand and
No/l00 Dollars ($75,000.00);
(iii) if Commencement of Operations occurred after July 15 but
on or before August 15 of such Lease Year, Fifty Thousand and No/100
Dollars ($50,000.00); and
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(iv) if Commencement of Operations occurred after August 15 of
such Lease Year, Twenty-Five Thousand and No/l00 Dollars
($25,000.00).
(b) In addition to Minimum Guaranteed Rental, Pace shall also pay to
the City for the Leased Premises and the Parking Tract Rights for the
initial Lease Year, as additional rental (the "Event Rental"), an amount
equal to (i) initial Lease Year event revenues (as hereinafter defined)
for such Lease Year less (ii) Minimum Guaranteed Rental for such Lease
Year. For purposes of this Section 3.02(b) only, the term "initial Lease
Year event revenues" shall mean all revenues actually received by Pace
from paid admission ticket sales from the presentation of the applicable
number of events specified below to be presented for the benefit of the
City at the Amphitheatre pursuant to Section 7.01 during the initial Lease
Year, less all sales and amusement taxes, if applicable, disbursements
made and reasonable and necessary costs incurred (operational or
maintenance) relating to the presentation of such events:
(i) if Commencement of Operations occurred on or before June
15 of such Lease Year, fourteen (14) events;
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(ii) if Commencement of Operations occurred after June 15 but
on or before July 15 of such Lease Year, ten (10) events;
(iii) if Commencement of Operations occurred after July 15 but
on or before August 15 of such Lease Year, seven (7) events; and
(iv) if Commencement of Operations occurred after August 15 of
such Lease Year, three (3) events.
(c) The term "Lease Year" shall mean the period beginning on the
Commencement Date and ending on December 31, 1988 and each subsequent
calendar year thereafter.
(d) The term "Commencement of Operations" shall mean the date the
Amphitheatre shall first be opened to the public for presentation of a
musical or theatrical production.
Section 3.03. Rental for Remaining Lease Years.
(a) Pace shall pay to the City for the Leased Premises and the
Parking Tract Rights Minimum Guaranteed Rental for each of the remaining
Lease Years in the amount for each respective Lease Year as specified
below:
Lease Year Minimum Guaranteed Rental
---------- -------------------------
2 - 4 $150,000.00
5 - 40 $200,000.00
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(b) Pace shall pay to the City for the Leased Premises and the
Parking Tract Rights Minimum Guaranteed Rental for each of the ninth (9th)
through thirteenth (13th) Lease Years in an amount to be determined as of
the commencement of the ninth (9th) Lease Year equal to the sum of (i)
Minimum Guaranteed Rental for the immediately preceding Lease Year plus
(ii) an amount equal to the product of Two Hundred Thousand and No/100
Dollars ($200,000.00) (the "Base Cost") times the increase stated as a
percentage in the CPI (as hereinafter defined) during such eight (8) year
period; provided, however, that for purposes of this Section the increase,
if any, in the CPI during such eight (8) year period shall not exceed
three percent (3%) per year. The term "CPI" shall mean the annual revised
Consumer Price Index for all Urban Consumers (CPI-U) Dallas/Fort Worth
(All Items: 1967 = 100) published by the Bureau of Labor Statistics,
United States Department of Labor. For example, if the increase in the CPI
during the initial eight (8) years of the Term were:
Actual Limited
Year Increase Increase
---- -------- --------
2 2% 2%
3 2% 2%
4 4% 3%
5 1% 1%
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6 3% 3%
7 6% 3%
8 2% 2%
then the percentage increase utilized in calculating Minimum Guaranteed
Rental would be sixteen percent (16%). Accordingly, the Minimum Guaranteed
Rental for the ninth (9th) through the thirteenth (13th) Lease Years would
increase by $32,000.00 ($200,000.00 x 16%) to $232,000.00.
(c) The Minimum Guaranteed Rental for each Lease Year commencing
with the fourteenth (14th) Lease Year and continuing through the remaining
Term shall be adjusted as of the commencement of each 5-year period
thereafter in accordance with the formula set forth in Section 3.03(b);
provided, however, that in applying such formula for adjustment, the Base
Cost shall mean the adjusted Minimum Guaranteed Rental for the immediately
preceding Lease Year.
(d) In addition to Minimum Guaranteed Rental, Pace shall also pay to
the City for the Leased Premises and the Parking Tract Rights for each
Lease Year following the initial Lease Year, as additional rental, Event
Rental equal to (i) Event Revenues (as hereinafter defined) for such Lease
Year less (ii) Minimum Guaranteed Rental for such Lease Year. For purposes
of this Section 3.03(d), the "Event Revenues" shall mean all revenues
actually received by Pace from
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paid admission ticket sales from the presentation of the events to be
presented for the benefit of the City at the Amphitheatre pursuant to
Section 7.01 during such Lease Year, less all sales and amusement taxes,
if applicable, disbursements made and reasonable and necessary costs
incurred (operational or maintenance) relating to the presentation of such
events.
Section 3.04. Ticket Sales Rental. In addition to Minimum Guaranteed
Rental and Event Rental, if applicable, Pace shall also pay to the City for the
Leased Premises and the Parking Tract Rights, as additional rental ("Additional
Rental"), an amount equal to the product obtained by multiplying (a) ten cents
($.10) times (b) the total number of paid admission tickets sold to all public
events at the Amphitheatre, exclusive of the events described in Section 7.01.
It is the intent of Pace and the City that such Additional Rental be used by the
City as a "South Dallas Economic Development Fund" to assist in programs,
activities and improvements in the South Dallas/Fair Park area. Additional
Rental shall be payable on or before the last day of the month following the
month in which the tickets to which such rental is applicable were sold.
Section 3.05. Payments and Accounting. The Minimum Guaranteed Rental and
Event Rental, if applicable, shall be payable on or before the expiration of one
hundred twenty (120) days following the presentation of the last in the series
of events presented for the benefit of the City pursuant to Section 7.01.
Following each of the events, Pace shall prepare
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and deliver to the City a statement of revenues and expenses made with respect
to such event certified by an officer of Pace. Pace shall maintain full and
adequate books of account and other records and shall make the same available to
an authorized representative of the City reflecting the results of the events
and all transactions pertaining to revenues and expenses. All such records shall
be retained and preserved for at least three (3) years following the event to
which they relate. In the event the City is not satisfied with the statements of
revenues and expenses submitted by Pace, Pace shall accord to the accountants,
employers, agents and attorneys of the City, at the expense of the city, the
right to conduct an audit of such records with respect to transactions
pertaining to revenues and expenses. Pace shall promptly pay to the City any
deficiency or the City shall promptly refund to Pace any overpayment, as the
case may be, which is established by such audit.
Section 3.06. CPI. In the event that (a) the Bureau of Labor Statistics
ceases to use the 1967 average of 100 as the basis of calculation, (b) a
substantial change is made in the number or character of "market basket" items
used in determining the CPI, (c) the City and Pace mutually agree in writing
that the CPI does not accurately reflect the purchasing power of the dollar, or
(d) the CPI shall be discontinued for any reason, the Bureau of Labor Statistics
shall be requested to furnish a new index comparable to the CPI together with
information which will make possible the conversation to the new index in
computing the adjusted rental. If for any reason the Bureau of Labor
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Statistics does not furnish such an index and such information, the Parties
shall thereafter accept and use such other index or comparable statistics on the
cost of living for Dallas County, Texas, as shall be computed and published by
an agency of the United States or by a responsible financial periodical of
recognized authority then to be selected by the City and Pace.
ARTICLE IV
Improvements
Section 4.01. Improvements by Pace.
(a) Pace covenants and agrees that, commencing on the Commencement
Date, it will, subject to the provisions of this Article IV, undertake and
diligently pursue to completion the construction of, and installation of
appropriate equipment for, the Amphitheatre.
(b) Pace covenants and agrees that the construction of the
Amphitheatre shall be commenced (the "Construction Commencement Date") on
or before the expiration of one hundred eighty (180) days from the
Commencement Date. For purposes hereof, commencement of construction shall
be deemed to have occurred upon the commencement of site preparation work
upon the Leased Premises and the execution of a properly bonded
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general construction contract for the Amphitheatre. Pace shall confirm by
letter to the City the commencement of construction.
Section 4.02. City Improvements. Provided that the total construction cost
to the City shall not exceed $3,500,000.00, the City covenants as follows:
(a) the City shall, at its sole cost and expense, construct a
fully-paved parking lot with drainage, striping and lighting on the
Parking Tract. The City shall, at its sole cost and expense, provide a
security fence around the entire perimeter of the Parking Tract and the
Leased Premises.
(b) the City, at its sole cost and expense, shall also provide for a
separate V.I.P. designated parking area immediately adjacent to the
Amphitheatre within the Assigned Parking Area with fencing, lighting and
landscaping of an enhanced quality.
(c) the City further agrees that it shall, at its sole cost and
expense, be responsible for all utility relocations, connections and
street alignments required in connection with the improvement of the
Parking Tract. The City may choose to install retaining walls at the rear
of the Amphitheatre berm instead of moving or re-aligning the area
formerly designated as Pennsylvania Avenue and the utilities adjacent
thereto or elsewhere within the Parking Tract.
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(d) the City acknowledges that time is of the essence and covenants
and agrees that it will commence construction on or before the expiration
of thirty (30) days, as such date may be extended in order to afford the
City the time period necessary for compliance with state bid laws,
following the Construction Commencement Date and diligently pursue to
completion the construction of all items described in Section 4.02 (the
"Parking Improvements"). For purposes hereof, commencement of construction
shall be deemed to have occurred upon the award by the City of a general
construction contract for the Parking Improvements.
Section 4.03. Approvals Required. Any construction of the Amphitheatre
by Pace and the Parking Improvements by the City shall be in substantial
accordance with plans, including, without limitation, lighting plans,
landscaping plans and parking plans, prepared by Pace and approved by the Park
and Recreation Board, which approval shall not be unreasonably withheld or
delayed.
Section 4.04. Recognition to the Parks and Recreation Department. Pace
covenants and agrees that Pace shall install signage on the Leased Premises of a
design and in a location mutually acceptable to Pace and the City, which signage
shall contain a designation similar to the following: "This facility is
developed in cooperation with the Dallas Parks and Recreation Department."
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Section 4.05. No Liens. Pace covenants and agrees that any building and
other improvements constructed on the Leased Premises shall be completed free
and clear of all liens and claims of any person, excepting any Permitted
Mortgage (as hereinafter defined) expressly permitted under the terms hereof,
which Permitted Mortgage shall expire upon the expiration of the Term; provided,
however, that Pace shall have the right in good faith to contest any and all
bills, fees and claims, being obligated to pay the contested item only if and
when liability is established against Pace or against the Leased Premises and
provided, further, that Pace shall bond any such liens in the event any claimant
seeks to foreclose any such lien. Pace covenants and agrees to protect,
indemnify, defend and hold harmless the City and the City's interests in the
Leased Premises from any and all bills and claims, liens and rights to liens for
laborers and materials and architects', contractors' and subcontractors' claims,
and all other fees, claims and expenses incident to the construction and
completion of any buildings or any other improvements constructed on the Leased
Premises and to provide such bonds as are required pursuant to Section 9.03.
Pace shall conform to and observe all laws and ordinances, rules and regulations
affecting such construction; provided, however, Pace shall have the right in
good faith to contest any such law, ordinance, rule or regulation. The term
"Permitted Mortgagee" shall mean the holder of a mortgage (a "Permitted
Mortgage") of
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this Lease (which may include Pace's interest as lessee in any present or future
leases and any other interest of Pace in any personal property upon the Leased
Premises).
Section 4.06. City Cooperation. The City agrees to cooperate with Pace in
expediting and obtaining all necessary zoning classification changes or
variances, special use permits, amendments to noise ordinances, alcoholic
beverage permits, building permits, certificates of occupancy and other licenses
and permits relating to the construction and operation of the Amphitheatre,
provided, however, nothing herein constitutes a waiver by the City of its
governmental powers or authority or a guarantee by the City that such matters
can be accomplished to Pace's satisfaction.
Section 4.07. Unforeseen Defects. In the event that prior to or during the
period of construction of the Amphitheatre, Pace discovers any unknown or
unforeseen subsurface defect or circumstance (it being agreed that subsurface
soil conditions shall not be considered such a defect or circumstance) existing
with respect to the Leased Premises, Pace shall be entitled to (i) redesign the
Amphitheatre so that the total cost of developing the Amphitheatre and curing or
satisfying such defect or circumstance shall equal the total project cost for
developing the Amphitheatre originally contemplated by Pace (approximately
$8,500,000.00), (ii) submit such redesigned plans to the Park and Recreation
Board for its approval, which approval shall not be unreasonably withheld or
delayed and (iii) thereafter, the obligation of Pace pursuant to Section 4.01
shall be to construct
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the Amphitheatre pursuant to such redesigned approved plans. In the event Pace
is unable to accomplish such redesign in (i) above such that the Amphitheatre
cannot be practically or economically used or the Park and Recreation Board
fails to approve the redesigned plans, Pace shall have the option to (i)
terminate this Agreement by written notice to the City, (ii) construct on the
Leased Premises improvements substantially equal to the Parking Improvements and
(iii) thereafter, the Parties hereto will have no further liability hereunder
one to the other.
Section 4.08. Alteration. Pace shall be entitled from time to time to
alter, add to, demolish, reconstruct or remodel the Amphitheatre so long as the
same does not materially adversely affect the utility of the Amphitheatre
facilities or the exterior appearance thereof. Any other alteration, addition,
demolition, reconstruction or remodeling shall require the prior written
approval of the Park and Recreation Board, which approval shall not be
unreasonably withheld or delayed.
ARTICLE V
Use of Amphitheatre Tract
and Parking Tract
Section 5.01. Use.
(a) Pace shall have the right to use the Leased Premises for the
purpose of providing, developing, maintaining, operating, improving,
repairing and rebuilding the Amphitheatre for entertainment, recreational,
cultural and social uses together with
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food and beverage service and retail and commercial uses normally
associated with or customarily available in entertainment or amusement
facilities similar to the Amphitheatre, such as Six Flags Over Texas and
Reunion Arena, including, without limitation, souvenir, gift and novelty
retail establishments, box office and sponsor services. Further, Pace
shall have the right to use the Leased Premises for such other uses as
shall be approved in advance in writing by the City. Pace shall be
entitled to charge such admission fees, parking charges and other fees as
it may from time to time determine and retain such funds for its own use,
subject only to the rental requirements described in Article III herein.
(b) Pace shall have the right to use the Parking Tract solely for
the purposes of (i) parking of motor vehicles, (ii) pedestrian and
vehicular ingress and egress to and from the Leased Premises, the Assigned
Parking Area, Fair Park and/or other public dedicated roadways, and (iii)
the other uses permitted on the Leased Premises pursuant to Section
5.01(a) within the Amphitheatre by Pace and its successors, assigns,
agents, contractors, tenants, concessionaires, licensees, employees,
customers, guests, patrons and invitees and the agents, contractors,
employees, customers, guests, patrons and invitees of the tenants,
concessionaires and licensees of Pace, its successors
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and assigns. Pace shall be entitled to charge such admission fees, parking
charges and other fees as it may from time to time determine and retain
such funds for its own use, subject only to the rental requirements
described in Article III herein.
Section 5.02. Compliance with Laws. Pace agrees not to use the Leased
Premises or any building situated thereon or on any part thereof for any use or
purpose in violation of any valid and applicable law, regulation or ordinance of
the United States, the State of Texas, the City of Dallas, or other lawful
authority having jurisdiction over the Leased Premises. Notwithstanding the
foregoing, however, the Parties acknowledge their sensitivity to the issue of
sound emissions, with the City desiring the operation of the Amphitheatre in a
manner that will not create undue noise interference with the enjoyment of
adjoining property and which operation the City believes will be satisfied by
Pace's compliance with regulations limiting sound emissions promulgated in the
Dallas Development Code as they exist on the Commencement Date and with Pace
agreeing to comply with such current regulations. Pace recognizes the
legislative power of the City to enact and enforce appropriate noise regulations
to protect the public welfare. Because of this recognized importance to Pace
that regulations limiting sound emissions applicable to Pace's operation of the
Amphitheatre not be made more restrictive, the City asserts that it is its
present intent not to impose upon Pace in connection with its operation of the
Amphitheatre regulations limiting sound emissions more restrictive than those
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existing on the Commencement Date, the City believing that the current and
revised regulations are reasonable and appropriate. The City further agrees, in
its capacity as landlord, that, so long as neither the City nor the Leased
Premises will be subjected to any liability, penalty or forfeiture, Pace may at
its sole cost and expense, and in its own name, contest the validity or
applicability of any such law, regulation or ordinance and may defer its
compliance therewith during the pendency of such contest only for such time as
enforcement of such law is stayed by valid court order.
Section 5.03. Repair. As of the Commencement Date, Pace accepts the Leased
Premises as suitable for its intended use. Pace shall keep any improvement or
building that from time to time may be on the Leased Premises in a reasonably
good state of repair, shall be responsible for the active upkeep, maintenance,
sanitation and good appearance of the Leased Premises and shall keep the grounds
of the Leased Premises free of trash, rubbish and fire hazards, and upon the
termination of this Agreement, Pace shall deliver up the Leased Premises and all
buildings and improvements then situated thereon in good condition, reasonable
wear and tear and casualty excepted, and said buildings and improvements shall
become the property of the City; provided, however, furniture, furnishings,
trade fixtures, machinery, business equipment or other movable personal property
installed
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in any space occupied by Pace or any subtenant shall not be deemed to be
included as part of the building and may be removed at or prior to the
expiration of the Term of this Agreement.
Section 5.04. City's Right to Perform Pace's Covenants. If Pace defaults
in the performance of any of its covenants, obligations or agreements contained
in this Agreement, other than the obligation to pay rent, the City, after
written notice to Pace and any Permitted Mortgagee, within the time periods
provided elsewhere in this Agreement, specifying such default (or shorter notice
if any emergency exists), may (but without any obligation so to do), after the
expiration of such notice period, perform the same for the account and at the
expense of Pace, and the amount of any payment made shall be payable by Pace to
the City within forty-five (45) days after demand therefor, and if not so paid,
such amount with interest thereon at the rate of ten percent (10%) per annum
from the due date until paid and reasonable attorneys' fees, if awarded by a
court, shall be payable by Pace to the City and may be treated, at the City's
option, as a monetary default hereunder pursuant to Section 11.01.
Section 5.05. Security. Pace may install landscaping, fences, walls or
other screening as Pace reasonably finds appropriate in order to secure the
Leased Premises. All costs of security personnel incurred in connection with the
use of the Amphitheatre shall be paid by Pace.
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Section 5.06. Utilities. Pace agrees that any water or sewer lines
constructed shall be connected to governmentally approved water and sewer
systems. All costs of utility usage shall be paid by Pace.
ARTICLE VI
Use of Parking Tract
Section 6.01. Use. The City hereby agrees that, throughout the Term, the
Parking Tract will be used solely for lawful purposes. The City shall comply
with all laws applicable to the Parking Tract; provided that the City shall have
the right, in good faith, at its sole cost and expense, and in its own name, to
contest the validity or applicability of any law, and may defer its compliance
therewith during the pendency of such contest only for such time as enforcement
of such law is stayed by valid court order.
Section 6.02. Maintenance and Repair of Parking Improvements. Except as
set forth in the following sentence, the City covenants to keep in clean
condition and to perform or cause to be performed all maintenance, repairs and
replacements including, but not limited to, painting, restriping, re-paving and
other repairs, to the Parking Improvements, in order to keep the same at all
times in reasonably good condition, such maintenance to include, but not be
limited to, maintaining the surface, removing all papers, debris, filth and
refuse and thoroughly sweeping the area, placing, keeping in repair, and
replacing any necessary directional signs, striping, markers and
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lines, operating, keeping in repair and replacing, when necessary, lighting
facilities, maintaining all perimeter walls in good condition, and maintaining
and replacing as necessary all landscaping. Notwithstanding the foregoing,
however, after each use of the Parking Improvements by Pace pursuant to Section
1.02(c), Pace covenants to clean the Parking Improvements, including, but not
limited to, removing all papers, debris, filth and refuse and thoroughly
sweeping the area.
Section 6.03. Damage or Destruction. The City shall promptly commence to
completely repair and restore, and shall repair and restore any damage or
destruction at its sole cost and expense, to substantially the same condition
existing immediately prior to the casualty and pursue such repair and
restoration with diligence and continuity to completion, subject, however, to
the terms of this Agreement. Any proceeds of insurance policies payable with
respect to, and attributable to, such damage or destruction which are reasonably
necessary for the repair or restoration of the Parking Improvements shall be
paid first for the costs and expenses of repair and restoration of the Parking
Improvements and any excess proceeds shall be paid the City to be used for any
lawful purpose.
Section 6.04. Pace's Right to Perform City's Covenants. If the City
defaults in the performance of any of its covenants, obligations or agreements
contained in this Agreement, Pace, after written notice to the City, within the
time period provided elsewhere in this Agreement specifying such default (or
shorter notice if any emergency exists), may (but without any obligation
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so to do), after the expiration of such notice period, perform the same for the
account and at the expense of the City, and shall file a written claim with the
City seeking payment and the amount of any payment made shall be payable by the
City to Pace within forty-five (45) days after the filing of such claim, and if
not so paid, such amount with interest thereon at the rate of ten percent (10%)
per annum from the due date until paid and reasonable attorneys' fees, if
awarded by a court, shall be payable by the City to Pace or at Pace's option,
Pace may deduct the amount of any payment made and interest accrued thereon
from and offset such amounts against amounts due under this Agreement as Minimum
Guaranteed Rental, Event Rental, Additional Rental, or any other sum payable by
Pace to the City hereunder.
ARTICLE VII
City Use of Amphitheatre
Section 7.01. City Use. Pace agrees that the City shall have the right to
use the Amphitheatre, free of any rent, from time to time on such dates as may
be approved by Pace, but not to exceed fourteen (14) events during each Lease
Year; provided, however, that during the initial Lease Year, such maximum number
of dates shall be as specified in Section 3.02(b). It is the intent of the
parties that Pace and the City shall jointly select the dates to be utilized for
the City's benefit as well as the nature of the program and event to occur on
such dates, which joint selection process shall also pertain to the third party
use
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contemplated in Section 7.02. It is further provided that Pace shall be
responsible for the production and presentation of such events.
Section 7.02. Third Party Use. The City and Pace agree that the City with
the approval of Pace may designate that a third party non-profit organization
may use one or more of the fourteen (14) dates for the benefit of such
organization. In such event, the Event Revenues (as defined in Sections 3.02(b)
and 3.03(d) shall be payable by Pace to such third party organization; provided,
however, that all payments of Event Revenue to such third party organization by
Pace shall be deemed to be Event Rental paid to the City.
Section 7.03. Non-Gated Use. In addition to the events described in
Section 7.01, Pace acknowledges that upon written request by the City at least
thirty (30) days prior to the requested use date, Pace shall from time to time
during the term of this Agreement permit the further use by the City of the
Amphitheatre or a portion thereof for non-gated, non-profit events; provided,
however, that Pace has not otherwise scheduled or is not then currently
expecting scheduling an event for the Leased Premises or otherwise contracted
with others for the use of the Amphitheatre or such portion thereof for such
time as the City shall have requested use of the Amphitheatre or such portion
thereof.
Section 7.04. Rights of Subtenants; City Obligations. The City agrees that
its use, or the use of any third party organizations, as contemplated herein,
shall be subject to the
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rights of Pace's subtenants and with respect to any use of the Amphitheatre
pursuant to Section 7.03, the City shall pay or perform all obligations of Pace
set forth herein or any other reasonable and necessary direct event expenses
paid or incurred with respect to the use of such Amphitheatre (except the
payment of rental), and should Pace otherwise perform such payment or
performance obligations (such as utility services billed to and paid by Pace),
any amounts paid by Pace shall be reimbursed to Pace by the City within
forty-five (45) days after the filing of a written claim with the City, or if
not so paid, may be, at Pace's option, deducted from and offset against amounts
due under this Agreement as Minimum Guaranteed Rental, Event Rental, Additional
Rental, or any other sum payable by Pace to the City hereunder.
ARTICLE VIII
Replacement Parking
Section 8.01. Designation. The City and Pace acknowledge that the City may
desire to reconfigure or relocate a portion of the Parking Improvements or
Parking Tract. The parties agree, therefore, that from time to time during the
Term of this Agreement, the City may submit to Pace, at the City's expense, a
written notice (the "Relocation Request") setting forth the City's request that
this Agreement be modified and amended in order to reflect that a portion of the
Parking Improvements or Parking Tract is reconfigured or relocated in a manner
as specifically described in the Relocation Request. The Relocation
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Request shall be accompanied by (i) if the Relocation Request involves a
relocation to another area not on the Site Plan, a current survey of the land to
be covered by this Agreement in the event of the implementation of the
Relocation Request, which survey shall be reasonably satisfactory to Pace, (ii)
site plans prepared by an engineer indicating one or more possible parking
configurations on the land to be covered by this Agreement in the event of the
implementations of the Relocation Request, and (iii) the proposed document
amending this Agreement.
Section 8.02. Review by Pace. Pace shall have a period of sixty (60) days
(the "Request Review Period") following receipt of the Relocation Request and
the documents required to accompany same in which to notify the City in writing
whether Pace agrees to the modification and amendment proposed in the Relocation
Request, which agreement shall not be unreasonably withheld by Pace. Pace shall
agree to any proposed Relocation Request that (a) provides for a new location
that at its farthest point is no further than 2,500 feet from the nearest ticket
entrance to the Amphitheatre, (b) provides for a new location that reconfigures
or relocates, when considered with any and all previous Relocation Requests
approved by Pace, not in excess of fifty percent (50%) of the land covered by
this Agreement upon which parking facilities have been constructed, (c) provides
for a new location within the boundaries of Fair Park as of the date hereof
which is usable for parking taking into account encumbrances, physical
characteristics and public or private restrictions, (d) provides for a new
location containing sufficient space to
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accommodate the number of parking spaces accommodated by the land previously
used for parking, and (e) provides for a new location that has adequate access
to and from public roads and all of the Amphitheatre's entrances (collectively,
the "Approval Requirements"). In the event Pace shall not agree to the
modification and amendment proposed in the Relocation Request and the City
asserts that such agreement was unreasonably withheld, the City shall have a
period of thirty (30) days after receipt of such written notice from Pace to
give written notice to Pace of such assertion.
Section 8.03. Resolution.
(a) In the event Pace agrees to the modification and amendment
proposed in the Relocation Request, the City may, at the City's expense,
forthwith construct within the land to be covered by this Agreement upon
the implementation of the Relocation Request improvements substantially
similar to those constructed by the City upon the land in accordance with
plans submitted to the City by Pace and, upon completion of construction
of such improvements to Pace's reasonable satisfaction, the City and Pace
shall execute and deliver the modification and amendment to that
Agreement, contemplated in the Relocation Request.
(b) In the event Pace does not agree to the modification and
amendment proposed in the Relocation Request and a court of final
jurisdiction shall determine that Pace acted unreasonably in its decision
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not to agree to the Relocation Request, the City may, at its expense,
forthwith construct within the land to be covered by this Agreement upon
the implementation of the Relocation Request improvements substantially
similar to those initially constructed for Pace and, upon completion of
construction of such improvements to Pace's reasonable satisfaction, the
Parties shall execute and deliver the modification and amendment to the
Agreement contemplated in the Relocation Request.
Section 8.04. Dispute as to Exercise of Reasonable Discretion.
Notwithstanding anything to the contrary contained in this Agreement, in no
event shall the City have the right to terminate or forfeit this Agreement,
dispossess Pace from its use and occupancy of the land pursuant to this
Agreement, or exercise any other remedy available to it, in law or in equity, by
reason of the failure of Pace to exercise reasonable discretion in determining
whether to agree to a Relocation Request (as defined in Section 8.01), it being
agreed that the sole and exclusive remedy of the City for Pace's failing to
exercise reasonable discretion shall be to require Pace to consummate the
modification and amendment proposed in the Relocation Request and to seek the
award by a court of court costs and reasonable attorneys' fees incurred in
connection with such litigation.
Section 8.05. Costs and Expenses. All reasonable and necessary costs and
expenses incurred by Pace (a) in connection with its review of the Relocation
Request, (b) if agreed to without resort to litigation, implementation of the
Relocation
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Request, including, without limitation, surveyors' and engineers' fees, and (c)
court costs and reasonable attorneys' fees if awarded by a court in connection
with litigation pertaining to such matter, shall be reimbursed by the City to
Pace upon demand, and, if the same is not so promptly reimbursed, may be
deducted from and offset against amounts due under this Agreement as rental or
any other sum payable by Pace to the City hereunder.
ARTICLE IX
insurance and Indemnity
Section 9.01. Liability Insurance. Pace agrees, at Pace's expense, to
obtain and maintain public liability insurance at all times during the Term with
responsible insurance companies, legally authorized to transact business in the
State of Texas, with limits, which limits may be increased upon the mutual
agreement of the Parties, of at least $300,000 for one person and at least
$1,000,000 ($5,000,000 if available at a reasonable cost as determined in Pace's
sole discretion) for one accident for personal injury to or death of any person
or persons and at least $100,000 property damages, protecting the City, as an
additional named insured, and Pace against any liability, damage, claim or
demand in any way arising out of or connected with the condition or use of the
Leased Premises.
Section 9.02. Property Insurance. At all times during the Term of this
Agreement, Pace shall at its expense keep all buildings and structures from time
to time on the Leased Premises insured against loss or damage by fire, with
extended coverage (if obtainable), to include direct loss by fire, windstorm,
hail,
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explosion (other than boiler explosion), riot, civil commotion, aircraft,
vehicles and smoke, in an amount equal to eighty percent (80%) of the
replacement value thereof, with responsible insurance companies legally,
authorized to transact business in the State of Texas. The City shall be named
therein as an additional named insured as its interest may appear.
Section 9.03. Builder's Risk and Bonds. During all periods of construction
of improvements on the Leased Premises, Pace shall maintain, or cause to be
maintained, Builder's Risk Insurance in such amounts as Pace shall reasonably
determine. Pace further agrees to require that each of its contractors provide,
with respect to such construction, statutory payment and performance bonds as
required for the construction of public facilities, with Pace and the City each
named therein as obligees.
Section 9.04. Policies. All insurance policies shall provide for at least
fifteen (15) days' written notice to the City before cancellation and copies of
certificates of policies of insurance shall be delivered to the City. If any
blanket general insurance policy of Pace complies with the terms of these
provisions, the naming of the City therein as an additional named insured shall
be deemed compliance with the requirements for the insurance coverage provided
in any such blanket policy.
Section 9.05. Named Insureds; Adjustment of Losses. At the request of
Pace, any Permitted Mortgagee may be named as an insured under any of said
insurance policies required under this Article IX, as its interest may appear.
Any loss under any such
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insurance policy required hereunder may be adjusted with and approved by Pace
and a Permitted Mortgagee, if any, or if there is no Permitted Mortgagee, then
by (a) Pace in absence of any default hereunder or (b) by Pace and the City in
the case of the existence of an event of default or with respect to a loss
occurring during the last ten (10) years of the Term. All proceeds under such
policy shall be paid to Pace and the Permitted Mortgagee, as their interests may
appear.
Section 9.06. Indemnity of the City. During the Term of this Agreement and
except arising out of or occurring solely in connection with the use and
occupancy of the Leased Premises, Parking Tract or Coliseum Lots by the City or
any third party organization designated by the City pursuant to the provisions
of Article VII, the City shall not be liable to Pace or Pace's employees,
agents, subtenants, contractors or visitors, or any other person whatsoever, and
Pace will indemnify, defend and save harmless the City of and from all fines,
suits, claims, demands, losses and actions (including reasonable attorneys' fees
if awarded by a court) for any injury to persons or damage to or loss of
property on or about the Leased Premises, and the Parking Tract and Coliseum
Lots when used in connection with the exercise of Pace's Parking Tract Rights,
caused by the negligence or misconduct of, or breach of this Agreement by Pace,
its employees, contractors, agents or subtenants, or arising out of Pace's
negligent use of the Leased Premises, Parking Tract or Coliseum Lots.
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Section 9.07. Indemnity of Pace. During the Term of this Agreement, and
except arising out of or occurring solely in connection with the use and
occupancy of the Parking Tract or Coliseum Lots pursuant to the exercise of
Pace's Parking Tract Rights, Pace shall not be liable to the City or the City's
employees, agents, subtenants, contractors or visitors, or any other person
whatsoever, and the City will indemnify, defend and save harmless Pace of and
from all fines, suits, claims, demands, losses and actions (including reasonable
attorneys' fees if awarded by a court) for any injury to persons or damage to or
loss of property on or about (a) the Parking Tract or Coliseum Lots caused by
the negligence or misconduct of, or breach of this Agreement by the City, its
employees, contractors, agents or subtenants, or arising out of the City's
negligent use of the Parking Tract or Coliseum Lots and (b) the Leased Premises,
Parking Tract or Coliseum Lots, when used by the City or a third party
organization designated by the City in connection with the rights granted
pursuant to Article VII, caused by the negligence or misconduct of the City,
such third party designee or their employees, contractors, agents or subtenants,
or arising out of the negligent use of the Leased Premises, Parking Tract or
Coliseum Lots by the City or such third party designee.
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ARTICLE X
Assignment and Subletting
Section 10.01. Assignment. Except as otherwise expressly provided herein,
Pace may assign this Agreement only upon the prior written consent of the City,
which consent shall not be unreasonably withheld or delayed; provided, however,
no consent of the City shall be required for an assignment of this Agreement by
Pace to an Affiliate, a Permitted Assignee or an Affiliate of a Permitted
Assignee. As used herein, the term "Permitted Assignee" shall mean any venture,
partnership, corporation or other business arrangement created by Pace or an
Affiliate and a third party to provide for or in order to obtain sufficient
capital to develop, construct, complete, own and operate the buildings and
improvements located on the Leased Premises. Pace may, without any consent of
the City, collaterally assign to a Permitted Mortgagee this Agreement or any
part thereof, or the interest of Pace in any sublease or rentals thereunder, or
mortgage, pledge, encumber, assign or transfer collaterally its interest
therein; provided, that Pace or the Permitted Mortgagee shall promptly deliver
to the City in the manner herein provided for the giving of notice to `the City,
a true copy of the Permitted Mortgage and of any assignment thereof and shall
notify the City of the address of the Permitted Mortgagee to which notices may
be sent. The term "Affiliate" shall mean (a) any natural person, corporation,
partnership, association or other legal entity owning or controlling at least
fifty percent (50%) of the voting interest in Pace; (b) any corporation,
partnership,
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association or other legal entity of which at least fifty percent (50%) of the
voting interest is owned by Pace or one or more of the persons or entities
referred to in (a); and (c) any natural person, corporation, partnership,
association or other legal entity controlling, controlled by or under common
control with Pace or one or more of the persons or entities referred to in (a)
or (b). For purposes hereof, "control" and words of similar import shall mean
the power to vote or direct the vote of at least fifty percent (50%) of the
shares or other evidences of beneficial ownership.
Section 10.02. Subletting. Pace shall have the right to sublease any
separate or segregated parcel of the Leased Premises or space in any building
upon the Leased Premises, but only for purposes of providing food, beverage,
parking, novelties or other merchandise concessions; it being understood and
agreed that each sublease shall be subject and subordinate to this Agreement and
the rights of the City hereunder. The term "subtenant" shall mean any tenant,
licensee or other occupant of space in any of the buildings located on the
Leased Premises holding under Pace (other than Pace) for a period longer than
twenty-four (24) hours; and the term "sublease" shall mean any lease or other
agreement for the use or occupancy of any such space for a period longer than
twenty-four (24) hours.
Section 10.03. Assumption of Liability. Each and every assignee, whether
as assignee or as successor in interest of any assignee of Pace, or as assignee
of any Permitted Mortgagee, or as successor in interest of any assignee,
including any purchaser
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of this Agreement under a foreclosure of any mortgage on this Agreement, shall,
immediately be and become and remain liable for the payment of rental,
additional rent and other charges payable under this Agreement accruing from and
after the date of such assignment or acquisition, and for the due performance of
all the covenants, agreements, terms and provisions of this Agreement, on Pace's
part to be performed accruing from and after the date of such assignment or
acquisition, and each and every provision of this Agreement applicable to Pace
prior to such assignment shall also apply to and bind every such assignee and
purchaser with the same force and effect as though such assignee or purchaser
were the original lessee named in this Agreement, and, effective as of the date
of such assignment, Pace or any subsequent assignee of Pace or its assigns,
shall be released and discharged from all duties or obligations to the City
incurred thereafter in connection with or arising from this Agreement; provided,
however, Pace shall not be so released and discharged in the event of an
assignment to an Affiliate unless the City shall have theretofore consented to
such assignment.
Section 10.04. Permitted Mortgagee Provisions.
(a) In the event of any default by Pace under the provisions of this
Agreement, each Permitted Mortgagee will have concurrent grace periods (i)
the same as are given Pace for remedying such default or causing it to be
remedied plus (ii) after the expiration thereof or after the City has
served a copy of a notice of such default upon such Permitted Mortgagee,
whichever is
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later, an additional period of ten (10) days in the event of a monetary
default and twenty (20) days in the event of any non-monetary default (the
"Cure Period").
(b) If Pace shall default under any of the provisions of this
Agreement, each Permitted Mortgagee, without prejudice to its rights
against Pace, shall have the right to cure such default within the Cure
Period whether the same consists of the failure to pay rent or the failure
to perform any other matter or thing which Pace is hereby required to do
or perform, and the City shall accept such performance on the part of any
Permitted Mortgagee as though the same had been done or performed by Pace,
and for such purpose the City and Pace hereby authorize any Permitted
Mortgagee to enter upon the Leased Premises and Parking Tract and to
exercise any of Pace's rights and powers under this Agreement.
(c) If there is a default under this Agreement, the City shall not
terminate or take any action to effect a termination of this Agreement or
reenter, take possession of or relet the Leased Premises or similarly
enforce performance of this Agreement in any manner if within the Cure
Period any Permitted Mortgagee either (i) cures such default, or (ii) if
such default cannot reasonably be cured within the Cure Period, promptly
commences and then proceeds with reasonable diligence to cure such
default; or (iii) if physical possession
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of the Leased Premises is required to cure such default, promptly
commences and then proceeds with reasonable diligence to acquire the
interest of Pace by foreclosure or otherwise and thereafter performs all
other obligations of Pace under this Agreement. The provisions of the
prior sentence shall apply only if any Permitted Mortgagee shall have
fully cured any default in the payment of any monetary obligation of Pace
within the Cure Period and shall continue to pay currently such monetary
obligations as and when the same are due. After gaining possession of the
Leased Premises any such Permitted Mortgagee shall perform all other
obligations of Pace hereunder as and when the same are due and shall agree
in writing to be bound as Pace under this Agreement. Notwithstanding the
foregoing, however, in the event the default under the Agreement is in the
performance of Pace's obligation to cause to be produced and presented the
events for the benefit of the City pursuant to Section 7.01, the City may
(but without any obligation to do so) elect, during such period that the
Permitted Mortgagee is proceeding to acquire the interest of Pace in the
Leased Premises by foreclosure or otherwise, to enter upon the Leased
Premises and operate the Amphitheatre and, if the City so elects, shall be
entitled to continue such operation
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until the December 31 following the acquisition of the interest of Pace by
the Permitted Mortgagee by foreclosure or otherwise.
(d) If any Permitted Mortgagee is prohibited by any process or
injunction issued by any court or by reason of any action by any court
having jurisdiction of any bankruptcy or insolvency proceeding involving
Pace or the Leased Premises from commencing or prosecuting foreclosure or
other appropriate proceedings in the nature thereof, the Permitted
Mortgagee's cure period specified above for commencing or prosecuting such
foreclosure or other proceedings shall be extended for the period of such
prohibition; provided, however, that any applicable Permitted Mortgagee
shall have fully cured any default of payment of any monetary obligations
of Pace under this Agreement and shall continue to pay currently such
monetary obligations as and when the same fall due. Notwithstanding the
foregoing, however, in the event the default under the Agreement is in the
performance of Pace's obligation to cause to be produced and presented the
events for the benefit of the City pursuant to Section 7.01, the City may
(but without any obligation to do so) elect, during such period that the
Permitted Mortgagee is proceeding to acquire the interest of Pace in the
Leased Premises by foreclosure or otherwise, to enter upon the Leased
Premises and
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operate the Amphitheatre and, if the City so elects, shall be entitled to
continue such operation until the December 31 following the acquisition of
the interest of Pace by the Permitted Mortgagee by foreclosure or
otherwise.
(e) If a default under any Permitted Mortgage shall have occurred,
any holder of such Permitted Mortgage may exercise with respect to the
Leased Premises any right, power or remedy under the Permitted Mortgage
which is not in conflict with the provisions of this Agreement.
(f) In the event of foreclosure or similar proceedings, or pursuant
to the sale, assignment or other transfer of this Agreement in lieu
thereof, this Agreement may be assigned, without the consent of the City,
upon notice to the City in the manner provided in this Agreement, to or by
any applicable Permitted Mortgagee or its trustee.
(g) Except with respect to a surrender upon the expiration of the
Term by Pace to the City, no surrender of any interest in this Agreement,
no surrender by Pace of the Leased Premises (or any part thereof, or of
any interest therein), and no termination or rejection of this Agreement
by Pace, shall be valid or effective, without the prior written consent of
each Permitted Mortgagee.
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ARTICLE XI
Default of Pace
Section 11.01. Events of Default. This Agreement and the terms and estate
hereby granted are subject to the limitation that:
(a) if Pace defaults in the payment of any installment of Minimum
Guaranteed Rental, Event Rental, Additional Rental, or any other sum
payable by Pace to the city on any date upon which the same ought to be
paid, and if such default continues for twenty (20) days after the City
provides to Pace a written notice specifying such default (with a copy of
said notice to any Permitted Mortgagee); or
(b) whenever Pace does, or permits to be done, whether by action or
inaction, anything contrary to any covenant or agreement on the part of
Pace herein contained or fails in keeping or performing of any of the
covenants, agreements, terms or provisions contained in this Agreement
which on the part or behalf of Pace are to be kept or performed (other
than those referred to in the foregoing subsection (a) of this Section
11.01] and Pace fails to (subject to unavoidable delay) remedy the same
within forty (40) days after the City gives to Pace a written notice
specifying the same (with a copy of said notice to any Permitted
Mortgagee); provided, however, if such default cannot be corrected within
said forty (40) day
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period, then said period of correction shall be extended for so long
thereafter as Pace (or any Permitted Mortgagee) proceeds in good faith and
with due diligence, in the judgment of the City, to remedy and correct the
same;
then, at any time after the date
(i) of the expiration of any such period of twenty (20) days,
if the City has given to Pace a twenty (20) day notice as
hereinbefore provided; or
(ii) of the expiration of any such period of forty (40) days
as extended as hereinabove provided, if the City has given to Pace a
forty (40) day notice as hereinbefore provided or at any time
thereafter if Pace fails to proceed diligently to remedy the
default;
then the City, at its option, and in addition to any and all other remedies
provided by law or in equity, may give to Pace (with a copy of said notice to
any Permitted Mortgagee) a notice (herein called the "second notice") of
intention to end the Term of this Agreement specifying a day not less than sixty
(60) days thereafter and, upon the giving of the second notice, this Agreement
and the Term and estate hereby granted shall expire and terminate upon the day
so specified in the second notice if the default be still then continuing, as
fully and completely and with the same force and effect as if the day so
specified were
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the date hereinbefore fixed for the expiration of the Term of this Agreement,
and all rights of Pace under this Agreement shall expire and terminate. The
remedies of the City under this Agreement shall be cumulative.
Section 11.02. Events Upon Termination. Upon any such termination or
expiration of this Agreement, Pace shall peaceably quit and surrender the Leased
Premises to the City, and the City, without further notice and with or without
legal proceedings, may enter upon, re-enter, possess and repossess the City
thereof; or at the City's option, may recover possession of the Leased Premises
in an action of forcible detainer in the Justice Court, or by other appropriate
legal proceedings, and may dispossess and remove Pace and all other persons and
property from the Leased Premises and may have, hold and enjoy the Leased
Premises and the right to receive all rental and other income of and from the
same.
ARTICLE XII
Default of the City
Section 12.01. Defaults. In the event the City does, or permits to be
done, whether by action or inaction, anything contrary to any covenant or
agreement on the part of the City herein contained or fails in keeping or
performance of any of the covenants, agreements, terms or provisions contained
in this Agreement that on the part or behalf of the City are to be kept or
performed, including, without limitation the assignment of the Parking Tract
Rights, which rights the City and Pace acknowledge
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are essential to the operation of the Amphitheatre, and the City fails to remedy
the same within one hundred twenty (120) days after Pace has given to the City a
written notice specifying the same, or having so commenced shall thereafter fail
to proceed diligently to remedy the same, Pace shall have the full right at
Pace's election to take any of the remedies set forth in Section 12.02 of this
Agreement.
Section 12.02. Remedies. In the event the City fails to remedy a default
described in Section 12.01, Pace shall be entitled to pursue any and all
remedies provided by law or in equity (including, but not limited to, the right
of specific performance, damages or mandamus, reliance damages, such as cost of
leasehold improvements, and consequential damages, such as lost revenues) by
reason of the default by the City hereunder and in addition thereto Pace shall
be entitled to terminate this Agreement (subject to the consent of all Permitted
Mortgagees). The remedies of Pace under this Agreement shall be cumulative.
ARTICLE XIII
Condemnation and Casualty
Section 13.01. Definitions. Whenever used in this Article, the following
words shall have the definitions and meanings hereinafter set forth:
(a) "Condemnation proceedings": Any action brought for the purpose
of any taking of the fee of the Leased Premises or any part thereof or any
other property interest therein by competent authority as a
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result of the exercise of the power of eminent domain, including a
voluntary sale to such authority either under threat of condemnation or
while such action or proceeding is pending.
(b) "Taking" or "taken": The event and date of vesting of title to
the fee of the Leased Premises or any part thereof pursuant to the
condemnation proceedings.
Section 13.02. Entire Taking. If all or substantially all of the Leased
Premises shall be taken in condemnation proceedings, this Agreement shall
terminate as of the taking and the rental shall be paid to the date of such
taking. For purposes of this Article XIII, "substantially all of the Leased
Premises" shall be deemed to have been taken if the untaken portion cannot be
practically and economically used or converted for use by Pace, in Pace's sole
opinion, for the purposes for which the Leased Premises are being used
immediately prior to such taking.
Section 13.03. Partial Taking. Except as provided below in this Section
13.03, if only a part of the Leased Premises are taken in condemnation
proceedings, this Agreement shall remain in effect as to that part of the Leased
Premises not taken; however, Pace shall have the option by notice to the City
within a reasonable time after such taking to restore or repair the portion of
the improvements, if any, then on the Leased premises to the extent Pace
determines to be reasonable and practical under the circumstances then
obtaining. If Pace elects to 50
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repair or restore, Pace shall be entitled to the recovery of all of the award
made or damages granted to the extent necessary for such repair and restoration.
In the event Pace elects not to repair or restore, then this Agreement shall
terminate as of the taking of the part of the Leased Premises in question, and
the rentals hereunder shall be abated during the unexpired portion of this
Agreement, effective on the date of such taking. The City and Pace shall each be
entitled to make claim for and receive such damages in accordance with the loss
and damage suffered by each, taking into consideration all the relevant facts
and circumstances.
Section 13.04. Temporary Taking. In the event of a temporary taking of all
or part of the Leased Premises in condemnation proceedings, this Agreement shall
not terminate; and Pace shall be entitled to the award made or damages granted
in connection with such temporary taking attributable to any period prior to the
expiration of the term hereof; provided, however, the rentals hereunder shall be
reduced during the period of such use on a just and proportionate basis having
due regard to the value of the portion of the Leased Premises so taken as
compared to the remainder thereof and taking into consideration the amount of
the award made or granted to Pace and the extent, if any, to which Pace's use of
the remainder of the Leased Premises are interfered with by reason of such
taking.
Section 13.05. Condemnation Award. In any condemnation proceedings (except
those as may be commenced by the City) the City and Pace agree to cooperate in
obtaining the highest award
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possible. Any compensation which may be awarded on account of the taking of all
or a part of the Leased Premises by condemnation proceedings shall be fairly
allocated between the ownership of the fee and the leasehold estate hereunder in
accordance with the loss and damage suffered by the City and Pace, taking into
consideration all the relevant facts and circumstances. Any compensation awarded
on account of the taking of all or a part of the improvements, buildings,
fixtures, and other property on or within or the use of the Leased Premises
shall be allocated solely to Pace, subject to the limitations of the next
sentence. If any such condemnation occurs during the last ten (10) years of the
Term of this Agreement, then, so long as the useful life of the improvements,
buildings, fixtures, and other property then on or within the Leased Premises
extends beyond the scheduled expiration of the term of this Agreement, Pace
shall only be entitled to that portion of the award allocated with respect to
such property for the scheduled remainder of the term of this Agreement; and the
balance of such compensation with respect to such property shall be allocated to
the City on account of its reversionary interest therein.
Section 13.06. Consent of Pace and Permitted Mortgagee. Without the
written consent of Pace, the Permitted Mortgagee and the City, neither Party
shall make any settlement with the condemning authorities or convey any portion
of the Leased Premises and improvements thereon to such authority in lieu of
condemnation or consent to any taking.
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Section 13.07. Casualty. In the event the Leased Premises or improvements,
buildings or fixtures within the Leased Premises are damaged or destroyed from
any casualty, Pace shall to the extent of available insurance proceeds, repair
the damage and restore the Leased Premises or such improvements, buildings or
fixtures to the extent reasonable and practical under the circumstances then
existing; provided, however, Pace shall not be required to so repair and restore
the Leased Premises and shall be entitled to terminate this Agreement by written
notice to the City in the event (a) theretofore or contemporaneously therewith
there shall have occurred damage or destruction to Fair Park such that the
Amphitheatre cannot be economically operated by Pace, in Pace's sole opinion, in
the manner it was operated prior to such damage or destruction and/or (b) the
Leased Premises or improvements, buildings or fixtures within the Leased
Premises are damaged or destroyed from any casualty of the type then generally
excluded from conventional property insurance.
Section 13.08. Proceeds. Pace shall be in all events entitled to all of
the insurance proceeds payable by reason of such damage or destruction. All
rental required hereunder shall abate in full until completion of the repair and
restoration, unless Pace terminates this Agreement by written notice to the City
in accordance with Section 13.07.
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ARTICLE XIV
Title and Other Warranties
Section 14.01. The City's Warranty of Title. The City hereby represents
and warrants to Pace that as of the Commencement Date the City has good and
indefeasible fee simple title in the Leased Premises and that there are no
mortgages, deeds of trust or other encumbrances against the Leased Premises,
other than utility and communication facilities, arising by, through or under
the City. The City shall put Pace into actual possession of the Leased Premises
upon the Commencement Date of this Agreement.
Section 14.02 Obligation to Provide Access and Parking. Notwithstanding
anything that may be contained herein to the contrary, in the event that by
reason of an adverse claim or encumbrance affecting title to the Parking Tract
which the City is unable to cure or otherwise remedy, Pace shall be unable to
exercise the Parking Tract Rights, the City shall forthwith provide those rights
in additional land in order to provide Pace with substantially similar access
and parking rights as it had with the Parking Tract Rights. Further, with
respect to such additional land, the City shall, at the City's expense,
forthwith construct improvements substantially similar to those theretofore
constructed by the City on the Parking Tract, and Pace and the City shall have
such rights and obligations with respect to such additional land as each Party
had with respect to the Parking Tract.
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Section 14.03. Quiet Enjoyment. After the Commencement Date, the City
hereby warrants and represents to Pace the quiet enjoyment and peaceable
possession of the Leased Premises and the Parking Tract, except as to such
portion of the Leased Premises and the Parking Tract, if any, as shall be taken
under the power of eminent domain and subject to the public utility facilities
now existing therein, the provisions of this Agreement and the rights of The
State Fair of Texas in and to the Parking Tract during New Years' Day, the
Period of the Fair and the thirty (30) days prior and fourteen (14) days
following the Period of the Fair pursuant to that certain Fair Park Contract
dated April 20, 1987, as amended by that certain First Amendment to Fair Park
Contract executed by The State Fair of Texas and the City on or before the
Commencement Date.
Section 14.04. City Warranties. The City hereby represents and warrants to
Pace that as of the Commencement Date:
(a) The City has all requisite power and authority to enter into
this Agreement and consummate the transactions herein contemplated, and
the joinder, consent or approval of no other person or entity is required
to properly consummate the transactions herein contemplated; and
(b) This Agreement is a valid obligation of the City and is binding
upon the City in accordance with its terms.
Section 14.05. Pace Warranties. Pace hereby represents and warrants to the
City that as of the Commencement Date:
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(a) Pace has all requisite power and authority to enter into this
Agreement and consummate the transactions herein contemplated, and the
joinder, consent or approval of no other person or entity is required to
properly consummate the transactions herein contemplated; and
(b) This Agreement is a valid obligation of Pace and is binding upon
Pace in accordance with its terms.
ARTICLE XV
Taxes
Section 15.01. Exemption from Taxes. The City and Pace acknowledge that
each will take the position that the Leased Premises are exempt under state law
from assessment by any taxing authority for real property taxes.
Section 15.02 Pace's Payment of Taxes if Not Exempt. In the event a court
of final jurisdiction determines the Leased Premises are not exempt under state
law from assessment for real property taxes, Pace shall pay to the appropriate
governmental body or instrumentality prior to delinquency all taxes which during
the Term of this Agreement may be levied upon or assessed against the Leased
Premises. Notwithstanding anything to the contrary, if the imposition of any of
such taxes shall be deemed by Pace, in its sole discretion, to be excessive or
if Pace desires to contest any taxes for any other reason, Pace may, at Pace's
sole cost and expense, dispute and contest the same and file all such protests
or other instruments and institute or prosecute all such proceedings for the
purpose of contest as Pace
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shall deem necessary or appropriate. Any such contested taxes need not be paid
until the same have been finally adjudged to be valid and owing with respect to
the Leased Premises unless the levying authority requires the payment of the
taxes being contested as a condition to contesting such taxes.
ARTICLE XVI
Miscellaneous
Section 16.01. Confirmation Letter. Pace and the City shall, at any time
and from time to time (but no more frequently than twice during any calendar
year) upon reasonable prior request by the other Party, execute, acknowledge and
deliver to the other Party or its designee a statement in writing certifying
only (i) that this Agreement is unmodified and in full force and effect (or if
there have been any modifications, that the same is in full force and effect as
modified and stating the modifications), and (ii) that it has no knowledge that
any default hereunder exists (except that if any such default does exist,
specifying such default).
Section 16.02. Notices. Any notice to be given or to be served in
connection with this Agreement must be in writing, and may be given by (a)
actual delivery or (b) certified or registered mail and shall be deemed to have
been given and received either (i) upon actual delivery (if delivered by
subsection (a) above) or (ii) forty-eight (48) hours after a
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certified or registered letter containing such notice, properly addressed, with
postage prepaid is deposited in the United States mail, addressed as follows:
If to Pace:
Pace Entertainment Group, Inc.
4543 Post Oak Place Drive
Suite 200
Houston, Texas 77027
If to the City:
City of Dallas
City Hall
1500 Marilla
Dallas, Texas 75201
Attention: Director
Park and Recreation Department
If to a Permitted Mortgagee:
[to be supplied when Permitted Mortgage(s) given]
provided, however, that any Party may at any time change the place of receiving
notice by ten (10) days written notice of such change of address to the other
Party in accordance with the manner of giving notice described above.
Section 16.03. Modifications. This Agreement may be modified only by
written agreement signed by the City and Pace or their successors or assigns no
earlier than ten (10) days following issuance of written notice of such proposed
modification to any Permitted Mortgagee.
Section 16.04. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience in reference only and do not in any way
limit or amplify the terms and provisions of this Agreement.
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Section 16.05. Unavoidable Delay. The time within which either Party
hereto shall be required to perform any act under this Agreement shall be
extended by a period of time equal to the number of days during an unavoidable
delay. The term "unavoidable delays" shall mean delays due to strikes,
lock-outs, acts of God, inability to obtain labor, materials or governmental
approvals, governmental restrictions, enemy action, war, civil commotion, fire,
unavoidable casualty, construction delays due to weather, delays caused by the
City, or other similar causes beyond the control of such party.
Section 16.06. Venue. Any action brought to enforce or interpret this
Agreement shall be brought in the court of appropriate jurisdiction in Dallas
County, Texas.
Section 16.07. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
Section 16.08. Interpretation. Nothing contained herein shall be deemed or
construed by the Parties hereto, nor by any third party, as creating the
relationship of principal and agent or of partnership or of joint venture or of
any association between the Parties hereto, it being understood and agreed that
neither the method of computation of rent, nor any other provision contained
herein, nor any acts of the Parties herein, shall be deemed to create any
relationship between the Parties hereto other than the relationship of lessor
and lessee.
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Section 16.09. Circumstances Under Which Liens Permissible. The existence
of any lien (constitutional or statutory) which arises by operation of law in
connection with construction, alteration, repair, reconstruction or demolition
work on any building or other improvements on the Leased Premises shall not be
deemed to constitute a default hereunder provided Pace pays, discharges, bonds
or otherwise makes provision for payment for such work in accordance with the
provisions hereof. The existence of any attachment lien or other lien on the
leasehold estate created by this Agreement arising by legal or equitable process
or by operation of law shall not be deemed to constitute a default hereunder if
this Agreement does not devolve upon or pass to another person, firm,
corporation or city.
Section 16.10. Waiver of Landlord's Lien. The City hereby subordinates all
right, title and interest in and to any landlord's lien, statutory or otherwise,
upon the property of Pace arising by virtue of this Agreement to any Permitted
Mortgage.
Section 16.11. Conditions Precedent to Commencement Date. The Commencement
Date shall be the date of satisfaction of the last of the following matters: (i)
the City Council of the City of Dallas adopting an ordinance designating the
zoning classification of the Leased Premises as a classification upon which may
be developed the Amphitheatre; (ii) the City Council of the City of Dallas
conforming its Contract between the City and The State Fair of Texas dated April
20, 1987 to the provisions of this Agreement; (iii) the City Council of the City
of Dallas
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conducting the hearings and making the determinations specified by Chapter 26 of
the Texas Parks and Wildlife Code; and (iv) Pace has been satisfied that the
City has good title to the Leased Premises and Parking Tract. In the event any
of the above matters have not been satisfied on or before December 31, 1988,
either Party may, at its option, terminate this Agreement by written notice to
the other Party. Each Party agrees to use its best efforts to facilitate the
satisfaction of such matters; provided, however, nothing herein constitutes a
waiver of any governmental power or authority of the City.
Section 16.12. Liaison Committee. Pace agrees to cooperate fully with the
Liaison Committee consisting of members of the Board of Directors of the State
Fair of Texas and members of the Park and Recreation Board for the purpose of
enhancing liaison and communication among major interest groups at Fair Park.
While the Liaison Committee is intended to function in an advisory capacity
only, without any specific policy making authority or decision making power,
Pace agrees to receive, review and consider suggestions made by the State Fair
of Texas and the Park and Recreation Board.
Section 16.13. Coordination with Fair Park General Manager. Pace agrees to
use its best efforts to cooperate with the Fair Park General Manager of the City
in order to facilitate the complementary scheduling and production of events
within Fair Park, such coordination to include Pace's notifying the Fair Park
General Manager of scheduled activities, bookings, tentative bookings, timing of
events, schedule changes and security and
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traffic plans. Pace shall provide at least fifteen (15) days written notice to
the Fair Park General Manager of the dates on which it intends to schedule on
entertainment, recreational, cultural or social event at the Amphitheatre or
elsewhere at Fair Park for the purpose of exercising the rights described in
Section 1.02(c) herein.
Section 16.14. Non-Discrimination. During the term of this Agreement and
any extension thereof, Pace shall not discriminate against any employee or
applicant for employment because of race, age, color, religion, handicap, sex,
ancestry, national origin, or place of birth; nor shall any person be denied
admittance nor be prevented from participating in any portion of any public
function or activity at the leased premises because of race, age, color,
religion, handicap, sex, ancestry, national origin, or place of birth.
Section 16.15. Minority Business Enterprise. Pace agrees to cooperate with
the City in meeting the City's commitments and goals with regard to the maximum
utilization of minority business enterprises and will in good faith act to
assure that minority business enterprises shall have the maximum practicable
opportunity to compete for procurements and contracts under this Agreement.
Section 16.16. Partial Invalidity. If any term, provision, condition or
covenant of this Agreement other than the provisions of Section 1.02 or the
application thereof to any Party or circumstances shall, to any extent, be held
invalid or unenforceable, the remainder of this Agreement, or the
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application of such term, provision, condition or covenant to persons or
circumstances other than those as to whom or which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
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EXECUTED as of the day and year first above written, but actually executed
on the dates set forth in the respective acknowledgments below.
CITY:
CITY OF DALLAS
APPROVED AS TO FORM: RICHARD KNIGHT, JR.
CITY MANAGER
ANALESLIE MUNCY
CITY ATTORNEY
By: /s/ Galen M. Sparks By: /s/ [Illegible]
------------------------- --------------------------
Assistant City Attorney Assistant City Manager
ATTEST: PARK AND RECREATION BOARD
/s/ Jean Craft By: /s/ Mrs. S. W. Papert, Jr.
- ----------------------------- --------------------------
Jean Craft, Secretary, Park Mrs. S. W. Papert, Jr.,
and Recreation Board President
PACE:
PACE ENTERTAINMENT GROUP, INC.
By: /s/ [Illegible]
Name: [Illegible]
Title: Vice President
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THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on the 12th day of February,
1988, by Samuel A. Morino, Assistant City Manager of the CITY OF DALLAS, a
political subdivision and municipality of the State of Texas.
/s/ Alanna G. Anderson
--------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
My Commission Expires:
03/16/91 Alanna G. Anderson
--------------------------------
(Printed Name of Notary)
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on the 11 day of February,
1988, by Mrs. S. W. Papert, Jr., President of PARK AND RECREATION BOARD, on
behalf of the CITY OF DALLAS, a political subdivision and municipality of the
State of Texas.
/s/ Emma Lee Clines
--------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
My Commission Expires:
10/13/89 EMMA LEE CLINES
--------------------------------
(Printed Name of Notary)
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THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on the 10th day of February,
1988, by Rodney L. Eckerman, Vice President of PACE ENTERTAINMENT GROUP, INC., a
Delaware corporation.
/s/ Donna P. McDonald
--------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
--------------------------------
[Seal] DONNA P. McDONALD
Notary Public, State of Texas
My Commission Expires 04-25-1989
--------------------------------
My Commission Expires:
- ----------------------------- --------------------------------
(Printed Name of Notary)
<PAGE>
EXHIBIT C
ALL THAT certain lot, tract or parcel of land lying and being situated in the
City and County of Dallas, Texas and being more particularly described as
follows:
BEING a tract of land within the boundary of Fair Park, between Fitzhugh Avenue
(crosstown), Pennsylvania Avenue, Second Avenue and Gaisford Street, and being
more particularly described as follows.
BEGINNING at the intersection of the original southeast line of Pennsylvania
Avenue (46 feet wide) with the original northeast line, of Second Avenue (61
feet wide);
THENCE North 42 degrees 30 minutes 00 seconds East, along the original
southeast line of Pennsylvania Avenue, a distance of 2900.00 feet to a point for
a corner;
THENCE North 87 degrees 29 minutes 54 seconds East, along a proposed corner
cut-off line, a distance of 14.14 feet to a point on the proposed southwest
line of Gaisford Street (60 feet wide);
THENCE South 47 degrees 30 minutes 12 seconds East, along the said proposed
southwest line of Gaisford Street, a distance of 843.35 feet to the beginning
of a curve to the right having a radius of 470.00 feet;
THENCE in a southeasterly direction, along said curve and along the proposed
southwest line of Gaisford Street, passing through an angle of 12 degrees 39
minutes 33 seconds, an arc distance of 103.84 feet to a point on the original
northwest line of Fitzhugh Avenue (40 feet wide);
THENCE South 42 degrees 29 minutes 48 seconds West, along the original
northwest line of Fitzhugh Avenue, a distance of 89.92 feet to a point on the
present northwest line of Fitzhugh Avenue (105.52 feet wide at this point);
THENCE South 60 degrees 48 minutes 54 seconds West, along the present
northwest line of Fitzhugh Avenue, a distance of 255.35 feet to the beginning of
a curve to the left having a radius of 865.75 feet;
THENCE in a southwesterly direction, along said curve and along the present
northwest line of Fitzhugh Avenue, passing through an angle of 18 degrees 21
minutes 06 seconds, an arc distance of 277.30 feet to the end of said curve;
THENCE South 42 degrees 27 minutes 48 seconds West, along tangent to the last
mentioned curve and along the present northwest line of Fitzhugh Avenue, a
distance of 2,330.90 feet to the original northeast line of Second Avenue (61
feet wide);
THENCE North 45 degrees 00 minutes 57 seconds West, along the original
northeast line of Second Avenue, a distance of 392.12 feet to an offset in the
northeast line of Second Avenue;
THENCE North 42 degrees 28 minutes 46 seconds East, along said offset, a
distance of 1.0 feet to a point on the northeast line of Second Avenue;
THENCE North 45 degrees 00 minutes 37 seconds West, along the northeast line of
Second Avenue, a distance of 442.41 feet to the POINT OF BEGINNING AND
CONTAINING approximately 2,475,509 square feet or 56.8299 acres of land, more
or less, SAVE AND EXCEPT THE REAL PROPERTY AS DESCRIBED ON EXHIBIT "A".
/s/ [Illegible]
<PAGE>
January 12, 1988
EXHIBIT D
ALL THAT certain lot, tract or parcel of land lying and being situated in the
city and County of Dallas, Texas and being more particularly described as
follows:
BEING a tract of land within the boundary of Fair Park, between Fitzhugh Avenue
(Crosstown), Pennsylvania Avenue, Second Avenue, and Gaisford Street, and being
more particularly described as follows:
COMMENCING at the intersection of the original southeast line of Pennsylvania
Avenue (46 feet wide) with the original northeast line of Second Avenue (61 feet
wide);
THENCE North 42 degrees 30 minutes 00 seconds East, along the original southeast
line of Pennsylvania Avenue, a distance of 653.00 feet;
THENCE South 47 degrees 30 minutes 00 seconds East, a distance of 10.00 feet to
a point for a corner;
THENCE South 06 degrees 57 minutes 44 seconds West, a distance of 145.85 feet to
a point for a corner;
THENCE South 47 degrees 30 minutes 00 seconds East, a distance of 470.22 feet to
a point for a corner;
THENCE South 81 degrees 11 minutes 24 seconds East, a distance of 72.11 feet to
a point for a corner;
THENCE North 42 degrees 30 minutes 00 seconds East, a distance of 185.92 to a
point for a corner;
THENCE South 47 degrees 25 minutes 07 seconds East, a distance of 10.44 feet to
the PLACE OF BEGINNING;
THENCE North 42 degrees 34 minutes 53 seconds East, a distance of 340.00 feet
to a point for a corner;
THENCE South 47 degrees 25 minutes 07 seconds East, a distance of 123.00 feet to
a point for a corner;
THENCE South 42 degrees 34 minutes 53 seconds West, a distance of 340.00 feet to
a point for a corner;
THENCE North 47 degrees 25 minutes 07 seconds West, a distance of 123.00 feet to
the PLACE OF BEGINNING AND CONTAINING approximately 41,820 square feet or 0.9601
acres of land.
FIELD NOTES O.K.
/s/ [illegible]
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<PAGE>
EXHIBIT "A"
REVISED FIELD NOTES DESCRIBING A PART OF FAIR PARK TO BE USED FOR AN
AMPHITHEATER SITE.
ALL THAT certain lot, tract or parcel of land lying and being situated in the
City and County of Dallas, Texas, more particularly described as follows:
BEING all of Blocks A/1407 and B/1409 and a part of Blocks E/1408, F/1410,
C/1412, D/l406, 1805, 1807, 1555 and G/1553 all official City numbers, and being
a part of Fair Grounds Addition, being a subdivision of the west end of Lots 1
and 3, and all of Lot 2 of Block "G" of the estate of Richard Lagow, as per map
or plat of said addition recorded in Volume 124, Page 1, of the Deed Records of
Dallas County, Texas, and being a part of South View Addition, according to the
map or plat thereof recorded in Volume 1, Page 46 of the Map Records of Dallas
County, Texas, and being a part of Amos Subdivision of Block 1555, as per map or
plat of said Subdivision recorded in Volume 1, Page 313 of said Map Records, and
being a part of J. C. Watkins's Homestead Addition; as per map or plat of said
Addition recorded in Volume 1, Page 237 of said Map Records, and being a part of
J. Workman's Addition as per map or plat of said addition recorded in Volume 1,
Page 555, of said Map Records, and being a part of Tella Street, Birmingham
Street, Exposition Avenue, Cross Street, Rice Street, Davidson Street and Earle
Street and an alley in Block 1805, all being closed and vacated by City of
Dallas Ordinance No. 16060, and being a part of the property conveyed to the
City of Dallas by the following instruments:
1. Deed from Mayme Jack Reynonds, a widow, dated December 26, 1957 and
recorded in Volume 4820, Page 0022, Deed Records of Dallas County,
Texas;
2. Deed from Isodore Rangel and wife, Mercedes V. Rangel, dated March
6, 1958 and recorded in Volume 4863, Page 0458, of said Deed
Records;
3. Deed from Levolia Hamilton Jones, and husband, Jewell Jones, dated
February 11, 1958 and recorded in Volume 4871, Page 107, of said
Deed Records;
4. Deed from Frances Morris Allee and husband, David Alle, dated August
28, 1969 and recorded in Volume 69172, Page 1462, of said Deed
Records;
5. Deed from Fred G. Keller, dated April 9, 1969 and recorded in Volume
69087, Page l627, of said Deed Records;
6. Deed from Albert E. Powell, dated November 15, 1968 and recorded in
Volume 68233, Page 1373 of said Deed Records;
7. Deed from Virginia Straughter Jackson, a single woman, dated
December 2, 1968 and recorded in Volume 68235, Page 1037, of said
Deed Records;
8. Deed from Adolphus Hudleton and wife, Georgia M. Hudleton, dated
August 27, 1969 and recorded in Volume 69170, Page 1466, of said
Deed Records;
9. Judgment (No. 69-6264-d) in the records of the County Court of
Dallas County at Law No. 4, Dallas County, Texas awarding part of
said Lots 17 and 18 in Block 1555, official City numbers, to the
City of Dallas from Bennie Chance, et ux, et al, dated June 12, 1970
and recorded in Volume 70200, Page 0975 of, said Deed Records;
Page 1 of 6
FIELD NOTES O.K.
/s/ [illegible]
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<PAGE>
CONTINUATION OF REVISED FIELD NOTES DESCRIBING A PART OF FAIR PARK TO BE USED
FOR AN AMPHITHEATER SITE. PAGE TWO.
10. Deed from Millie Ray Cepak, et vir, Albert J. Cepak, dated November
7, 1968 and recorded in Volume 68236, Page 1900, of said Deed
Records;
11. Deed from Clarice Lawson Garrett, widow of E. L. Lawson, deceased,
Joined Proforma by her husband, George Garrett, dated March 24, 1969
and recorded in Volume 69071, Page 1741, of said Deed Records;
12. Confirmation Warranty Deed from Fred Joiner, et ux, Dorothy Vernon
Joiner, dated November 24, 1975 and recorded in Volume 76081, Page
2889, of said Deed Records;
13. Deed from Credit Finance Corporation, dated December 30, 1968 and
recorded in Volume 69001, Page 0055, of said Deed Records;
14. Deed from Bonnie L. Grizzaffi, dated March 11, 1970 and recorded in
Volume 70059, Page 1411, of said Deed Records;
15. Deed from Claud Yeldell dated December 6, 1968 and recorded in
Volume 68244, Page 1357, of said Deed Records;
16. Deed from S. G. Newsome, dated May 9, 1969 and recorded in Volume
69096, Page 0833, of said Deed Records;
17. Deed from Joseph Somer and wife, Phyllis Somer, dated March 27, 1969
and recorded in Volume 69062, Page 1017, of said Deed Records;
18. Deed from Jessie Tidwell dated July 22, 1969 and recorded in Volume
69142, Page 0739, of said Deed Records;
19. Deed from S. G. Newsome dated December 10, 1956 and recorded in
Volume 4625, Page 442, of said Deed Records;
20. Deed S. G. Newsome, Jr., dated April 23, 1954 and recorded in Volume
4029, Page 612, of said Deed Records;
21. Deed from Sadie Black, et vir, Harry Black, dated June 3, 1957 and
recorded in Volume 4711, Page 437, of said Deed Records;
22. Deed from Costodio Guzzeto et al, dated October 31, 1969 and
recorded in Volume 69219, Page 0927, of said Deed Records;
23. Deed from Allison Gardner, Jr., et ux, James L. Gardner dated June
6, 1956 and recorded in Volume 4608, Page 388, of said Deed Records;
24. Deed from John Lee Webster, Independent Executor of the estate of
Mary Frances Webster, deceased, et al, dated March 7, 1957 and
recorded in Volume 4670, Page 147, of said Deed Records;
Page 2 of 6
FIELD NOTES O.K.
/s/ [illegible]
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<PAGE>
CONTINUATION OF REVISED FIELD NOTES DESCRIBING A PART OF FAIR PARK TO BE USED
FOR AN AMPHITHEATER SITE. PAGE THREE.
25. Deed from G. Velasquex, et ux, et al, dated June 6, 1956 and
recorded in Volume 4524, Page 188, of said Deed Records;
26. Deed from Southern Bible Training School, Inc., dated July 30, 1956
and recorded in Volume 4558, Page 371, of said Deed Records;
27. Deed from Paul A. Juhlin and wife, Zula Juhlin, dated August 22,
1956 and recorded in Volume 4562, Page 123, of said Deed Records;
28. Deed from Birtie May Armstrong White, a widow, dated June 13, 1956
and recorded in Volume 4522, Page 28, of said Deed Records;
29. Conformation Warranty Deed from Eli Anderson et ux, Jessie Anderson,
dated June 15, 1973 and recorded in Volume 73127, Page 0942 of said
Deed Records;
30. Final Judgment from Nancy Pace, a widow, et al, dated May 4, 1976
and recorded in Volume 77011, Page 1016 of said Deed Records;
31. Deed from Elgin Jernigan et ux, Viola Jernigan, dated December 2,
1968, and recorded in Volume 69001, Page 1010 of said Deed Records;
32. Deed from Clara Onella Poole, a single woman, dated October 30, 1968
and recorded in Volume 68221, Page 1114 of said Deed Records;
33. Deed from Theresa Brady Brubaker, et al dated November 3, 1969 and
recorded in Volume 69243, Page 1152 of said Deed Records;
and being all of the land conveyed to the City of Dallas by the following
instruments:
34. Deed from Mary Wessie Wilson, et ux, et al, dated December 12, 1957
and recorded in Volume 4816, Page 273, of said Deed Records;
35. Deed from Susie Britt Cawthon, et al, dated March 6, 1958 and
recorded in Volume 4880, Page 143, of said Deed Records;
36. Deed from C-M-E Corporation, Inc., dated April 18, 1969 and
recorded in Volume 69081, Page 1531, of said Deed Records;
37. Deed from Eula Chandler, dated August 6, 1969 and recorded in Volume
69162, Page 1091, of said Deed Records;
38. Judgment from Neely Blackman (deceased), et ux, et al, dated April
9, 1974 and recorded in Volume 74070, Page 0587, of said Deed
Records;
39. Deed from George V. Basham, Jr., dated August 1, 1969 and recorded
in Volume 69156, Page 0877, of said Deed Records;
40. Deed from Robert Louis Richardson, et al, dated December 13, 1968
and recorded in Volume 69001, Page 1008, of said Deed Records;
Page 3 of 6
FIELD NOTES O.K.
/s/ [illegible]
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<PAGE>
CONTINUATION OF REVISED FIELD NOTES DESCRIBING A PART OF FAIR PARK TO BE USED
FOR AN AMPHITHEATER SITE. PAGE FOUR.
41. Deed from Montgomery, Jr., and wife, Ivy Lee Montgomery dated July
29, 1969 and recorded in Volume 69152, Page 1078, of said Deed
Records;
42. Deed from James M. Shaw and Sylvanus Allen, dated October 25, 1968
and recorded in Volume 68222, Page 1354, of said Deed Records;
43. Deed from Pat N. Newson, dated October 7, 1968 and recorded in
Volume 68200, Page 1822, of said Deed Records;
44. Deed from Yale Griffis, dated June 9, 1969 and recorded in Volume
69118, Page 0994, of said Deed Records;
45. Deed from K. B. Banks, et ux, Elnora Banks, dated October 16, 1968
and recorded in Volume 68209, Page 1936, of said Deed Records;
46. Deed from B. J. Cardella, et ux, dated August 24, 1956 and recorded
in Volume 4572, Page 299, of said Deed Records;
47. Deed from Guillermo Valasquez C., et ux, dated June 13, 1956 and
recorded in Volume 4525, Page 607, of said Deed Records;
48. Deed from Jinnie Joe Williams dated July 11, 1956 and recorded in
Volume 4539, Page 449, of said Deed Records;
49. Deed from Frank Rodriquez, et ux, dated July 18, 1956 and recorded
in Volume 4543, Page 241, of said Deed Records;
50. Deed from Robert E. Frady dated August 23, 1956 and recorded in
Volume 4564, Page 533, of said Deed Records;
51. Deed from 0. M. McCratic dated August 20, 1956 and recorded in
Volume 4562, Page 17, of said Deed Records;
52. Deed from Mable Caison dated August 21, 1956 and recorded in Volume
4562, Page 19, of said Deed Records;
53. Deed from Lee Boyd Johnson, et ux, dated August 3, 1956 and recorded
in Volume 4562, Page 22, of said Deed Records;
54. Deed from Louis F. Rick, et al, dated June 29, 1957 and recorded in
Volume 4781, Page 119, of said Deed Records;
55. Deed from Maggie Anton, dated August 29, 1956 and recorded in Volume
4566, Page 527, of said Deed Records;
56. Deed from Jodie Bolt, et ux, dated June 21, 1956 and recorded in
Volume 4531, Page 518, of said Deed Records;
57. Deed from Carrie Tolbert dated July 18, 1956 and recorded in Volume
4551, Page 412, of said Deed Records;
Page 4 of 6
FIELD NOTES O.K.
/s/ [illegible]
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<PAGE>
CONTINUATION OF REVISED FIELD NOTES DESCRIBING A PART OF FAIR PARK TO BE USED
FOR AN AMPHITHEATER SITE. PAGE FIVE.
58. Deed from Charles Williams, et ux, dated August 1, 1956 and recorded
in Volume 4552, Page 67, of said Deed Records;
59. Deed from P. B. Gonzales, et ux, dated June 20, 1956 and recorded in
Volume 4523, Page 381, of said Deed Records;
60. Deed from John H. Randle, et ux, dated November 1, 1968 and recorded
in Volume 68239, Page 2073, of said Deed Records;
61. Deed from D. E. Henson, dated November 12, 1968 and recorded in
Volume 68234, Page 1559, of said Deed Records;
62. Deed from T. 0. Lindsey, et ux, dated April 7, 1969 and recorded in
Volume 69076, Page 2253, of said Deed Records;
63. Deed from Louis Benavides, dated October 7, 1969 and recorded in
Volume 69199, Page 1403, of said Deed Records;
64. Deed from Tony R. Piazza, et ux, dated April 7, 1969 and recorded in
Volume 69076, Page 2257, of said Deed Records;
65. Deed from Adeles B. Callejo, et ux, dated October 14, 1970 and
recorded in Volume 70210, Page 1434, of said Deed Records;
66. Deed from Douglas A. Lord, et al, dated August 9, 1969 and recorded
in Volume 69176, Page 0837, of said Deed Records;
67. Confirmation Warranty Deed from Cleo Jernigan, et al, dated March
31, 1976 and recorded in Volume 76081, Page 2917, of said Deed
Records;
68. Deed from Floyd A. Borchardt, et ux, dated October 10, 1968 and
recorded in Volume 68205, Page 1632, of said Deed Records;
69. Deed from Lena Lingenfelder, et vir, dated August 28, 1969 and
recorded in Volume 69178, Page 1477, of said Deed Records;
70. Deed from Kathleen Renfro, dated September 17, 1969 and recorded in
Volume 69213, Page 1620, of said Deed Records;
71. Deed from Walter N. Mincey, Jr., et ux, dated March 14, 1969 and
recorded in Volume 69057, Page 1794, of said Deed Records;
72. Deed from Bennie Roberts and G. W. McMillian, dated April 4, 1969
and recorded in Volume 69067, Page 1910, of said Deed Records;
73. Deed from Ira Levels, et ux, dated October 11, 1973, and recorded in
Volume 73200, Page 0480, of said Deed Records;
74. Deed from Paul A. Juhlin, et ux, dated August 4, 1969 and recorded
in Volume 69172, Page 1434, of said Deed Records;
Page 5 of 6
FIELD NOTES O.K.
/s/ [illegible]
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<PAGE>
CONTINUATION OF REVISED FIELD NOTES DESCRIBING A PART OF FAIR PARK TO BE USED
FOR AN AMPHITHEATER SITE. PAGE SIX.
and being more particularly described as follows:
COMMENCING at the intersection of the original southeast line of Pennsylvania
Avenue (46 feet wide) with the original northeast line of Second Avenue (61 feet
wide);
THENCE North 42(degrees) 30' East along the original southeast line of
Pennsylvania Avenue, a distance of 653.0 feet;
THENCE South 47(degrees) 30' East, a distance of 10.0 feet to the PLACE OF
BEGINNING;
THENCE North 42(degrees) 30' East along the proposed southeast line for
Pennsylvania Avenue, and along a line which is 10.00 feet perpendicular distance
southeast from and parallel with the original southeast line of Pennsylvania
Avenue, a distance of 655.00 feet to a point for corner;
THENCE North 79(degrees) 22' 12" East, a distance of 100.00 feet to a point for
corner;
THENCE South 47(degrees) 30' East, a distance of 217.30 feet to a point for
corner;
THENCE North 42(degrees) 30' East, a distance of 19.93 feet to a point for
corner;
THENCE South 47(degrees) 30' East, a distance of 305.00 feet to a point for
corner;
THENCE South 05(degrees) 30' 46" East, a distance of 43.99 feet to a point for
corner;
THENCE South 42(degrees) 30' West, a distance of 804.19 feet to a point for
corner;
THENCE North 81(degrees) 11' 24" West, a distance of 72.11 feet to a point for
corner;
THENCE North 47(degrees) 30' West, a distance of 470.22 feet to a point for
corner;
THENCE North 06(degrees) 57' 44" East, a distance of 145.85 feet to the Place of
Beginning and containing approximately 522,635 square feet or 11.9981 acres of
land.
SUBJECT TO all existing utilities.
CJT/mb
12-28-87/0595S
dk30
/s/ [illegible]
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Page 6 of 6
<PAGE>
[GRAPHIC OMITTED]
EXHIBIT "B"
AMPHITHEATRE SITE
and
PARKING AREA
at
FAIR PARK
<PAGE>
================================================================================
AGREEMENT BY AND BETWEEN
THE CITY OF ATLANTA,
a municipal corporation ("City"),
AND
MCA CONCERTS, INC.,
a California corporation ("MCA")
Dated as of October 10, 1988
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND EXHIBITS
1.1 Definitions ............................................... 2
1.2 Exhibits .................................................. 2
ARTICLE II
NON-DISTURBANCE, ATTORNMENT, RECOGNITION,
AND RELATED MATTERS
2.1 Non-Disturbance ........................................... 2
2.2 Attornment and Recognition ................................ 4
2.3 Master Lease Defaults ..................................... 5
2.4 Warranties by City ........................................ 6
2.5 Warranties by MCA ......................................... 7
2.6 Approval of Sublease by City .............................. 8
2.7 Other Instruments ......................................... 8
ARTICLE III
PROVISIONS CONCERNING CERTAIN
MASTER LEASE PROVISIONS
3.1 Extension of Sublease ..................................... 8
3.2 Removal of Existing Improvements .......................... 9
3.3 Removal of MCA's Property ................................. 10
3.4 Equal Employment Opportunity and Minority
Business Enterprise Goals ................................. 10
3.5 Casualty and Condemnation ................................. 15
3.6 Use of Project Area ....................................... 15
3.7 Generality of Other Provisions ............................ 16
ARTICLE IV
CONSTRUCTION OF AMPHITHEATRE PROJECT BY MCA
AND OTHER OBLIGATIONS OF CITY
4.1 Construction by MCA ...................................... 16
4.2 Construction by City ..................................... 17
4.3 Access and Soil Condition ................................ 18
4.4 Security and Traffic Control ............................. 20
4.5 Permits and Approvals .................................... 21
<PAGE>
4.6 Consent to Sale of Liquor and Other
Goods and Services ....................................... 22
4.7 Sound Requirements ....................................... 22
4.8 Termination and Reimbursement ............................ 23
4.9 City Use of Amphitheatre ................................. 25
4.10 Tickets for City Use ..................................... 29
4.11 Benefits to Community .................................... 29
ARTICLE V
GENERAL MATTERS
5.1 Assignment and Binding Effect ............................ 31
5.2 Severability ............................................. 32
5.3 Further Documents ........................................ 32
5.4 Applicable Law ........................................... 32
5.5 Controlling Provisions ................................... 32
5.6 Waiver ................................................... 33
5.7 Multiple Counterparts .................................... 33
5.8 Interpretation of Agreement .............................. 33
5.9 No Third Party Beneficiary ............................... 33
5.10 Entire Agreement ......................................... 33
5.11 Notices .................................................. 34
5.12 Captions ................................................. 35
5.13 Number and Gender ........................................ 35
5.14 Rights Are Cumulative .................................... 35
5.15 Injunctive Relief ........................................ 35
5.16 "Affiliate(s)" Defined ................................... 36
5.17 "Person(s)" Defined ...................................... 36
5.18 "Midnight" Defined ....................................... 36
5.19 "Business Day(s)" Defined ................................ 36
5.20 Estoppel Certificates .................................... 36
5.21 Confidentiality .......................................... 37
5.22 Survival of Certain Provisions ........................... 37
5.23 MCA Insurance ............................................ 37
5.24 Memorandum of Agreement .................................. 38
SIGNATURES AND SEALS ............................................. 39
EXHIBIT A MASTER LEASE
EXHIBIT B SUBLEASE
EXHIBIT C DESCRIPTION OF AMPHITHEATRE PROJECT
EXHIBIT D CITY WORK
- ii -
<PAGE>
AGREEMENT BETWEEN THE CITY OF ATLANTA
AND MCA CONCERTS, INC.
THIS AGREEMENT is made and entered into as of the 10th day of October,
1988, by and between THE CITY OF ATLANTA, a municipal corporation chartered
pursuant to the law of the State of Georgia ("City"), and MCA CONCERTS, INC., a
California corporation ("MCA").
WHEREAS, City and MCA make the following recitals of fact:
A. City is the fee owner of an approximately 117-acre parcel commonly
known as Lakewood Fairgrounds ("Lakewood"). Filmworks U.S.A., Inc., a
Georgia corporation ("Sublessor") is the lessee of Lakewood under that
certain Amended Indenture of Lease between City and Sublessor, dated
February 2, 1984, and recorded in Book 8831, Page 185 of the Records of
the Clerk of the Superior Court of Fulton County, Georgia, as amended by
that certain Amendment dated October 10, 1988 (the "Master Lease"). Those
tracts or parcels of land comprising Lakewood are described in Exhibit "C"
of the Master Lease.
B. Sublessor and MCA have entered into that certain Agreement Regarding
Sublease, dated as of January 20, 1988, as amended by that certain First
Amendment To Agreement Regarding Sublease, dated as of January 21, 1988,
by that certain Second Amendment to Agreement Regarding Sublease, dated as
of April 19, 1988, and by that certain Third Amendment to Agreement
Regarding Sublease, dated as of September 15, 1988 (said Agreement
Regarding Sublease, as so amended by said First Amendment To Agreement
Regarding Sublease, said Second Amendment To Agreement Regarding Sublease,
and said Third Amendment to Agreement Regarding Sublease, being
hereinafter referred to as the "Preliminary Agreement") and, pursuant and
subject to the Preliminary Agreement, have entered into that certain
Sublease dated as of January 20, 1988, as amended by that certain First
Amendment To Sublease, dated as of January 21, 1988 (the "First
Amendment"), by that certain Second Amendment To Sublease, dated as of
April 19, 1988 (the "Second Amendment"), and by that certain Third
Amendment to Sublease, dated as of September 15, 1988 (the "Third
Amendment") (said Sublease, as so amended by the First Amendment, the
Second Amendment, and the Third Amendment, being hereinafter referred to
as the "Sublease").
<PAGE>
C. City and MCA believe that it will be to their mutual benefit (i) for
MCA to sublease a portion of Lakewood from Sublessor, (ii) for MCA to
construct and operate the outdoor commercial concert facility described in
Exhibit C (the "Amphitheatre Project") on a long-term basis at Lakewood
under the terms and conditions of the Sublease, (iii) for City and MCA to
undertake and perform their respective covenants and agreements under this
Agreement, the execution and delivery of which constitute a condition
precedent to the effectiveness of the Sublease, unless said condition
precedent is waived by MCA.
NOW THEREFORE, for and in consideration of the sum of Ten Dollars ($10.00)
in hand paid by MCA to City and for and in consideration of the foregoing
recitals and the covenants and agreements set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, City and MCA do hereby covenant and agree as
follows:
ARTICLE I
DEFINITIONS AND EXHIBITS
1.1. Definitions. For purposes of this Agreement, initially capitalized
terms used in this Agreement shall have the meanings ascribed to such terms in
the Sublease, unless the context hereof clearly indicates to the contrary.
1.2. Exhibits. The following exhibits are attached hereto and by this
reference incorporated herein:
(a) Exhibit A: Master Lease;
(b) Exhibit B: Sublease;
(c) Exhibit C: Description of Amphitheatre Project; and
(d) Exhibit D: Description of City Work.
ARTICLE II
NON-DISTURBANCE, ATTORNMENT,
RECOGNITION, AND RELATED MATTERS
2.1. Non-Disturbance. City covenants and agrees that MCA's possession of
the Project Area, together with all
- 2 -
<PAGE>
easements and other rights appurtenant thereto, and MCA's rights and interest
under the Sublease (including, without limitation, any renewal or extension
thereof), and MCA's right to use, enjoy, and occupy the Project Area shall not
be terminated, disturbed, interfered with, diminished, or otherwise impaired by
any actions taken or proceedings initiated under the provisions of the Master
Lease (as currently existing or as hereafter amended) or otherwise by City.
Without limiting the generality of the foregoing provisions of this Section 2.1,
City covenants and agrees that unless an Event of Default under the Sublease has
occurred and is continuing:
(a) City shall not join MCA as a party defendant in any action or
proceeding for the purpose of terminating Sublessor's interest under the
Master Lease or for any other purpose, provided, however, that if MCA or
any person claiming by, through, or under MCA is deemed a necessary party
by a court of competent jurisdiction in any action or proceeding brought
by or on behalf of City pursuant to the Master Lease, MCA or such other
person may be so named or joined but such naming or joinder shall not
otherwise be in derogation of the rights of MCA as set forth in this
Agreement.
(b) If any "Event of Default" as defined in the Master Lease or any
other event, action, or inaction which would, with the lapse of time, the
giving of notice, or otherwise, give rise to any right of City to
terminate the Master Lease (any and all such "Events of Default," as
defined in the Master Lease, and any and all such other events, actions,
and inactions being hereinafter collectively referred to as "Master Lease
Defaults") shall occur, and City is entitled to take, or does take any
action against Sublessor on account of one or more Master Lease Defaults,
City shall not take any such action the result of which may be that either
MCA or any person claiming by, through, or under MCA will be dispossessed
or evicted from the Project Area (or any portion thereof), or the rights
or interest or possession of MCA pursuant to the Sublease or of any person
claiming by, through, or under MCA will be terminated, disturbed,
interfered with, diminished, or otherwise impaired or adversely affected
in any way by reason of any default, event of default, violation, or other
breach under the Master Lease or by reason of any termination or
modification of the Master Lease; provided that nothing in this Section
2.1(b) shall bar City from dispossessing or evicting Sublessor from
Lakewood in accordance with the Master Lease and applicable law.
- 3 -
<PAGE>
2.2. Attornment and Recognition. If either expiration, termination or
invalidation of the Master Lease occurs for any reason (including without
limitation a judicial determination that the Master Lease is void, or voidable
by either party thereto) prior to the expiration or termination of the Sublease
in accordance with the provisions of the Sublease, then:
(a) The Sublease shall not terminate.
(b) MCA shall attorn to City under all terms and conditions of the
Sublease as if the Sublease were a direct lease between City and MCA,
provided, however, that MCA shall be under no obligation under this
Agreement to pay any rent to, or to perform any other obligations in favor
of, City unless and until MCA receives written notice from City that
either expiration or termination of the Master Lease has occurred and that
City has become the substitute Sublessor under the Sublease.
(c) City shall accept such attornment by MCA and shall recognize MCA
as the Sublessee under the Sublease as if the Sublease were a direct lease
between City and MCA.
(d) Without the further act or writing of any party, City shall be
deemed to be bound, as substitute Sublessor, by all terms and conditions
of the Sublease and shall be deemed to have assumed all obligations of
Sublessor under the Sublease.
(e) MCA shall retain all rights existing under the Sublease as of
the time of any such expiration or termination of the Master Lease; and
any such expiration or termination of the Sublease shall not prejudice MCA
in any manner with respect to any rights of MCA existing under the
Sublease as of the time of any such termination of the Master Lease.
(f) In addition to the First Amendment, the Second Amendment, and
the Third Amendment to which City has already consented and by which City
is already bound in accordance with this Agreement, City shall be bound by
any further Sublease amendment to which City consents, and City shall not
unreasonably withhold, delay, or condition any such consent. If City does
not consent to any further Sublease amendment with respect to which City
is entitled to withhold its consent, City shall not be bound by such
further Sublease amendment
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<PAGE>
but shall nevertheless be bound by the Sublease and any and all other Sublease
amendments to which City has consented or to which City was obligated to
consent. All references in this Agreement to the "Sublease" shall include all
Sublease amendments to which City has consented or to which City is hereafter
obligated to consent.
2.3. Master Lease Defaults. City agrees as follows:
(a) City shall deliver to MCA, in accordance with Section 5.11 of
this Agreement and at the same time that any such notice is given to
Sublessor, a copy of any notice given under the Master Lease. As soon as
known by City, City shall give to MCA notice of any attempted or purported
rejection of the Master Lease by a trustee in bankruptcy of Sublessor or
by Sublessor as debtor in possession, whether pursuant to Section 365 of
the United States Bankruptcy Code (11 U.S.C. Section 365) or pursuant to
any similar federal or state law in any bankruptcy proceeding of
Sublessor. Neither any termination of the Master Lease or of Sublessor's
right of possession of any portion of Lakewood nor any reletting of any
portion of Lakewood by City, which termination or reletting is predicated
on City's giving of any notice to Sublessor, shall be effective unless
City gives to MCA notice (or a copy of the notice to Sublessor) as
required by this Subsection 2.3(a).
(b) If the Sublease is rejected under Section 365 of the United
States Bankruptcy Code (11 U.S.C. ss. 365) or any similar federal or state
law in any bankruptcy proceeding of Sublessor, then City, within thirty
(30) days after receiving a written request therefor, which request shall
be given within sixty (60) days after such rejection, shall execute and
deliver to MCA a new direct lease between City and MCA for the remainder
of the Lease Term as defined in the Sublease, which new direct lease shall
contain the same covenants, agreements, terms, provisions, and limitations
as are contained in the Sublease. Any such new direct lease made pursuant
to this Subsection 2.3(b) shall have the same priority as the Sublease;
and all liens, charges, or other consensual encumbrances which are created
by City with respect to the interest of City in the Project Area shall
contain express provisions to the effect that (i) such lien, charge, or
encumbrance shall be subject to any such new direct lease to the same
extent as such lien, charge, or encumbrance was or would have been
- 5 -
<PAGE>
subject to the Sublease and (ii) the beneficiary or other holder of such
lien, charge, or encumbrance shall, upon request by MCA, give MCA (and any
other person reasonably designated by MCA, including, without limitation,
any Registered Mortgagee) written confirmation of such status.
(c) MCA may exercise any rights, powers, or remedies under the
Sublease (or any direct lease made between City and MCA pursuant to this
Agreement) without regard to whether any Master Lease Default has been
cured or is continuing. Without limiting any other provisions of this
Agreement, MCAs rights under this Section 2.3 are cumulative and may be
exercised in addition to, and not merely in lieu of, MCA's rights under
the other provisions (including, without limitation, Section 2.2) of this
Agreement. If MCA cures, or causes to be cured, any Master Lease
Default(s) at any time and from time to time, then, except to the extent
that MCA specifies otherwise in writing: (i) such cure shall constitute a
cure by or on behalf of Sublessor, (ii) Sublessor shall be deemed to have
cured such Master Lease Default(s), and (iii) Sublessor shall be relieved
of any liabilities or losses arising from such Master Lease Default(s);
provided, however, that nothing in this Agreement shall limit Sublessor's
liability, if any, to MCA, which liability arises from the fact that MCA
has so cured, or has so caused to be cured, such Master Lease Default(s).
2.4. Warranties by City. City hereby represents, warrants, and covenants
in favor of MCA as follows:
(a) Exhibit A constitutes a true, correct, and complete copy of the
Master Lease; and the Master Lease has not been modified, changed,
altered, or amended in any respect except as set forth in Exhibit A.
(b) City holds all right, title, and interest as "Lessor" under the
Master Lease; and the Master Lease is the only lease or agreement between
City and Sublessor with respect to Lakewood or otherwise.
(c) The Master Lease is in full force and effect and is enforceable
in accordance with its terms; and to the best of City's knowledge, no
Master Lease Defaults currently exist. No default, breach, or violation by
City under the Master Lease currently exists.
- 6 -
<PAGE>
(d) Upon execution and delivery of this Agreement by City and MCA,
this Agreement will be in full force and effect as to City and will be
enforceable against City in accordance with the terms of this Agreement.
(e) The development and construction of the Amphitheatre Project,
the operation of the Amphitheatre Project for the purposes referenced in
Section 3.6 hereof and for purposes of food and beverage sales, liquor
sales, souvenir and other retail sales, parking, and related activities,
and any other use of the Project Area in accordance with this Agreement
and the Sublease (i) do not and will not conflict with or violate any City
laws, rules, regulations, or other legal requirements applicable to said
project, subject, however, to MCA's obtaining permits in accordance with
Section 4.5 of this Agreement, (ii) are and will be within the scope of
use as described in Section 7.1.1 of the Master Lease, and (iii) are
expressly authorized by O.C.G.A. ss. 36-37-6.1, as the same currently
exists. The warranty and covenant set forth in this Subsection 2.4(e) as
to the development and construction of the Amphitheatre Project shall not
extend to activities beyond the scope of the Amphitheatre Project and the
warranty and covenant set forth in this Subsection 2.4(e) as to the
operation of the Amphitheatre Project shall not extend to purposes which
are not in accordance with this Agreement and the Sublease.
2.5. Warranties by MCA. MCA hereby represents, warrants, and covenants in
favor of City as follows:
(a) Exhibit B constitutes a true, correct, and complete copy of the
Sublease; and the Sublease has not been modified, changed, altered, or
amended in any respect except as set forth in Exhibit B.
(b) MCA holds all right, title, and interest as "Tenant" under the
Sublease, subject to assignment obligations to MCA/Pace Amphitheatres
Group, L.P.; and the Sublease and the Preliminary Agreement are the only
agreements between MCA and Sublessor with respect to Lakewood or
otherwise.
(c) The Sublease is in full force and effect and is enforceable in
accordance with its terms; and no Event of Default under the Sublease
currently exists.
- 7 -
<PAGE>
To the best knowledge of MCA, no default, breach, or violation by
Sublessor under the Sublease currently exists.
(d) Upon execution and delivery of this Agreement by City and MCA,
this Agreement will be in full force and effect as to MCA and will be
enforceable against MCA in accordance with the terms of this Agreement.
2.6. Approval of Sublease by City. City, acting through its governing
body, hereby approves the Sublease (including, without limitation, those
Sublease provisions referenced in Article III of this Agreement) for purposes of
Section 11.2 of the Master Lease and for any and all other purposes whatsoever.
City further consents to the development, construction, and operation of the
Amphitheatre Project, subject to MCA's obtaining Permits in accordance with
Section 4.5 of this Agreement.
2.7. Other Instruments. Although, except as otherwise specifically
provided in this Agreement, the attornment, recognition, and other provisions of
this Agreement shall be effective and self-operative without the execution of
any other instruments on the part of any party hereto and without the taking of
any other actions on the part of any other party hereto, the parties hereto
agree that, at the request of either City or MCA, each party hereto shall
execute and deliver to the other party such other instruments (in recordable
form, if requested) as either party shall reasonably request in order to
evidence such attornment, recognition and other matters.
ARTICLE III
PROVISIONS CONCERNING
CERTAIN MASTER LEASE PROVISIONS
3.1. Extension of Sublease. If, for any reason, Sublessor does not
exercise, or is not permitted to exercise, Sublessor's right to extend the
Master Lease for an additional period of fifteen (15) years pursuant to Section
2.3 of the Master Lease, then MCA shall have the separate and independent right
to extend the term of the Sublease to 12:00 midnight on December 31, 2033 and,
upon expiration of the Master Lease, to become the direct lessee of City in
accordance with Section 2.2 of this Agreement. If, for any reason, Sublessor
does not exercise, or is not permitted to exercise, Sublessor's right to extend
the Master
- 8 -
<PAGE>
Lease pursuant to Section 2.3 of the Master Lease, then City shall give MCA
notice of such fact within thirty (30) days after such fact is made known to
City but in all events not later than October 3, 2018. MCA shall be entitled to
exercise its right to extend the Sublease pursuant to this Section 3.1 by giving
City written notice which specifies that MCA has elected to exercise said right
and which is given to City at or before the later of either 12:00 midnight on
December 31, 2018, or 12:00 midnight on the ninetieth (90th) day after MCA's
receipt of said notice from City. If MCA exercises its right to extend the
Sublease pursuant to this Section 3.1, then MCA and City, both acting in good
faith, shall seek to renegotiate the rights and obligations of MCA under
Sections 3.4, 4.8, 4.9, and 4.11, provided that, in any such renegotiation: (a)
MCA's obligations under said Sections shall not be decreased; (b) MCA's
obligations under Section 3.4 shall not be less than then-current City MBE/EEO
requirements for lessees and contractors of City; (c) MCA's obligations under
Sections 4.9 and 4.11 shall not be increased by more than 100%; (d) City's
obligations under Section 4.8 shall not be increased; and (e) such renegotiation
shall not be a condition of such extension of the Sublease.
3.2. Removal of Existing Improvements. MCA shall have the right at any
time during the Lease Term under the Sublease to remove any improvements
existing (as of the date of this Agreement) on the Project Area, except MCA may
not remove any improvements located on the Easement Areas which serve or benefit
facilities within Lakewood beyond the Site if such removal would materially
adversely affect Sublessor, unless MCA takes appropriate action to avoid such
result. City, acting through City's governing body, hereby gives City's approval
of any material alteration and/or demolition of any buildings or other
improvements now located at Lakewood, provided that any such material alteration
and/or demolition is performed by or on behalf of MCA in accordance with the
Sublease and provided further that nothing in this Agreement shall be in
derogation of any rights of City, under Section 7.3.1 of the Master Lease, to
any salvage from the five (5) structures specified in Section 7.3.1 of the
Master Lease (i.e., the four main exhibit buildings and grandstand existing, as
of the date of this Agreement, at Lakewood) and provided further that none of
said five (5) structures shall be demolished by MCA without City's prior
written approval, which shall not be unreasonably withheld, delayed, or
conditioned as to said grandstand.
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3.3. Removal of MCA's Property. Notwithstanding any provisions to the
contrary under Section 7.6 of the Master Lease or any other portion of the
Master Lease, MCA and other persons claiming by, through, or under MCA shall
have the right to remove from the Project Area any or all of the temporary
buildings, temporary facilities, personal property of any kind, sound equipment,
lighting equipment, stage equipment, kitchen and commissary equipment,
non-permanent seating and benches (e.g., picnic tables and portable chairs),
concessionaire kiosks, and similar installations and trade fixtures, whether any
or all of the foregoing items are attached or affixed. The removal of such
items, to the extent that MCA elects to do so, may be accomplished at any time
and from time to time during the Lease Term of the Sublease (or during the
period of effectiveness of any direct lease made between City and MCA pursuant
to this Agreement) and/or within sixty (60) days after the termination or
expiration of the Lease Term of the Sublease (or within sixty (60) days after
the termination or expiration of the period of effectiveness of any direct lease
made between City and MCA pursuant to this Agreement).
3.4. Equal Employment Opportunity and Minority Business Enterprise Goals.
As a party to this Agreement, MCA hereby agrees with City that MCA shall be
bound by the valid laws of the United States, the State of Georgia and all valid
ordinances and laws of the City of Atlanta, Georgia with reference to
prohibitions against discrimination on the basis of race, religion, color, sex
or national origin.
(a) MCA acknowledges that MCA has been made fully aware of Sections
5-5131 through 5-5159 of the Code of Ordinances of the City of Atlanta, as
in force on the date hereof. City and MCA acknowledge that MCA is not a
"contractor" as the term is used in Sections 5-5154 and 5-5157 of said
Code. MCA nonetheless agrees that during the term of this Agreement:
(i) MCA shall not discriminate against any employee, or
applicant for employment, because of race, religion, color, sex or
national origin. As used here, the words 'shall not discriminate'
shall mean and include without limitation the following: Recruited,
whether by advertising or other means; compensated, whether in the
form of rates of pay, or other forms of compensation; selected for
training, including apprenticeship; promoted; upgraded; demoted;
downgraded; transferred; laid off; and terminated. MCA agrees to and
shall post
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in conspicuous places, available to employees and applicants for
employment, notices to be provided by the contracting officers
setting forth the provisions of the EEO clause.
(ii) MCA shall, in all solicitations or advertisements for
employees, placed by or on behalf of the contractor, state that all
qualified applicants will receive consideration for employment
without regard to race, religion, color, sex or national origin.
(iii) MCA shall send, or require its contractors to send, to
each labor union or representative of workers with which the
contractor may have a collective bargaining agreement or other
contract or understanding a notice advising the labor union or
workers' representative of MCA's commitments under the equal
employment opportunity program of City and under the Code of
Ordinances and shall post copies of the notice in conspicuous places
available to employees and applicants for employment.
(iv) MCA shall furnish all information and reports required by
the Contract Compliance Officer pursuant to the Code of Ordinances,
and shall permit access during normal business hours by the Contract
Compliance Officer to the books, records, and accounts of MCA
pertaining to the Amphitheatre Project or the Project Area for the
purpose of investigation so as to ascertain compliance with this
Subsection 3.4(a).
(v) MCA shall file, or require its contractors to file,
compliance reports at reasonable times and intervals with City in
the form and to the extent prescribed by the Contract Compliance
Officer. Compliance reports filed at such times directed shall
contain information as to employment practices, policies, programs
and statistics of MCA and its contractors.
(vi) MCA shall include the provisions of this Subsection
3.4(a)[l-5] of this equal employment opportunity clause in every
subcontract or purchase order so that such provisions will be
binding upon each subcontractor or vendor.
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(b) MCA acknowledges that MCA has been made fully aware of City of
Atlanta Administrative Order 84-5, dated December 6, 1984. Although City
and MCA acknowledge that the Amphitheatre Project (as defined in this
Agreement) is not an "Eligible Project" as defined in said Administrative
Order, MCA nonetheless agrees to make all good faith, best efforts to meet
the goals set forth in Subsection 3.4(c) of this Agreement by making
available opportunities for minority and female business enterprise
participation in any and all contracts of MCA pertaining to architectural
and design contracts, construction contracts, and contracts for the
operation or maintenance of the Project Area (all such contracts,
exclusive of contracts for performing artists, being herein collectively
referred to as "Eligible Contracts") and shall take the following actions
as part of its good faith, best efforts:
(i) Notification to community organizations that MCA has
contracting opportunities available and maintenance of records of
the organization's response.
(ii) Maintenance by MCA of a file of the names and addresses
of each minority and female business referred to it and action taken
with respect to each such referred business.
(iii) Dissemination of MCA's minority and female business
enterprise policy externally by informing and discussing it with all
management and technical assistance sources; by advertising in news
media specifically including minority news media; and by notifying
and discussing it with all subcontractors and suppliers.
(iv) Specific and continuing personal (both written and oral)
recruitment efforts directed at minority and female contractor
organizations, minority and female recruitment organizations and
minority and female business assistance organizations.
(v) Subdivision of the Eligible Contracts into as many
segments as practical to allow the greatest opportunity for
participation by MBEs and FBEs.
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(vi) Increasing where possible the number of aggregate
purchase items so as to eliminate the requirement of front-end
purchases of material for as many MFBE subcontractors as possible.
(vii) Adoption of the MBE and FBE participation program
described in this Agreement.
(viii) Submission of participation reports on the forms and to
the extent required by the Contract Compliance Officer, which
summarize the number and dollar amounts of awards made during the
term of this Agreement. This report shall be submitted to the
Contract Compliance Officer on the last day of each month following
the award of Eligible Contracts.
(ix) MCA shall designate a representative who shall be
responsible for preparing and submitting reports in accordance with
this Subsection 3.4(b) and for coordinating with City's Contract
Compliance Officer.
(c) MCA agrees to adopt equal employment opportunity goals of
twenty-five percent (25%) minority manpower and three percent (3%) female
manpower utilization in the initial construction, any future capital
improvements, and the management of facilities within the Project Area.
MCA agrees to adopt a goal of thirty-five percent (35%) certified Minority
Business Enterprise ("MBE") participation with respect to all contracts
for construction and for capital improvements to be made within the
Project Area. In seeking to achieve said MBE participation goal, MCA
agrees to maximize minority business participation through the promotion
of joint ventures which include a minimum of thirty-five percent (35%) MBE
participation in such joint ventures and which involve the major
categories of general construction contract and architectural contract
(including most engineering work and interior design). MCA agrees to adopt
a goal that thirty-five percent (35%) of all expenditures for operations
expenses (exclusive of contracts for performing artists) in connection
with its operations within the Project Area shall consist of purchases to
be made from vendors who are certified Minority Business Enterprises. In
respect to contracts for performing artists, services and personnel that
are the responsibility of the performing artist to engage directly under
such contracts shall be
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excluded from City's MBE requirements. MCA further agrees to adopt a goal
that thirty-five percent (35%) of concessions within the Project Area
which are awarded by contract shall be awarded to certified Minority
Business Enterprises. "Certified Minority Business Enterprise" shall be
defined as those businesses which have been certified as Minority Business
Enterprises by City's Office of Contract Compliance.
(d) MCA acknowledges the right of City, through its Office of
Contract Compliance, to monitor the efforts of MCA to achieve the goals
set forth in Subsections 3.4(b) and (c). MCA agrees to submit such reports
to City, as may be reasonably required, to monitor compliance with
Subsections 3.4(b) and (c). Upon MCA's request City shall provide
technical assistance from City's Office of Contract Compliance in
identifying Certified Minority Business Enterprises and in forming joint
ventures and subcontractor arrangements with Certified Minority Business
Enterprises for Eligible Contracts. To that end, the Office of Contract
Compliance will provide to MCA, upon MCA's request, a list of certified
Minority and Female Business Enterprises. If MCA, or any bidder on an
Eligible Contract, proposes to utilize a Minority Business Enterprise not
currently certified by the Office of Contract Compliance, the Office of
Contract Compliance agrees to expedite the certification process and make
a certification decision within ten (10) business days of the receipt of a
complete Affidavit of Minority Business Enterprise, along with the
required supporting documents.
(e) MCA acknowledges and agrees that the provisions of Subsection
3.4(b) shall be included in all Eligible Contracts.
(f) City and MCA acknowledge and agree that nothing in this
Agreement or elsewhere shall obligate, or shall be construed to obligate,
MCA or MCA's Affiliates [i] to enter into any joint venture or partnership
with any Person(s) or any category or classification (on the basis of
race, religion, color, sex, national origin or otherwise) of Person(s) or
[ii] to permit any Person(s) on any category or classification (on the
basis of race, religion, color, sex, national origin, or otherwise) of
Person(s) to own or otherwise hold, directly or indirectly, any equity
interest whatsoever in MCA, in any Affiliate of MCA, or in any successor
to or assigned of MCA's interest under the Sublease.
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(g) Due to the special requirements arising out of MCA's operations
in serving the public as well as the needs of performing artists whose
appearance at the Amphitheatre are often part of larger scale tours of
facilities across the country, City and MCA acknowledge and agree that the
operation of the Amphitheatre Project requires special qualifications in
certain areas such as but not limited to stagecraft, lighting, sound
amplification, electronic ticketing, advertising (both print and
electronic), and food and beverage procurement. MCA will make a good faith
effort to use Certified Minority Business Enterprises (including, wherever
practicable, the use of joint ventures involving Certified Minority
Business Enterprises) in these areas.
(h) City and MCA further acknowledge and agree that nothing in this
Section 3.4 shall be deemed to impose upon MCA, MCA's Affiliates, MCA's
contractors or subcontractors, any requirement, obligation or expectation
to employ or contract with any person or entity deemed unqualified in the
sole discretion of MCA, MCA's Affiliates, MCA's contractors or
subcontractors.
(i) City acknowledges and agrees that compliance by MCA with the
terms and conditions of this Section 3.4 shall be deemed compliance with
Section 14.12 of the Master Lease, and that the requirements of this
Section 3.4 are clarification of, and not in addition to, said Section
14.12.
3.5. Casualty and Condemnation. In the event of any casualty or
condemnation affecting or involving any or all of MCA's interest under the
Sublease (including, without limitation, the Project Area and improvements
currently or hereafter located thereon), all insurance proceeds and condemnation
awards (including, without limitation, any monies paid in connection with any
sale or other transfer made in lieu of or under threat of condemnation) relating
to the Project Area and/or any improvements currently or hereafter located
thereon shall be held and applied only in accordance with Section 10 of the
Sublease, notwithstanding provisions, if any, to the contrary in the Master
Lease.
3.6. Use of Project Area. City hereby consents to MCA's use and enjoyment
of the Project Area for any and all purposes consistent with Section 2.1 of the
Sublease. Without derogating from the generality of the immediately preceding
sentence, City agrees and acknowledges that the
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project contemplated by the Sublease may be used as a commercial outdoor concert
facility operated in a manner consistent with other commercial outdoor concert
facilities nationwide. Without derogating from the generality of the immediately
preceding sentence, City agrees and acknowledges that the project contemplated
by the Sublease may be used for performing, with or without amplified sound,
popular and contemporary music, rock and roll, pyrotechnic shows, and other
similar sound-intensive and light-intensive activities. Nothing in this Section
3.6 shall be deemed or construed to limit the provisions of Section 4.7 of this
Agreement.
3.7 Generality of Other Provisions. The foregoing provisions of this
Article III shall in no event be deemed or construed to be in derogation of the
generality of Section 2.6 and Section 5.5 of this Agreement.
ARTICLE IV
CONSTRUCTION OF AMPHITHEATRE PROJECT
BY MCA AND OTHER OBLIGATIONS OF CITY
4.1. Construction by MCA. MCA shall commence, or shall cause commencement
of, on-site construction of the Amphitheatre Project in accordance with and
subject to the terms and conditions of the Sublease and the Preliminary
Agreement, subject, however, to the provisions of Section 4.3 of this Agreement.
Following such commencement and subject to Section 4.3 hereof, MCA agrees to
exercise its reasonable best efforts in order to complete said construction of
the Amphitheatre Project in order to open for the summer 1989 season and further
agrees to complete said construction in order to open for the summer 1990
season, subject, however, to being delayed or hindered in or prevented from so
completing said construction of the Amphitheatre Project by reason of fire,
catastrophe, acts of God, strikes, lockouts, labor troubles, inability to
procure materials, failure of power, retroactive governmental laws or
regulations, riots, insurrection, civil commotion, war, or any other reason of a
like nature not the fault of MCA. MCA agrees that, as part of the construction
and development of the Amphitheatre Project, MCA shall expend the sum of Thirty
Thousand Dollars ($30,000.00) for the aesthetic enhancement of the Amphitheatre
Project, which expenditure shall include any costs of commissioning or acquiring
works of art, designing artistic architectural design features, and the
placement or construction thereof. MCA shall consult with the City's
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Commissioner of Parks and Recreation in determining the nature of this
expenditure for aesthetic enhancement; provided, however, MCA reserves the
right, in its sole discretion, to make the final decision on the most
appropriate form and method of such aesthetic enhancement. Prior to and during
construction of the Amphitheatre Project, MCA shall regularly meet and confer
with the City's Commissioner of Public Works and the City's Commissioner of
Parks and Recreation concerning the design and construction of the Amphitheatre
Project. MCA will develop detailed design plans, specifications, construction
sequencing, and timetables for all on-site City Work, the cost of developing
such plans and specifications to be borne solely by MCA. Any divergence from
these plans and specifications will be mutually approved by the City and MCA,
such approval not to be unreasonably withheld. The scheduling of all City Work
will be coordinated with MCA's construction work on the Amphitheatre Project, so
that the City Work will proceed concurrently with, and not substantially in
advance of, MCA's construction work.
4.2. Construction by City. City shall perform, or shall cause to be
performed, all of the construction, repairs, and other work described in and in
accordance with Exhibit D (collectively, the "City Work") at no cost or expense
to MCA. The timely completion of the work in accordance with Exhibit D is of the
essence of this Agreement, and the failure of the City so to perform such work
shall constitute a breach of this Agreement. In the event of such breach, MCA
shall have the right (but no obligation) to perform, or to cause to be
performed, part or all of the City Work and shall further be entitled to pursue
any and all other rights and remedies available at law or in equity. In the
event that City fails to perform in accordance with this Section 4.2 and MCA
elects to perform, or to cause to be performed, part or all of the City Work,
City shall reimburse MCA for all costs of performance of such work within sixty
(60) days following receipt by City of documentation (including copies of all
relevant invoices) from MCA fully supporting the amount of costs for which
reimbursement is being sought; and in such event, City shall further pay MCA
interest on the amount of such costs from and including the date which is sixty
(60) days following the date of City's receipt of such documentation through and
including the date on which City reimburses MCA for such costs and pays MCA any
and all interest due under this Section 4.2. Said interest shall accrue at the
floating interest rate described in Section 15.9 of the Sublease.
Notwithstanding any other provision to the contrary in this
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Section 4.2, MCA shall not be entitled to perform, or to cause to be performed,
part or all of the City Work pursuant to this Section 4.2 unless and until the
following conditions have been satisfied:
(a) MCA has given City written notice of City's failure to achieve
timely completion of the City Work in accordance with Exhibit D, which
notice (the "First Noncompletion Notice") shall comply with Section 5.11
of this Agreement and shall also be given to City's Commissioner of Public
Works.
(b) Within ten (10) days following City's receipt of the First
Noncompletion Notice, City either has failed to achieve completion of the
City Work or has not otherwise satisfied MCA with respect to completion of
the City Work by City.
(c) MCA has given City a second written notice that the condition
set forth in Subsection 4.2(b) hereof has been satisfied, which notice
(the "Second Noncompletion Notice") shall comply with Section 5.11 of this
Agreement and shall also be given to City's Commissioner of Public Works.
(d) Within five (5) days following City's receipt of the Second
Noncompletion Notice, City either has failed to achieve completion of the
City Work or has not otherwise satisfied MCA with respect to completion of
the City Work by City.
4.3. Access and Soil Condition.
(a) City shall, in good faith, exercise its absolute best efforts to
cause the Georgia Department of Transportation to expand both the on-ramp
to the Lakewood Freeway and the off-ramp from the Lakewood Freeway,
which ramps serve the Lakewood area, from one (1) lane to two (2) lanes.
(b) City agrees to bear fifty percent (50%) of the costs of any and
all soil tests pertaining to Lakewood and heretofore or hereafter
performed by a duly licensed engineering or soil testing firm on behalf of
Sublessor, MCA, or any actual or potential Registered Mortgagee up to an
amount which, together with direct expenditures of City in accordance with
Section 4.2 of this Agreement equals an aggregate amount of One Million
Dollars ($1,000,000.00).
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(c) City covenants and agrees that in the event that (i) part or all
of the soil at Lakewood is found by any local, state, or federal entity to
contain chemicals or substances which may be harmful and (ii) such entity
orders either the removal of such chemicals or substances or the cessation
or curtailment of activities at Lakewood because of such chemicals or
substances, then City shall, at City's sole cost and expense, take any and
all actions which are legally required (including, without limitation, any
and all actions which are necessary or appropriate in order to remove all
such chemicals or substances) unless City elects to terminate this
Agreement in accordance with Subsection 4.3(e) of this Agreement or MCA
elects to terminate this Agreement in accordance with Subsection 4.3(f) or
Subsection 4.3(g) of this Agreement; provided, however, that City shall
only be required under this Subsection 4.3(c) to spend up to One Million
Dollars ($1,000,000.00) for such actions.
(d) City further covenants and agrees that in the event of chemical
or substance removal in accordance with Subsection 4.3(c) of this
Agreement, City shall reimburse MCA for the costs of replacing, repairing,
or restoring any improvements, fixtures, or equipment damaged or adversely
affected by such removal activities and shall further pay MCA, in each
instance, interest on the amount of such costs from and including the date
which is sixty (60) days following receipt by City of MCA's invoice for
such costs through and including the date on which City reimburses MCA for
such costs and pays MCA the interest due under this Subsection 4.3(d).
Said interest shall accrue at the floating interest rate described in
Section 15.9 of the Sublease.
(e) In the event that chemical or substance removal is required in
accordance with Subsection 4.3(c) of this Agreement and that the total
costs which would be incurred by City under Subsection 4.3(c) hereof
exceed One Million Dollars ($1,000,000.00), then City shall have the
option to terminate this Agreement upon payment to MCA of the
Reimbursement Amount and interest, if any, thereon, in accordance with
Section 4.8 of this Agreement.
(f) MCA shall have the right to terminate this Agreement and to
require City to pay the Reimbursement Amount and interest thereon in
accordance with Section 4.8 of this Agreement in the event that, at any
point from the date hereof to the date of substantial completion of both
the City Work (as defined in
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Exhibit D) and the Amphitheatre Project, MCA determines, in its exercise
of good faith discretion, that the presence of chemicals or other
substances in the Project Area would substantially and materially impair,
hinder, or otherwise adversely affect MCA's use of the Project Area. MCA
may exercise said termination right by giving written notice of such
termination to City.
(g) If, following substantial completion of the City Work and the
Amphitheatre Project, chemicals or other substances are required to be
removed in accordance with Subsection 4.3(c) of this Agreement, and such
removal by City cannot be completed or is not completed, in the reasonable
and good faith business judgment of MCA, within a period of time which
would not materially and substantially adversely affect the business of
MCA at the Amphitheatre Project, then and in that event MCA shall have the
right to terminate this Agreement and to require City to pay the
Reimbursement Amount and interest thereon in accordance with Section 4.8
of this Agreement. MCA may exercise said termination right by giving
written notice of such termination to City.
4.4. Security and Traffic Control. In order to ensure adequate security
and traffic control in connection with Amphitheatre Project events, City shall
exercise City's best efforts to provide, at no cost or expense to MCA, uniformed
police officers in accordance with the following:
(a) For the one (1)-hour period prior to each Amphitheatre Project
event and for the one (1)-hour period following each Amphitheatre Project
event, at least one (1) uniformed police officer shall be so provided, for
purposes of traffic control and public safety and security, at each of the
following intersections and other locations:
(i) Lakewood Avenue/Lakewood Way-Macon Drive;
(ii) Pryor Road/Fair Drive-Parking Access;
(iii) Pryor Road/Lakewood Way;
(iv) Lakewood Avenue at the entrance to the Amphitheatre parking;
and
(v) Lakewood Avenue east of the Amphitheatre parking entrance (to
merge westbound traffic into a single lane if a new eastbound
left turn lane is not constructed).
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(b) MCA acknowledges that, in the event of an unusual and
unanticipated public emergency, City may not be able to provide the police
officer services described in this Section 4.4. In such event, MCA shall
hire off-duty police officers to provide such services.
(c) MCA shall be required to provide appropriate police personnel to
handle crowd and traffic control according to a plan approved by the Chief
of Police or his/her designee.
4.5. Permits and Approvals. City shall assist MCA and shall cooperate
fully with MCA in securing from City and any and all other appropriate
governmental authorities all approvals, actions, commitments, permits, and
similar authorizations (collectively, "Permits") which MCA reasonably requires
in order to assure itself that the project contemplated by the Sublease can be
developed, constructed, and operated in accordance with MCA's contemplated plan,
provided that MCA shall be responsible for paying standard and customary fees
for such Permits. Such Permits may include, without limitation, building
permits, commitments to MCA from the appropriate governmental entities for
vehicular traffic flow improvement such as freeway off-ramps and other traffic
mitigation measures, liquor licenses, and other licenses and approvals from
appropriate regulatory agencies with reference to environmental regulations,
zoning, land use regulations, and licensing. Without limiting the foregoing
provisions of this Section 4.5, City agrees to cooperate fully in, and to
exercise its absolute best efforts in, obtaining any Permits or other actions
from the United States Army Corps of Engineers, which Permits or other actions
may be necessary or appropriate in connection with the Project as contemplated
by the Sublease. City hereby agrees and acknowledges that MCA, in entering into
the Sublease and this Agreement and in undertaking the project contemplated by
the Sublease, is expressly relying upon currently applicable ordinances, laws,
rules, regulations, and other legal requirements with respect to the zoning
classification, the building and other permit requirements, liquor regulation,
vehicular traffic requirements, environmental regulations, land use regulations,
licensing requirements, and other Permit-related matters; and City hereby
covenants and agrees, to the full extent permitted by applicable law, that no
such Permit-related requirements and no other legal or administrative
requirements within City's control shall hereafter be modified or otherwise
changed in any manner detrimental to MCA, MCA's interest under the Sublease, or
MCA's project contemplated by the Sublease.
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4.6. Consent to Sale of Liquor and Other Goods and Services. City hereby
agrees and acknowledges that MCA shall be entitled to sell, or to cause or
permit to be sold, within Lakewood, any and all lawful goods, articles, and
services of any nature and that this Section 4.6 of this Agreement shall
constitute written permission from the Mayor of City or his designee for such
sales of goods, articles, and services within Lakewood. City hereby further
agrees and acknowledges that such sales may include the sale of spirituous,
vinous, and/or malt liquors, provided that such sale of liquors are undertaken
as otherwise provided by applicable ordinance other than Section 10-2014 of the
Atlanta City Code, the requirements of said Section 10-2014 being satisfied by
this Section 4.6.
4.7. Sound Requirements. City hereby covenants and agrees to amend Section
17-3103(c) of the Atlanta City Code by adding the words "or at any amphitheatre
constructed upon the Lakewood Fairgrounds" immediately following the words
"Chastain Park Amphitheatre" in said Section 17-3103(c). City covenants and
agrees that the use and operation of any loudspeaker systems, sound amplifiers,
or other similar devices at the Amphitheatre Project shall be governed by this
Agreement, which constitutes a contract for purposes of said Section 17-3103(c).
MCA shall be entitled to use or operate any loudspeaker system, sound amplifier,
or other similar device in conjunction with the Amphitheatre Project between the
hours of 10:00 a.m. and midnight on Fridays and Saturdays and on days before
legal holidays, and between the hours of 10:00 a.m. and 11:00 p.m. on other days
(except that on Sundays, events shall not begin prior to 2:00 p.m.), subject
only to complying with the following provisions of this Section 4.7 in the
initial design and construction of the Amphitheatre Project and in the operation
of the Amphitheatre Project. MCA shall have the right to operate the
Amphitheatre Project for any and all purposes consistent with this Agreement or
the Sublease, including without limitation, the purpose of rock and roll
concerts. To minimize noise impact in neighboring communities, MCA shall design
the "house" sound system of the Amphitheatre Project to include directional
loudspeakers designed specifically to concentrate sound within the seating area
of the Amphitheatre Project; provided, however, the foregoing shall not prohibit
the use by artists of their own sound systems in addition to that of the
Amphitheatre Project. Additionally, sound containment walls and/or berms shall
be included in the initial design and construction of the Amphitheatre Project
in order to minimize noise impact in the adjacent areas. MCA covenants that,
during concerts presented at the Amphitheatre
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Project, the "equivalent sound level" over a thirty (30)-minute period (from
both MCA's and the performer's sound equipment) at the residential property
lines adjacent to the Amphitheatre Project shall not exceed 65 dBA. Any MCA
Amphitheatre Project concert at which the covenant set forth in the immediately
preceding sentence is breached by MCA is hereinafter referred to as a "Sound
Violation." As liquidated damages for Sound Violations, MCA shall pay City the
following:
(a) With respect to each operating season at the Amphitheatre
Project, $250.00 per Sound Violation which occurs after the first five (5)
Sound Violations and prior to the eleventh Sound Violation during such
season;
(b) With respect to each operating season at the Amphitheatre
Project, $500.00 per Sound Violation which occurs after the first ten (10)
Sound Violations and prior to the sixteenth Sound Violation during such
season; and
(c) With respect to each operating season at the Amphitheatre
Project, not more than $1,000.00 (as may be imposed by City's Commissioner
of Parks, Recreation, and Cultural Affairs) per Sound Violation which
occurs after the first fifteen (15) Sound Violations during such season.
MCA's compliance with the noise limitations set forth in this Section 4.7 shall
constitute compliance with and full satisfaction of any and all ordinances and
other legal requirements relating to noise and/or sound levels, whether or not
such ordinances or other legal requirements currently exist or are hereafter
enacted.
4.8 Termination and Reimbursement. In the event of any or all of (a)
failure of any material conditions to this Agreement, which failure is not
caused by MCA's breach of this Agreement, (b) breach of any warranties or
covenants by City, or (c) any changes in permit or other legal requirements by
City notwithstanding Section 4.5 of this Agreement, which changes substantially
and materially adversely affect the ability of MCA to conduct the business
contemplated by this Agreement, then and in that event MCA shall be entitled to
terminate this Agreement by giving City written notice of such termination. In
the event of such termination by MCA pursuant to this Section 4.8 or
termination of this Agreement by MCA pursuant to Subsection 4.3(f) or
Subsection 4.3(g) of this Agreement or
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in the event of termination of this Agreement by City pursuant to Subsection
4.3(e) of this Agreement, then and in any such event City shall pay to MCA an
amount (the "Reimbursement Amount") which, except as provided in the last
sentence of this Section 4.8, shall be equal to the total amount of Unamortized
Developmental and Investment Costs (as hereinafter defined), not to exceed Seven
Million Dollars ($7,000,000.00), related to the Project Area and incurred by MCA
as of the date of such termination. Developmental and Investment Costs shall
mean and include documented third-party payments, costs, expenses, and
disbursements related to (i) capital construction, non-maintenance repair, or
renovation, (ii) architectural design, engineering, and testing, (iii) costs for
travel, lodging, entertainment, and food incurred in the planning, development,
and construction of the Amphitheatre Project (including, without limitation,
expense reimbursements by MCA to its own employees and to its consultants), (iv)
fixtures or equipment, (v) delay costs or termination costs associated with any
contract pending as of the date of such termination, (vi) interest costs and
other costs related to financing, and (vii) attorneys' fees and consultants'
fees pertaining to the planning, development, and construction of the
Amphitheatre Project; provided that [A] the amount includable in Developmental
and Investment Costs for purposes of calculating the Reimbursement Amount shall
be fifty percent (50%) of the lesser of either the aggregate costs and expenses
described in clauses (iii) and (vii) of this Section 4.8 or an amount equal to
five percent (5%) of the total amount of Developmental and Investment Costs, [B]
the Developmental and Investment Costs shall not include any items for which MCA
has already received reimbursement from City, and [C] the Developmental and
Investment Costs shall not include salary and wage payments by MCA to its own
employees other than any salary and wage payments by MCA to any employee(s)
residing in the metropolitan Atlanta area during and in connection with
construction of the Amphitheatre Project. The Unamortized Developmental and
Investment Costs shall mean an amount equal to the Developmental and Investment
Costs (determined in accordance with the immediately preceeding sentence) less
the amount of amortization of the Developmental and Investment Costs if the
Developmental and Investment Costs were amortized on a monthly, straight-line
basis over a term of twenty (20) years (x) commencing, with respect to
Developmental and Investment Costs incurred on or prior to the date of issuance
of a final certificate of occupancy for the Amphitheatre Project, on the earlier
of the date of issuance of said certificate of occupancy or the date that is the
last day of the calendar month immediately before the
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date of termination of this Agreement, and commencing, with respect to
Developmental and Investment Costs which are incurred after the date of issuance
of said certificate of occupancy and which are properly includable under
generally accepted accounting principles on the basis of a tangible asset, on
the earlier of the date that such asset is placed in service or the date that is
the last day of the calendar month immediately before the date of termination of
this Agreement, and commencing, with respect to Developmental and Investment
Costs which are incurred after the date of issuance of said certificate of
occupancy and which are not so includable, on the date incurred and (y) ending
on the last day of the calendar month immediately before the date of termination
of this Agreement. For purposes of this Section 4.8, all assets placed in
service and all costs incurred in a calendar month shall be deemed to have been
placed in service or incurred, respectively, on the first day of such month.
City shall further pay MCA interest on the Reimbursement Amount from and
including the date which is sixty (60) days following the date of City's receipt
of MCA's documentation of the Reimbursement Amount through and including the
date on which City pays the Reimbursement Amount to MCA and pays MCA any and all
interest due under this Section 4.8. Said interest shall accrue at the floating
interest rate described in Section 15.9 of the Sublease. Notwithstanding any
other provision to the contrary in this Agreement, in the event that termination
by MCA pursuant to this Section 4.8, termination of this Agreement by MCA
pursuant to Subsection 4.3(f) of this Agreement, or termination of this
Agreement by City pursuant to Subsection 4.3(e) of this Agreement occurs prior
to substantial completion of the Amphitheatre Project, then and in any such
event the Reimbursement Amount to be paid by City to MCA in accordance with this
Agreement shall be equal to the lesser of [X] the Reimbursement Amount
calculated in accordance with the foregoing provisions of this Section 4.8 or
[Y] the sum of One Million Dollars ($1,000,000.00).
4.9. City Use of Amphitheatre.
(a) MCA and City acknowledge and agree that MCA shall permit City,
through City's Bureau of Cultural Affairs, to utilize the Amphitheatre
Project for cultural events on a maximum of twelve (12) days each calendar
year. City shall request in writing any such date at least sixty (60) days
but not more than one hundred eighty (180) days in advance thereof. With
respect to each and every such cultural event and on or before the date
which is sixty (60) days prior to the
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scheduled date for any such cultural event, MCA shall have the right to
decline City's request in the event MCA has scheduled other activities
which conflict with such date. In the event MCA declines any such date due
to a conflict, MCA shall confer with City regarding an alternate date and
shall, acting on the basis of MCA's business judgment (including, among
other factors, giving reasonable consideration to City's suggestions),
select and confirm an alternate date, which may not be cancelled by MCA
and which may be less than sixty (60) days after such confirmation. With
respect to one (1) of the twelve (12) dates each calendar year requested
by City in accordance with this Subsection 4.9, MCA agrees to confirm such
date one hundred twenty (120) calendar days in advance thereof unless MCA
has, as of the date for confirmation, already scheduled other activities
which conflict with the requested date; provided that (i) the agreement in
this sentence shall not apply to dates between and including July lst-7th
of each year, and (ii) if MCA so declines to confirm such date originally
requested by City under the agreement in this sentence, MCA shall confer
with City regarding an alternate date and shall, acting on the basis of
MCA's business judgment (including, among other factors, giving reasonable
consideration to City's suggestions), select and confirm an alternate date
in lieu of such date originally requested by City, which alternate date
may not be cancelled by MCA. MCA shall not charge City any rental for the
use of the Amphitheatre Project on such dates. However, City [A] shall pay
all expenses and costs related to use of the Amphitheatre Project by City
pursuant to this Section 4.9, [B] shall have no right to or interest in
any proceeds of parking, merchandise sales, facilities maintenance
charges, or concession sales at the Amphitheatre Project (except as
permitted under Section 4.9(b) or Section 4.9(c) hereof) or in any other
income or revenue other than the proceeds of ticket sales (exclusive of
such facilities maintenance charges) for City's events at the
Amphitheatre Project, and [C] shall undertake, by written contract having
form and content reasonably satisfactory to MCA, any and all obligations
(exclusive of the payment of rental) customarily undertaken by other
lessees, licensees, and users of the Amphitheatre Project.
(b) With respect to any event for which City uses the Amphitheatre
Project pursuant to this Section 4.9 and for which tickets are free of
charge, City and MCA agree as follows:
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(i) MCA shall not charge patrons for parking at the
Amphitheatre Project.
(ii) City shall be entitled to sell, and to retain all
proceeds from the sale of, any and all merchandise produced or
purchased by City, including the sale of any food, beverage, or
other perishable items at the Amphitheatre Project.
(c) With respect to any event for which City uses the Amphitheatre
Project pursuant to this Section 4.9 and for which tickets are not free of
charge, City and MCA agree as follows:
(i) MCA shall not charge patrons for parking at the
Amphitheatre Project unless City notifies MCA, at least fifteen (15)
days prior to the applicable City event, that MCA shall charge
patrons fifty percent (50%) of the then standard rate of parking
fees for events at the Amphitheatre Project and that MCA shall remit
to City fifty percent (50%) of such parking fees collected by MCA at
such City event.
(ii) City shall be entitled to dell, and to retain all
proceeds from the sale of, any and all merchandise produced or
purchased by City, including the sale of any food, beverage, or
other perishable items at the Amphitheatre Project.
(iii) City shall be entitled to retain all revenues from
City's ticket sales; provided, however, that the then-standard
facilities maintenance charge included in ticket prices for events
at the Amphitheatre Project shall be included in the price of each
ticket for City's event, with MCA being entitled to the total amount
of such facilities maintenance charges for all tickets sold for
City's event.
(iv) City's event may not utilize any "headline" entertainment
act that is committed to perform, during the period from May 1
through October 31 (inclusive) of the calendar year in which such
event occurs, on eight (8) or more dates at outdoor amphitheatre
facilities having 4,000 or more seats in each facility. City's
event may utilize any "headline" entertainment act that is not
prohibited under the immediately preceding
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sentence, may utilize any "headline" act that MCA has considered for
a performance to be given at the Amphitheatre Project during said
period and has decided not to engage for any such performance, and
may utilize any non-"headline" entertainment act. Furthermore, City
may use any act for a benefit concert (i.e., a concert for which the
performer has donated his or her services and from which the
proceeds are donated to a charitable purpose) which does not compete
with MCA (e.g., and without limitation, by selling or advertising
tickets for the City event before tickets have been sold for an MCA
concert with the same act in a sufficient number to enable MCA to
cover its costs and expenses for such MCA concert).
(d) With respect to any event for which City uses the Amphitheatre
Project, City and MCA agree as follows:
(i) Admission to all events at the Amphitheatre Project shall
be by ticket only, whether or not tickets are free of charge.
(ii) At no charge to City, MCA shall provide on-site
management during City's event if City's event occurs during MCA's
regular summer season at the Amphitheatre Project and shall exercise
reasonable best efforts to assist City in talent acquisition for
City's event, including advancing deposits on behalf of City for
purposes of booking entertainment acts, provided that [A] MCA shall
not be obligated to advance any such deposit until the date for the
applicable event of City has been confirmed by MCA in accordance
with Section 4.9(a) hereof, [B] City shall reimburse MCA for such
deposits, and [C] MCA shall not be obligated under this Agreement to
assume any risk for the economic success or failure of City's event.
(iii) If City elects to use or credit any promoter or
co-promoter in conjunction with any City event, City shall not, in
any manner whatsoever, use or credit any promoter or co-promoter
other than MCA (or MCA's designee) in conjunction with such event.
City shall be entitled to engage a corporate sponsor or
governmental body in conjunction with any of City's events, provided
that a business enterprise of such
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corporate sponsor or of any Affiliate of such corporate sponsor is
not the promotion of live entertainment in Georgia.
(iv) Notwithstanding any other provision to the contrary in
this Section 4.9, City shall be entitled to sell, and to retain all
proceeds from the sale of, any and all merchandise, food, beverages,
and perishable items which are produced or purchased by City and
which are vended by City from facilities and equipment brought by
City to the Amphitheatre Project for the applicable City event;
provided, however, that only MCA or its designee shall be entitled
to sell, and to retain the proceeds from the sale of, any performing
artist's merchandise. If City undertakes such sale of merchandise,
food, beverages, and perishable items for a City event at the
Amphitheatre Project, then City shall elect whether or not the
MCA-controlled concessions at the Amphitheatre Project shall be
operated during such City event and shall give MCA written notice of
such election at least fifteen (15) days prior to the date of such
City event; and MCA shall abide by such election. If City elects for
the MCA-controlled concessions to be operated during such City
event, then MCA shall be entitled to any and all proceeds from the
operation of such concessions during such City event.
4.10. Tickets for City Use. MCA shall provide, at no cost or expense to
City, forty-six (46) tickets to City for each event which is held at the
Amphitheatre Project.
4.11. Benefits to Community. In furtherance of, and to the extent
consistent with, the obligations of MCA under Section 3.4 of this Agreement, MCA
agrees: (a) to give preference consistent with City's First Source Jobs Policy
ordinance, throughout the Lease Term under the Sublease, to individuals residing
in the City of Atlanta for purposes of employment for MCA's operations at the
Amphitheatre Project, with MCA's specific goal under this Section 4.11(a) being
that at least seventy-five percent (75%) of MCA's employees for the Amphitheatre
Project will be residents of the City of Atlanta; and (b) to conduct job
fairs/skills workshops in conjunction with the surrounding communities, the
Southside Council for Jobs, and the Atlanta Area Vocational Technical School for
purposes of (i) informing the residents of the surrounding communities of the
employment and subcontract
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opportunities which may be available in connection with the development and
operation of the Amphitheatre Project and (ii) facilitating the qualification
and application process for prospective Amphitheatre Project employees residing
in the City of Atlanta. In connection with the first season of MCA's operations
at the Amphitheatre Project, MCA shall conduct at least three (3) such job
fairs/skills workshops. MCA shall meet periodically with duly appointed
representatives of the surrounding communities in order to discuss the
development and implementation of the programs described in this Section 4.11
and in order to discuss other aspects of the development of the Amphitheatre
Project. MCA shall contribute twenty-five cents ($0.25) to Metropolitan Atlanta
Community Foundation for each ticket sold by MCA at the Amphitheatre Project
during each calendar year in excess of 125,000 tickets in such year, said
proceeds to be distributed within communities impacted by the development within
a three (3)-mile radius of the facility. During the first year of MCA's
operations at the Amphitheatre Project, MCA shall contribute $100,000.00 to such
fund or association as an advance against (and not in addition to) the
contribution contemplated under the immediately preceding sentence. MCA's
performance under this Section 4.11 shall be monitored by City's Office of
Contract Compliance; and MCA shall, on or before June 1 and December 1 of each
year, submit written reports to City's Office of Contract Compliance regarding
such performance. Furthermore, in the event that MCA has not achieved or is not
maintaining the seventy-five percent (75%) goal set forth in Section 4.11(a)
hereof during operation of the Amphitheatre Project, then MCA shall request and
utilize the assistance of City's Office of Contract Compliance in achieving or
maintaining said goal. MCA shall, in good faith, facilitate the hiring of
residents of the City of Atlanta by MCA's general contractor and subcontractors
in connection with construction of the Amphitheatre Project. Without limiting
MCA's liability for City ad valorem property taxes relating to MCA's
improvements at the Amphitheatre Project, MCA also agrees that MCA shall pay, or
shall cause to be paid, any and all City ad valorem property taxes properly and
duly levied with respect to MCA's improvements at the Amphitheatre Project
during a five (5)-calendar year period commencing with the first calendar year
in which such taxes are so levied, regardless of whether the operation of the
Amphitheatre Project is continuing during said five (5)-calendar year period or
any portion thereof.
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ARTICLE V
GENERAL MATTERS
5.1. Assignment and Binding Effect.
(a) City may assign its rights under this Agreement to any
party that has succeeded to City's right, title, and interest in
Lakewood and City's right, title, and interest under the Master
Lease, provided, however, that no such assignment by City shall
reduce, mitigate, or otherwise limit in any manner any obligations
of City under this Agreement, including, without limitation, City's
obligations under Article IV of this Agreement.
(b) Subject only to disapproval by City in accordance with
this Subsection 5.1(b) (which right of disapproval shall not apply
in situations described in Subsection 5.1(c) of this Agreement), MCA
may assign, in whole or in part, MCA's rights under this Agreement
to any successor, assignee or transferee with respect to any or all
of MCA's interest under, the Sublease. Whenever MCA proposes to
assign or transfer all or substantially all of its rights under this
Agreement together with all or substantially all of MCA's rights and
interests under the Sublease, MCA shall provide written notice to
City of the proposed assignment and the proposed assignee. City
shall have a period of sixty (60) days from the date of receipt of
such notice in which to disapprove, by resolution or ordinance
adopted by its governing body, such proposed assignee. Disapproval
by City may be based upon a good faith determination that the
proposed assignee either: (i) is debarred or suspended in accordance
with Section 5-5112 of the Atlanta City Code, as the same currently
exists; or (ii) lacks the financial resources to perform the
obligations of MCA in accordance with this Agreement; or (iii) is
unable to perform in the best interest of City. Failure of City to
disapprove such proposed assignment in accordance herewith shall be
deemed a waiver of City of its right to disapprove such assignee.
(c) Without the consent of City, MCA may assign, in whole or
in part, absolutely or as collateral, MCA's rights under this
Agreement to any Affiliate(s) of MCA or to any partnership, joint
venture or other entity in which MCA or an Affiliate of MCA retains
an equity interest.
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(d) Any or all of MCA's rights under this Agreement may be
assigned, without the consent of City, upon notice to City, to or by
any Registered Mortgagee or its nominee, as collateral or pursuant
to foreclosure or similar proceedings, pursuant to the sale,
assignment, or other transfer of MCA's interest under the Sublease
in lieu of foreclosure or similar proceedings, or pursuant to the
exercise of any other right, power, or remedy of any Registered
Mortgagee.
(e) This Agreement shall be binding upon City and MCA and
their respective successors and assigns and shall inure to the
benefit of City and MCA and their respective permitted successors
and assigns.
5.2. Severability. The provisions of this Agreement shall be deemed
severable in accordance with this Section 5.2. If any provision of this
Agreement, the deletion of which would not adversely affect the receipt of any
material benefit by any party hereunder and would not substantially increase the
burden on any party hereto, shall be held to be invalid or unenforceable to any
extent, then (a) the same shall not affect in any respect whatsoever the
validity or enforceability of the remainder of this Agreement, (b) the remainder
of this Agreement shall remain in full force and effect, and (c) such invalid or
unenforceable provision shall -be reformed so as to give maximum legal effect to
the intention of the parties as expressed in such provision.
5.3. Further Documents. Each of the parties hereto agrees to sign such
other and further documents as may be consistent with the terms hereof and
appropriate to carry out the intentions expressed in this Agreement.
5.4. Applicable Law. It is the parties' express intention that this
Agreement is made pursuant to and shall be governed by and construed under the
laws of the State of Georgia.
5.5. Controlling Provisions. In the event of any inconsistency between any
provisions of the Master Lease and the provisions of this Agreement, then the
provisions of this Agreement shall be controlling. In the event of any
inconsistency between any provisions of the Master Lease and the provisions of
the Sublease, then the provisions of the Sublease shall be controlling.
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5.6. Waiver. This Agreement may not be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge, or termination is
sought. The waiver by either party of any breach of any term, covenant, or
condition herein contained shall not be deemed to be a waiver of such term,
covenant, or condition or any subsequent breach of the same or any other term,
covenant, or condition herein contained.
5.7. Multiple Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto on separate counterparts, each
complete set of which, when so executed and delivered by all parties, shall be
an original, but all such counterparts shall together constitute but one and the
same instrument.
5.8. Interpretation of Agreement. Should any provision of this Agreement
require interpretation or construction in any judicial, administrative, or other
proceeding or circumstance, it is agreed that the parties hereto intend that the
court, administrative body, or other entity interpreting or construing the same
shall not apply a presumption that the provisions hereof shall be more strictly
construed against one party by reason of the rule of construction that a
document is to be construed more strictly against the party who itself or
through its agent prepared the same, it being agreed that the agents of both
parties hereto have fully participated in the preparation of all provisions of
this Agreement.
5.9. No Third Party Beneficiary. No individual or entity that is not a
signatory to this Agreement (other than successors and assigns of the
signatories to this Agreement) shall have any rights or privileges under or
arising out of this Agreement, nor shall any person or entity that is not a
signatory to this Agreement otherwise be deemed a third party beneficiary of
this Agreement.
5.10. Entire Agreement. This Agreement sets forth all the covenants,
promises, agreements, conditions, and understandings between City and MCA, oral
or written, relating to the subject matter of this Agreement. Neither party has
made any representations or promises not expressly contained in this Agreement.
No subsequent alterations, amendment, change, or addition to this Agreement
shall be binding upon City and MCA unless reduced to writing and signed by both
parties hereto.
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5.11. Notices.
(a) All notices, demands, invoices, and requests required or
permitted to be given under this Agreement shall be in writing and shall
be delivered by personal service, by express courier, or by certified or
registered mail, postage prepaid, return receipt requested, to the parties
at the addresses set forth hereinbelow or such other address as either
party may from time to time designate in writing to the other party.
The current addresses for notices are as follows:
If to City: Department of Parks, Recreation &
Cultural Affairs
City of Atlanta
236 Forsyth Street, S.W.
Atlanta, GA 30303
Attn: The Honorable Betsy C. Baker
Commissioner
With a concurrent
copy to: City of Atlanta
Office of City Attorney
City of Atlanta
Suite 1100, South Tower
1 CNN Center
Atlanta, GA 30303-2705
Attn: Marva Jones Brooks, Esq.
If to MCA:
MCA Concerts, Inc.
100 Universal City Plaza
Universal City, CA 91608
Attn: Mr. Marc Bension
With a concurrent
copy to:
MCA Music Entertainment Group
70 Universal City Plaza
Universal City, CA 91608
Attn: Senior Vice President,
Business and Legal Affairs
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(b) All notices, demands, invoices, and requests shall be effective
and shall be deemed to have been given on the date of actual delivery by
personal service or by express courier or, if mailed, on the fourth (4th)
Business Day following the date of mailing, provided that the mailing
occurs in a major metropolitan area within the United States.
(c) All approvals and consents given by any party pursuant to this
Agreement shall be in writing, and neither party shall rely upon an
approval or consent given by the other party which is not in writing. No
party shall unreasonably delay acting upon a request by the other party
for a consent or approval contemplated by this Agreement.
5.12. Captions.
(a) The captions, section numbers, article numbers, exhibit titles,
and table of contents appearing in this Agreement are inserted only as a
matter of convenience and shall in no way define, limit, construe, or
describe the scope or intent of any section or article, nor in any way
affect this Agreement, nor in any manner be considered in the construction
or interpretation of this Agreement.
(b) Reference to section and article numbers are references to
sections and articles within this Agreement, unless the context clearly
indicates otherwise.
5.13. Number and Gender. Whenever the singular or plural number or
masculine, feminine, or neuter gender is used in this Agreement, it shall
equally apply to, extend to, and include the other.
5.14. Rights Are Cumulative. The rights and remedies conferred upon either
party in this Agreement and by law and equity are cumulative, unless and to the
extent inconsistent with the provisions of this Agreement.
5.15. Injunctive Relief. In the event of a breach or threatened breach of
any of the covenants or provisions of this Agreement by either party hereto,
the other party shall, in addition to any rights and remedies expressly
mentioned in this Agreement, have the right of injunction, the remedy of
specific performance, and the right to invoke any remedy allowed at law or in
equity.
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5.16. "Affiliate(s)" Defined. The term "Affiliate(s)" herein means any
Person which, directly or indirectly, is controlled by, is in control of, or is
under common control with, the Person with reference to which the term
"Affiliate" is used. Ownership of 50% of more of the voting or decision making
power with respect to any Person shall be deemed control, although ownership of
less than 50% shall not necessarily negate control.
5.17. "Person(s)" Defined. The term "Person(s)" herein means any person,
corporation, partnership, firm, association, trust, or other entity.
5.18. "Midnight" Defined. For purposes of this Agreement, references to
"12:00 midnight" on any day shall mean the last point in time on said day.
5.19. "Business Day(s)" Defined. The term "Business Day(s)" herein means
any day(s) other than any Saturday, any Sunday, and any holiday on which
national banking associations or the municipal governmental offices of City are
closed.
5.20. Estoppel Certificates. At any time and from time to time, upon not
less than fifteen (15) Business Days' prior request by either party hereto, City
and MCA, respectively, shall execute, acknowledge, and deliver to the other a
written estoppel certificate certifying (a) that this Agreement (in the form
attached to the certificate) is unmodified and is in full force and effect or,
if there have been modifications, that the same is in full force and effect as
modified and identifying the modifications, (b) that, to the best knowledge of
the certifying party, there is not any uncured Master Lease Default or any
uncured Event of Default under the Sublease or any act or omission which, with
the lapse of time, the giving of notice, or otherwise, will ripen into a Master
Lease Default or an Event of Default under the Sublease, other than any
specified in the certificate, and (c) that, to the best knowledge of the
certifying party, there is no default, breach, or violation by the lessor under
the Master Lease or by the sublessor under the Sublease, other than any
specified in the certificate. The party requesting the estoppel certificate may
accompany its request with a proposed certificate to be executed by the other
party; and if the other party does not execute and deliver either the estoppel
certificate tendered by the requesting party or such other party's own version
of the estoppel certificate to the requesting party within said fifteen
(15)-Business Day period, then the estoppel certificate
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prepared by the requesting party shall be conclusively deemed to have been
executed and delivered by such other party and shall be binding on such other
party as if executed and delivered by such other party. Estoppel certificates
may be relied upon by any Person proposing to acquire City's or MCA's interest
hereunder, or any portion thereof or interest therein, as the case may be, and
by any mortgagee or encumbrancer or prospective mortgagee or encumbrancer (or
any assignee thereof) now or hereafter having any present or prospective
interest in the right, title, or interest of City or MCA.
5.21. Confidentiality. City shall not use for its own benefit, and shall
hold in confidence, all information concerning MCA and its Affiliates that City
learns from MCA, from MCA's Affiliates, or from any officers, agents, licensees,
employees, or concessionaires of MCA, MCA's Affiliates, or City, provided that
City and MCA acknowledge the possibility that some information may be subject to
official Code of Georgia Annotated ss. ss. 50-18-70,71,72, and 73, as amended.
City shall not violate the confidentiality imposed in this Section 5.21 without
first obtaining the written consent of MCA unless pursuant to court order or
pursuant to written legal opinion issued by the City Attorney to City and MCA.
5.22. Survival of Certain Provisions. Notwithstanding any termination of
this Agreement pursuant to Subsection 4.3(e), Subsection 4.3(f), Subsection
4.3(g), or Section 4.8 of this Agreement, the provisions of Section 3.3, Section
4.8, and Article V (excluding Section 5.23) of this Agreement shall survive.
5.23. MCA Insurance. For the benefit of City but not for the benefit of
Sublessor or any other person, MCA agrees as follows:
(a) The public liability insurance to be maintained by MCA pursuant
to Section 9.1 of the Sublease, shall have combined single limits of not
less than Five Million Dollars ($5,000,000.00) per injury and occurrence
with respect to any insured liability, whether for death, bodily injury,
or property damage, subject to a reasonable deductible amount.
(b) The insurance which MCA is required to purchase and maintain by
virtue of the reference in Section 9.1 of the Sublease to Section 8.4 of
the Master Lease shall be fire, lightning, extended coverage,
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windstorm, and malicious mischief and casualty insurance, including
vandalism on the Amphitheatre Project (and not on any of the five (5)
buildings specified in Section 7.3.1 of the Master Lease) in the amount of
the full insurable replacement cost of the Amphitheatre Project.
(c) In performing under the last sentence of Section 9.1 of the
Sublease, MCA shall comply with Subsection 8.6 of the Master Lease, so
that, for purposes of complying' with said Subsection 8.6 under Section
9.1 of the Sublease, MCA shall be deemed to be "Lessee" (as said term is
used in said Subsection 8.6), Sublessor shall be deemed to be "Lessor" (as
said term is used in said Subsection 8.6), and any instrument whereby MCA
grants any rights or interest of MCA under the Sublease shall be deemed a
"Sublease" (as said term is used in said Subsection 8.6).
(d) MCA's right to employ self-insurance under Section 9.2 of the
Sublease shall be subject to the written approval of City's Commissioner
of Finance, which approval shall be based upon said Commissioner's review
of any specific self-insurance plan hereafter submitted to City and shall
not be unreasonably withheld, delayed, or conditioned by said Commissioner
or by City. Said Commissioner's failure to deliver to MCA any written
disapproval (setting forth the specific reasons for such disapproval) of a
proposed self-insurance plan within sixty (60) days after MCA's submittal
of such plan shall be deemed to constitute said Commissioner's approval of
such plan for purposes of this Agreement.
(e) The confirmation to be made to Sublessor under Section 9.2(ii)
of the Sublease shall also be made to City.
5.24. Memorandum of Agreement. Simultaneously with execution and delivery
hereof, City and MCA shall execute and deliver a recordable short-form
memorandum of this Agreement. MCA shall be entitled to record said memorandum at
MCA's expense.
[Remainder of this page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, City and MCA, acting through their respective duly
authorized officers or representatives, have duly executed this Agreement under
seal as of the day and year first above written.
Signed, sealed, and delivered MCA CONCERTS, INC.,
this 17th day of October, 1988, a California corporation
in the presence of:
/s/ [Illegible] By /s/ Marc Bension
- ------------------------ -------------------------
Unofficial Witness Name Marc Bension
--------------------
Title President
/s/ Linda Jo Brown -------------------
- ------------------------
Notary Public Attest /s/ Robert Biniaz
---------------------
My commission expires: Name Robert Biniaz
--------------------
July 10, 1992 Title Vice-President
- ------------------------ -------------------
[Notary Seal]
[CORPORATE SEAL]
====================================
LINDA JO BROWN
[SEAL] NOTARY PUBLIC CALIFORNIA
CITY AND COUNTY OF [Signatures continued on next page]
LOS ANGELES
My Commission Expires July 10, 1992
====================================
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<PAGE>
Signed, sealed, and delivered CITY OF ATLANTA,
this 25 day of October 1988, a municipal corporation
in the presence of: of the State of Georgia
By /s/ [Illegible]
/s/ [Illegible] --------------------------------
- ----------------------------------------- Name /s/ Andrew Young
Unofficial Witness ---------------------------
Title Mayor
--------------------------
/s/ [Illegible]
- ----------------------------------------- Recommended:
Notary Public
My commission expires: /s/ [Illegible]
Notary Public, Gwinnett County, Georgia -----------------------------------
My Commission Expires Apr. 9, 1992 Chief Administrative 0fficer
- -----------------------------------------
[Notary Seal] Attest /s/ Jessy C. Bearden
----------------------------
Name /s/ Jessy C. Bearden
----------------------------
Title Dep. Clerk
---------------------------
[CORPORATE SEAL]
Recommended:
/s/ [Illegible]
-----------------------------------
Commissoner of Parks,
Recreation and Cultural
Affairs
Recommended:
/s/ [Illegible]
-----------------------------------
Commissioner of Finance
Recommended:
/s/ [Illegible]
-----------------------------------
Commissioner of Public Works
Approved as to form on
behalf of City of Atlanta:
/s/ [Illegible]
-----------------------------------
Assistant City Attorney
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<PAGE>
EXHIBIT A
MASTER LEASE
<PAGE>
THIS AMENDED INDENTURE OF LEASE, made this 2nd day of February, 1984,
between THE CITY OF ATLANTA, a Municipal corporation chartered pursuant to the
laws of the State of Georgia, Party of the First Party (hereinafter defined as
"Lessor"), and FILMWORKS U.S.A., INC., a Georgia corporation created pursuant to
the laws of the State of Georgia, Party of the Second Part (hereinafter defined
as "Lessee"), pursuant to assignment and transfer of the Indenture between
Lessor and Atlanta Lakewood Enterprises, Ltd., dated May 1, 1979, which
assignment and transfer were authorized by order of Judge A. D. Kahn, United
States Bankruptcy Court, Northern District of Georgia, dated January 16, 1984,
Case No. 80-03317A.
WHEREAS, the Council of the City Of Atlanta, Georgia by ordinance approved
January 3, 1984, has authorized the Amendment of this Lease, said ordinance
being attached hereto as Exhibit "A"; and
WHEREAS, the parties desire to restate the Indenture of Lease as Amended,
such restatement being set forth herein;
NOW, THEREFORE, in consideration of ten dollars ($10.00) paid by Lessee to
Lessor and the mutual covenants herein contained, Lessor and Lessee hereby
convenant and agree as hereinafter provided:
1. DEFINITIONS. For the purposes of this Agreement, the following defined
terms shall have the meanings ascribed hereto in this Article 1.
1.1. "Affiliate" means, in the context of Lessee, any other entity of
which two percent (2%) or more of the ownership interest therein is owned,
directly or indirectly, by Lessee or by the holders of more than two percent
(2%) of the stock of Lessee. Such ownership interests owned by members of the
immediate families of the shareholders of Lessee shall be ascribed to such
shareholders for the purpose of the foregoing definition.
1.2. "Agreement" means this Indenture of Lease.
1.3. "Demised Premises" means the Property, the Improvements (including
the Existing Improvements) and all rights, easements and appurtenances
appertaining thereto.
<PAGE>
1.4. "Entity" means any person, corporation, partnership (general or
limited), joint venture, association, joint stock company, trust or other
business entity or organization.
1.5. "Event of Default" means those events, occurrences and circumstances
so designated in Section 10.2 of Article 10 of this Agreement.
1.6. "Existing Improvements" means those buildings, structures and other
facilities located upon the Property on the date of this Agreement and more
particularly described in Exhibit "B" attached hereto and by reference made a
part hereof.
1.7. "Gross Revenues" means the entire amount of all revenues received by
Lessee during the term of this lease with respect to the following:
(a) Admission charges, ticket sales, or any and all income derived
from sporting events, automobile races, and any and all other entertainment
events or tours where the Lessee charges admission, or is otherwise compensated.
(b) All revenues received by Lessee from occupancy leases as defined
in Section 1.18 hereof, or subleases as described in Section 1.22 hereof.
(c) All revenues received from charges made for vehicular parking on
the demised premises.
1.8. "Impositions" means any and all lawful impositions of ad valorem
taxes, special assessments for public improvements, street and sewer levies and
utility charges upon the Property or any portion thereof.
1.9. "Improvements" means all buildings, (other than temporary buildings),
structures and other facilities at any time and from time to time affixed to the
Property, including, but not by way of limitation, the Existing Improvements;
provided, however, that Improvements shall only include property which is a
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<PAGE>
building or similar structure which is intended by Lessee to become a part of
the Property as a permanent improvement thereof; and further provided that
Improvements shall not include trade fixtures, sets of scenery, displays and
similar property used in filming. Lessee shall notify Lessor within thirty (30)
calendar days after completion of construction of any structure intended by
Lessee to be an Improvement.
1.10. "Insurance Trustee" means the trustee appointed herein or by the
requirements of any mortgagee holding a mortgage on Lessee's interest in the
Demised Premises or any portion thereof, for the purpose of receiving, investing
and paying Net Insurance Proceeds. Any mortgagee holding a mortgage on Lessee's
interest in the Demised Premises or any portion thereof may elect itself to act
as insurance trustee. If an insurance trustee is not otherwise designated, the
Commissioner of Finance of Lessor shall perform the functions of the insurance
trustee.
1.11. "Lease Term" means the period of time specified in Section 2.2 of
Article 2 of this Agreement.
1.12. "Lessee" means Filmworks U.S.A., Inc., a Georgia corporation, the
assignee of Atlanta Lakewood Enterprises, Ltd., a corporation created pursuant
to the laws of the State of Georgia, and its successors and assigns of the
leasehold estate and interest in the Demised Premises under this Agreement (but
excluding any sub-lessees, occupancy-lessees, tenants and concessionaires).
1.13. "Lessor" means the City of Atlanta, a municipal corporation
chartered pursuant to the Laws of the State of Georgia. Whenever a provision of
this Lease requires approval, agreement, or action by Lessor, such provision
shall be construed to mean approval agreement or action by the governing body of
said Lessor, unless otherwise stated.
1.14. "Mortgage" (in singular) and "Mortgages" (in the plural) means any
deed to secure debt, deed of trust, mortgage, security agreement or other
instrument in the nature thereof at
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<PAGE>
any time and from time to time constituting a lien upon Lesses's interest in the
Demised Premises or any portion thereof, or collectively, two (2) or more of
such.
1.15. "Mortgagee" (in the singular) and "Mortgagees" (in the plural) means
the holder or, collectively, the holders of a Mortgage or Mortgages.
1.16. "Net Insurance Proceeds" means, in the context of any insurance
required pursuant to this Agreement, the gross proceeds from the insurance with
respect to which such term has reference (that is, the gross proceeds arising by
virtue of any insured loss in respect to the Demised Premises or any
Improvements) remaining after payment of all expenses (including, but not by way
of limitation, attorneys' fees and any extraordinary expenses of the Insurance
Trustee) incurred in the collection of such gross proceeds.
1.17. "Notice" means a written advice or notification required or
permitted by this Agreement to be served by Lessor or Lessee upon the other, or,
in the circumstances defined in Article 13 of this Agreement, upon or by the
Insurance Trustee or Mortgagees.
1.18 "Occupancy Lease" means any and all rental agreements in all or any
portions of the Demised Premises between Lessee as landlord thereunder and
others, as tenants thereunder for a term of twenty-four (24) months or less,
including the term of all options to renew.
1.19. "Operating Year" means that calendar year through the lease term,
except for the first operating year, which commences on the date of execution of
this Agreement and terminates at the and of the day on December 31, 1984.
1.20. "Property" means those tracts or parcels of land in the County of
Fulton, State of Georgia, more particularly described in Exhibit "C" attached
hereto and by reference made a part hereof and shall include all portions
thereof as to which the Lessor subsequently acquires title.
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<PAGE>
1.21. "Rent" means all amounts payable by Lessee to Lessor as rental for
the Demised Premises, as more particularly described in Article 5 of this
Agreement. Rent does not include impositions or other items payable by Lessee
under this Agreement which are not designated as rental for the Demised
Premises.
1.22. "Sub-Lease" means any and all instruments creating usufructs or
subleasehold estates in all or any portion of the Demised Premises, between
Lessee as landlord or lessor thereunder and others, as tenants or lessees
thereunder for a term in excess of twenty-four (24) months, as set forth in
Section 11.2 to this Agreement.
1.23. "Zoning and Other Encumbrances" means those matters, other than
Impositions, affecting title to the Property and the Existing Improvements which
are more specifically set forth in Exhibit "D" attached hereto and incorporated
herein.
2. PREMISES AND TERM
2.1. Premises. Lessor, for and in consideration of the rents, covenants,
agreements and stipulations hereinafter mentioned, reserved and contained, to be
paid, kept and performed by Lessee, has demised, leased and rented, and by these
presents does demise, lease and rent, unto Lessee, and Lessee hereby agrees to
lease and take upon the terms and conditions which hereinafter appear, the
Demised Premises, subject only to the Impositions and zoning and other
Encumbrances. As of the date of this Agreement, the Demised Premises consist of
the Property and the Existing Improvements. Title to the Improvements during
the Lease Term shall be in Lessee. Notwithstanding such title to the
Improvements, the terms and conditions of this Agreement shall govern the use
and operation of the improvements and the exercise of all Lessee's rights with
respect thereto and Lessee's estate, right, title and interest in and to the
improvements, which,
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<PAGE>
except for Subleases and Occupancy Leases, shall not be separable from the
leasehold estate granted Lessee hereunder. Except for termination pursuant to
Article 12 of this Agreement, upon termination of the Lease Term, whether by
expiration of time or otherwise, title to the Improvements shall, subject to the
rights of any Mortgagee, vest in and become the full and absolute property of
Lessor without need of any further action being taken by Lessee or Lessor, and
Lessee shall immediately surrender possession of the Improvements, subject to
the rights of any Mortgagee, Sub-Lessee or Occupancy Lessee.
2.2. Lease Term. The Lease Term under this Amended indenture shall
commence on the date of execution as not forth above and shall expire midnight,
local time in the City of Atlanta, State of Georgia, on the date which is
thirty-five (35) years from January 1, 1984, subject to being sooner terminated
as provided in this Indenture of Lease, as amended.
2.3. Option. Lessee, if not in default at the expiration of this lease,
and if it has faithfully performed its obligations during the term of the Lease,
shall, upon notice to Lessor, have the right to extend the lease for an
additional period of fifteen (15) years upon the same terms and conditions as
herein. Said notice shall be in writing from Lessee to Lessor no less than 120
days prior to end of the initial thirty-five (35) year term of the lease.
2.4. Interest Conveyed By This Lease. The Interest conveyed by this lease
consists of a limited and restricted interest (said limitations and restrictions
being set forth in this lease) and said conveyed interest does not include an
estate in real property.
3. CONVENANTS AND WARRANTIES BY LESSOR.
3.1. Quiet Enjoyment. Lessee paying the Rent hereby reserves, and fully
performing and observing the covenants, duties and obligations by Lessee to be
performed, observed and kept, may
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<PAGE>
peaceably possess, hold, enjoy and use the Demised Premises with the exclusive
control, possession and enjoyment thereof during the Lease Term.
3.2 Title. Lessor has fee simple title to the Property and the Existing
improvements and the Property and the Existing Improvements will be delivered to
Lessee free and clear of all claims, demands, obligations, mortgages, liens and
encumbrances of any nature or kind, except for Impositions and Zoning and Other
Encumbrances set out on Exhibit "D". Lessor warrants that the Demised Premises
are, as of the effective date of this Amendment to Indenture of Lease, zoned
M1-C, and such zoning permits the use of the Demised Premises for the use and
purposes herein specified, which zoning shall, unless otherwise requested by
Lessee, continue during the Term of this Amended Lease. As of the effective date
of this Amendment, Lessor warrants that it has fee simple title to the Demised
Premises, the Property and the Existing Improvements which is free and clear of
all claims, demands, obligations, mortgages, liens, reversions and encumbrances
of every nature, kind and description, except only for those Impositions, Zoning
and other Encumbrances which are set forth on Exhibit "D", attached hereto and
Incorporated herein by reference. Lessor warrants that Lessor's fee simple title
and the leasehold estate Amendment are marketable and insurable by such title
insurance company, licensed to do business in the State of Georgia, as Lessor or
Assigns may select, without exception other than those matters specifically set
forth in Exhibit "D". The expense of obtaining any title policy shall be borne
by Lessee.
3.3. Public Records. Pursuant to the provisions of Sections 50-18-70, et
seq, of the Official Code of Georgia Annotated, Lessor hereby agrees to make
available to Lessee any public records concerning the Demised Premises or any
other matter directly or indirectly involving the Demised Premises or any
portion thereof.
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<PAGE>
4. ENCROACHMENTS.
4.1. Removal. Lessor shall take any reasonable action necessary, including
instituting legal proceedings for the purpose of protecting the title to the
Demised Premises and Lessee's quiet enjoyment thereof against any adverse
claims, uses, occupancies and encroachments on the Property. Lessee will, if and
when requested by Lessor, join with Lessor and become a party to any judicial or
other proceedings that may be instituted by or on behalf of Lessor for the
purpose of protecting and preserving Lessor's title to the Property and Lessee's
enjoyment thereof pursuant to this Lease.
4.2. Use. Lessor and Lessee further understand and agree that when such
encroachments, adverse uses and occupancies shall have been removed by judicial
proceedings or otherwise, the use of the same for the remaining period of the
Lease Term shall inure to the benefit of Lessee to the same extent as the other
portions of the Demised Premises herein leased shall inure to Lessee under the
provisions, covenants, terms and conditions of this Agreement.
5. RENT.
5.1. Minimum Rent.
5.1.1. Lessee shall pay to Lessor the sum of $100,000.00 for each of the
first three Operating Years, and thereafter in the fourth and fifth Operating
Years the sum of $150,000.00 per year. Thereafter, Lessee shall pay to Lessor a
minimum rent of $150,000.00 per annum during the continuance of this Lease,
subject to the rental adjustment provided in Section 5.1.2. Any rent payable for
less than a full Operating Year shall be prorated in the proportion that such
period of less than a full Operating Year bears to a full Operating Year.
5.1.2. Rental Adjustments. The minimum amount of Rent payable by Lessee to
Lessor with respect to the sixth Operating Year and for each Operating Year
thereafter shall be One Hundred Fifty Thousand Dollars ($150,000.00) multiplied
by a fraction, the numerator of which fraction is the Consumer Price Index
number for
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<PAGE>
the Current Month applicable to the Operating Year and the denominator of which
fraction is the Consumer Price Index number for the Base Month, provided that
the increase in minimum rent in any given operating year shall not exceed six
percent (6%) of the minimum rent for the previous Operating Year.
5.2. Computation of Rent. Commencing with the sixth Operating Year and
subject to the provisions of Section 5.1 of this Article 5, Lessee shall, within
sixty (60) calendar days after the close of each Operating Year, pay to Lessor
three percent (3%) of its Gross Revenues received for each Operating Year, or
portion thereof, during the Lease Term. The amount due Lessor under this Section
5.2 shall be reduced by any Minimum Rent paid by Lessee to Lessor with respect
to such Operating Year, provided however, that under no circumstances shall the
amount of Rent paid to Lessor be less than the Minimum Rent due under Section
5.1.1 and 5.1.2.
The term "Consumer Price Index" means the Consumer Price index for
Atlanta, Georgia for Urban Wage Earners and Clerical Workers [1967=100], as
published by the Bureau of Labor statistics of the United States Department of
Labor. If the publishing of the "Consumer Price Index" shall cease, then the
most comparable and similar index published by any department or agency of the
United States government shall be used.
The term "Current Month" number which is applicable to the Operating Year
means the Consumer Price Index number published for the last month of the last
Operating Year which immediately precedes the beginning of the then current
Operating Year (and if no Consumer Price Index is published for said month, then
the number published for the most recent month prior thereto shall be used.
The term "Base Month" number means the Consumer Price Index number
published for the last month of the fifth Operating Year (and if no Consumer
Price Index is published for the last month of the fifth Operating Year, then
the number published for the most recent month prior thereto shall be used).
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<PAGE>
5.3. Payment of Rent. Lessee shall pay rent to Lessor in monthly
installments, in advance, on or before the first day of each and every calendar
month during the entire Lease Term. The amount of each such monthly installment
shall be equal to one-twelfth (1/12th) of the amount of the Minimum Rent with
respect to the applicable Operating Year as provided in Section 5.2 of this
Article 5. (The parties recognize that the first Operating Year [1984] shall not
be a complete year and rentals shall be prorated for such year.)
Within sixty (60) calendar days following the end of each Operating Year,
Lessee shall submit to Lessor its annual audited financial statement showing the
determination of Gross Revenues with respect to such Operating Year, and for the
sixth Operating Year and each Operating Year thereafter in the event that three
percent (3%) of the Gross Revenues for such sixth Operating Year and thereafter
shall exceed the amount of Rent paid for such Operating Year pursuant to this
Section, then Lessee shall remit and pay to Lessor the balance of the Rent due
in accordance with Section 5.1.2.
5.4. Books and Records. During the Lease Term, Lessee shall maintain
complete and accurate records, in accordance with generally accepted accounting
principles consistently applied, of all Gross Revenues received and earned with
respect to the Demised Premises by Lessee during each Operating Year, and such
other records, data and facts necessary to determine Gross Revenues hereunder as
Lessor say reasonably require.
Lessor expressly reserves the right to examine and audit all of said
records, including sales, entertainment, business and occupation tax reports to
the extent that said records and reports contain information relating to Gross
Revenues derived by Lessee from the Demised Premises. The right of examination
and audit may be exercised at any time during normal business hours. If Lessee
fails to make the aforesaid records available to Lessor in Atlanta, Georgia,
then Lessee shall pay all reasonable expenses incurred by Lessor to examine and
audit said records in the place where they are located and maintained.
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<PAGE>
Lessee agrees to keep, maintain and preserve for four (4) years following
the expiration of each Operating Year all records required under this Section,
or adequate photostatic copies thereof. In the event Lessor shall dispute the
amount of Gross Revenues during said four-year period, Lessee agrees to preserve
all such records until such dispute is resolved; and if Lessor shall not, within
said four-year period, dispute the accuracy of the statement of Gross Revenues
furnished by Lessee to Lessor, then such statement shall be conclusive on Lessor
and Lessee with respect to the amount of Gross Revenues received by Lessee with
respect to such Operating Year.
6. TAXES AND OTHER IMPOSITIONS.
6.1. Payment. Lessee shall bear and pay to the public officer charged with
the collection thereof, before the same shall become delinquent, and shall
indemnify, save and hold harmless Lessor from the payment of, any and all taxes,
assessments, license fees, excises, imposts, fees and charges of every sort,
nature and kind, which during the Lease Term are levied, assessed, charged or
imposed upon or against the Demised Premises (including any Improvements) during
the Lease Term for which the Lessee is liable at law, to the extent of all
installments becoming due in connection therewith during the term of the Lease.
The parties, however, recognize the restricted and limited interest conveyed by
the lease as described in Section 2.4 above.
6.2. Contest. If any Imposition (including without limitation, any tax,
assessment, license fee, excise, impost, fee or charge) shall be deemed by
Lessee to be improper, illegal or excessive, Lessee may, at no cost or expense
to Lessor and in Lessee's own name, dispute and contest the same and, in such
case, such item need not be paid only if and to the extent that the laws or
regulations governing such contest permit postponement of payment; provided,
however, that Lessee shall first furnish to Lessor, if requested by Notice to
Lessee from Lessor, reasonable security for the payment of such item so
contested. Unless so
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<PAGE>
contested by Lessee, all such Impositions shall be paid by Lessee within the
time provided by law, and if contested, any such Imposition shall be paid before
the issuance of an execution on the final judgment.
6.3. Receipts. After all payments are made by Lessee pursuant to and in
conformity with Sections 6.1 and 6.2 of this Article 6, Lessee shall at once
furnish to Lessor duplicate receipts or other satisfactory evidence of such
payment.
6.4. Utilities. Lessee is to be responsible for and shall pay all water,
sanitation, gas, heat, light, power, steam and telephone services and any and
all other services supplied to the Demised Premises.
6.5. Performance by Lessor. If Lessee fails to procure insurance, as
hereinafter provided, or wrongfully fails to pay any Impositions (including
taxes, assessments, license fees, excises, imposts and fees), utility charges or
premiums of insurance, Lessor may, at Lessor's option, after ten (10) days
following Notice to Lessee by Lessor, and an behalf of Lessee, procure any such
insurance and make any such payment or payments as may be reasonably necessary.
6.6. Reimbursement. Any reasonable amount paid or expended by Lessor under
the provisions of Section 6.5 of this Article 6 shall be reimbursed and paid to
Lessor by Lessee on demand.
7. USE OF DEMISED PREMISES.
7.1. Purposes and Compliance With Laws.
7.1.1. Lessee agrees that the dominant theme in the development of the
Demised Premises shall be in connection with the entertainment field, production
of film and television programming and complimentary uses and activities, as now
exist or as may be developed in the future.
Lessor acknowledges and agrees that the Demised Premises may be used
for any lawful purpose or use connected with
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<PAGE>
or related to the production of motion pictures, television programming and
similar or related entertainment, commercial and production activities, and all
sorts and types of visual and sound recording, copying, producing and
processing, and for retail stores, lodging, office buildings and complexes and
related entertainment and commercial activities. Such uses, purposes and
facilities for which the Demised Premises may be used shall include, without
limitation, studios, sound stages, outdoor lots, recording studios, studio
manufacturing, film processing laboratories, educational facilities for
vocational and academic training, auditoriums, theatres and exhibition halls,
lodging, office buildings and complexes, retail stores, food, beverage and
entertainment facilities, parking, warehouses, fairs and special events, public
tours, and entertainment facilities and parks. Further, the Demised Premises may
he used for public entertainment, including, without limitation, such events as
automobile and motorcycle races, expositions, demonstrations, trade shows, and
any and all other presentations and performances which are lawful; and such
other uses and purposes as shall from time to time be approved by Lessor upon
application of Lessee. Lessee expressly covenants not to operate horse racing,
dog racing, or any other events or undertakings involving wagering in connection
with horse racing or dog racing without the express consent of Lessor.
7.1.2. At all times, Lessee shall conform to, obey and comply with all
present and future laws and ordinances, and all lawful requirements, rules and
regulations of all legally constituted authorities, existing at the commencement
of the Lease Term, or at any time during the continuance of the Lease Term,
which in any way affect the Demised Premises or the use of the Demised Premises,
or any repair, replacement, demolition, renovation, construction, restoration or
excavation being done on or to the Demised Premises, or in any way affecting
this Agreement. The right to contest the validity thereof in good faith, at
Lessee's
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<PAGE>
sole cost and expense and in Lessee's own name, is hereby reserved to Lessee.
7.2. Condition of Demised Premises. Lessor shall not be liable or
responsible for the condition of the Demised Premises, or for maintenance of the
Demised Premises, or for the safety and suitability of the Demised Premises for
any uses for which the Demised Premises may be employed by Lessee; nor shall
Lessor be liable or responsible for any loss, damage or injury which may occur
from any cause whatsoever to Lessee, or the property, agents, employees,
patrols, exhibitors, licensees or concessionaires of Lessee, or any other person
whatsoever, occurring on the Demised Premises or in or about the Improvements.
Lessee hereby acknowledges that Lessee has inspected and is familiar with the
condition of the Demised Premises including the terrain features of the property
and the Existing Improvements located thereon, and accepts such in the present
condition thereof. Provided, however, that Lessee accepts the premises subject
to the agreement of Lessor that Lessor will maintain the dam and related
facilities located on the Premises and the drainage of water from the lake
impounded by such dam. Provided further, however, that the Lessor, recognizing
Lessee's desire to relocate the dam, lake and drainage system now in place to
accommodate better uses of the race track facilities on the Demised Premises
agrees to have its Department of Environment and Streets study possible
alternatives to the present lake and dam, with a view toward cooperating with
Lessee in this regard if it is determined to be both economically and
environmentally feasible.
7.3. 0ptional Improvements and Demolition of Improvements.
7.3.1. If Lessee desires to undertake any material alteration or
demolition of the grandstand, or of any of the four main exhibit buildings now
located on the premises, Lessee must first obtain approval of such action by
Lessor, acting through Lessor's
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governing body. In the event that material alteration or demolition of any of
these five (5) specified structures is approved by Lessor, any salvage from
these specified structures shall belong to Lessor.
7.3.2. Lessee may, at no cost or expense to Lessor, either add to,
renovate or construct anew any of the Existing Improvements and to construct new
Improvements, or remove or demolish any of the Existing Improvements or any
other Improvements (at any time and from time to time during the Lease Term)
including, but not limited to, the destruction of the racetrack and grandstands
on the Demised Premises to permit the use of all of the Demised Premises as in
accordance with Section 7.1.1. for such other or additional uses or construction
as Lessee may determine and desire, except that approval by Lessor must be
obtained with regard to the five (5) structures specified in Section 7.3.1
above. No prior approval shall be required as to other alterations or
demolitions. Any salvage resulting from any such additions, renovations,
construction or demolition during the Term of the Lease shall belong to Lessee,
except the salvage from the five (5) specified structures in Section 7.3.1. Any
Existing Improvements (excluding the lake, racetrack and grandstands) which are
demolished by Lessee shall be replaced by new Improvements of equal or greater
value in accordance with Lessor's development plan for the Demised Premises. As
long as any law, rule or regulation shall require that the lake on the Demised
Premises must be maintained, Lessor agrees to maintain, repair, restore and
rebuild (if necessary) the lake, dam and all facilities related thereto. If
Lessee shall become aware of any condition of this lake which may require any
action by Lessor, Lessee agrees to give Lessor written notice thereof. At such
time as the lake is no longer required to be maintained as aforesaid, Lessee may
drain the lake and demolish the dam and related facilities for the purpose of
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using the area comprising the lake for such purposes as are permitted under
Section 7.1.1. hereof.
7.3.3. Lessee's Development Plan. Lessee pledges its good faith efforts
throughout the term of this lease to implement a development plan for capital
improvements on the Demised Premises, substantially along the lines of the
proposed plan set forth in Exhibit "E" to this Agreement. It is understood and
agreed between the parties that in the event that economic necessity or
legitimate business considerations require alterations in the plan as set forth,
such alterations shall not be grounds for declaring Lessee in default under this
Agreement, in the absence of actual fraud or manifest bad faith.
7.4. Protection of Adjacent Property. While any excavation, demolition or
construction is being performed on the Demised Premises or any portion thereof,
Lessee shall protect all adjacent property.
7.5. Liens. Lessee shall permit no Liens to attach to the reversionary
estate of Lessor in the Demised Premises as a result of any excavation,
demolition or construction upon the Demised Premises or any portion thereof,
unless Lessee shall remove such Liens, within ninety (90) days from and after
recordation thereof, by discharge, bonding or other proceeding; provided that
this Section 7.5 shall not, and shall not be deemed to, authorize or empower
Lessee to cause or permit any lien whatsoever to attach to Lessor's reversionary
estate in tbe Demised Premises, which shall always remain superior to Lessee's
interest hereunder.
7.6. Title. Any Improvements constructed by Lessee shall become a part of
the Demised Premises, but the legal title to the same shall not vest in Lessor
until the termination of this Agreement, whether by expiration of the Lease Term
or otherwise. Title to all Improvements, facilities and betterments of any sort
whatsoever which are constructed hereafter or placed upon any portion of the
Demised Premises, and any and all depreciation and
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investment Tax Credit generated thereby or available in connection therewith
shall belong to and accrue to the benefit of Lessee during the Lease Term.
7.7. Removal of Property. Lessee and all other persons and entities shall
have the right to remove from the Demised Premises all temporary buildings,
temporary facilities, trade fixtures and personal property of any kind which
belong to Lessee or any other person or entity which have been placed upon the
Demised Premises by Lessee or by such persons or entities. The removal thereof
shall be made within sixty (60) days from and after the termination of this
Agreement, or at any time prior thereto.
7.8. Subleases and Occupancy Leases. The voluntary, involuntary or other
surrender or termination of this Agreement during the term of this Agreement
shall not terminate or affect any then existing Subleases, but such Subleases
shall continue in full force and effect according to their terms and shall be
binding on Lessor, provided the person or entity holding any portion of the
Demised Premises under such Sublease is not then in default thereunder and shall
promptly and faithfully thereafter perform all covenants and agreements
contained therein and shall, in writing, agree to attorn to the Lessor with
respect to such SubLeases. No Sublease shall extend beyond the Lease Term
specified in Section 2.2 of Article 2, or, as extended pursuant to Section 2.3.
In the event of such termination of this Agreement, outstanding occupancy leases
shall also be honored by Lessor as to terms and conditions relating to occupancy
of the premises and rentals, but any other terms or conditions must be expressly
ratified by Lessor, provided the person or entity holding such occupancy Lease
is not then in default, and agrees in writing to attorn to Lessor herein. No
term in such Occupancy Lease which has not been expressly ratified by Lessor may
bind Lessor to expend monies in excess of rental due from the holder of said
Occupancy Lease.
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7.9. Repair. Lessee shall, at all times during the Lease Term, at Lessee's
sole cost and expense, keep and maintain the Demised Premises in good and
sanitary order, condition and repair.
7.10. Future Requirements. In the event, at any time during the Lease
Term, any alteration, demolition, renovation, repair, replacement or other work
of any nature, structural or otherwise, shall be required or ordered or becomes
necessary on account of any governmental rule or regulation now in effect or
hereafter adopted which affects the Demised Premises or with respect to any and
all other buildings, other structures, alterations or improvements that may
thereafter be constructed, located on, in or made a part of the Demised
Premises, the entire cost and expense thereof (regardless of when the same shall
be incurred or become due) shall be the liability of Lessee and in no event
shall Lessor be called upon to contribute thereto or to do or pay for any work
performed, materials furnished or obligations incurred by Lessee, except as
otherwise provided in this Lease.
8. INSURANCE.
8.1. Public Liability Insurance. Lessee shall purchase and maintain public
liability insurance with responsible insurance companies authorized to do
business in the State of Georgia, having a duly designated agent or agents upon
whom process in any suit or action in the courts of the State of Georgia or of
the United States of America can be served, insuring Lessee against liability
for injuries to persons (including death) and property caused by Lessee's
negligent use and occupancy of the Demised Premises or otherwise caused by the
negligence of Lessee on the Demised Premises, the policy limits thereof to be in
an amount of not less than Five Hundred Thousand Dollars ($500,000.00) for any
one person and not less than Three Million Dollars ($3,000,000.00) for any one
occurrence involving injury (including death), to more than one person and an
amount of not less than One Hundred Thousand Dollars ($100,000.00) for property
damage
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resulting from any one occurrence. The Lessor shall be an additional named
insured in all such policies.
8.2. Motor Vehicle Liability Insurance. Lessee shall purchase and maintain
during the term of this Agreement motor vehicle liability insurance on all motor
vehicles owned, leased or otherwise used by Lessee upon the Demised Premises in
an amount of not less than Three Hundred Thousand Dollars ($300,000.00) for
injury (including death) to any one person and an amount of not less than One
Million dollars ($1,000,000.00) for any one occurrance involving injury
(including death) to more than one person, and in an amount of not less than
Twenty-five Thousand Dollars ($25,000.00) for property damage resulting from any
one occurrence.
8.3. Worker's Compensation Insurance. Leasee shall provide for and
maintain adequate Workmen's Compensation Insurance for all of Lessee's employees
upon the Demised Premises, as required by statute, and employer's liability
insurance for protection of such of Lessee's employees upon the Demised Premises
as cannot be covered by Worker's Compensation in an amount not less than One
Hundred Thousand Dollars ($100,000.00).
8.4. Improvement Insurance. Lessee shall purchase and maintain fire,
lightning, extended coverage, windstorm and malicious mischief and casualty
insurance, including vandalism, on the five (5) buildings specified in Section
7.3.1 above in the amount of their full, insurable value. The determination of
full, insurable value shall be made by Lessee at least once every other
Operating Year during the Lease Term, and the insurance coverage shall be
adjusted to reflect such valuations. Lessee shall pay the expense of such
determination.
8.5. Insurance Polices. Leasse shall furnish to Lessor a photostatic copy
of all policies of insurance obtained pursuant to this Article 8. With respect
to the first of such policies obtained, Lessee shall furnish Lessor copies of
binders evidencing
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that such coverage is in force within fifteen (15) calendar days after the date
of this Agreement and shall furnish copies of all such policies within sixty
(60) calendar days after the date of this Agreement. Such policies shall provide
that the coverage shall not be amended to decrease the protection below the
limits specified herein or be subject to cancellation without at Least thirty
(30) calendar days advance notice to the Commissioner of Finance of Lessor and,
if desired by Lessee, to Lessee and any mortgagee. Such policies obtained in
accordance with Sections 8.1 and 8.4 of this Article 8 shall also include in
addition to Lessee, Lessor as an additional named insured and, if desired by
Lessee, any Mortgagee.
8.6. Coverage by Others. Lessee shall require that all persons and
entities occupying any portion of the Demised Premises under any Sublease shall
provide and maintain during such person's use or occupancy of the Demised
Premises liability insurance with limits of liability of not less than
$300,000.00 for any injury (including death) to any one person, not less than
$1,000.000.00 for injuries (including death) to more than one person in any one
occurrence and not less than $25,000.00 for property damage in any one
occurrence. Lessee and Lessor, and, if desired by Lessee, any Mortgagees, shall
appear as additional named insureds on all such policies. Unless Lessor shall
object to the valuations as determined by Lessee within thirty (30) days from
receipt of notice from Lessee of such determination, the same shall be deemed to
have been agreed to by Lessor.
8.7. Indemnification. Notwithstanding the foregoing, Lessee shall
indemnify and hold Lessor and the officers, agents and employees of Lessor
harmless against any and all claims of any kind or character resulting from
negligent acts or omissions of Lessee or the officers, agents, exhibitors,
licensees, employees or concessionaires of Lessee in the use and occupancy of
the
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Demised Premises, or resulting from the failure of Lessee to perform any of
Lessee's obligations hereunder or to comply with any of the terms thereof, or
otherwise resulting from the negligence of Lessee or the officers or employees
of Lessee. The obligation of Lessee to hold Lessor and the officers, agents and
employees of Lessor harmless shall not be restricted to the limits of the
liability insurance required to be purchased pursuant to this Article 8.
8.8. Insurance Trustee. If required by any Mortgagee, the Net Insurance
Proceeds of payment for any loss under the policies described in Section 8.4 of
this Article 8 shall be paid to the Insurance Trustee, for the benefit of Lessor
and Lessee, to the end that the Insurance Trustee shall be entitled to collect
for the use and benefit of such Mortgagee, Lessor and Lessee the Net Insurance
Proceeds in the event of and by reason of the loss or damage of any
Improvements. Lessor and Lessee hereby authorize and direct any carrier of such
insurance to so pay the Insurance Proceeds to the Insurance Trustee.
8.9. Damage, Destruction and Restoration. If at any time any Improvements
are destroyed or damaged (in whole or in part) by fire or other casualty, Lessee
shall promptly give Notice thereof to the Insurance Trustee, and Lessee shall
give all notices required under insurance policies and shall prosecute all
claims to the extent it deems it economically feasible to do so, and Lessor
shall cooperate with Lessee in such prosecution of claims. All Net Insurance
Proceeds of insurance resulting from such claims for Lessee shall be paid to and
held by the Insurance Trustee in a separate trust account. Lessee, upon request
of the Insurance Trustee, shall apply the Net Insurance Proceeds to repair the
Improvements or to construct new Improvements which shall approximate in value
the damaged or destroyed Improvements; provided, however, in the event such
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damage or destruction affects a material portion of the Improvements, then
Lessee shall have the option to cancel this Agreement, whereupon all Net
Insurance Proceeds shall be paid over to Lessor and become the sole property of
Lessor. The foregoing option must be exercised by Lessee, if at all, by Notice
to Lessor from Lessee within ninety (90) calendar days from and after the event
of such damage or destruction.
8.10. Application of Net Insurance Proceeds. All Net insurance Proceeds,
whether held by Lessor, Lessee or the Insurance Trustee, shall be made available
to Lessee for the purpose of any repair, rebuilding or restoration by Lessee
pursuant to Section 8.9 of this Article 8. Upon completion by Lessee during the
Lease Term of the repair, restoration or construction of such Improvements, any
unexpended portion of the Net Insurance Proceeds shall inure to Lessee and any
Mortgagee, as their interests may appear.
8.11. Termination. In the event of the termination of this Agreement by
reason of an Event of Default before the expenditure of the full amount of the
Net Insurance Proceeds, any unexpended balance remaining thereof, including any
interest previously earned by such balance, shall inure to and become the sole
property of Lessor, subject to the rights of any Mortgagee having an interest
therein.
8.12. Investments. Any moneys held by the Insurance Trustee under the
provisions of Section 8.8 of this Article 8 shall, at the written request of
Lessee, be invested or reinvested by the Insurance Trustee as specified by
Lessee in such request, or in the absence of such specification, in such
investments as the Insurance Trustee shall deem proper.
8.13. Evidence of Payment. Lessee shall promptly furnish to Lessor
duplicate receipts or satisfactory evidence of the payment of all premiums on
any and all insurance required to be carried by Lessee in accordance with this
Agreement.
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8.14. Invalidation. Lessee agrees and covenants that Lessee will not do or
permit to be done in, to, or about the Demised Premises, any act or thing which
will invalidate any insurance pertaining to any Improvements; and, further,
Lessee will not permit any Improvements at any time to be put, kept or
maintained on the Demised Premises in such condition that the same cannot be
insurable in the amount of the full insurable value thereof.
9. MORTGAGES.
9.1. Encumbrances. Lessee shall have the right to encumber by Mortgage (or
Mortgages) all or any portion of Lessee's rights and interests hereunder
including, without limiting the generality of the foregoing, all or any portion
of Lessee's rights and interests in and to all Improvements on the Demised
Premises. In all respects, however, any Mortgagee's interests shall be
subordinate, inferior and junior to Lessor's rights, title, privileges, liens
and interests as provided in this Agreement, subject to the rights of any such
Mortgagee to cure any Event of Default by Lessee as herein provided. Lessee
shall not have the right to, in any way, burden or encumber Lessor's fee simple
title and reversionary interest in and to the Demised Premises.
9.2. Notices to Mortgagees. If, at any time after the execution and
recording in the Office of the Clerk of the Superior Court of Fulton County,
Georgia, of any Mortgage, the Mortgagee thereunder shall notify Lessor in
writing that such mortgage has been given and executed by Lessee, and shall at
the same time furnish Lessor with a copy of such Mortgage certified as true and
correct by the said Clerk, and the address to which such Mortgagee desires
Notices and copies of suits as hereinbelow provided to be mailed, Lessor hereby
agrees that Lessor will mail to such Mortgagee, as a notice, duplicate copies of
any and all suits filed by Lessor against Lessee and such Notices as Lessor has
agreed to provide to Mortgagees under Section 10.4
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of Article 10 of this Agreement. Notification by any Mortgagee shall cease to be
effective upon written notice by such Mortgagee to Lessor of the satisfaction of
the Mortgage held by such Mortgagee.
9.3. Cure by Mortgagees. To the extent that Lessee grants such right to
any Mortgagee, such Mortgagee may, at the option of such Mortgagee, at any time
before Lessor shall have terminated this Agreement as provided in Section 10.4
of Article 10 of this Agreement, pay any amount or do any act or thing required
of Lessee by the terms of this Agreement. All payments so made and all acts or
things so done and performed by any such Mortgagee shall be as effective to
prevent a forfeiture of the rights and interests of Lessee hereunder as the same
would have been if done and performed by Lessee instead of any such Mortgagee.
Lessor shall not modify, terminate, cancel or surrender this Lease without the
prior written consent of any Mortgagee entitled to Notice under Section 9.2,
except upon the occurrence of an Event of Default as defined in Section 10.2 and
then only if all conditions and provisions of Articles 9 and 10 have been fully
complied with by Lessor and such Event of Default continues and has not been
cured pursuant to the provisions of Article 10.
9.4. Subrogation. Any Mortgage given by Lessee may be so conditioned as to
provide that as between Lessee and any Mortgagee under such Mortgage, such
Mortgagee, on curing any circumstances which might ripen into an Event of
Default, shall be thereby subrogated to any and all of the rights of Lessee
under the provisions, covenants, terms and conditions of this Agreement.
10. DEFAULT AND TERMINATION.
10.1. Interest Conditional. The Lessee's interest created by this
Agreement is granted on the condition that should any Event of Default occur and
be continuing, then Lessor
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may, subject to all of the terms, conditions and provisions hereof, terminate
this Agreement and such Lessee's interest as provided in this Article 10.
10.2. Events of a Default. The following conditions and events shall
constitute Events of Default for purposes of this Agreement:
a. Lessee fails to make or pay any fees, charges or other payments
required hereunder when due to City within fifteen (15) days after receipt
of written notice from Commissioner of Finance of Non-payment thereof;
b. Forty-nine percent (49%), or more, of the ownership of Lessee is in any
calendar year transferred, passes to or devolves upon (by operation of law
or otherwise) any other person, firm or corporation without the written
consent of the Lessor, unless such transfer of interest is approved or
permitted under Articles 3, 9, or 11;
c. Lessee fails to keep, perform and observe each and every promise,
covenant and condition set forth in this Agreement on its part to be kept,
performed or observed for thirty (30) days after receipt of written notice
of default from Comissioner of Finance, except where fulfillment of such
obligation requires activity over a period of time and Lessee has
commenced to perform whatever may be required within thirty (30) days
after receipt of such notice from the Comissioner of Finance and continues
such perfomances without interruption except for causes beyond its
control;
d. The levy of any attachment or execution, or the appointment of any
receiver, or the execution of any other process of any court of competent
jurisdiction which is not vacated, dismissed or set aside within a period
of ninety (90) days and which does, or as a
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direct consequence of such process will, interfere with Lessee's use of
the Demised Premises or with its operations under this Agreement;
e. Lessee becomes insolvent, or takes the benefit of any present or future
insolvency statute, or makes a general assignment for the benefit of
creditors, or files a voluntary petition in bankruptcy, or a petition or
answer seeking an arrangement for reorganization, or for readjustment of
indebtedness under the federal bankruptcy laws or under any other law or
statute of the United States, or of any state law, or consents to the
appointment of a receiver, trustee or liquidator of all or substantially
all of its property located within the Demised Premises;
f. By order or decree of court, Lessee is adjudged bankrupt, or an order
is made approving a petition filed by any of the creditors or stockholders
of Lessee seeking the reorganization or the readjustment of its
indebtedness under the federal bankruptcy laws, or under any law or
statute of the United States, or any state thereof;
g. A petition under any part of the federal bankruptcy laws, or an action
under any present or future solvency law or statute is filed against
Lessee and is not dismissed within one hundred twenty (120) days;
h. By, pursuant to or under authority of (1) any legislative act,
resolution or rule, or (2) any order or decree of any court, governmental
board, agency or officer having jurisdiction, a receiver trustee or
liquidator takes possession or control of all or substantially all of the
property of Lessee, and such possession or control continues in effect for
a period of one hundred twenty (120) days;
i. Any lien is filed against the Demised Premises because of any act or
omission of Lessee or a sub-tenant and such lien is not removed, enjoined
or a bond for
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satisfaction of such lien is not posted within sixty (60) days after
Lessee has actual knowledge of the filing of such lien; or
j. Lessee voluntarily abandons, deserts or vacates the Demised Premises.
10.2.1. Lessee's Right to Contest and Effect of Acceptance.
a. Nothing in this Section 10.2 shall prohibit Lessee from contesting in
good faith any governmental authority's requirements or its duty to pay
any tax, lien, claim, charge or demand, but Lessee shall comply with all
laws, ordinances, rules, regulations, orders and other governmental
directives until and unless relieved from doing so by a court of
competent jurisdiction.
b. No acceptance by Lessor of the fees and charges or other payments
specified herein, in whole or in part, and for any period or periods,
after a default in complying with any of the terms, covenants and
conditions to be performed, kept or observed by Lessee shall be deemed a
waiver of any right on the part of Lessor to cancel or terminate this
Agreement on account of such default, so long as such default continues.
10.2.2. Lessor's Rights of Re-Entry. Subject to the provisions of Article
9 and Section 10.3 through 10.9, Lessor shall, as a non-exclusive remedy, upon
the giving of written notice of cancellation or termination as above provided,
have the right to re-enter the Demised Premises and every part thereof on the
effective date of cancellation or termination without further notice of any
kind, remove any and all persons therefrom and may regain and resume possession
either with or without the institution of summary or legal proceedings or
otherwise. Such re-entry, however, shall not in any manner affect, alter or
diminish any of the obligations of Lessee under this Agreement.
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10.2.3. Additional Rights of Lessor. Lessor, upon termination or
cancellation of this Agreement, or upon re-entry, regaining or resumption of
possession of the Demised Premises, pursuant to 10.2 hereof, may occupy said
premises and shall have the right to permit any person, firm or corporation to
enter upon the Demised Premises and use the same. Such occupation by others may
be of only a part of said Premises, or the whole thereof or a part thereof
together with other premises, and for a period of time the same as or different
from the balance of the term remaining hereunder, and on terms and conditions
the same as or different from those set forth in this Agreement. Lessor shall
also have the right to repair or to make such structural or other changes in the
Demised Premises as are necessary in its judgment to maintain the suitability
thereof for uses and purposes similar to those granted under this Agreement
without affecting, altering or diminishing the obligations of Lessee hereunder.
10.2.4. Survival of Lessee's Obligations. In the event this Agreement is
terminated or cancelled by Lessor pursuant to the provisions of this Agreement,
or in the event Lessor re-enters, regains or resumes possession of the Demised
Premises, Lessor shall be entitled to recover damages to be computed in the
following manner: Subject to Lessor's obligation to mitigate damages, Lessor
shall be entitled to recover the amount or amounts of fees and charges which
would have been due and payable to Lessor to the same extent, at the same time
or times, and in the same manner as if no termination, cancellation, re-entry,
regaining or resumption of possession had taken place. Lessor shall have the
responsibility to diligently seek mitigation of damages in the event of such
termination, cancellation or resumption of possession.
10.2.5. Waiver of Redemption and Damages. Lessee hereby waives any and all
rights of redemption and damages granted by or under any present or future law
or statute in the
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event it is dispossessed by reason of an uncured default, and Lessor obtains or
retains possession of the Demised Premises in any lawful manner.
10.3 Force Majeure. For the purpose of any of the provisions of this
Agreement, neither Lessor nor Lessee, as the case may be, nor any successor in
interest, shall be considered in breach of, or default in, the obligations
thereof with respect to this Agreement in the event of enforced delay in the
performance of such obligations due to unforeseeable causes beyond the control
and without the fault or negligence thereof, including, but not restricted to,
acts of God, acts of the public enemy, acts of the Federal Government, acts of
the other party, fires, floods, epidemics, quarantine restrictions, strikes,
freight embargoes, unusually severe weather or delays of any contractor or
subcontractors due to such causes; it being the purpose and intent of this
Section 10.3 that in the event of the occurrence of any such enforced delay, the
time or times for perfomance of the obligations of Lessor or Lessee, as the case
may be, with respect to this Agreement shall be extended for the period of the
enforced delay; provided that the party seeking the benefit of the provisions of
this Section 10.3 shall, within ten (10) calendar days after the beginning of
any such enforced delay, have first notified the other party thereof by Notice,
and of the cause of causes thereof, and requested an extension for the period of
the enforced delay.
10.4. Remedies. If an Event of Default has occurred and is continuing,
Lessor may, at Lessor's option, upon giving sixty (60) calendar days prior
Notice to any Mortgagee entitled to such Notice as provided In Section 9.2 of
Article 9 of this Agreement of the circumstances which may ripen into any such
Event of Default (which Notice may be given concurrently with any Notice to
Lessee from Lessor required pursuant to Section
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10.2 of the Article l0), except as otherwise provided in Section 10.5 of this
Article 10, unless such Mortgagee is in compliance with either Section 10.4 or
Section 10.5 of this Article 10, in good faith instituted proceedings necessary
to secure such possession and if Mortgagee proceeds with due diligence to cure
the circumstances which may ripen into such Event of Default, Lessor will not
terminate this Agreement provided Mortgagee, for the period from the inception
to the cure of such circumstances, pay all Rent and other monetary sums due
Lessor under this Agreement and otherwise performs all the other obligations
required by this Agreement to be performed by Lessee, which Mortgagee is able to
perform under the circumstances.
10.5. Foreclosure by Mortgagee. If the nature of the circumstances which
may ripen into an Event of Default (as declared by Lessor under Section 10.4 of
this Article 10) is such that the same cannot be cured by Mortgagee, then if
Mortgagee, after receiving Notice of such circumstances and prior to the
expiration of the first thirty (30) days of the sixty (60) calendar days grace
period in Section 10.4 of this Article 10, promptly institutes foreclosure
proceedings to foreclose the Mortgage held by such Mortgagee, and proceeds with
due diligence to prosecute such foreclosure proceedings to a conclusion, Lessor
will not terminate this Agreement provided Mortgagee, for the period from the
inception of such circumstances until such foreclosure proceedings are
concluded, pays all Rent and other monetary sums due Lessor under this Agreement
and otherwise performs all other obligations required by this Agreement to be
performed by Lessee, which Mortgagee is able to perform under the circumstances.
Such Mortgagee, following foreclosure thereby upon any interest of Lessee under
this Agreement and Mortgagee's purchase of Lessee's interest at such
foreclosure, shall be obligated as the successor to Lessee under this Agreement
for such obligations as mature under the terms of this Agreement only during the
time that the title to the Lessee's interest is and remains vested in such
Mortgagee.
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Any purchaser at any foreclosure sale shall not have the right to
transfer, sell, convey and assign the interest and title purchased at such sale
without the approval or consent of Lessor. Said approval or consent shall not be
unreasonably withheld.
10.6. New Lease. If any Mortgagee shall effect a cure of circumstances
which may ripen into an Event of Default, as allowed by Sections 10.4 and 10.5
of this Article 10, such Mortgagee, at its option, shall have the right to
notify Lessor by Notice within ten (10) calendar days after such Mortgagee shall
have effected such cure that such Mortgagee is desirous of assuming this
Agreement for the remainder of the Lease Term, provided such Mortgagee in said
Notice obligates itself to immediately (i) pay to Lessor all unpaid Rent and
other monetary sums which are due, or which except for such termination would
otherwise be due, under this Agreement up to and including the date of
commencement of the term following such assumption of this Agreement; and (ii)
pay to Lessor all expenses and reasonable attorney's fees incurred by Lessor in
connection with any such circumstances which might have ripened into an Event of
Default.
10.7. Operation by Lessor. Lessor agrees that after a circumstance which
may ripen into an Event of Default until the assumption of this Agreement as
contemplated by Section 10.6 of this Article l0, Lessor will do nothing which
would give rise to any liens against the Demised Premises, and Lessor shall have
the right, but not the obligation, to operate the Demised Premises. If Lessor
shall elect to operate the Demised Premises, then Lessor shall pay over to
Mortgagee the net income or rental received by Lessor, if any, derived from the
operation of the Demised Premises from the date Lessor commenced such operation,
or Mortgagee shall pay over to Lessor the net deficit to Lessor from such
operation, both determined in accordance with an audit prepared for and
certified to Lessor and Mortgagee by an independent certified
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public accountant registered and licensed in the State of Georgia and approved
in writing by Lessor and Mortgagee. The cost and expense of the said audit shall
be borne by Mortgagee.
10.8. Possession. If any Mortgagee shall become entitled to possess the
Demised Premises, whether by reason of foreclosure, succession to the Lessee's
interests, by assumption of this Agreement or otherwise, Lessor shall, at the
request, cost and expense of Mortgagee take all appropriate steps and action to
remove any persons from possession and to put Mortgage (or its assigns) in
possession of the Demised Premises, but Lessor shall not be liable to Mortgagee
or to any person for any damages resulting from any delay in delivering
possession of Demised Premises, and there shall be no abatement of rental under
any new Lease Agreement or otherwise by reason of any delay.
11. ASSIGNMENTS, SUBLEASES AND OCCUPANCY LEASES.
11.1. Assignments and Transfers. Lessee shall not sell, assign or
otherwise convey its title and interest in the Demised Premises or any part
thereof except as permitted by Section 9.1, 11.2 and 11.3 of this Agreement or
as may otherwise be approved by Lessor, which approval shall not be reasonably
withheld. There shall be no transfer within any calendar year of forty-nine
percent (49%) or more of the ownership of Lessee to any person, firm or entity
(excluding transfers to the immediate family and trusts for the immediate family
of the transferor) without approval by Lessor, which approval shall not be
unreasonably withheld.
11.2. Occupancy Leases and Subleases. Lessee may enter into Occupancy
Leases as defined herein for the whole or any portion of the Demised Premises
and/or Improvements without reference to or approval by the Lessor.
Lessee may enter into subleases as defined herein for the whole or any
portion of the Demised Premises and/or Improve-
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ments after obtaining approval by Lessor, acting through its governing body. All
such subleases must contain language concerning nondiscrimination as required by
Section 14.12 infra.
11.3. Effect of Termination. All Occupancy Leases and all Subleases shall
be subordinate to this Agreement (subject to the provisions of Paragraph 7.8)
and shall contain a covenant on the part of the tenant thereunder to the effect
that neither the termination of this Agreement nor the institution of any suit,
action, or proceeding by Lessor to recover possession of the Demised Premises
shall by operation of law, or otherwise, result in the cancellation or
termination of such Occupancy Leases or Subleases (or of any of the obligations
of tenant therein or thereunder) so long as no uncured default exists
thereunder, and if such tenant shall attorn to Lessor or Lessor's successor in
interest. The requirements of any Mortgagee holding a Mortgage, with respect to
any of such Subleases or Occupancy Leases shall govern the relative priorities
of such Mortgage and such Occupancy Leases and such Subleases and the rights of
such Mortgagee concerning such Occupancy Leases and such Subleases which are not
inconsistent with these provisions.
12. CONDEMNATION.
12.1. Condemnation Proceedings. If, during the Lease Term, the Demised
Premises or any portion thereof be condemned and taken by the United States of
America, the State of Georgia or by other body having power of eminent domain
thereover, then the provisions of this Section 12.1 shall apply.
12.1.1. The amount of any awards from any condemnation shall be made
separately to Lessor and Lessee to adequately compensate Lessor and Lessee for
the fair market value of each of their respective interests in the Demised
Premises without reference to or consideration of any termination of this Lease
or the obligations hereunder relating to the portion of the Demised Premises
condemned.
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12.1.2. If all of the Demised Premises is condemned, or such portion
thereof is condemned so that the residue has substantially no commercial value
to Lessee, then the obligations of Lessee to pay Rent which would accrue after
the date that condemnor takes possession of the condemned property shall
terminate. If, after a condemnation occurs, the residue of the Demised Premises
has commercial value to Lessee, then Lessor and Lessee shall mutually select a
qualified, independent real estate appraiser who shall, as expeditiously as
possible, determine the commercial value to Lessee of the residue of the
property remaining after such condemnation. If Lessor and Lessee are unable to
agree in their selection of such appraiser, then an appraiser shall be appointed
by the presiding judge of the Superior Court of Fulton County, Georgia, and the
appraiser so selected shall determine the commercial value to Lessee of said
residue of such Demised Premises. The Minimum Rent, as adjusted, and the
percentage rent payable under the provisions of Article 5 of this Agreement
shall be reduced to that percentage thereof which the value of said residue (as
so determined), bears to the sum of said value and the amount paid by award to
Lessor and Lessee under Section 12.1.1 hereof.
12.1.3. No Acknowledgement. This Article 12 shall not constitute an
acknowledgment or be construed as constituting an acknowledgment by Lessor or
Lessee or either or both of them that Lessor's rights as an entity of government
in and to the reversionary fee simple estate in the Demised Premises are in any
manner subject to any power of eminent domain vested in any government or other
body.
13. NOTICES.
13.1. Notices. All Notices provided for or permitted to be given pursuant
to this Agreement must be in writing and shall be deemed to have been properly
given or served by depositing such in the United States Mail, postpaid and
registered
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or certified return receipt requested, and addressed as hereinafter provided.
All Notices shall be effective upon being deposited in the united states mail,
however, the time period in which a response to any Notice must be given, if
any, shall commence to run from the date of receipt on the return receipt of the
Notice by the addressed thereof. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given
shall be deemed to be receipt of the notice. In the event that registered or
certified mail is not being accepted for prompt delivery, notices may then be
served by personal service on the person to whose attention notices are to be
addressed as herein provided. By giving at least thirty (30) days notice
thereof, Lessor, Lessee, the Insurance Trustee and any Mortgagee shall have the
right from time to time and at any time during the term of this Agreement to
change their respective addresses and each shall have the right to specify as
its address any other address within the United States of America.
13.2. Address. Notices shall be addressed as provided in Subsections
13.2.1 and 13.2.2 of this Section 13.2. This Section 13.2 shall from time to
time be supplemented by Lessor and Lessee as required to add hereto the
addresses for Notice to the Insurance Trustee and Mortgagees, and to reflect
changes in the address of the parties.
13.2.1. A11 Notices to Lessor shall be addressed to:
City of Atlanta
68 Mitchell Street, S.W.
Atlanta, Georgia 30303
Attention: The Commissioner of Finance
13.2.2. All notices to Lessee shall be addressed to:
Filmworks U.S.A., Inc.
2000 Lakewood Way, S.E.
Atlanta, Georgia 30315
14. MISCELLANEOUS.
14.1 Inspection. Lessor or the agents of Lessor may, but shall be under no
duty to, enter the Demised Premises at
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reasonable time and hours and without unreasonable interference with the use of
the Demised Premises, to inspect the Demised Premises in order to determine
whether or not Lessee is complying with the undertakings, duties and
obligations of Lessee under this Agreement and Lessor shall indemnify Lessee
from any loss or damage sustained as a result of inspections.
14-2. Zoning. Without limiting the covenants and warranties of Lessor set
forth in Section 3.2 of Article 3 of this Agreement, Lessee takes the Demised
Premises subject to all zoning regulations and ordinances now in force,
including but not limited to, those as to building line and setback. Upon
written request of Lessee, Lessor shall initiate appropriate zoning proceedings
necessary to allow uses of the property contemplated by this Agreement at no
cost to Lessee. Lessee agrees to assist and participate in such proceedings at
no cost to Lessor. In the event such rezoning has not occurred within five (5)
months after initiated, Lessee shall have the option to terminate this
Agreement, and thereafter stand relieved of any and all responsibilities, duties
and obligations to Lessor. Lessee at Lessee's own expense may, in good faith,
contest and litigate as to validity of any ordinance, rule, regulation,
resolution or statute of any govermental body affecting the Demised Premises at
Lessee's use or occupancy thereof if said ordinance, rule, regulation,
resolution or statute is considered by Lessee to be invalid.
14.3. Holding Over. Lessee shall not use or remain in possession of the
Demised Premises after the expiration of the Lease Term. Any holding over, or
continued use and/or occupancy by Lessee, after the expiration of the Lease
Term, without written consent of Lessor, shall not constitute a tenant at will
interest in behalf of Lessee; but Lessee shall become a tenant at sufferance at
the annual rate of Rent for the last year of the Lease Term set out above. If
Lessor accepts Rent from Lessee as a tenant at sufferance, such tenancy shall be
terminable by
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<PAGE>
either Lessor or Lessee upon one hundred eighty (180) days prior notice to the
other. There shall be no renewal whatsoever of this Agreement by operation of
law.
14-4. Non-Waiver. No failure of Lessor to exercise any power given Lessor
hereunder or to insist upon strict compliance by Lessee with the undertakings,
duties and obligations of Lessee hereunder, and no custom or practice of Lessor
and Lessee at variance with the terms hereof shall constitute a waiver of
Lessor's right to demand exact compliance with the provisions, covenants, terms
and conditions of this Agreement.
14.5. Rights Cumulative. All rights, powers and privileges conferred
herein upon both Lessor and Lessee shall be cumulative.
14.6. Successors and Assigns. It is mutually covenanted, understood and
agreed by and between Lessor and Lessee that each of the stipulations,
expressions, phrases, provisions, covenants, terms and conditions of this
Agreement shall apply, extend to, be binding upon and inure to the benefit or
detriment not only of the parties hereto, but to the legal representatives,
successors and assigns of Lessor and Lessee, and shall be deemed and treated as
covenants real running with the Demised Premises during the Lease Term.
Whenever a reference to the parties hereto is made, such reference shall be
deemed to include the legal representatives, successors and assigns of said
party, the same as if in each case expressed.
14.7. Governing Law. It is mutually covenanted, understood and agreed by
and between Lessor and Lessee that this Agreement and the leasehold estate
created hereby shall be governed, construed, performed and enforced in
accordance with the laws of the State of Georgia.
14.8. Termination. The words "terminate" or "termination" as used herein
shall refer to the end of the Lease
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<PAGE>
Term whether due to the expiration thereof or the earlier end of this Agreement
by reason of an Event of Default.
14.9. Terminology. Whenever the singular or plural number, or masculine,
feminine, or neuter gender is used in this Agreement, it shall equally apply to,
extend to and include the other. The headings of Articles and Sections herein
are included only for convenience of reference, and shall not be considered in
the interpretation of this Agreement.
14.10. Estoppel Certificates. Lessor and Lessee agree that at any time and
from time to time upon not less than ten (10) days prior notice by the other,
Lessor or Lessee will execute, acknowledge and deliver to the other a statement
in writing certifying (a) that this Agreement is unmodified and in full force
and effect or if there have been modifications that the same is in full force
and affect as modified and identifying the modifications, (b) the date to which
the Rent and other charges have been paid, and (c) that so far as the certified
knows, there is no default (regardless of whether such shall have ripened into
an Event of Default, specifying the nature of same. Estoppel Certificates may be
relied upon by any person or entity proposing to acquire Lessor's or Lessee's
interests hereunder, or any portion thereof or interest therein, as the case may
be, and by any Mortgagee or prospective Mortgagee (or any Assignee thereof) now
or hereafter having any present or prospective interest in the right, title or
Interest of Lessor or Lessee created hereby or existing hereunder.
14.11. Time of the Essence. All time limits stated in this Agreement are
of the essence.
14.12. Non-Discrimination. As a contractor with Lessor, Lessee hereby
agrees with Lessor that Lessee shall be bound by the valid laws of the United
States, the State of Georgia and all valid ordinances and laws of the City of
Atlanta, Georgia
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<PAGE>
with reference to prohibitions against discrimination on the basis of race,
religion, color, sex or national origin, and specifically, Lessee acknowledges
that Lessee has been made fully aware of the provisions of Section 5-5153
through 5-5154 of the Code of Ordinances of the City of Atlanta, and that Lessee
shall be bound by the provisions thereof as the same exist upon the date of the
execution of this Agreement. Said provisions are attached hereto marked Exhibit
F and incorporated herein by reference. In any event, at a minimum, Lessee
pledges that with respect to all capital improvements made upon the Demised
Premises at least twenty-five percent (25%) of all expenditures during each
Operating Year for such capital improvements shall be made in connection with
contracts awarded to certified minority or joint venture contractors approved by
the Contract Compliance officer of the City of Atlanta. Provided however, that
foe Purposes of this section interest payments made on loans for capital
improvements shall not be included in the computation hereunder.
Furthermore, Lessee pledges that at least twenty-five percent (25%) of all
expenditures during each Operating Year for operating expenses in connection
with its operations on the Demised Premises shall consist of purchases made from
vendors who are certified as approved minority or joint-venture vendors by the
Contract Compliance Officer of the City of Atlanta.
For purposes of this Section, compliance with the percentage requirements
herein shall be determined annually conmencing with the first Operating Year.
For purposes of determining compliance with this section Lessor shall have
the right at any time to request production of any and all information available
to Lessee concerning its expenditures within the meaning of this section.
All Subleases entered into pursuant to this Agreement shall contain
language similar in substance to this Section 14.12 with regard to the
obligations of the Subleases.
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<PAGE>
14.13. Lessee acknowledges that Lessee has been fully informed concerning
Code of Ordinances of the City of Atlanta requirements relating to equal
employment opportunity provisions of public contracts of the City of Atlanta,
and Lessee declares its intention and obligation under the terms of this
Agreement to fully comply with all of the provisions of said Code of Ordinances.
14.14. Complete Agreement. This Agreement constitutes the full, complete
and entire agreement between and among Lessor and Lessee concerning the Demised
Premises; no agent, officer or representative of Lessor or Lessee has authority
to make, or has made, any statement, agreement, representation or
contemporaneous agreement, oral or written, in connection herewith modifying,
adding to or changing the provisions, convenants, terms and conditions hereof.
No modification or amendment of this Agreement shall be binding unless such
modification or amendment shall be in writing and signed by both Lessor and
Lessee.
14.13. Transactions with Affiliates.
14.15.1. All transactions between Lessee and any Affiliate of Lessee with
respect to the use or occupancy of the Demised Premises or any portion thereof
shall be entered into upon an "arms-length" basis such that the rentals or other
charges payable to Lessee are as if the same space or services had been leased
by an Entity having no common ownership with Lessee. Lessee and Lessor
acknowledge and agree that the purpose of the foregoing is to assure that for
such transaction the Gross Revenues of Lessee, upon which percentage rental is
due Lessor pursuant to this Agreement, are not less than such Gross Revenues
would have been if Lessee had dealt with an independent Entity instead of with
such Affiliate.
14.15.2. Lessee shall, within sixty (60) calendar days followinq the end
of each Operating Year, deliver to Lessor a schedule of all transactions with
respect to the use of the
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<PAGE>
Demised Premises between Lessee and any Affiliate of Lessee entered into during
the preceeding Operating Year, listing the amount paid Lessee with respect to
each such transaction.
14.16. UDAG Application. Lessor has been requested by Lessee to prepare
and file an application for an Urban Development Action Grant with the
Department of Housing and Urban Development of the United States Government for
assistance in the development of the Demised Premises. The parties agree to seek
such grant by cooperating with one another in approval of the application.
14.17. Industrial Development Bonds. The parties recognize that it is the
intention of Lessee to seek approval by the Fulton County Development Authority
of an Industrial Revenue Bond Issue by said Authority for the purpose of
financing certain improvements of the Demised Premises. Lessor agrees to
cooperate fully with Lessee in connection with the procedures required to obtain
such approval and the issuance of said bonds.
14.18. Historic Designation of Demised Premises. The parties agree that
certain structures and areas on the Demised Premises may be eligible for
inclusion on the National Register of Historic Places or for other designations
as historic places or historic structures by a governmental entity.
Either party may request assistance from the other in preparing and
processing an application for such historic designation, and the other party
will provide assistance as reasonably requested in making such application. Such
assistance shall include, but not necessarily be limited to, staff assistance
and access to records necessary to promote the application.
14.19. Existing Leases and Subleases. Lessor agrees to transfer all
existing leases and subleases now in force upon the Demised Premises to Lessee
and to prorate rentals as of the date of this Instrument.
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14.20. Survey. Lessee, at it option, or Lessor, at its option, may at any
time cause to be prepared a certified survey of the property (including but not
limited to a definition of the Park Parcel) by a Georgia Registered Surveyor and
shall furnish a copy of any such survey to the other party hereunder.
14.21. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall comprise but a single instrument.
IN WITNESS WHEREOF, Lessor and Lessee, acting through their respective
proper and duly authorized officers, have executed this Agreement on the day and
year hereinabove first written.
ATTEST: CITY OF ATLANTA, a Municipal
Corporation Chartered Pursuant to
the Laws of the State of Georgia
("Lessor")
/s/ [Illegible] /s/ [Illegible]
- ---------------------------- --------------------------------------
Clerk of Council Mayor
Recommended:
/s/ [Illegible]
--------------------------------------
Chief Administrative Officer
As to the Mayor, Deputy City Approved as to form on behalf of
Clerk and Chief Administrative the City of Atlanta:
Officer, signed, sealed and
delivered in the presence of:
/s/ [Illegible]
- ---------------------------- --------------------------------------
Unofficial Witness Commissioner, Parks, Recreation
and Cultural Affairs
/s/ [Illegible] /s/ [Illegible]
- ---------------------------- --------------------------------------
Notary Public [Illegible] Commissioner of Finance
Approved as to form on behalf of
the City of Atlanta:
/s/ [Illegible]
--------------------------------------
Assistant City Attorney
CORP.
SEAL
As to Filmworks U.S.A., Inc. FILMWORKS U.S.A., INC.
and the execution by its
officers, signed, sealed and
delivered in the presence of: By: /s/ [Illegible]
----------------------------------
/s/ [Illegible] President
- ----------------------------
Unofficial Witness
/s/ [Illegible]
----------------------------------
/s/ [Illegible] Secretary
- ----------------------------
Notary Public [Illegible]
<PAGE>
THIS AMENDED INDENTURE OF LEASE, made this 2nd day of February,
1984, between THE CITY OF ATLANTA, a municipal corporation chartered pursuant to
the laws of the State of Georgia, Party of the First Party (hereinafter defined
as "Lessor"), and FILMWORKS U.S.A., INC., a Georgia corporation created pursuant
to the laws of the State of Georgia, Party of the Second Part (hereinafter
defined as "Lessee"), pursuant to assignment and transfer of the Indenture
between Lessor and Atlanta Lakewood Enterprises, Ltd., dated May 1, 1979, which
assignment and transfer were authorized by order of Judge A. D. Kahn, United
States Bankruptcy Court, Northern District of Georgia, dated January 16, 1984,
Case No. 80-03317A.
WHEREAS, the Council of the City of Atlanta, Georgia by ordinance
approved January 3, 1984, has authorized the Amendment of this Lease, said
ordinance being attached hereto as Exhibit "A"; and
WHEREAS, the parties desire to restate the Indenture of Lease as
Amended, such restatement being set forth herein;
NOW, THEREFORE, in consideration of ten dollars ($10.00) paid by
Lessee to Lessor and the mutual covenants herein contained, Lessor and Lessee
hereby convenant and agree as hereinafter provided,
1. DEFINITIONS. For the purposes of this Agreement, the following
defined terms shall have the meanings ascribed hereto in this Article 1.
1.1. "Affiliate" means, in the context of Lessee, any other entity of
which two percent (2%) or more of the ownership interest therein is owned,
directly or indirectly, by Lessee or by the holders of more than two percent
(2%) of the stock of Lessee. Such ownership interests owned by members of the
immediate families of the shareholders of Lessee shall be ascribed to such
shareholders for the purpose of the foregoing definition.
1.2. "Agreement" means this Indenture of Lease.
1.3. "Demised Premises" means the Property, the Improvements (including
the Existing Improvements) and all rights, members, easements and appurtenances
appertaining thereto.
<PAGE>
1.4. "Entity" means any person, corporation, partnership (general or
limited), joint venture, association, joint stock company, trust or other
business entity or organization.
1.5. "Event of Default" means those events, occurrences and circumstances
so designated in Section 10.2 of Article 10 of this Agreement.
1.6. "Existing Improvements" means those buildings, structures and other
facilities located upon the Property on the date of this Agreement and more
particularly described in Exhibit "B" attached hereto and by reference made a
part hereof.
1.7. "Gross Revenues" means the entire amount of all revenues received by
Lessee during the term of this lease with respect to the following:
(a) Admission charges, ticket sales, or any and all income derived
from sporting events, automobile races, and any and all other entertainment
events or tours where the Lessee charges admission, or is otherwise compensated.
(b) All revenues received by Lessee from occupancy leases as defined
in Section 1.18 hereof, or subleases as described in Section 1.22 hereof.
(c) All revenues received from charges made for vehicular parking on
the demised premises.
1.8. "Impositions" means any and all lawful impositions of ad valorem
taxes, special assessments for public improvements, street and sewer levies and
utility charges upon the Property or any portion thereof.
1.9. "Improvements" means all buildings, (other than temporary buildings),
structures and other facilities at any time and from time to time affixed to the
Property, including, but not by way of limitation, the Existing Improvements;
provided, however, that Improvements shall only include property which is a
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<PAGE>
building or similar structure which is intended by Lessee to become a part of
the Property as a permanent improvement thereof; and further provided that
Improvements shall not include trade fixtures, sets of scenery, displays and
similar property used in filming. Lessee shall notify Lessor within thirty (30)
calendar days after completion of construction of any structure intended by
Lessee to be an Improvement.
1.10. "Insurance Trustee" means the trustee appointed herein or by the
requirements of any mortgagee holding a mortgage on Lessee's interest in the
Demised Premises or any portion thereof, for the purpose of receiving, investing
and paying Net Insurance Proceeds. Any mortgagee holding a mortgage on Lessee's
interest in the Demised Premises or any portion thereof may elect itself to act
as insurance trustee. If an insurance trustee is not otherwise designated, the
Commissioner of Finance of Lessor shall perform the functions of the insurance
trustee.
1.11. "Lease Term" means the period of time specified in Section 2.2 of
Article 2 of this Agreement.
1.12. "Lessee" means Filmworks U.S.A., Inc., a Georgia corporation, the
assignee of Atlanta Lakewood Enterprises, Ltd., a corporation created pursuant
to the laws of the State of Georgia, and its successors and assigns of the
leasehold estate and interest in the Demised Premises under this Agreement (but
excluding any sub-lessees, occupancy-lessees, tenants and concessionaires).
1.13. "Lessor" means the City of Atlanta, a municipal corporation
chartered pursuant to the laws of the State of Georgia. Whenever a provision of
this Lease requires approval, agreement, or action by Lessor, such provision
shall be construed to mean approval agreement or action by the governing body of
said Lessor, unless otherwise stated.
1.14. "Mortgage" (in singular) and "Mortgages" (in the plural) means any
deed to secure debt, deed of trust, mortgage, security agreement or other
instrument in the nature thereof at
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any time and from time to time constituting a lien upon Lessee's interest in the
Demised Premises or any portion thereof, or collectively, two (2) or more of
such.
1.15. "Mortgagee" (in the singular) and "Mortgagees" (in the plural) means
the holder or, collectively, the holders of a Mortgage or Mortgages.
1.16. "Net Insurance Proceeds" means, in the context of any insurance
required pursuant to this Agreement, the gross proceeds from the insurance with
respect to which such term has reference (that is, the gross proceeds arising by
virtue of any insured loss in respect to the Demised Premises or any
Improvements) remaining after payment of all expenses (including, but not by way
of limitation, attorneys' fees and any extraordinary expenses of the Insurance
Trustee) incurred in the collection of such gross proceeds.
1.17. "Notice" means a written advice or notification required or
permitted by this Agreement to be served by Lessor or Lessee upon the other, or,
in the circumstances defined in Article 13 of this Agreement, upon or by the
Insurance Trustee or Mortgagees.
1.18. "Occupancy Lease" means any and all rental agreements in all or any
portions of the Demised Premises between Lessee as landlord thereunder and
others, as tenants thereunder for a term of twenty-four (24) months or less,
including the term of all options to renew.
1.19. "Operating Year" means the calendar year through the lease term,
except for the first operating year, which commences on the date of execution of
this Agreement and terminates at the end of the day on December 31, 1964.
1.20. "Property" means those tracts or parcels of land in the County of
Fulton, State of Georgia, more particularly described in Exhibit "C" attached
hereto and by reference made a part hereof and shall include all portions
thereof as to which the Lessor subsequently acquires title.
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<PAGE>
1.21. "Rent" means all amounts payable by Lessee to Lessor as rental for
the Demised Premises, as more particularly described in Article 5 of this
Agreement. Rent does not include Impositions or other items payable by Lessee
under this Agreement which are not designated as rental for the Demised
Premises.
1.22. "Sub-Lease" means any and all instruments creating usufructs or
subleasehold estates in all or any portion of the Demised Premises, between
Lessee as landlord or lessor thereunder and others, as tenants or lessees
thereunder for a term in excess of twenty-four (24) months, as set forth in
Section 11.2 to this Agreement.
1.23. "Zoning and Other Encumbrances" means those matters, other than
Impositions, affecting title to the Property and the Existing Improvements which
are more specifically set forth in Exhibit "D" attached hereto and incorporated
herein.
2. PREMISES AND TERM.
2.1. Premises. Lessor, for and in consideration of the rents, covenants,
agreements and stipulations hereinafter mentioned, reserved and contained, to be
paid, kept and performed by Lessee, has demised, leased and rented, and by these
presents does demise, lease and rent, unto Lessee, and Lessee hereby agrees to
lease and take upon the terms and conditions which hereinafter appear, the
Demised Premises, subject only to the Impositions and zoning and other
Encumbrances. As of the date of this Agreement, the Demised Premises consist of
the Property and the Existing Improvements. Title to the Improvements during the
Lease Term shall be in Lessee. Notwithstanding such title to the Improvements,
the terms and conditions of this Agreement shall govern the use and operation of
the improvements and the exercise of all Lessee's rights with respect thereto
and Lessee's estate, right, title and interest in and to the Improvements,
which,
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<PAGE>
except for Subleases and Occupancy Leases, shall not be separable from the
leasehold estate granted Lessee hereunder. Except for termination pursuant to
Article 12 of this Agreement, upon termination of the Lease Term, whether by
expiration of time or otherwise, title to the Improvements shall, subject to the
rights of any Mortgagee, vest in and become the full and absolute property of
Lessor without need of any further action being taken by Lessee or Lessor, and
Lessee shall immediately surrender possession of the Improvements, subject to
the rights of any Mortgagee, Sub-Lessee, or Occupancy Lessee.
2.2. Lease Term. The Lease Term under this Amended Indenture shall
commence on the date of execution as set forth above and shall expire midnight,
local time in the City of Atlanta, State of Georgia, on the date which is
thirty-five (35) years from January 1, 1984, subject to being sooner terminated
as provided in this Indenture of Lease, as amended.
2.3. Option. Lessee, if not in default at the expiration of this lease,
and if it has faithfully performed its obligations during the term of the Lease,
shall, upon notice to Lessor, have the right to extend the lease for an
additional period of fifteen (15) years upon the same terms and conditions as
herein. Said notice shall be in writing from Lessee to Lessor no less than 120
days prior to end of the initial thirty-five (35) year term of the lease.
2.4. Interest Conveyed By This Lease. The interest conveyed by this lease
consists of a limited and restricted interest (said limitations and restrictions
being set forth in this lease) and said conveyed interest does not include an
estate in real property.
3. COVENANTS AND WARRANTIES BY LESSOR.
3.1. Quiet Enjoyment. Lessee paying the Rent hereby reserves, and fully
performing and observing the covenants, duties and obligations by Lessee to be
performed, observed and kept, may
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<PAGE>
peaceably possess, hold, enjoy and use the Demised Premises with the exclusive
control, possession and enjoyment thereof during the Lease Term.
3.2 Title. Lessor has fee simple title to the Property and the Existing
Improvements and the Property and the Existing Improvements will be delivered to
Lessee free and clear of all claims, demands, obligations, mortgages, liens and
encumbrances of any nature or kind, except for Impositions and zoning and Other
Encumbrances set out on Exhibit "D". Lessor warrants that the Demised Premises
are, as of the effective date of this Amendment to Indenture of Lease, zoned
M1-C, and such zoning permits the use of the Demised Premises for the use and
purposes herein specified, which zoning shall, unless otherwise requested by
Lessee, continue during the Term of this Amended Lease. As of the effective date
of this Amendment, Lessor warrants that it has fee simple title to the Demised
Premises, the Property and the Existing Improvements which is free and clear of
all claims, demands, obligations, mortgages, liens, reversions and encumbrances
of every nature, kind and description, except only for those Impositions, Zoning
and other Encumbrances which are set forth on Exhibit "D", attached hereto and
incorporated herein by reference. Lessor warrants that Lessor's fee simple title
and the leasehold estate Amendment are marketable and insurable by such title
insurance company, licensed to do business in the State of Georgia, as Lessee or
Assigns may select, without exception other than those matters specifically set
forth in Exhibit "D". The expense of obtaining any title policy shall be borne
by Lessee.
3.3. Public Records. Pursuant to the provisions of Sections 50-18-70, et
seq, of the Official Code of Georgia Annotated, Lessor hereby agrees to make
available to Lessee any public records concerning the Demised Premises or any
other matter directly or indirectly involving the Demised Premises or any
portion thereof.
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4. ENCROACHMENTS.
4.1. Removal Lessor shall take any reasonable action necessary, including
instituting legal proceedings for the purpose of protecting the title to the
Demised premises and Lessee's quiet enjoyment thereof against any adverse
claims, uses, occupancies and encroachments on the Property. Lessee will, if and
when requested by Lessor, join with Lessor and become a party to any judicial or
other proceedings that may be instituted by or on behalf of Lessor for the
purpose of protecting and preserving Lessor's title to the Property and Lessee's
enjoyment thereof pursuant to this Lease.
4.2. Use. Lessor and Lessee further understand and agree that when such
encroachments, adverse uses and occupancies shall have been removed by judicial
proceedings or otherwise, the use of the same for the remaining period of the
Lease Term shall inure to the benefit of Lessee to the same extent as the other
portions of the Demised Premises herein leased shall inure to Lessee under the
provisions, covenants, terms and conditions of this Agreement.
5. RENT.
5.1. Minimum Rent.
5.1.1. Lessee shall pay to Lessor the sum of $100,000.00 for each of the
first three Operating Years, and thereafter in the fourth and fifth Operating
Years the sum of $150,000.00 per year. Thereafter, Lessee shall pay to Lessor a
minimum rent of $150,000.00 per annum during the continuance of this Lease,
subject to the rental adjustment provided in Section 5.1.2. Any rent payable for
less than a full Operating Year shall be prorated in the proportion that such
period of less than a full Operating Year bears to a full Operating Year.
5.1.2. Rental Adjustments. The minimum amount of Rent payable by Lessee to
Lessor with respect to the sixth Operating Year and for each Operating Year
thereafter shall be One Hundred Fifty Thousand Dollars ($150,000.00) multiplied
by a fraction, the numerator of which fraction is the Consumer Price Index
number for
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the Current Month applicable to the Operating Year and the denominator of which
fraction is the Consumer Price Index number for the Base Month, provided that
the increase in minimum rent in any given operating year shall not exceed six
percent (6%) of the minimum rent for the previous Operating Year.
5.2. Computation of Rent. Commencing with the sixth Operating Year and
subject to the provisions of Section 5.1 of this Article 5, Lessee shall, within
sixty (60) calendar days after the close of each Operating Year, pay to Lessor
three percent (3%) of its Gross Revenues received for each Operating Year, or
portion thereof, during the Lease Term. The amount due Lessor under this Section
5.2 shall be reduced by any Minimum Rent paid by Lessee to Lessor with respect
to such Operating Year, provided however, that under no circumstances shall the
amount of Rent paid to Lessor be less than the Minimum Rent due under Section
5.1.1 and 5.1.2.
The term "Consumer Price Index" means the Consumer Price Index for
Atlanta, Georgia for Urban Wage Earners and Clerical Workers [1967=100], as
published by the Bureau of Labor Statistics of the United States Department of
Labor. If the publishing of the "Consumer Price Index" shall cease, then the
most comparable and similar index published by any department or agency of the
United States government shall be used.
The term "Current Month" number which is applicable to the Operating Year
means the Consumer Price Index number published for the last month of the last
Operating Year which immediately precedes the beginning of the then current
Operating Year (and if no Consumer Price Index is published for said month, then
the number published for the most recent month prior thereto shall be used.
The term "Base Month" number means the Consumer Price Index number
published for the last month of the fifth Operating Year (and if no Consumer
Price Index is published for the last month of the fifth Operating Year, then
the number published for the most recent month prior thereto shall be used).
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5.3. Payment of Rent. Lessee shall pay rent to Lessor in monthly
installments, in advance, on or before the first day of each and every calendar
month during the entire Lease Term. The amount of each such monthly installment
shall be equal to one-twelfth (1/12th) of the amount of the Minimum Rent with
respect to the applicable Operating Year as provided in Section 5.2 of this
Article 5. (The parties recognize that the first Operating Year [1984] shall not
be a complete year and rentals shall be prorated for such year.)
Within sixty (60) calendar days following the end of each Operating Year,
Lessee shall submit to Lessor its annual audited financial statement showing the
determination of Gross Revenues with respect to such Operating Year, and for the
sixth Operating Year and each Operating Year thereafter in the event that three
percent (3%) of the Gross Revenues for such sixth Operating Year and thereafter
shall exceed the amount of Rent paid for such Operating Year pursuant to this
Section, then Lessee shall remit and pay to Lessor the balance of the Rent due
in accordance with Section 5.1.2.
5.4. Books and Records. During the Lease Term, Lessee shall maintain
complete and accurate records, in accordance with generally accepted accounting
principles consistently applied, of all Gross Revenues received and earned with
respect to the Demised Premises by Lessee during each Operating Year, and such
other records, data and facts necessary to determine Gross Revenues hereunder as
Lessor may reasonably require.
Lessor expressly reserves the right to examine and audit all of said
records, including sales, entertainment, business and occupation tax reports to
the extent that said records and reports contain information relating to Gross
Revenues derived by Lessee from the Demised Premises. The right of examination
and audit may be exercised at any time during normal business hours. If Lessee
fails to make the aforesaid records available to Lessor in Atlanta, Georgia,
then Lessee shall pay all reasonable expenses incurred by Lessor to examine and
audit said records in the place where they are located and maintained.
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Lessee agrees to keep, maintain and preserve for four (4) years following
the expiration of each Operating Year all records required under this Section,
or adequate photostatic copies thereof. In the event Lessor shall dispute the
amount of Gross Revenues during said four-year period, Lessee agrees to preserve
all such records until such dispute is resolved; and if Lessor shall not, within
said four-year period, dispute the accuracy of the statement of Gross Revenues
furnished by Lessee to Lessor, then such statement shall be conclusive on Lessor
and Lessee with respect to the amount of Gross Revenues received by Lessee with
respect to such Operating Year.
6. TAXES AND OTHER IMPOSITIONS.
6.1. Payment. Lessee shall bear and pay to the public officer charged with
the collection thereof, before the same shall become delinquent, and shall
indemnify, save and hold harmless Lessor from the payment of, any and all taxes,
assessments, license fees, excises, imposts, fees and charges of every sort,
nature and kind, which during the Lease Term are levied, assessed, charged or
imposed upon or against the Demised Premises (including any Improvements) during
the Lease Term for which the Lessee is liable at law, to the extent of all
installments becoming due in connection therewith during the term of the Lease.
The parties, however, recognize the restricted and limited interest conveyed by
the lease as described in Section 2.4 above.
6.2. Contest. If any Imposition (including without limitation, any tax,
assessment, license fee, excise, impost, fee or charge) shall be deemed by
Lessee to be improper, illegal or excessive, Lessee may, at no cost or expense
to Lessor and in Lessee's own name, dispute and contest the same and, in such
case, such item need not be paid only if and to the extent that the laws or
regulations governing such contest permit postponement of payment; provided,
however, that Lessee shall first furnish to Lessor, if requested by Notice to
Lessee from Lessor, reasonable security for the payment of such item so
contested. Unless so
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contested by Lessee, all such Impositions shall be paid by Lessee within the
time provided by law, and if contested, any such Imposition shall be paid before
the issuance of an execution on the final judgment.
6.3. Receipts. After all payments are made by Lessee pursuant to and in
conformity with Sections 6.1 and 6.2 of this Article 6, Lessee shall at once
furnish to Lessor duplicate receipts or other satisfactory evidence of such
payment.
6.4. Utilities. Lessee is to be responsible for and shall pay all water,
sanitation, gas, heat, light, power, steam and telephone services and any and
all other services supplied to the Demised Premises.
6.5. Performance by Lessor. If Lessee fails to procure insurance, as
hereinafter provided, or wrongfully fails to pay any Impositions (including
taxes, assessments, license fees, excises, imposts and fees), utility charges or
premiums of insurance, Lessor may, at Lessor's option, after ten (10) days
following Notice to Lessee by Lessor, and on behalf of Lessee, procure any such
insurance and make any such payment or payments as may be reasonably necessary.
6.6. Reimbursement. Any reasonable amount paid or expended by Lessor under
the provisions of Section 6.5 of this Article 6 shall be reimbursed and paid to
Lessor by Lessee on demand.
7. USE OF DEMISED PREMISES.
7.1. Purposes and Compliance With Laws.
7.1.1. Lessee agrees that the dominant theme in the development of the
Demised Premises shall be in connection with the entertainment field, production
of film and television programming and complimentary uses and activities, as now
exist or as may be developed in the future.
Lessor acknowledges and agrees that the Demised Premises may be used
for any lawful purpose or use connected with
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or related to the production of motion pictures, television programming and
similar or related entertainment, commercial and production activities, and all
sorts and types of visual and sound recording, copying, producing and
processing, and for retail stores, lodging, office buildings and complexes and
related entertainment and commercial activities. Such uses, purposes and
facilities for which the Demised Premises may be used shall include, without
limitation, studios, sound stages, outdoor lots, recording studios, studio
manufacturing, film processing laboratories, educational facilities for
vocational and academic training, auditoriums, theatres and exhibition halls,
lodging, office buildings and complexes, retail stores, food, beverage and
entertainment facilities, parking, warehouses, fairs and special events, public
tours, and entertainment facilities and parks. Further, the Demised Premises may
be used for public entertainment, including, without limitation, such events as
automobile and motorcycle races, expositions, demonstrations, trade shows, and
any and all other presentations and performances which are lawful; and such
other uses and purposes as shall from time to time be approved by Lessor upon
application of Lessee. Lessee expressly covenants not to operate horse racing,
dog racing, or any other events or undertakings involving wagering in connection
with horse racing or dog racing without the express consent of Lessor.
7.1.2. At all times, Lessee shall conform to, obey and comply with all
present and future laws and ordinances, and all lawful requirements, rules and
regulations of all legally constituted authorities, existing at the commencement
of the Lease Term, or at any time during the continuance of the Lease Term,
which in any way affect the Demised Premises or the use of the Demised Premises,
or any repair, replacement, demolition, renovation, construction, restoration or
excavation being done on or to the Demised Premises, or in any way affecting
this Agreement. The right to contest the validity thereof in good faith, at
Lessee's
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sole cost and expense and in Lessee's own name, is hereby reserved to Lessee.
7.2. Condition of Demised Premises. Lessor shall not be liable or
responsible for the condition of the Demised Premises, or for maintenance of the
Demised Premises, or for the safety and suitability of the Demised Premises for
any uses for which the Demised Premises may be employed by Lessee; nor shall
Lessor be liable or responsible for any loss, damage or injury which may occur
from any cause whatsoever to Lessee, or the property, agents, employees,
patrols, exhibitors, licensees or concessionaires of Lessee, or any other person
whatsoever, occurring on the Demised Premises or in or about the Improvements.
Lessee hereby acknowledges that Lessee has inspected and is familiar with the
condition of the Demised Premises, including the terrain features of the
property and the Existing Improvements located thereon, and accepts such in the
present condition thereof. Provided, however, that Lessee accepts the premises
subject to the agreement of Lessor that Lessor will maintain the dam and related
facilities located on the premises and the drainage of water from the lake
impounded by such dam. Provided further, however, that the Lessor, recognizing
Lessee's desire to relocate the dam, lake and drainage system now in place to
accommodate better uses of the race track facilities on the Demised Premises,
agrees to have its Department of Environment and Streets study possible
alternatives to the present lake and dam, with a view toward cooperating with
Lessee in this regard if it is determined to be both economically and
environmentally feasible.
7.3. Optional Improvements and Demolition of Improvements.
7.3.1. If Lessee desires to undertake any material alteration or demolition
of the grandstand, or of any of the four main exhibit buildings now located on
the premises, Lessee must first obtain approval of such action by Lessor, acting
through Lessor's
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governing body. In the event that material alteration or demolition of any of
these five (5) specified structures is approved by Lessor, any salvage from
these specified structures shall belong to Lessor.
7.3.2. Lessee may, at no cost or expense to Lessor, either add to, renovate
or construct anew any of the Existing Improvements and to construct new
Improvements, or remove or demolish any of the Existing Improvements or any
other Improvements (at any time and from time to time during the Lease Term)
including, but not limited to, the destruction of the racetrack and grandstands
on the Demised Premises to permit the use of all of the Demised Premises as in
accordance with Section 7.1.1. for such other or additional uses or construction
as Lessee may determine and desire, except that approval by Lessor must be
obtained with regard to the five (5) structures specified in Section 7.3.1
above. No prior approval shall be required as to other alterations or
demolitions. Any salvage resulting from any such additions, renovations,
construction or demolition during the Term of the Lease shall belong to Lessee,
except the salvage from the five (5) specified structures in Section 7.3.1. Any
Existing Improvements (excluding the lake, racetrack and grandstands) which are
demolished by Lessee shall be replaced by new Improvements of equal or greater
value in accordance with Lessee's development plan for the Demised Premises. As
long as any law, rule or regulation shall require that the lake on the Demised
Premises must be maintained, Lessor agrees to maintain, repair, restore and
rebuild (if necessary) the lake, dam and all facilities related thereto. If
Lessee shall become aware of any condition of this lake which may require any
action by Lessor, Lessee agrees to give Lessor written notice thereof. At such
time as the lake is no longer required to be maintained as aforesaid, Lessee may
drain the lake and demolish the dam and related facilities for the purpose of
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using the area comprising the lake for such purposes as are permitted under
Section 7.1.1. hereof.
7.3.3. Lessee's Development Plan. Lessee pledges its good faith efforts
throughout the term of this lease to implement a development plan for capital
improvements on the Demised Premises, substantially along the lines of the
proposed plan set forth in Exhibit "E" to this Agreement. It is understood and
agreed between the parties that in the event that economic necessity or
legitimate business considerations require alterations in the plan as set forth,
such alterations shall not be grounds for declaring Lessee in default under this
Agreement, in the absence of actual fraud or manifest bad faith.
7.4. Protection of Adjacent Property. While any excavation, demolition or
construction is being performed on the Demised Premises or any portion thereof,
Lessee shall protect all adjacent property.
7.5. Liens. Lessee shall permit no liens to attach to the reversionary
estate of Lessor in the Demised Premises as a result of any excavation,
demolition or construction upon the Demised Premises or any portion thereof,
unless Lessee shall remove such liens, within ninety (90) days from and after
recordation thereof, by discharge, bonding or other proceeding; provided that
this Section 7.5 shall not, and shall not be deemed to, authorize or empower
Lessee to cause or permit any lien whatsoever to attach to Lessor's reversionary
estate in the Demised Premises, which shall always remain superior to Lessee's
interest hereunder.
7.6. Title. Any Improvements constructed by Lessee shall become a part of
the Demised Premises, but the legal title to the same shall not vest in Lessor
until the termination of this Agreement, whether by expiration of the Lease Term
or otherwise. Title to all Improvements, facilities and betterments of any sort
whatsoever which are constructed hereafter or placed upon any portion of the
Demised Premises, and any and all depreciation and
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Investment Tax Credit generated thereby or available in connection therewith
shall belong to and accrue to the benefit of Lessee during the Lease Term.
7.7. Removal of Property. Lessee and all other persons and entities shall
have the right to remove from the Demised Premises all temporary buildings,
temporary facilities, trade fixtures and personal property of any kind which
belong to Lessee or any other person or entity which have been placed upon the
Demised Premises by Lessee or by such persons or entities. The removal thereof
shall be made within sixty (60) days from and after the termination of this
Agreement, or at any time prior thereto.
7.8. Subleases and Occupancy Leases. The voluntary, involuntary or other
surrender or termination of this Agreement during the term of this Agreement
shall not terminate or affect any then existing Subleases, but such Subleases
shall continue in full force and effect according to their terms and shall be
binding on Lessor, provided the person or entity holding any portion of the
Demised Premises under such Sublease is not then in default thereunder and shall
promptly and faithfully thereafter perform all covenants and agreements
contained therein and shall, in writing, agree to attorn to the Lessor with
respect to such Subleases. No Sublease shall extend beyond the Lease Term
specified in Section 2.2 of Article 2, or, as extended pursuant to Section 2.3.
In the event of such termination of this Agreement, outstanding occupancy leases
shall also be honored by Lessor as to terms and conditions relating to occupancy
of the premises and rentals, but any other terms or conditions must be expressly
ratified by Lessor, provided the person or entity holding such Occupancy Lease
is not then in default, and agrees in writing to attorn to Lessor herein. No
term in such Occupancy Lease which has not been expressly ratified by Lessor may
bind Lessor to expend monies in excess of rental due from the holder of said
Occupancy Lease.
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7.9. Repair. Lessee shall, at all time during the Lease Term, at Lessee's
sole cost and expense, keep and maintain the Demised Premises in good and
sanitary order, condition and repair.
7.10. Future Requirements. In the event, at any time during the Lease
Term, any alteration, demolition, renovation, repair, replacement or other work
of any nature, structural or otherwise, shall be required or ordered or becomes
necessary on account of any governmental rule or regulation now in effect or
hereafter adopted which affects the Demised Premises or with respect to any and
all other buildings, other structures, alterations or improvements that may
thereafter be constructed, located on, in or made a part of the Demised
Premises, the entire cost and expense thereof (regardless of when the same shall
be incurred or become due) shall be the liability of Lessee and in no event
shall Lessor be called upon to contribute thereto or to do or pay for any work
performed, materials furnished or obligations incurred by Lessee, except as
otherwise provided in this Lease.
8. INSURANCE.
8.1. Public Liability Insurance. Lessee shall purchase and maintain public
liability insurance with responsible insurance companies authorized to do
business in the State of Georgia, having a duly designated agent or agents upon
whom process in any suit or action in the courts of the State of Georgia or of
the United States of America can be served, insuring Lessee against liability
for injuries to persons (including death) and property caused by Lessee's
negligent use and occupancy of the Demised Premises or otherwise caused by the
negligence of Lessee on the Demised Premises, the policy limits thereof to be in
an amount of not less than Five Hundred Thousand Dollars ($500,000.00) for any
one person and not less than Three Million Dollars ($3,000,000.00) for any one
occurrence involving injury (including death), to more than one person and an
amount of not less than One Hundred Thousand Dollars ($100,000.00) for property
damage
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resulting from any one occurrence. The Lessor shall be an additional named
insured in all such policies.
8.2. Motor Vehicle Liability Insurance. Lessee shall purchase and maintain
during the term of this Agreement motor vehicle liability insurance on all motor
vehicles owned, leased or otherwise used by Lessee upon the Demised Premises in
an amount of not less than Three Hundred Thousand Dollars ($300,000.00) for
injury (including death) to any one person and an amount of not less than One
Million dollars ($1,000,000.00) for any one occurrence involving injury
(including death) to more than one person, and in an amount of not less than
Twenty-five Thousand Dollars ($25,000.00) for property damage resulting from any
one occurrence.
8.3. Worker's Compensation Insurance. Lessee shall provide for and
maintain adequate Workmen's Compensation Insurance for all of Lessee's employees
upon the Demised Premises, as required by statute, and employer's liability
insurance for protection of such of Lessee's employees upon the Demised Premises
as cannot be covered by Worker's Compensation in an amount not less than One
Hundred Thousand Dollars ($100,000.00).
8.4. Improvement Insurance. Lessee shall purchase and maintain fire,
lightning, extended coverage, windstorm and malicious mischief and casualty
insurance, including vandalism, on the five (5) buildings specified in Section
7.3.1 above in the amount of their full, insurable value. The determination of
full, insurable value shall be made by Lessee at least once every other
Operating Year during the Lease Term, and the insurance coverage shall be
adjusted to reflect such valuations. Lessee shall pay the expense of such
determination.
8.5. Insurance Polices. Lessee shall furnish to Lessor a photostatic copy
of all policies of insurance obtained pursuant to this Article 8. With respect
to the first of such policies obtained, Lessee shall furnish Lessor copies of
binders evidencing
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that such coverage is in force within fifteen (15) calendar days after the date
of this Agreement and shall furnish copies of all such policies within sixty
(60) calendar days after the date of this Agreement. Such policies shall provide
that the coverage shall not be amended to decrease the protection below the
limits specified herein or be subject to cancellation without at least thirty
(30) calendar days advance notice to the Commissioner of Finance of Lessor and,
if desired by Lessee, to Lessee and any Mortgagee. Such policies obtained in
accordance with Sections 8.1 and 8.4 of this Article 8 shall also include, in
addition to Lessee, Lessor as an additional named insured and, if desired by
Lessee, any Mortgagee.
8.6. Coverage by Others. Lessee shall require that all persons and
entities occupying any portion of the Demised Premises under any Sublease shall
provide and maintain during such person's use or occupancy of the Demised
Premises liability insurance with limits of liability of not less than
$300,000.00 for any injury (including death) to any one person, not less than
$1,000.000.00 for injuries (including death) to more than one person in any one
occurrence and not less than $25,000.00 for property damage in any one
occurrence. Lessee and Lessor, and, if desired by Lessee, any Mortgagees, shall
appear as additional named insureds on all such policies. Unless Lessor shall
object to the valuations as determined by Lessee within thirty (30) days from
receipt of notice from Lessee of such determination, the same shall be deemed to
have been agreed to by Lessor.
8.7. Indemnification. Notwithstanding the foregoing, Lessee shall
indemnify and hold Lessor and the officers, agents and employees of Lessor
harmless against any and all claims of any kind or character resulting from
negligent acts or omissions of Lessee or the officers, agents, exhibitors,
licensees, employees or concessionaires of Lessee in the use and occupancy of
the
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Demised Premises, or resulting from the failure of Lessee to perform any of
Lessee's obligations hereunder or to comply with any of the terms thereof, or
otherwise resulting from the negligence of Lessee or the officers or employees
of Lessee. The obligation of Lessee to hold Lessor and the officers, agents and
employees of Lessor harmless shall not be restricted to the limits of the
liability insurance required to be purchased pursuant to this Article 8.
8.8. Insurance Trustee. If required by any Mortgagee, the Net Insurance
Proceeds of payment for any loss under the policies described in Section 8.4 of
this Article 8 shall be paid to the Insurance Trustee, for the benefit of Lessor
and Lessee, to the end that the Insurance Trustee shall be entitled to collect
for the use and benefit of such Mortgagee, Lessor and Lessee the Net Insurance
Proceeds in the event of and by reason of the loss or damage of any
Improvements. Lessor and Lessee hereby authorize and direct any carrier of such
insurance to so pay the Insurance Proceeds to the Insurance Trustee.
8.9. Damage, Destruction and Restoration. If at any time any Improvements
are destroyed or damaged (in whole or in part) by fire or other casualty, Lessee
shall promptly give Notice thereof to the Insurance Trustee, and Lessee shall
give all notices required under insurance policies and shall prosecute all
claims to the extent it deems it economically feasible to do so, and Lessor
shall cooperate with Lessee in such prosecution of claims. All Net Insurance
Proceeds of insurance resulting from such claims for losses shall be paid to and
held by the Insurance Trustee in a separate trust account. Lessee, upon request
of the Insurance Trustee, shall apply the Net Insurance Proceeds to repair the
Improvements or to construct new Improvements which shall approximate in value
the damaged or destroyed Improvements; provided, however, in the event such
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damage or destruction affects a material portion of the Improvements, then
Lessee shall have the option to cancel this Agreement, whereupon all Net
Insurance Proceeds shall be paid over to Lessor and become the sole property of
Lessor. The foregoing option must be exercised by Lessee, if at all, by Notice
to Lessor from Lessee within ninety (90) calendar days from and after the event
of such damage or destruction.
8.10. Application of Net Insurance Proceeds. All Net Insurance Proceeds,
whether held by Lessor, Lessee or the Insurance Trustee, shall be made available
to Lessee for the purpose of any repair, rebuilding or restoration by Lessee
pursuant to Section 8.9 of this Article 8. Upon completion by Lessee during the
Lease Term of the repair, restoration or construction of such Improvements, any
unexpended portion of the Net Insurance Proceeds shall inure to Lessee and any
Mortgagee, as their interests may appear.
8.11. Termination. In the event of the termination of this Agreement by
reason of an Event of Default before the expenditure of the full amount of the
Net Insurance Proceeds, any unexpended balance remaining thereof, including any
interest previously earned by such balance, shall inure to and become the sole
property of Lessor, subject to the rights of any Mortgagee having an interest
therein.
8.12. Investments. Any moneys held by the Insurance Trustee under the
provisions of Section 8.8 of this Article 8 shall, at the written request of
Lessee, be invested or reinvested by the Insurance Trustee as specified by
Lessee in such request, or in the absence of such specification, in such
investments as the Insurance Trustee shall deem proper.
8.13. Evidence of Payment. Lessee shall promptly furnish to Lessor
duplicate receipts or satisfactory evidence of the payment of all premiums on
any and all insurance required to be carried by Lessee in accordance with this
Agreement.
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8.14. Invalidation. Lessee agrees and covenants that Lessee will not do or
permit to be done in, to, or about the Demised Premises, any act or thing which
will invalidate any insurance pertaining to any Improvements; and, further,
Lessee will not permit any Improvements at any time to be put, kept or
maintained on the Demised Premises in such condition that the same cannot be
insurable in the amount of the full insurable value thereof.
9. MORTGAGES.
9.1. Encumbrances. Lessee shall have the right to encumber by Mortgage (or
Mortgages) all or any portion of Lessee's rights and interests hereunder
including, without limiting the generality of the foregoing, all or any portion
of Lessee's rights and interests in and to all Improvements on the Demised
Premises. In all respects, however, any Mortgagee's interests shall be
subordinate, inferior and junior to Lessor's rights, title, privileges, liens
and interests as provided in this Agreement, subject to the rights of any such
Mortgagee to cure any Event of Default by Lessee as herein provided. Lessee
shall not have the right to, in any way, burden or encumber Lessor's fee simple
title and reversionary interest in and to the Demised Premises.
9.2. Notices to Mortgagees. If, at any time after the execution and
recording in the Office of the Clerk of the Superior Court of Fulton County,
Georgia, of any Mortgage, the Mortgagee thereunder shall notify Lessor in
writing that such Mortgage has been given and executed by Lessee, and shall at
the same time furnish Lessor with a copy of such Mortgage certified as true and
correct by the said Clerk, and the address to which such Mortgagee
desires Notices and copies of suits as hereinbelow provided to be mailed, Lessor
hereby agrees that Lessor will mail to such Mortgagee, as a notice, duplicate
copies of any and all suits filed by Lessor against Lessee and such Notices as
Lessor has agreed to provide to Mortgagees under Section 10.4
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of Article 10 of this Agreement. Notification by any Mortgagee shall cease to be
effective upon written notice by such Mortgagee to Lessor of the satisfaction of
the Mortgage held by such Mortgagee.
9.3. Cure by Mortgagees. To the extent that Lessee grants such right to
any Mortgagee, such Mortgagee may, at the option of such Mortgagee, at any time
before Lessor shall have terminated this Agreement as provided in Section 10.4
of Article 10 of this Agreement, pay any amount or do any act or thing required
of Lessee by the terms of this Agreement. All payments so made and all acts or
things so done and performed by any such Mortgagee shall be as effective to
prevent a forfeiture of the rights and interests of Lessee hereunder as the same
would have been if done and performed by Lessee instead of any such Mortgagee.
Lessor shall not modify, terminate, cancel or surrender this Lease without the
prior written consent of any Mortgagee entitled to Notice under Section 9.2,
except upon the occurrence of an Event of Default as defined in Section 10.2 and
then only if all conditions and provisions of Articles 9 and 10 have been fully
complied with by Lessor and such Event of Default continues and has not been
cured pursuant to the provisions of Article 10.
9.4. Subrogation. Any Mortgage given by Lessee may be so conditioned as to
provide that as between Lessee and any Mortgagee under such Mortgage, such
Mortgagee, on curing any circumstances which might ripen into an Event of
Default, shall be thereby subrogated to any and all of the rights of Lessee
under the provisions, covenants, terms and conditions of this Agreement.
10. DEFAULT AND TERMINATION.
10.1. Interest Conditional. The Lessee's interest created by this
Agreement is granted on the condition that should any Event of Default occur and
be continuing, then Lessor
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may, subject to all of the terms, conditions and provisions hereof, terminate
this Agreement and such Lessee's interest as provided in this Article 10.
10.2. Events of a Default. The following conditions and events shall
constitute Events of Default for purposes of this Agreement:
a. Lessee fails to make or pay any fees, charges or other payments
required hereunder when due to City within fifteen (15) days after receipt
of written notice from Commissioner of Finance of Non-payment thereof;
b. Forty-nine percent (49%), or more, of the ownership of Lessee is in any
calendar year transferred, passes to or devolves upon (by operation of law
or otherwise) any other person, firm or corporation without the written
consent of the Lessor, unless such transfer of interest is approved or
permitted under Articles 3, 9, or 11;
c. Lessee fails to keep, perform and observe each and every promise,
covenant and condition set forth in this Agreement on its part to be kept,
performed or observed for thirty (30) days after receipt of written notice
of default from Commissioner of Finance, except where fulfillment of such
obligation requires activity over a period of time and Lessee has
commenced to perform whatever may be required within thirty (30) days
after receipt of such notice from the Commissioner of Finance and
continues such performances without interruption except for causes beyond
its control;
d. The levy of any attachment or execution, or the appointment of any
receiver, or the execution of any other process of any court of competent
jurisdiction which is not vacated, dismissed or set aside within a period
of ninety (90) days and which does, or as a
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direct consequence of such process will, interfere with Lessee's use of
the Demised Premises or with its operations under this Agreement:
e. Lessee becomes insolvent, or takes the benefit of any present or future
insolvency statute, or makes a general assignment for the benefit of
creditors, or files a voluntary petition in bankruptcy, or a petition or
answer seeking an arrangement for reorganization, or for readjustment of
indebtedness under the federal bankruptcy laws or under any other law or
statute of the United States, or of any state law, or consents to the
appointment of a receiver, trustee or liquidator of all or substantially
all of its property located within the Demised Premises;
f. By order or decree of court, Lessee is adjudged bankrupt, or an order
is made approving a petition filed by any of the creditors or stockholders
of Lessee seeking the reorganization or the readjustment of its
indebtedness under the federal bankruptcy laws, or under any law or
statute of the United States, or any state thereof;
g. A petition under any part of the federal bankruptcy laws, or an action
under any present or future solvency law or statute is filed against
Lessee and is not dismissed within one hundred twenty (120) days;
h. By, pursuant to or under authority of (1) any legislative act,
resolution or rule, or (2) any order or decree of any court, governmental
board, agency or officer having jurisdiction, a receiver trustee or
liquidator takes possession or control of all or substantially all of the
property of Lessee, and such possession or control continues in effect for
a period of one hundred twenty (120) days;
i. Any lien is filed against the Demised Premises because of any act or
omission of Lessee or a sub-tenant and such lien is not removed, enjoined
or a bond for
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satisfaction of such lien is not posted within sixty (60) days after
Lessee has actual knowledge of the filing of such lien; or
j. Lessee voluntarily abandons, deserts or vacates the Demised Premises.
10.2.1. Lessee's Right to Contest and Effect of Acceptance.
a. Nothing in this Section 10.2 shall prohibit Lessee from contesting in
good faith any governmental authority's requirements or its duty to pay
any tax, lien, claim, charge or demand, but Lessee shall comply with all
laws, ordinances, rules, regulations, orders and other governmental
directives until and unless relieved from doing so by a court of competent
jurisdiction.
b. No acceptance by Lessor of the fees and charges or other payments
specified herein, in whole or in part, and for any period or periods,
after a default in complying with any of the terms, covenants and
conditions to be performed, kept or observed by Lessee shall be deemed a
waiver of any right on the part of Lessor to cancel or terminate this
Agreement on account of such default, so long as such default continues.
10.2.2. Lessor's Rights of Re-Entry. Subject to the provisions of Article
9 and Section 10.3 through 10.9, Lessor shall, as a non-exclusive remedy, upon
the giving of written notice of cancellation or termination as above provided,
have the right to re-enter the Demised Premises and every part thereof on the
effective date of cancellation or termination without further notice of any
kind, remove any and all persons therefrom and may regain and resume possession
either with or without the institution of summary or legal proceedings or
otherwise. Such re-entry, however, shall not in any manner affect, alter or
diminish any of the obligations of Lessee under this Agreement.
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10.2.3. Additional Rights of Lessor. Lessor, upon termination or
cancellation of this Agreement, or upon re-entry, regaining or resumption of
possession of the Demised Premises, pursuant to 10.2 hereof, may occupy said
premises and shall have the right to permit any person, firm or corporation to
enter upon the Demised Premises and use the same. Such occupation by others may
be of only a part of said Premises, or the whole thereof or a part thereof
together with other premises, and for a period of time the same as or different
from the balance of the term remaining hereunder, and on terms and conditions
the same as or different from those set forth in this Agreement. Lessor shall
also have the right to repair or to make such structural or other changes in the
Demised Premises as are necessary in its judgment to maintain the suitability
thereof for uses and purposes similar to those granted under this Agreement
without affecting, altering or diminishing the obligations of Lessee hereunder.
10.2.4. Survival of Lessee's Obligations. In the event this Agreement is
terminated or cancelled by Lessor pursuant to the provisions of this Agreement,
or in the event Lessor re-enters, regains or resumes possession of the Demised
Premises, Lessor shall be entitled to recover damages to be computed in the
following manner: Subject to Lessor's obligation to mitigate damages, Lessor
shall be entitled to recover the amount or amounts of fees and charges which
would have been due and payable to Lessor to the same extent, at the same time
or times, and in the same manner as if no termination, cancellation, re-entry,
regaining or resumption of possession had taken place. Lessor shall have the
responsibility to diligently seek mitigation of damages in the event of such
termination, cancellation or resumption of possession.
10.2.5. Waiver of Redemption and Damages. Lessee hereby waives any and all
rights of redemption and damages granted by or under any present or future law
or statute in the
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event it is dispossessed by reason of an uncured default, and Lessor obtains or
retains possession of the Demised Premises in any lawful manner.
10.3. Force Majeure. For the purpose of any of the provisions of this
Agreement, neither Lessor nor Lessee, as the case may be, nor any successor in
interest, shall be considered in breach of, or default in, the obligations
thereof with respect to this Agreement in the event of enforced delay in the
performance of such obligations due to unforeseeable causes beyond the control
and without the fault or negligence thereof, including, but not restricted to,
acts of God, acts of the public enemy, acts of the Federal Government, acts of
the other party, fires, floods, epidemics, quarantine restrictions, strikes,
freight embargoes, unusually severe weather or delays of any contractor or
subcontractors due to such causes; it being the purpose and intent of this
Section 10.3 that in the event of the occurrence of any such enforced delay, the
time or times for performance of the obligations of Lessor or Lessee, as the
case may be, with respect to this Agreement shall be extended for the period of
the enforced delay; provided that the party seeking the benefit of the
provisions of this Section 10.3 shall, within ten (10) calendar days after the
beginning of any such enforced delay, have first notified the other party
thereof by Notice, and of the cause of causes thereof, and requested an
extension for the period of the enforced delay.
10.4. Remedies. If an Event of Default has occurred and is continuing,
Lessor may, at Lessor's option, upon giving sixty (60) calendar days prior
Notice to any Mortgagee entitled to such Notice as provided in Section 9.2 of
Article 9 of this Agreement of the circumstances which may ripen into any such
Event of Default (which Notice may be given concurrently with any Notice to
Lessee from Lessor required pursuant to Section
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10.2 of the Article 10), except as otherwise provided in Section 10.5 of this
Article 10, unless such Mortgagee is in compliance with either Section 10.4 or
Section 10.5 of this Article 10, in good faith instituted proceedings necessary
to secure such possession and if Mortgagee proceeds with due diligence to cure
the circumstances which may ripen into such Event of Default, Lessor will not
terminate this Agreement provided Mortgagee, for the period from the inception
to the cure of such circumstances, pay all Rent and other monetary sums due
Lessor under this Agreement and otherwise performs all the other obligations
required by this Agreement to be performed by Lessee, which Mortgagee is able to
perform under the circumstances.
10.5. Foreclosure by Mortgagee. If the nature of the circumstances which
may ripen into an Event of Default (as declared by Lessor under Section 10.4 of
this Article 10) is such that the same cannot be cured by Mortgagee, then if
Mortgagee, after receiving Notice of such circumstances and prior to the
expiration of the first thirty (30) days of the sixty (60) calendar days grace
period in Section 10.4 of this Article 10, promptly institutes foreclosure
proceedings to foreclose the Mortgage held by such Mortgagee and proceeds with
due diligence to prosecute such foreclosure proceedings to a conclusion, Lessor
will not terminate this Agreement provided Mortgagee, for the period from the
inception of such circumstances until such foreclosure proceedings are
concluded, pays all Rent and other monetary sums due Lessor under this Agreement
and otherwise performs all other obligations required by this Agreement to be
performed by Lessee, which Mortgagee is able to perform under the circumstances.
Such Mortgagee, following foreclosure thereby upon any interest of Lessee under
this Agreement and Mortgagee's purchase of Lessee's interest at such
foreclosure, shall be obligated as the successor to Lessee under this Agreement
for such obligations as mature under the terms of this Agreement only during the
time that the title to the Lessee's interest is and remains vested in such
Mortgagee.
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Any purchaser at any foreclosure sale shall not have the right to
transfer, sell, convey and assign the interest and title purchased at such sale
without the approval or consent of Lessor. Said approval or consent shall not be
unreasonably withheld.
10.6. New Lease. If any Mortgagee shall effect a cure of circumstances
which may ripen into an Event of Default, as allowed by Sections 10.4 and 10.5
of this Article 10, such Mortgagee, at its option, shall have the right to
notify Lessor by Notice within ten (10) calendar days after such Mortgagee shall
have effected such cure that such Mortgagee is desirous of assuming this
Agreement for the remainder of the Lease Term, provided such Mortgagee in said
Notice obligates itself to immediately (i) pay to Lessor all unpaid Rent and
other monetary sums which are due, or which except for such termination would
otherwise be due, under this Agreement up to and including the date of
commencement of the term following such assumption of this Agreement; and (ii)
pay to Lessor all expenses and reasonable attorney's fees incurred by Lessor in
connection with any such circumstances which might have ripened into an Event of
Default.
10.7. Operation by Lessor. Lessor agrees that after a circumstance which
may ripen into an Event of Default until the assumption of this Agreement, as
contemplated by Section 10.6 of this Article 10, Lessor will do nothing which
would give rise to any liens against the Demised Premises, and Lessor shall have
the right, but not the obligation, to operate the Demised Premises. If Lessor
shall elect to operate the Demised Premises, then Lessor shall pay over to
Mortgagee the net income or rental received by Lessor, if any, derived from the
operation of the Demised Premises from the date Lessor commenced such operation,
or Mortgagee shall pay over to Lessor the net deficit to Lessor from such
operation, both determined in accordance with an audit prepared for and
certified to Lessor and Mortgagee by an independent certified
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public accountant registered and licensed in the State of Georgia and approved
in writing by Lessor and Mortgagee. The cost and expense of the said audit shall
be borne by Mortgagee.
10.8. Possession. If any Mortgagee shall become entitled to possess the
Demised Premises, whether by reason of foreclosure, succession to the Lessee's
interests, by assumption of this Agreement or otherwise, Lessor shall, at the
request, cost and expense of Mortgagee take all appropriate steps and action to
remove any persons from possession and to put Mortgagee (or its assigns) in
possession of the Demised Premises, but Lessor shall not be liable to Mortgagee
or to any person for any damages resulting from any delay in delivering
possession of Demised Premises, and there shall be no abatement of rental under
any new Lease Agreement or otherwise by reason of any delay.
11. ASSIGNMENTS, SUBLEASES AND OCCUPANCY LEASES.
11.1. Assignments and Transfers. Lessee shall not sell, assign or
otherwise convey its title and interest in the Demised Premises or any part
thereof except as permitted by Section 9.1, 11.2 and 11.3 of this Agreement or
as may otherwise be approved by Lessor, which approval shall not be reasonably
withheld. There shall be no transfer within any calendar year of forty-nine
percent (49%) or more of the ownership of Lessee to any person, firm or entity
(excluding transfers to the immediate family and trusts for the immediate family
of the transferor) without approval by Lessor, which approval shall not be
unreasonably withheld.
11.2. Occupancy Leases and Subleases. Lessee may enter into Occupancy
Leases as defined herein for the whole or any portion of the Demised Premises
and/or Improvements without reference to or approval by the Lessor.
Lessee may enter into subleases as defined herein for the whole or any
portion of the Demised Premises and/or Improve-
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ments after obtaining approval by Lessor, acting through its governing body. All
such subleases must contain language concerning nondiscrimination as required by
Section 14.12 infra.
11.3. Effect of Termination. All Occupancy Leases and all Subleases shall
be subordinate to this Agreement (subject to the provisions of Paragraph 7.8)
and shall contain a covenant on the part of the tenant thereunder to the effect
that neither the termination of this Agreement nor the institution of any suit,
action, or proceeding by Lessor to recover possession of the Demised Premises
shall by operation of law, or otherwise, result in the cancellation or
termination of such Occupancy Leases or Subleases (or of any of the obligations
of tenant therein or thereunder) so long as no uncured default exists
thereunder, and if such tenant shall attorn to Lessor or Lessor's successor in
interest. The requirements of any Mortgagee holding a Mortgage, with respect to
any of such Subleases or Occupancy Leases shall govern the relative priorities
of such Mortgage and such Occupancy Leases and such Subleases and the rights of
such Mortgagee concerning such Occupancy Leases and such Subleases which are not
inconsistent with these provisions.
12. CONDEMNATION.
12.1. Condemnation Proceedings. If, during the Lease Term, the Demised
Premises or any portion thereof be condemned and taken by the United States of
America, the State of Georgia or by other body having power of eminent domain
thereover, then the provisions of this Section 12.1 shall apply.
12.1.1. The amount of any awards from any condemnation shall be made
separately to Lessor and Lessee to adequately compensate Lessor and Lessee for
the fair market value of each of their respective interests in the Demised
Premises without reference to or consideration of any termination of this Lease
or the obligations hereunder relating to the portion of the Demised Premises
condemned.
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12.1.2. If all of the Demised Premises is condemned, or such portion
thereof is condemned so that the residue has substantially no commercial value
to Lessee, then the obligations of Lessee to pay Rent which would accrue after
the date that condemnor takes possession of the condemned property shall
terminate. If, after a condemnation occurs, the residue of the Demised Premises
has commercial value to Lessee, then Lessor and Lessee shall mutually select a
qualified, independent real estate appraiser who shall, as expeditiously as
possible, determine the commercial value to Lessee of the residue of the
property remaining after such condemnation. If Lessor and Lessee are unable to
agree in their selection of such appraiser, then an appraiser shall be appointed
by the presiding judge of the Superior Court of Fulton County, Georgia, and the
appraiser so selected shall determine the commercial value to Lessee of said
residue of such Demised Premises. The Minimum Rent, as adjusted, and the
percentage rent payable under the provisions of Article 5 of this Agreement
shall be reduced to that percentage thereof which the value of said residue (as
so determined), bears to the sum of said value and the amount paid by award to
Lessor and Lessee under Section 12.1.1 hereof.
12.1.3. No Acknowledgement. This Article 12 shall not constitute an
acknowledgement or be construed as constituting an acknowledgment by Lessor or
Lessee or either or both of them that Lessor's rights as an entity of government
in and to the reversionary fee simple estate in the Demised Premises are in any
manner subject to any power of eminent domain vested in any government or other
body.
13. NOTICES.
13.1. Notices. All Notices provided for or permitted to be given pursuant
to this Agreement must be in writing and shall be deemed to have been properly
given or served by depositing such in the United States Mail, postpaid and
registered
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or certified return receipt requested, and addressed as hereinafter provided.
All Notices shall be effective upon being deposited in the United States Mail;
however, the time period in which a response to any Notice must be given, if
any, shall commence to run from the date of receipt on the return receipt of the
Notice by the addressed thereof. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given
shall be deemed to be receipt of the notice. In the event that registered or
certified mail is not being accepted for prompt delivery, notices may then be
served by personal service on the person to whose attention notices are to be
addressed as hereinafter provided. By giving at least thirty (30) days notice
thereof, Lessor, Lessee, the Insurance Trustee and any Mortgagee shall have the
right from time to time and at any time during the term of this Agreement to
change their respective addresses and each shall have the right to specify as
its address any other address within the United States of America.
13.2. Address. Notices shall be addressed as provided in Subsections
13.2.1 and 13.2.2 of this Section 13.2. This Section 13.2 shall from time to
time be supplemented by Lessor and Lessee as required to add hereto the
addresses for Notice to the Insurance Trustee and Mortgagees, and to reflect
changes in the address of the parties.
13.2.1. All Notices to Lessor shall be addressed to:
City of Atlanta
63 Mitchell Street, S.W.
Atlanta, Georgia 30303
Attention: The Commissioner of Finance
13.2.2. All notices to Lessee shall be addressed to:
Filmworks U.S.A., Inc.
2000 Lakewood Way, S.E.
Atlanta, Georgia 30315
14. MISCELLANEOUS.
14.1. Inspection. Lessor or the agents of Lessor may, but shall be under
no duty to, enter the Demised Premises at
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reasonable time and hours and without unreasonable interference with the use of
the Demised Premises, to inspect the Demised Premises in order to determine
whether or not Lessee is complying with the undertakings, duties and obligations
of Lessee under this Agreement and Lessor shall indemnify Lessee from any loss
or damage sustained as a result of inspections.
14.2. Zoning. Without limiting the covenants and warranties of Lessor set
forth in Section 3.2 of Article 3 of this Agreement, Lessee takes the Demised
Premises subject to all zoning regulations and ordinances now in force,
including but not limited to, those as to building line and setback. Upon
written request of Lessee, Lessor shall initiate appropriate zoning proceedings
necessary to allow uses of the property contemplated by this Agreement at no
cost to Lessee. Lessee agrees to assist and participate in such proceedings at
no cost to Lessor. In the event such rezoning has not occurred within five (5)
months after initiated, Lessee shall have the option to terminate this
Agreement, and thereafter stand relieved of any and all responsibilities, duties
and obligations to Lessor. Lessee at Lessee's own expense may, in good faith,
contest and litigate as to validity of any ordinance, rule, regulation,
resolution or statute of any governmental body affecting the Demised Premises or
Lessee's use or occupancy thereof if said ordinance, rule, regulation,
resolution or statute is considered by Lessee to be invalid.
14.3. Holding Over. Lessee shall not use or remain in possession of the
Demised Premises after the expiration of the Lease Term. Any holding over, or
continued use and/or occupancy by Lessee, after the expiration of the Lease
Term, without written consent of Lessor, shall not constitute a tenant at will
interest in behalf of Lessee; but Lessee shall become a tenant at sufference at
the annual rate of Rent for the last year of the Lease Term set out above. If
Lessor accepts Rent from Lessee as a tenant at sufference, such tenancy shall be
terminable by
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either Lessor or Lessee upon one hundred eighty (180) days prior notice to the
other. There shall be no renewal whatsoever of this Agreement by operation of
law.
14.4. Non-Waiver. No failure of Lessor to exercise any power given Lessor
hereunder or to insist upon strict compliance by Lessee with the undertakings,
duties and obligations of Lessee hereunder, and no custom or practice of Lessor
and Lessee at variance with the terms hereof shall constitute a waiver of
Lessor's right to demand exact compliance with the provisions, covenants, terms
and conditions of this Agreement.
14.5. Rights Cumulative. All rights, powers and privileges conferred
herein upon both Lessor and Lessee shall be cumulative.
14.6. Successors and Assigns. It is mutually covenanted, understood and
agreed by and between Lessor and Lessee that each of the stipulations,
expressions, phrases, provisions, covenants, terms and conditions of this
Agreement shall apply, extend to, be binding upon and inure to the benefit or
detriment not only of the parties hereto, but to the legal representatives,
successors and assigns of Lessor and Lessee, and shall be deemed and treated as
covenants real running with the Demised Premises during the Lease Term. Whenever
a reference to the parties hereto is made, such reference shall be deemed to
include the legal representatives, successors and assigns of said party, the
same as if in each case expressed.
14.7. Governing Law. It is mutually covenanted, understood and agreed by
and between Lessor and Lessee that this Agreement and the leasehold estate
created hereby shall be governed, construed, performed and enforced in
accordance with the laws of the State of Georgia.
14.8. Termination. The words "terminate" or "termination" as used herein
shall refer to the end of the Lease
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Term whether due to the expiration thereof or the earlier end of this Agreement
by reason of an Event of Default.
14.9. Terminology. Whenever the singular or plural number, or masculine,
feminine, or neuter gender is used in this Agreement, it shall equally apply to,
extend to and include the other. The headings of Articles and Sections herein
are included only for convenience of reference, and shall not be considered in
the interpretation of this Agreement.
14.10. Estoppel Certificates. Lessor and Lessee agree that at any time and
from time to time upon not less than ten (10) days prior notice by the other,
Lessor or Lessee will execute, acknowledge and deliver to the other a statement
in writing certifying (a) that this Agreement is unmodified and in full force
and effect or if there have been modifications that the same is in full force
and effect as modified and identifying the modifications, (b) the date to which
the Rent and other charges have been paid, and (c) that so far as the certified
knows, there is no default (regardless of whether such shall have ripened into
an Event of Default, specifying the nature of same. Estoppel Certificates may be
relied upon by any person or entity proposing to acquire Lessor's or Lessee's
interests hereunder, or any portion thereof or interest therein, as the case may
be, and by any Mortgagee or prospective Mortgagee (or any Assignee thereof) now
or hereafter having any present or prospective interest in the right, title or
interest of Lessor or Lessee created hereby or existing hereunder.
14.11. Time of the Essence. All time limits stated in this Agreement are
of the essence.
14.12. Non-Discrimination. As a contractor with Lessor, Lessee hereby
agrees with Lessor that Lessee shall be bound by the valid laws of the United
States, the State of Georgia and all valid ordinances and laws of the City of
Atlanta, Georgia
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with reference to prohibitions against discrimination on the basis of race,
religion, color, sex or national origin, and specifically, Lessee acknowledges
that Lessee has been made fully aware of the provisions of Section 5-5153
through 5-5154 of the Code of Ordinances of the City of Atlanta, and that
Lessee shall be bound by the provisions thereof as the same exist upon the date
of the execution of this Agreement. Said provisions are attached hereto marked
Exhibit F and incorporated herein by reference. In any event, at a minimum,
Lessee pledges that with respect to all capital improvements made upon the
Demised Premises, at least twenty-five percent (25%) of all expenditures during
each Operating Year for such capital improvements shall be made in connection
with contracts awarded to certified minority or joint-venture contractors
approved by the Contract Compliance Officer of the City of Atlanta. Provided
however, that for purposes of this section interest payments made on loans for
capital improvements shall not be included in the computation hereunder.
Furthermore, Lessee pledges that at least twenty-five percent (25%) of all
expenditures during each Operating Year for operating expenses in connection
with its operations on the Demised Premises shall consist of purchases made from
vendors who are certified as approved minority or joint-venture vendors by the
Contract Compliance Officer of the City of Atlanta.
For purposes of this Section, compliance with the percentage requirements
herein shall be determined annually commencing with the first Operating Year.
For purposes of determining compliance with this section Lessor shall have
the right at any time to request production of any and all information available
to Lessee concerning its expenditures within the meaning of this section.
All Subleases entered into pursuant to this Agreement shall contain
language similar in substance to this Section 14.12 with regard to the
obligations of the Subleases.
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14.13. Lessee acknowledges that Lessee has been fully informed concerning
Code of Ordinances of the City of Atlanta requirements relating to equal
employment opportunity provisions of public contracts of the City of Atlanta,
and Lessee declares its intention and obligation under the terms of this
Agreement to fully comply with all of the provisions of said Code of Ordinances.
14.14. Complete Agreement. This Agreement constitutes the full, complete
and entire agreement between and among Lessor and Lessee concerning the Demised
Premises; no agent, officer or representative of Lessor or Lessee has authority
to make, or has made, any statement, agreement, representation or
contemporaneous agreement, oral or written, in connection herewith modifying,
adding to or changing the provisions, convenants, terms and conditions hereof.
No modification or amendment of this Agreement shall be binding unless such
modification or amendment shall be in writing and signed by both Lessor and
Lessee.
14.15. Transactions with Affiliates.
14.15.1. All transactions between Lessee and any Affiliate of Lessee with
respect to the use or occupancy of the Demised Premises or any portion thereof
shall be entered into upon an "arms-length" basis such that the rentals or other
charges payable to Lessee are as if the same space or services had been leased
by an Entity having no common ownership with Lessee. Lessee and Lessor
acknowledge and agree that the purpose of the foregoing is to assure that for
such transaction the Gross Revenues of Lessee, upon which percentage rental is
due Lessor pursuant to this Agreement, are not less than such Gross Revenues
would have been if Lessee had dealt with an independent Entity instead of with
such Affiliate.
14.15.2. Lessee shall, within sixty (60) calendar days following the end
of each Operating Year, deliver to Lessor a schedule of all transactions with
respect to the use of the
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Demised Premises between Lessee and any Affiliate of Lessee entered into during
the preceeding Operating Year, listing the amount paid Lessee with respect to
each such transaction.
14.16. UDAG Application. Lessor has been requested by Lessee to prepare
and file an application for an Urban Development Action Grant with the
Department of Housing and Urban Development of the United States Government for
assistance in the development of the Demised Premises. The parties agree to seek
such grant by cooperating with one another in approval of the application.
14.17. Industrial Development Bonds. The parties recognize that it is the
intention of Lessee to seek approval by the Fulton County Development Authority
of an Industrial Revenue Bond Issue by said Authority for the purpose of
financing certain improvements of the Demised Premises. Lessor agrees to
cooperate fully with Lessee in connection with the procedures required to obtain
such approval and the issuance of said bonds.
14.18. Historic Designation of Demised Premises. The parties agree that
certain structures and areas on the Demised Premises may be eligible for
inclusion on the National Register of Historic Places or for other designations
as historic places or historic structures by a governmental entity.
Either party may request assistance from the other in preparing and
processing an application for such historic designation, and the other party
will provide assistance as reasonably requested in making such application. Such
assistance shall include, but not necessarily be limited to, staff assistance
and access to records necessary to promote the application.
14.19. Existing Leases and Subleases. Lessor agrees to transfer all
existing leases and subleases now in force upon the Demised Premises to Lessee
and to prorate rentals as of the date of this instrument.
-41-
<PAGE>
14.20. Survey. Lessee, at it option, or Lessor, at its option, may at any
time cause to be prepared a certified survey of the Property (including but not
limited to a definition of the Park Parcel) by a Georgia Registered Surveyor and
shall furnish a copy of any such survey to the other party hereunder.
14.21. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall comprise but a single instrument.
IN WITNESS WHEREOF, Lessor and Lessee, acting through their respective
proper and duly authorized officers, have executed this Agreement on the day and
year hereinabove first written.
ATTEST: CITY OF ATLANTA, a Municipal
Corporation Chartered Pursuant to
the Laws of the State of Georgia
("Lessor")
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- --------------------------- -----------------------------------------
Clerk of Council Mayor
Recommended:
/s/ [ILLEGIBLE]
-----------------------------------------
Chief Administrative Officer
As to the Mayor, Deputy City Approved as to form on behalf of
Clerk and Chief Administrative the City of Atlanta:
Officer, signed, sealed and,
delivered in the presence of:
/s/ [ILLEGIBLE]
- --------------------------- -----------------------------------------
Unofficial Witness Commissioner, Parks, Recreation
and Cultural Affairs
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- --------------------------- -----------------------------------------
Notary Public Commissioner of Finance
Approved as to form on behalf of
the City of Atlanta:
/s/ [ILLEGIBLE]
-----------------------------------------
Assistant City Attorney ---------
Corp. Seal
---------
As to Filmworks U.S.A., Inc. FILMWORKS U.S.A., INC.
and the execution by its
officers, signed, sealed and
delivered in the presence of: By: /s/ [ILLEGIBLE]
-------------------------------------
President
/s/ [ILLEGIBLE]
- ---------------------------
Unofficial Witness /s/ [ILLEGIBLE]
-----------------------------------------
Asst Secretary
/s/ [ILLEGIBLE]
- ---------------------------
Notary Public
Comm Expires 1-10-87
<PAGE>
CITY OF ATLANTA
SEAL
RESURGENS
1847 - 1865
ATLANTA, GA.
DEPARTMENT OF CLERK OF COUNCIL
STATE OF GEORGIA )
) CITY OF ATLANTA
COUNTY OF FULTON )
I, JESSY C. BEARDEN, do hereby certify that I am the duly APPOINTED DEPUTY CLERK
OF COUNCIL of the city of Atlanta, Georgia, and as such am in charge of keeping
the Minutes of the City Council of the said City of Atlanta. I further certify
that the attached is a true and correct copy of a substitute ordinance to
authorize the acceptance and approval on behalf of the City of Atlanta of a
modified plan in bankruptcy court implementing the transfer and assignment of
the present lease held by Atlanta Lakewood Enterprises, LTD, To Filmworks USA,
Inc. and to authorize the Mayor to execute and amended lease with said Filmworks
WSA, Inc. for the purpose of developing the complex at Lakewood Fairgrounds as a
movie production facility, and for other purposes. Adopted by City Council
January 3, 1984 and Approved by the Mayor January 3, 1984 all as the same
appears from the original which is of record and on file in my said office.
GIVEN under my hand and seal of office this 1st day of February, 1984.
EXHIBIT A
/s/ Jessy C. Bearden
-----------------------------------------
DEPUTY CLERK OF COUNCIL
<PAGE>
[ILLEGIBLE]
A SUBSTITUTE ORDINANCE BY COUNCILMEMBERS
DEBBY McCARTY, BARBARA ASHER, ROBB PITTS
AND DOZIER SMITH:
AN ORDINANCE TO AUTHORIZE THE ACCEPTANCE AND
APPROVAL ON BEHALF OF THE CITY OF ATLANTA OF A
MODIFIED PLAN IN BANKRUPTCY COURT IMPLEMENTING
THE TRANSFER AND ASSIGNMENT OF THE PRESENT LEASE
HELD BY ATLANTA LAKEWOOD ENTERPRISES, LTD., TO
FILMWORKS USA, INC., AND TO AUTHORIZE THE MAYOR
TO EXECUTE AN AMENDED LEASE WITH SAID FILMWORKS
USA, INC., FOR THE PURPOSE OF DEVELOPING THE
COMPLEX AT LAKEWOOD FAIRGROUNDS AS A MOVIE
PRODUCTION FACILITY, AND FOR OTHER PURPOSES.
WHEREAS, in May, 1979, the City of Atlanta entered into a contract with Atlanta
Lakewood Enterprises, Ltd., whereby the City leased Lakewood Fairgrounds for the
purpose of developing a movie production facility; and
WHEREAS, the said Atlanta Lakewood Enterprises, Ltd., never paid any rent,
thereby defaulting on its lawful obligations to the City; and
WHEREAS, the said Atlanta Lakewood Enterprises, Ltd., filed petition in
bankruptcy on September 19, 1980, and the court entered an order preventing the
City from terminating the leases at that time; and
WHEREAS, the aforesaid bankrupt, Atlanta Lakewood Enterprises, Ltd., submitted
to the bankruptcy court a plan of reorganization whereby the bankrupt would
transfer and assign its only asset, to wit: the aforementioned lease for
Lakewood Fairgrounds, to a new purchaser if one were found and approved, with
the stipulation that the funds realized in the purchase and assignment of the
lease would pay a certain percentage of the debts of the bankrupt corporation;
and
WHEREAS, said plan of reorganization was approved by the Honorable David A.
Kahn, Bankruptcy Judge in the United States District Court for the Northern
District of Georgia, in March, 1981; and
WHEREAS, after numerous appeals said order approving the plan of reorganization
finally became effective in December, 1982; and
WHEREAS, due to the high cost of funding the reorganization plan approved by
Judge Kahn no potential purchaser has been able or willing to pay into
bankruptcy court the sum of money necessary to implement the transfer of the
lease; and
<PAGE>
WHEREAS, the practical result of the continued existence of the reorganization
plan unfulfilled has been to make virtually useless a valuable asset belonging
to the City of Atlanta, to wit: Lakewood Fairgrounds; and
WHEREAS, a potential new purchaser has approached the bankrupt company with a
proposal for a modification of the original plan in bankruptcy, under which
modification the potential new purchaser of the lease proposes to pay the sum of
$100,000 into bankruptcy court to fund the modified plan in exchange for the
liquidation of all encumbrances against the bankrupt company's lease and the
transfer and assignment of the lease on Lakewood Fairgrounds to the potential
new purchaser; and
WHEREAS, the bankrupt company, Atlanta Lakewood Enterprises, Ltd., has agreed
with the potential new purchaser on the proposal for the modification of the
plan in bankruptcy; and
WHEREAS, on November 21, 1983, Atlanta Lakewood Enterprises, Ltd., filed a
petition in bankruptcy court setting forth the agreed-upon proposed modification
of the plan, a copy of which petition setting forth the modified plan is
attached hereto as Exhibit "A" to this ordinance; and
WHEREAS, the aforesaid potential new purchaser, a Georgia corporation known as
Filmworks USA, Inc., has proposed pursuant to the modified plan shown here as
Exhibit "A" to take an assignment of the Atlanta Lakewood Enterprises, Ltd.,
lease and thereupon to amend the lease in accordance with the terms set forth in
the proposed amended lease, a copy of which is attached hereto as Exhibit "B" to
this ordinance; and
WHEREAS, the potential new purchaser, Filmworks USA, Inc., appears to have the
resources, energy and ability necessary to make viable the plan as modified; and
WHEREAS, Lakewood Fairgrounds is potentially a valuable asset to the people and
to the economy of this City and should be utilized to its fullest for the
betterment of the citizenry;
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF ATLANTA, GEORGIA:
SECTION ONE. THAT the City Attorney be, and she hereby is, authorized to consent
in the United States Bankruptcy Court for the Northern District of Georgia to an
order setting aside the previous order of that Court confirming a reorganization
plan and instituting a modified plan of reorganization in substantially the form
as set forth in Exhibit "A", to this ordinance;
SECTION TWO. THAT the Mayor be, and he hereby is, authorized on behalf of the
City of Atlanta to execute an amended lease with Filmworks USA, Inc., for the
lease of Lakewood Fairgrounds as a movie production facility for a term of
thirty-five (35) years with an option to extend for an additional fifteen (15)
years in substantially the from as the proposed amended lease attached hereto as
exhibit "B" to this ordinance and incorporated herein by reference;
<PAGE>
SECTION THREE. THAT in exchange for the leasing of the Lakewood Fairgrounds the
lease shall provide that Filmworks USA, Inc., shall pay as rent during the term
of the lease certain sums of money according to the following schedule:
Base Rent. Subject to the subsequent provision
herein for a Minimum Rent, Filmworks USA, Inc.,
shall pay a base rental of three (3%) percent of
its annual gross revenues, commencing with the
Sixth Operating Year.
Minimum Rent. In any event, Filmworks USA, Inc.,
shall pay as a minimum rent annually the sum of
$100,000 during the first three (3) operating
years of the amended lease term; the sum of
$150,000 during the fourth (4th) and fifth (5th)
operating years; and for the sixth (6th)
operating year and thereafter Filmworks USA,
Inc., shall pay a minimum annual rental equal to
the sum of $150,000 multiplied by a fraction the
numerator of which is the Consumer Price Index
for the Current Month immediately prior to the
commencement of the Operating Year in question
and the denominator of which is the Consumer
Price Index for the Base Month, which Base Month
is defined as the last month immediately
preceding the end of the fifth (5th) operating
year for which a Consumer Price Index is
reported; and
SECTION FOUR. THAT the lease, as amended, between the City of Atlanta and
Filmworks USA, Inc., shall be in substantially the same from as the proposed
lease attached hereto as Exhibit "B" to this ordinance; THAT it shall be
approved as to form by the City Attorney prior to its execution by the Mayor;
THAT it shall not be executed until all conditions precedent as set forth in the
proposed modified plan (Exhibit "A") have been satisfied; and THAT the lease
shall not be effective and binding upon the City of Atlanta until it shall have
been executed by the Mayor and an executed copy delivered to Filmworks USA,
Inc.; and
SECTION FIVE. THAT all ordinances in conflict herewith are hereby repealed to
the extent of said conflict, PROVIDED, HOWEVER, that nothing in this repealer
shall be construed as a repeal, implied or otherwise, of those portions of that
certain Ordinance No. 1983-52, approved by Council and signed into law by the
Mayor on the 21st day of July, 1983, relative to the equality of participation
of women and minorities in the performance of City of Atlanta contracts and
subcontracts in connection therewith, which relevant part of said ordinance is
codified at Section 5-5153 and 5-5154 of the Code of Ordinances of the City of
Atlanta.
0-83-054
A true copy ADOPTED by City Council Jan 3, 1984
/S/ [ILLEGIBLE] APPROVED by the Mayor Jan 3, 1984
<PAGE>
Filed in U.S. Bankruptcy Court
Atlanta, Georgia
DEC. 8, 1983
Johnny [ILLEGIBLE], Clerk
By: /s/ [ILLEGIBLE]
-----------------------------
Deputy Clerk
RECEIVED
DEC 16, 1983
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
IN THE MATTER OF: : CASE NUMBER
:
ATLANTA LAKEWOOD ENTERPRISES, : 80-03317A
LTD., :
: IN PROCEEDINGS UNDER
: CHAPTER 11 OF THE
DEBTOR. : BANKRUPTCY CODE
ORDER AND NOTICE APPROVING DISCLOSURE STATEMENT
AND FIXING TIME FOR FILING ACCEPTANCE OR REJECTION OF SECOND
MODIFIED PLAN, AND NOTICE OF CONFIRMATION HEARING,
AND NOTICE OF THE TIME FIXED FOR FILING OBJECTIONS TO
TO CONFIRMATION OF THE SECOND MODIFIED PLAN
A disclosure statement under Chapter 11 of the Bankruptcy Code, 11
U.S.C. ss.101 et seq., having been filed by the Debtor in the above-styled case
on November 21, 1983, referring to a second modified plan under Chapter 11 of
the Code, also filed by the Debtor on November 21, 1983; and
It having been determined after hearing on notice that the
disclosure statement contains adequate information;
IT IS ORDERED, AND NOTICE IS HEREBY GIVEN THAT:
A. The disclosure statement filed by the Debtor in the above-styled
case, dated November 21, is approved.
B. January 5, 1984, is fixed as the last day for filing written
acceptances or rejections of the plan referred to above.
C. Within 4 days after the entry of this order, the plan, the
disclosure statement, and a ballot conforming to Official Form No. 30, shall be
transmitted by mail to creditors, equity security holders and other parties in
interest, as provided in Rule 3017 (d).
D. January 11, 1984, is fixed for the hearing on confirmation of the
plan. Said hearing shall be held at 2:30 o'clock P.M., in Courtroom 1707, of the
United States Courthouse, 75 Spring Street, S.W., Atlanta, Georgia, before the
undersigned. Said hearing may be adjourned from time to time by announcement
made in open court without further written notice to parties in interest.
<PAGE>
E. January 5, 1984, is fixed as the last day for filing and serving
pursuant to Rule 302 [ILLEGIBLE] written objections to confirmation of the
plan. Any such objections shall be filed with the Clerk, United States
Bankruptcy Court, Room 1340, United States Courthouse, 75 Spring Street, S.W.,
Atlanta, Georgia 30303.
IT IS SO ORDERED.
At Atlanta, Georgia, this 6 day of December, 1983.
/s/ A.D. Kahn
-----------------------------------------
A. D. KAHN
UNITED STATES BANKRUPTCY JUDGE
<PAGE>
Filed in U.S. Bankruptcy Court
Atlanta, Georgia
NOV 21 1983
Johnny [ILLEGIBLE], Clerk
By: /s/ [ILLEGIBLE]
-----------------------------
Deputy Clerk
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
RECEIVED
DEC 16, 1983
LAW DEPARTMENT
IN RE: : CHAPTER 11
:
ATLANTA LAKEWOOD ENTERPRISES, : CASE NO. 80-03317A
LTD., :
:
:
Debtor :
DISCLOSURE STATEMENT
FOR SECOND MODIFIED PLAN OF REORGANIZATION
I.
INTRODUCTION
Atlanta Lakewood Enterprise, Ltd., the Debtor, provides this
Disclosure Statement for all of its known holders of a claim or interest in
order to disclose that information deemed by the Debtor to be material,
important, and necessary for the holders of a claim or interest to arrive at an
informed decision in exercising their right to vote for acceptance of the Second
Modified Plan of Reorganization (hereinafter "the Plan") which has been filed by
the Debtor. A copy of the Plan accompanies this Statement.
At a later date the Court, by Order, will fix a date for a hearing
on the acceptance of the Plan. Creditors may vote on the Plan by filling out and
mailing the Acceptance form, which will be attached to the Order, to the Clerk,
Bankruptcy Court, Room 1240, 75 Spring Street, S.W., Atlanta, Georgia 30335, or
may attend such hearing and present the Acceptance in person at that time.
NO REPRESENTATIONS CONCERNING THE DEBTOR OR THE PLAN ARE AUTHORIZED
BY THE DEBTOR OTHER THAN AS SET FORTH IN THIS STATEMENT. ANY REPRESENTATION OR
INDUCEMENTS MADE TO SECURE YOUR ACCEPTANCE WHICH ARE OTHER THAN AS CONTAINED IN
THIS STATEMENT SHOULD NOT BE RELIED UPON BY YOU IN ARRIVING AT YOUR DECISION.
II.
BACKGROUND
Debtor is a Georgia corporation formed in February, 1979.
<PAGE>
The corporation was formed for the purpose of acquiring a lease from
the City of Atlanta on the property known generally as Lakewood Fairgrounds. On
May 1, 1979, debtor did become a Lessee of the property.
It was the intention of Debtor to develop the leased property into a
facility for the production of films and related entertainment activities.
Although the Debtor operated in this fashion, it has been unable to develop the
enterprise to the extent necessary to become a profitable operation and on
September 19, 1980 this Chapter 11 case was instituted by the Debtor. At that
time Debtor was in arrears on the lease liabilities to the City of Atlanta, and
the City had advised that it intended to terminate the lease.
Debtor had determined that it was not capable of reorganizing itself
in order to continue business and had submitted its Modified Plan of
Reorganization filed with the court January 19, 1981, which was subsequently
confirmed by the Court; however, that Plan required funds in excess of
$300,000.00 and Debtor has been unable to find an Acquiring Party willing to pay
that sum. Through the efforts of Debtor's principals an Acquiring Party willing
to pay $100,000.00 for Debtor's assets has been found and your Debtor has
submitted its Second Modified Plan of Reorganization.
As reflected in the Schedule of Assets and Liabilities, as amended,
filed with the Court, Debtor had general obligations of approximately
$230,000.00, claims of holders of Debtor's Five (5) Year ten (10%) percent
Registered Debentures Notes in the amount of $200,000.00 plus interest, an
unknown sum due the City of Atlanta for accrued rentals, and an amount less than
$1,000.00 owed to taxing authorities. Additionally there may be a liability of
Debtor of approximately $100,000.00 for a security deposit made by a third party
to the City of Atlanta.
The Assets of the Debtor at this time consists only of the Indenture
of Lease to the City of Atlanta.
III.
PLAN OF REORGANIZATION
The Plan is a liquidation Plan and provides for distribution to the
creditors of all funds to be received for the transfer of all of Debtor's
Assets.
The Plan will be funded by the assignment of Debtor assets to an
Acquiring Party for the sum of one Hundred Thousand
<PAGE>
($100,000.00) Dollars, to be paid in cash upon Confirmation of the Plan.
The Plan provides for the divisions of creditors into classes. Class
I and Class II creditors, administrative and tax liabilities, are entitled to
priority in payment under the Bankruptcy Code and they are to be paid in full
when the Orders allowing such claims become non-appealable and the assets are
transferred.
Class III consists of secured creditors. With the exception of
utility companies and leasing entities holding deposits, the Debtor knows of no
secured creditors. Under the Plan the parties holding deposits will be allowed
to offset these deposits against the amounts owed to them and any balance due
and owing will become a Class VI claim.
Class IV is comprised of creditors holding $200,000.00 of five (5)
year, ten percent (10%) registered debenture notes, together with accrued, but
unpaid interest, computed to the date of Confirmation. These creditors, along
with the Class VI creditors, shall receive all the sums received from the
Acquiring Party after the satisfaction of Class I, Class II, and Class III
creditors, it being anticipated that the dividend to Class IV and Class VI
creditors shall be between 17% and 19% of their allowed claim.
Class V consists solely of the City of Atlanta with regard to all
delinquent obligations under the existing lease between the City as Lessor and
the Debtor as Lessee. At the time of transfer of the Lease, the City of Atlanta
will, after applying all security deposits placed with it pursuant to the
Indenture of Lease by or on behalf of the Debtor and after accounting for
post-filing receipts and disbursements, withdraw all claims against the Debtor.
Class VI creditors are all other holders of claims against the
Debtor, including claims which may arise out of the rejection of executory
contracts, and including claims of secured creditors to the extent that the
Court finds the same to be unsecured in whole or in part. These creditors, along
with the Class IV creditors, shall receive all the sums received from the
Acquiring Party after the satisfaction of Class I, Class II, and Class III
creditors, it being anticipated that the dividend to Class IV and Class VI
creditors shall be between 17% and 19% of their allowed claim.
Class VII is comprised of the ownership interests of the
stockholders of Debtor. As the sums to be received for the
<PAGE>
transfer of Debtor's assets will be insufficient to pay all creditors in full,
the stockholders will receive nothing for their ownership interests.
IV.
MEANS FOR EXECUTION
OF THE PLAN
All funds to be paid to creditors will be obtained from the
Acquiring Party of Debtor's assets. However, the obligation to pay these funds,
and thereby consummate this Plan, is subject to:
(a) The Lease between Debtor and City of Atlanta dated May 1, 1979,
being amended in the manner to be specified by Acquiring Party; and
(b) Approval of the Council of the City of Atlanta to the assignment
of said Lease by Debtor to Acquiring Party; and
(c) A Court Order which is not appealed approving the transfer of
the Lease as amended; and
(d) Confirmation of the Plan; and
(e) All of which shall occur within seventy-five (75) days after the
filing of this Plan.
Debtor believes these conditions can be met.
V.
CONCLUSION
It is the intention of the Debtor that upon the transfer of its
assets and distribution to creditors and the closing of the Chapter 11 case, the
Debtor will cease to operate.
This Plan has been approved by the Board of Directors of Debtor,
none of whom are officers, directors, shareholders, or employees of the
Acquiring Party.
This 21st day November, 1983.
ATLANTA LAKEWOOD ENTERPRISES, LTD.
BY: /s/ [ILLEGIBLE]
-------------------------------------
Richard P. Perry, President
Of Counsel to Debtor
<PAGE>
Filed in U.S. Bankruptcy Court
Atlanta, Georgia
NOV 21 1983
Johnny [ILLEGIBLE], Clerk
By: /s/ [ILLEGIBLE]
-----------------------------
Deputy Clerk
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
RECEIVED
DEC 16, 1983
LAW DEPARTMENT
IN RE: : CHAPTER 11
:
ATLANTA LAKEWOOD ENTERPRISES, : CASE NO. 80-03317A
LTD., :
:
Debtor :
SECOND MODIFIED
PLAN OF REORGANIZATION
ATLANTA LAKEWOOD ENTERPRISES, LTD., Debtor, proposes this Plan of
Reorganization.
DEFINITIONS
The following terms, when used in this Plan of Reorganization shall,
unless the context otherwise requires, have the following meanings,
respectively:
Debtor: Atlanta Lakewood Enterprises, Ltd., a Georgia Corporation.
Chapter 11: Chapter 11 of the Bankruptcy Code.
Reorganization Case: The case for the reorganization of the Debtor
commenced by voluntary petition under Chapter 11 on September 19, 1980, and now
pending in this Court as styled above.
Court: The United States Bankruptcy Court for the Northern District
of Georgia, Atlanta Division, acting in this case.
Plan: This Plan of Reorganization.
Assets: All of the assets of the Estate of Debtor.
Acquiring Party: The entity taking assignment of the Assets.
Stock: The common stock and convertible preferred stock of Debtor.
Confirmation of the Plan: The entry by this Court of an Order
confirming the Plan in accordance with Chapter 11.
<PAGE>
Effective Date: The date on which the transfer provided in the Plan
occurs which shall be one day after the later of (1) the date on which the Order
of Confirmation of the Plan becomes non-appealable with no appeal having been
filed; or (2) if an appeal is filed the date on which all appeal orders
affirming confirmation become non-appealable.
ARTICLE I
CLASSIFICATION OF CLAIMS AND INTERESTS
1.1 Class I - Costs and expenses of administration as defined in the
Bankruptcy Code for which application for allowance or a claim is filed prior to
the Effective Date, as the same are allowed and ordered paid by the Court.
1.2 Class II - Claims entitled to priority by sections 507(a)(3)
and 507(a)(6) of the Bankruptcy Code, as the same are allowed and ordered paid
by the Court.
1.3 Class III - Claims of secured creditors.
1.4 Class IV - Claims of creditors arising from Debtor's 5 year 10%
Registered Debenture Notes and claims of creditors arising by virtue of any
security deposits made on behalf of the Debtor.
1.5 Class V - Claims of the City of Atlanta arising out of the Lease
between the City of Atlanta and Debtor dated May 1, 1979.
1.6 Class VI - Claims of all other creditors of the Debtor,
excluding those in classes I, II, III, IV, and V, as the same are allowed and
ordered paid by the Court, including, but not limited to creditors whose claims
may arise out of the rejection of executory contracts and secured creditors to
the extent that the Court finds the same unsecured in whole or in part.
1.7 Class VII - The interests of the holders of Stock of the Debtor.
ARTICLE II
CLAIMS AND INTERESTS NOT IMPAIRED UNDER THE PLAN
2.1 Class I shall be paid in full on the later of the Effective Date
or the Date on which the Orders allowing such claims become non-appealable.
<PAGE>
2.2 Class II shall be paid in full on the later of the Effective
Date or the date on which the Orders allowing such claims become non-appealable.
2.3 Class III shall be paid in full on the Effective Date of the
Plan to the extent of the value of the collateral unless other terms are agreed
to by the parties; to the extent any such claim exceeds the value of the
collateral such excess shall be a Class VI claim.
2.4 Class VII shall receive nothing as the assets of Debtor are
insufficient to pay all creditors in full.
These classes are not impaired under the Plan.
ARTICLE III
TREATMENT OF CLASSES THAT ARE IMPAIRED
UNDER THE PLAN
3.1 Class V shall withdraw all claims against the Debtor as of the
Effective Date after giving credit for any security deposits placed with Class V
Creditor by or on behalf of the Debtor and including all claims for post-Chapter
11 filing receipts and disbursements.
3.2 Creditors in class IV and Class VI which receive, after the
payment of claims and interests to Class I, Class II, and Class III Creditors,
the balance of the sum to be paid by Acquiring Party to the Debtor pursuant to
Section 4.1 hereof.
ARTICLE IV
CONDITIONS OF AND
MEANS FOR EXECUTION OF THE PLAN
4.1 Assets of Debtor shall be transferred to Acquiring Party for a
sum of One Hundred Thousand ($100,000.00) Dollars, payment by Acquiring Party to
be made as follows:
(a) Fifteen Thousand ($15,000.00) Dollars shall be deposited by
Acquiring Party with the Clerk of the United States Bankruptcy Court on or
before the 5th day of December, 1983, to be held pursuant to the terms of
Section 4.3 hereof and, in the event of Confirmation of this Plan, applied
to the sums to be delivered to Debtor pursuant hereto or in the event of
default of Acquiring Party delivered over to the Debtor as liquidated
damages for such default; and
<PAGE>
(b) The balance of said sum to be paid by Acquiring Party to Debtor
within ten (10) days next following the day on which Order of Confirmation
becomes non-appealable.
4.2 Acquiring Party's obligation to acquire Assets and make payment
is conditioned upon:
(a) The Lease between Debtor and City of Atlanta dated May 1, 1979,
being amended in the manner to be specified by Acquiring Party; and
(b) Approval of the Council of the City of Atlanta of the assignment
of said Lease by Debtor to Acquiring Party; and
(c) A Court Order, which is not appealed, approving the transfer of
the Lease as amended; and
(d) Confirmation of the Plan; and
(e) all of which shall occur within seventy-five (75) days after the
filing of this Plan.
Acquiring Party may waive any of the foregoing conditions in its sole
discretion.
4.3 Any and all sums deposited with the Clerk of the United States
Bankruptcy Court pursuant hereto by Acquiring Party, as a condition to
Confirmation, shall remain the property of Acquiring Party and all of said sums,
together with any earnings thereon, shall, provided Acquiring Party is not in
default hereunder, be returned to Acquiring Party if the Assets are not
transferred to Acquiring Party in accordance with the terms hereof; it is an
express provision hereof that there shall be no invasion of sums deposited or
earnings thereon for any purpose, other than as liquidated damages for Acquiring
Party's default, if the transfer of Assets is not consummated in accordance with
the terms of this Plan.
ARTICLE V
PROVISIONS FOR ASSUMPTION AND REJECTION
OF LEASES AND EXECUTORY CONTRACTS
5.1 The Lease between Debtor and the City of Atlanta is assumed
subject to the provisions of Article IV.
5.2 All existing Leases between Debtor as Lessor and
<PAGE>
tenants as Lessees are assumed, subject to the provisions of paragraph 5.1,
unless rejected prior to Confirmation of the Plan.
5.3 All other contracts which exist between Debtor and any
individual or entity, whether such contracts be in writing or oral, which have
not heretofore been rejected or heretofore been approved by orders of the Court
are hereby specifically rejected.
ARTICLE VI
GENERAL PROVISIONS
6.1 Upon distribution of all funds of the Estate of Debtor as
provided in this Plan, Debtor shall have no further business.
6.2 The Court shall retain jurisdiction to hear and determine all
claims against the Debtor and to enforce all causes of action which may exist on
behalf of the Debtor, and until the case is closed, the Court shall retain
jurisdiction of the Reorganization Case for all purposes to insure that the
purpose and intent of this Plan are fulfilled.
DATED: November 21, 1983 ATLANTA LAKEWOOD ENTERPRISES, LTD.
BY: /s/ Richard P. Perry
-------------------------------------
Richard P. Perry, President
and of Counsel to the Debtor
<PAGE>
EXHIBIT "B"
[Description of Existing Improvements]
All buildings, structures, lakes, ponds, parking areas, rail tracks and other
railroad installations, roads, driveways, racetracks, gatehouses, gates, fences,
plazas, paved areas and other improvements existing upon the Property as of the
date of the Indenture of Lease to which this Exhibit "B" is attached, including
(but not by way of limitation) the Benton Administration Building, the Home
Building, the Agriculture-Education Building, the Commerce Building, the Rabbit
House, Gatehouse No. 1, Gatehouse No. 2, Gatehouse No. 3, Gatehouse No. 4, the
Municipal Building-Fire Station, the Georgia Livestock Exhibition Building, the
Livestock Feeder, the Office (rear of Livestock Feeder), the Grandstand and the
Press Box.
BOOK 8831 PAGE 316
<PAGE>
EXHIBIT "C"
[Description of the Property]
All that tract or parcel of land lying and being in Land Lots 58, 71 and 72 of
the 14th District of Fulton County, Georgia and being more particularly
described as follows:
BEGINNING at a nail placed in the intersection formed by the centerline of South
Pryor Road (abandoned on June 4, 1958) and the southwest line of the
right--of--way of Claire Drive (being a 50 foot right-of-way); running thence
southeasterly along the southwest line of the right-of-way of Claire Drive, and
following the curvature thereof, a distance of 1379.3 feet to an iron pin
placed; running thence south 35 degrees 48 minutes west a distance of 481.9 feet
to an iron pin placed; running thence south 51 degrees 17 minutes 00 seconds
east a distance of 1096.0 feet to an iron pin placed; running thence south 45
degrees 14 minutes 30 seconds east a distance of 220.0 feet to an iron pin
placed; running thence south 74 degrees 29 minutes east a distance of 320.0 feet
to the center of a manhole; running thence south 46 degrees 29 minutes east a
distance of 326.3 feet to an iron pin placed on the northwest line of the
right-of-way of Lakewood Avenue (being a 60 foot right-of-way), said iron pin
placed being at a point 518.0 feet southwest, as measured along the northwest
line of the right-of-way of Lakewood Avenue, from the intersection formed by the
northwest line of the right-of-way of Lakewood Avenue and the southwest line of
the right-of-way of Shadydale Avenue; running thence southwesterly along the
northwest line of the right-of-way of Lakewood Avenue, and following the
curvature thereof, a distance of 1733.1 feet to an iron pin placed; running
thence north 84 degrees 50 minutes west a distance of 56.6 feet to an iron pin
placed; running thence south 29 degrees 45 minutes west a distance of 33.6 feet
to an iron pin placed; running thence in a westerly and northwesterly direction,
along the arc of a curve having a chord bearing north 65 degrees 22 minutes west
for 967.8 feet, a distance of 970.8 feet to an iron pin placed; running thence
south 87 degrees 46 minutes west along the north line of the right-of-way of
Lakewood Way (being a 60 foot right-of-way) a distance of 1176.2 feet to an iron
pin found in the intersection formed by the north line of the right-of-way of
Lakewood Way and the east line of the right-of-way of Pryor Road (being a 50
foot right-of-way); running thence north 00 degrees 32 minutes east along the
east line of the right-of-way of Pryor Road a distance of 1598.7 feet to a nail
placed in the intersection formed by the east line of the right-of-way of Pryor
Road and the centerline of South Pryor Road (abandoned June 4, 1958); running
thence in a northeasterly, easterly, southeasterly, northeasterly and northerly
direction along the centerline of South Pryor Road and following the curvature
thereof a distance of 2796.3 feet to the POINT OF BEGINNING (said course of
2796.3 feet being comprised of the arcs of the following chords: begin at the
nail placed in the intersection formed by the east line of the right-of-way of
Pryor Road and the centerline of South Pryor Road and run thence north 63
degrees 34 minutes east for 251.9 feet, run thence north 88 degrees 47 minutes
east for 357.8 feet, run thence north 89 degrees 44 minutes east for 272.2 feet,
run thence south 74 degrees 27 minutes east for 458.1 feet, run thence north 55
degrees 49 minutes east for 353.8 feet, run thence north 00 degrees 14 minutes
east for 569.8 feet and run thence north 00 degrees 00 minutes west for 563.4
feet to the nail placed in the intersection formed by the centerline of South
Pryor Road and the southwest line of the right-of-way of Claire Drive); being
property depicted as 132.62 acres on that certain blueprint of survey, to which
reference is made for all purposes, prepared by Watts & Browning, Engineers,
dated May 20, 1970, and bearing the certification of A. W. Browning, Georgia
Registered Land Surveyor No. 490.
TOGETHER WITH all other property, if any, owned by the City of Atlanta in Land
Lots 58, 71 and 72 of the 14th District of Fulton County, Georgia, within the
area which is bounded on the west by the above
BOOK 8831 PAGE 317
<PAGE>
described property, on the south by Lakewood Avenue, on the east by Shadydale
Avenue and on the north by Claire Drive, BUT NOT INCLUDING the rights of the
City of Atlanta in and to (i) the right-of-way of any road, street or highway
dedicated to public use or (ii) any utility easements or installations.
TOGETHER WITH all rights, members and appurtenances (except as hereinabove
expressly limited) pertaining to the above described property.
LESS AND EXCEPT that portion of the above-described property lying and being in
Land Lot 71 of the 14th District of Fulton County, Georgia and being more
particularly described as follows:
BEGINNING at an iron pin found in the intersection formed by the east line of
the right-of-way of Pryor Road and the north line of the right-of-way of
Lakewood Way and running thence north 00 degrees 49 minutes 17 seconds west
along the east line of right-of-way of Pryor Road a distance of 27.80 feet to an
iron pin found in the intersection formed by the east line of the right-of-way
of Pryor Road and the southeast side of Lakewood Park Entrance Road; running
thence north 62 degrees 40 minutes 00 seconds east along the southeast side of
Lakewood Park Entrance Road a distance of 299.83 feet to an iron pin found;
running thence in a southeasterly, easterly and northeasterly direction, along
the arc of a curve having a chord running north 82 degrees 47 minutes 17 seconds
east for 156.00 feet, a distance of 173.40 feet to an iron pin set; running
thence north 61 degrees 21 minutes 01 seconds east a distance of 92.00 feet to
an iron pin found on the south side of Lakewood Park Entrance Road; running
thence south 86 degrees 17 minutes 01 seconds east along the south side of
Lakewood Park Entrance Road a distance of 277.56 feet to an iron pin found;
running thence south 82 degrees 22 minutes 59 seconds east along the south side
of Lakewood Park Entrance Road a distance of 230.00 feet to an iron pin set;
running south 39 degrees 14 minutes 49 seconds east along the southwest side of
Lakewood Park Entrance Road a distance of 45.00 feet to an iron pin set; running
thence south 57 degrees 45 minutes 17 seconds east along the southwest side of
Lakewood Park Entrance at a distance of 125.00 feet to an iron pin found;
running thence south 05 degrees 25 minutes 06 seconds west along the west side
of Lakewood Park Entrance Road a distance of 25.05 feet to an iron pin found in
the intersection formed by the west side of Lakewood Park Entrance Road and the
north line of the right-of-way of Lakewood Way; running thence south 86 degrees
31 minutes 57 seconds west along the north line of the right-of-way of Lakewood
Way a distance of 1,119.33 feet to an iron pin found; running thence north 57
degrees 14 minutes 39 seconds west along the northeast line of the right-of-way
of Lakewood Way a distance of 24.92 feet to the POINT OF BEGINNING; being
property depicted as 3.80 acres on that certain blueprint of survey, to which
reference is made for all purposes, prepared by and bearing the certification of
Donald K. Stokes, Georgia Registered Land Surveyor No. 1896, dated April 1977;
being property developed as the Southeast Atlanta Neighborhood Facility pursuant
to a Resolution proposed by the Human Resources Committee under date of August
3, 1976, adopted by the Council of the City of Atlanta on August 16, 1976 and
approved by the Mayor on August 20, 1976.
BOOK 8831 PAGE 318
<PAGE>
EXHIBIT "C" (continued)
LESS AND EXCEPT that portion of the above-described property lying and being in
Land Lot 72 of the 14th District of Fulton County, Georgia and being an area of
5.42 acres as shown on General Site Plan of the Lakewood Substation as attached
hereto and made a part hereof and also filed in the Office of Engineering,
Department of Environment and Streets, City of Atlanta.
EXHIBIT "C" (continued)
BOOK 8831 PAGE 319
<PAGE>
EXHIBIT "D"
[Description of Zoning and Other Encumbrances]
The Property is not subject to any Zoning restrictions, and there are no other
Zoning and Other Encumbrances.
EXHIBIT "D"
BOOK 8831 PAGE 320
<PAGE>
1
LAKEWOOD FAIRGOUNDS
CASH FLOW ANALYSIS
Most Likely
($000) 1st Year 2nd Year 3rd Year 4th Year 5th Year
-------- -------- -------- -------- --------
Revenues $ 60 $1,037 $1,250 $1,500 $1,750
Expenses 1,764 3,416 3,453 3,552 2,248
Net Profit (Loss) (1,704) (2,379) (2,203) (2,052) (498)
Less Depreciation 494 1,840 1,840 1,840 494
Cash Flow (1,210) (539) (363) (212) (4)
(Before Tax)
Tax Credits
- -Corporate Income 852 1,190 1,102 1,026 249
- -ITC 1,063 425 -- -- --
Cash Flow 705 1,076 738 814 245
Cumulative
Cash Flow 705 1,781 2,519 3,333 3,578
Exhibit "E"
(Development Plan)
BOOK 8831 PAGE 285
<PAGE>
LAKEW00D FAIRGROUNDS 2
REVENUE PLAN
PHASE I - YEAR #1
* Assume $60,000.00 from present tenants and miscellaneous revenues.
LAKEWOOD FAIRGROUNDS
REVENUE PLAN
PHASE I - YEAR #2
BUILDING D
1) Sound Stage
@ $500/day x 150 days $ 75,000
2) Screening Room @ $800/day x 150 days
capacity 120,000
3) Offices
4,000 sq. ft. x 10.00 sq. ft. 40,000
---------
TOTAL $ 235,000
=========
BUILDING A
1) Video Tape Studio
@ $2,400/day x 150 days $ 360,000
2) Sound Recording Studio
@ $100/hr. x 20 hrs. x 30 wks. 60,000
3) Miscellaneous Income
@ 20% of $405,000 101,250
---------
TOTAL $ 521,250
=========
BUILDING E
Studio Service Space
@ 36,000 sq. ft. x 250 sq. ft. $ 90,000
=========
MISCELLANEOUS INCOME
1) Backlot Shooting $100/day
x 150 days/yr. $ 15,000
2) Parking Lot Storage or
Staging of Equipment, Vehicles,
other 25,000
3) Current Tenants 60,000
---------
TOTAL $ 97,000 $ 943,250
=========
+ Error Factor $ 93,750
----------
$1,037,000
==========
3rd - 5th Years
* Assume 20% Escalation
BOOK 8831 PAGE 286
<PAGE>
3
LAKEWOOD FAIRGOUNDS
FIVE YEAR EXPENSE FORECAST
Expense 1 2 3 4 5
------- ------ ------ ------ ------ ------
1. Operating Personnel $ 223 $ 445 $ 467 $ 498 $ 523
2. Lease of Land & Buildings 100 100 100 150 150
3. Insurance 15 25 28 31 34
4. Maintenance & Repair 35 39 43 47 52
5. Utilities 50 100 112 123 135
6. Office Expenses 42 46 51 56 62
7. Marketing Expense 95 103 113 124 136
8. Depreciation 494 1,840 1,840 1,840 494
9. Interest on Debt 480 660 660 660 660
10. Interest on Working Capital 130 58 39 23 2
11. City of Atlanta -
Bankruptcy Payment 100 -- -- -- --
Total Expense $1,764 $3,416 $3,453 $3,552 $2,248
BOOK 8831 PAGE 287
<PAGE>
LAKEWOOD FAIRGOUNDS 4
Operating Expenses
1. Operating Personnel
a. First Year -- Pre-Construction and Construction Phase
o Administrative (1) @ $30,000 $ 30,000
o Accounting (1) @ 25,000 25,000
o Marketing (1) @ 36,000 36,000
o Maintenance (2) @ 15,000 30,000
o Security (5) @ 13,000 65,000
--------
$186,000
Fringe @ 20% 37,200
--------
$223,200
b. 2nd -- 5th Years
o Administrative (2) @ $35,000 & 18,000 $ 53,000
o Accounting (2) 1 @30,000 & 12,000 42,000
o Marketing (1) @ 40,000 40,000
o Maintenance (5) @ 15,000 45,000
o Security (5) @ 14,300 71,500
--------
$371,500
Fringe @ 20% 74,300
--------
$445,800
Escalation @ 5% 3rd - 5th years
2. Lease of Land and Buildings
o 1st year - 100,000
o 2nd year - 100,000
o 3rd year - 100,000
o 4th year - 150,000
o 5th year - 150,000
BOOK 8831 PAGE 288
<PAGE>
5
Operating Expenses (continued)
1st year 2nd year 3 - 5 years
-------- -------- -----------
3. Insurance
$15,000 $25,000
------- -------
$15,000 $25,000 + 10% Escalation
4. Maintenance and Repairs
o Estimated @ $35,000, increasing 10% per year
5. Utilities
o $50,000 estimate -- 1st year
o $ 8,350 monthly 2nd year
o + 10% increase 3rd -- 5th year
6. Office Expense
o $3,500/mo. x 12 = $42,000 yr. + 10% yearly increase
7. Marketing Expense
1st Year
o Advertising $10,000
o Brochures 2,500
o Travel 75,000
o Promotions 5,000
o Miscellaneous 2,500
-------
$95,000 + 10% yearly Escalation
BOOK 8831 PAGE 289
<PAGE>
6
Operating Expenses (continued)
6. Depreciation
o Use 15 year straight line for Real Property
o Use 5 year straight line for Personal Property
1st year
o Real Property
$4,250,000 (less 1/2 x $1,062,500 = $531,250 = $3,718,750
$1,230,000 / 15 years = $ 247,916
o Personal Property
$1,230,000 / 5 years = 246,000
---------
$ 493,916
2nd year - 5th year
o Real Property - Equipment
$4,250,000 (less 1/2 $ 425,000 = $212,500) = $4,037,500
$4,037,500 / 3 = $1,346,000 $1,346,000
----------
$1,346,000
+ 1st year 493,916
----------
$1,839,916
Investment Tax Credit
o Historic -- Must Be Assigned Dept. of Interior Project Number
o Basis 25% of Capital Improvements for Real Property
o 1st year $4,250,000 x .25 = $1,062,500
o Equipment $4,250,000 x .10 = $ 425,000
Income Tax Credit
o 50% of operating loss is credited back as income tax savings
9. Interest on Debt
Debt Service Basis
o Investment Funds = $5,500,000 - 12% - 20 yrs.
1st year $4,000,000 debt x 12% = $ 480,000
2nd year $5,500,000 debt x 12% = $ 660,000
3rd - 5th year $ 660,000 Estimated
BOOK 8831 PAGE 290
<PAGE>
7
Operating Expenses (continued)
10. Interest on Working Capital
o 1st year
Expenses $1,634,000
less Depr. 494,000
-----------
$1,140,000
less Revenue 60,000
-----------
Cash Flow Loss ($1,080,000)
Cost of Work Capital $1,080,000 x 12% = $129,600
o 2nd year
Expenses $3,358,000
less Depr. 1,840,000
-----------
$1,518,000
less Revenue 1,037,000
-----------
Cash Flow Loss ($ 481,000)
Cost of Work Capital $ 481,000 x 12% = $ 57,720
o 3rd year
Expenses $3,414,000
less Depr. 1,840,000
-----------
$1,574,000
less Revenue 1,250,000
-----------
Cash Flow Loss ($ 324,000)
Cost of Work Capital $ 324,000 x 12% = $ 38,880
o 4th year
Expenses $3,529,000
less Depr. 1,840,000
-----------
$1,689,000
less Revenue 1,500,000
-----------
Cash Flow Loss ($ 189,000)
Cost of Work Capital $ 189,000 x 12% = $ 22,680
BOOK 8831 PAGE 291
<PAGE>
8
Operating Expenses (continued)
o 5th year
Expenses $2,246,000
less Depr. 494,000
-----------
$1,752,000
Less Revenue 1,750,000
-----------
Cash Flow Loss ($ 2,000)
Cost of Work Capital $ 2,000 x 12% = $ 240
11. Start Up Expense
o $100,000 - Required to clear up existing bankruptcy.
BOOK 8831 PAGE 292
<PAGE>
9
LAKEWOOD FAIRGROUNDS
Budget Allowances - Total
Phase I Development
Soft Costs ( Arch., Electrical, Mechanical) $ 300,000
Roofing 296,500
Plaster & Stucco 163,750
Landscaping 252,000
Electrical 250,000
Painting 184,000
Paving 25,000
Glass & Glazing 140,000
Building E Interior 544,000
Building D Interior 1,037,500
Building A Interior 1,077,187
Lake and Raceway 62,500
Overhead @ 15% 649,866
Profit @ 10% 498,230
----------
Total $5,480,533
==========
BOOK 8831 PAGE 293
<PAGE>
10
LAKEWOOD FAIRGROUNDS
PHASE I CONSTRUCTION BUDGET DETAIL
INTERIORS ONLY
<TABLE>
<CAPTION>
PRIORITY #1
- ----------------------------------------------------------------------------------------
Cost/ Budget
Building Level Use Sq. Ft. Sq. Ft. Estimate
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
D-#4 Main Floor Sound Stage 10,200 $70.00 $ 714,000.00
D-#4 Main Floor Screening Room 1,100 55.00 60,500.00
D-#4 2nd Floor Offices 4,000 25.00 100,000.00
D-#4 -- Cat Walk 2,460 50.00 123,000.00
D-#4 Main Conference 1,600 25.00 40,000.00
-------------
$1,037,500.00
=============
<CAPTION>
PRIORITY #2
- ----------------------------------------------------------------------------------------
Cost/ Budget
Building Level Use Sq. Ft. Sq. Ft. Estimate
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A-#2 1) Main Floor Video-Tape Studio 12,375 $40.00 = $ 495,000.00
A-#2 Interior Sound Wall 1,875 3.50 = 6,562.50
A-#2 2) Main Floor Sound Recording Studio 6,750 40.00 = 270,000.00
A-#2 Interior Sound Wall 1,875 3.50 = 6,562.50
A-#2 3) Main Floor Post Production 5,625 25.00 = 140,625.00
A-#2 Interior Sound Wall 1,875 3.50 = 6,562.50
A-#2 4) 2nd Floor Post Production 5,625 25.00 = 140,625.00
A-#2 5) Main Sound Truck Storage 1,125 10.00 = 11,250.00
--------------
$1,077,187.50
=============
</TABLE>
BOOK 8831 PAGE 294
<PAGE>
LAKEWOOD FAIRGROUNDS 11
PHASE I - CONSTRUCTION BUDGET
<TABLE>
<CAPTION>
PRE-CONSTRUCTION CONSTRUCTION
- ------------------------------------------------------------------------------------------------------------------------------------
Prio
# 1 2 3 4 5 6 7 8 9
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 37,500 163,012 175,212 194,112 169,212 140,140 142,140 132,267 73,880
2 95,000 95,000 205,000 205,000 205,000
3 75,000 100,000 225,000 225,000
4 61,200 90,000 112,164 112,164
5 18,750 18,750 18,750
- ------------------------------------------------------------------------------------------------------------------------------------
T.C. 37,500 163,012 175,212 194,112 282,962 390,090 555,890 674,431 616,044
O.15 5,625 24,451 26,282 29,117 42,444 58,514 83,384 101,165 92,406
P.10 4,313 18,746 20,149 22,323 32,541 44,860 63,927 77,560 70,845
- ------------------------------------------------------------------------------------------------------------------------------------
T. 47,438 206,209 221,643 245,552 357,947 493,464 703,201 853,156 779,295
C. 47,438 253,647 475,290 720,842 1,078,789 1,572,253 2,275,454 3,128,610 3,907,905
<CAPTION>
CONSTRUCTION
- -----------------------------------------------------------------------------------------------------------------------
Prio
# 10 11 12 13 14 15 16 TOTALS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 21,250 82,025 12,500 10,000 10,000 10,000 40,000 1,413,250
2 105,000 95,000 41,250 116,250 1,162,500
3 225,000 95,000 90,168 115,019 1,150,187
4 60,000 54,072 54,400 544,000
5 6,250 62,500
- -----------------------------------------------------------------------------------------------------------------------
T.C. 417,500 326,097 143,918 64,400 241,269 10,000 40,000 4,332,437
O.15 62,625 48,915 21,588 9,660 36,190 1,500 6,000 649,866
P.10 48,013 37,500 16,551 7,406 27,746 1,150 4,600 498,230
- -----------------------------------------------------------------------------------------------------------------------
T. 528,138 412,512 182,057 81,466 305,205 12,650 50,600 5,480,533
C. 4,436,043 4,848,555 5,030,612 5,112,078 5,417,283 5,429,933 5,480,533
</TABLE>
#1 Site Development
2 Building D (incl. 125,000 Elect)
3 Building A (incl. 73,000 Elect)
4 Building E
5 Lake, Grandstand, Raceway
BOOK 8831 PAGE 295
<PAGE>
LAKEWOOD FAIRGROUNDS
FINANCIAL PLAN
PHASE I DEVELOPMENT
REVENUE PLAN:
The Phase I plan as detailed on page 2 addresses itself to the phased
occupancy of Building D, Building A, and Building E. Assumptions are based upon
50% occupancy at a prevailing rate comparable to our competition in Charlotte,
N.C. and Dallas, Texas. The rates are approximately 50% of those charged by
Hollywood, California studios. Other general rates for office, storage, and
industrial type space are based on the local Atlanta metro market.
EXPENSE FORECAST:
The Phase I operating costs are detailed for five years. Escalations range
from 5% to 10% per year. A review of the significant criteria of each expense
category is detailed as follows:
-Operating Personnel - a staff of 7 is anticipated the first year with 15
the second year.
-Lease of Land & Buildings - Assumes a favorable 50 year lease that
- -begins with $100,000 annual payments for years one through three, escalating to
$150,000 per annum in years four and five.
-Maintenance and Repairs - Costs are material only with labor being
provided by operating personnel.
-Depreciation - Straight line was used although ACRS could be used thus
giving a large buildup of depreciation during the first five years.
BOOK 8831 PAGE 296
<PAGE>
LAKEWOOD
FINANCIAL PLAN
PAGE 2
-Interest on Debt - Assumes the annual carry on 5,500,000.00 will be 12%.
Other sources of financing are being addressed and include but are not limited
to joint ventures and limited partnerships combined with IRB's.
-Investment Tax Credit - Due to the historical nature of the buildings, an
assumption was used that the investors are entitled to a 25% tax credit of the
capital rehabilitation improvements against corporate income taxes.
-Interest on Working Capital - Due to the negative cash flow during the
first five years, there will be a cost of working capital until tax credits can
be realized.
BOOK 8831 PAGE 297
<PAGE>
LAKEWOOD FAIRGROUNDS
OUTLINE
SCOPE OF WORK
PHASE I DEVELOPMENT
ENGINEERING:
Provide an allowance Of 8 to 9% for the cost of engineering,
architectural, and special consulting fees.
ROOFING:
Repair and replace as necessary roof flashing, membrane, planking, gutter,
downspouts to Buildings 1, 2, 3, & 4. Spray two coats of fibrated aluminum paint
on Buildings 5 & 5A. Reroof Firehouse Building with asphalt shingles.
PLASTER & STUCCO:
Repair all plaster and stucco damage to Buildings 1, 2, 3, 4, and
Firehouse. Add stucco facade to front and sides of Buildings 5 & 5A matching
existing architectural design.
LANDSCAPING:
Landscape the area immediately located around Buildings 1, 2, 3, 4, and
the Lakewood Avenue entry. Included work is removal of existing shrubs and
trees, metal fences and planting tubs. Establish a planted median strip dividing
the entry road and parking lots, remove areas of paving to allow for additional
planting. Planting will include azaleas, pear trees, dogwood trees, and crepe
myrtle all of large caliber and maturity.
BOOK 8831 PAGE 298
<PAGE>
LAKEWOOD
SCOPE OF WORK
PHASE I DEVELOPMENT
PAGE 2
ELECTRICAL:
Repair and renovate electrical power supplies in and around Buildings 1,
2, 3, & 4 including the removal of surplus power lines, poles, and transformers.
PAINTING:
Paint entry structure, Buildings 1, 2, 3, 4, 5, 5A and Firehouse with two
coats of masonry paint. Paint finish will be in two hues of tan or buff with the
finish colors on all exposed surfaces including the terra cotta roof tiles.
PAVING:
Repair and reseal all bituminous drive and parking areas including
striping and directional indicators.
GLASS & GLAZING:
Replace all broken and cracked lites. Supply and install bronze aluminum
and bronze plate glass structures in selected arched openings in Buildings 1, 2,
& 3.
METAL BUILDINGS:
Rehabilate Buildings 5 & 5A to house motor pool and carpentry shops.
Included will be concrete floors, new lighting, bathroom, office, and inventory
control space. The Kirby Building sited next to these metal buildings is to be
relocated to an alternative site as directed.
BOOK 8831 PAGE 299
<PAGE>
LAKEWOOD
SCOPE OF WORK
PHASE I DEVELOPMENT
PAGE 3
BUILDING "4":
Build offices, catwalks, conference room, screening room within Building
#4. Add electrical supply and controls adequate for film production.
BUILDING "2":
Build soundproof interior within Building #2 to house pre & post
production.
LAKE AND RACEWAY:
Drain lake and clean of muck and vegetation, relocate dam and overflow,
replace valve and mechanical overflow, and grade track to half-mile
configuration.
BOOK 8831 PAGE 300
<PAGE>
LAKEWOOD FAIRGROUNDS
REVENUE PLAN
PHASE I - YEAR #1
* Assume $60,000.00 from present tenants and miscellaneous revenues.
LAKEWOOD FAIRGROUNDS
REVENUE PLAN
PHASE I - YEAR #2
BUILDING D
1) Sound Stage
@ $500/day x 150 days $ 75,000
2) Secreening Room
@ $800/day x 150 days
capacity 120,000
3) Offices
4,000 sq. ft. x 10.00 sq. ft. 40,000
---------
TOTAL $ 235,000
=========
BUILDING A
1) Video Tape Studio
@ $2,400/day x 150 days $ 360,000
2) Sound Recording Studio
@ $100/hr. x 20 hrs. x 30 wks. 60,000
3) Miscellaneous Income
@ 20% of $405,000 101,250
---------
TOTAL $ 521,250
=========
BUILDING E
Studio Service Space
@ 36,000 sq. ft. x 250 sq. ft. $ 90,000
=========
MISCELLANEOUS INCOME
1) Backlot Shooting $100/day
x 150 days/yr. $ 15,000
2) Parking Lot Storage or
Staging of Equipment, Vehicles,
other 25,000
3) Current Tenants 60,000
---------
TOTAL $ 97,000 $ 943,250
=========
+ Error Factor $ 93,750
----------
$1,037 000
==========
3rd - 5th Years
* Assume 20% Escalation
BOOK 8831 PAGE 301
<PAGE>
3
LAKEWOOD FAIRGOUNDS
FIVE YEAR EXPENSE FORECAST
Expense 1 2 3 4 5
------- ----- ----- ----- ----- -----
1. Operating Personnel $ 223 $ 445 $ 467 $ 498 $ 523
2. Lease of Land & Buildings 100 100 100 150 150
3. Insurance 15 25 28 31 34
4. Maintenance & Repair 35 39 43 47 52
5. Utilities 50 100 112 123 135
6. Office Expenses 42 46 51 56 62
7. Marketing Expense 95 103 113 124 136
8. Depreciation 494 1,840 1,840 1,840 494
9. Interest on Debt 480 660 660 660 660
10. Interest on Working Capital 130 58 39 23 2
11. City of Atlanta -
Bankruptcy Payment 100 -- -- -- --
Total Expense $1,764 $3,416 $3,453 $3,552 $2,248
<PAGE>
4
LAKEWOOD FAIRGOUNDS
Operating Expenses
1. Operating Personnel
a. First Year - Pre-Construction and Construction Phase
o Administrative (1) @ $30,000 $ 30,000
o Accounting (1) @ 25,000 25,000
o Marketing (1) @ 36,000 36,000
o Maintenance (2) @ 15,000 30,000
o Security (5) @ 13,000 65,000
--------
$186,000
Fringe @ 20% 37,200
--------
$223,200
b. 2nd - 5th Years
o Administrative (2) @ $35,000 & 18,000 $ 53,000
o Accounting (2) @ $30,000 $ 12,000 42,000
o Marketing (1) @ 40,000 40,000
o Maintenance (5) @ 15,000 45,000
o Security (5) @ 14,300 71,500
--------
$371,500
Fringe @ 20% 74,300
--------
$445,800
Escalation @ 5% 3rd - 5th years
2. Lease of Land and Buildings
o 1st year - 100,000
o 2nd year - 100,000
o 3rd year - 100,000
o 4th year - 150,000
o 5th year - 150,000
<PAGE>
5
Operating Expenses (continued)
1st year 2nd year 3 - 5 years
-------- -------- -----------
3. Insurance $15,000 $25,000
------- -------
$15,000 $25,000 + 10% Escalation
4. Maintenance and Repairs
o Estimated @ $35,000, increasing 10% per year
5. Utilities
o $50,000 estimate - 1st year
o $8,350 monthly 2nd year
o + 10% increase 3rd - 5th year
6. Office Expense
o $3,500/mo. x 12 = $42,000 yr. + 10% yearly increase
7. Marketing Expense
1st year
o Advertising $10,000
o Brochures 2,500
o Travel 75,000
o Promotions 5,000
o Miscellaneous 2,500
-------
$95,000 + 10% yearly Escalation
<PAGE>
6
Operating Expenses (continued)
8. Depreciation
o Use 15 year straight line for Real Property
o Use 5 year straight line for Personal Property
1st year
o Real Property
$4,250,000 (less 1/2 x $1,062,500 = $531,250 = $3,718,750
$1,230,000 / 15 years = $247,916
o Personal Property
$1,230,000 / 5 years = 246,000
--------
$493,916
2nd year - 5th year
o Real Property - Equipment
$4,250,000 (less 1/2 $425,000 = $212,500) = $4,037,500
$4,037,500 / 3 = $1,346,000 1,346,000
----------
$1,348,000
+ 1st year 493,916
----------
$1,839,916
Investment Tax Credit
o Historic - Must Be Assigned Dept. of Interior Project Number
o Basis 25% of Capital Improvements for Real Property
o 1st year $4,250,000 x .25 = $1,062,500
o Equipment $4,250,000 x 10 = $ 425,000
Income Tax Credit
o 50% of operating loss is credited back as income tax savings
9. Interest on Debt
Debt Service Basis
o Investment Funds = $5,500,000 - 12% - 20 yrs.
1st year $4,000,000 debt x 12% = $480,000
2nd year $5,500,000 debt x 12% = $660,000
3rd - 5th year $660,000 Estimated
<PAGE>
7
Operating Expenses (continued)
10. Interest on Working Capital
o 1st year
Expenses $ 1,634,000
less Depr. 494,000
-----------
$ 1,140,000
less Revenue 60,000
-----------
Cash Flow Loss $(1,080,000)
Cost of Work Capital $ 1,080,000 x 12% = $129,600
o 2nd year
Expenses $ 3,358,000
less Depr. 1,840,000
-----------
$ 1,518,000
less Revenue 1,037,000
-----------
Cash Flow Loss $ (481,000)
Cost of Work Capital $ 481,000 x 12% = $57,720
o 3rd year
Expenses $ 3,414,000
less Depr. 1,840.000
-----------
$ 1,574,000
less Revenue 1,250,000
-----------
Cash Flow Loss $ (324,000)
Cost of Work Capital $ 324,000 x 12% = $38,380
o 4th year
Expenses $ 3,529,000
less Dept. 1,840,000
-----------
$ 1,689,000
less Revenue 1,500,000
-----------
Cash Flow Loss $ (189,000)
Cost of Work Capital $ 189,000 x 12% = $22,160
<PAGE>
8
Operating Expenses (continued)
o 5th year
Expenses $ 2,246,000
less Depr. 494,000
-----------
$ 1,752,000
Less Revenue 1,750,000
----------
Cash Flow Loss $ (2,000)
Cost of Work Capital $ 2,000 x 12% = $240
11. Start Up Expense
o $100,000 - Required to clear up existing bankruptcy.
<PAGE>
9
LAKEWOOD FAIRGROUNDS
Budget Allowances - Total
Phase I Development
Soft Costs (Arch., Electrial, Mechanical) $ 300,000
Roofing 296,500
Plaster & Stucco 163,750
Landscaping 252,000
Electrical 250,000
Painting 184,000
Paving 25,000
Glass & Glazing 140,000
Building E Interior 544,000
Building D Interior 1,037,500
Building A Interior 1,077,187
Lake and Raceway 62,500
Overhead @ 15% 649,866
Profit @ 10% 498,230
----------
Total $5,480,533
==========
<PAGE>
10
LAKEWOOD FAIRGROUNDS
PHASE I CONSTRUCTION BUDGET DETAIL
INTERIORS ONLY
PRIORITY #1
- --------------------------------------------------------------------------------
Cost/ Budget
Building Level Use Sq. Ft. Sq. Ft. Estimate
- --------------------------------------------------------------------------------
D-#4 Main Floor Sound Stage 10,200 $ 70.00 $ 714,000.00
D-#4 Main Floor Screening Room 1,100 55.00 60,500.00
D-#4 2nd Floor Offices 4,000 25.00 100,000.00
D-#4 -- Cat Walk 2,460 50.00 123,000.00
D-#4 Main Conference 1,600 25.00 40,000.00
-------------
$1,037,500.00
=============
PRIORITY #2
- --------------------------------------------------------------------------------
Cost/ Budget
Building Level Use Sq. Ft. Sq. Ft. Estimate
- --------------------------------------------------------------------------------
A-#2 1) Main Floor Video-Tape Studio 12,375 $40.00 = $ 495,000.00
A-#2 Interior Sound Wall 1,875 3.50 = 6,562.50
A-#2 2) Main Floor Sound Recording Studio 6,750 40.00 = 270,000.00
A-#2 Interior Sound Wall 1,875 3.50 = 6,562.50
A-#2 3) Main Floor Post Production 5,625 25.00 = 140,625.00
A-#2 Interior Sound Wall 1,875 3.50 = 6,562.50
A-#2 4) 2nd Floor Post Production 5,625 25.00 = 140,625.00
A-#2 5) Main Sound Truck Storage 1,125 10.00 = 11,250.00
-------------
$1,077,187.50
=============
<PAGE>
11
LAKEWOOD FAIRGROUNDS
PHASE 1 - CONSTRUCTION BUDGET
<TABLE>
<CAPTION>
CONSTRUCTION
- -------------------------------------------------------------------------------------------------------------------------------
7 8 9 10 11 12 13 14 15 16 TOTALS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
,140 132,267 73,880 21,250 82,025 12,500 10,000 10,000 10,000 40,000 1,413,250
,000 205,000 205,000 105,000 95,000 41,250 -- 116,250 -- -- 1,162,500
,000 225,000 225,000 225,000 95,000 90,168 -- 115,019 -- -- 1,150,187
,000 112,164 112,164 60,000 54,072 -- 54,400 -- -- -- 544,000
,750 -- -- 6,250 -- -- -- -- -- -- 62,500
- -------------------------------------------------------------------------------------------------------------------------------
,890 674,431 616,044 417,500 326,097 143,918 64,400 241,269 10,000 40,000 4,332,437
,384 101,165 92,406 62,625 48,915 21,588 9,660 36,190 1,500 6,000 649,866
,927 77,560 70,845 48,013 37,500 16,551 7,406 27,746 1,150 4,600 498,230
- -------------------------------------------------------------------------------------------------------------------------------
,201 853,156 779,295 528,138 412,512 182,057 81,466 305,205 12,650 50,600 5,480,533
,454 3,128,610 3,907,905 4,436,043 4,848,555 5,030,612 5,112,078 5,417,283 5,429,933 5,480,533
</TABLE>
<PAGE>
LAKEWOOD
SCOPE OF WORK
PHASE I DEVELOPMENT
PAGE 2
ELECTRICAL:
Repair and renovate electrical power supplies in and around Buildings 1,
2, 3, & 4 including the removal of surplus power lines, poles, and transformers.
PAINTING:
Paint entry structure, Buildings 1, 2, 3, 4, 5, 5A and Firehouse with two
coats of masonry paint. Paint finish will be in two hues of tan or buff with the
finish colors on all exposed surfaces including the terra cotta roof tiles.
PAVING:
Repair and reseal all bituminous drive and parking areas including
striping and directional indicators.
GLASS & GLAZING:
Replace all broken and cracked lites. Supply and install bronze aluminum
and bronze plate glass structures in selected arched openings in Buildings 1, 2,
& 3.
METAL BUILDINGS:
Rehabilitate Buildings 5 & 5A to house motor pool and carpentry shops.
Included will be concrete floors, new lighting, bathroom, office, and inventory
control space. The Kirby Building sited next to these metal buildings is to be
relocated to an alternative site as directed.
<PAGE>
LAKEWOOD
SCOPE OF WORK
PHASE I DEVELOPMENT
PAGE 3
BUILDING "4":
Build offices, catwalks, conference room, screening room within Building
#4. Add electrical supply and controls adequate for film production.
BUILDING "2":
Build soundproof interior within Building #2 to house pre & post
production.
LAKE AND RACEWAY:
Drain lake and clean of muck and vegetation, relocate dam and overflow,
replace valve and mechanical overflow, and grade track to half-mile
configuration.
<PAGE>
LAKEWOOD FAIRGROUNDS
FINANCIAL PLAN
PHASE I DEVELOPMENT
REVENUE PLAN:
The Phase I plan as detailed on page 2 addresses itself to the phased
occupancy of Building D, Building A, and Building E. Assumptions are based upon
50% occupancy at a prevailing rate comparable to our competition in Charlotte,
N.C. and Dallas, Texas. The rates are approximately 50% of those charged by
Hollywood, California studios. Other general rates for office, storage, and
industrial type space are based on the local Atlanta metro market.
EXPENSE FORECAST:
The Phase I operating costs are detailed for five years. Escalations range
from 5% to 10% per year. A review of the significant criteria of each expense
category is detailed as follows:
-Operating Personnel - a staff of 7 is anticipated the first year with 15
the second year.
-Lease of Land & Buildings - Assumes a favorable 50 year lease that begins
with $100,000 annual payments for years one through three, escalating to
$150,000 per annum in years four and five.
-Maintenance and Repairs - Costs are material only with labor being
provided by operating personnel.
Depreciation - Straight line was used although ACRS could be used thus
giving a large buildup of depreciation during the first five years.
<PAGE>
LAKEWOOD FAIRGROUNDS
OUTLINE
SCOPE OF WORK
PHASE I DEVELOPMENT
ENGINEERING:
Provide an allowance of 8 to 9% for the cost of engineering,
architectural, and special consulting fees.
ROOFING:
Repair and replace as necessary roof flashing, membrane, planking, gutter,
downspouts to Buildings 1, 2, 3, & 4. Spray two coats of fibrated aluminum paint
on Buildings 5 & 5A. Reroof Firehouse Building with asphalt shingles.
PLASTER & STUCCO:
Repair all plaster and stucco damage to Buildings 1, 2, 3, 4, and
Firehouse. Add stucco facade to front and sides of Buildings 5 & 5A matching
existing architectural design.
LANDSCAPING:
Landscape the area immediately located around Buildings 1, 2, 3, 4, and
the Lakewood Avenue entry. Included work is removal of existing shrubs and
trees, metal fences and, planting tubs. Establish a planted median strip
dividing the entry road and parking lots, remove areas of paving to allow for
additional planting. Planting will include azaleas, pear trees, dogwood trees,
and crepe myrtle all of large caliber and maturity.
<PAGE>
LAKEWOOD
FINANCIAL PLAN
PAGE 2
-Interest on Debt - Assumes the annual carry on 5,500,000.00 will be 12%.
Other sources of financing are being addressed and include but are not limited
to joint ventures and limited partnerships combined with IRB's.
-Investment Tax Credit - Due to the historical nature of the buildings, an
assumption was used that the investors are entitled to a 25% tax credit of the
capital rehabilitation improvements against corporate income taxes.
-Interest on Working Capital - Due to the negative cash flow during the
first five years, there will be a cost of working capital until tax credits can
be realized.
<PAGE>
LAKEWOOD FAIRGOUNDS
CASH FLOW ANALYSIS
Most Likely
($000) 1st Year 2nd Year 3rd year 4th Year 5th Year
-------- -------- -------- -------- --------
Revenues $ 60 $ 1,037 $ 1,250 $ 1,500 $ 1,750
Expenses 1,764 3,416 3,453 3,552 2,248
Net Profit (Loss) (1,704) (2,379) (2,203) (2,052) (498)
Less Depreciation 494 1,840 1,840 1,840 494
Cash Flow (1,210) (539) (363) (212) (4)
(Before Tax)
Tax Credits
- -Corporate Income 852 1,190 1,102 1,026 249
- -ITC 1,063 425 -- -- --
Cash Flow 705 1,076 738 814 245
Cumulative
Cash Flow 705 1,781 2,519 3,333 3,578
<PAGE>
5-5151 Atlanta City Code 5-104
ARTICLE L
Equal Employment Opportunity
Cross Reference: See also ch. 6 of this part.
Section 5-5151 Application.
Section 5-5153 Requirements for execution of city contracts.
No contract shall be executed on behalf of the City of Atlanta unless at
least one (1) of the following requirements is met:
(1) Fifteen or More Employees - Workforce Reflects Local Labor Pool
Demographics: The contractor has demonstrated that its workforce, if consisting
of 15 or more employees, reflects the demographic characteristics of the
available pool of labor skills normally utilized by the contractor,
Supp. No. 20, 7-83
<PAGE>
5-105 Administrative Services 5-5154
according to the United States Equal Employment Opportunity Commission ("EEOC")
and Office of Federal Contract Compliance Program ("OFCCP") guidelines, as they
may be amended, and that each subcontractor with 15 or more employees has met
one (1) of the requirements of this section. If a contractor or subcontractor
has an Atlanta-area workforce of 15 or more employees, it shall meet this
requirement if its Atlanta-area workforce reflects local demographic
characteristics of the available pool of labor skills.
(2) Affirmative Action Program: The contractor has demonstrated good
faith efforts to comply with the contractual requirement of section 5-5055
(Equal Employment Opportunity Clause Requirement) and section 5-5154 (Equal
Employment Opportunity Clause). Such good faith is to be demonstrated by an
existing affirmative action program, including but not limited to training
programs, advertising, recruitment efforts, and goals and timetables, to be
approved by the contract compliance officer. The contractor must demonstrate
that each subcontractor has met one (1) of the requirements of this section. An
affirmative action program shall be approved if it is pursuant to an order of a
federal court with jurisdiction over the contractor's employment practices, or
if it meets the standard of the EEOC or OFCCP guidelines, as they may be
amended; provided, that certification by the EEOC or OFCCP shall be accepted as
fulfillment of this requirement only when issued within 30 days of the
submission of the contractor's program to the city.
(3) Emergency or Sole Source Contract: The contract has been determined by
the mayor, the mayor's designee or the purchasing agent to be an emergency
procurement, pursuant to section 5-5047, or to be available only through a sole
source, pursuant to section 5-5046.
(4) Fourteen or Less Employees: The contractor and all subcontractors, if
any, have workforces of 14 or less employees. (Ord. No. 1983-52, Sec. 1,
7/21/93)
Section 5-5154 Equal employment opportunity clause.
The equal employment opportunity ("EEO") clause required in all city
contracts, pursuant to section 5-5055, shall read as follows:
"During the performance of this agreement, said contractor agrees as
follows:
"(a) The contractor shall not discriminate against any employee, or
applicant for employment, because of race, religion, color, sex or national
origin. As used here, the words 'shall not discriminate' shall mean and include
without limitation the following:
"Recruited, whether by advertising or other means; compensated, whether in
the form of rates of pay, or other forms of compensation; selected for training,
including apprenticeship; promoted; upgraded; demoted; downgraded; transferred;
laid off; and terminated.
"The contractor agrees to and shall post in conspicuous places, available
to employees and applicants for employment, notices to be provided by the
contracting officers setting forth the provisions of the EEO clause.
"(b) The contractor shall, in all solicitations or advertisements for
employees, placed by or on behalf of the contractor, state that all qualified
applicants will receive consideration for employment without regard to race,
religion, color, sex or national origin.
"(c) The contractor shall send to each labor union or representative of
workers with which the contractor may have a collective bargaining agreement or
other contract or understanding a notice advising the labor union or workers'
representative of the contractor's commitments under the equal employment
opportunity program of the City of Atlanta and under the Code of Ordinances and
shall post copies of the notice in conspicuous places available to employees and
applicants for employment. The contractor shall register all workers in the
skilled trades who are below the journeyman level with the U.S. Bureau of
Apprenticeship and Training.
"(d) The contractor shall furnish all information and reports required by
the Contract Compliance Officer pursuant to the Code of Ordinances, and shall
permit access to the books, records, and accounts of the contractor during
normal business hours by the Contract Compliance Officer for the purpose of
investigation so as to ascertain compliance with the program.
"(e) The contractor shall take such action with respect to any
subcontractor as the City may direct as a means of enforcing the provisions of
Supp. No. 20, 7-83
<PAGE>
5-5154 Atlanta City Code 5-106
paragraphs (a) through (h) herein, including penalties and sanctions for
noncompliance; provided, however, that in the event the contractor becomes
involved in or is threatened with litigation as a result of such direction by
the City, the City will enter into such litigation as is necessary to protect
the interest of the City and to effectuate the equal employment opportunity
program of the City; and, in the case of contracts receiving federal assistance,
the contractor or the City may request the United States to enter into such
litigation to protect the interests of the United States.
"(f) the contractor and its subcontractors, if any, shall file compliance
reports at reasonable times and intervals with the City in the form and to the
extent prescribed by the Contract Compliance Officer. Compliance reports filed
at such times directed shall contain information as to employment practices,
policies, programs and statistics of the contractor and its subcontractors.
"(g) The contractor shall include the provisions of paragraphs (a) through
(h) of this equal employment opportunity clause in every subcontract or purchase
order so that such provisions will be binding upon each subcontractor or vendor.
"(h) A finding, as hereinafter provided, that a refusal by the contractor
or subcontractor to comply with any portion of this program as herein provided
and described, may subject the offending party to any or all of the following
penalties:
"(1) Withholding from the contractor in violation all future payments
under the involved contract until it is determined that the contractor or
subcontractor is in compliance with the provisions of the contract;
"(2) Refusal of all future bids for any contract with the City of Atlanta
or any of its departments or divisions until such time as the contractor or
subcontractor demonstrates that there has been established and there shall be
carried out all of the provisions of the program as provided in the Code of
Ordinances;
"(3) Cancellation of the public contract.
"(4) In a case in which there is substantial or material violation, of the
compliance procedure herein set forth or as may be provided for by the contract,
appropriate proceedings may be brought to enforce those provisions, including
the enjoining, within applicable law, of contractors, subcontractors or other
organizations, individuals or groups who prevent or seek to prevent directly or
indirectly compliance with the policy as herein provided."
(Ord. No. 1983-52, Sec. 1, 7/21/83)
Section 5-5155 Notice to and requirements of bidders and offerors.
Supp. No. 20, 7-83
<PAGE>
AMENDMENT TO LEASE AGREEMENT
GEORGIA, FULTON COUNTY:
In accordance with the provisions of an Ordinance adopted by the Council
of the City of Atlanta, Georgia ("CITY") on the 3rd day of October, 1988,
approved by the Mayor on the 7th day of October, 1988, and approved by
resolution of the Board of Directors of FILMWORKS U.S.A., INC., ("FILMWORKS") on
the 26th day of April, 1988, CITY and FILMWORKS, for and in consideration of the
CITY's approval of the Sublease between FILMWORKS and MCA and for and in
consideration of FILMWORKS' agreements and covenants contained herein, do by
this Agreement entered into as of the 10th day of October, 1988, hereby amend
the "Amended Indenture of Lease" ("LEASE") between them entered into as of the
2nd day of February, 1984, as follows:
1.
The LEASE is hereby amended by adding a new section, Section 7.3.4, to the
original LEASE as now written:
"7.3.4. Capital Improvements Program.
"FILMWORKS (Lessee) shall devote at least fifty percent of its gross
rental income each year received pursuant to that certain Sublease Agreement
between FILMWORKS, U.S.A.,
<PAGE>
INC., and MCA CONCERTS, INC., as executed on January 20, 1988, commencing with
the execution of this (1988) amendment to the completion of that definite and
certain list of capital improvements attached hereto as EXHIBIT A, subject to
the following conditions:
"(a) A portion of the rental income in the first three years of the life
of the Sublease with MCA shall be excluded from the 50% pledge, to wit: $150,000
in the first year and $75,000 in each of the second and third years;
"(b) 50% of the rental revenues subject to the foregoing limitations shall
continue to be pledged until an amount equivalent to the CITY's expenditures, as
documented, pursuant to Section 4.2 of that certain agreement between the CITY
OF ATLANTA and MCA CONCERTS, INC., dated as of October 10, 1988, not to exceed a
cumulative total of $1.5 million, has been expended by FILMWORKS as
improvements;
"(c) The improvements associated with the 50% pledge are to be completed
within the first six months of the year following the year in which the rental
proceeds are received by FILMWORKS;
"(d) If expenditures in excess of 50% of rental revenues are expended in
any one calendar year, such excess will be credited to subsequent years; and
"(e) The 50% pledge is to be devoted and dedicated exclusively to capital
improvements that will restore and
2
<PAGE>
preserve the Exhibit Halls and Fire Station at the Demised Premises as described
in the attached EXHIBIT A."
2.
Section 8.6 of the LEASE ("Coverage by others") is hereby amended by
adding the following paragraph to the section as it is now written:
"In the event that there should be residual payments made to Lessee
(FILMWORKS) by virtue of any insurance policy carried upon the premises, either
by FILMWORKS or by its sublessees, which residual payments are defined as that
portion of insurance proceeds over and above the amounts actually paid to
sublessees or used to replace or rebuild casualty losses, then such residual
payments shall be devoted by FILMWORKS (Lessee) exclusively to capital
improvements to the Demised Premises as approved by the CITY's Department of
Parks, Recreation and Cultural Affairs."
3.
Section 8.7 of the Lease ("Indemnification") is hereby amended by adding
the following paragraph to the section as now written:
3
<PAGE>
"Notwithstanding the foregoing paragraph, to the extent that the CITY's
(Lessor's) interest may appear in the same, Lessee (FILMWORKS) hereby and for a
valuable consideration (the approval of the Sublease with MCA) assigns its
interest in the indemnity given FILMWORKS by MCA in the Sublease to the CITY
(Lessor)."
IN WITNESS WHEREOF, CITY and FILMWORKS, acting through their duly
authorized officers, have executed this AMENDMENT TO LEASE under seal, as of the
10th day of October, 1988.
ATTEST: CITY OF ATLANTA, a Municipal
Corporation of the State of
Georgia ("Lessor")
/s/ Olivia Parks By: /s/ Andrew J. Young
- ---------------------------- -------------------------------------
Deputy Clerk of Council ANDREW J. YOUNG, Mayor
SEAL
Recommended:
/s/ [ILLEGIBLE]
-----------------------------------------
Chief Administrative officer
As to the Mayor, Clerk of Approved:
Council and Chief
Administrative Officer,
signed, sealed and delivered /s/ [ILLEGIBLE]
in the presence of: -----------------------------------------
Commissioner of Finance
/s/ [ILLEGIBLE]
-----------------------------------------
/s/ [ILLEGIBLE] Commissioner of Parks,
- ---------------------------- Recreation & Cultural Affairs
Unofficial Witness
November 8, 1988
/s/ [ILLEGIBLE]
-----------------------------------------
Commissioner of Public Works
/s/ [ILLEGIBLE]
- ----------------------------
Notary Public Approved as to Form on Behalf
of the City of Atlanta:
Notary Public, Gwinnett
County, Georgia /s/ [ILLEGIBLE]
My Commission Expires -----------------------------------------
Apr 9, 1992 Assistant City Attorney
(SIGNATURES CONTINUED)
4
<PAGE>
As to Filmworks, U.S.A., FILMWORKS, U.S.A., INC.
Inc., and the execution by
its officers, signed,
sealed, and delivered in By: /s/ [ILLEGIBLE]
the presence of -------------------------------------
President
SEAL
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
- --------------------------- -------------------------------------
Unofficial Witness Chairman of the Board of
Directors
/s/ [ILLEGIBLE]
- ----------------------------
Notary Public
Notary Public, Gwinnett County, Georgia
My Commission Expires Mar. 7, 1992
5
<PAGE>
EXHIBIT A
Program for Improvements
The 50% pledge is to be invested in capital improvements on the following
structures:
Exhibit Halls 1, 2, 3, and 4
Fire House
The improvements include the following major categories of work:
(1.) Roofing Systems -- Replacement of roofing, or repair of roofing where
appropriate. Includes decking, eaves, gutters, down spouts, soffets, facia
boards, etc.
(2.) Bathrooms -- Renovation of bathroom area and surroundings replacement of
fixtures, and elimination of hazardous electrical and plumbing conditions.
(3.) Structural cracks -- Repair and replacement of surfaces on interior and
exterior walls.
(4.) Paint -- Renewal of interior and exterior wall surfaces in combination
with the other types of improvements stated above.
On an annual basis, a representative from Filmworks U.S.A., Inc. is to present a
capital improvements plan (based on the previous calendar year's 50% pledge) to
the City's Department of Parks, Recreation and Cultural Affairs and Department
of Finance for approval by these departments. So long as this plan will help
accomplish the general purpose of this arrangement, restoration and preservation
of the major historical buildings at the site, the City's approval cannot be
withheld.
In order to assess the scope and structural needs of this restoration effort,
consultants will be hired to evaluate the condition of the buildings. The
consultants' reports will be included as part of the presentation to City
representatives as support for the capital improvements plan proposed by
Filmworks.
Should sufficient funds be available or additional needs arise, Filmworks can
propose, subject to approval by the City's Department of Parks, Recreation, and
Cultural Affairs and Department of Finance, that the work program deviate from
the four major categories of work described herein.
<PAGE>
EXHIBIT B
SUBLEASE
<PAGE>
TABLE OF CONTENTS
1. Grant and Term .................................................... 1
1.1 Demising Agreement ....................................... 1
1.2 Easements ................................................ 1
1.3 Project Area ............................................. 3
1.4 Adjustments of Project Area .............................. 3
1.5 Interest Conveyed ........................................ 3
1.6 Lease Term ............................................... 3
1.7 Termination by Tenant .................................... 4
1.8 Quiet Enjoyment .......................................... 4
2. Use; Restrictions on Sublessor .................................... 4
2.1 Tenant's Use of Site ..................................... 4
2.2 Tenant's Exclusive Use ................................... 4
2.3 Restrictions on Sublessor ................................ 5
2.4 Sublessor Co-operation ................................... 5
3. Construction ...................................................... 5
3.1 Amphitheatre and Primary Parking Area .................... 5
3.2 Tenant to Complete Initial Construction .................. 6
3.3 Extension of Utilities ................................... 6
3.4 Removal of Existing Improvements ......................... 6
3.5 Improvements ............................................. 6
3.6 Alterations and New Construction ......................... 6
3.7 Protection of Adjacent Property .......................... 7
3.8 Liens .................................................... 7
3.9 Removal of Property ...................................... 7
4. Rent .............................................................. 7
i.
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4.1 Consumer price index ..................................... 7
4.2 Minimum Rent ............................................. 8
4.3 Percentage Rent .......................................... 10
5. Sublessor Purchase Options ........................................ 15
5.1 Percentage Rent - Short Fall Option ...................... 15
5.2 11th and 21st Lease Year Options ......................... 18
6. Parking ........................................................... 20
6.1 Operation of Primary Parking Area ........................ 20
6.2 Parking Area Taxes and Costs ............................. 21
6.3 Indemnification and Liability Insurance For Parking Area . 21
6.4 Conflict with Other Sublease Provisions .................. 22
7. Taxes and Other Impositions ....................................... 22
7.1 Taxes Based Upon the Project Area ........................ 22
7.2 Taxes Based Upon Amphitheatre ............................ 22
7.3 Taxes Arising with Respect to Business ................... 22
7.4 Tax Contest .............................................. 23
8. General Requirements Upon Tenant .................................. 23
8.1 Compliance with Laws ..................................... 23
8.2 Repair ................................................... 23
8.3 Utilities ................................................ 23
8.4 Costs and Expenses ....................................... 23
8.5 Event Tickets ............................................ 23
9. Insurance and Indemnification ..................................... 24
9.1 Tenant Insurance Requirements ............................ 24
9.2 Tenant Self-Insurance .................................... 24
9.3 Indemnification by Tenant ................................ 24
ii.
<PAGE>
9.4 Sublessor Waiver ......................................... 24
10. Casualty and Condemnation ........................................ 25
10.1 Casualty ................................................. 25
10.2 Condemnation ............................................. 25
11. Mortgages ........................................................ 26
11.1 Tenant's Right to Encumber ............................... 26
11.2 Mortgagee Requested Modifications ........................ 27
11.3 Mortgage Protection ...................................... 27
11.4 Rent Assignment .......................................... 30
11.5 Possession ............................................... 30
11.6 No Merger ................................................ 30
11.7 Limitation on Liability of Mortgagee Parties ............. 31
11.8 Mortgage Benefitted ...................................... 31
12. Tenant Default ................................................... 31
12.1 Interest Conditional ..................................... 31
12.2 Events of Default ........................................ 31
12.3 Sublessor's Rights of Re-Entry ........................... 33
12.4 Additional Rights of Sublessor ........................... 33
12.5 Survival of Tenant's Obligations ......................... 33
13. Tenant First Refusal and Consultant Rights ....................... 34
13.1 First Refusal ............................................ 34
13.2 Sublessor Consultation ................................... 35
14. Tenant Concessions and Subletting; Assignment .................... 35
14.1 Concessions and Subletting ............................... 35
14.2 Assignments by Tenant .................................... 35
15. Miscellaneous .................................................... 36
15.1 Waiver ................................................... 36
iii.
<PAGE>
15.2 No Benefits to Others .................................... 36
15.3 Entire Agreement ......................................... 36
15.4 Force Majeure ............................................ 36
15.5 Notices; Approvals and Consents .......................... 37
15.6 Captions and Section Numbers ............................. 38
15.7 Construction of Language ................................. 38
15.8 Broker's Commission ...................................... 38
15.9 Interest ................................................. 38
15.10 Persons Indemnified ...................................... 39
15.11 Georgia Law Applies ...................................... 39
15.12 Rights are Cumulative .................................... 39
15.13 Saving Clause ............................................ 39
15.14 Attorney's Fees .......................................... 39
15.15 Injunctive Relief ........................................ 39
15.16 Affiliate Defined ........................................ 39
15.17 Person Defined ........................................... 39
15.18 Estoppel Certificates .................................... 40
15.19 Confidentiality .......................................... 40
16. Non-Discrimination ............................................... 40
17. Successors and Assigns ........................................... 40
18. Recording of Lease ............................................... 40
iv.
<PAGE>
GLOSSARY OF TERMS
Page
----
1. Affiliate ....................................................... 39
2. Amphitheatre .................................................... 5
3. City ............................................................ 1
4. CPI ............................................................. 7
5. CPI Escalation .................................................. 8
6. Cure Period ..................................................... 28
7. Direct Cost ..................................................... 11
8. Easement Areas .................................................. 2
9. Escalation Avoidance Payment .................................... 9
10. Events of Default ............................................... 31
11. Exclusive Party ................................................. 20
12. Existing Minimum Value .......................................... 6
13. Gross receipts from all other sources ........................... 12
14. Gross receipt from sponsorships ................................. 11
15. Improvements .................................................... 6
16. Initial Date .................................................... 1
17. Lakewood ........................................................ 1
18. Lease Term ...................................................... 3
19. Lease Year ...................................................... 3
20. Master Lease .................................................... 1
21. Minimum Rent Excess ............................................. 13
22. Mortgage ........................................................ 27
23. Mortgagee ....................................................... 27
24. Mortgagee Party ................................................. 30
25. Net Revenues .................................................... 19
v.
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Page
----
26. Net Ticket Receipts ............................................. 11
27. Opening Date .................................................... 3
28. Option Avoidance Payment ........................................ 16
29. Option Exercise Notice .......................................... 15
30. Option Segment .................................................. 15
31. Parking Area .................................................... 1
32. Permitted Activities ............................................ 5
33. Person .......................................................... 39
34. Percentage Rent Earned .......................................... 14
35. Prepayment Date ................................................. 8
36. Project Area .................................................... 2
37. Registered Mortgagee ............................................ 27
38. Rental Arrangements ............................................. 11
39. Rental Net ...................................................... 11
40. Requesting Party ................................................ 20
41. Site ............................................................ 1
42. Start Date ...................................................... 3
43. Stub Period ..................................................... 3
44. Sublessor ....................................................... 1
45. Substantial Completion .......................................... 5
46. Tenant .......................................................... 1
47. Voluntary Payments .............................................. 10
vi.
<PAGE>
SUBLEASE
This Sublease is executed as of 1/20, 1988 (the "Initial Date") between
Filmworks U.S.A., Inc. ("Sublessor") and MCA Concerts, Inc. ("Tenant").
This Sublease is entered into with reference to the following facts:
A. The City of Atlanta (the "City") is the fee owner of an approximately
117 acre parcel commonly known as Lakewood Fairgrounds ("Lakewood"). Sublessor
is the lessee of Lakewood under a lease with the City dated February 2, 1984
(the "Master Lease") which, together with the legal description of Lakewood, is
attached as Exhibit A. Sublessor represents and warrants to Tenant that: Exhibit
A is a true and complete copy of the Master Lease; there are no amendments to
the Master Lease; the Master Lease is in full force and effect; there are no
uncured defaults by Sublessor under the Master Lease; there are no occurrences,
omissions, or states of fact that with the passage of time will constitute a
default by Sublessor under the Master Lease; the City has made no claim contrary
to any of the above; to the best of Sublessor's knowledge there are no uncured
defaults by the City under the Master Lease and no occurrences, omissions or
states of fact that with the passage of time will constitute a default by the
City under the Master Lease.
B. The parties believe it to be to their mutual benefit for Sublessor to
sublease a portion of Lakewood to Tenant to enable Tenant to construct and
operate an outdoor commercial concert facility on a long-term basis.
Therefore, the parties agree as follows:
Section 1. Grant and Term.
1.1 Demising Agreement. For and in consideration of the covenants, terms
and conditions contained in this Sublease, Sublessor hereby demises, subleases
and rents to Tenant, and Tenant hereby agrees to lease and take upon the terms
and conditions hereinafter contained, the following premises:
1.1.1 The "Site," the legal description of which is attached as
Exhibit B.
1.1.2 The "Parking Area," the legal description of which is attached
as Exhibit C.
1.2 Easements. Upon and subject to the terms and conditions contained in
this Sublease, Sublessor does hereby grant, bargain, sell and convey unto
Tenant, its successors and assigns, a non-exclusive easement, for the benefit of
Tenant, its successors and assigns, and also for the benefit of all
Subsublessees, licensees, invitees, guests and occupants of the
1.
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Project Area (as hereinafter defined) or any portion or portions thereof, and
also for the benefit of any and all persons or entities providing the utility
services referenced in Subsection 1.2.1 hereinafter set forth, in, over,
through, beneath and across those portions of Lakewood, the legal descriptions
of which are attached as Exhibit E, and any structures or improvements now or
hereafter erected thereon for the following purposes, and any of them, to-wit:
1.2.1 to establish, install, construct, lay, operate, maintain,
repair, remove, demolish and reconstruct all such pipes, wires, conduits,
equipment, apparatus and facilities as Tenant, its successors and assigns,
shall deem necessary or appropriate for the provision of utility services
to the Project Area or any portion thereof, including, but not limited to,
water, electricity, steam, natural gas, telephone, sanitary sewer, storm
sewer and oil; and
1.2.2 for vehicular and pedestrian ingress to and egress from the
Project Area to and from each of the public rights-of-way abutting
Lakewood (or any portion of Lakewood), together with the right to grade,
level, fill, drain, pave, construct, maintain, repair, expand, rebuild and
replace such roads, ramps, drives, stairways, bridges and passages as
Tenant, its successors and assigns, shall deem necessary or appropriate to
provide such ingress and egress; and
1.2.3 for the purpose of entry thereon, passage thereover, deposit
of materials and equipment thereon, erection of temporary structures
therein or thereon, and for all such other purposes and uses as are at any
time and from time to time directly related to and made necessary by the
construction, demolition, reconstruction, repair, replacement or
alteration of any buildings, other structures or improvements now or
hereafter erected in, over, through or upon the Project Area or any
portions thereof.
The above easements shall benefit and be appurtenant to the Site, and the
Parking Area and shall be binding upon, burden, and run with the land with
respect to the portions of Lakewood so described on attached Exhibit E for a
period coterminous with the Lease Term. The areas encompassed within the legal
descriptions set forth in Exhibit E are hereinafter referred to as the "Easement
Areas." Sublessor, its successors and assigns, shall retain the entire leasehold
interest conveyed to Sublessor by the Master Lease in the "Easement Areas"
except as said interest is specifically burdened by the easements granted in
this Subsection 1.2. Further, the parties recognize that Sublessor, as well as
its patrons, customers and invitees, shall utilize Easement Areas for ingress
and egress in connection with activities of Sublessor; provided that Sublessor
shall not permit utilization which would interfere with amphitheatre events or
pedestrian and vehicular ingress and egress related to
2.
<PAGE>
amphitheatre events or would otherwise interfere with the proper exercise of the
rights granted above.
1.3 Project Area. The "Project Area" consists of the Site, the Parking
Area and the Easement Areas.
1.4 Adjustments of Project Area. Prior to the Opening Date (as defined in
Subsection 1.6.2) Sublessor will make such adjustments in the dimensions and
specific locations of all or any portion of the areas within the Project Area as
Tenant may in good faith request from time to time. Thereafter during the Lease
Term Sublessor will agree to make such minor adjustments to all or any of the
foregoing as Tenant may reasonably request, provided, however, such minor
adjustments will not adversely affect in any material way the then present or
contemplated activities of Sublessor or Persons claiming under Sublessor.
Sublessor shall not be required to agree to adjustments which would cause the
Site to exceed approximately 10 acres or the Parking Area to exceed
approximately 50 acres.
1.5 Interest Conveyed. The interest conveyed by this Sublease consists of
a limited and restricted interest (said limitations and restrictions being set
forth in this Sublease) and said conveyed interest does not include an estate in
real property.
1.6 Lease Term. The "Lease Term" under this Sublease shall commence on the
Initial Date and shall expire midnight, local time in the City of Atlanta, State
of Georgia, on December 31, 2033/January 1, 2034, and for as long thereafter as
Sublessors rights are extended under the Master Lease, or Sublessor by any other
instrument retains a leasehold interest in the areas of Lakewood within the
Project Area. Should Sublessor acquire the fee interest in the Project Area or
any other interest consistent with the continued maintenance of the relationship
contemplated by this Sublease, the term of this Sublease shall also continue as
long as Sublessor retains such an interest. Notwithstanding the foregoing, the
Lease Term will expire, if not sooner, at the same hour specified above on
December 31, 2086/January 1, 2087. Sublessor will exercise any option which it
possesses to enable the Lease Term to extend to the December 31, 2033/January 1,
2034 date specified above and to extend further to the maximum duration
specified in the preceding sentence. The Lease Term is subject to being
terminated as hereinafter provided in this Sublease.
1.6.1 Notwithstanding the above provisions, the terms and conditions
of this Sublease will not become effective until ______________ (the
"Start Date").
1.6.2 The "opening Date" is the date the Amphitheatre (as defined in
Subsection ______) is first opened for business to the public.
3.
<PAGE>
1.6.3 The Term "Lease Year" means a calendar year during the Lease
Term. If the Opening Date occurs on January 1 of any calendar year, the
1st Lease Year will begin on the Opening Date. If the Opening Date occurs
on any day other than January 1, the period of time between the Opening
Date and the first day of the following calendar year is the "Stub Period"
and the 1st Lease Year shall commence on the first day of the calendar
year following the Stub Period. Each successive 12 month period following
the 1st Lease Year shall be a separate and successively numbered Lease
Year.
1.7 Termination by Tenant. Effective any time on or after the second
anniversary of the Initial Date, Tenant may, upon six months' prior notice,
terminate this Sublease and if the termination was solely pursuant to this
Subsection 1.7, Sublessor shall be entitled to the Improvements, but Tenant may
retain ownership of, and may remove at any time up to 60 days after the
termination, all or any of the items which are the same as the items which
Tenant is entitled to retain ownership of, and remove, pursuant to Subsection
5.1.3.2.
1.8 Quiet Enjoyment. Subject to this Sublease, Sublessor covenants and
agrees to take all necessary steps to secure and maintain for the benefit of
Tenant the quiet and peaceful possession and enjoyment of the Project Area for
the full Lease Term (as such Lease Term may be extended as provided in
Subsection 1.6), without hindrance, claim, or molestation by Sublessor or any
other Person acting by, through or under Sublessor, or by the City or any other
fee owner of the Project Area or any other Person acting by, through or under
such fee owner.
Section 2. Use; Restrictions on Sublessor; Sublessor Cooperation
2.1 Tenant's Use of Site. Tenant shall have the right to use the Site for
live entertainment, and for commercial concert and arena activities, including
without limitation the vending of food, beverages (including but not limited to
alcoholic beverages), and merchandise and in addition for any other lawful use
which is either not inconsistent with Subsection 7.1.1 of the Master Lease or is
otherwise permitted by the City. Sublessor represents and warrants that provided
the City approves this Sublease, Tenant will have the right to use the Site (and
the rest of the Project Area in conjunction therewith) for all the purposes
specified in the prior sentence in the manner contemplated by Tenant without
violating any laws, ordinances, regulations and without violating the rights of
any Person, provided, however, alcoholic beverages may not be served or sold
without complying with the specific laws relating thereto.
2.2 Tenant's Exclusive Use. Tenant shall have the sole and exclusive right
to use, occupy, and enjoy the Site and all improvements erected thereon, except
for Sublessor's limited inspection rights as elsewhere provided in the Sublease.
4.
<PAGE>
2.3 Restrictions on Sublessor. During the entire Lease Term, neither
Sublessor nor any Person deriving rights directly or indirectly from Sublessor
shall on all or any portion of Lakewood engage in any activities at any time
which are similar to, or competitive with, the types of activities which at the
particular time are normal and customary for commercial concert and arena
facilities. Sublessor shall be entitled to use facilities in Lakewood for
parties, conventions, dancing, receptions, banquets, film and video production,
musical programs, recreational and sports activities and other similar
activities; if such activities involve live musical programs or live
entertainment they shall not entail audiences of more than 1,000 persons and
shall also not be of the type which is normally and customarily held at
commercial concert and arena facilities. Although not an activity which has
previously been engaged in by Sublessor, Sublessor may, subject to the same
qualifications specified above in the prior sentence, conduct a so-called studio
tour business on other portions of Lakewood (which may involve more than 1,000
persons for the tour itself, as distinguished from particular shows which are
part of the tour). The activities which Sublessor is entitled to engage in, in
accordance with the prior two sentences, are referred to as the "Permitted
Activities." In addition to the restrictions upon Sublessor for the above,
neither Sublessor nor any Person deriving rights from Sublessor will engage in
any conduct on any portion of Lakewood which interferes with Tenant's conduct of
business or Tenant's use of, enjoyment of, or operations on, the Project Area.
Sublessor recognizes that it is of utmost importance that Tenant be free from
any competitive activities at Lakewood and also free from any interference.
Accordingly, all prohibitions contained in this Subsection 2.3 shall be broadly
construed against Sublessor and persons deriving rights from Sublessor and the
scope of the Permitted Activities shall be narrowly construed, it being the
intention of the parties to prohibit all activities at Lakewood which could be
deemed to be competitive with, or to interfere with, Tenant, other than matters
which are de minimis.
2.4 Sublessor Co-operation. Without derogating from the generality of
Sublessor's other obligations, Sublessor shall cooperate and coordinate its
activities so as to assist and expedite the planning for, and construction of,
the improvements contemplated by this Sublease on the Project Area and during
the Lease Term support further in every reasonable manner Tenant's activities on
the Project Area.
Section 3. Construction.
3.1 Amphitheatre and Parking Area. Tenant intends to construct an outdoor
amphitheatre facility on the Site and to improve the Parking Area so as to
accommodate self-parking for approximately 6300 vehicles. The term
"Amphitheatre" refers to the aforementioned amphitheatre as constructed on the
Site. Tenant agrees to expend a minimum of $5,000,000 for the development of
plans and specifications, permit fees, insurance and interest cost (paid or
imputed) during construction, cost of
5.
<PAGE>
construction, and other direct and indirect costs related to the development and
construction of the Amphitheatre and related improvements elsewhere within the
Project Area deemed desirable by Tenant.
3.2 Tenant to Complete Initial Construction. Tenant will, if practical,
attempt to complete substantially the Amphitheatre and related improvements so
as to enable the Amphitheatre to be opened to the public ("Substantial
Completion") by June 16, 1988. However, if this is not accomplished, Tenant will
have 24 months from the Start Date in which to complete substantially the
Amphitheatre and related improvements which date shall be subject to extension
to allow for causes beyond Tenant's control until the first June 16 which occurs
at least 36 months from the Start Date.
3.3 Extension of Utilities; Meters. As part of Tenant's responsibilities
under Subsections 3.1 and 3.2, Tenant shall provide for the extension of
utilities from their present locations to service the Amphitheatre and Parking
Area and for utility meters to measure usage by the Amphitheatre and Parking
Area.
3.4 Removal of Existing Improvements. Tenant shall have the right at any
time during the Lease Term to remove any improvements existing on the Project
Area as of the Initial Date except Tenant may not remove any improvements
located on the Easement Areas which serve or benefit facilities within Lakewood
beyond the Site if such removal would materially adversely affect Sublessor
unless Tenant takes appropriate action to avoid such result.
3.5 Improvements. The term "Improvements" means all improvements,
betterments, facilities and the like which are at any time constructed or placed
upon the Site and/or Parking Area and also includes all improvements,
betterments, facilities and the like which are at any time constructed, or
placed upon the Easement Areas which benefit or serve the Site and/or the
Parking Area or which are constructed or placed upon the Easement Areas by
Tenant or any Person deriving rights from Tenant. Any Improvements within the
Project Area shall become part of the Project Area, but the legal title to the
same shall not vest in Sublessor or the City until the termination of this
Sublease, whether expiration of the Lease Term or otherwise. Title to all
Improvements, any and all depreciation and investment tax credits generated
thereby or available in connection therewith, shall belong to, and accrue to the
benefit of, Tenant during the Lease Term.
3.6 Alterations and New Construction. Tenant shall have the right from
time to time to engage in any alterations, modifications, demolition, and new
construction as Tenant may desire, subject to the same qualification with
respect to Improvements on the Easement Areas as specified in Subsection 3.5.
The term "Existing Minimum Value" means what the
6.
<PAGE>
approximate fair market value would have been at the particular point of time if
an amphitheatre appropriate for the commercial concert business costing
$5,000,000 (with costs including those items specified in Subsection 3.1) had
been completed by the Opening Date and thereafter had been maintained in
accordance with the provisions of this Sublease. If after the completion of the
original facilities contemplated by Subsection 3.1, Tenant exercises Tenant's
right to modify, alter or demolish any Improvements, Tenant may only do so if
the fair market value of the Improvements which will exist on the Project Area
after the completion of the particular work will at the time have a value at
least equal to the Existing Minimum Value.
3.7 Protection of Adjacent Property. While any excavation, demolition or
construction is being performed within the Project Area or any portion thereof,
Tenant shall to the full extent required by applicable law protect all adjacent
property from reasonably foreseeable adverse effects of such excavation,
demolition or construction.
3.8 Liens. Tenant shall permit no liens to attach to the interest in
Lakewood of either Sublessor or the city as the result of any excavation,
demolition or construction upon the Project Area or any portion thereof, unless
Tenant shall remove such liens, within 120 days from and after recordation
thereof, by discharge, bonding or other proceeding; provided that this
Subsection 3.8 shall not, and shall not be deemed to, authorize or empower the
Tenant to cause or permit any lien whatsoever to attach to Sublessor's or the
City's interest in Lakewood.
3.9 Removal of Property. Tenant and other Persons claiming under Tenant
shall have the right to remove from the Project Area all or any of the items
which, pursuant to Subsection 5.1.3.2 are specified as being subject to Tenant's
retained ownership and Tenant's right to remove. The removal of such items, to
the extent that Tenant elects to do so, may be accomplished at any time and from
time to time during the Lease Term, and/or within 60 days from and after the
termination or expiration of the Lease Term.
Section 4. Rent
4.1 Consumer Price Index.
4.1.1 "CPI" means the Consumer Price Index for All Urban Consumers,
U.S. City Average, All Items (1967=100). If the aforementioned Index
ceases to exist in substantially its form as of the Initial Date, a
substitute index shall be utilized, which index shall be reasonably
comparable to the index specified in the prior sentence as agreed upon by
the parties, or if the parties disagree, established by the presiding
Judge of the United States District Court for the Northern District of
Georgia, Atlanta Division.
7.
<PAGE>
4.1.2 "CPI Escalation" means multiplying the dollar figure which is
the subject of the escalation by a fraction the denominator of which is
the CPI for the second month prior to the month in which the date occurs
which is the beginning of the comparison period and the numerator of which
is the CPI for the second month prior to the month in which the later date
used in the comparison occurs.
4.2 Minimum Rent
4.2.1 During the period from the Initial Date up to the Opening Date
minimum rent shall be payable at the rate of $12,500 per month. The first
$__________ of minimum rent payable under this Sublease (i.e. rent for the
period ending _____________) has been prepaid. If the date to which
minimum rent has been prepaid (the "Prepayment Date") occurs on a date
other than the first day of a calendar month, then on the after the
Prepayment Date Tenant shall pay to Sublessor rent for the partial month
occurring between such day and the first day of the next calendar month on
the basis of the pro-rated amount of $12,500. Subject to the preceding
sentence, minimum rent of $12,500 per month following the Prepayment Date
shall be payable in advance on the first day of each calendar month. If
the opening Date is other than the first day of a calendar year, then
minimum rent during the period from the Opening Date to the first day of
the 1st Lease Year shall continue to be payable at the same rate and in
the same manner.
4.2.2 Minimum rent starting with the 1st Lease Year and continuing
through the 20th Lease Year shall be payable in the following annual
amounts (which shall be divided into 12 equal monthly installments and
each such installment shall be payable in advance on the first day of each
calendar month of the particular Lease Year): For the 1st through 5th
Lease Years the minimum annual rent shall be $150,000, for the 6th and 7th
Lease Years the minimum annual rent shall be $160,000 and for the 7th
through the 20th Lease Years the minimum annual rent shall be $170,000.
The minimum annual rent starting with the 21st Lease Year shall be
determined in accordance with the formula specified in Subsection 4.2.3.
4.2.3 In order to determine the minimum annual rent applicable to
each Lease Year beginning with the 21st Lease Year a hypothetical
adjustment to the minimum annual rent shall be made with respect to the
Lease Years beginning with the 11th Lease Year and continuing through the
20th Lease Year. There shall be established four Measuring Segments. The
first Measuring Segment shall be the three Lease Years beginning with the
11th Lease Year; the second Measuring Segment shall be the three Lease
Years beginning with the 14th Lease Year; the third Measuring Segment
shall be the three Lease Years beginning with the 17th Lease Year and the
fourth Measuring Segment shall be the 20th Lease Year.
8.
<PAGE>
There shall be a hypothetical adjustment to the minimum annual rent for
each of the Lease Years of each Measuring Segment based upon the CPI
Escalation between the beginning of the 10th Lease Year and the beginning
of the first Lease Year of the particular Measuring Segment. The
hypothetically adjusted minimum annual rent shall remain at the same level
for all three years of each of the first three Measuring Segments. If the
aggregate percentage rent earned with respect to the entire period covered
by a Measuring Segment is less than the aggregate hypothetically adjusted
minimum annual rent for the same period, and if Tenant does not elect to
make an "Escalation Avoidance Payment" which means a payment of the
deficiency within 60 days following the last day of the aforementioned
Measuring Segment, then the hypothetical assumption shall be that the
minimum annual rent during the Measuring Segment was increased to reflect
the above described CPI Escalation. If, on the other hand, the percentage
rent earned with respect to the Measuring Segment did equal or exceed the
hypothetically adjusted minimum annual rent applicable to such Measuring
Segment or Tenant elects to make an Escalation Avoidance Payment, then the
CPI Escalation which was otherwise presumed to have gone into effect as of
the beginning of the particular Measuring Segment shall be cancelled, and
the minimum annual rent for each year of the Measuring Segment shall be
deemed to be the same as the minimum annual rent in effect in the last
year prior to the particular Measuring Segment. Therefore, by way of
example, if, in accordance with the above hypothetical calculation, the
hypothetical minimum annual rent for the first Measuring Segment did not
increase above $170,000 because sufficient percentage rent was payable
with respect to that period (or Tenant made the Escalation Avoidance
Payment with respect thereto) and if the same conditions exist during the
second Measuring Segment, the hypothetical minimum annual rent during the
second Measuring Segment will continue to be $170,000. In making the
calculations specified in this Subsection 4.2.3, regardless of the
increase in the CPI, in no event will the hypothetical minimum annual rent
at any time during the 11th through the 20th Lease Years be deemed to
exceed $250,000 for purposes of making the above calculation. The minimum
annual rent for each Lease Year beginning with the 21st Lease Year and
continuing until the end of the term shall be the same as the final
determination of the hypothetically calculated minimum annual rent for the
20th Lease Year. Therefore in no event will the minimum annual rent for
any Lease Year starting with the 21st Lease Year exceed $250,000 and such
minimum annual rent may be as low as $170,000 regardless of any increases
in the CPI. The sole purpose of this Subsection 4.2.3 is to provide the
mechanism for determining the minimum annual rent applicable to each Lease
Year beginning with the 21st Lease Year. Accordingly, notwithstanding
anything contained above, Tenant shall not under any circumstances be
obligated for any Lease Year from the 10th through the 20th Lease Years to
pay any rent of
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more than the greater of $170,000 or the percentage rent payable pursuant
to Subsection 4.3 (although Tenant may elect to pay more in the form of
Voluntary Payments (which term is defined in Subsection 4.2.4)).
4.2.4 Any Escalation Avoidance Payment made pursuant to Subsection
4.2.3, and any Option Avoidance Payment made pursuant to Subsection 5.1.2
(these two types of payments are hereinafter collectively referred to as a
"Voluntary Payments") shall also be deemed a payment of the other two
above described Voluntary Payments for any Lease Year or Segment which
overlaps the period with respect to which the particular Voluntary Payment
was made.
4.3 Percentage Rent.
4.3.1 Tenant shall pay to Sublessor, with respect to the Stub Period
and each Lease Year, a percentage of the gross receipts received by Tenant
during the Stub Period, or such Lease Year, as the case may be, from the
operation of the Amphitheatre and the Parking Area.
4.3.2 First, there shall be determined for the Stub Period and for
each Lease Year (except for the specific provisions below which are
applicable only to the periods stated herein), the amount of percentage
rent earned which shall be the sum of the product of multiplying each
category specified below of a particular period's gross receipts by the
percentage applicable to that category:
4.3.2.1 3-1/2% of net ticket revenues up to $6,000,000 in the
Stub Period and in the particular Lease Year, respectively, plus
4-1/2% of net ticket revenues in excess of $6,000,000 in such
period.
4.3.2.2 For the Stub Period and for the 1st Lease Year, 3% of
gross receipts received by Tenant during the Stub Period and during
the 1st Lease Year respectively from sponsorships, whether such
receipts are in cash or other valuable consideration.
4.3.2.3 3% of any valuable consideration, other than cash,
received by Tenant from sponsorships during the particular Lease
Year after the 1st Lease Year.
4.3.2.4 25% of Rental Net received by Tenant for the Stub
Period and in the particular Lease Year, respectively.
4.3.2.5 On gross receipts of Tenant from all other sources
(i.e., sources not specified above in this Subsection 4.3.2), in the
aggregate for the Stub Period and in the particular Lease Year,
respectively, 5.5% on the first $2,000,000 in such period,
escalating to 6% of the next $3,000,000 in such period and
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escalating to 7% on any additional gross receipts over and above
$5,000,000 in such period (the base upon which the percentages
specified in this Subsection 4.3.2.4 are predicated shall include,
after the 1st Lease Year, cash received by Tenant from
sponsorships).
4.3.3 The categories of gross receipts referred to in Subsection
4.3.2 are defined as follows:
4.3.3.1 The terms "net ticket receipts" and "net ticket
revenues" mean gross receipts from all ticket sales and other
admission or entry fees less returns, commissions on sales, credit
card charges on sales and charge backs, discounts from face value,
excise, sales, seat, entertainment and similar taxes, and shall
include any receipts by Tenant in the form of any rebate or
reimbursement from authorized ticket agents;
4.3.3.2 The term "gross receipts from sponsorships" (and
variants thereof) shall refer to cash or other valuable
consideration received by Tenant for signage, building
identification, and advertising tie-ins (the latter term not to be
confused with advertising or other benefits received by Tenant in
consideration of admission tickets) and from such other activities,
if any, as are considered at the time to be sponsorship in
accordance with the practices then generally prevailing in the
commercial concert business;
4.3.3.3 "Rental Arrangements" means a transaction in which
Tenant's subsublessee or licensee pays essentially a flat fee and
does not pay on the basis of such entity's own receipts. Should
there be a transaction which would qualify as a Rental Arrangement
except that the transaction is with an Affiliate of Tenant, the
gross receipts of the Affiliate shall be treated the same as
Tenant's gross receipts (i.e. pursuant to Subsections 4.3.2.1, and
4.3.2.5), and the transaction shall not be deemed a Rental
Arrangement. "Rental Net" means the amount of rent received by
Tenant from a subsublessee or licensee of the Amphitheatre and the
Parking Area pursuant to a Rental Arrangement, less Direct Costs.
"Direct Costs" means those costs which are directly incurred for
each particular Rental Arrangement. Direct Costs do not include
those continuing costs to Tenant such as costs for administration,
management, continuing insurance, permanent security, standard
utility costs and all such similar costs to the extent they would
have been incurred regardless of whether the Rental Arrangement had
occurred. Direct Costs do include the costs for stage crews, parking
attendants, ticket sellers, ushers, additional security, event
insurance, and all such similar costs which are incurred and paid by
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Tenant which are directly required for the particular Rental
Arrangement. As an example only, assume that B rents the
Amphitheatre and the Parking Area from Tenant for one evening and
pays Tenant a rental fee of $25,000 and Tenant retains the right to
engage in the activities generating all of the sources of income
described in 4.3.2 except the right to sell tickets and charge for
parking. Further, assume that the rental agreement requires Tenant
to provide a stage crew at a cost of $1,000, ticket sellers and
parking attendants at a cost of $600, and ushers at a cost of $900,
and B furnishes its own sound and light technicians, security forces
and pays all other costs of production of the event. In this case,
the Rental Arrangements rate of 25% provided for in Subsection
4.3.2.4 would be applied to a Rental Net of $22,500 ($25,000 less
the sum of $1,000 and $600 and $900) which would result in
percentage rental payment of $5,625 to Sublessor, as well as all
percentage rent set forth in Subsection 4.3.2.5 (excluding parking),
but Sublessor would receive no percentage rent based upon ticket
sales and upon parking. As a further example, if pursuant to the
particular Rental Arrangement, Tenant had retained the right to
charge for parking, the costs relating to parking would not be
deducted in computing Rental Net and Tenant would be accountable
under Subsection 4.3.2.5 for parking receipts.
4.3.3.4 The term "gross receipts from all other sources" (and
variants thereof) refers to gross operating revenue from other
activities directly related to the Amphitheatre including revenues
from food, beverage, and merchandise sales, parking charges, cash
receipts from sponsorships which are received after the 1st Lease
Year, and other operating income not otherwise excluded.
4.3.4 The following principles shall govern the determination of the
composition and amount of gross receipts.
4.3.4.1 Gross receipts (except for the specific provisions
above relating to receipts from sponsorship) shall be computed only
upon the cash receipts of Tenant unless and to the extent that the
reason Tenant did not receive cash receipts, but received
consideration in some other form, was primarily to enable Tenant to
avoid paying percentage rent to Sublessor with respect to such
transaction or Sublessor can establish that the receipt by Tenant of
non-cash consideration was inconsistent with practices which at the
time were generally prevailing in the commercial concert business.
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4.3.4.2 There shall be deducted in computing all types of
gross receipts, returns, commissions on sales, credit card charges
on sales and chargebacks, discount from face value and similar "off
the top" charges as well as all taxes (other than net income taxes)
paid to governmental entities in connection with Tenant's business,
activities and/or any property, and any payments made by licensees,
subsublessees or the like which are primarily "pass-through" items
or expense reimbursement (such as amounts equal to any taxes,
license fees, insurance premiums, and personnel charges paid to
Tenant by concessionaires, sublessees of Tenant or the like for
transmittal to licensing agencies and insurance companies).
The gross receipts which are subject to percentage rent are in
all cases operating income directly related to activities at the
Amphitheatre and Parking Area and includes only operating income as
distinguished from income received from sources such as the sale of
capital assets, the receipts of insurance proceeds, payment of the
proceeds of a judgment obtained against third parties and other
non-operating income.
4.3.4.4 Subject to Subsection 4.3.4.5, the receipts of
concessionaires, subsublessees and licensees of Tenant shall be
treated the same as if the income were received directly by Tenant
and in those instances, any concession fees, rental fees or the like
paid by such concessionaire, sublessee of Tenant or licensee shall
be excluded from the computation of gross receipts.
4.3.4.5 In cases in which Tenant enters into Rental
Arrangements the receipts of the subsublessee or licensee of Tenant
shall not be included in gross receipts.
4.3.5 After the amount of the percentage rent earned has been
determined, the amount of percentage rent which Tenant shall be required
to pay shall be the percentage rent earned less the following adjustments:
4.3.5.1 The minimum annual rent paid with respect to a
particular Lease Year shall be credited against the percentage rent
earned with respect to the same Lease Year. If the minimum annual
rent paid with respect to such Lease Year exceeds the amount of
percentage rent earned with respect to the same Lease Year, the
excess is hereinafter referred to as the "Minimum Rent Excess." (If
there is a Stub Period, then the entire minimum annual rent payable
with respect to the calendar year in which the Stub Period occurs
shall be subtracted from the percentage rent
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earned with respect to the Stub Period and if the Minimum Annual
Rent exceeded the amount of percentage rent payable with respect to
the Stub Period, that excess shall also constitute a Minimum Rent
Excess.).
4.3.5.2 The Minimum Rent Excess from the two most recent Lease
Years (or Stub Period) prior to the Lease Year for which the amount
of percentage rent payable is being determined shall be credited
against percentage rent earned with respect to the Lease Year for
which the amount of percentage rent payable is being determined, to
the extent not previously credited. The oldest Minimum Rent Excess
shall be the first to be credited.
4.3.5.3 Any Voluntary Payment shall be credited against
percentage rent earned, in the two Lease Years following the end of
the Lease Year (or the end of the last Lease Year in the Measuring
Segment or the Option Segment) for which the Voluntary Payment was
made. The oldest Voluntary Payment shall be the first to be
credited. To the extent that any Voluntary Payment arising from a
particular Lease Year or Measuring Segment is credited against
percentage rent earned in the next Lease Year, the amount of such
Voluntary Payment available to be credited in the following Lease
Year shall be reduced.
4.3.5.4 References elsewhere in this Sublease to "percentage
rent earned" means the percentage rent earned before giving effect
to the adjustments and credit provided for in this Subsection 4.3.5.
4.3.6 Sublessor shall be bound by Tenant's good faith allocation of
receipts which relate to the Amphitheatre and other facilities where the
receipts involved are not identified or allocated to specific facilities.
4.3.7 Within 30 days following the end of each Lease Year (and if
there was a Stub Period or a partial Lease Year at the end of the lease
term, then within 30 days following the end of the Stub Period or partial
Lease Year, as the case may be) Tenant shall provide a report to Sublessor
showing the amount of percentage rent earned and the amount of the credits
to which Tenant is entitled with respect to the particular period and
shall accompany such report (providing such details and line entries as
the parties mutually agree are appropriate) with the payment of percentage
rent payable, if any, with respect to that period. Tenant shall maintain
complete and accurate records with respect to matters relevant to the
computation of percentage rent. Sublessor shall have the right, on no more
than two occasions in any one year period, to inspect and audit, at its
own expense, Tenant's books and records upon 30 days notice to Tenant;
upon exercising this right Tenant
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shall make such books and records available to Sublessor at a location
designated by Tenant in the greater Atlanta area. If within 15 months
after Sublessor's receipt of Tenant's report of percentage rent with
respect to the Stub Period or a particular Lease Year, Sublessor has not
commenced an action, and served a summons and complaint with respect to
such action upon Tenant, Sublessor shall be deemed to have accepted the
report for all purposes and waived its right to raise any objection at a
later date; the fact that information is reiterated or presented in a
cumulative fashion in later reports shall not extend the time within which
Sublessor must object or be deemed to have waived its right to do so.
Section 5. Sublessor Purchase Options
5.1 Percentage Rent - Short Fall Option
5.1.1 There shall be a hypothetical adjustment to the minimum annual
rent for the 11th Lease Year based upon the CPI Escalation between the
beginning of the 11th Lease Year and the beginning of the 12th Lease Year
and if the percentage rent earned with respect to the 11th Lease Year does
not equal or exceed such hypothetically adjusted minimum annual rent,
Sublessor shall have the Option to purchase Tenant's leasehold interest.
The 11th Lease Year is hereinafter referred to as an "Option Segment".
Similarly, there shall be established three successive Option Segments.
One Option Segment shall be the three Lease Years beginning with the 12th
Lease Year; the next option segment shall be the three Lease Years
beginning with the 15th Lease Year; and the last Option Segment shall be
the three Lease Years beginning with the 18th Lease Year. There shall be a
hypothetical adjustment to the minimum annual rent for each of the three
Lease Years of each Option Segment following the 11th Lease Year Option
Segment based upon the CPI Escalation between the beginning of the 11th
Lease Year and the beginning of the first year of the particular Option
Segment; the hypothetically adjusted minimum annual rent shall remain at
the same level for all three years of the particular Option Segment. If
the aggregate percentage rent earned with respect to the entire period
covered by the particular Option Segment is less than the aggregate
hypothetically adjusted minimum annual rent for the same period, Sublessor
shall have an option following the end of the particular Option Segment as
to which there was a deficiency in the amount of percentage rate earned in
accordance with the preceding formula, to purchase the leasehold interest
of Tenant.
5.1.2 In order for Sublessor to exercise an option which has come
into effect in accordance with the provisions of Subsection 5.1.1,
Sublessor must, within 60 days following the date upon which Tenant
rendered its report with respect to percentage rent for the period, give
notice
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(the "Option Exercise Notice") to Tenant that Sublessor will exercise its
purchase option. Tenant shall have the right to advise Sublessor of
Tenant's good faith estimate of the purchase price which will be payable
pursuant to Subsection 5.1.3. Sublessor's Option Exercise Notice will be
void if not given within the 60 day period specified above or if within 30
days following Tenant's advice concerning the estimated purchase price,
Sublessor does not provide Tenant with an unconditional letter of credit
or other security satisfactory to Tenant to assure Tenant that Sublessor
will have sufficient cash to close the purchase of the leasehold interest.
Tenant will also have 60 days from giving of the Sublessor's exercise of
the Option Exercise Notice in which to void the Sublessor's exercise of
the option by making an "Option Avoidance Payment" in an amount equal to
the sum by which the aggregate of the hypothetically adjusted minimum
annual rent for the period in question. If Tenant does make the Option
Avoidance Payment within the aforementioned time period, the option
exercise by Sublessor shall be of no force or effect.
5.1.3 If, pursuant to the above provisions, Sublessor properly
exercised its purchase option and provided Tenant with the required letter
of credit or other security and Tenant did not make the Option Avoidance
Payment, then Sublessor shall purchase, and Tenant shall sell, Tenant's
leasehold interest on the following terms:
5.1.3.1 The sale of the leasehold interest shall close one
year from the date of the Option Exercise Notice unless within 90
days from the giving of the Option Exercise Notice, Tenant notifies
Sublessor of an earlier closing date in which case the date
designated by Tenant shall be the closing date.
5.1.3.2 Tenant shall, at the closing, convey Tenant's
leasehold interest, free of any liens and encumbrances incurred by
Tenant without Sublessor's consent to Sublessor. Included in the
conveyance will be the Improvements, but Tenant may retain ownership
of, and may remove at any time up to 60 days after the closing, all
or any of the temporary buildings, temporary facilities, personal
property of any kind, sound equipment, lighting equipment, stage
equipment, kitchen and commissary equipment, seating and benches,
concessionaire kiosks and similar installations and trade fixtures
whether all or not any of the foregoing are attached.
5.1.3.3 The purchase price shall be payable entirely in cash
at the closing. Rent (minimum annual, pro-rated to the closing, and
percentage rent) shall continue to be payable until the closing.
Premiums on insurance policies, utilities and any pre-paid items
which cover periods or services which will continue or
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will occur after the closing will be pro-rated to the closing. Any
cost of the transaction will be borne in the manner customary in
Atlanta, Georgia.
5.1.3.4 The purchase price shall be the higher of (i) the
depreciated value of the Improvements and of all equipment and trade
fixtures (notwithstanding Sublessor's removal rights), or (ii) 50%
of the appraised fair market value thereof.
5.1.3.4.1 The depreciated value of the Improvements,
equipment and trade fixtures shall be determined by taking
their historical cost and reducing that cost by the amount of
depreciation/amortization which would have been taken to the
date of sale, computed on a straight line basis over the
longest period which could be utilized by Tenant under
generally accepted accounting principles (regardless of
whether a shorter period or different method were in fact
utilized).
5.1.3.4.2 The determination of the appraised value of
the Improvements, equipment and trade fixtures shall be made
by three disinterested appraisers who shall be members of the
American Institute of Real Estate Appraisers of the National
Association of Realtors with at least ten years experience in
the appraisal of business and real property in the greater
Atlanta area and shall have generally recognized current
competence in the evaluation of business property. If the
parties are unable to agree upon the selection of three
appraisers within the 90 day period specified in Subsection
5.1.3.1, then a petition may be made by either party to the
presiding judge of the United States District Court for
Northern District of Georgia, Atlanta Division for such
selection. Each party shall, have the right to submit the
names of three appraisers so qualified, and the judge shall
select three appraisers from the names so submitted. Each
appraiser so selected shall furnish the parties with a written
appraisal within 30 days of selection, setting forth his
determination of the fair market value of the properties. The
average of the two closest evaluations shall be treated as the
fair market value of the properties. The fair market value
shall be determined as of the date of the appraisal. In
determining the fair market value, the appraisers shall work
on the hypothesis that Tenant owned the unencumbered fee of
the Project Area and shall then disregard the value of the
land. The determination of the appraiser shall be final and
binding on the parties and a judgment upon the determination
of the appraisers may be
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entered and enforced in any court of competent jurisdiction.
The parties shall each bear one-half of the cost of the
appraisal.
5.2 11th and 21st Lease Year Options
5.2.1 In addition to the options described in subsections 5.1 and
5.3, Sublessor shall have the option, exercisable during the 11th Lease
Year and if not so exercised in the 11th Lease Year, then exercisable in
the 21st Lease Year to purchase the leasehold interest of Tenant.
5.2.2 In order for Sublessor to exercise the option specified above
in Subsection 5.2.1, Sublessor must give Tenant an Option Exercise Notice
anytime during the 11th Lease Year, or during the 21st Lease Year, as the
case may be. Tenant shall have the right to advise Sublessor of Tenant's
good faith estimate of the purchase price which will be payable pursuant
to Subsection 5.2.3. Sublessor's Option Exercise Notice will be void if
not given within the 11th or 21st Lease Years or if within 30 days
following Tenant's advice concerning the estimated purchase price,
Sublessor does not provide Tenant with an unconditional letter of credit
or other security satisfactory to Tenant to assure Tenant that Sublessor
will have sufficient cash to close the purchase of the leasehold interest.
5.2.3 If, pursuant to the above provisions, Sublessor properly
exercised its purchase option and provided Tenant with the required letter
of credit or other security, then the provisions of Subsections 5.1.3.1
and 5.1.3.2 shall be applicable except that the sale of the leasehold
interest shall close two years from the date of the Option Exercise Notice
(instead of one year) unless an earlier date is specified by Tenant in
accordance with the provisions of Subsection 5.1.3.1. Furthermore, anytime
during the period following Landlord's giving of the Option Exercise
Notice and prior to the date upon which the sale would otherwise close,
Tenant may accelerate or further accelerate the closing date by notice to
Sublessor of a new closing date which new closing date may not be less
than six months later than the date upon which Tenant gives the notice so
accelerating the closing date.
5.2.4 The purchase price shall be the highest of (i) depreciated
value of the Improvements and of all equipment and trade fixtures or (ii)
50% of the appraised fair market value thereof, or (iii) the value to
Tenant of the projected net revenues for the remainder of the lease term.
The provisions of Subsections 5.1.3.4.1 and 5.1.3.4.2 shall, respectively,
be applicable to determining the values described in (i) and (ii) above.
The value to Tenant of the projected net revenue for the remainder of the
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lease term shall be determined as follows. First, the net revenues shall
be determined for each of the five most recent Lease Years prior to the
date of sale, with the year in which the sale takes place being included
as the most recent year if the sale will close on or after October 1 of
the then current calendar year. For this purpose "net revenues" means the
total gross revenues received by Tenant from the exploitation of the
Amphitheatre and Parking Area during a particular Lease Year, less all
expenses associated with those gross receipts, including all sums due
Sublessor under this Sublease, all artists' and other performers' fees,
the cost of goods sold, amount of sales and ticket commissions, credit
card charges and other sums charged against gross ticket sales, the cost
of labor, materials, and contractors incurred in producing events, but
excluding the expense of managerial and executive personnel of Tenant who
are not signed exclusively to manage the Amphitheatre and also excluding
interest, other non-operating expenses, and depreciation/amortization.
Next, Tenant shall designate two of the aforementioned five Lease Years,
the net revenue from which shall be used for the computation. Next, the
net revenues from each of the two Lease Years designated by Tenant shall
be increased by CPI Escalation occurring between the beginning of the
particular Lease Year and the date which is 120 days after the date upon
which the Option Exercise Notice was given. The total CPI adjusted net
revenues for each of the aforementioned two Lease Years shall then be
averaged to give an assumed base year net revenue figure. The assumed net
revenue base increased at the rate of 7% per year, compounded annually,
for each Lease Year (or partial Lease Year) in the formula hereinafter
specified in this sentence shall be multiplied by the number of Lease
Years (and partial Lease Year) between the date of sale and December 31,
2033 (or such later date as the lease term had been extended prior to
Sublessor's Option Exercise Notice) and the product shall then be
discounted to then present value by using a 10% factor.
5.2.5 As a material part of the consideration from Sublessor to
Tenant in connection with the purchase of Tenant's leasehold interest,
Sublessor agrees that no portion of the Project Area will be used for the
commercial concert business for a period of 10 years from the closing of
Sublessor's purchase of Tenant's leasehold interest. Tenant shall be
entitled to injunctive relief to enforce the provisions of the prior
sentence and in addition to recover 25% of the gross receipts of Sublessor
and of any Person occupying or doing business on any portion of the
Project Area arising from the commercial concert business during the
aforementioned 10 year period. Sublessor will execute such instruments as
Tenant requires in order to give record notice of the provisions of this
Subsection which instruments will include such other provisions as Tenant
may require in order to assure Tenant of the enforceability of these
provisions and to assist Tenant in the enforcement
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thereof; such instruments shall provide for covenants which will burden
the Project Area and run with the land, and will, at Tenant's request, be
recorded concurrently with the closing.
Section 6. Parking.
6.1 Operation of Parking Area.
6.1.1 Tenant will have the right of exclusive use and occupancy of
the Parking Area from 6:00 P.M. each evening until 6:00 A.M. of the next
day during the entire Lease Term. Sublessor will have the right of
exclusive use and occupancy of the Parking Area from 6:00 A.M. in the
morning until 6:00 P.M. in the evening each day during the entire Lease
Term. The income realized by each party from the Parking Area will be
solely for such party's benefit (subject, however, in the case of Tenant,
to Tenant's obligation to include such income in the computation of
percentage rent under Subsection 4.3). Each party will provide competent
management and employees including parking attendants in connection with
its use of the Parking Area.
6.1.2 If one of the parties (the "Requesting Party") desires to use
the Parking Area during the hours of any day or series of days, which
hours, pursuant to Subsection 6.1.1 are subject to the exclusive rights of
the other party (the "Exclusive Party"), the Requesting Party may notify
the Exclusive Party of the specifics of its intended use at any time at
least 10 days before its intended use. If the Exclusive Party in good
faith believes that the intended use of the Parking Area by the Requesting
Party for all or a portion of the requested period will not likely cause
an interference with the Exclusive Party's use and enjoyment of the
Parking Area, the Exclusive Party may notify the Requesting Party within
36 hours of receiving the aforementioned notice from the Requesting Party
(and in counting the 36 hours, there shall be excluded the 24 hours of any
Saturday, Sunday, or day upon which the United States mails are not
regularly delivered) of the Exclusive Party's permission for the
Requesting Party to use the Parking Area for the entire period specified
in the Requesting Party's notice or for less than the entire period. If
and to the extent the Exclusive Party does not give such permission within
said 36 hours, the Requesting Party shall have no right to use the Parking
Area during the hours when it is subject to the exclusive rights of the
Exclusive Party. If the Exclusive Party does give permission, the
Requesting Party shall notify the Exclusive Party that it will use the
Parking Area in accordance with the permission which notification shall be
given at least 4 days before the intended use. The parties shall, on a
reasonably regular and periodic basis, exchange schedules of events in
which it is anticipated that parking will be required, in order to
maximize the use of the Parking Area.
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6.2 Parking Area Taxes and Costs. Taxes and other charges of the character
described in Subsection 7.2 which are measured by or based upon the land
comprising the Parking Area or by any Improvements on the Easement Areas to the
extent they serve the Parking Area shall be borne by Sublessor. The cost of
utilities for, and the cost of operating, maintaining, repairing and restoring
(including without limitation, after a casualty or condemnation) the Parking
Area and any portion of the Easement Areas which serve the Parking Area will be
borne by Sublessor, except for those personnel costs and any other costs which
are solely caused by Tenant's use of the Parking Area. Sublessor will maintain
the Parking Area (including the surface thereof) and any portion of the Easement
Areas which serve the Parking Area in as good condition as when Tenant first
improved such area. Sublessor shall comply with procedures and requirements
imposed by Tenant designed to insure that cars that are parked during hours when
the Parking Area is used by Sublessor depart, or are removed, at no cost to
Tenant, by 6:00 P.M. each day and by any other time when, pursuant to Subsection
6.1.2, Tenant is entitled to use of the Parking Area. Sublessor shall pay the
taxes and other charges of the character described in Subsection 7.3 which are
based upon the business or activities of Sublessor on the Parking Area.
Subsections 7.3 and 7.4 shall be applicable to the Parking Area.
6.3 Indemnification and Liability Insurance For Parking Area.
6.3.1 Tenant shall indemnify and hold Sublessor and the officers,
agents, and employees of Sublessor harmless against any and all claims of
any kind of character resulting from negligent acts or omissions of Tenant
or the officers, agents, licensees, employees or concessionaires of Tenant
in the use and occupancy of the Parking Area and the pedestrian and
vehicular easements thereto, or resulting from the failure of Tenant to
perform any of Tenant's obligations under this Section 6. The obligations
of Tenant under the prior sentence shall not be restricted to the limits
of liability insurance required to be carried by Tenant. Sublessor shall
indemnify and hold Tenant and the officers, agents and employees of Tenant
harmless against any and all claims of any kind or character resulting
from the negligent acts or omissions of Sublessor, or the officers,
agents, licensees, employees or concessionaires of Sublessor in the use
and occupancy of the Parking Area and the pedestrian and vehicular
easements thereto, or resulting from the failure of Sublessor to perform
any of Sublessor's obligations under this Section 6, and furthermore,
subject to the first two sentences of this Subsection 6.3.1, the
aforementioned indemnification and hold harmless obligation of Sublessor
shall extend to any occurrences on or about the Parking Area and the
pedestrian and vehicular easements thereto. The obligations of Sublessor
under the prior sentence shall not be restricted to the limits of
liability insurance required to be carried by Sublessor.
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6.3.2 The insurance required of Tenant under Subsection 9.1 shall be
extended to cover the claims with respect to the Parking Area and the
pedestrian and vehicular easements thereto, for which Tenant is
responsible under Subsection 6.3.1. Sublessor hereby undertakes the same
obligations to Tenant as Sublessor undertakes to the City under
Subsections 8.1, 8.2, 8.3 and 8.5 of the Master Lease, which provisions
are incorporated herein by this reference and the public liability
insurance shall be extended to include contractual liability coverage. For
purposes of this incorporation, references to "Demised Premises" means the
Parking Area and the pedestrian and vehicular easements thereto.
6.4 Conflict With Other Sublease Provisions. If and to the extent there is
any conflict or inconsistency between the provisions of this Section 6 and any
other provisions of this Sublease, the provisions of this Section 6. shall
prevail.
Section 7. Taxes and Other Impositions.
7.1 Taxes Based Upon the Project Area. The parties recognize the
restricted and limited interest conveyed by the Sublease, as described in
Subsection 1.5 and believe that no property or similar tax is payable on the
Project Area. However, if and to the extent any tax, assessment, license fee,
excise, impost, fee, or charge of any sort is imposed by any governmental entity
which, in whole or in part, is measured by or based upon any or all of the land
(the term "land" being used herein refers to the land itself alone and excludes
any Improvements which may constitute real property and also excludes any
personal property located upon or affixed to the land) comprising the Project
Area, Sublessor shall pay the same before delinquency.
7.2 Taxes Based Upon Amphitheatre. Tenant shall pay before delinquency and
taxes, assessments, license fees, excises, imposts, fees, and charges of every
kind imposed by any governmental entity to the extent the foregoing is measured
by or based upon the Amphitheatre or by any Improvements on the Easement Areas
(except to the extent such Improvements serve the Parking Area) or by any
Tenant-owned (or owned by some Person deriving rights from Tenant) temporary
building, temporary facilities, personal property of any kind, sound equipment,
lighting equipment, stage equipment, kitchen and commissary equipment, seating
and benches, concessionaire kiosks and similar installations, and all trade
fixtures. Any tax or other imposition which is payable with respect to a period
of time which falls partly within and partly outside the Lease Term shall be
pro-rated between Sublessor and Tenant.
7.3 Taxes Arising with Respect to Business. Tenant shall pay before
delinquency any sales tax, gross receipts tax, license fee, excise, impost or
fee or charge of any kind which is based upon the business or activities of
Tenant or any Person deriving rights from Tenant (but not the business or
activities of
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Sublessor), and which pertains to activities or business at the Amphitheatre and
the Parking Area during the Lease Term.
7.4 Tax Contest. The party responsible, pursuant to the above provisions
of this Section 7, for the payment of any particular, tax, assessment or other
charge may, at no cost or expense to the other party, dispute and contest the
same and in such case such item need only be paid if and to the extent that the
laws or regulations governing such contest permit postponement of payment,
provided, however, if the non-payment thereof places the other party or its
property at any risk, the other party may require the party who is responsible
for the payment to post such reasonable security as the other party may require.
If the party not responsible for the payment of the tax must nevertheless join
in any protest or contest, such other party shall do so, provided all cost and
expense of the contest will be borne by the party responsible for the tax.
Section 8. General Requirements Upon Tenant.
8.1 Compliance with Laws. During the Lease Term, Tenant shall obey and
comply with all present and future laws, ordinances, rules and regulations of
all governmental entities which in any way affect the Amphitheatre or any
Improvements on the Easement Areas (except to the extent such Improvements serve
the Parking Area). Tenant shall have the right at its sole cost and expense to
contest the validity of any of the foregoing in good faith and if necessary,
Sublessor agrees to join in any such contest, provided however, the cost thereof
shall be borne by Tenant. Tenant's obligations under this Subsection 8.1 are
subject to Sublessor not being in breach of Sublessor's representations and
warranties set forth in Subsection 2.1.
8.2 Repair. Tenant shall, during the Lease Term, at Tenant's sole cost and
expense, keep and maintain the Amphitheatre and all other Improvements in good
and sanitary order, condition and repair, fair wear and tear excepted.
8.3 Utilities. Tenant shall, during the Lease Term, pay for all utilities
to the extent used in and on the Amphitheatre and on the Site and Sublessor
shall have no responsibility for any interruptions in the supply of such
utilities unless and to the extent caused by the negligence of Sublessor, or the
officers, agents, licensees, employees or concessionaires of Sublessor.
8.4 Costs and Expenses. Except as otherwise provided in this Sublease,
Tenant shall, during the Lease Term, bear all costs and expenses pertaining to
the Site and the Amphitheatre including without limitation the costs and
expenses arising out of the activities of Tenant and any concessionaires and
subsublessees of Tenant.
8.5 Event Tickets. Unless and to the extent precluded by contract with an
artist, act, or similar Person, Tenant will make
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available to Sublessor, 8 tickets for each event at the Amphitheatre other than
those held pursuant to Rental Arrangements.
Section 9. Insurance and Indemnification.
9.1 Tenant Insurance Requirements. Tenant hereby undertakes the same
obligations to Sublessor, as Sublessor undertakes to the City under Subsections
8.1. 8.2. 8.3, 8.4 and 8.5 of the Master Lease, which provisions are
incorporated herein by this reference (except with respect to Subsection 8.5,
Tenant may provide certificates of insurance instead of the actual policies).
Furthermore, the public liability insurance shall be extended to include
contractual liability coverage. For purposes of this incorporation, references
to "Demised Premises" mean the Amphitheatre and the Site and references to the 5
buildings referred to in Subsection 8.4 of the Master Lease means the
Amphitheatre. In addition to naming Sublessor as an insured as required by the
above referenced incorporated provisions, in those instances where Sublessor is
so named, the City shall also be named. Tenant shall also comply with Subsection
8.6 of the Master Lease.
9.2 Tenant Self-Insurance. In lieu of providing all or any of the
insurance required by Subsection 9.1, Tenant may self-insure such risk or risks
only if all the following three conditions are met: (i) the coverage afforded
under the self-insurance program with respect to the particular risk or risks is
not less extensive than the coverage which would have been afforded by a third
party carrier; (ii) an independent certified public accountant, an actuary, or
a recognized expert in evaluating self-insurance programs (the accountant,
actuary, or expert shall be designated by Tenant, but shall be subject to
Sublessor's reasonable approval) shall confirm to Sublessor that the
self-insurance program is actuarily sound or is otherwise backed by sufficient
assets to provide assurance that Sublessor will not be prejudiced by relying
upon a self-insurance program as distinguished from insurance provided by a
third party carrier; and (iii) the fee owner of the Site waives any objection to
the self-insurance program to the extent such a waiver is necessary in order to
avoid Sublessor's being in breach of the Master Lease.
9.3 Indemnification by Tenant hereby undertakes the same obligations to
Sublessor as Sublessor has undertaken to the City under subsection 8.7 of the
Master Lease, with the references to "Demised Premises" in the aforementioned
8.7 being, for purposes of this incorporation, defined to mean the Amphitheatre.
9.4 Sublessor Waiver. Sublessor waives any right Sublessor or any of
Sublessor's insurers may have to recover from Tenant for any damage caused to
the property located in, on, or about Lakewood of Sublessor (or any Person
deriving rights from Sublessor) by any act or omission (whether or not such act
or
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omission was negligent) of Tenant, its officers, agents and employees.
Section 10. Casualty and Condemnation.
10.1 Casualty.
10.1.1 If the Amphitheatre or any Improvements on the Easement Areas
(except to the extent such Improvements serve the Parking Area) are
damaged by fire or other casualty, Tenant shall, to the extent of the
insurance proceeds received by Tenant arising out of such casualty, plus
the amount of any deductible under such insurance applicable to such
casualty, be obligated to repair and restore the damage to the
Amphitheatre and the aforementioned Improvements caused by such casualty.
If and to the extent the casualty is not of the type required to be
insured against by Tenant, or despite Tenant's compliance with the
insurance provisions of this Sublease, there are insufficient insurance
proceeds to pay for such restoration, Tenant shall nevertheless be
obligated to expend its own funds up to $500,000 in order to restore the
damage. This Subsection is subject to Subsection 10.1.2.
10.1.2 If at any time the Amphitheatre is substantially destroyed by
casualty (whether or not of the type insured against), or if the cost of
restoring the Improvements referred to in Subsection 9.3.1 following the
casualty in excess of the available insurance proceeds (and the amounts of
any deductibles) would exceed $500,000, or if a casualty (whether or not
insured against) occurs during the last five years of the Lease Term and
causes damage in excess of $500,000, then Tenant shall have the right in
each such instance to terminate this Sublease and to receive that portion
of the insurance proceeds, if any are available, as is equal to the
purchase price determined under Subsection 5.1.3.4, and Sublessor shall be
entitled to the balance, if any, of the insurance proceeds.
10.2 Condemnation.
10.2.1 If at any time during the Lease Term, the entire Site and/or
Amphitheatre is condemned or taken by any body having the power of eminent
domain, then the Lease Term shall automatically terminate on the date that
the condemning authority takes possession. If there is a condemnation or
taking of a portion of the Project Area, but which does not result in a
automatic termination pursuant to the prior sentence, and whether or not
such condemnation or taking is of a temporary or permanent nature, if
Tenant in good faith determines that such condemnation or taking may
likely result in a substantial impairment of its use and enjoyment of the
Project Area, then, at any time up to the date upon which that the
condemning authority takes
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possession and for 30 days thereafter Tenant shall have the right to
terminate the Sublease by notice to Sublessor.
10.2.2 If there is a condemnation or taking and the Lease Term does
not terminate pursuant to the above provisions, then from and after the
date possession is taken by the condemning authority, Tenant's non-rental
obligations shall be equitably abated and the minimum rent (including
without limitation minimum annual rent utilized for the Subsections 4.2.3
and 5.1.1 hypothetical adjustments) shall be abated in accordance with the
following formula. The abated minimum rent shall equal that percent of
what the minimum rent would otherwise have been as is determined by
dividing the fair market value of the land which constitutes the Project
Area after the condemnation (i.e., the portion not taken) by the fair
market value of the land comprising the Project Area prior to the
condemnation; for purposes of both the before condemnation and after
condemnation valuation, the value of improvements (including Improvements)
and any affect the condemnation (including the activities contemplated
following the condemnation) would have on land valuation shall be
disregarded. If the parties cannot agree upon the amount of abatement
within 30 days following the date possession is taken, the determination
shall be made by three disinterested appraisers following the procedures
specified in Subsection 5.1.3.4.2, except the third and fourth sentences
from the end of said Subsection shall not be applicable.
10.2.3 If following a condemnation or taking the Lease Term is not
terminated, Tenant shall be entitled to such portion of award as is
required to compensate it for any consequential or severance damages
suffered by it. Subject to the foregoing, the amount of any awards from
any condemnation or taking (whether or not the Lease Term is terminated)
shall be made separately to Sublessor and Tenant to provide each with just
and adequate compensation for each of their respective interests in the
Project Area and Improvements and such awards shall be made without
reference to or consideration of any termination of this Sublease as if
Tenant's leasehold interest had continued for the full Lease Term.
Section 11. Mortgages.
11.1 Tenant's Right to Encumber. Tenant shall have the right from time to
time to encumber by Mortgage or Mortgages all or any portion of Tenant's rights
and interests hereunder including, without limiting the generality of the
foregoing, all or any portion of Tenant's rights and interests in and to the
Project Area and/or all Improvements. In all respects, however, any Mortgagees'
interests shall be subordinate, inferior, and junior to Sublessor's rights,
title, privileges, liens and interests as provided in this Sublease and also
shall be subordinate, inferior, and junior to the City's rights, title,
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privileges, liens and interests as provided in the Master Lease, subject to the
rights of any Mortgagee as expressly conferred pursuant to this Sublease.
11.1.1 The term "Mortgage" means any deed to secure debt, deed of
trust, mortgage, security agreement or other instrument in the nature
thereof at any time from time to time constituting a lien upon Tenant's
interest in this Sublease and/or the Project Area and/or Improvements or
any portion of any of the foregoing.
11.1.2 "Mortgagee" means a holder or, collectively the holders of a
Mortgage or Mortgages.
11.2 Mortgagee Requested Modifications. Sublessor agrees to modify this
Sublease from time to time for the purpose of incorporating herein such
mortgagee protective provisions in addition to those already set forth in this
Section 11 as may be reasonably requested by any proposed or existing Mortgagee;
provided such modifications do not result in a change in the payment of rent
hereunder or materially modify the obligations of Tenant hereunder, and are not
inconsistent with any of the terms and conditions of this Sublease in any
material respect and do not increase the obligations of or unduly burden
Sublessor.
11.3 Mortgage Protection. Upon execution and recordation in the Office of
Clerk of the Superior Court of Fulton County, Georgia, of any Mortgage,
notwithstanding anything to the contrary contained in this Sublease, so long as
such Mortgage is a lien on the interest of the Tenant created by this Sublease,
Sublessor and Tenant agree as follows:
11.3.1 If Tenant or any Mortgagee delivers to Sublessor a notice
setting forth the address for notice purposes of a Mortgagee, a Mortgagee
whose address has been so furnished shall be referred to as a "Registered
Mortgagee." Any Registered Mortgagee may change its address by notice to
Sublessor. Sublessor shall deliver to each Registered Mortgagee in the
same manner as delivered to Tenant, a copy of any notice under this
Sublease at the time of giving such notice to Tenant, and as soon as known
by Sublessor will give to each Registered Mortgagee notice of any
attempted or purported rejection of this Sublease by a trustee in
bankruptcy of Tenant or by Tenant as debtor in possession. No termination
of this Sublease or termination of Tenant's right of possession of any
portion of the Project Area or reletting of any portion of the Project
Area by Sublessor predicated on the giving of any notice to Tenant shall
be effective unless Sublessor gives to each Registered Mortgagee notice
(or a copy of the notice to Tenant) as required by this Subsection 11.3.1.
11.3.2 In the event of any default by Tenant under the provisions of
this Sublease, each Registered Mortgagee will have the same concurrent
grace periods as are given Tenant
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for remedying such default or causing it to be remedied, plus, in each
case, an additional period of 30 days in the event of a monetary default
and 60 days in the event of any non-monetary default after the expiration
thereof or after Sublessor has served a notice or a copy of a notice of
such default upon such Registered Mortgagee, whichever is later (the "Cure
Period").
11.3.3 If Tenant shall default under any of the provisions of this
Sublease, each Registered Mortgagee, without prejudice to its rights
against Tenant, shall have the right to cure such default within the Cure
Period whether the same consists of the failure to pay rent or the failure
to perform any other matter or thing which Tenant is hereby required to do
or perform, and Sublessor shall accept such performance on the part of any
Registered Mortgagee as though the same had been done or performed by
Tenant; for such purpose Sublessor and Tenant hereby authorize any
Registered Mortgagee to enter upon the Project Area and to exercise any of
Tenant's rights and powers under this Sublease, including without
limitation, Tenant's rights under Subsection 12.2.2.
11.3.4 If there is a default under this Sublease, Sublessor shall
not terminate or take any action to effect a termination of this Sublease
or reenter, take possession of or relet the Project Area or similarly
enforce performance of this Sublease in any manner if within the Cure
Period any Registered Mortgagee either (i) cures such default; or (ii) if
such default cannot reasonably be cured within the Cure Period, promptly
commences and then proceeds with reasonable diligence to cure such
default; or (iii) if physical possession of the Project Area is required
to cure such default, promptly commences and then proceeds with reasonable
diligence to acquire the interest of Tenant by foreclosure or otherwise
and thereafter performs all other obligations of Tenant under this
Sublease. The provisions of the prior sentence shall apply only if any
Registered Mortgagee shall have fully cured any default in the payment of
any monetary obligation of Tenant within the Cure Period and shall
continue to pay currently such monetary obligations as and when the same
are due. If a default is such that it cannot be reasonably cured by a
Registered Mortgagee without possession of the Project Site, then
Sublessor shall not terminate or take any action to effect a termination
of this Sublease or reenter, take possession of or relet the Project Area,
or similarly enforce performance of this Sublease in any manner if within
the Cure Period any Registered Mortgagee shall promptly commence and then
proceed with reasonable diligence to acquire the interest of Tenant by
foreclosure or otherwise; provided however, that the provisions of this
sentence shall apply only if any Registered Mortgagee shall have fully
cured any default in the payment of any monetary obligation of Tenant
within the Cure Period and shall continue to pay currently such
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monetary obligations as and when the same are due and after gaining
possession of the Project Area any such Registered Mortgagee performs all
other obligations of Tenant hereunder as and when the same are due and
agrees in writing to be bound as Tenant under this Sublease (subject to
Subsection 11.7).
11.3.5 If this Sublease is terminated by Sublessor on account of a
default by Tenant or if Tenant's interest under this Sublease shall be
sold, assigned or transferred pursuant to the exercise of any remedy of
any Registered Mortgagee, or pursuant to judicial proceedings, and if (i)
no rent or other charges shall then be due and payable by Tenant under
this Sublease, and (ii) any Registered Mortgagee shall have cured any
default of Tenant under this Sublease of the type capable of cure by any
such Registered Mortgagee, then Sublessor, within 30 days after receiving
a request therefor, which shall be given within 60 days after such
termination or transfer, will execute and deliver to any Registered
Mortgagee (if there is more than one Registered Mortgagee, the Registered
Mortgagee of the highest priority shall be entitled to such new Sublease),
its nominee or the purchaser at a foreclosure sale, or a transferee in
lieu thereof, a new Sublease for the Project Area for the remainder of the
Lease Term of this Sublease containing the same covenants, agreements,
terms, provisions and limitations contained herein. Any new Sublease made
pursuant to this Subsection 11.3.5 shall have the same priority as this
Sublease. All liens, charges or other consentual encumbrances on the
interest of Sublessor in the Project Area which are created by Sublessor
shall contain express provisions to the effect that (i) such lien, charge
or encumbrance shall be subject to such new Sublease to the same extent as
such encumbrance was to this Sublease, and (ii) the mortgagee or other
beneficiary thereof shall, upon request, confirm to Tenant and any
Registered Mortgagee such status.
11.3.6 If any Registered Mortgagee is prohibited by any process or
injunction issued by any court or by reason of any action by any court
having jurisdiction of any bankruptcy or insolvency proceeding involving
the Tenant or the Subject Area from commencing or prosecuting foreclosure
or other appropriate proceedings in the nature thereof, the Cure Period
specified above for commencing or prosecuting such foreclosure or other
proceedings shall be extended for the period of such prohibition;
provided, however, that any applicable Registered Mortgagee shall have
fully cured any default of payment of any monetary obligations of Tenant
under this Sublease and shall continue to pay currently such monetary
obligations as and when the same fall due.
11.3.7 If a default under any Mortgage shall have occurred, any
holder of such Mortgage may exercise with respect to the Project Area any
right, power or remedy under
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the Mortgage which is not in conflict with the provisions of this
Sublease.
11.3.8 This Sublease may be assigned, without the consent of the
Sublessor, upon notice to Sublessor, to or by any applicable Registered
Mortgagee or its nominee, pursuant to foreclosure or similar proceedings,
or pursuant to the sale, assignment or other transfer of this Sublease in
lieu thereof, or pursuant to the exercise of any other right, power or
remedy of any Registered Mortgagee. The Registered Mortgagee and any
assignee of this Sublease, and any purchaser or transferee of the type
described above in this Subsection 11.3.8, is hereinafter referred to as a
"Mortgagee Party".
11.3.9 No surrender of any interest in this Sublease (except a
surrender upon the expiration of the Lease Term) by Tenant to Sublessor
and no surrender by Tenant of the Project Area (or any part thereof, or of
any interest therein), and no termination or rejection of this Sublease by
Tenant, shall be valid or effective, and neither this Sublease nor any of
the terms hereof may be amended, modified, changed, rejected or cancelled
without the prior written consent of each Registered Mortgagee.
11.4 Rent Assignment. Sublessor consents to a provision in any Mortgage
for an assignment of rents, concession revenues, and all other income from any
subsublease of the Amphitheatre and from any other source to any Mortgagee,
provided that such assignment shall reserve unto Sublessor its rental
percentages as described in Section 4.
11.5 Possession. If any Mortgagee Party shall become entitled to
possession of the Project Area (or any portion thereof), whether by reason of
foreclosure, succession to the Sublessee's interests by assumption of this
Sublease, or otherwise, Sublessor shall, at the request, cost and expense of the
Mortgagee Party take all appropriate steps and action to remove any Persons from
possession and to put the Mortgagee Party (or its assigns) in possession of such
area, but Sublessor shall not be liable to Mortgagee Party or to any Person for
any damages resulting from any delay in delivering possession, and there shall
be no abatement of rental under any new Sublease or otherwise by reason of
delay.
11.6 No Merger. There shall be no merger of this Sublease or any interest
in this Sublease nor of the interest created hereby with the interest of
Sublessor or the fee estate in the Project Area by reason of the fact that this
Sublease or such interest therein or such interest of Sublessor may be directly
or indirectly held by or for the account of any Person who shall hold directly
or indirectly, in whole or in part, the interest of Sublessor or the fee estate
in the Project, or any interest in either such interest or estate.
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11.7 Limitation on Liability of Mortgagee Parties. No Mortgagee Party
shall be or become liable to Sublessor as an assignee of this Sublease or
otherwise unless it expressly assumes by written instrument such liability, in
which event the Mortgagee Party's liability shall be limited to the period of
time it is the owner of the interest created by this Sublease, and no assumption
shall be inferred from or result from foreclosure or other appropriate
proceedings in the nature thereof or as the result of any other action or remedy
provided for by such Mortgage or other instrument or from a conveyance from
Tenant pursuant to which the purchaser at foreclosure or grantee shall acquire
the rights and interest of Tenant under the terms of this Sublease; provided
that nothing in this Section 11.7 shall be deemed to prevent Sublessor from
exercising its remedies in accordance with Section 12 (as qualified by this
Section 11) if the obligations of Tenant under this Sublease are not
subsequently performed as provided in this Sublease. The provisions of this
Subsection 11.7 shall apply notwithstanding that any Mortgage may provide for a
present assignment of Tenant's rights under this Sublease to the Mortgagee.
11.8 Mortgage Benefitted. The provisions of this Section 11 are for the
benefit of, and are to be enforceable by, any Registered Mortgagee (or Mortgagee
where the provision is not qualified by the word "Registered"), including
without limitation any successor holder of a Mortgage.
Section 12. Tenant Default.
12.1 Interest Conditional. The Tenant's interest created by this Sublease
is granted on the condition that should any Event of Default occur and be
continuing, then Sublessor may, subject to all of the terms, conditions and
provisions hereof, terminate this Sublease and Tenant's interest as provided in
this Section 12.
12.2 Events of Default. The following conditions and events shall
constitute "Events of Default" for purposes of this Sublease.
12.2.1 Tenant fails to make or pay any fees, charges or other
payments required hereunder when due to Sublessor within 10 days after
receipt of notice from Sublessor of non-payment thereof.
12.2.2 Tenant fails to keep, perform and observe each and every
promise, covenant and condition set forth in this Sublease on its part to
be kept, performed or observed for 30 days after receipt of notice of such
failure from Sublessor, except where fulfillment of such obligation
requires activity over a period of time and Tenant has commenced to
perform whatever may be required within 30 days after receipt of such
notice from Sublessor and continues such performances without interruption
except for causes beyond its control. Notwithstanding the foregoing, if
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Tenant within 15 days after the receipt of such notice of default shall in
good faith dispute the existence of any such default by notice to
Sublessor and, within 45 days after receipt of such notice of default
Tenant shall in good faith institute appropriate legal proceedings in a
court of competent jurisdiction for declaratory relief or another
appropriate remedy for the resolution of such dispute, then so long as
such proceedings have not been finally determined and Tenant is
prosecuting them, Sublessor shall not have the right to terminate this
Sublease or exercise any other remedies of Sublessor hereunder on account
of the alleged default, provided however, that the foregoing provisions of
this Subsection 12.2.2 shall not be construed to preclude a court of
competent jurisdiction from entering temporary orders or otherwise
exercising its equitable powers to protect the interests of the parties
during the pendency of the above described proceedings. If it shall be
finally determined in such proceedings that Tenant is in default, then the
time within which Tenant shall have to remedy the same as set forth above
shall be computed from the date of such determination but Tenant shall
have no further right under this Subsection 12.2.2 to dispute such
default. No such dispute by Tenant or the filing or prosecution of any
such proceedings shall operate to relieve Tenant from or permit Tenant to
defer the performance of any of its obligations hereunder not specifically
under dispute, and Tenant shall not be relieved of any liability to
Sublessor for actual damages (including any consequential damages to the
extent Sublessor promptly notifies Tenant of the same as soon as Sublessor
could reasonably be expected to be aware that such damages may occur)
suffered by Sublessor if Tenant contests the existence of the Event of
Default by appropriate proceedings as provided above but fails to prevail
in such proceedings. If the court of competent jurisdiction in which such
proceedings has been instituted determines that such proceeding has not
been brought by Tenant in good faith, in addition, such court may also
make an award of damages therefor.
12.2.3 The levy of any attachment or execution, or the appointment
of any receiver, or the execution of any other process of any court of
competent jurisdiction which is not vacated, dismissed or set aside within
a period of 90 days and which substantially interferes with Tenant's use
of the Amphitheatre or with Tenant's operations under this Sublease.
12.2.4 Tenant becomes insolvent, or takes the benefit of any present
or future insolvency statute, or makes a general assignment for the
benefit of creditors, or files a voluntary petition in bankruptcy, or a
petition or answer seeking an arrangement for reorganization, or for
readjustment of indebtedness under the federal bankruptcy laws or under
any other law or statute of the United States, or of any state law, or
consents to the appointment of a
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receiver, trustee or liquidator of all or substantially all of its
property located within the Site.
12.2.5 By order or decree of court, Tenant is adjudged bankrupt, or
an order is made approving a petition filed by any of the creditors or
stockholders of Tenant seeking the reorganization or the readjustment of
its indebtedness under the federal bankruptcy laws, or under any law or
statute of the United States, or any state thereof.
12.2.6 A petition under any part of the federal bankruptcy laws, or
an action under any present or future solvency law or statute is filed
against Tenant and is not dismissed within 120 days.
12.2.7 By, pursuant to, or under authority of (1) any legislative
act, resolution or rule, or (2) any order or decree of any court,
governmental board, agency or officer having jurisdiction, a receiver
trustee or liquidator takes possession or control of all or substantially
all of the property of Tenant, and such possession or control continues in
effect for a period of 120 days.
12.3 Sublessor's Rights of Re-Entry. Subject to Section 11, and the other
provisions of this Sublease, Sublessor shall, as a non-exclusive remedy, upon
the giving of notice of cancellation or termination as above provided, have the
right to re-enter the Project Area and every part thereof on the effective date
of cancellation or termination without further notice of any kind, remove any
and all persons therefrom and may regain and resume possession either with or
without the institution of summary or legal proceedings or otherwise. Such
re-entry, however, shall not in any manner affect, alter or diminish any of the
obligations of Tenant under this Sublease.
12.4 Additional Rights of Sublessor. Sublessor, upon termination or
cancellation of this Sublease, or upon re-entry, regaining or resumption of
possession of the Project Area pursuant to Subsection 12.3 hereof, may occupy
said premises and shall have the right to permit any person, firm or corporation
to enter upon the Project Area and use the same. Such occupation by others may
be of only a part of said Project Area, or the whole thereof or a part thereof
together with other premises, and for a period of time the same as or different
from the balance of the term remaining hereunder, and on terms and conditions
the same as or different from those set forth in this Sublease. Sublessor shall
also have the right to repair or to make such structural or other changes in the
Amphitheatre as are reasonably necessary to maintain the suitability thereof for
commercial concert and arena activities without affecting, altering or
diminishing the obligations of Tenant hereunder.
12.5 Survival of Tenant's Obligations. If this Sublease is terminated or
cancelled by Sublessor pursuant to the provisions of this Sublease or if
Sublessor rightfully enters, regains or
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resumes possession of the Site, Sublessor shall be entitled to recover damages
to be computed in the following manner; subject to Sublessor's obligation to
mitigate damages, Sublessor shall be entitled to recover the amount or amounts
of fees and charges which would have been due and payable to Sublessor to the
same extent, at the same time or times, and in the same manner as if no
termination, cancellation or re-entry, regaining or resumption of possession had
occurred. Sublessor shall have the responsibility to seek diligently the
mitigation of damages in the event of such termination, cancellation, re-entry,
regaining or resumption of possession.
Section 13. Tenant First Refusal and Consultation Rights.
13.1 First Refusal. Before making or accepting an offer with respect to
any transaction which would result in the sale or transfer of any interest of
Sublessor in the Site or in all or any portion of Lakewood, Sublessor shall
first notify Tenant of the best (from the standpoint of Tenant) terms and
conditions under which Filmworks would be willing to offer to Tenant the
interest of the subject transaction. (Filmworks may, at its option, notify
Tenant of alternative terms and conditions with respect to the interest of the
subject transaction.) Tenant shall have 15 days following receipt of such
notification in which to elect to acquire the interest which was the subject of
the transaction on the terms and conditions (or any of the alternative terms and
conditions, if any) specified in the Sublessor's notice. If Tenant does not so
notify Sublessor, Sublessor shall be free to complete the transaction specified
in Sublessor's notice with any third Person on the same terms and conditions (or
any alternative terms and conditions, if any) as specified in such notice, or on
terms and conditions which, are more favorable, as a whole, to Sublessor than
such terms and conditions, as a whole, which are specified in the notice to
Tenant; provided, however, if said transaction does not close within six months
from the date upon which Sublessor gave such notice, the same procedure shall
again be required to be followed, even for the same transaction. Tenant's not
exercising the right specified in the prior sentence shall not constitute waiver
of Tenant's right of first refusal for any subsequent transactions affecting the
Site or the same or different portions of Lakewood (whether owned by Sublessor
or some Person who previously acquired an interest which as of the Initial Date
was owned by Sublessor) and Tenant shall continue to have such right regardless
of the number of successive transactions which occur as to which Tenant does not
exercise its right. The parties expressly reserve all remedies, judicial or
otherwise, if a dispute should arise concerning whether the terms and conditions
of any transaction with any third Party under this subparagraph are in fact the
same as or more favorable to Sublessor than those specified in any notice to
Tenant.
Tenant's first refusal rights shall not apply to any transaction which
does not affect or pertain to the Site in which Sublessor would retain a
controlling interest in a substantial
34.
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portion of Lakewood, provided that the transferee would under the terms of the
transaction be obligated to actually use the subject property in a particular
manner and further provided that the transferee is specially and uniquely
qualified and able actually to conduct such uses.
Any transaction or concurrently contemplated series of transactions
pursuant to which either by the issuance of new stock or by the transfer of
existing stock, a Person or Persons other than the stockholders existing as of
the Initial Date (or the immediate families or trusts for the benefit of the
immediate families of such existing stockholders) would acquire 50% or more of
the equity or of any class of stock or any class of other security convertible
into equity or stock shall be deemed a transaction subject to the first refusal
rights specified in this Subsection 13.1, and Tenant's first refusal rights
shall apply to and bind the successive owners of any such class of stock, equity
or other security convertible into equity or stock.
13.2 Sublessor Consultation. Sublessor agrees to consult with Tenant prior
to undertaking any transactions with a third Person or Persons pertaining to
Lakewood or otherwise developing all or any portions of Lakewood, so as to
afford Tenant an opportunity to become involved in any transactions within
Lakewood.
Section 14. Tenant Concessions and Subsubletting; Assignment.
14.1 Concessions and Subsubletting. Tenant shall have the unrestricted
right at any time to grant concessions and to subsublease all or any portion of
the Project Area.
14.2 Assignments by Tenant.
14.2.1 Tenant shall have the unrestricted right at any time to
assign this Sublease to (i) any Affiliate of Tenant; (ii) any Person
acquiring substantially all of Tenant's assets; or (iii) any partnership,
joint venture, or other entity in which Tenant or an Affiliate of Tenant
or a successor of the type described in (ii) retains both an equity
interest and a role in management.
14.2.3 Tenant shall have the unrestricted right at any time after
the last to occur of Substantial Completion and the Opening Date to assign
this Sublease to any Person.
14.2.3 Tenant shall have the right at any time prior to the time
specified in Subsection 14.2.2 to assign this Sublease with the prior
approval of Sublessor which approval will not be unreasonably withheld. In
exercising its approval rights, Sublessor may not withhold approval on the
ground that Tenant will in any fashion realize any economic gain or
benefit from the assignment. Tenant need only to
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rely on this Subsection 14.2.3 if the provisions of Subsections 14.2.1 or
14.2.2 are not available to Tenant.
14.2.4 Tenant will be entitled to be relieved of all obligations
arising from and after the effective date of any assignment if the
assignee assumes such obligations provided, however, if the effective date
of the assignment occurs before the date specified in Subsection 14.2.2,
Tenant will be relieved of all obligations only with respect to
obligations arising from and after the date Specified in Subsection
14.2.2.
14.2.5 Any assignment, sale or transfer, as described in Section 14,
shall impose all Tenant obligations set forth in this Sublease upon the
purchaser, transferee or assignee, and such party shall execute in writing
an acknowledgment of all of said obligations. Said acknowledgment shall be
transmitted to Sublessor prior to the closing of any such transaction.
Section 15. Miscellaneous.
15.1 Waiver. The waiver by either party of any breach of any term,
covenant or condition herein contained shall not be deemed to be a waiver of
such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained.
15.2 No Benefits to Others. This Sublease does not confer any rights or
benefits upon any person or entity other than Sublessor and Tenant and, to the
extent consistent with this lease, their respective successors and assigns.
There are no third party beneficiaries.
15.3 Entire Agreement. This Sublease sets forth all the covenants,
promises, agreements, conditions and understandings between Sublessor and
Tenant, oral or written, relating to the subject matter of this Sublease.
Neither party has made any representations or promises not expressly contained
in this Sublease. No subsequent alterations, amendment, change or addition to
this Sublease shall be binding upon Sublessor and Tenant unless reduced to
writing and signed by them.
15.4 Force Majeure. If either party hereto shall be delayed or hindered in
or prevented from the performance of any act required hereunder by reason of
unavoidable delays caused by fire, catastrophe, acts of God, strikes, lockouts,
labor troubles, inability to procure materials, failure of power, restrictive
governmental laws or regulations, riots, insurrection, civil commotion, war or
other reason of a like nature not the fault of the party delayed in performing
work or doing acts required under the terms of this Sublease, then performance
of such act shall be excused for the period of the delay and the period for the
performance of any such
36.
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act shall be extended for a period equivalent to the period of such delay.
Neither party shall in any event be liable in damages or otherwise, nor
shall the other party be released from any obligations hereunder because of the
interruption of any service, or a termination, or disturbance (except to the
extent, it any, expressly provided elsewhere in this Sublease) attributable to
strike, lockout, breakdown, accident, war, or other emergency, order or
regulation of, or by any governmental authority, failure of supply, inability to
obtain supplies, parts or employees, or any cause beyond such party's reasonable
control.
The provisions of this Subsection shall not operate to excuse Tenant from
the prompt payment of rents, or any other payments required from either party to
the other by the terms of this Sublease.
15.5 Notices; Approvals and Consents.
(a) All notices required or permitted to be given under this
Sublease shall be in writing and shall be delivered by certified or
registered mail, postage prepaid, return receipt requested, to the parties
at the addresses set forth hereinbelow or such other address as either
party may from time to time designate in writing to the other party.
The current addresses for notices are as follows:
If to Sublessor: Filmworks U.S.A., Inc.
P.O. Box 6826
2000 Lakewood Avenue, Building F
Atlanta, GA 30315
With a concurrent
copy to: Sell & Melton
P.O. Box 229
1414 Charter Medical Building
Macon, GA 31297
If to Tenant: MCA Concerts, Inc.
100 Universal City Plaza
Universal City, California 91608
Attention: Marc Bension
With a concurrent
copy to: Law Department
MCA Inc.
100 Universal City Plaza
Universal City, California 91608
(b) All notices, demands and request shall be effective and to have been
given on the fourth business day following the date
37.
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of mailing provided the mailing occurs in a major metropolitan area within the
United States. Saturdays, Sundays and holidays on which the United States mails
are not regularly delivered shall not be deemed business days. Notices may also
be served by personal service delivered to the then current notice address of
the recipient party.
(c) All approvals and consents given by any party pursuant to this
Sublease shall be in writing and neither party shall rely upon an approval or
consent given by the other party which is not in writing. No party shall
unreasonably delay acting upon a request by the other party for a consent or
approval called for by this Sublease.
15.6 Captions and Section Numbers.
(a) The captions, section numbers, article numbers and table of contents
appearing in this Sublease are inserted only as a matter of convenience, and in
no way define, limit, construe or describe the scope or intent of any section or
article, nor in any way affect this Sublease.
(b) References to section and article numbers are references to sections
and articles within this Sublease.
15.7 Construction of Language. The language in all parts of this Sublease
shall be construed simply, according to its fair meaning, and not strictly for
or against either Sublessor or Tenant, regardless of which party initiated or
drafted particular language or this Sublease. This Sublease was negotiated
between parties of equal bargaining power.
Whenever the singular or plural number or masculine, feminine or neuter
gender is used in this Sublease, it shall equally apply to, extend to, and
include the other.
15.8 Broker's Commission. Both Sublessor and Tenant each warrant it has
employed no broker or finders in connection with this transaction, except Jerry
Dickerson has made a claim which claim is not subject to the following
provisions of this Subsection. However, if claims for brokerage commission or
finders fees are asserted, each party will initially bear its own costs and
indemnify the other against and hold it harmless from, any and all claims or
liabilities for such fees and/or commissions (including, without limitation, the
cost of counsel fees in connection therewith) resulting from the acts of such
indemnitor in causing such commission or fee.
15.9 Interest. Interest shall accrue on any sums owed by either party to
the other starting from the first date of delinquency and continuing until the
full amount including interest is paid at floating rate equal to one point over
the prime or reference rate announced from time to time by Citizens & Southern
National Bank (or successor institution), provided such charge shall not exceed
the maximum interest rate permitted by
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law for loans which are not primarily for personal, family or household
purposes.
15.10 Persons Indemnified. All agreements by either Tenant or Sublessor to
indemnify or hold the other harmless contained in this Sublease shall inure to
the benefit not only of the respective indemnitee but also to its Affiliates,
and if a party is a partnership, to the benefit of such party's partners and to
the directors, officers, employees and agents of any of the foregoing.
15.11 Georgia Law Applies. This Sublease and all provisions thereof,
irrespective of the place of execution or performance, shall be construed and
enforced in accordance with the laws of the State of Georgia applicable to
agreements which are executed by all parties and are performed wholly in
Georgia.
15.12 Rights Are Cumulative. The rights and remedies conferred upon either
party in this Sublease and by law are cumulative, unless and to the extent
inconsistent with the provisions of this Sublease.
15.13 Saving Clause. If any provision of this Sublease, the deletion of
which would not adversely affect the receipt of any material benefit by any
party hereunder or substantially increase the burden on any party hereto, shall
be held to be invalid or unenforceable to any extent, the same shall not affect
in any respect whatsoever the validity or enforceability of the remainder of
this Sublease.
15.14 Attorney's Fees. If either party incurs any expense, including
reasonable attorney's fees, in prosecuting or defending any action or proceeding
against the other, arising out of or in connection with this Sublease, the sums
so paid by the prevailing party shall be due from and be paid by the
nonprevailing party on demand.
15.15 Injunctive Relief. In the event of a breach or threatened breach by
either party, of any of the covenants or provisions of this Sublease, the other
party shall, in addition to any remedies expressly mentioned in this Sublease,
have the right of injunction and the right to invoke any remedy allowed at law
or in equity.
15.16 "Affiliate" Defined. The term "Affiliate" means any Person which,
directly or indirectly, is controlled by, is in control of, or is under common
control with, the Person with reference to which the term "Affiliate" is used.
Ownership of 50% or more of the voting or decision making power with respect to
any Person shall be deemed control, although ownership of less than 50% shall
not necessarily negate control.
15.17 "Person" Defined. The term "Person" means any person, corporation,
partnership, firm, association, trust, or other entity.
39.
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15.16 Estoppel Certificates. Sublessor and Tenant agree at any time and
from time to time upon not less than 10 days prior request by the other, that
Sublessor and Tenant, respectively, will execute, acknowledge and deliver to the
other an estoppel certificate in writing certifying (i) that this Sublease (in
the form attached to the certificate) is unmodified and in full force and effect
or if there have been modifications that the same is in full force and effect as
modified and identifying the modifications, (ii) the date to which the minimum
rent, percentage rent and other charges have been paid, and (iii) that so far as
the certifying party knows, there is not an uncured Event of Default or act or
omission which with the passage of time will ripen into an Event of Default,
other than any specified in the certificate. The party requesting the estoppel
certificate may accompany its request with a proposed certificate to be executed
by the other party, and if the other party does not execute and deliver either
the estoppel certificate tendered by the requesting party or its own prepared
estoppel certificate to the requesting party within said 10 day period, the
estoppel certificate prepared by the requesting party shall be conclusively
deemed to have been executed and delivered by the other party, and shall be
binding on such other party as if executed and delivered by it. Estoppel
certificates may be relied upon by any Person proposing to acquire Sublessor's
or Tenant's interest hereunder, or any portion thereof or interest therein, as
the case may be, and by any mortgagee or encumbrancer or prospective mortgagee
or encumbrancer (or any assignee thereof) now or hereafter having any present or
prospective interest in the right, title or interest of Sublessor or Tenant.
15.19 Confidentiality. Sublessor will not use for its own benefit and will
hold in confidence all information which it learns from Tenant and from any of
Tenant's officers, agents, licensees, employees and concessionaires, which
information is not clearly of a public nature. The foregoing will not preclude
Sublessor from providing to the City such information as Sublessor is required
to provide under the terms of the Master Lease, but Sublessor will use its best
efforts to obtain an agreement from the City obligating the City to similarly
refrain from using and to hold in confidence all such information.
Section 16. Non-Discrimination. Neither Tenant nor any Person under Tenant's
control will discriminate against any customer, employee, or applicant for
employment because of race, color, religion, sex or national origin.
Section 17. Successors and Assigns. This Agreement is binding upon, and subject
to the other provisions of this Sublease, inures to the benefit of the
successors and assigns of the respective parties.
Section 18. Recording of Lease. Each party shall, upon request of the other
party, execute and deliver a notice or short form of this Agreement in form and
content suitable for recording in
40.
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accordance with the laws and customs of the State of Georgia and the City.
Filmworks U.S.A., Inc. MCA Concerts, Inc.
By /s/ Edwin D. [ILLEGIBLE] By: /s/ Marc Bension
-------------------------- -------------------------------------
President
41.
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EXHIBIT C
DESCRIPTION OF AMPHITHEATRE PROJECT
The new amphitheatre at Lakewood Fairgrounds will consist of approximately
8,000 fixed seats on a sloped/tiered concrete bowl with a gently sloped rear
lawn area for approximately 10,000 additional patrons. A pitched steel framed
roof supported on large concrete columns will cover the fixed seating area and
will be coincident to an attenuated masonry stage structure approximately 75'
deep by 150' wide by 50' high, over and around the artists performance area
immediately North of the fixed seating. The westerly and southerly amphitheatre
bowl exposures will be protected with a highly acoustical sound wall, designed
to specific sound attenuating properties. The rear stage area will consist of
modular production and operations offices, artists and group dressing rooms,
crew/group dining, audio/electronic rooms, truck load-in facilities, bus and
artists drop off facilities, and ancillary spaces. On both "sides" of the
amphitheatre will be located expansive paved plazas with circulation ways to all
seating sections. Each plaza will have restroom and concession facilities in a
festive park-like setting. The amphitheatre parcel will be totally enclosed with
security fencing and, on two sides adjacent to parking areas, with well-lighted
pedestrian walkways. Total cost to MCA for the planning, development, and
construction of the amphitheatre and associated improvements will equal not less
than $8 million.
<PAGE>
EXHIBIT D
CITY WORK
Pryor Circle Improvements
1. Resurfacing Pryor Circle - Lakewood Station to Pryor Road. $ 8,000
2. Upgrade street lighting. 5,200
3. Replace/repair fencing adjacent to housing project. 12,000
4. Remove overgrown vines and shrubs in R/W, and;
5. Remove fence across Pryor Circle at Pryor Road. 1,600
6. Install 12 foot high masonry wall from Pryor Road to area
of the stagehouse. 65,000
7. Provide crosswalk, centerline and shoulder stripping
along Pryor Circle and at intersection of Pryor Road
and Pryor Circle. 500
Lakewood Avenue Entryway
1. Grading and paving of ramp, approximately 100 feet long by
72 feet wide (5 lanes plus walkway) from existing northeast
corner of Fairgrounds at Lakewood Avenue to present existing
grade at racetrack surface excluding decorative pedestrian
curbs and walks. 24,700
2. Fine grading. 1,000
3. Provide new high intensity lighting at intersection of
Lakewood Avenue and new entryway. 3,250
4. Provide left turn arrow and signals at intersection of
northerly entryway and Lakewood Avenue. 40,000
5. Provide overhead lane control signs on Lakewood Avenue. 56,000
<PAGE>
Lakewood Avenue/Lakewood Way Focal Imps.
1. Remove existing signage. 6,000
2. Provide new area lighting along new walkway same as
northeasterly entryway and at intersection of Lakewood
Avenue and Lakewood Way. 3,250
3. Remove overgrowth and trim vines. 1,000
4. Provide overhead lane use control signs at Lakewood
Avenue/Lakewood Way/Macon Drive Intersection. 56,000
5. Provide appropriate lane stripping, arrows, etc. as required. 500
Lakewood Way Entryway
1. Provide new graded and paved ramp from Lakewood Way to the
existing paved parking approximately 70 feet long by 70 feet
wide (five lanes plus walkway), including curbs and excluding
decorative pedestrian walkway. 24,700
2. Provide new high intensity lighting at the intersection of
Lakewood Way and new south-easterly entryway. 3,250
3. Provide roadway/entryway lane stripping arrows, etc. as required. 500
Fair Drive Entryway
1. Provide new high intensity lighting at the intersection of
Pryor Road and Fair Drive, and along Pryor Road between Pryor
Circle and Lakewood Way. 13,500
2. Remove existing chain link fence and gates at existing entry -
approximately 100 feet. 500
3. Remove existing billboards. 1,000
4. Provide upgraded signals with directional arrows, etc. as
determined by the Department of Public Works. Provide lane
stripping, arrows as required. 16,000
D-2
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Perimeter Fencing
1. Repair existing fences and gates around entire facility and
replace existing chain link fencing as required, with similar
utility fencing and gates, as subsequently determined. 10,000
Perimeter Landscaping
1. Clean, trim and remove vines and shrubs around entire site
as determined necessary and required. 10,000
Roadway Improvements
1. Provide a double left-turn lane E.B. on Lakewood Way at
the Lakewood Avenue/Lakewood Way/Macon Drive intersection. 40,000
2. Provide a double right-turn S.B. lane on Lakewood Way at
the Lakewood Avenue/Lakewood Way/Macon Drive intersection. 11,400
3. Construct a left turn lane on the W.B. approach to the
Lakewood Avenue/Lakewood Way/Macon Drive intersection. see #1
4. Convert the existing two-way section of Lakewood Way to
one-way S.B. during Amphitheatre events. 500
5. Provide a double right-turn lane W.B. on Lakewood Way into
the parking area for the proposed Amphitheatre. 6,000
6. Provided a double left-turn lane E.B. on Lakewood Avenue into
the parking area for the proposed Amphitheatre. 15,600
7. Provide three lanes into the parking area at the Pryor
Road/Fair Drive entrance during the arrival period. --
8. Provide three exit lanes from the parking area at the
Pryor Road/Fair Drive exit during the departure period. --
D-3
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Fair Drive Entrance and Perimeter Landscaping
1. Plant 250 Canopy Trees and 500 Flowering Trees. 87,500
Plant shrubs:
Lakewood Way Entrance 5,250
Fair Drive Entrance 5,250
Parking Perimeter 26,250
2. Lakewood Way Entrance:
Plant 30 Canopy Trees 7,500
Plant 90 Flowering Trees 4,500
3. Trim existing trees. 10,000
Pryor Road and Pryor Circle Landscaping
1. Provide upgraded landscaping, lighting, and signage
at the Pryor Road and Pryor Circle intersection and at
other Amphitheatre Project entrances as may be mutually
agreed to by the City and MCA. 84,950
Interior Site Landscaping
1. Lakeshore - 4,800 linear feet:
Plant 80 Canopy Trees 20,000
Plant 160 Flowering Trees 8,000
Plant 400 shrubs 6,000
2. Grandstand Area:
Plant 90 Canopy Trees 22,500
Plant 250 Flowering Trees 12,500
Miscellaneous
1. Provide utility chain link fencing, repair existing
fencing where necessary, between lake area parking
southerly Filmworks' leasehold, along southerly
boundary of existing track and grandstand; along boundary
between new Amphitheatre and existing exhibition
D-4
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AMENDMENT TO LEASE AGREEMENT
GEORGIA, FULTON COUNTY:
In accordance with the provisions of an Ordinance adopted by the Council
of the City of Atlanta, Georgia ("CITY") on the 3rd day of October, 1988,
approved by the Mayor on the 7th day of October, 1988, and approved by
resolution of the Board of Directors of FILMWORKS U.S.A., INC., ("FILMWORKS") on
the 26th day of April, 1988, CITY and FILMWORKS, for and in consideration of the
CITY's approval of the Sublease between FILMWORKS and MCA and for and in
consideration of FILMWORKS' agreements and covenants contained herein, do by
this Agreement entered into as of the 10th day of October, 1988, hereby amend
the "Amended Indenture of Lease" ("LEASE") between them entered into as of the
2nd day of February, 1984, as follows:
1.
The LEASE is hereby amended by adding a new section, Section 7.3.4, to
the original LEASE as now written:
"7.3.4. Capital Improvement Program.
"FILMWORKS (Lessee) shall devote at least fifty percent of its gross
rental income each year received pursuant to that certain Sublease Agreement
between FILMWORKS, U.S.A.,
<PAGE>
INC., and MCA CONCERTS, INC., as executed on January 20, 1988, commencing with
the execution of this (1988) amendment to the completion of that definite and
certain list of capital improvements attached hereto as EXHIBIT A, subject to
the following conditions:
"(a) A portion of the rental income in the first three years of the life
of the Sublease with MCA shall be excluded from the 50% pledge, to wit: $150,000
in the first year and $75,000 in each of the second and third years;
"(b) 50% of the rental revenues subject to the foregoing limitations shall
continue to be pledged until an amount equivalent to the CITY's expenditures, as
documented, pursuant to Section 4.2 of that certain agreement between the CITY
OF ATLANTA and MCA CONCERTS, INC., dated as of October 10, 1988, not to exceed a
cumulative total of $1.5 million, has been expended by FILMWORKS as
improvements;
"(c) The improvements associated with the 50% pledge are to be completed
within the first six months of the year following the year in which the rental
proceeds are received by FILMWORKS;
"(d) If expenditures in excess of 50% of rental revenues are expended in
any one calendar year, such excess will be credited to subsequent years; and
"(e) The 50% pledge is to be devoted and dedicated exclusively to capital
improvements that will restore and
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preserve the Exhibit Halls and Fire Station at the Demised Premises as described
in the attached EXHIBIT A."
2.
Section 8.6 of the LEASE ("Coverage by others") is hereby amended by
adding the following paragraph to the section as it is now written:
"In the event that there should be residual payments made to Lessee
(FILMWORKS) by virtue of any insurance policy carried upon the premises, either
by FILMWORKS or by its sublessees, which residual payments are defined as that
portion of insurance proceeds over and above the amounts actually paid to
sublessees or used to replace or rebuild casualty losses, then such residual
payments shall be devoted by FILMWORKS (Lessee) exclusively to capital
improvements to the Demised Premises as approved by the CITY's Department of
Parks, Recreation and Cultural Affairs."
3.
Section 8.7 of the Lease ("Indemnification") is hereby amended by adding
the following paragraph to the section as now written:
3
<PAGE>
"Notwithstanding the foregoing paragraph, to the extent that the CITY's
(Lessor's) interest may appear in the same, Lessee (FILMWORKS) hereby and for a
valuable consideration (the approval of the Sublease with MCA) assigns its
interest in the indemnity given FILMWORKS by MCA in the Sublease to the CITY
(Lessor)."
IN WITNESS WHEREOF, CITY and FILMWORKS, acting through their duly
authorized officers, have executed this AMENDMENT TO LEASE under seal, as of the
10th day of October, 1988.
ATTEST: CITY OF ATLANTA, a Municipal
Corporation of the State of
Georgia ("Lessor")
/s/ [Illegible] By: /s/ Andrew J. Young
- ----------------------------- -------------------------
Deputy Clerk of Council ANDREW J. YOUNG, Mayor
{SEAL}
Recommended:
/s/ [Illegible]
-----------------------------
Chief Administrative Officer
As to the Mayor, Clerk of Approved:
Council and Chief
Administrative Officer, /s/ [Illegible]
signed, sealed and delivered -----------------------------
in the presence of: Commissioner of Finance
/s/ [Illegible] /s/ [Illegible]
- ------------------------------ -----------------------------
Unofficial Witness Commissioner of Parks,
November 8, 1988 Recreation & Cultural Affairs
/s/ [Illegible] /s/ [Illegible]
- ------------------------------ -----------------------------
Notary Public Commissioner of Public Works
[Notary Stamp] Approved as to Form on Behalf
of the City of Atlanta:
/s/ [Illegible]
-----------------------------
Assistant City Attorney
(SIGNATURES CONTINUED)
4
<PAGE>
As to Filmworks, U.S.A., FILMWORKS, U.S.A., INC.
Inc., and the execution by
its officers, signed,
sealed, and delivered in By: /s/ [Illegible]
the presence of: ------------------------
President
SEAL
/s/ [Illegible] By: /s/ [Illegible]
- ------------------------------- ------------------------
Unofficial Witness Chairman of the Board of
Directors
/s/ [Illegible]
- -------------------------------
Notary Public
[Notary Stamp]
5
<PAGE>
EXHIBIT A
Program for Improvements
The 50% pledge is to be invested in capital improvements on the following
structures:
Exhibit Halls 1, 2, 3, and 4
Fire House
The improvements include the following major categories of work:
(1.) Roofing Systems -- Replacement of roofing, or repair of roofing where
appropriate. Includes decking, eaves, gutters, down spouts, soffets, facia
boards, etc.
(2.) Bathrooms -- Renovation of bathroom area and surroundings replacement of
fixtures, and elimination of hazardous electrical and plumbing conditions.
(3.) Structural cracks -- Repair and replacement of surfaces on interior and
exterior walls.
(4.) Paint -- Renewal of interior and exterior wall surfaces in combination
with the other types of improvements stated above.
On an annual basis, a representative from Filmworks U.S.A., Inc. is to present a
capital improvements plan (based on the previous calendar year's 50% pledge) to
the City's Department of Parks, Recreation and Cultural Affairs and Department
of Finance for approval by these departments. So long as this plan will help
accomplish the general purpose of this arrangement, restoration and preservation
of the major historical buildings at the site, the City's approval cannot be
withheld.
In order to assess the scope and structural needs of this restoration effort,
consultants will be hired to evaluate the condition of the buildings. The
consultants' reports will be included as part of the presentation to City
representatives support as for the capital improvements plan proposed by
Filmworks.
Should sufficient funds be available or additional needs arise, Filmworks can
propose, subject to approval by the City's Department of Parks, Recreation, and
Cultural Affairs and Department of Finance, that the work program deviate from
the four major categories of work described herein.
<PAGE>
AGREEMENT REGARDING SUBLEASE
This Agreement is executed as of 1/20, 1988 (the "Initial Date") between
Filmworks U.S.A., Inc. ("Sublessor") and MCA Concerts, Inc. ("Tenant").
Section 1. This Agreement is entered into with reference to the following
facts:
1.1 The City of Atlanta (the "City") is the fee owner of an
approximately 117 acre parcel commonly known as Lakewood Fairgrounds
("Lakewood"), the legal description of which is attached as Exhibit A.
1.2 Sublessor is the lessee of Lakewood under a lease with the City
dated February 2, 1984 (the "Master Lease").
1.3 Concurrently herewith the parties have executed a sublease
between Sublessor (as sublessor) and Tenant (as sublessee) pertaining to a
portion of Lakewood (the "Sublease").
1.4 The parties recognize that the Master Lease requires the
approval of the Sublease by the City.
Section 2. Each party will exercise its best efforts expeditiously to
secure the City's approval of the Sublease and such minor amendments of the
Master Lease as Tenant may deem appropriate (subject to Sublessor's reasonable
approval) in order to conform the Master Lease with any provision which would
otherwise conflict with it in the Sublease as well as such attornment and
non-disturbance agreements from the City as Tenant deems appropriate to assure
Tenant of the choice to continue as a sublessee (or direct lessee, if
applicable) regardless of the future relationship between Sublessor and the
City. The matters as referred to in the prior sentence are hereinafter referred
to as the "City Approval Matters." The date upon which all action required by
the City to approve the Sublease has been accomplished and such approval is
fully effective, and all other of the City Approval Matters have been
accomplished to Tenant's satisfaction, is referred to as the "City Approval
Date."
11/23/87
<PAGE>
Section 3. Each party will exercise its best efforts expeditiously to
secure from the appropriate governmental authorities all approvals, actions, and
commitments which Tenant reasonably requires in order to assure itself that the
project contemplated by the Sublease can be developed, constructed, and operated
in accordance with Tenant's contemplated plan. Without derogating from the
generality of the foregoing, this includes assurances to Tenant that appropriate
building permits can be obtained by Tenant without any unusual requirements
being imposed and without any financial obligations (other than standard and
customary permit fees) being imposed, commitments to Tenant from the appropriate
governmental entities for vehicular traffic flow improvement such as freeway
off-ramps and other traffic mitigation measures, and the receipt by Tenant of
licenses and approvals from appropriate regulatory agencies with reference to
environmental regulations, zoning, land use regulations, and licensing.
Sublessor will also take such steps as are necessary to provide Tenant with a
binding commitment from a carrier approved by Tenant to issue the title
insurance policy referred to in Subsection 6.4. The matters referred to above in
this Section 3 (excluding City Approval Matters) are hereinafter referred to as
"Final Action Matters." The date when all of the Final Action Matters have been
accomplished to Tenant's satisfaction or Tenant has waived in writing any Final
Action Matters not so accomplished, and the City Approval Date has previously,
or contemporaneously occurred, is referred to as the "Start Date." If Tenant
commences substantial construction for the erection of the amphitheater facility
(as distinguished from surveys, testing and the like, preparatory work, the
erection of temporary structures and other activities which do not materially
alter the area described in Section 5), the date upon which such construction
begins shall be the Start Date regardless of whether the City Approval Matters
or Final Action Matters have been accomplished.
Section 4. Promptly upon execution of this Agreement, Tenant shall deposit
$150,000 in an escrow account with __________________; interest earned in the
account shall be for the benefit of Tenant. Tenant and Sublessor shall each pay
half the escrow holder's fees except if the Sublease is voided pursuant to
Subsections 4.1 or 4.2 the party electing to void the Sublease shall pay (or
reimburse the other party for) the entire fee. The parties shall execute escrow
instructions consistent with this Agreement and including
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<PAGE>
the standard exculpatory and indemnification provisions required by the escrow
holder. The interest earned on the funds held in escrow shall be disbursed to
Tenant in accordance with instructions given by Tenant from time to time to the
escrow holder. The $150,000 plus any additional deposit into escrow pursuant to
the last sentences of Subsection 4.1 (the sum of $150,000 plus said additional
deposit is hereinafter referred to as the "Escrow Deposit") held by the escrow
holder shall be disbursed as follows:
4.1 If the Start Date has not occurred by a date which is one year
from the Initial Date (the "First Anniversary Date") Sublessor and Tenant
may each cause the Sublease to become void (from its inception as if it
had never been executed) by giving the other notice (the "Termination
Notice") specifying the date upon which the Sublease will become void,
which date will not be less than 30 days after the date upon which the
Termination Notice was given, and the Sublease shall become void on the
date so designated in the Termination Notice unless prior to such date the
Start Date occurs. Notwithstanding the foregoing, if Tenant in good faith
believes that the City Approval Matters (if not previously accomplished)
can be accomplished, and that the Final Action Matters can be
satisfactorily resolved within a reasonable time following the date upon
which the Sublease would, as a result of Sublessor's notice, otherwise
become void, Sublessor will not unreasonably withhold approval of Tenant's
request for an extension of the date upon which, absent the earlier
occurrence of the Start Date, the Sublease will become void; during the
period of any such extension, Tenant shall deposit $12,500 per month into
the escrow account, with the first such payment being due five days
following the First Anniversary Date and each successive monthly payment
being due on the corresponding day of each calendar month thereafter
during the extension period.
4.2 If Tenant in good faith determines, prior to the First
Anniversary Date, that either the City Approval Matters of the Final
Action Matters cannot be accomplished by the First Anniversary Date on
terms satisfactory to Tenant, Tenant may give Sublessor notice that the
Sublease is void and the Sublease will be void immediately upon the giving
of such notice.
-3-
<PAGE>
4.3 On the Start Date the Escrow Deposit shall be released to
Sublessor. A sum equal to $12,500 per month (pro-rated for a partial
month) from the Initial Date to the Start Date shall be credited to
Tenant's rental obligation under the Sublease for the aforementioned
period; if the Start Date is earlier than the First Anniversary Date, the
balance shall constitute pre-paid rent under the Sublease for the
remainder of the one year period following the Initial Date, and if, by
reason of the last sentence of Subsection 4.1, the Start Date is more than
one year following the Initial Date, the balance shall constitute
pre-paid rent under the Sublease for the partial month following the
Start Date.
4.4 If the Sublease was voided pursuant to Subsection 4.1 and the
Termination Notice was given prior to the City Approval Date, the Escrow
Deposit shall be paid entirely to Tenant.
4.5 If the Sublease was voided pursuant to Subsection 4.1 and the
Termination Notice was given after the City Approval Date, the entire
Escrow Deposit shall be paid to Sublessor.
4.6 If the Sublease was voided pursuant to Subsection 4.2 before the
City Approval Date, the Escrow Deposit shall be paid entirely to Tenant,
and if voided after the City Approval Date, a sum equal to $12,500 per
month (pro-rated for a partial month) from the Initial Date to the date
upon which Tenant gave the notice under Subsection 4.2 shall be released
to Sublessor and the balance shall be paid to Tenant.
4.7 If the Sublease is not voided pursuant to Subsection 4.1 or 4.2,
the Sublease shall remain in full force and effect.
Section 5. The Site (approximately 10 acres), the Parking Area
(approximately 50 acres) and the Easement Areas (as those terms are defined in
the Sublease) will be located within that portion of Lakewood as outlined on
attached Exhibit B and within that portion will be located as designated and
selected by Tenant prior to the Start Date. Tenant will cooperate with Sublessor
with respect to locating the Easement
-4-
<PAGE>
Areas so as to accommodate the reasonable needs of Sublessor, provided Tenant
will not be required to incur any additional expense or suffer any adverse
effect as a result of such cooperation.
Section 6. Promptly following the Start Date the parties shall complete
the Sublease by taking the following actions:
6.1 The date of the Start Date shall be inserted in Subsection 1.6.1
of the Sublease.
6.2 The dollar amount of the Escrow Deposit and the date to which
pre-paid rent has been paid shall be inserted in Subsection 4.2.1 of the
Sublease.
6.3 The plot plan showing the location of each of the areas within
the Project Area (as defined in the Sublease) together with legal
descriptions for each such area shall be attached as Exhibits to the
Sublease (which the parties shall have the right to approve, but approval
will not be withheld if and to the extent the descriptions are consistent
with the areas designated and selected by Tenant pursuant to Section 5).
Tenant will bear the expenses of platting and obtaining the legal
descriptions from a licensed surveyor, unless and to the extent survey
work is required outside the Project Area, the expense for which shall be
borne by Sublessor.
6.4 Sublessor shall deliver to Tenant an ALTA extended coverage
policy of title insurance (issued by a carrier approved by Tenant), with
limits designated by Tenant, with the survey and facts disclosed by
inspection exceptions deleted, insuring Tenant's leasehold interest
subject only to the Master Lease and to easements, if any, as are approved
by Tenant as not constituting any potential interference with Tenant's use
and enjoyment of the leasehold; Tenant shall pay the premium for such
coverage.
Section 7. Except for the obligations specified in Section 6, for the
provisions of Section 9 below, and for any actions required to effectuate the
disbursement of funds from escrow (as specified in Section 4), following the
Start Date this Agreement will be of no further force or effect
-5-
<PAGE>
and the relationship between the parties shall be governed solely by the
Sublease. While this Agreement is in effect, the provisions of Subsection 15.3
of the Sublease which recite that the Sublease constitutes the full, complete
and entire agreement shall be deemed modified to reflect incorporation of this
Agreement.
Section 8. This Agreement, together with the Sublease, constitutes the
full, complete and entire agreement between and among Sublessor and Tenant
concerning Lakewood; no agent, officer or representative of either party has
authority to make, or has made, any statement, agreement, representation or
contemporaneous agreement, oral or written, in connection with this Agreement
and the Sublease modifying, adding to or changing the provisions, covenants,
terms and conditions of this Agreement and the Sublease. Any prior agreements
between the parties (including without limitation the Memorandum of Intent) are
hereby superseded. No modification or amendment of this Agreement or the
Sublease shall be binding unless such modification or amendment shall be in
writing and signed by both Sublessor and Tenant.
Section 9. During the period from the Initial Date up to the Start Date or
earlier termination of the Sublease, Tenant and any persons and entities
designated by Tenant shall have access to Lakewood for planning, inspections,
conducting tests (including without limitation sound tests and soil tests) and
for similar purposes. Tenant shall indemnify and hold Sublessor harmless from
and against any and all claims, losses, liabilities, costs and expenses arising
solely out of the activities of Tenant and the persons and entities designated
by Tenant in the course of exercising the rights specified in the prior
sentence. Subject to the prior sentence, Sublessor shall indemnify and hold
Tenant harmless from and against any and all claims, losses, liabilities, costs
and expenses arising out of or connected with Lakewood which occur by reason of
any act or omission prior to the Start Date or earlier termination of the
Sublease. Notwithstanding anything to the contrary in Section 9 or elsewhere in
this Agreement nothing in this Agreement shall constitute, or be construed as
constituting, a covenant, promise, agreement, or understanding for Sublessor to
indemnify or hold harmless Tenant against liability for damage arising out of
bodily injury to persons or damage to property caused by or resulting from the
sole negligence of Tenant, his agents or employees.
-6-
<PAGE>
The respective indemnification and hold harmless obligations of Tenant and
Sublessor above shall also inure to the benefit of the shareholders, directors,
officers, employees and agents of the respective indemnified parties. Sublessor
and Tenant shall carry the insurance policies and comply with the provisions of
Subsections 9.1 (except only the provisions of Subsections 8.1 and 8.2 of the
Master Lease shall be applicable) and 9.2 of the Sublease during the period
prior to the Start Date or earlier termination of the Sublease. The liability of
the parties under this Section 9 for acts or omissions occurring prior to the
Start Date or earlier termination of the Sublease shall survive the termination
of the Sublease and shall also survive the Start Date. Except as specified above
Tenant will have no rights or obligations of any kind whatsoever with respect to
the Project Area during the period prior to the Start Date.
Section 10. In addition to the obligations and covenants undertaken by
Tenant under this Agreement, concurrently with the execution hereof Tenant is
paying Sublessor $1.00, receipt of which Sublessor hereby acknowledges.
Sublessor also acknowledges that Tenant will be relying upon this Agreement,
including without limitation by expending sums in connection with planning for
the project contemplated by the Sublease, and Sublessor accordingly recognizes
that this Agreement is binding upon it and that it has received consideration
for executing it.
Section 11. The provisions of Sections 15.19 [confidentiality], 14.2.3
[assignment], 17 [successors and assigns], 15.5 [notice], 15.14 [attorneys
fees], 15.8 [broker's commissions], and 15.11 [governing law] of the Sublease
are incorporated mutatis mutandis herein by this reference. Except to the extent
otherwise specified in this Agreement, until the Start Date has occurred, the
provisions of the Sublease will not be in effect.
MCA Concerts, Inc.
By /s/ [Illegible]
------------------
Filmworks, USA, Inc.
By /s/ [Illegible]
------------------
President
-7-
<PAGE>
EXHIBIT A
(Description of the Property)
All that tract or parcel of land lying and being in Land Lots 58, 71 and
72 of the 14th District of Fulton County, Georgia, and being more particularly
described as follows:
BEGINNING at a nail placed in the intersection formed by the centerline of South
Pryor Road (abandoned on June 4, 1958) and the southwest line of the
right-of-way of Claire Drive (being a 50 foot right-of-way) running thence
southeasterly along the southwest line of the right-of-way of Claire Drive, and
following the curvature thereof, a distance of 1379.3 feet to an iron pin
placed; running thence south 35 degrees 48 minutes west a distance of 481.9 feet
to an iron pin placed, running thence south 51 degrees 17 minutes 00 seconds
east a distance of 1096.0 feet to an iron pin placed; running thence south 45
degrees 14 minutes 30 seconds east a distance of 220.0 feet to an iron pin
placed; running thence south 74 degrees 29 minutes east a distance of 320.0 feet
to the center of a manhole, running thence south 46 degrees 29 minutes east a
distance of 326.3 feet to an iron pin placed on the northwest line of the
right-of-way of Lakewood Avenue (being a 60 feet right-of-way), said iron pin
placed being at a point 518.0 feet southwest, as measured along the northwest
line of the right-of-way of Lakewood Avenue, from the intersection formed by the
northwest line of the right-of-way of Lakewood Avenue and the southwest line of
the right-of-way of Shadydale Avenue, running thence southwesterly along the
northwest line of the right-of-way of Lakewood Avenue, and following the
curvature thereof a distance of 1733.1 feet to an iron pin placed; running
thence north 84 degrees 50 minutes west a distance of 56.6 feet to an iron pin
placed; running thence south 29 degrees 45 minutes west a distance of 33.6 feet
to an iron pin placed; running thence in a westerly and northwesterly direction,
along the arc of a curve having a chord bearing north 65 degrees 22 minutes west
for 967.8 feet, a distance of 970.8 feet to an iron pin placed, running thence
south 87 degrees 46 minutes west along the north line of the right-of-way of
Lakewood Way (being a 60 foot right-of-way) a distance of 1176.2 feet to an iron
pin found in the intersection formed by the north line of the right-of-way of
Lakewood Way and the east line of the right-of-way of Pryor Road (being a 50
foot right-of-way), running thence north 00 degrees 32 minutes east along the
east line of the right-of-way of Pryor Road a distance of 1598.7 feet to a nail
placed in the intersection formed by the east line of the right-of-way of Pryor
Road and the centerline of South Pryor Road (abandoned June 4, 1958), running
thence in a northeasterly, easterly, southeasterly, northeasterly and northerly
direction along the centerline of South Pryor Road and following the curvature
thereof a distance of 2796.3 feet to the POINT OF BEGINNING (said course of
2796.3 feet being comprised of the area of the following chords: begin at the
nail placed in the intersection formed by the east line of the right-of-way of
Pryor Road and the centerline of South Pryor Road and run thence north 63
degrees and 34 minutes east for 251.9 feet, run thence north 88 degrees 47
minutes east for 357.8 feet, run thence north 89 degrees 44 minutes east for
272.2 feet, run thence south 74 degrees 27 minutes east for 458.1 feet, run
thence north 55 degrees and 49 minutes east for 353.8 feet, run thence north 00
degrees 14 minutes east for 569.8 feet and run thence north 00 degrees and 00
west for 563.4 feet to the nail placed in the intersection formed by the
centerline of South Pryor Road and the southwest line of the right-of-way of
Claire Drive); being property depicted as 132.62 acres on that certain blueprint
of survey, to which reference is made for all purposes, prepared by Watts &
Browning, Engineers, dated May 20, 1970, and bearing the certification of A. W.
Browning, Georgia Registered Land Surveyor No. 490.
TOGETHER WITH all other property, if any, owned by the City of Atlanta in Land
Lots 58, 71 and 72 of the 14th District of Fulton County, Georgia, within the
area which the area which is bounded on the west by the above
<PAGE>
described property, on the south by Lakewood Avenue and on the east by Shadydale
Avenue and on the north by Claire Drive, BUT NOT INCLUDING the rights of the
City of Atlanta in and to (i) the right-of-way of any road, street or highway,
dedicated to public use or (ii) any utility easements or installations.
TOGETHER WITH all rights, members and appurtenances (except as hereinabove
expressly limited) pertaining to the above described property.
LESS AND EXCEPT that portion of the above-described property lying and being in
Land Lot 71 of the 14th District of Fulton County, Georgia and being more
particularly described as follows:
BEGINNING at an iron pin found in the intersection formed by the east line of
the right-of-way of Pryor Road and the north line of the right-of-way of
Lakewood Way and running thence north 00 degrees 49 minutes 17 seconds west
along the east line of right-of-way of Pryor Road a distance of 27.80 feet to an
iron pin found in the intersection formed by the east line of the right-of-way
of Pryor Road and the southeast side of Lakewood Park Entrance Road, running
thence north 62 degrees 40 minutes 00 seconds east along the southeast side of
Lakewood Park Entrance Road a distance of 299.83 feet to iron pin found, running
thence in a southeasterly, easterly and northeasterly direction, along the arc
of a curve having a chord running north 82 degrees 47 minutes 17 seconds east
for 156.00 feet, a distance of 173.40 feet to an iron pin set; running thence
north 61 degrees 21 minutes 01 seconds east a distance of 92.00 feet to an iron
pin found on the south side of Lakewood Park Entrance Road; running thence south
86 degrees 17 minutes 01 seconds east along the south side of Lakewood Park
Entrance Road a distance of 277.56 feet to an iron pin found; running thence
south 82 degrees 22 minutes 59 seconds east along the south side of Lakewood
Park Entrance Road a distance of 230.00 feet to an iron pin set; running south
33 degrees 14 minutes 49 seconds east along the southwest side of Lakewood Park
Entrance Road a distance of 45.00 feet to an iron pin set; running thence south
57 degrees 45 minutes 17 seconds east along the southwest side of Lakewood Park
Entrance a distance of 125.00 feet to an iron pin found; running thence south 05
degrees 25 minutes 06 seconds west along the west side of Lakewood Park Entrance
Road a distance of 25.05 feet to an iron pin found in the intersection formed by
the west side of Lakewood Park Entrance Road and the north line of the
right-of-way of Lakewood running thence south 86 degrees 31 minutes 57 seconds
west along the north line of the right-of-way of Lakewood Way a distance of
1,119.33 feet to an iron pin found; running thence north 57 degrees and 14
minutes 39 seconds west along the northeast line of the right-of-way of Lakewood
Way a distance of 24.92 feet to the POINT OF BEGINNING; being property depicted
as 3.80 acres on that certain blueprint of survey, to which reference is made
for all purposes, prepared by and bearing the certification of Donald K. Stokes,
Georgia Registered Land Surveyor No. 1896, dated April 1977; being property
developed as the Southeast Atlanta Neighborhood Facility pursuant to a
Resolution proposed by the Human Resources Committee under date of August 3,
1976, adopted by the Council of the City of Atlanta on August 16, 1976 and
approved by the Mayor on August 20, 1976.
<PAGE>
LESS AND EXCEPT that portion of the above-described property lying and being in
Land Lot 72 of the 14th District of Fulton County, Georgia and being an area of
5.42 acres as shown on General Site Plan of the Lakewood Substation as attached
hereto and made a part hereof and also filed in the Office of Engineering,
Department of Environment and Streets, City of Atlanta.
<PAGE>
EXHIBIT B
Tenant has the right anytime up to and including the Start Date to designate
whether this Exhibit B or Exhibit B - Alternate will be deemed to be "Exhibit B"
for purposes of Section 5 of Agreement Regarding Sublease.
(Graphic omitted)
Sublessor has requested that tenant utilize as little of parking Area X as
possible and Tenant will in good faith attempt to accommodate this request but
sublessee's determination in its sole discretion as to the frequency and extent
of parking usage of the aforementioned Area X shall be final and binding.
MCA AMPHITHEATRE
AT THE LAKEWOOD FAIRGROUNDS [LOGO] The Blurock Partnership
ATLANTA, GEORGIA Architects and Planners
<PAGE>
EXHIBIT B - ALTERNATE
Tenant has the right anytime up to and including the Start Date to designate
whether this Exhibit B - Alternate or Exhibit B will be deemed to be the
"Exhibit B" for purposes of Section 5 of Agreement Regarding Sublease.
(Graphic omitted)
MCA AMPHITHEATRE
AT THE LAKEWOOD FAIRGROUNDS ATLANTA, GEORGIA [LOGO] The Blurock Partnership
Architects and Planners
<PAGE>
FIRST AMENDMENT TO SUBLEASE
This Amendment is executed as of 1/21, 1988 between Filmworks U.S.A., Inc.
("Sublessor") and MCA Concerts, Inc. ("Tenant") and amends the Sublease between
the same parties executed as of 1/20, 1988 (the "Original Sublease") pertaining
to a portion of the approximately 117 acre parcel commonly known as Lakewood
Fairgrounds. The capitalized terms used in this Amendment shall have the same
meaning as the same terms in the Original Sublease.
Sublessor and Tenant agree to amend the Original Sublease as follows:
1. Dickerson Agreement. Tenant has entered into an Agreement (the
"Dickerson Agreement") with Jerry Dickerson ("JD") as of _______________, 1988.
One of the inducements for Tenant to execute the Dickerson Agreement was certain
assurances given to Tenant by Sublessor that Sublessor would participate in
certain of the burdens imposed upon Tenant under the Dickerson Agreement, and
Sublessor acknowledges that Tenant would not have entered into the Dickerson
Agreement without such assurances from Sublessor, which assurances are
memorialized in this Amendment.
2. Consideration. The consideration for Sublessor's execution of this
Amendment is Tenant's execution of the Dickerson Agreement, and Sublessor
acknowledges that Tenant executed the Dickerson Agreement in reliance on
Sublessor's promise to execute this Amendment.
3. Recoupment of $25,000. Subsection 5.1 of the Dickerson Agreement
provides for Tenant to make a payment to Dickerson of $125,000. Of this
$125,000, $25,000 is recoupable by Tenant out of first monies payable to JD by
Tenant pursuant to Section 4 and/or Section 5.2 of the Dickerson Agreement. An
additional $25,000 of Tenant's payment to JD shall be borne by Sublessor by
allowing Tenant to offset $25,000 without interest, from the first monies
otherwise due Sublessor by Tenant pursuant to the Original Sublease excluding
the first $150,000 payable under the Sublease (including in that $150,000, any
prepaid sums under Subsection 4.2.1 of the Original Sublease).
- 1 -
1/15/88
<PAGE>
4. Recoupment of 6% Payments. Subsection 5.2 of the Dickerson Agreement
provides for Tenant to make payments to JD in an amount equal to 6% of the rent
paid by Tenant to Sublessor. Sublessor shall, during the entire Lease Term, bear
one-half of the burden of making the payments to JD specified in Subsection 5.2
of the Dickerson Agreement (i.e. Sublessor shall pay to Tenant an amount equal
to 3% of the rent paid by Tenant to Sublessor under the Sublease -- computed
without taking into account the offset provided for in Section 3 above and this
Section 4). In order to give effect to Sublessor's contribution to the 6%
payment to JD, Tenant shall be entitled to offset an amount equal to one-half of
the 6% payment due JD against rent and any other sums otherwise due Sublessor by
Tenant pursuant to the Original Sublease as of the first day of the calendar
month in which Tenant is obligated to make a payment of said 6% to JD, and if
Tenant in good faith believes that the amount of monies subject to offset on
said date will be insufficient to cover Sublessor's one-half share of the
payment due JD, Tenant may begin offsetting earlier to such extent as Tenant
believes in good faith is necessary so that by the time Tenant makes the payment
to JD, the Tenant will have offset Sublessor's one-half share of the payment.
5. Annual Festival. Section 6 of the Dickerson Agreement provides for the
Amphitheatre to be made available to JD each year for a one or two day annual
festival (the "Festival"). Whether the Festival is a one day or a two day event,
Sublessor waives its right to receive any percentage rent computed on net ticket
revenues as provided in Subsection 4.3.2.1 of the Original Sublease and on any
consideration received in connection with sponsorships as provided in
Subsections 4.3.2.2 and 4.3.2.3 of the Original Sublease arising in connection
with a festival, and Sublessor's only right to receive percentage rent in
connection with a festival shall be based upon income derived by Sublessor from
concessions, merchandising, and parking. If a festival is a two day event
instead of a one day event all the above provisions shall apply and without
derogating from the generality of the foregoing Sublessor shall not be entitled
to any percentage rent based upon the 50/50 split of profits as provided in
subsection 6.5 of the Dickerson Agreement but will be entitled to treat rent, if
any, paid by JD to Tenant under Subsection 6.6 of the Dickerson Agreement as
income from a Rental Arrangement under the Original Sublease and, after
deducting
- 2 -
<PAGE>
Direct Costs therefrom, as Rental Net as provided in Subsections 4.3.2.4 and
4.3.3.3 of the Original Sublease.
6. Original Sublease in Effect. Except as expressly amended hereby the
Original Sublease remains in full force and effect.
Filmworks U.S.A., Inc. MCA Concerts, Inc.
By By /s/ Marc Bension
--------------------------- ---------------------------
- 3 -
<PAGE>
SECOND AMENDMENT TO SUBLEASE
This Amendment is executed as of 4/19/, 1988 between Filmworks U.S.A.,
Inc. ("Sublessor") and MCA Concerts, Inc. ("Tenant") and amends the Sublease
between the same parties executed as of January 20, 1988 (the "Origina1
Sublease") pertaining to a portion of the approximately 117 acre panel commonly
known as Lakewood Fairgrounds. The Original Sublease has been amended by the
First Amendment to Sublease dated January 21, 1988. The capitalized terms used
in this Amendment shall have the same meaning as the same terms in the Original
Sublease.
Sublessor and Tenant agree to amend the Original Sublease as
previously amended as follows:
1. Sharing Agreement. If Tenant enters into an arrangement with a
foundation or other organization ("Association") pursuant to which Tenant would
pay Association a sum not to exceed 25 cents per ticket for each ticket sold at
the Site during a particular calender year in excess of 125,000 tickets in that
year, Sublessor shall, during the entire Lease Term, bear one-half of the burden
of making the per ticket payments to Association which are specified above
provided that Sublessor's one-half of the burden shall not exceed 12 1/2 cents
per ticket. In order to give effect to Sublessor's obligation to bear up to 12
1/2 cents per ticket, Tenant shall be entitled to offset an amount equal to
one-half of the per ticket payment made to Association (but not to exceed an
offset of 12 1/2 cents per ticket) against rent and any other sums otherwise due
Sublessor by Tenant pursuant to the Original Sublease as amended. Tenant may
exercise the aforementioned offset rights at such time as Tenant believes in
good faith is necessary so that by the time Tenant makes any payment to
Association, Tenant will have offset Sublessor's one-half share of such payment.
2. Dickerson Agreement.
Reference is made to Section 1 of the First Amendment to Sublease. The
reference therein to the Dickerson Agreement is hereby modified to refer to the
Agreement dated as of
- 1 -
<PAGE>
February 2, 1988 as executed between Tenant and Dickerson Outdoor Entertainment
Corporation (together with the Jerry Dickerson Agreement between Tenant and
Jerry Dickerson personally), a copy of which is attached hereto and incorporated
herein by this reference which incorporated Agreement with Dickerson Outdoor
Entertainment Corporation is hereby substituted in lieu of the earlier
unexecuted draft between Tenant and Jerry Dickerson personally.
3. Consideration. The consideration for Sublessor's execution of this
Amendment includes, but is not limited to, Tenant's entering into the Agreement
with Dickerson Outdoor Entertainment Corporation referred to in paragraph 2
above. In addition, if Tenant has entered into or does enter into the above
described arrangements with the Association, Sublessor acknowledges that Tenant
will have done so or will be doing so in reliance on Sublessor's promise to
execute this Amendment.
4. Original Sublease as Previously Amended in Effect. Except as amended
hereby, the 0riginal Sublease as previously amended remains in full force and
effect.
Filmworks U.S.A., Inc. MCA Concerts, Inc.
By /s/ Edwin D. Spivia By /s/ Marc Bension
---------------------------- ----------------------------
its President
- 2 -
<PAGE>
THIRD AMENDMENT TO SUBLEASE
THIS AMENDMENT is executed as of September 15, 1988 between FILMWORKS
U.S.A., INC. ("Sublessor") and MCA CONCERTS, INC. ("Tenant") and amends the
Sublease between the same parties executed as of January 20, 1988 (the "Original
Sublease") pertaining to a portion of the approximately 117 acre parcel commonly
known as Lakewood Fairgrounds. The Original Sublease has been amended by the
First Amendment to Sublease executed as of January 21, 1988 and by the Second
Amendment to Sublease executed as of April 19, 1988. The capitalized terms used
in this Amendment shall have the same meaning as the same terms in the Original
Sublease.
Sublessor and Tenant agree to amend the Original Sublease, as previously
amended, as follows:
1. Termination of Obligations to City. If the obligations Tenant has to
the City of Atlanta (the "City") are terminated pursuant to termination rights
set forth in Section 4.3 or Section 4.8 of the Agreement by and between the City
of Atlanta and MCA Concerts, Inc., dated as of October 10, 1988 (the "City-MCA
Agreement"), Tenant shall have the right to terminate the Original Sublease, as
amended, and to retain any amounts paid by the City to Tenant pursuant to said
Section 4.8. The foregoing sentence shall not, however, entitle Tenant to a
refund of the first $150,000 in minimum rent prepaid pursuant to Subsection
4.2.1 of the Original Sublease or to any additional rentals paid or due to be
paid by Tenant to Sublessor pursuant to Subsection 4.2.2 of the Original
Sublease for the period prior to termination of the Original Sublease, as
amended, under the foregoing sentence. Except as expressly specified above,
Sublessor's rights under the Original Sublease, as amended, shall be neither
adversely affected nor abridged under the City-MCA Agreement. In the event of
any termination of the Original Sublease, as amended, pursuant to this Section 1
of this Amendment, Tenant shall have no obligation to restore the Project Area
(or any portion thereof) in any manner whatsoever or to remove or demolish any
partially or fully completed Improvements or other property and Sublessor's and
Tenant's respective right, title and interest in and to the Improvements and
other property at the Project Area shall be in accordance with the provisions of
the Original Sublease, as amended.
2. Consideration. The consideration for Sublessor's execution of this
Amendment includes, but is not limited to, Tenant's entering into an agreement
with the City pursuant to which Tenant agrees, subject to certain terms and
conditions, to construct the Amphitheatre.
<PAGE>
3. Original Sublease as Previously Amended in Effect. Except as amended
hereby, the Original Sublease as previously amended remains in full force and
effect.
FILMWORKS U.S.A., INC.
By /s/ Edwin D. Spivia
---------------------------------
Name Edwin D. Spivia
Title President
MCA CONCERTS, INC.
By /s/ Marc Bension
---------------------------------
Name Marc Bension
Title President
-2-
<PAGE>
EXECUTION COPY
4155q
MEMORANDUM OF AGREEMENT
THIS MEMORANDUM OF AGREEMENT (this "Memorandum") is made and entered into
as of the 10th day of October, 1988, by and between THE CITY OF ATLANTA, a
municipal corporation chartered pursuant to the law of the State of Georgia
("City"), and MCA CONCERTS, INC., a California corporation ("MCA").
City and MCA have executed and entered into that certain Agreement between
the City of Atlanta and MCA Concerts, Inc., dated as of even date herewith (the
"Agreement"), whereby City and MCA make certain agreements upon the terms and
conditions set forth in the Agreement. The Agreement relates to (i) that certain
Amended Indenture of Lease between City and Filmworks U.S.A., Inc., a Georgia
corporation, dated February 2, 1984, and recorded in Book 8831, Page 185 of the
Records of the Clerk of the Superior Court of Fulton County, Georgia, as
amended, (ii) that certain Sublease between Filmworks U.S.A., Inc., and MCA,
dated as of January 20, 1988, as amended, a memorandum of which is recorded in
the aforesaid Records, and (iii) that certain real property which is situated in
Fulton County, Georgia, and described in Exhibit A, attached hereto and by this
reference incorporated herein. The Agreement is on file in the offices of City
and MCA.
IN WITNESS WHEREOF, City and MCA, acting through their respective duly
authorized officers or representatives, have duly executed this Memorandum under
seal as of the day and year first above written.
Signed, sealed, and delivered MCA CONCERTS, INC.,
this 17th day of October, 1988, a California corporation
in the presence of:
/s/ [ILLEGIBLE] By /s/ Marc Bension
- --------------------------- ---------------------------
Unofficial Witness Name Marc Bension
Title President
/s/ Linda Jo Brown
- ---------------------------
Notary Public Attest /s/ Robert Biniaz
-----------------------
Name Robert Biniaz
My commission expires: Title Vice-President
July 10, 1992 [CORPORATE SEAL]
- ---------------------------
[Notary Seal]
- -------------------------------------
LINDA JO BROWN
[SEAL] NOTARY PUBLIC - CALIFORNIA
CITY AND COUNTY OF
LOS ANGELES
My Commission Expires July 10, 1992
- -------------------------------------
[Signatures continued on next page]
<PAGE>
Signed, sealed, and delivered CITY OF ATLANTA,
this 25th day of October 1988, a municipal corporation
in the presence of: of the State of Georgia
/s/ Vicki Moore By /s/ Andrew Young
- --------------------------- ---------------------------
Unofficial Witness Name Andrew Young
Title Mayor
/s/ [ILLEGIBLE] Recommended:
- ---------------------------
Notary Public
/s/ [ILLEGIBLE]
My commission expires: -------------------------------
Chief Administrative Officer
Notary Public, Gwinnett County, Georgia
My Commission Expires Apr. 9, 1992
[Notary Seal] Attest /s/ [ILLEGIBLE]
------------------------
Name
Title: [ILLEGIBLE]
[CORPORATE SEAL]
Recommended:
/s/ Betsy C. Baker
--------------------------------
Commissioner of Parks,
Recreation and Cultural
Affairs
Recommended:
/s/ [ILLEGIBLE]
--------------------------------
Commissioner of Finance
Recommended:
/s/ [ILLEGIBLE]
--------------------------------
Commissioner of Public Works
Approved as to form on
behalf of City of Atlanta:
/s/ [ILLEGIBLE]
--------------------------------
Assistant City Attorney
-2-
<PAGE>
EXHIBIT A
Legal Description of Lakewood
<PAGE>
All that tract or parcel of land lying and being in Land Lots 58, 71 and 72 of
the 14th District of Fulton County, Georgia and being more particularly
described as follows:
BEGINNING at a nail placed in the intersection formed by the centerline of South
Pryor Road (abandoned on June 4, 1958) and the southwest line of the
right-of-way of Claire Drive (being a 50 foot right-of-way); running thence
southeasterly along the southwest line of the right-of-way of Claire Drive, and
following the curvature thereof, a distance of 1379.3 feet to an iron pin
placed; running thence south 35 degrees 48 minutes west a distance of 481.9 feet
to an iron pin placed; running thence south 51 degrees 17 minutes 00 seconds
east a distance of 1096.0 feet to an iron pin placed; running thence south 45
degrees 14 minutes 30 seconds east a distance of 220.0 feet to an iron pin
placed; running thence south 74 degrees 29 minutes east a distance of 320.0 feet
to the center of a manhole; running thence south 46 degrees 29 minutes east a
distance of 326.3 feet to an iron pin placed on the northwest line of the
right-of-way of Lakewood Avenue (being a 60 foot right-of-way), said iron pin
placed being at a point 518.0 feet southwest, as measured along the northwest
line of the right-of-way of Lakewood Avenue, from the intersection formed by the
northwest line of the right-of-way of Lakewood Avenue and the southwest line of
the right-of-way of Shadydale Avenue; running thence southwesterly along the
northwest line of the right-of-way of Lakewood Avenue, and following the
curvature thereof, a distance of 1733.1 feet to an iron pin placed; running
thence north 84 degrees 50 minutes west a distance of 56.6 feet to an iron pin
placed; running thence south 29 degrees 45 minutes west a distance of 33.6 feet
to an iron pin placed; running thence in a westerly and northwesterly direction,
along the arc of a curve having a chord bearing north 65 degrees 22 minutes west
for 967.8 feet, a distance of 970.8 feet to an iron pin placed; running thence
south 87 degrees 46 minutes west along the north line of the right-of-way of
Lakewood Way (being a 60 foot right-of-way) a distance of 1176.2 feet to an iron
pin found in the intersection formed by the north line of the right-of-way of
Lakewood Way and the east line of the right-of-way of Pryor Road (being a 50
foot right-of-way); running thence north 00 degrees 32 minutes east along the
east line of the right-of-way of Pryor Road a distance of 1598.7 feet to a nail
placed in the intersection formed by the east line of the right-of-way of Pryor
Road and the centerline of South Pryor Road (abandoned June 4, 1958); running
thence in a northeasterly, easterly, southeasterly, northeasterly end northerly
direction along the centerline of South Pryor Road and following the curvature
thereof a distance of 2796.3 feet to the POINT OF BEGINNING (said course of
2796.3 feet being comprised of the arcs of the following chords: begin at the
nail placed in the intersection formed by the east line of the right-of-way of
Pryor Road and the centerline of South Pryor Road and run thence north 63
degrees 34 minutes east for 251.9 feet, run thence north 88 degrees 47 minutes
east for 357.8 feet, run thence north 89 degrees 44 minutes east for 272.2 feet,
run thence south 74 degrees 27 minutes east for 458.1 feet, run thence north 55
degrees 49 minutes east for 353.8 feet, run thence north 00 degrees 14 minutes
east for 569.8 feet and run thence north 00 degrees 00 minutes west for 563.4
feet to the nail placed in the intersection formed by the centerline of South
Pryor Road and the southwest line of the right-of-way of Claire Drive); being
property depicted as 132.62 acres on that certain blueprint of survey, to which
reference is made for all purposes, prepared by Watts & Browning, Engineers,
dated May 20, 1970, and bearing the certification of A. W. Browning, Georgia
Registered Land Surveyor No. 490.
TOGETHER WITH all other property, if any, owned by the City of Atlanta in Land
Lots 58, 71 and 72 of the 14th District of Fulton County, Georgia, within the
area which is bounded on the west by the above
<PAGE>
described property, on the south by Lakewood Avenue, on the east by Shadydale
Avenue and on the north by Claire Drive, BUT NOT INCLUDING the rights of the
City of Atlanta in and to (i) the right-of-way of any road, street or highway
dedicated to public use or (ii) any utility easements or installations.
TOGETHER WITH all rights, members and appurtenances (except as hereinabove
expressly limited) pertaining to the above described property.
LESS AND EXCEPT that portion of the above-described property lying and being in
Land Lot 71 of the 14th District of Fulton County, Georgia and being more
particularly described as follows:
BEGINNING at an iron pin found in the intersection formed by the east line of
the right-of-way of Pryor Road and the north line of the right-of-way of
Lakewood Way and running thence north 00 degrees 49 minutes 17 seconds west
along the east line of right-of-way of Pryor Road a distance of 27.80 feet to an
iron pin found in the intersection formed by the east line of the right-of-way
of Pryor Road and the southeast side of Lakewood Park Entrance Road; running
thence north 62 degrees 40 minutes 00 seconds east along the southeast side of
Lakewood Park Entrance Road a distance of 299.83 feet to an iron pin found;
running thence in a southeasterly, easterly and northeasterly direction, along
the arc of a curve having a chord running north 82 degrees 47 minutes 17 seconds
east for 156.00 feet, a distance of 173.40 feet to an iron pin set; running
thence north 61 degrees 21 minutes 01 seconds east a distance of 92.00 feet to
an iron pin found on the south side of Lakewood Park Entrance Road; running
thence south 86 degrees 17 minutes 01 seconds east along the south side of
Lakewood Park Entrance Road a distance of 277.56 feet to an iron pin found;
running thence south 82 degrees 22 minutes 59 seconds east along the south side
of Lakewood Park Entrance Road a distance of 230.00 feet to an iron pin set;
running south 39 degrees 14 minutes 49 seconds east along the southwest side of
Lakewood Park Entrance Road a distance of 45.00 feet to an iron pin set; running
thence south 57 degrees 45 minutes 17 seconds east along the southwest side of
Lakewood Park Entrance a distance of 125.00 feet to an iron pin found; running
thence south 05 degrees 25 minutes 06 seconds west along the west side of
Lakewood Park Entrance Road a distance of 25.05 feet to an iron pin found in the
intersection formed by the west side of Lakewood Park Entrance Road and the
north line of the right-of-way of Lakewood Way; running thence south 86 degrees
31 minutes 57 seconds west along the north line of the right-of-way of Lakewood
Way a distance of 1,119.33 feet to an iron pin found; running thence north 57
degrees 14 minutes 39 seconds west along the northeast line of the right-of-way
of Lakewood Way a distance of 24.92 feet to the POINT 0F BEGINNING; being
property depicted as 3.80 acres on that certain blueprint of survey, to which
reference is made for all purposes, prepared by and bearing the certification of
Donald K. Stokes, Georgia Registered Land Surveyor No. 1896, dated April
1977; being property developed as the Southeast Atlanta Neighborhood Facility
pursuant to a Resolution proposed by the Human Resources Committee under
date of August 3, 1976, adopted by the Council of the City of Atlanta on August
16, 1976 and approved by the Mayor on August 20, 1976.
<PAGE>
LESS AND EXCEPT that portion of the above-described property lying and being in
Land Lot 72 of the 14th District of Fulton County, Georgia and being an area of
5.42 acres as shown on General Site Plan of the Lakewood Substation as attached
hereto and made a part hereof and also filed in the Office of Engineering,
Department of Environment and Streets, City of Atlanta.
<PAGE>
GEORGIA Fulton County Clerk's Office Superior Court
Filed & Recorded June 28, 1989 at 2:31
/s/ Juanita Hicks CLERK
-------------
ASSIGNMENT OF SUBLEASE
THE STATE OF GEORGIA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF FULTON )
WHEREAS, by that certain Sublease dated as of January 20, 1988,
executed by Filmworks U.S.A., Inc., a Georgia corporation ("Filmworks"), and MCA
Concerts, Inc., a California corporation ("MCA"), a memorandum of which is
recorded in Book 12239, Page 59 of the Records of the Clerk of the Superior
Court of Fulton County, as amended (the "Sublease"), Filmworks and MCA have made
certain covenants and agreements which relate to (i) that certain Amended
Indenture of Lease between The City of Atlanta, a municipal corporation, and
Filmworks dated February 2, 1984 and recorded in Book 8831, Page 185 of the
aforesaid Records, as amended, and (ii) that certain real property which is
situated in Fulton County, Georgia, and described in Exhibit A, attached hereto
and by this reference incorporated herein;
WHEREAS, MCA has agreed to assign, transfer and convey to MCA
Concerts II, Inc., a California corporation ("Assignee"), all of MCA's rights
and interest in, to and under the Sublease, and, subject to the terms and
conditions herein provided, Assignee agrees to accept said assignment, transfer
and conveyance upon said terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained:
1. MCA has granted, bargained, sold, assigned, conveyed, transferred
and set over, and by these presents, does grant, bargain, sell, assign, convey,
transfer and set over unto Assignee, its successors and assigns, all the rights,
titles and interests of MCA in, to and under the Sublease.
TO HAVE AND TO HOLD all the same unto Assignee, its successors and
assigns, forever, and MCA does hereby bind itself and its successors and legal
representatives to warrant and forever defend the rights, titles and interests
in and under the Sublease against every person whomsoever lawfully claiming the
same or any part thereof by, through or under MCA, but not otherwise.
2. Assignee hereby accepts, assumes and agrees to be and become and
remain liable for all payments and other charges payable under the Sublease
accruing from and after the effective date of this assignment and for the due
performance of all the covenants, agreements, terms and provisions of the
Sublease, on
<PAGE>
MCA's part to be performed, accruing from and after the effective date of this
assignment. Assignee hereby agrees to indemnify, defend and save harmless MCA of
and from all fines, suits, claims, demands, losses and actions (including
reasonable attorneys' fees) arising out of or resulting from the failure of
Assignee to so pay and perform such obligations or by reason of any injury or
death to persons or damage to or loss of property on or about the aforesaid real
property from and after the effective date of this Assignment.
3. This Assignment of Sublease shall bind and inure to the benefit
of MCA and Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, MCA has caused this instrument to be executed
under seal and Assignee in token of its acceptance of the assignment, transfer
and conveyance herein made upon the terms and conditions herein provided, and of
its assumption and agreement to perform and to be bound by all of the terms,
conditions, obligations, undertakings and agreements of MCA contained in the
Sublease hereafter to be performed, has executed this instrument under seal,
effective as of the 15th day of June, 1989.
MCA:
As to MCA Concerts, Inc. MCA CONCERTS, INC.,
and the execution by its a California corporation
officers, signed, sealed
and delivered this 15th
day of June, 1989 BY: /s/ Marc Bension
in the presence of: ---------------------
Name: Marc Bension
Title: President
/s/ Dawn Ballard
- ----------------
Unofficial Witness ATTEST: /s/ Robert Biniaz
--------------------
Name: Robert Biniaz
-------------------
Title: Executive V.P.
-------------------
/s/ Linda Jo Brown
- ------------------
Notary Public [Corporate Seal]
My Commission Expires:
July 10, 1992
- -------------------------
(Notarial Seal) BOOK 12603 PAGE 222
-2-
<PAGE>
ASSIGNEE:
As to MCA Concerts II, Inc. MCA CONCERTS II, INC.,
and the execution by its a California corporation
officers, signed, sealed
and delivered this 15th
day of June, 1989 BY: /s/ Marc Bension
in the presence of: ---------------------
Name: Marc Bension
Title: President
/s/ Dawn Ballard
- ----------------
Unofficial Witness ATTEST: /s/ Robert Biniaz
--------------------
Name: Robert Biniaz
-------------------
Title: Executive V.P.
-------------------
/s/ Linda Jo Brown
- ------------------
Notary Public [Corporate Seal]
My Commission Expires:
July 10, 1992
- -------------------------
(Notarial Seal) BOOK 12603 PAGE 223
-3-
<PAGE>
EXHIBIT "A"
All that tract or parcel of land lying and being in Land Lots 58, 71 and 72 of
the 14th District of Fulton County, Georgia and being more particularly
described as follows:
BEGINNING at a nail placed in the intersection formed by the centerline of South
Pryor Road (abandoned on June 4, 1958) and the southwest line of the
right-of-way of Claire Drive (being a 50 foot right-of-way); running thence
southeasterly along the southwest line of the right-of-way of Claire Drive, and
following the curvature thereof, a distance of 1379.3 feet to an iron pin
placed; running thence south 35 degrees 48 minutes west a distance of 481.9 feet
to an iron pin placed; running thence south 51 degrees 17 minutes 00 seconds
east a distance of 1096.0 feet to an iron pin placed; running thence south 45
degrees 14 minutes 30 seconds east a distance of 220.0 feet to an iron pin
placed; running thence south 74 degrees 29 minutes east a distance of 320.0 feet
to the center of a manhole; running thence south 46 degrees 29 minutes east a
distance of 326.3 feet to an iron pin placed on the northwest line of the
right-of-way of Lakewood Avenue (being a 60 foot right-of-way), said iron pin
placed being at a point 518.0 feet southwest, as measured along the northwest
line of the right-of-way of Lakewood Avenue, from the intersection formed by the
northwest line of the right-of-way of Lakewood Avenue and the southwest line of
the right-of-way of Shadydale Avenue; running thence southwesterly along the
northwest line of the right-of-way of Lakewood Avenue, and following the
curvature thereof, a distance of 1733.1 feet to an iron pin placed; running
thence north 84 degrees 50 minutes west a distance of 56.6 feet to an iron pin
placed; running thence south 29 degrees 45 minutes west a distance of 33.6 feet
to an iron pin placed; running thence in a westerly and northwesterly direction,
along the arc of a curve having a chord bearing north 65 degrees 22 minutes west
for 967.8 feet, a distance of 970.8 feet to an iron pin placed; running thence
south 87 degrees 46 minutes west along the north line of the right-of-way of
Lakewood Way (being a 60 foot right-of-way) a distance of 1176.2 feet to an iron
pin found in the intersection formed by the north line of the right-of-way of
Lakewood Way and the east line of the right-of-way of Pryor Road (being a 50
foot right-of-way); running thence north 00 degrees 32 minutes east along the
east line of the right-of-way of Pryor Road a distance of 1598.7 feet to a nail
placed in the intersection formed by the east line of the right-of-way of Pryor
Road and the centerline of South Pryor Road (abandoned June 4, 1958); running
thence in a northeasterly, easterly, southeasterly, northeasterly and northerly
direction along the centerline of South Pryor Road and following the curvature
thereof a distance of 2796.3 feet to the POINT OF BEGINNING (said course of
2796.3 feet being comprised of the arcs of the following chords: begin at the
nail placed in the intersection formed by the east line of the right-of-way of
Pryor Road and the centerline of South Pryor Road and run thence north 63
degrees 34 minutes east for 251.9 feet, run thence north 88 degrees 47 minutes
east for 357.8 feet, run thence north 89 degrees 44 minutes east for 272.2 feet,
run thence south 74 degrees 27 minutes east for 458.1 feet, run thence north 55
degrees 49 minutes east for 353.8 feet, run thence north 00 degrees 14 minutes
east for 569.8 feet and run thence north 00 degrees 00 minutes west for 563.4
feet to the nail placed in the intersection formed by the centerline of South
Pryor Road and the southwest line of the right-of-way of Claire Drive); being
property depicted as 132.62 acres on that certain blueprint of survey, to which
reference is made for all purposes, prepared by Watts & Browning, Engineers,
dated May 20, 1970, and bearing the certification of A. W. Browning, Georgia
Registered Land Surveyor No. 490.
<PAGE>
EXHIBIT "A"
TOGETHER WITH all other property, if any, owned by the City of Atlanta in Land
Lots 58, 71 and 72 of the 14th District of Fulton County, Georgia within the
area which is bounded on the west by the above described property, on the south
by Lakewood Avenue, on the east by Shadydale Avenue and on the north by Claire
Drive, BUT NOT INCLUDING the rights of the City of Atlanta in and to (i) the
right-of-way of any road, street or highway dedicated to public use or (ii) any
utility easements or installations.
TOGETHER WITH all rights, members and appurtenances (except as hereinabove
expressly limited) pertaining to the above described property.
LESS AND EXCEPT that portion of the above-described property lying and being in
Land Lot 71 of the 14th District of Fulton County, Georgia and being more
particularly described as follows:
BEGINNING at an iron pin found in the intersection formed by the east line of
the right-of-way of Pryor Road and the north line of the right-of-way of
Lakewood Way and running thence north 00 degrees 49 minutes 17 seconds west
along the east line of right-of-way of Pryor Road a distance of 27.80 feet to an
iron pin found in the intersection formed by the east line of the right-of-way
of Pryor Road and the southeast side of Lakewood Park Entrance Road; running
thence north 62 degrees 40 minutes 00 seconds east along the southeast side of
Lakewood Park Entrance Road a distance of 299.83 feet to an iron pin found;
running thence in a southeasterly, easterly and northeasterly direction, along
the arc of a curve having a chord running north 82 degrees 47 minutes 17 seconds
east for 156.00 feet, a distance of 173.40 feet to an iron pin set; running
thence north 61 degrees 21 minutes 01 seconds east a distance of 92.00 feet to
an iron pin found on the south side of Lakewood Park Entrance Road; running
thence south 86 degrees 17 minutes 01 seconds east along the south side of
Lakewood Park Entrance Road a distance of 277.56 feet to an iron pin found;
running thence south 82 degrees 22 minutes 59 seconds east along the south side
of Lakewood Park Entrance Road a distance of 230.00 feet to an iron pin set;
running south 39 degrees 14 minutes 49 seconds east along the southwest side of
Lakewood Park Entrance Road a distance of 45.00 feet to an iron pin set; running
thence south 57 degrees 45 minutes 17 seconds east along the southwest side of
Lakewood Park Entrance a distance of 125.00 feet to an iron pin found; running
thence south 05 degrees 25 minutes 06 seconds west along the west side of
Lakewood Park Entrance Road a distance of 25.05 feet to an iron pin found in the
intersection formed by the west side of Lakewood Park Entrance Road and the
north line of the right-of-way of Lakewood Way; running thence south 86 degrees
31 minutes 57 seconds west along the north line of the right-of-way of Lakewood
Way a distance of 1,119.33 feet to an iron pin found; running thence north 57
degrees 14 minutes 39 seconds west along the northeast line of the right-of-way
of Lakewood Way a distance of 24.92 feet to the POINT OF BEGINNING; being
property depicted as 3.80 acres on that certain blueprint of survey, to which
reference is made for all purposes, prepared by and bearing the certification of
Donald K. Stokes, Georgia Registered Land Surveyor No. 1896, dated April 1977;
being property developed as the Southeast Atlanta Neighborhood Facility pursuant
to a Resolution proposed by the Human Resources Committee under date of August
3, 1976, adopted by the Council of the City of Atlanta on August 16, 1976 and
approved by the Mayor on August 20, 1976.
<PAGE>
EXHIBIT "A"
FURTHER LESS AND EXCEPT that portion of the above described property lying and
being in Land Lot 72 of the 14th District of Fulton County, Georgia, and being
an area of 5.42 acres as shown on General Site Plan of the Lakewood Substation
as filed in the Office of Engineering, Department of Environment and Streets,
City of Atlanta, Georgia.
FURTHER LESS AND EXCEPT that portion of the above described property, if any,
located in Land Lot 58 of the 14th District, and being that property bounded on
the north by the north Land Lot Line of Land Lot 58, on the south by the
southerly right-of-way line of Daleview Drive, and the extension of said line to
the westerly right-of-way line of Shadydale Avenue, on the west by the west land
lot line of Land Lot 58, and on the east by the westerly right-of-way line of
Shadydale Avenue.
<PAGE>
GEORGIA Fulton County Clerk's Office Superior Court
Filed & Recorded June 28, 1989 at 2:31
Juanita [ILLEGIBLE] Clerk
ASSIGNMENT OF SUBLEASE
THE STATE OF GEORGIA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF FULTON )
WHEREAS, by that certain Sublease dated as of January 20, 1988, executed by
Filmworks U.S.A., Inc., a Georgia corporation ("Filmworks"), and MCA Concerts,
Inc., a California corporation ("MCA"), a memorandum of which is recorded in
Book 12239, Page 59 of the Records of the Clerk of the Superior Court of Fulton
County, as amended (the "Sublease"), Filmworks and MCA have made certain
covenants and agreements which relate to (i) that certain Amended Indenture of
Lease between The City of Atlanta, a municipal corporation, and Filmworks dated
February 2, 1984 and recorded in Book 8831, Page 185 of the aforesaid Records,
as amended, and (ii) that certain real property which is situated in Fulton
County, Georgia, and described in Exhibit A, attached hereto and by this
reference incorporated herein;
WHEREAS, MCA has heretofore assigned, transferred and conveyed to MCA
Concerts II, Inc., a California corporation ("Assignor"), all of MCA's rights
and interest in, to and under the Sublease;
WHEREAS, Assignor has agreed to assign, transfer and convey to MCA/PACE
Amphitheatres Group, L.P., a Delaware limited partnership created by Assignor
and PACE Amphitheatres, Inc., a Texas corporation ("Assignee"), all of
Assignor's rights in, to and under the Sublease, and, subject to the terms and
conditions herein provided, Assignee agrees to accept said assignment, transfer
and conveyance upon said terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions herein contained:
l. Assignor has granted, bargained, sold, assigned, conveyed, transferred
and set over, and by these presents, does grant, bargain, sell, assign, convey,
transfer and set over unto Assignee, its successors and assigns, all the rights,
titles and interests of Assignor in, to and under the Sublease.
TO HAVE AND TO HOLD all the same unto Assignee, its successors and assigns,
forever, and Assignor does hereby bind itself and its successors and legal
representatives to warrant and forever defend the rights, titles and interests
in and under the Sublease against every person whomsoever lawfully claiming the
same or any part thereof by, through or under Assignor, but not otherwise.
BOOK 12603 PAGE 233
<PAGE>
2. Assignee hereby accepts, assumes and agrees to be and become and remain
liable for all payments and other charges payable under the Sublease accruing
from and after the effective date of this assignment and for the due performance
of all the covenants, agreements, terms and provisions of the Sublease, on
Assignor's part to be performed, accruing from and after the effective date of
this assignment. Assignee hereby agrees to indemnify, defend and save harmless
Assignor of and from all fines, suits, claims, demands, losses and actions
(including reasonable attorneys' fees) arising out of or resulting from the
failure of Assignee to so pay and perform such obligations or by reason of any
injury or death to persons or damage to or loss of property on or about the
aforesaid real property from and after the effective date of this Assignment.
3. This Assignment of Sublease shall bind and inure to the benefit of
Assignor and Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, Assignor has caused this instrument to be executed
under seal and Assignee in token of its acceptance of the assignment, transfer
and conveyance herein made upon the terms and conditions herein provided, and of
its assumption and agreement to perform and to be bound by all of the terms,
conditions, obligations, undertakings and agreements of Assignor contained in
the Sublease hereafter to be performed, has executed this instrument under seal,
effective as of the day of June 23rd, 1989.
ASSIGNOR:
As to MCA Concerts II, Inc. MCA CONCERTS II, INC.,
and the execution by its a California corporation
officers, signed, sealed
and delivered this 15th By: /s/ Marc Bension
day of June, 1989 ---------------------------
in the presence of: Name: Marc Bension
---------------------
Title: President
---------------------
/s/ Dawn Ballard
- -------------------------- ATTEST: /s/ Robert Biniaz
Unofficial Witness -----------------------
Name: Robert Biniaz
/s/ Linda Jo Brown ---------------------
- -------------------------- Title: Exec. V.P.
Notary Public ---------------------
My Commission Expires: [Corporate Seal]
July 10, 1992
- -------------------------- [Corporate seal inside circle]
(Notarial Seal)
- -----------------------------------
[seal] LINDA JO BROWN
NOTARY PUBLIC - CALIFORNIA
CITY AND COUNTY OF
LOS ANGELES
My Commission Expires July 10, 1992
- -----------------------------------
BOOK 12603 PAGE 234
-2-
<PAGE>
ASSIGNEE:
As to MCA/PACE Amphitheatres MCA/PACE AMPHITHEATRES GROUP,
Group, L.P. and the execution L.P., a Delaware limited
by its general partner, MCA partnership
Concerts II, Inc., signed,
sealed and delivered this 15th By: MCA CONCERTS, II, INC.,
day of June, 1989 in a California corporation, one
the presence of: of two general partners
/s/ Dawn Ballard BY: /s/ Marc Bension
- -------------------------- ---------------------------
Unofficial Witness Name: Marc Bension
---------------------
/s/ Linda Jo Brown Title: Pres
- -------------------------- ---------------------
Notary Public
ATTEST: /s/ Robert Biniaz
My Commission Expires: -----------------------
Name: Robert Biniaz
July 10, 1992 ---------------------
- -------------------------- Title: Exec. V.P.
(Notarial Seal) ---------------------
- -----------------------------------
[seal] LINDA JO BROWN [Corporate Seal]
NOTARY PUBLIC - CALIFORNIA
CITY AND COUNTY OF
LOS ANGELES [Corporate seal inside circle]
My Commission Expires July 10, 1992
- -----------------------------------
As to MCA/PACE Amphitheatres PACE AMPHITHEATRES, INC.,
Group, L.P. and the execution a Texas corporation, one
by its general partner, PACE of two partners
Amphitheatres, Inc., signed,
sealed and delivered this [ILLEGIBLE]
day of [ILLEGIBLE], 1989 in BY: /s/ ILLEGIBLE
the presence of: ---------------------------
Name: ILLEGIBLE
/s/ [ILLEGIBLE] ---------------------
- -------------------------- Title: ILLEGIBLE
Unofficial Witness ---------------------
/s/ [ILLEGIBLE] ATTEST: /s/ [ILLEGIBLE]
- -------------------------- -----------------------
Notary Public Name: [ILLEGIBLE]
---------------------
My Commission Expires: Title: Vice President
---------------------
[ILLEGIBLE] [Corporate Seal]
- --------------------------
(Notarial Seal)
[N.P. SEAL IN CIRCLE]
BOOK 12603 PAGE 235
-3-
<PAGE>
EXHIBIT "A"
All that tract or parcel of land lying and being in Land Lots 58, 71 and 72 of
the 14th District of Fulton County, Georgia and being more particularly
described as follows:
BEGINNING at a nail placed in the intersection formed by the centerline of South
Pryor Road (abandoned on June 4, 1958) and the southwest line of the
right-of-way of Claire Drive (being a 50 foot right-of-way); running thence
southeasterly along the southwest line of the right-of-way of Claire Drive, and
following the curvature thereof, a distance of 1379.3 feet to an iron pin
placed; running thence south 35 degrees 48 minutes west a distance of 481.9 feet
to an iron pin placed; running thence south 51 degrees 17 minutes 00 seconds
east a distance of 1096.0 feet to an iron pin placed; running thence south 45
degrees 14 minutes 30 seconds east a distance of 220.0 feet to an iron pin
placed; running thence south 74 degrees 29 minutes east a distance of 320.0 feet
to the center of a manhole; running thence south 46 degrees 29 minutes east a
distance of 326.3 feet to an iron pin placed on the northwest line of the
right-of-way of Lakewood Avenue (being a 60 foot right-of-way), said iron pin
placed being at a point 518.0 feet southwest, as measured along the northwest
line of the right-of-way of Lakewood Avenue, from the intersection formed by the
northwest line of the right-of-way of Lakewood Avenue and the southwest line of
the right-of-way of Shadydale Avenue; running thence southwesterly along the
northwest line of the right-of-way of Lakewood Avenue, and following the
curvature thereof, a distance of 1733.1 feet to an iron pin placed; running
thence north 84 degrees 50 minutes west a distance of 56.6 feet to an iron pin
placed; running thence south 29 degrees 45 minutes west a distance of 33.6 feet
to an iron pin placed; running thence in a westerly and northwesterly direction,
along the arc of a curve having a chord bearing north 65 degrees 22 minutes west
for 967.8 feet, a distance of 970.8 feet to an iron pin placed; running thence
south 87 degrees 46 minutes west along the north line of the right-of-way of
Lakewood Way (being a 60 foot right-of-way) a distance of 1176.2 feet to an iron
pin found in the intersection formed by the north line of the right-of-way of
Lakewood Way and the east line of the right-of-way of Pryor Road (being a 50
foot right-of-way); running thence north 00 degrees 32 minutes east along the
east line of the right-of-way of Pryor Road a distance of 1598.7 feet to a nail
placed in the intersection formed by the east line of the right-of-way of Pryor
Road and the centerline of South Pryor Road (abandoned June 4, 1958); running
thence in a northeasterly, easterly, southeasterly, northeasterly and northerly
direction along the centerline of South Pryor Road and following the curvature
thereof a distance of 2796.3 feet to the POINT OF BEGINNING (said course of
2796.3 feet being comprised of the arcs of the following chords: begin at the
nail placed in the intersection formed by the east line of the right-of-way of
Pryor Road and centerline of South Pryor Road and run thence north 63 degrees
34 minutes east for 251.9 feet, run thence north 88 degrees 47 minutes east for
357.8 feet, run thence north 89 degrees 44 minutes east for 272.2 feet, run
thence south 74 degrees 27 minutes east for 458.1 feet, run thence north 55
degrees 49 minutes east for 353.8 feet, run thence north 00 degrees 14 minutes
east for 569.8 feet and run thence north 00 degrees 00 minutes west for 563.4
feet to the nail placed in the intersection formed by the centerline of South
Pryor Road and the southwest line of the right-of-way of Claire Drive); being
property depicted as 132.62 acres on that certain blueprint of survey, to which
reference is made for all purposes, prepared by Watts & Browning, Engineers,
dated May 20, 1970, and bearing the certification of A. W. Browning, Georgia
Registered Land Surveyor No. 490.
BOOK 12603 PAGE 236
<PAGE>
EXHIBIT "A"
TOGETHER WITH all other property, if any, owned by the City of Atlanta in Land
Lots 58, 71 and 72 of the 14th District of Fulton County, Georgia, within the
area which is bounded on the west by the above described property, on the south
by Lakewood Avenue, on the east by Shadydale Avenue and on the north by Claire
Drive, BUT NOT INCLUDING the rights of the City of Atlanta in and to (i) the
right-of-way of any road, street or highway dedicated to public use or (ii) any
utility easements or installations.
TOGETHER WITH all rights, members and appurtenances (except as hereinabove
expressly limited) pertaining to the above described property.
LESS AND EXCEPT that portion of the above-described property lying and being in
Land Lot 71 of the 14th District of Fulton County, Georgia and being more
particularly described as follows:
BEGINNING at an iron pin found in the intersection formed by the east line of
the right-of-way of Pryor Road and the north line of the right-of-way of
Lakewood Way and running thence north 00 degrees 49 minutes 17 seconds west
along the east line of right-of-way of Pryor Road distance of 27.80 feet to an
iron pin found in the intersection formed by the east line of the right-of-way
of Pryor Road and the southeast side of Lakewood Park Entrance Road; running
thence north 62 degrees 40 minutes 00 seconds east along the southeast side of
Lakewood Park Entrance Road a distance of 299.83 feet to an iron pin found;
running thence in a southeasterly, easterly and northeasterly direction, along
the arc of a curve having a chord running north 82 degrees 47 minutes 17 seconds
east for 156.00 feet, a distance of 173.40 feet to an iron pin set; running
thence north 61 degrees 21 minutes 01 seconds east a distance of 92.00 feet to
an iron pin found on the south side of Lakewood Park Entrance Road; running
thence south 86 degrees 17 minutes 01 seconds east along the south side of
Lakewood Park Entrance Road a distance of 277.56 feet to an iron pin found;
running thence south 82 degrees 22 minutes 59 seconds east along the south side
of Lakewood Park Entrance Road a distance of 230.00 feet to an iron pin set;
running south 39 degrees 14 minutes 49 seconds east along the southwest side of
Lakewood Park Entrance Road a distance of 45.00 feet to an iron pin set; running
thence south 57 degrees 45 minutes 17 seconds east along the southwest side of
Lakewood Park Entrance a a distance of 125.00 feet to an iron pin found; running
thence south 05 degrees 25 minutes 06 seconds west along the west side of
Lakewood Park Entrance Road a distance of 25.05 feet to an iron pin found in the
intersection formed by the west side of Lakewood Park Entrance Road and the
north line of the right-of-way of Lakewood Way; thence south 86 degrees 31
minutes 57 seconds west along the north line of the right-of-way of Lakewood Way
a distance of 1,119.33 feet to an iron pin found; running thence north 57
degrees 14 minutes 39 seconds west along the northeast line of the right-of-way
of Lakewood Way a distance of 24.92 feet to the POINT OF BEGINNING; being
property depicted as 3.80 acres on that certain blueprint of survey, to which
reference is made for all purposes, prepared by and bearing the certification of
Donald K. Stokes, Georgia Registered Land Surveyor No. 1896, dated April 1977;
being property developed as the Southeast Atlanta Neighborhood Facility pursuant
to a Resolution proposed by the Human Resources Committee under date of August
3, 1976, adopted by the Council of the City of Atlanta on August 16, 1976 and
approved by the Mayor on August 20, 1976.
BOOK 12603 PAGE 237
<PAGE>
EXHIBIT "A"
FURTHER LESS AND EXCEPT that portion of the above described property lying and
being in Land Lot 72 of the 14th District of Fulton County, Georgia, and being
an area of 5.42 acres as shown on General Site Plan of the Lakewood Substation
as filed in the Office of Engineering, Department of Environment and Streets,
City of Atlanta, Georgia.
FURTHER LESS AND EXCEPT that portion of the above described property, if any,
located in Land Lot 58 of the 14th District, and being that property bounded on
the north by the north Land Lot Line of Land Lot 58, on the south by the
southerly right-of-way line of Daleview Drive, and the extension of said line to
the westerly right-of-way line of Shadydale Avenue, on the west by the west land
lot line of Land Lot 58, and on the east by the westerly right-of-way line of
Shadydale Avenue.
BOOK 12603 PAGE 238
<PAGE>
GEORGIA Fulton County Clerk's Office Superior Court
Filed & Recorded, June 28, 1989 at 2:31
/s/ Juanita Hicks CLERK
ASSIGNMENT OF AGREEMENT
THE STATE OF GEORGIA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF FULTON )
WHEREAS, by that certain Agreement dated as of October 10, 1988,
executed by The City of Atlanta, a municipal corporation (the "City"), and MCA
Concerts, Inc., a California corporation ("MCA"), a memorandum of which is
recorded in Book 12239, Page 70 of the Records of the Clerk of the Superior
Court of Fulton County, as amended (the "Agreement"), the City and MCA have made
certain covenants and agreements which relate to (i) that certain Amended
Indenture of Lease between the City and Filmworks U.S.A., Inc., a Georgia
corporation, dated February 2, 1984 and recorded in Book 8831, Page 185 of the
aforesaid Records, as amended, (ii) that certain Sublease between Filmworks,
U.S.A., Inc. and MCA, dated as of January 20, 1988, a memorandum of which is
recorded in Book 12239, Page 59 of the aforesaid Records, as amended, and (iii)
that certain real property which is situated in Fulton County, Georgia, and
described in Exhibit A, attached hereto and by this reference incorporated
herein;
WHEREAS, MCA has agreed to assign, transfer and convey to MCA
Concerts II, Inc., a California corporation ("Assignee"), all of MCA's rights
and interest in, to and under the Agreement, and, subject to the terms and
conditions herein provided, Assignee agrees to accept said assignment, transfer
and conveyance upon said terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained:
1. MCA has granted, bargained, sold, assigned, conveyed, transferred
and set over, and by these presents, does grant, bargain, sell, assign, convey,
transfer and set over unto Assignee, its successors and assigns, all the rights,
titles and interests of MCA in, to and under the Agreement.
TO HAVE AND TO HOLD all the same unto Assignee, its successors and
assigns, forever, and MCA does hereby bind itself and its successors and legal
representatives to warrant and forever defend the rights, titles and interests
in and under the Agreement against every person whomsoever lawfully claiming the
same or any part thereof by, through or under MCA, but not otherwise.
2. Assignee hereby accepts, assumes and agrees to be and become and
remain liable for all payments and other charges payable under the Agreement
accruing from and after the effective
<PAGE>
date of this assignment and for the due performance of all the covenants,
agreements, terms and provisions of the Agreement, on MCA's part to be
performed, accruing from and after the effective date of this assignment.
Assignee hereby agrees to indemnify, defend and save harmless MCA of and from
all fines, suits, claims, demands, losses and actions (including reasonable
attorneys' fees) arising out of or resulting from the failure of Assignee to so
pay and perform such obligations or by reason of any injury or death to persons
or damage to or loss of property on or about the aforesaid real property from
and after the effective date of this Assignment.
3. This Assignment of Agreement shall bind and inure to the benefit
of MCA and Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, MCA has caused this instrument to be executed
under seal and Assignee in token of its acceptance of the assignment, transfer
and conveyance herein made upon the terms and conditions herein provided, and of
its assumption and agreement to perform and to be bound by all of the terms,
conditions, obligations, undertakings and agreements of MCA contained in the
Agreement hereafter to be performed, has executed this instrument under seal,
effective as of the 15th day of June, 1989.
MCA:
As to MCA Concerts, Inc. MCA CONCERTS, INC.,
and the execution by its a California corporation
officers, signed, sealed
and delivered this 15th
day of June, 1989 BY: /s/ Marc Bonsior
in the presence of: ---------------------
Name: Marc Bonsior
---------------------
Title: President
---------------------
/s/ Dawn Ballard
- ---------------
Unofficial Witness ATTEST: /s/ [ILLEGIBLE]
--------------------
Name: [ILLEGIBLE]
-------------------
Title: Executive V.P.
-------------------
/s/ Linda Jo Brown
- -----------------
Notary Public [Corporate Seal]
My Commission Expires:
July 10, 1992
- -------------------------
(Notarial Seal)
-2-
<PAGE>
ASSIGNEE:
As to MCA Concerts II, Inc. MCA CONCERTS II, INC.,
and the execution by its a California corporation
officers, signed, sealed
and delivered this 15th
day of June, 1989 BY: /s/ Marc Bonsior
in the presence of: ---------------------
Name: Marc Bonsior
---------------------
Title: President
---------------------
/s/ Dawn Ballard
- ---------------
Unofficial Witness ATTEST: /s/ [ILLEGIBLE]
--------------------
Name: [ILLEGIBLE]
-------------------
Title: Executive V.P.
-------------------
/s/ Linda Jo Brown
- -----------------
Notary Public [Corporate Seal]
My Commission Expires:
July 10, 1992
- -------------------------
(Notarial Seal)
-3-
<PAGE>
EXHIBIT "A"
All that tract or parcel of land lying and being in Land Lots 58, 71 and 72 of
the 14th District of Fulton County, Georgia and being more particularly
described as follows:
BEGINNING at a nail placed in the intersection formed by the centerline of South
Pryor Road (abandoned on June 4, 1958) and the southwest line of the
right-of-way of Claire Drive (being a 50 foot right-of-way); running thence
southeasterly along the southwest line of the right-of-way of Claire Drive, and
following the curvature thereof, a distance of 1379.3 feet to an iron pin
placed; running thence south 35 degrees 48 minutes west a distance of 481.9 feet
to an iron pin placed; running thence south 51 degrees 17 minutes 00 seconds
east a distance of 1096.0 feet to an iron pin placed; running thence south 45
degrees 14 minutes 30 seconds east a distance of 220.0 feet to an iron pin
placed; running thence south 74 degrees 29 minutes east a distance of 320.0 feet
to the center of a manhole; running thence south 46 degrees 29 minutes east a
distance of 326.3 feet to an iron pin placed on the northwest line of the
right-of-way of Lakewood Avenue (being a 60 foot right-of-way), said iron pin
placed being at a point 518.0 feet southwest, as measured along the northwest
line of the right-of-way of Lakewood Avenue, from the intersection formed by the
northwest line of the right-of-way of Lakewood Avenue and the southwest line of
the right-of-way of Shadydale Avenue; running thence southwesterly along the
northwest line of the right-of-way of Lakewood Avenue, and following the
curvature thereof, a distance of 1733.1 feet to an iron pin placed; running
thence north 84 degrees 50 minutes west a distance of 56.6 feet to an iron pin
placed; running thence south 29 degrees 45 minutes west a distance of 33.6 feet
to an iron pin placed; running thence in a westerly and northwesterly direction,
along the arc of a curve having a chord bearing north 65 degrees 22 minutes west
for 967.8 feet, a distance of 970.8 feet to an iron pin placed; running thence
south 87 degrees 46 minutes west along the north line of the right-of-way of
Lakewood Way (being a 60 foot right-of-way) a distance of 1176.2 feet to an iron
pin found in the intersection formed by the north line of the right-of-way of
Lakewood Way and the east line of the right-of-way of Pryor Road (being a 50
foot right-of-way); running thence north 00 degrees 32 minutes east along the
east line of the right-of-way of Pryor Road a distance of 1598.7 feet to a nail
placed in the intersection formed by the east line of the right-of-way of Pryor
Road and the centerline of South Pryor Road (abandoned June 4, 1958); running
thence in a northeasterly, easterly, southeasterly, northeasterly and northerly
direction along the centerline of South Pryor Road and following the curvature
thereof a distance of 2796.3 feet to the POINT OF BEGINNING (said course of
2796.3 feet being comprised of the arcs of the following chords: begin at the
nail placed in the intersection formed by the east line of the right-of-way of
Pryor Road and the centerline of South Pryor Road and run thence north 63
degrees 34 minutes east for 251.9 feet, run thence north 88 degrees 47 minutes
east for 357.8 feet, run thence north 89 degrees 44 minutes east for 272.2 feet,
run thence south 74 degrees 27 minutes east for 458.1 feet, run thence north 55
degrees 49 minutes east for 353.8 feet, run thence north 00 degrees 14 minutes
east for 569.8 feet and run thence north 00 degrees 00 minutes west for 563.4
feet to the nail placed in the intersection formed by the centerline of South
Pryor Road and the southwest line of the right-of-way of Claire Drive); being
property depicted as 132.62 acres on that certain blueprint of survey, to which
reference is made for all purposes, prepared by Watts & Browning, Engineers,
dated May 20, 1970, and bearing the certification of A. W. Browning, Georgia
Registered Land Surveyor No. 490.
<PAGE>
EXHIBIT "A"
TOGETHER WITH all other property, if any, owned by the City of Atlanta in Land
Lots 58, 71 and 72 of the 14th District of Fulton County, Georgia within the
area which is bounded on the west by the above described property, on the south
by Lakewood Avenue, on the east by Shadydale Avenue and on the north by Claire
Drive, BUT NOT INCLUDING the rights of the City of Atlanta in and to (i) the
right-of-way of any road, street or highway dedicated to public use or (ii) any
utility easements or installations.
TOGETHER WITH all rights, members and appurtenances (except as hereinabove
expressly limited) pertaining to the above described property.
LESS AND EXCEPT that portion of the above-described property lying and being in
Land Lot 71 of the 14th District of Fulton County, Georgia and being more
particularly described as follows:
BEGINNING at an iron pin found in the intersection formed by the east line of
the right-of-way of Pryor Road and the north line of the right-of-way of
Lakewood Way and running thence north 00 degrees 49 minutes 17 seconds west
along the east line of right-of-way of Pryor Road a distance of 27.80 feet to an
iron pin found in the intersection formed by the east line of the right-of-way
of Pryor Road and the southeast side of Lakewood Park Entrance Road; running
thence north 62 degrees 40 minutes 00 seconds east along the southeast side of
Lakewood Park Entrance Road a distance of 299.83 feet to an iron pin found;
running thence in a southeasterly, easterly and northeasterly direction, along
the arc of a curve having a chord running north 82 degrees 47 minutes 17 seconds
east for 156.00 feet, a distance of 173.40 feet to an iron pin set; running
thence north 61 degrees 21 minutes 01 seconds east a distance of 92.00 feet to
an iron pin found on the south side of Lakewood Park Entrance Road; running
thence south 86 degrees 17 minutes 01 seconds east along the south side of
Lakewood Park Entrance Road a distance of 277.56 feet to an iron pin found;
running thence south 82 degrees 22 minutes 59 seconds east along the south side
of Lakewood Park Entrance Road a distance of 230.00 feet to an iron pin set;
running south 39 degrees 14 minutes 49 seconds east along the southwest side of
Lakewood Park Entrance Road a distance of 45.00 feet to an iron pin set; running
thence south 57 degrees 45 minutes 17 seconds east along the southwest side of
Lakewood Park Entrance a distance of 125.00 feet to an iron pin found; running
thence south 05 degrees 25 minutes 06 seconds west along the west side of
Lakewood Park Entrance Road a distance of 25.05 feet to an iron pin found in the
intersection formed by the west side of Lakewood Park Entrance Road and the
north line of the right-of-way of Lakewood Way; running thence south 86 degrees
31 minutes 57 seconds west along the north line of the right-of-way of Lakewood
Way a distance of 1,119.33 feet to an iron pin found; running thence north 57
degrees 14 minutes 39 seconds west along the northeast line of the right-of-way
of Lakewood Way a distance of 24.92 feet to the POINT OF BEGINNING; being
property depicted as 3.80 acres on that certain blueprint of survey, to which
reference is made for all purposes, prepared by and bearing the certification of
Donald K. Stokes, Georgia Registered Land Surveyor No. 1896, dated April 1977;
being property developed as the Southeast Atlanta Neighborhood Facility pursuant
to a Resolution proposed by the Human Resources Committee under date of August
3, 1976, adopted by the Council of the City of Atlanta on August 16, 1976 and
approved by the Mayor on August 20, 1976.
<PAGE>
EXHIBIT "A"
FURTHER LESS AND EXCEPT that portion of the above described property lying and
being in Land Lot 72 of the 14th District of Fulton County, Georgia, and being
an area of 5.42 acres as shown on General Site Plan of the Lakewood Substation
as filed in the Office of Engineering, Department of Environment and Streets,
City of Atlanta, Georgia.
FURTHER LESS AND EXCEPT that portion of the above described property, if any,
located in Land Lot 58 of the 14th District, and being that property bounded on
the north by the north Land Lot Line of Land Lot 58, on the south by the
southerly right-of-way line of Daleview Drive, and the extension of said line to
the westerly right-of-way line of Shadydale Avenue, on the west by the west land
lot line of Land Lot 58, and on the east by the westerly right-of-way line of
Shadydale Avenue.
<PAGE>
GEORGIA Fulton County Clerk's Office Superior Court
Filed & Recorded, June 28, 1989 at 2:31
/s/ Juanita Hicks CLERK
ASSIGNMENT OF AGREEMENT
THE STATE OF GEORGIA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF FULTON )
WHEREAS, by that certain Agreement dated as of October 10, 1988,
executed by The City of Atlanta, a municipal corporation (the "City"), and MCA
Concerts, Inc., a California corporation ("MCA"), a memorandum of which is
recorded in Book 12239, Page 70 of the Records of the Clerk of the Superior
Court of Fulton County, as amended (the "Agreement"), the City and MCA have made
certain covenants and agreements which relate to (i) that certain Amended
Indenture of Lease between the City and Filmworks U.S.A., Inc., a Georgia
corporation, dated February 2, 1984 and recorded in Book 8831, Page 185 of the,
aforesaid Records, as amended, (ii) that certain Sublease between Filmworks,
U.S.A., Inc. and MCA, dated as of January 20, 1988, a memorandum of which is
recorded in Book 12239, Page 59 of the aforesaid Records, as amended, and (iii)
that certain real property which is situated in Fulton County, Georgia, and
described in Exhibit A, attached hereto and by this reference incorporated
herein;
WHEREAS, MCA has heretofore assigned, transferred and conveyed to
MCA Concerts II, Inc., a California corporation ("Assignor"), all of MCA's
rights and interest in, to and under the Agreement;
WHEREAS, Assignor has agreed to assign, transfer and convey to
MCA/PACE Amphitheaters Group, L.P., a Delaware limited partnership created by
Assignor and PACE Amphitheaters, Inc., a Texas corporation ("Assignee"), all of
Assignor's rights and interest in, to and under the Agreement, and, subject to
the terms and conditions herein provided, Assignee agrees to accept said
assignment, transfer and conveyance upon said terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained:
1. Assignor has granted, bargained, sold, assigned, conveyed,
transferred and set over, and by these presents, does grant, bargain, sell,
assign, convey, transfer and set over unto Assignee, its successors and assigns,
all the rights, titles and interests of Assignor in, to and under the Agreement.
TO HAVE AND TO HOLD all the same unto Assignee, its successors and
assigns, forever, and Assignor does hereby bind itself and its successors and
legal representatives to warrant and forever defend the rights, titles and
interests in and under
<PAGE>
the Agreement against every person whomsoever lawfully claiming the same or any
part thereof by, through or under Assignor, but not otherwise.
2. Assignee hereby accepts, assumes and agrees to be and become and
remain liable for all payments and other charges payable under the Agreement
accruing from and after the effective date of this assignment and for the due
performance of all the covenants, agreements, terms and provisions of the
Agreement, on Assignor's part to be performed, accruing from and after the
effective date of this assignment. Assignee hereby agrees to indemnify, defend
and save harmless Assignor of and from all fines, suits, claims, demands, losses
and actions (including reasonable attorneys' fees) arising out of or resulting
from the failure of Assignee to so pay and perform such obligations or by reason
of any injury or death to persons or damage to or loss of property on or about
the aforesaid real property from and after the effective date of this
Assignment.
3. This Assignment of Agreement shall bind and inure to the benefit
of Assignor and Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, Assignor has caused this instrument to be
executed under seal and Assignee in token of its acceptance of the assignment,
transfer and conveyance herein made upon the terms and conditions herein
provided, and of its assumption and agreement to perform and to be bound by all
of the terms, conditions, obligations, undertakings and agreements of Assignor
contained in the Agreement hereafter to be performed, has executed this
instrument under seal, effective as of the 23rd day of June, 1989.
ASSIGNOR:
As to MCA Concerts II, Inc. MCA CONCERTS II, INC.,
and the execution by its a California corporation
officers, signed, sealed
and delivered this 15th
day of June, 1989 BY: /s/ Marc Bonsior
in the presence of: ---------------------
Name: Marc Bonsior
---------------------
Title: President
---------------------
/s/ Dawn Ballard
- ---------------
Unofficial Witness ATTEST: /s/ [ILLEGIBLE]
--------------------
Name: [ILLEGIBLE]
-------------------
Title: Executive V.P.
-------------------
/s/ Linda Jo Brown
- -----------------
Notary Public [Corporate Seal]
My Commission Expires:
July 10, 1992
- -------------------------
(Notarial Seal)
-2-
<PAGE>
ASSIGNEE:
As to MCA/PACE Amphitheatres MCA/PACE AMPHITHEATRES GROUP,
Group, L.P. and the execution L.P., a Delaware limited
by its general partner, MCA partnership
Concerts II, Inc., signed,
sealed and delivered this 15th BY: MCA CONCERTS II, INC.,
day of June, 1989 in a California corporation, one
the presence of: of two general partners
BY: /s/ Marc Bonsior
---------------------
Name: Marc Bonsior
/s/ Dawn Ballard ---------------------
- --------------- Title: President
Unofficial Witness ---------------------
ATTEST: /s/ [ILLEGIBLE]
--------------------
Name: [ILLEGIBLE]
-------------------
Title: Executive V.P.
-------------------
/s/ Linda Jo Brown
- -----------------
Notary Public [Corporate Seal]
My Commission Expires:
July 10, 1992
- -------------------------
(Notarial Seal)
As to MCA/PACE Amphitheatres BY: PACE AMPHITHEATRES, INC.
Group, L.P. and the execution a Texas corporation, one
by its general partner, PACE of two partners
Amphitheatres, Inc., signed,
sealed and delivered this ____
day of ____________, 1989 in
the presence of: BY:/s/
---------------------
Name:
---------------------
/s/ Title:
- --------------- ---------------------
Unofficial Witness
ATTEST: /s/ Rodney Eckerman
--------------------
Name: Rodney Eckerman
-------------------
Title: Vice-President
-------------------
/s/
- -----------------
Notary Public [Corporate Seal]
My Commission Expires:
- -------------------------
(Notarial Seal)
-3-
<PAGE>
EXHIBIT "A"
All that tract or parcel of land lying and being in Land Lots 58, 71 and 72 of
the 14th District of Fulton County, Georgia and being more particularly
described as follows:
BEGINNING at a nail placed in the intersection formed by the centerline of South
Pryor Road (abandoned on June 4, 1958) and the southwest line of the
right-of-way of Claire Drive (being a 50 foot right-of-way); running thence
southeasterly along the southwest line of the right-of-way of Claire Drive, and
following the curvature thereof, a distance of 1379.3 feet to an iron pin
placed; running thence south 35 degrees 48 minutes west a distance of 481.9 feet
to an iron pin placed; running thence south 51 degrees 17 minutes 00 seconds
east a distance of 1096.0 feet to an iron pin placed; running thence south 45
degrees 14 minutes 30 seconds east a distance of 220.0 feet to an iron pin
placed; running thence south 74 degrees 29 minutes east a distance of 320.0 feet
to the center of a manhole; running thence south 46 degrees 29 minutes east a
distance of 326.3 feet to an iron pin placed on the northwest line of the
right-of-way of Lakewood Avenue (being a 60 foot right-of-way), said iron pin
placed being at a point 518.0 feet southwest, as measured along the northwest
line of the right-of-way of Lakewood Avenue, from the intersection formed by the
northwest line of the right-of-way of Lakewood Avenue and the southwest line of
the right-of-way of Shadydale Avenue; running thence southwesterly along the
northwest line of the right-of-way of Lakewood Avenue, and following the
curvature thereof, a distance of 1733.1 feet to an iron pin placed; running
thence north 84 degrees 50 minutes west a distance of 56.6 feet to an iron pin
placed; running thence south 29 degrees 45 minutes west a distance of 33.6 feet
to an iron pin placed; running thence in a westerly and northwesterly direction,
along the arc of a curve having a chord bearing north 65 degrees 22 minutes west
for 967.8 feet, a distance of 970.8 feet to an iron pin placed; running thence
south 87 degrees 46 minutes west along the north line of the right-of-way of
Lakewood Way (being a 60 foot right-of-way) a distance of 1176.2 feet to an iron
pin found in the intersection formed by the north line of the right-of-way of
Lakewood Way and the east line of the right-of-way of Pryor Road (being a 50
foot right-of-way); running thence north 00 degrees 32 minutes east along the
east line of the right-of-way of Pryor Road a distance of 1598.7 feet to a nail
placed in the intersection formed by the east line of the right-of-way of Pryor
Road and the centerline of South Pryor Road (abandoned June 4, 1958); running
thence in a northeasterly, easterly, southeasterly, northeasterly and northerly
direction along the centerline of South Pryor Road and following the curvature
thereof a distance of 2796.3 feet to the POINT OF BEGINNING (said course of
2796.3 feet being comprised of the arcs of the following chords: begin at the
nail placed in the intersection formed by the east line of the right-of-way of
Pryor Road and the centerline of South Pryor Road and run thence north 63
degrees 34 minutes east for 251.9 feet, run thence north 88 degrees 47 minutes
east for 357.8 feet, run thence north 89 degrees 44 minutes east for 272.2 feet,
run thence south 74 degrees 27 minutes east for 458.1 feet, run thence north 55
degrees 49 minutes east for 353.8 feet, run thence north 00 degrees 14 minutes
east for 569.8 feet and run thence north 00 degrees 00 minutes west for 563.4
feet to the nail placed in the intersection formed by the centerline of South
Pryor Road and the southwest line of the right-of-way of Claire Drive); being
property depicted as 132.62 acres on that certain blueprint of survey, to which
reference is made for all purposes, prepared by Watts & Browning, Engineers,
dated May 20, 1970, and bearing the certification of A. W. Browning, Georgia
Registered Land Surveyor No. 490.
<PAGE>
EXHIBIT "A"
TOGETHER WITH all other property, if any, owned by the City of Atlanta in Land
Lots 58, 71 and 72 of the 14th District of Fulton County, Georgia within the
area which is bounded on the west by the above described property, on the south
by Lakewood Avenue, on the east by Shadydale Avenue and on the north by Claire
Drive, BUT NOT INCLUDING the rights of the City of Atlanta in and to (i) the
right-of-way of any road, street or highway dedicated to public use or (ii) any
utility easements or installations.
TOGETHER WITH all rights, members and appurtenances (except as hereinabove
expressly limited) pertaining to the above described property.
LESS AND EXCEPT that portion of the above-described property lying and being in
Land Lot 71 of the 14th District of Fulton County, Georgia and being more
particularly described as follows:
BEGINNING at an iron pin found in the intersection formed by the east line of
the right-of-way of Pryor Road and the north line of the right-of-way of
Lakewood Way and running thence north 00 degrees 49 minutes 17 seconds west
along the east line of right-of-way of Pryor Road a distance of 27.80 feet to an
iron pin found in the intersection formed by the east line of the right-of-way
of Pryor Road and the southeast side of Lakewood Park Entrance Road; running
thence north 62 degrees 40 minutes 00 seconds east along the southeast side of
Lakewood Park Entrance Road a distance of 299.83 feet to an iron pin found;
running thence in a southeasterly, easterly and northeasterly direction, along
the arc of a curve having a chord running north 82 degrees 47 minutes 17 seconds
east for 156.00 feet, a distance of 173.40 feet to an iron pin set; running
thence north 61 degrees 21 minutes 01 seconds east a distance of 92.00 feet to
an iron pin found on the south side of Lakewood Park Entrance Road; running
thence south 86 degrees 17 minutes 01 seconds east along the south side of
Lakewood Park Entrance Road a distance of 277.56 feet to an iron pin found;
running thence south 82 degrees 22 minutes 59 seconds east along the south side
of Lakewood Park Entrance Road a distance of 230.00 feet to an iron pin set;
running south 39 degrees 14 minutes 49 seconds east along the southwest side of
Lakewood Park Entrance Road a distance of 45.00 feet to an iron pin set; running
thence south 57 degrees 45 minutes 17 seconds east along the southwest side of
Lakewood Park Entrance a distance of 125.00 feet to an iron pin found; running
thence south 05 degrees 25 minutes 06 seconds west along the west side of
Lakewood Park Entrance Road a distance of 25.05 feet to an iron pin found in the
intersection formed by the west side of Lakewood Park Entrance Road and the
north line of the right-of-way of Lakewood Way; running thence south 86 degrees
31 minutes 57 seconds west along the north line of the right-of-way of Lakewood
Way a distance of 1,119.33 feet to an iron pin found; running thence north 57
degrees 14 minutes 39 seconds west along the northeast line of the right-of-way
of Lakewood Way a distance of 24.92 feet to the POINT OF BEGINNING; being
property depicted as 3.80 acres on that certain blueprint of survey, to which
reference is made for all purposes, prepared by and bearing the certification of
Donald K. Stokes, Georgia Registered Land Surveyor No. 1896, dated April 1977;
being property developed as the Southeast Atlanta Neighborhood Facility pursuant
to a Resolution proposed by the Human Resources Committee under date of August
3, 1976, adopted by the Council of the City of Atlanta on August 16, 1976 and
approved by the Mayor on August 20, 1976.
<PAGE>
EXHIBIT "A"
FURTHER LESS AND EXCEPT that portion of the above described property lying and
being in Land Lot 72 of the 14th District of Fulton County, Georgia, and being
an area of 5.42 acres as shown on General Site Plan of the Lakewood Substation
as filed in the Office of Engineering, Department of Environment and Streets,
City of Atlanta, Georgia.
FURTHER LESS AND EXCEPT that portion of the above described property, if any,
located in Land Lot 58 of the 14th District, and being that property bounded on
the north by the north Land Lot Line of Land Lot 58, on the south by the
southerly right-of-way line of Daleview Drive, and the extension of said line to
the westerly right-of-way line of Shadydale Avenue, on the west by the west land
lot line of Land Lot 58, and on the east by the westerly right-of-way line of
Shadydale Avenue.
<PAGE>
LEASE
BY AND BETWEEN
500 TEXAS AVENUE LIMITED PARTNERSHIP,
a Maryland Limited Partnership
And
BAYOU PLACE PERFORMANCE HALL GENERAL PARTNERSHIP,
a Texas General Partnership
<PAGE>
THIS LEASE (this "Lease") made this ______ day of June, 1997, by and
between 500 TEXAS AVENUE LIMITED PARTNERSHIP, a Maryland limited partnership
("Landlord"), and BAYOU PLACE PERFORMANCE HALL GENERAL PARTNERSHIP, a Texas
corporation ("Tenant");
WITNESSETH THAT, in consideration of the rents, covenants and agreements
hereinafter set forth, such parties enter into the following agreement:
ARTICLE I
EXHIBITS AND DEFINITIONS
Section 1.1 Exhibits
The exhibits listed below and attached to this Lease are incorporated
herein by this reference:
EXHIBIT "A" Site plan depicting the project intended by Landlord to be
initially developed as an entertainment center on the
Property (such project, including the Property, are
hereinafter called the "Project", however, the parties
hereto recognize that the Project does not include the
parking garage that is commonly known as the "Civic Center
Garage" which is presently owned and operated by the City
and which is located below grade on the Property and
property adjacent to the Property).
EXHIBIT "B" Legal description of land underlying the Project (the
"Property")
EXHIBIT "C" Rules and Regulations applicable to Tenant
EXHIBIT "D" Forms of Non-Disturbance Agreement
Section 1.2 Definitions
For purposes of this Lease, the following terms shall have the following
meanings:
Arbitration Notice. As defined in Article XX hereof.
Additional Rent. All amounts required or provided to be paid by
Tenant under this Lease other than Minimum Annual Rent and Percentage Rent.
<PAGE>
Affiliates. As defined for purposes of the Securities Act of 1933,
as amended.
And/or - means any one or more of the items joined by such
conjunction.
Applicable Law. Means any duly adopted and enforceable law, statute,
regulation, ordinance, resolution, code or order of any federal, state, county,
district, municipality, city or other governmental entity and any order of any
Court of competent jurisdiction that is applicable to the Project, the Premises,
Landlord and/or Tenant (as the context may require), including, without
limitation, the William-Steiger Occupational Safety and Health Act and the
Americans with Disability Act. Whenever a provision of this Lease requires a
party hereto to comply with Applicable Law, such party shall have the right to
enjoy any grand-father or non-conforming use provisions that may apply to such
Applicable Law.
Breakpoint. As defined in Section 4.1 hereof.
Casualty. As defined in Section 16.1 hereof.
Control Area. The portions of the Common Areas adjacent to the
Premises and cross-hatched on Exhibit A hereto.
City. Means the City of Houston, Texas, acting in its capacity as
Landlord under the Ground Lease.
Commencement Date. As defined in Section 2.3 hereof.
Condemnation. As defined in Section 17.1 hereof.
Credit Card. As defined in Section 4.4 (a) hereof.
Default Interest Rate. Means the lesser of (a) the maximum rate of
interest payable by Tenant as permitted under Applicable Law and (b) an annual
rate equal to two percent (2%) over the then current prime rate as published in
the Wall Street Journal (or its successor).
Excluded Personal Property. Any inventory, trade fixtures,
machinery, equipment or other personal property, used or useful in Tenant's
business owned by Tenant or third parties including, without limitation, sound
and light equipment, acoustical wall coverings, seating, draperies, ticketing
equipment, computer systems, video equipment, interior and exterior signage,
cash registers and point-of-sale equipment and
2
<PAGE>
concession stand equipment. The Excluded Personal Property does not include
permanent improvements to the Premises, such as fixtures (as opposed to trade
fixtures such as stage lighting), air conditioning equipment, plumbing,
electrical wiring, curtain walls, storefronts, or other elements of the TALP
Improvements (as that term is defined in the Ground Lease). During the Lease
Term all permanent improvements made to the Premises by the Tenant shall remain
the property of Tenant in accordance with the provisions of Section 10.2 hereof
and, for purposes of determining the federal and/or state income tax liability
of Tenant, Landlord and Tenant shall each take the position that all permanent
improvements to the Premises made by Tenant are the property of Tenant (and,
therefore, Tenant shall have the right, subject to applicable tax law, to
depreciate same). Upon the termination of the Lease Term, the provisions of
Section 10.2 hereof shall control the disposition of such permanent improvements
to the Premises made by Tenant.
Extended Terms. As defined in Section 2.3 (b) hereof.
Fiscal Year. Tenant's fiscal year of operations, currently January
1, to December 31. Tenant shall have the right, from time to time, after notice
to Landlord, to select another consecutive twelve (12) month period as the
Fiscal Year. In the event of a change in the Fiscal Year, the parties hereto
shall make an equitable adjustment in the Breakpoint for any Fiscal Year that
contains less than, or more than, twelve (12) full calendar months.
Four-Wall-Deal. As defined in Section 4.4 (b) hereof.
GAAP. Generally accepted accounting principles, applied on a
consistent basis.
Gross Sales. As defined in Section 4.4 (a) hereof.
Ground Lease. Means that certain Lease and Development Agreement,
dated November 8, 1991, between the City and Landlord, as amended by that
certain First Amendment to Lease and Development Agreement, dated May 24, 1996,
between the City and Landlord and that certain Second Amendment to Lease and
Development Agreement and Angelika Parking Rights Agreement, dated April 28,
1997, by and among the City, Landlord and Angelika Houston, Inc. The term Ground
Lease, for purposes of this Lease, shall also include each amendment to the
Ground Lease entered into after the date hereof that does not materially
adversely affect any of the rights of Tenant hereunder (or if such amendment
contains provisions that materially adversely affect any of the rights of Tenant
hereunder, the term Ground Lease shall include those provisions of such
amendment that do
3
<PAGE>
not materially adversely affect the rights of Tenant hereunder). In addition, in
the event that an amendment to the Ground Lease entered into after the date
hereof materially adversely affects any of the rights of Tenant hereunder, such
amendment shall nevertheless be considered part of the Ground Lease for purposes
of this Lease if such amendment has been consented to and/or approved by Tenant
in writing (which consent Tenant shall not be obligated to provide). Landlord
shall promptly provide Tenant with a true and correct copy of each amendment to
the Ground Lease entered into after the date hereof.
Intended Use. Means the use of the Premises as a performance hall
for the presentation of live musical performances, live theatrical performances
and other entertainment events and the selling of food, beverages, and
merchandise typically sold at such facilities and, as an incidental use, the use
of the Premises as a catering facility and function room. The term "Intended
Use" also includes (A) all other forms of entertainment which make use of places
of public assembly, (other then cinema auditoriums), which uses may, but need
not necessarily, include the presentation of both live and pre-recorded
entertainment (other then motion pictures), broadcast entertainment, interactive
entertainment, lectures, meetings, conventions and educational presentations,
(B) the operation of a box office for the sale of admissions to events to be
held at other venues, and (C) the offering of entertainment related merchandise
such as books, periodicals, videos, audio recordings, computer software and such
products as may evolve from, augment or supersede such products.
Landlord's Work. As defined in Section 3.1 hereof.
Landlord's Mortgage. Any deed of trust, mortgage or other security
interest granted by Landlord that encumbers the leasehold estate created by the
Ground Lease and the other rights of Landlord under the Ground Lease.
Landlord's Mortgagee. The holder or beneficiary of any assignment,
lien, security interest or other security encumbrance encumbering, mortgaging
and assigning to such holder or beneficiary the leasehold estate created by the
Ground Lease and the other rights of Landlord under the Ground Lease and under
the easements and agreements executed by Landlord and the City in connection
with the Ground Lease.
Lease. This lease and all amendments hereof and supplements hereto.
Lease Term. As defined in Section 2.3 hereof.
4
<PAGE>
Lease Year. As defined in Section 2.4 hereof.
Minimum Annual Rent. As defined in Section 4.1 (a) hereof.
Percentage Rent. As defined in Section 4.1 (b) hereof.
Premises. Means that certain portion of the Project that contains
approximately Fifty-Nine Thousand Two Hundred Thirty-Three (59,233) square feet
of space distributed as follows: (i) approximately Thirty Thousand Nine Hundred
Twenty-Eight (30,928) square feet of contiguous first floor space, (ii)
approximately Nineteen Thousand Five Hundred Forty-Eight (19,548) square feet of
contiguous second floor space, which includes an intermediate floor of
approximately One Thousand Seven Forty (1,740) square feet of contiguous floor
space, and (iii) approximately Eight Thousand Seven Hundred Fifty-Seven (8,757)
square feet of storage space located below Bagby Street. The first and second
floor areas are adjacent to Bagby Street, and bound by Capital Street and Texas
Avenue, Houston, Texas. The Premises (with the exception of the intermediate
floor) is outlined in red on Exhibit A. The Premises includes the non-exclusive
mutual and reciprocal rights and easements to use the Common Areas from time to
time located on the Property as provided herein.
Project. As defined in Section 1.1 hereof.
Project Floor Area. As defined in Section 2.1 (b) (ii). In the event
the Project is modified, Landlord shall have the right to modify the Project
Floor Area (subject to the restrictions contained in this Lease) by providing
Tenant with a notice of such modification, which modification shall be
accompanied by a certification of such adjusted Project Floor Area that was
prepared by Gensler Architects, or such other architect selected by Landlord and
reasonably acceptable to Tenant, and that is addressed to Tenant.
Property. As defined in Section 1.1 hereof.
Rent. The term Rent shall include all monetary obligations payable
by Tenant hereunder, including without limitation Minimum Annual Rent,
Percentage Rent, Tenant's pro rata share of Taxes and Common Area Costs, and
Additional Rent.
Required Completion Date. As defined in Section 2.3 (a) hereof.
Restoration. As defined in Section 16.1 hereof.
5
<PAGE>
Tenant Mortgage. As defined in Section 15.1(a) hereof.
Tenant Mortgagee. The holder or beneficiary of any assignment, lien,
security interest or other security encumbrance encumbering, mortgaging and
assigning to such holder or beneficiary the leasehold estate created by this
Lease and the other rights of Tenant under this Lease and under the easements
and agreements executed by Tenant and Landlord in connection with this Lease
that has first priority (i.e., holds a first priority lien on Tenant's interests
in this Lease).
Tenant's Work. As defined in Section 3.2 hereof.
ARTICLE II
PREMISES AND TERM
Section 2.1 Premises/ Measurement of Floor Areas
(a) Landlord hereby leases to Tenant and Tenant hereby rents from Landlord
the Premises.
(b) Within sixty (60) days of the date hereof, Landlord shall deliver to
Tenant a certificate from Gensler Architects stating the Premises Floor Area,
and the Project Floor Area.
(i) For purposes of determining the Premises Floor Area, the number of
square feet contained in that portion of the interior of the Project
constituting the Premises (exclusive of that part of the Premises located
beneath Bagby Street) shall be measured (A) with respect to the front and
rear width thereof, from the exterior face of the adjacent exterior or
corridor wall or, if none, from the center of the demising partition, to
the opposite exterior face of the adjacent exterior or corridor wall or,
if none, to the center of the opposite demising partition, and (B) with
respect to the depth thereof, from the exterior face of the adjacent
exterior or corridor wall or, if none, from the center of the demising
partition to the exterior face of the rear exterior wall, or corridor
wall, or, if neither, to the center of the rear demising partition; and in
no case shall there be any deduction for columns or other structural
elements within any the Premises.
(ii) The Project Floor Area shall be measured and determined using the
same methodology utilized in the determination of Premises Floor Area,
except that the term "Premises" utilized in Section 2.1 (b) (i) shall be
deemed to mean the premises of each leaseable space in the Project, but
shall not include Common Areas. Project Floor Area shall not
6
<PAGE>
include any portion of the Project that is located below Bagby Street.
Section 2.2 Roof and Walls
Subject to Tenant's rights under Section 10.1 hereof concerning Tenant's
signage and the last sentence of this Section 2.2, Landlord shall have the
exclusive right to use all or part of the roof of the Premises and the exterior
side and rear walls of the Premises for purposes of carrying out its obligations
under this Lease, including, without limitation, erecting scaffolds and other
aids to the construction and installation of the same, and installing,
maintaining, using, repairing and replacing pipes, ducts, conduits and wires
leading through, to or from the Premises and serving other parts of the Project
in locations which, in Tenant's reasonable judgment, do not materially adversely
interfere with Tenant's use of the Premises. Tenant shall have no right
whatsoever in the exterior of exterior walls, including the roof or any
structural portions of the Premises, except as required in connection with the
completion of Tenant's Work (as hereinafter defined) in accordance with the
provisions of Article III hereof and except in accordance with Tenant's signage
rights. Landlord shall have the right to place signage on the exterior walls of
the Premises and the roof of the Premises (and grant signage rights to others in
connection with such areas), provided that Tenant`s signage rights hereunder are
not materially adversely affected.
Section 2.3 Lease Term
(a) The term of this Lease (hereinafter the "Lease Term") shall commence
upon the earlier of: (i) November 15, 1997 (the Required Completion Date), and
(ii) the day on which Tenant initially opens the Premises for business to the
public, the applicable date being hereinafter the "Commencement Date". The term
of this Lease shall end on the last day of the tenth (10th) Lease Year (as
hereinafter defined) after the Commencement Date unless sooner terminated as
herein provided or unless extended as provided in Section 2.3 (b) below.
(b) Landlord hereby grants Tenant one (1) option to extend the Lease Term
for one five (5) year period (the "Extended Term"); provided (i) at the date of
the exercise of such option and on the first day of the Extended Term this Lease
is in full force and effect, and (ii) an uncured Event of Default does not exist
on the first day of the Extended Term. Tenant shall exercise such option to
extend by giving Landlord notice of its intention to extend not less than twelve
(12) months prior to the expiration of the then current Lease Term. During the
Lease Term, as extended by the Extended Term, the terms, covenants, and
conditions of this Lease shall apply, except that Tenant shall
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only have one (1) option to extend the Term and if Tenant utilizes such option,
it will not have additional options. The Extended Term shall commence on the day
immediately succeeding the expiration date of the next preceding term and shall
end, unless sooner terminated, at midnight on the day immediately preceding the
fifth (5th) anniversary of the first day of such term. "Lease Term" shall
include the initial approximately ten (10) year term of this Lease and the
properly exercised Extended Term. Time shall be of the essence with respect to
this Section 2.3(b).
Section 2.4 Lease Year, Defined
"Lease Year," as used herein, means a period of twelve (12) consecutive
months during the Lease Term commencing each January 1 and ending each December
31; provided, however, the first Lease Year shall mean that portion of the Lease
Term in excess of a calendar year commencing on the Commencement Date and ending
on December 31, 1998.
ARTICLE III
LANDLORD'S AND TENANT'S WORK
Section 3.1 Landlord's Work
Landlord shall use its reasonable efforts to cause the Landlord's Work to
be substantially completed by the earlier of November 15, 1997, or provided
Tenant provides Landlord with reasonable advance notice of such date, the date
that Tenant anticipates initially opening its business in the Premises to the
public. The term Landlord's Work means the construction of the Control Area and
the exterior walls of the Premises that face Bagby, Street, Capital Street and
Texas Avenue (exclusive of wall penetrations, storefronts, ticket windows, bus
parking areas, loading docks and doorways). Except as specifically set forth
below and in the other provisions of this Lease (including Landlord's repair and
maintenance obligations contained herein), Landlord shall have no further
obligations with respect to the condition of the Premises, and, with the
exception of the Landlord's Work described in this Section 3.1, Tenant
acknowledges that it is taking the Premises in "as-is" condition. Landlord
hereby represents and warrants that the Landlord's Work has been, or will be,
completed in compliance with all Applicable Laws and in accordance with the
plans and specifications for the Landlord's Work. Landlord shall install a
grease trap in the Project for the use, in common, of the tenants of the
Project, Tenant shall have the right to connect to such grease trap and utilize
up to 5,000 gallons of its capacity.
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Section 3.2 Tenant's Work
(a) All work with respect to the Premises that is not provided in Section
3.1 hereof to be done by Landlord shall be performed by Tenant (hereinafter
called "Tenant's Work") necessary to create a two level, first class, fully
functional, performance hall with a capacity of approximately 2,800 spectators
in a combination of portable and permanent seating (but not less than 2,500
spectators in a combination of portable and permanent seating). Tenant's Work
shall include construction of the following items to the extent, and in the
manner, provided for in the Tenant's Plans (as hereinafter defined): finished
floors and finished ceilings, utility service hook-ups and distribution,
construction of a performance stage, the installation of house lights and all
life safety equipment and systems, the installation of a sound and lighting
system that is appropriate for the use of the Premises as a first class live
performance hall, the installation of any acoustic features selected by Tenant,
the construction and installation of bathrooms, the construction of all doorways
and exits, the construction of a box office, the construction of all appropriate
"back of the house" facilities, such as a green room (or a space that is capable
of being utilized as a green room), dressing rooms (with bathroom and shower
facilities), bus parking areas, and loading docks and service areas, the
construction of all appropriate "front of the house" facilities, such as sound
board areas and lighting control boards, the construction of adequate storage
areas, HVAC installation and distribution, sprinkler system installation, the
construction of all interior partitions, finished walls, appropriate staircases
and vertical transportation sufficient to serve the Premises, the installation
of grease traps (at Tenant's election), service bar facilities and kitchen
facilities, the installation of all interior and exterior signage, including a
theater style marquee sign, the installation of all storefronts, fire exits and
fire stairways, the construction of the demising wall of the Premises that is
closest to Smith Street (including the construction of both sides of such
demising wall, from the floor of the first floor of the Premises, to the
underside of the roof of the Premises), the construction of a permanent riser
system on the second floor of the Premises, the acquisition and installation of
a portable riser system on the first floor of the Premises (at Tenant's
election), the installation of a service elevator that connects the first and
second floors of the Premises to the storage area of the Premises located
beneath Bagby Street, and the acquisition and installation of the Excluded
Personal Property. Tenant shall do and perform at its expense all Tenant's Work
diligently and in accordance with the provisions herein.
(b) Tenant's Work shall be performed in accordance with Applicable Law, to
the end that the Premises is in material compliance with Applicable Law on the
Commencement Date. In
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connection with the Premises: (i) Tenant shall, in accordance with Applicable
Law, satisfy and comply with, in all material respects, the requirements of (x)
the Americans with Disabilities Act applicable to the Premises (including the
regulations issued thereunder) and (y) the Texas Architectural Barriers Act
applicable to the Premises (including the regulations issued thereunder), as
each may be amended from time to time (except to the extent that such laws,
regulations or amendments are not applicable to the Premises, or Tenant's
operations thereat); and (ii) TENANT HEREBY INDEMNIFIES THE CITY AND LANDLORD
FOR ANY AND ALL CLAIMS AND LIABILITIES ARISING OUT OF TENANT'S FAILURE TO
SATISFY THE ABOVE DESCRIBED REQUIREMENTS (i.e., AMERICANS WITH DISABILITIES ACT
AND TEXAS ARCHITECTURAL BARRIERS ACT).
Section 3.3 Tenant's Obligations Before Commencement Date
(a) Tenant has retained Gensler Architects (the "Tenant's Architect") to
prepare the Tenant's Schematic Plans and the Tenant Plans.
(b) Prior to the date hereof, Tenant has delivered to Landlord, for
informational purposes, a schematic layout of the Premises (the Tenant's
Schematic Plans).
(c) Within twelve (12) weeks after the date hereof, Tenant shall submit to
Landlord one (1) reproducible set (sepia) and two (2) copies of plans and
specifications, prepared by a registered architect or engineers, of all Tenant's
Work to be done within the Premises (hereinafter the "Tenant's Plans") which
shall substantially comply with Tenant's Schematic Plan. Landlord shall review
Tenant's Plans in a timely manner and shall notify Tenant of any failures of
Tenant's Plans to substantially comply with Tenant's Schematic Plan or to
otherwise meet with Landlord's approval (which notice, if containing an
objection, shall be reasonably detailed), which approval shall only be required
in connection with any proposed roof cuts, or any proposed changes in the
exterior facade, storefront, roof or structural portions of the Project and
which approval shall not be unreasonably withheld, delayed or conditioned. In
the event that Landlord does not object to the Tenant's Plans within ten (10)
days after the date Landlord actually receives same from Tenant, the Tenant
Plans shall be deemed approved by Landlord. Tenant shall within fifteen (15)
days after receipt of any such notice of objection cause Tenant's Plans to be
revised to the extent reasonably necessary to obtain Landlord's approval and
resubmitted for Landlord's approval, which approval shall not be unreasonably
withheld, delayed or conditioned. When Landlord has approved the original or
revised Tenant's Plans (or is deemed to have approved same), at Tenant's
request, Landlord shall initial and return one (1) set of approved Tenant's
Plans to Tenant. Approval (or deemed approval) of plans and specifications by
Landlord shall not constitute the assumption of any responsibility of Landlord
for their accuracy or sufficiency, or compliance with applicable
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codes and Tenant shall be solely responsible for such plans and specifications.
Tenant shall not commence any of Tenant's Work until Landlord has approved (or
is deemed to have approved) Tenant's Plans, unless prior approval by Landlord
has been obtained in writing.
(d) Tenant shall complete the Tenant's Work in substantial accordance with
Tenant's Plans therein no later than the Required Completion Date.
(e) On or before the Required Completion Date, Tenant shall install all
merchandise and inventory in the Premises and shall open the Premises for
business to the general public.
(f) At the request of Landlord, Tenant (or its representative) shall
attend construction meetings with representatives of Landlord and the City in
connection with the undertaking and completion of the Tenant's Work. Tenant (or
its representative) shall not be obligated to attend more then one (1) such
meeting in any calendar month.
Section 3.4 Condition of Premises
Tenant's opening of the Premises for business to the public shall be
conclusive evidence of Tenant's acceptance thereof, including Landlord's Work,
in good order and satisfactory condition, and in compliance with Landlord's
obligations hereunder, except for (a) latent defects in any of the Landlord's
Work, (b) any patent defects in the Landlord's Work (exclusive of punch list
items of the Landlord's Work that are completed after the Required Completion
Date) of which Tenant notifies Landlord in writing no later than the ninetieth
(90th) day following the Required Completion Date, and (c) any patent defect in
any punch list item of the Landlord's Work that is completed after the Required
Completion Date of which Tenant notifies Landlord in writing no later than the
ninetieth (90th) day following the completion of such punch list item.
Section 3.5 Construction Rules
Tenant and Tenant's contractor, and their respective employees,
contractors and agents shall fully comply with all reasonable and
non-discriminatory rules and regulations of Landlord and/or Landlord's
contractor concerning construction, staging and/or safety in connection with the
undertaking and completion of the Tenant's Work that are provided to Tenant in
writing. With the exception of life safety rules and regulations, no such rules
and regulations shall be effective until five (5) business days after delivery
to Tenant of a written notice setting forth such rules and regulations.
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ARTICLE IV
RENT
Section 4.1 Minimum and Percentage Rent
Tenant covenants and agrees to pay to Landlord, commencing on the
Commencement Date, without notice, demand or set-off, at Landlord's address for
notice (Landlord's and Tenant's notice addresses being the addresses specified
in Section 25.7 hereof), as rent for the Premises, the following:
(a) A Minimum Annual Rent of One Hundred Thousand and 00/100 Dollars
($100,000.00) per annum, payable in equal monthly installments of
Eight Thousand Three Hundred Thirty-Three Dollars and 33/100 Dollars
($8,333.33) each, in advance upon the first day of each and every
month commencing upon the calendar month which includes the
Commencement Date and continuing thereafter through and including
the last calendar month of the fifth (5th) Lease Year (such monthly
installment being hereinafter called "Minimum Monthly Rent");
A Minimum Annual Rent of One Hundred Fifty Thousand and 00/100
Dollars ($150,000.00) per annum, payable in equal monthly
installments of Twelve Thousand Five Hundred Dollars and 00/100
Dollars ($12,500.00) each, in advance upon the first day of each and
every month commencing on the first day of the sixth Lease Year
thereafter through and including the last calendar month of the
tenth (10th) Lease Year (such monthly installment being hereinafter
called "Minimum Monthly Rental"); and
A Minimum Annual Rent of Two Hundred Thousand and 00/100 Dollars
($200,000.00) per annum, payable in equal monthly installments of
Sixteen Thousand Six Hundred Sixty-Six Dollars and 67/100 Dollars
($16,666.67) each, in advance upon the first day of the each and
every month commencing on the first day of the Extended Term and
continuing thereafter through and including the last day of the
Extended Term (such monthly installment being hereinafter called
"Minimum Monthly Rental").
(b) Commencing upon, the Commencement Date and continuing throughout the
Lease Term and any renewals thereof, seven and one/half percent
(7.5%) of Gross Sales in excess of the Breakpoint (the resulting
figure hereinafter called "Percentage Rent"). The Breakpoint shall
is equal to: $5,000,000.00 during each of Fiscal Years 1 through 10
of the Lease Term; and $6,000,000.00
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during each of Fiscal Years 11 through 15 of the Lease Term.
Section 4.2 Miscellaneous Rent Provisions
Any Rent or other amounts to be paid by Tenant which are not paid when due
shall bear interest at the Default Interest Rate. If the Commencement Date is
other than the first day of a month, Tenant shall pay on the Commencement Date a
prorated partial Minimum Monthly Rent for the period prior to the first day of
the next calendar month, and thereafter Minimum Monthly Rent payments shall be
made not later than the first day of each calendar month.
Section 4.3 Percentage Rent, Records and Reports, Etc.
(a) Percentage Rent. Percentage Rent shall be payable within ninety
(90) days after the expiration of each Fiscal Year. Percentage Rent for any
partial Fiscal Year during the Lease Term, along with the applicable Breakpoint,
shall be equitably pro-rated based upon the number of days elapsed in such
partial Fiscal Year.
(b) Tenant's Records.
(i) Tenant shall prepare and keep at its home office (currently
located in Houston, Texas) full, complete and proper books and source documents,
in accordance with "GAAP", of the Gross Sales. Tenant shall preserve such
records for at least three (3) years.
(ii) Tenant agrees that it will furnish to Landlord, within ninety
(90) days after the expiration of each Fiscal Year (or partial Fiscal Year), a
report showing in reasonable detail the amount of such Gross Sales made by
Tenant from the Premises during the preceding Fiscal Year (or partial Fiscal
Year, as the case may be), certified as true and complete by an officer of
Tenant, such as Tenant's chief financial officer.
(iii) Landlord shall have the right for a period of three (3) years
after the end of each calender year, upon at least ten (10) days prior notice to
Tenant, to audit the books and records of Tenant relating to the Premises for
such calender year in order to verify any statement issued pursuant to this
Subsection (b) with respect to such calender year. If such audit discloses that
Gross Sales, as previously reported for the period audited were understated
Tenant shall immediately pay to Landlord: (A) the additional Percentage Rent;
and (B) if such underpayment was in excess of the greater of Five Thousand and
00/100 Dollars and two percent (2%) of the actual Gross Sales as disclosed by
such audit, the cost of such audit. Landlord agrees that, absent a finding of a
material discrepancy between the Gross Sales as reflected in such books and
records and the Gross Sales reported by Tenant, Landlord shall not exercise this
right of audit more than once in any given
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three year period, and in no event more frequently than once for each Fiscal
Year.
(iv) Tenant shall not later than the thirtieth (30th) day after the
close of each calendar month, deliver to Landlord, for informational purposes, a
written statement certified by Tenant showing, on a preliminary basis, Gross
Sales made in such calendar month, and listing by category and amount all
exclusions from Gross Sales. (In the event of a conflict between such monthly
statements and the annual statement described in Section 4.3(b)(ii), such annual
statement shall control.)
Section 4.4 Gross Sales Defined
(a) Gross Sales. The term "Gross Sales" as used herein shall mean
the entire amount of the actual sales price, whether for cash or otherwise for
all sales of admissions to the Premises and/or sale of merchandise and/or
concessions from the Premises, the proceeds to Tenant (or any subtenant or
licensee of Tenant) of all coin or card operated devices, including telephones
and video games, less amounts paid to the owners or operators of such devices
and the proceeds to Tenant of all Four-Wall Deal income. Gross Sales shall be
reduced, however, by, (i) any sums collected and paid out by Tenant for any
sales, use, occupancy, excise or other tax imposed upon or collectable by Tenant
(other than income taxes), (ii) any returned, exchanged or "pass" admissions to
the Premises, (iii) monies and/or credits received by Tenant in the settlement
of claims for loss of or damage to Tenant's merchandise or returns to shippers
or manufacturers, (iv) sales to employees, (v) sales of fixtures, equipment, or
property which are not stock in trade, by the owners or operators of such
devices, (vi) tips collected by Tenant and paid to employees, and (vii) the
actual fees paid by Tenant to performers or acts that perform in the Premises,
and the costs of all services provided by Tenant to such performers or acts.
There shall be deducted from Gross Sales the amount of any cash or credit refund
from any sale made in or from the Premises, to the extent previously included in
"Gross Sales" hereunder, and all fees or changes paid or discounts or credits
given to any person issuing or servicing credit cards, debit cards or other
non-cash means for the settlement of bills (a Credit Card) as a consequence of
the completion of a sale transaction through the use, acceptance or debiting of
such Credit Card. In the event Tenant determines to contract to a concessionaire
or operator for the operation of any merchandise concession, food service or
beverage facility or service in the Premises, Gross Sales will be limited to the
proceeds received by Tenant from such concessionaire or operator.
(b) Four-Wall-Deal Exclusions. Notwithstanding anything to the
contrary set forth in this Lease, Gross Sales with respect to any Four-Wall-Deal
(defined below), will be the amounts actually received by Tenant for the use of
the Premises and not the gross
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receipts of any third party that is not an Affiliate of Tenant contracting for
the Premises on a Four-Wall-Deal basis. As used herein, the term
"Four-Wall-Deal" means any bona fide use of the Premises by a third party that
is not an Affiliate of Tenant for attractions, events or as a meeting, lecture
or convention hall for religious, civic, private, public or education purposes,
provided such party contracts for the use of the Premises and such contract for
use is for a limited duration). Tenant shall not use the Four-Wall Deal
Exclusions as a means to minimize Percentage Rent.
Section 4.5 Real Estate Taxes
(a) Definition. (i) Landlord shall pay or cause to be paid all Real Estate
Taxes (as hereinafter defined) assessed or imposed upon the Project which become
due or payable during the Lease Term. As used in this Section 4.5 the term "Real
Estate Taxes" shall mean and include all real estate taxes, public and
governmental charges and assessments, including all extraordinary or special
assessments, taxes imposed pursuant to Section 23.13 of the Texas Tax Code, as
amended, or any similar tax governing the taxation of leasehold interests, or
assessments against any of Landlord's personal property now or hereafter located
in and used with respect to the Project, all costs, expenses and reasonable
attorneys' fees incurred by Landlord in contesting or negotiating with public
authorities (Landlord having the sole authority to conduct such a contest or
enter into such negotiations) as to any of the same and all sewer and other
taxes and charges, but shall not include taxes on Tenant's business in the
Premises, machinery, equipment, inventory or other personal property or assets
of Tenant, Tenant agreeing to pay, before delinquency, all taxes upon or
attributable to such items without apportionment (provided, however, Tenant
shall have the right to delay payment of such taxes on such excluded items in
connection with any bona fide appeal concerning such taxes).
(b) Tenant's Share. Tenant shall pay to Landlord, as Additional Rent,
Tenant's pro rata share of Real Estate Taxes which become due or payable during
the Lease Term, such pro rata share to be prorated for periods at the beginning
and end of the Lease Term which do not constitute full calendar months or years.
Tenant's pro rata share of Real Estate Taxes shall be that portion of such Real
Estate Taxes which bears the same ratio to the total Real Estate Taxes as the
Premises Floor Area bears to the Project Floor Area.
(c) Payment by Tenant. Tenant's pro rata share of Real Estate Taxes shall
be paid annually within thirty (30) days after date Landlord provides Tenant
with a statement setting forth in reasonable detail the Tenant's pro rata share
of Real Estate Taxes together with copies of all tax bills received by the
Landlord for the Project and evidence of the payment of such bills. The amount
of any Taxes payable by the Tenant shall be calculated on the basis of all
discounts which would have been available to the Landlord
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for early payment thereof, regardless of whether Landlord actually received such
discount.
ARTICLE V
PARKING AND COMMON AREAS AND FACILITIES
Section 5.1 Parking Areas
(a) The Project does not include and, except as provided herein,
Landlord shall not be obligated to provide any parking spaces or areas in
connection with the use of the Premises.
(b) Pursuant to the provisions of Section 5.13 of the Ground Lease,
Landlord, Tenant and the other tenants of the Project are granted access on a
nonexclusive basis to parking within the Garage (as that term is defined in the
Ground Lease) on the same basis as such parking is available to the general
public at the then published rates.
(c) Pursuant to and subject to the provisions of Section 5.13 of the
Ground Lease, Landlord is entitled to certain discounted employee parking rates
for a certain number of parking spaces located in City owned parking facilities,
designated by the City, that are within three (3) blocks of the Project.
Landlord shall permit Tenant, at Tenant's expense, to utilize up to twenty-five
(25) of such employee parking spaces for use by Tenant's employees each day of
the Lease Term. If Tenant elects to use all or any portion of such twenty-five
(25) employee parking spaces for its employees, then Tenant will use its
reasonable efforts, with the assistance of Landlord, to arrange with the City to
have bills sent directly to Tenant for the expenses and fees related to the use
of such spaces by Tenant's employees, and Tenant shall pay all such expenses and
fees promptly when due. If such an arrangement cannot be made with the City, and
the City bills Landlord for the use of such spaces by Tenant's employees,
Landlord shall pay such bill and provide Tenant with a copy of such bill.
Tenant, as Additional Rent, shall, within twenty (20) days of receiving any such
bill, pay Landlord the amount of such bill. In the event that Tenant fails to
pay any such bill in the manner provided above, and such failure continues for
ten (10) days after the date that Landlord provides Tenant with written notice
of such failure, Landlord shall have the right, exercisable by notice to Tenant
by Landlord at any time prior to the date that Tenant cures such failure, to
terminate Tenant's rights under this Subsection 5.1 (c).
(d) Pursuant to and subject to the provisions of the Ground Lease,
Landlord has the right to utilize the Garage in connection with a valet parking
operation that benefits the Project and that is operated by or for Landlord. In
the event
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that Landlord elects to implement such a valet parking operation, the City is
obligated, pursuant to and subject to the provisions of the Ground Lease to
provide Landlord with a designated parking field in the Garage that contains up
to 400 parking spaces for use by such valet parking operation. At Landlord's
election, made from time to time, Landlord may implement a valet parking
operation for the benefit of the Project. In the event that, from time to time,
such a valet parking operation is not being operated for the benefit of the
Project, Tenant, with Landlord's consent, which consent shall not be
unreasonably withheld, shall have the right to operate, or cause others to
operate, a valet parking operation at the Project for customers of the Project
during the periods, or any portion of the periods, that such a valet parking
operation is not being operated by or for Landlord. The days and hours of any
such Tenant operated valet parking operation shall be approved by Landlord,
which approval shall not be unreasonably withheld or delayed; provided that
Landlord hereby recognizes and acknowledges that any such Tenant operated valet
parking operation will most likely be operated only on the days and during the
times that a performance or event is being presented in the Premises by Tenant.
Such Tenant operated valet parking operation shall be operated in a first class
manner in accordance with reasonable rules and regulations of Landlord and the
City at a location on the Property designated by Landlord and shall have the
right, subject to the provisions of the Ground Lease, to utilize the parking
field that the City is obligated to provide in the Garage. The operator of such
Tenant operated valet parking operation shall carry liability and property
insurance coverage that names the Landlord and the City as additional insureds.
The type and amount of such insurance coverage shall be subject to the
reasonable approval of Landlord. EXCEPT TO THE EXTENT OF ANY LIABILITY RESULTING
FROM THE NEGLIGENCE OR WILFUL MISCONDUCT OF LANDLORD OR ANY OTHER PERSON
INDEMNIFIED PURSUANT TO THE TERMS OF THIS SENTENCE, TENANT SHALL INDEMNIFY,
DEFEND AND HOLD HARMLESS LANDLORD AND THE CITY FROM AND AGAINST ANY AND ALL
LIABILITY THAT MAY ARISE IN CONNECTION WITH SUCH TENANT OPERATED VALET PARKING
OPERATION. When operating a valet parking operation at the Project, Tenant shall
be solely responsible for all costs and fees of such operation, including
parking fees due the City. Tenant shall, at Landlord's option, pay the City's
parking fees to Landlord or directly to the City.
(e) Under the Ground Lease, Landlord has the right to implement a
parking validation program for the benefit of the Project that utilizes the
Civic Center Garage as contemplated by Article XVI of the Ground Lease. In the
event Landlord elects to establish such a program, and Tenant elects to
participate in such program, Tenant shall fully cooperate with Landlord's
efforts to establish such program. In the event that a parking validation
program is established, Landlord shall use its reasonable efforts to cause the
City to agree to bill Tenant directly for validated parking fees incurred by
Tenant and/or its
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customers for the use of the parking validation program set forth in the Ground
Lease. In the event that a parking validation program is established by Landlord
at the Project, until such time as the City shall agree to bill the Tenant
directly for validated parking fees for parking services utilized by Tenant and
its customers, Landlord agrees to accept bills therefor from the City and to pay
the same when due, and Tenant agrees to reimburse to Landlord any such amounts
paid to the City by Landlord within ten (10) business days of written demand
therefor from Landlord to Tenant (accompanied by a copy of the bill from the
City and evidence of payment of such bill by the Landlord) (it being agreed that
Landlord shall not be required to continue to make such payments to the City for
so long as Tenant shall be in default of its obligation to reimburse Landlord
for such payments and that if Tenant is in default of its payment obligations
hereunder, Landlord shall have the right to immediately terminate such
validation program).
Section 5.2 Common Areas
All access roads and facilities furnished, made available or maintained by
Landlord in the Project; to the extent provided by Landlord, truck ways,
driveways, loading docks and delivery areas (not included in the Premises or
other demised premises in the Project); the roof, walls and all structural
portions of the Project, package pickup stations, elevators, escalators,
pedestrian sidewalks, malls, courts and ramps, landscaped areas, retaining
walls, stairways, bus stops, first-aid and comfort stations, lighting
facilities, sanitary systems, and utility lines, water filtration and treatment
facilities; and other areas and improvements provided by Landlord for the
general use in common of tenants and their customers (all herein called "Common
Areas") shall at all times be subject to the exclusive control and management of
Landlord.
Subject to the provisions of the next paragraph, Landlord shall have
the right from time to time to: change or modify and add to or subtract from the
sizes, locations, shapes and arrangements of entrances, exits and other Common
Areas; add to or subtract from the buildings in the Project; and do and perform
such other acts in and to the Common Areas as Landlord in its sole discretion,
reasonably applied, deems advisable for the use thereof by tenants and their
customers. Landlord may at any time close temporarily any Common Areas to make
repairs or changes, prevent the acquisition of public rights therein, or for any
other reasonable purposes.
Landlord shall exercise Landlord's rights under this Section 5.2 in
a manner that does not unreasonably and materially interfere with Tenant's
business operations at the Premises. In addition, notwithstanding anything to
the contrary contained in this Lease, Landlord shall not make any changes with
respect to the Control Area, that materially and adversely affects
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pedestrian access to the Premises, or the visibility of the Premises or Tenant's
permanently installed exterior signage without the prior written consent of
Tenant, which may be withheld in Tenant's reasonable discretion. Alterations to
the rest of the Common Areas may be made by Landlord.
Section 5.3 Use of Common Areas
Landlord hereby grants to Tenant for Tenant's benefit and for the benefit
of Tenant's successors, assigns, mortgagees, Tenant Mortgagees, subtenants,
employees, agents, customers, licensees and invitees nonexclusive rights,
licenses and easements on, over and across and for the use (free of charge) of
the Common Areas (as same may be configured from time to time), including,
without limitation, pedestrian sidewalks, directional signs, landscaping,
lighting, storm drainage and common utility facilities, for the purposes for
which they are provided and as reasonably needed on a temporary basis for
construction of and repair to the Premises. Such grant shall be on a
nonexclusive bases, in common with Landlord and all others to whom Landlord has
granted or may hereafter grant such rights or similar rights. Tenant shall not
interfere with Landlord's or other tenants' rights to use any part of the Common
Areas. Landlord acknowledges and agrees that Tenant's queue lines for Tenant's
patrons may form within the Control Area from time to time.
Section 5.4 Loading Docks/Bus Docks
As part of the Tenant's Work, Tenant is constructing a loading dock area
and a bus parking area in the Common Areas along the Capital Street side of the
Premises, between Column Lines 26 and 30. Tenant shall maintain such areas in
first class condition during the term of the Lease. Tenant shall have the
exclusive right to use such areas; provided, when Tenant is not utilizing such
areas, Landlord and the other tenants of the Project shall have the right to
utilize such areas on a non-exclusive basis, provided that such use does not
interfere with Tenant's use of the Premises.
ARTICLE VI
COST AND MAINTENANCE OF COMMON AREAS
Section 6.1 Expense of Operating and Maintaining the Common Areas
(a) Provided that Tenant is not in default of any of its obligations
hereunder beyond any applicable notice and/or cure period contained in this
Lease, Landlord shall operate, manage, maintain and repair or cause to be
operated, managed, maintained or repaired, the Common Areas of the Project to
the end that the Common Areas are operated, maintained and repaired in good
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condition and repair, in a safe and sound condition, and clean and free of
rubbish, debris, and other hazards to persons using the same in each case to the
same standard expected of a first-class urban entertainment center located in
the United States.
(b) "Landlord's Common Area Costs" shall mean all reasonable and necessary
costs of operating and maintaining the Common Areas and the Project in a manner
deemed by Landlord appropriate for the best interests of the tenants of and
other occupants in the Project and, in any event, consistent with Landlord's
obligations under Section 6.1 (a) hereof. Included among the costs and expenses
which constitute Landlord's Common Area Costs, but not limited thereto, shall
be, at the option of Landlord, all costs and expenses of protecting, operating,
managing (including reasonable attorneys' fees and other professional fees),
repairing, replacing, decorating, renovating, repaving, lighting, cleaning,
painting, insuring (including but not limited to fire and extended coverage and
other insurance on the Common Areas and the Project, the costs of providing
security to the Project, pest control at the Project, insurance protecting
Landlord and the City against liability for personal injury, death and property
damage, liquor liability and workers' compensation insurance), removing of snow,
ice and debris, security and security patrol, fire protection, regulating
traffic, inspecting, repairing, replacing, and maintaining of machinery and
equipment used in the operation of the Common Areas, including heating,
ventilating and air conditioning machinery and equipment that serve the Common
Areas (but not costs associated with heating, ventilating and air conditioning
machinery and equipment that serve a leaseable space in the Premises), trash
storage and removal, including central trash compaction and removal equipment
and services, cost and expense of inspecting, maintaining, repairing and
replacing storm and sanitary drainage systems, sprinkler and other fire
protection systems, electrical, gas, water, telephone and irrigation systems,
cost and expense of maintaining, repairing and replacing the exterior of the
buildings in the Project, including, but not limited to floors, roofs,
skylights, escalators, elevators, walls, stairs and signs, cost and expense of
installing, maintaining, repairing and replacing burglar or fire alarm systems,
if installed, cost and expense of landscaping and shrubbery and expenses of
utilities. Notwithstanding anything to the contrary contained herein, Landlord's
Common Area Costs shall not include: (i) any rent payments made by Landlord to
the City under the provisions of the Ground Lease (other than additional rent
type payments, if any, made by Landlord to the City under the Ground Lease for
services or materials provided by the City to Landlord and/or the Project that
if provided directly by Landlord would constitute part of Landlord's Common Area
Costs); (ii) Landlord's administrative and overhead costs incurred in connection
with the Common Areas; and (iii) the depreciation of any part of the Common
Area; but may include the cost of repairs to the Common Areas. Notwithstanding
anything to the contrary
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contained herein, with regard to capital expenditures, for purposes of this
Lease: (i) Landlord shall not have the right to include any capital expenditures
incurred during the first five (5) Lease Years of the Lease Term in connection
with the Common Areas as part of the Landlord's Common Area Cost, and (ii)
Landlord shall have the right to include capital expenditures incurred after
the first five (5) Lease Years of the Lease Term in connection with the Common
Areas, subject to the following limiting provisions:
(A) each such capital expenditure must be amortized over the useful life
and only the amortized portion of such capital expenditure attributable to
a Lease Year shall be included in Landlord's Common Area Costs for such
Lease Year; and
(B) no capital expenditures may be included as a part of the Landlord's
Common Area Costs unless such capital expenditure provides a benefit to
the Premises and is reasonably necessary for the operation of the Project
or the maintenance of the Project as a first class urban entertainment
center.
Section 6.2 Tenant to Bear Pro Rata Share of Expenses
(a) Tenant shall pay Landlord, in addition to all other amounts in this
Lease provided, as Additional Rent, its proportionate share of Landlord's Common
Area Costs for each Lease Year during the Lease Term. Tenant's proportionate
share of any such Common Area Costs shall be that portion of such Common Area
Costs which bears the same ratio to the total Common Area Costs for the Project
as the Premises Floor Area bears to the Project Floor Area.
(b) Tenant's share of Landlord's Common Area Costs shall be paid in
monthly installments, in amounts reasonably estimated from time to time by
Landlord, one (1) such installment being due on the first day of each month of
each calendar year.
(c) Within ninety (90) days after the end of each calendar year (and
within ninety (90) days after the end of the Lease Term), Landlord shall provide
Tenant with a statement (the "CAM Statement") setting forth in reasonable detail
the total Landlord's Common Area Costs for such calendar year (or, at the
beginning or end of the Lease Term, such partial calendar year) and Tenant's pro
rata share thereof. If Tenant's pro rata share of Landlord's Common Area Costs
for any calendar year exceeds the sum of the monthly installments of such costs
paid by the Tenant during such calendar year, then Tenant shall pay the excess
to Landlord within thirty (30) days after the CAM Statement is received by
Tenant. If the sum of Tenant's monthly installments of such costs paid during
any calendar year exceeds Tenant's pro
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rata share of Landlord's Common Area Costs for such calendar year, then Landlord
shall pay the excess to the Tenant at the time it delivers the CAM Statement to
Tenant.
(d) Landlord agrees to keep in its main administrative offices (which on
the date hereof are located at 300 Water Street, Baltimore, Maryland) records of
Landlord's Common Area Costs. Such records shall be retained by the Landlord for
not less than three (3) years after the expiration of the calendar year to which
they relate. For purposes of permitting verification by the Tenant of the
Landlord's Common Area Costs reported by Landlord, Tenant shall have the right
for a period of three (3) years after the end of each calendar year, exercisable
not more frequently than once in any twelve (12) month period for such calendar
year, upon not less than ten (10) days' notice to Landlord, to audit and copy or
cause to have audited and copied, Landlord's books and records with respect to
Landlord's Common Area Costs. If such audit discloses that the CAM Statement has
overstated Tenant's pro rata share of Landlord's Common Area Costs during a
calendar year, then Landlord shall refund any overpayment made by Tenant for
such calendar year and, in addition, if such overstatement (and resulting
overpayment) for such calendar year is more than the greater of Five Thousand
and 00/100 Dollars and two percent (2%), Landlord shall pay the costs of the
Tenant's inspection or audit.
ARTICLE VII
UTILITIES AND SERVICES
Section 7.1 Utilities
Tenant shall not install any equipment which can exceed the capacity of
any utility facilities serving the Project and if any equipment installed by
Tenant after the Commencement Date requires additional utility facilities, the
same shall be installed at Tenant's expense in compliance with all code
requirements and plans and specifications which must be approved in writing by
Landlord, which approval shall not be unreasonably withheld, delayed or
conditioned. Tenant shall be solely responsible for and shall promptly pay
directly to the applicable utility companies all charges for use or consumption
of sewer, gas, electricity, water, telephone, cable television and all other
utility services with respect to the Premises. In the event that the electric
utility industry in the State of Texas is at any time deregulated, Tenant shall
have the right to purchase electric service from the provider of its choice
(however, Tenant (or Tenant's utility provider of choice) shall be solely
responsible for any costs associated with providing such electric service, such
as new transformers or meters, if any).
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Section 7.2 HVAC MAINTENANCE.
Throughout the Lease Term Tenant shall, at the sole cost and expense of
Tenant, maintain (and replace if necessary) the HVAC equipment located within or
exclusively serving the Premises to the end that same is always in good
condition and repair and in good operational condition. In order, to comply with
its obligation under this Section 7.2 hereof, Tenant and its contractors shall
have a right of access across the roof of the Premises; provided that Tenant
promptly repairs any damage to the roof caused by such access.
ARTICLE VIII
CONDUCT OF BUSINESS BY TENANT
Section 8.1 Use of Premises
(a) Subject to the provisions of Sections 8.1 (b) and 8.2, the Premises
shall be occupied and used by Tenant solely for the Intended Use. Tenant shall
use only such minor portions of the Premises for storage and office purposes as
are reasonably required in connection with the conduct by Tenant of the Intended
Use in the Premises. Tenant shall not use or permit or suffer the use of the
Premises for any other business or purpose.
(b) Subject to Applicable Law, Tenant shall have the right to offer for
sale alcoholic beverages to its customers for consumption on the Premises. At
Tenant's request, Landlord shall assist Tenant with any effort of Tenant to
obtain a liquor license for Tenant's business in the Premises.
Section 8.2 Prohibited Uses
(a) By Tenant. (i) Tenant shall not use or occupy the Premises, an
adjacent or adjoining easement, roadway, street, sidewalk or alley, the Common
Areas, or the Garage in a manner which would: (A) violate the terms of the
Ground Lease, (B) make use of the Premises for any purposes other than that
permitted in Section 8.1, (C) cause structural injury to the Premises, the
Project, the Garage (or any part of any such improvements) or property adjacent
to the Project, (D) violate any Applicable Law applicable to Tenant or to the
Property, the Premises or Tenant's use thereof, or (E) unreasonably interfere
(absent the receipt of appropriate governmental permits or authorizations) with
the right of the public to use the public sidewalks adjacent to the Project. In
addition, Tenant shall not utilize all or any part of the Premises for the sale
or exhibition of unlawful pornographic materials, film or books or operate any
sexually oriented business (such as a peep show, adult book store, or topless
bar) that is regulated by local law applicable to the City, at large.
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(ii) Tenant shall not operate, or permit others to
operate all or part of the Premises for the exhibition of motion pictures in a
public auditorium setting as the exhibition of motion pictures in a public
auditorium setting in the United States may evolve after the date hereof.
(iii) Tenant shall not operate, or permit others to
operate, all or part of the Premises as a micro-brewery.
(iv) Tenant shall not operate, or permit others to
operate, all or part of the Premises as a billiard's hall or from locating in
the premises on a permanent basis more then one billiard's table for every 4,000
square feet of Premises Floor Area.
(b) By Others. Provided Tenant is not in default of any of its
obligations under this Lease beyond any applicable notice and/or cure period,
Landlord: (i) shall include in any lease executed by Landlord after the date
hereof for any part of the Project or any part of any project located on the
site of the West Hall of the former Albert Thomas Convention Center a
prohibition that prevents the tenant thereunder from operating its premises in
the Project (or any project located on the site of the West Hall) as a
performance hall for Broadway style theatrical performances or as a performance
hall for live, amplified, popular music performances: (A) with an actual indoor
seating capacity of more than four hundred (400) customers; and (B) with reserve
seating or advance ticket sales (e.g, the ability of the general public to
purchase tickets at least one (1) day in advance of a scheduled show); and (ii)
shall not execute any amendment to any Lease for the Project or any project
located on the site of the West Hall that would permit the tenant thereunder
from operating its premises in the Project (or such project on the West Hall) as
a performance hall for Broadway style theatrical performances or live,
amplified, popular music performances: (A) with an actual indoor seating
capacity of more than four hundred (400) customers; and (B) with reserve seating
or advance ticket sales (e.g, the ability of the general public to purchase
tickets at least one (l) day in advance of a scheduled show). The above
prohibition, if inserted into another tenant's lease, shall not prohibit the
utilization by such tenant of its premises in the Project (or any project in the
West Hall) for the presentation of Broadway style theatrical performances or
live, amplified, popular music performances so long as such premises: (A) is not
primarily perceived or operated as a performance hall for Broadway style
theatrical performances or live popular music performances with reserve seating
or advance ticket sales (e.g, the ability of the general public to purchase
tickets at least one (1) day in advance of a scheduled show) and (B) has an
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actual indoor seating capacity of less than four hundred and one (401)
customers.
The following examples are given for illustrative purposes to assist in
the interpretation of this Paragraph 8.2 (b):
(i) The above prohibition, if inserted into another tenant's lease,
shall not prevent a tenant of the Project (or any project on the site of
the "West Hall") that operates a restaurant, such as a bar-b-que
restaurant, from scheduling weekly live blues performances, even if such
restaurant has advanced ticket sales and reserve seating; provided that
the actual indoor seating capacity of such restaurant is less than four
hundred and one (401) customers.
(ii) The above prohibition, if inserted into another tenant's lease,
shall not prevent a tenant of the Project (or any project on the site of
the "West Hall") that operates a jazz nightclub or bar from hosting live
jazz music performances and other types of live music performances that
are appropriate for first class jazz music nightclub venues, even if such
club or nightclub has advanced ticket sales and reserve seating; provided
that the actual indoor seating capacity of such nightclub or bar is less
than four hundred and one (401) customers.
(iii) The above prohibition, if inserted into another tenant's
lease, shall not prevent a tenant of the Project (or any project on the
site of the "West Hall") that operates a nightclub or a bar in the Project
that may or may not charge a cover charge (but excluding any advanced
ticket sales), from having a house band perform at its premises or from
presenting, from time to time, free live music performances in its
premises.
(iv) The above prohibition, if inserted into another tenant's lease,
shall not prevent a tenant of the Project (or any project on the site of
the "West Hall") from operating its premises as a comedy based
improvisational style theater or as a comedy club, even if such theater or
club has advanced ticket sales and reserve seating; provided that the
actual indoor seating capacity of such nightclub or bar is less than four
hundred and one (401) customers.
Landlord shall use its reasonable efforts to enforce any such prohibition in any
such lease; provided, however, that Landlord may but shall not be obligated to
file suit to enforce any such prohibitions; and provided further, however, that
at the request of Tenant, and at the sole cost and expense of Tenant, Landlord
shall seek the imposition of a court ordered injunction against any
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tenant of the Project whose lease contains such a prohibition and who violates
such prohibition. Landlord shall have the right to terminate such a lawsuit if
its costs are not paid promptly by Tenant. Tenant shall also have the right, at
its sole cost and expense, to seek the imposition of such a court ordered
injunction, and Tenant's activities in seeking such an injunction shall be
deemed to be included within the matters for which Tenant has agreed to save
harmless, indemnify and defend Landlord and the City pursuant to Section 11.5
hereof.
Section 8.3 Prompt Occupancy and Use
On the Commencement Date, Tenant shall open and operate its business in
the Premises in compliance with the provisions of Sections 8.1 and 8.4 hereof.
During the Lease Term, Tenant shall maintain a staff, shall continuously pursue
the booking of concerts, events and shows for presentation in the Premises, and
shall use its reasonable efforts to present at least seventy-five (75) concerts,
events and/or shows in the Premises during each Lease Year. Notwithstanding the
previous sentence, Landlord recognizes and agrees that Tenant shall have the
sole and exclusive right to determine the number of concerts, events and shows
presented in the Premises and that Tenant shall not be deemed to be in default
of any of its obligations under this Lease as a result of the failure of Tenant
to present at least seventy-five (75) concerts, events and shows in the Premises
during any Lease Year.
Section 8.4 Conduct of Business
Tenant's business at the Premises shall initially be conducted under the
trade name "The Theater at Bayou Place. At any time thereafter, Tenant shall
have the right to change such trade name to another trade name selected by
Tenant; provided Tenant provides Landlord with at least seven (7) days prior
notice of such new trade name. Tenant shall comply with Landlord's reasonable
directives concerning traffic and crowd control.
Section 8.5 Operation by Tenant
Tenant covenants and agrees that it will: not place or maintain any
merchandise, vending machines or other articles outside the Premises; store
garbage, trash, rubbish and other refuse in rat-proof and insect-proof
containers inside the Premises, and remove the same frequently and regularly
and, if directed by Landlord, by such means and methods and at such times and
intervals as are reasonably specified by Landlord, all at Tenant's expense; not
permit any sounds to escape from the Premises which would result in a material
and adverse interference with the business operations of the other tenants in
the Project or permit any advertising medium visible outside of the Premises
(except in compliance with the provisions of Section 10.1 hereof); keep all
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mechanical equipment reasonably free of vibration and noise and in good working
order and condition; not commit or permit waste or a nuisance upon the Premises;
not permit or cause odors to emanate or be dispelled from the Premises to the
extent same violates Applicable Law, becomes a nuisance, or materially adversely
interferes with the use and enjoyment of any other tenant of Landlord of such
tenant's premises in the Project; not permit the loading or unloading or the
parking or standing of delivery vehicles outside any area designated therefor,
nor permit any use of vehicles which will interfere with the use of any Common
Areas; not permit any noxious, toxic or corrosive fuel or gas, dust, dirt or fly
ash on the Premises; and not place a load on any floor in the Project which
exceeds the floor load per square foot which such floor was designed to carry.
Section 8.6 Painting, Decorating, Displays, Alterations
Tenant shall not make any exterior or structural alterations to the
Premises or roof cuts to the roof of the Premises without Landlord's prior
written consent, which consent shall not be unreasonably withheld, delayed or
conditioned; provided, such alterations or roof cuts do not materially adversely
impair the value of the Project, invalidate or void any applicable warranties,
or materially adversely affect the operations of any other occupants of the
Project. Tenant shall have the right, without Landlord's consent, to make or
cause to be made such interior alterations, additions or improvements to the
Premises as Tenant shall desire; provided same does not materially adversely
impair the value of the Premises (the reconfiguration of auditoriums, the
combination of auditoriums and the dividing of auditoriums shall not be deemed
to impair the value of the Premises) or materially adversely affect the
operations of any other occupants of the Project. All such alterations,
additions and improvements shall be completed in a good and workmanlike manner,
and shall be constructed in accordance with all Applicable Law, in a manner so
as not to structurally impair the Premises and the Project, and in compliance
with Section 10.3 hereof. Tenant shall cause its contractors to comply with the
insurance provisions of this Lease. Tenant shall provide Landlord with a
complete set of plans and specifications for any alterations or roof cuts that
require the Landlord's consent at least thirty (30) days prior to the date that
Tenant anticipates commencing such work. Landlord's receipt, review and possible
approval of such plans and specifications shall not be construed to constitute a
representation or warranty by Landlord as to compliance with Applicable Law, as
to the structural, engineering or other design depicted in such plans and
specifications or as to the quality or fitness of any materials used. In the
event that Tenant requires a staging area in order to undertake and complete any
alterations to the Premises that it is permitted to undertake hereunder, such
areas, and the rules for their use, shall be mutually acceptable to Landlord and
Tenant;
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provided that no such staging area shall unreasonably impede the use of the
Project or by any of the other occupants thereof. Tenant may remove, modify, or
alter walls dividing auditoriums within or otherwise dividing the internal areas
of the Premises without Landlord's consent.
Section 8.7 Emissions and Hazardous Materials
(a) Landlord hereby represents and warrants to Tenant that the City has
provided Landlord with a certification that the Property, and the improvements
constructed thereon, does not contain any Hazardous Materials (as that term is
defined below). Landlord represents and warrants to Tenant that, on the date of
this Lease, the Property, and the improvements constructed thereon, does not
contain any Hazardous Materials.
(b) Tenant shall not cause or permit, knowingly or unknowingly, any
Hazardous Material (as that term is hereinafter defined) to be brought or remain
upon, kept, used, discharged, leaked, or emitted in or about, or at the Premises
or the Project, provided however, that Tenant shall have the right, in
accordance with Applicable Law, to utilize products that may constitute
Hazardous Materials in connection with the ordinary operation of its business in
the Premises, such as cleaning solvents utilized in connection with Tenant's
regular maintenance operations at the Premises and lubricants utilized in
connection with the maintenance of Tenant's projection equipment utilized in the
Premises. As used in this Lease, "Hazardous Material(s)" shall mean any
hazardous, toxic or radioactive substance, material, matter of waste which is or
becomes regulated by any federal, state or local law, ordinance, order, rule,
regulation, code or any other governmental restriction or requirement, and shall
include asbestos, petroleum products and the terms "Hazardous Substance" and
"Hazardous Waste" as defined in the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), as amended, 42 U.S.C. ss. 9601 et
seq., and the Resource Conservation and Recovery Act ("RCRA"), as amended, 42
U.S.C. ss. 6901 et seq. Tenant shall obey and adhere to any and all federal,
state or local laws, ordinances, orders, rules, regulations, codes or any other
governmental restrictions or requirements (including but not limited to CERCLA
and RCRA which in any way regulate, govern or impact Tenant's possession, use,
storage or disposal of said Hazardous Material(s). In addition, Tenant
represents and warrants to Landlord that (1) Tenant shall apply for and remain
in compliance with any and all necessary federal, state or local permits in
regard to Hazardous Materials; (2) Tenant shall report to any and all applicable
governmental authorities any release of reportable quantities of any Hazardous
Material(s) as required by any and all federal, state or local laws, ordinances,
orders, rules, regulations, codes or any other governmental restrictions or
requirements; (3) Tenant, within five
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(5) days of receipt, shall send to Landlord a copy of any notice, order,
inspection report, or other document issued by any governmental authority
relevant to the Tenant's compliance status with environmental or health and
safety laws; and, (4) Tenant shall remove from the Premises all Hazardous
Materials at the termination of this Lease to the extent caused by Tenant or any
of its employees, contractors, licensees or invitees.
IN ADDITION TO, AND IN NO WAY LIMITING, TENANT'S DUTIES AND OBLIGATIONS AS
SET FORTH IN SECTION 11.5 OF THIS LEASE, SHOULD TENANT BREACH ANY OF ITS DUTIES
AND OBLIGATIONS AS SET FORTH IN THIS SECTION 8.7 OF THIS LEASE, OR IF TENANT OR
ANY CONTRACTOR, AGENT, EMPLOYEE OR SUBTENANT OF TENANT BRINGS ANY HAZARDOUS
MATERIAL(S) ONTO THE PREMISES THAT RESULTS IN CONTAMINATION OF THE PREMISES, THE
PROJECT, THE PROPERTY, ANY LAND OTHER THAN THE PROPERTY, THE ATMOSPHERE, OR ANY
WATER OR WATERWAY (INCLUDING GROUNDWATER), OR IF CONTAMINATION OF THE PREMISES
OR THE PROJECT BY ANY HAZARDOUS MATERIAL(S) OTHERWISE OCCURS AS A RESULT OF THE
ACTIONS OF TENANT AND/OR TENANT'S SUBTENANTS, AGENTS, EMPLOYEES OR CONTRACTORS,
TENANT SHALL INDEMNIFY, SAVE HARMLESS AND, AT LANDLORD'S OPTION AND WITH
ATTORNEYS APPROVED IN WRITING BY LANDLORD, WHICH APPROVAL SHALL NOT BE
UNREASONABLY WITHHELD, DELAYED OR CONDITIONED, DEFEND LANDLORD, AND ITS
CONTRACTORS, AGENTS, EMPLOYEES, PARTNERS, OFFICERS, DIRECTORS, THE CITY AND
LANDLORD'S MORTGAGEES, IF ANY, FROM ANY AND ALL CLAIMS, DEMANDS, DAMAGES,
EXPENSES, FEES, COSTS, FINES, PENALTIES, SUITS, PROCEEDINGS, ACTIONS, CAUSES OF
ACTION, AND LOSSES OF ANY AND EVERY KIND AND NATURE (INCLUDING, WITHOUT
LIMITATION, DIMINUTION IN VALUE OF THE PREMISES OR THE PROJECT, DAMAGES ARISING
FROM ANY ADVERSE IMPACT ON MARKETING SPACE IN THE PROJECT, AND REASONABLE SUMS
PAID IN SETTLEMENT OF CLAIMS AND FOR REASONABLE ATTORNEY'S, CONSULTANT'S, AND
EXPERT'S FEES (PROVIDED THAT TENANT SHALL NOT BE OBLIGED TO REIMBURSE SUCH FEES
TO THE EXTENT THAT TENANT IS PROVIDING A DEFENSE UNDER THIS LEASE), WHICH MAY
ARISE DURING OR AFTER THE LEASE TERM OR ANY EXTENSION THEREOF AS A RESULT OF
SUCH CONTAMINATION). THIS INCLUDES, WITHOUT LIMITATION, COSTS AND EXPENSES,
INCURRED IN CONNECTION WITH ANY INVESTIGATION OF SITE CONDITIONS OR ANY CLEANUP,
REMEDIAL, REMOVAL OR RESTORATION WORK REQUIRED BY ANY FEDERAL, STATE OR LOCAL
GOVERNMENTAL AGENCY OR POLITICAL SUBDIVISION BECAUSE OF THE PRESENCE OF
HAZARDOUS MATERIAL(S) ON OR ABOUT THE PREMISES OR THE PROJECT WHICH WAS PLACED
THERE BY TENANT AND/OR TENANT'S SUBTENANTS, AGENTS, CONTRACTORS OR EMPLOYEES.
WITHOUT LIMITING THE FOREGOING, IF THE PRESENCE OF ANY HAZARDOUS MATERIAL(S) ON
OR ABOUT THE PREMISES OR THE PROJECT CAUSED OR PERMITTED BY TENANT RESULTS IN
ANY CONTAMINATION OF THE PREMISES OR THE PROJECT, TENANT SHALL, AT ITS SOLE
EXPENSE, PROMPTLY TAKE ALL ACTIONS AND EXPENSE AS ARE NECESSARY TO RETURN THE
PREMISES AND/OR THE PROJECT TO THE CONDITION EXISTING PRIOR TO THE INTRODUCTION
OF ANY SUCH HAZARDOUS MATERIAL(S) TO THE PREMISES OR THE PROJECT; PROVIDED,
HOWEVER, THAT LANDLORD'S APPROVAL OF SUCH ACTIONS WITH RESPECT TO ANY PORTION OF
THE PROJECT OTHER THAN THE PREMISES SHALL FIRST BE OBTAINED IN
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WRITING, WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD, DELAYED OR
CONDITIONED.
(c) IF LANDLORD OR ANY CONTRACTOR, AGENT, OTHER TENANT, OR EMPLOYEE OF
LANDLORD BRINGS ANY HAZARDOUS MATERIAL(S) ONTO THE PREMISES THAT RESULTS IN
CONTAMINATION OF THE PREMISES, THE PROJECT, THE PROPERTY, ANY LAND OTHER THAN
THE PROPERTY, THE ATMOSPHERE, OR ANY WATER OR WATERWAY (INCLUDING GROUNDWATER),
OR IF CONTAMINATION OF THE PREMISES OR THE PROJECT BY ANY HAZARDOUS MATERIAL(S)
OTHERWISE OCCURS AS A RESULT OF THE ACTIONS OF LANDLORD AND/OR LANDLORD'S
AGENTS, EMPLOYEES, OTHER TENANTS, OR CONTRACTORS, LANDLORD SHALL INDEMNIFY, SAVE
HARMLESS AND, AT TENANT'S OPTION AND WITH ATTORNEYS APPROVED IN WRITING BY
TENANT, WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD, DELAYED OR
CONDITIONED, DEFEND TENANT, AND ITS CONTRACTORS, AGENTS, EMPLOYEES, PARTNERS,
OFFICERS, DIRECTORS, AND TENANT MORTGAGEE, IF ANY, FROM ANY AND ALL CLAIMS,
DEMANDS, DAMAGES, EXPENSES, FEES, COSTS, FINES, PENALTIES, SUITS, PROCEEDINGS,
ACTIONS, CAUSES OF ACTION, AND LOSSES OF ANY AND EVERY KIND AND NATURE
(INCLUDING, WITHOUT LIMITATION, DIMINUTION IN VALUE OF THE PREMISES, AND
REASONABLE SUMS PAID IN SETTLEMENT OF CLAIMS AND FOR REASONABLE ATTORNEY'S,
CONSULTANT'S, AND EXPERT'S FEES (PROVIDED THAT LANDLORD SHALL NOT BE OBLIGATED
TO REIMBURSE SUCH FEES TO THE EXTENT THAT LANDLORD IS PROVIDING A DEFENSE UNDER
THIS LEASE), WHICH MAY ARISE DURING OR AFTER THE LEASE TERM OR ANY EXTENSION
THEREOF AS A RESULT OF SUCH CONTAMINATION). THIS INCLUDES, WITHOUT LIMITATION;
COSTS AND EXPENSES, INCURRED IN CONNECTION WITH ANY INVESTIGATION OF SITE
CONDITIONS OR ANY CLEANUP, REMEDIAL, REMOVAL OR RESTORATION WORK REQUIRED BY ANY
FEDERAL, STATE OR LOCAL GOVERNMENTAL AGENCY OR POLITICAL SUBDIVISION BECAUSE OF
THE PRESENCE OF HAZARDOUS MATERIAL(S) ON OR ABOUT THE PREMISES OR THE PROJECT
THAT WERE BROUGHT ONTO THE PREMISES BY LANDLORD AND/OR LANDLORD'S CONTRACTORS,
AGENTS OR EMPLOYEES. WITHOUT LIMITING THE FOREGOING, IF THE PRESENCE OF ANY
HAZARDOUS MATERIAL(S) ON OR ABOUT THE PREMISES OR THE PROJECT CAUSED OR
PERMITTED BY LANDLORD RESULTS IN ANY CONTAMINATION OF THE PREMISES OR THE
PROJECT, LANDLORD SHALL, AT ITS SOLE EXPENSE, PROMPTLY TAKE ALL ACTIONS AND
EXPENSE AS ARE NECESSARY TO RETURN THE PREMISES AND/OR THE PROJECT TO THE
CONDITION EXISTING PRIOR TO THE INTRODUCTION OF ANY SUCH HAZARDOUS MATERIAL(S)
TO THE PREMISES OR THE PROJECT; PROVIDED, HOWEVER, THAT TENANT'S APPROVAL OF
SUCH ACTIONS WITHIN THE PREMISES SHALL FIRST BE OBTAINED IN WRITING, WHICH
APPROVAL SHALL NOT BE UNREASONABLY WITHHELD, DELAYED, OR CONDITIONED.
Section 8.8 Public Policy
Tenant acknowledges that it is aware of and familiar with the City's
significant support of the Project and of the legitimate public policies
necessitating Tenant's adherence to the requirements of Tenant contained in this
Lease, particularly as to the first class use and maintenance of a first class
appearance of
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the Premises. In acknowledgment of the fact that Tenant is leasing a significant
portion of the Project, Tenant agrees to meet with the Landlord and the City as
may be reasonably requested from time to time by Landlord and to reasonably
discuss proposed resolutions of any issues that may be raised by the City.
Section 8.9 Dumpster/Trash
Tenant shall install (as part of the Tenant's Work) and thereafter
maintain throughout the Lease Term adequate trash disposal facilities for the
Premises at a location designated by Landlord on the Property. Such trash
disposal facilities shall, as part of Tenant's Work, be screened and landscaped
in a first class manner. Landlord shall have the right, at Landlord's sole
expense, with Tenant's consent, which consent shall not be unreasonably
withheld, delayed or conditioned, to relocate such trash disposal facilities.
Landlord shall have the right to implement a trash collection service for the
Project and Tenant shall participate in such service. The cost of such service
shall be deemed to be part of the Landlord's Common Area Cost.
Section 8.10 Rule & Regulations
Tenant shall comply with the Rules and Regulations attached hereto
as Exhibit C. Landlord reserves the right at all times during the Lease Term to
add to, change, amend and/or modify the Rules and Regulations, provided such
additions, changes, amendments and/or modifications are reasonable and are not
discriminatory nor materially adversely affect Tenant's operation or enjoyment
of the Premises (to the extent same is in compliance with the express provisions
of this Lease). No such addition, change, amendment and/or modification shall
apply to Tenant until ten (10) days after the date Landlord provides Tenant with
a notice of such addition, change, amendment and/or modification.
ARTICLE IX
MAINTENANCE OF LEASED PREMISES
Section 9.1 Maintenance by Landlord
Landlord shall keep or cause to be kept the foundations, roof and
structural portions of the walls of the Premises in good order, repair and
condition except for damage thereto due to the negligence or wilful misconduct
of Tenant, its agents, employees, licensees (other than customers) or
contractors. Landlord shall commence required repairs as soon as reasonably
practicable after receiving notice from Tenant thereof. This Section 9.1 shall
not apply in case of damage or destruction by fire or other casualty or
condemnation or eminent domain, in which events the obligations of Landlord
shall be controlled by Articles XVI and
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XVII hereof. Except as provided in this Section 9.l and Section 8.7 hereof,
Landlord shall not be obligated to make repairs, replacements or improvements of
any kind upon the Premises, or to any equipment, merchandise, stock in trade,
facilities or fixtures therein, all of which shall be Tenant's responsibility,
but Tenant shall give Landlord prompt notice of any serious accident, casualty,
damage or other similar occurrence in or to the Premises or the Common Areas of
which Tenant has knowledge.
Section 9.2 Maintenance by Tenant
Tenant shall at all times keep the Premises (including all entrances and
vestibules) and all partitions, window and window frames and moldings, glass,
store fronts, doors, door openers, fixtures, equipment and appurtenances thereof
(including lighting, heating, electrical, plumbing, ventilating and air
conditioning fixtures and systems and other mechanical equipment and
appurtenances) and all other parts of the Premises not required herein to be
maintained by Landlord, in a good, clean, safe and operable condition and repair
and in compliance with Applicable Law and in a condition comparable to other
first class urban entertainment centers, damage by casualty excepted. If
replacement of equipment, fixtures and appurtenances thereto is necessary,
Tenant shall replace the same with new or completely reconditioned equipment,
fixtures and appurtenances, and repair all damages done in or by such
replacement. Notwithstanding the foregoing, Landlord reserves the right to
provide or contract for alternative or additional pest control measures (and the
cost thereof shall be part of the Landlords Common Area Costs).
Section 9.3 Surrender of Premises
At the expiration or earlier termination of the Lease Term, with the
exception of the Excluded Personal Property, Tenant shall surrender the Premises
in the same condition as they were required to be in on the Commencement Date
(as same may have been modified by Tenant in accordance with the terms and
provisions of this Lease), reasonable wear and tear and damage by casualty
excepted, and deliver all keys for, and all combinations on locks, safes and
vaults in, the Premises to Landlord at Landlord's notice address as specified in
Section 25.7 or, at Landlord's option, to the office of the Project's general
manager, if any. Tenant may, at Tenant's option, remove from the Premises within
ninety (90) days after such expiration (or after a termination not due to
Tenant's default) all of the Excluded Personal Property then situated thereon.
Excluded Personal Property not so removed shall become the property of Landlord,
and Landlord may cause such all Property to be removed from the Premises and
disposed of.
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ARTICLE X
SIGNS, AWNINGS, CANOPIES, ALTERATIONS
Section 10.1 Installation
Tenant may, at its cost and expense, install signs, awnings and canopies
at, on or from the Premises (included the exterior of the Premises) that
advertise Tenant's business in the Premises, provided Tenant submits to Landlord
Tenant's plans showing such sign, awning or canopy, and Landlord's written
approval is first obtained, which approval shall not be unreasonably withheld,
delayed or conditioned. Landlord will cooperate with Tenant with respect to
Tenant's sign applications to applicable governmental entities. All signs,
awnings and canopies shall comply with Applicable Law.
Section 10.2 Ownership of Tenant's Improvements/Removal and Restoration by
Tenant
All alterations, changes and additions and all improvements, including
leasehold improvements made by Tenant to the Premises, whether part of Tenant's
Work or not and whether or not paid for wholly or in part by Landlord, shall
remain Tenant's property for the Lease Term. With the exception of Excluded
Personal Property, any alterations, changes, additions and improvements shall
immediately upon the termination or expiration of this Lease become Landlord's
property, be considered part of the Premises, and not be removed at or prior to
the end of the Lease Term without Landlord's written consent. Tenant shall not
be entitled during the Lease Term, or after termination of same, to remove
permanent improvements, fixtures or any air conditioning equipment, plumbing,
electrical wiring, curtain walls, storefronts, or other elements of the TALP
Improvements (as that term is defined in the Ground Lease), but, at the end of
the Lease Term, Tenant shall have the right to remove all Removable Improvements
(as that term is defined in the Ground Lease) such as the Excluded Personal
Property.
Section 10.3 Tenant's Liens
Tenant shall not suffer any mechanics' or materialmen's lien to be filed
against the Premises or the Project by reason of work, labor, services or
materials performed or furnished to Tenant or anyone holding any part of the
Premises under Tenant. If any such lien shall at any time be filed as aforesaid,
Tenant may contest the same in good faith, but, notwithstanding such contest,
Tenant shall, within thirty (30) days after the filing thereof, cause such lien
to be bonded or released of record by payment, or order of a court of competent
jurisdiction. In the
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event of Tenant's failure to bond or release of record any such lien within the
aforesaid period, Landlord, any Affiliate of Landlord or any party who delivered
a guaranty with respect to any financing of the Project or the Premises may
remove said lien by paying the full amount thereof or by bonding or in any other
manner that such person deems appropriate, without investigating the validity
thereof, and irrespective of the fact that Tenant may contest the propriety or
the amount thereof, and Tenant, upon demand, shall pay Landlord the amount so
paid out by Landlord in connection with the discharge of said lien, together
with interest thereon at the Default Interest Rate and reasonable expenses
incurred in connection therewith, including reasonable attorneys' fees, which
amounts are due and payable in full to Landlord as Additional Rent on the first
day of the next following month. Nothing contained in this Lease shall be
construed as a consent on the part of Landlord to subject Landlord's estate in
the Premises to any lien or liability under the lien laws of the State of Texas.
Tenant's obligation to observe and perform any of the provisions of this Section
10.3 shall survive the expiration of the Lease Term or the earlier termination
of this Lease.
ARTICLE XI
INSURANCE
Section 11.1 By Tenant
(a) Tenant shall carry the following insurance on the Premises during the
Lease Term, which amounts may be increased at any time during the Lease Term
after sixty (60) days prior notice to Tenant, if and to the extent Applicable
Law requires such increases:
(i) Worker's Compensation and Employer's Liability Insurance
("Worker's Insurance") in compliance with Applicable Law.
(ii) Commercial general liability insurance (including contractual
liability coverage) against claims for bodily injury, death or property damage
by Tenant with respect to the Premises ("Liability Insurance"), such insurance
to afford minimum protection of not less than (x) $3,000,000 in respect of
bodily injury or death in respect of any one occurrence, and (y) $500,000 for
property damage for any one occurrence. In the event that alcoholic beverages
are served at the Premises, the commercial general liability insurance shall
include Liquor Liability or a Separate Liquor Liability Policy (the "Liquor
Liability Policy") - Bodily injury and property damage $1,000,000.00 for each
occurrence and $1,000,000 aggregate. At
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the election of Tenant, the Liquor Liability Policy may be provided by Tenant's
food and beverage concessionaire instead of directly by Tenant, provided that
all of the other provisions of this Lease concerning such Liquor Liability
Policy are complied with.
(iii) Property insurance against loss or damage by fire and such
other risks covered under a standard "All-Risk" policy of property insurance to
include the Tenant's Work (and all replacements and/or modifications thereto)
and Tenant's property located in the Premises (with commercially reasonable
deductibles) for the full replacement value of such improvements and property,
without any deduction being made for depreciation, or such greater amount as
shall be necessary so as to preclude Tenant from being treated as a co-insurer
with respect to any covered loss (Casualty Insurance).
(b) During any period of construction (commencing with the performance of
Tenant's Work) Tenant shall, at its own cost and expense, maintain, or cause to
be maintained, in full force and effect, until completion of construction, a
policies of builders' risk insurance insuring (on a non reporting and completed
value basis) the improvements, as the same are constructed (Construction Period
Insurance).
Section 11.2 Mutual Waiver of Subrogation Rights
(a) Landlord and Tenant, and all parties claiming through or under them,
mutually release and discharge each other and the City from all claims and
liabilities arising from or caused by any casualty or hazard covered or required
under this Lease to be covered in whole or in part by insurance on the Premises
or the Project, and waive any right of subrogation which might otherwise exist
in or accrue to any person on account thereof and agree to evidence such waiver
by endorsement to such required insurance policies; provided that such release
and discharge and such waiver of subrogation will only be effective to the
extent that such claim is, or would be, covered by a policy required by this
Lease and shall not release any party from liability for failure to obtain any
insurance required by this Lease, and; provided further that such release and
discharge and such waiver of subrogation shall not operate in any case where the
effect is to invalidate or increase the cost of such insurance coverage
(provided, that in the case of increased cost, the other party shall have the
option of (i) paying such increased cost, thereby keeping such release and
waiver in full force and effect), or (ii) surrendering its right to demand such
release and discharge and such a waiver of subrogation.
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(b) Notwithstanding anything to the contrary contained in this Lease,
Tenant shall cause each insurance policy carried or to be carried by Tenant
hereunder to be written in a manner so as to provide that the insurance company
waives all right of recovery by way of subrogation against the City, in
connection with any loss or damage that may occur to the Premises or to the
trade fixtures, signs, video display equipment, supplies, personal property,
valuables, files and movable equipment utilized or owned by Tenant (including
all desks, typewriters, computers, communication systems, file boxes, film
equipment, video equipment and office equipment) and covered by any such
policies.
Section 11.3 Waiver
Except to the extent (i) of the proceeds of any policy of insurance
required to be maintained by Landlord under this Lease, (ii) of any negligence
or wilful misconduct of Landlord, or (iii) a breach of any of the provisions of
this Lease by Landlord that results in a claim for damages by Tenant, Landlord
shall not be liable for, and Tenant waives with respect to Landlord all claims
for, damage, including but not limited to consequential damages, to person,
property or otherwise, sustained by Tenant or any person claiming through Tenant
resulting from any accident or occurrence in or upon any part of the Project
including, but not limited to, claims for damage resulting from: (a) any
equipment or appurtenances becoming out of repair; (b) Landlord's failure to
keep any part of the Project in repair; (c) injury done or caused by wind,
water, or other natural element; (d) any defect in or failure of plumbing,
heating or air conditioning equipment, electric wiring or installation thereof,
gas, water, and steam pipes, stairs, porches, railings or walks; (e) broken
glass; (f) the backing up of any sewer pipe or down spout; (g) the bursting,
leaking or running of any tank, tub, washstand, water closet, waste pipe, drain
or any other pipe or tank in, upon or about the Premises; (h) the escape of
steam or hot water; (i) water, snow or ice upon the Premises; (j) the falling of
any fixture, plaster or stucco; (k) damage to or loss by theft or otherwise of
property of Tenant or others; (l) acts or omissions of persons in the Premises,
other tenants in the Project, occupants of nearby properties, or any other
persons; and (m) any act or omission of owners of adjacent or contiguous
property, or of Landlord, its agents or employees.
Section 11.4 Insurance - Tenant's Operation
Tenant will not do or suffer to be done anything which will contravene
Landlord's insurance policies or prevent Landlord from procuring the policies of
insurance which Landlord is required to obtain under the terms of this Lease. If
anything done, omitted to be done or suffered to be done by Tenant in, upon or
about the
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Premises shall cause the rates of any insurance effected or carried by Landlord
on the Premises in accordance with the provisions of this Lease to be increased
beyond the regular rate from time to time applicable to the Premises for use for
the purpose permitted under this Lease, Tenant will pay the amount of such
increase promptly upon Landlord's demand. In the event that this Lease so
permits and Tenant engages in the preparation of food or packaged foods or
engages in the use, sale or storage of inflammable or combustible material,
Tenant shall install chemical extinguishing devices (such as ansul) approved by
Underwriters Laboratories and Factory Mutual Insurance Company and the
installation thereof must be approved by the appropriate local authority. Tenant
shall keep such devices under service as required by such organizations. If gas
is used in the Premises, Tenant shall install gas cut-off devices (manual and
automatic).
Section 11.5 Indemnification
(a) EXCEPT TO THE EXTENT OF ANY LIABILITY RESULTING FROM THE NEGLIGENCE OR
WILFUL MISCONDUCT OF LANDLORD OR ANY OTHER PERSON INDEMNIFIED PURSUANT TO THE
TERMS OF THIS SECTION 11.5 OR A BREACH BY LANDLORD OF THE PROVISIONS OF THIS
LEASE, TENANT SHALL SAVE HARMLESS, INDEMNIFY, AND AT LANDLORD'S AND THE CITY'S
RESPECTIVE OPTIONS, DEFEND LANDLORD AND THE CITY, AND THEIR RESPECTIVE AGENTS
AND EMPLOYEES, AND MORTGAGEES, IF ANY, FROM AND AGAINST ANY AND ALL LIABILITY,
LIENS, CLAIMS, DEMANDS, DAMAGES, EXPENSES, FEES (INCLUDING REASONABLE ATTORNEYS'
FEES), COSTS, FINES, PENALTIES, SUITS, PROCEEDINGS, ACTIONS AND CAUSES OF ACTION
OF ANY AND EVERY KIND AND NATURE PROXIMATELY CAUSED BY (i) TENANT'S USE,
OCCUPANCY, MANAGEMENT OR CONTROL OF THE PREMISES OR TENANT'S OPERATIONS, CONDUCT
OR ACTIVITIES IN THE PROJECT; (ii) TENANT'S VIOLATION OF APPLICABLE LAW; AND
(iii) TENANT'S CONTEST OF TAXES AND ASSESSMENTS; PROVIDED THAT THIS PROVISION IS
NOT INTENDED (A) TO INDEMNIFY LANDLORD OR THE CITY, AS THE CASE MAY BE, WITH
RESPECT TO ANY OBLIGATIONS THEY MAY SEPARATELY OR COLLECTIVELY HAVE UNDER THIS
LEASE OR ANY OTHER AGREEMENT WITH TENANT, (B) TO INDEMNITY LANDLORD WITH RESPECT
TO LIABILITIES COVERED BY POLICIES OF INSURANCE WHICH LANDLORD IS REQUIRED TO
MAINTAIN UNDER THE TERMS OF THIS LEASE, OR (C) TO INDEMNIFY LANDLORD WITH
RESPECT TO INJURY OR DAMAGE SUSTAINED BY PERSONS MAKING USE OF THOSE PORTIONS OF
THE PREMISES OTHER THAN THE PREMISES (EXCEPT TO THE EXTENT SUCH INJURY OR DAMAGE
WAS SUSTAINED DUE TO THE NEGLIGENCE OR WILFUL MISCONDUCT OF TENANT).
(b) EXCEPT TO THE EXTENT OF ANY NEGLIGENCE OR WILFUL MISCONDUCT OF TENANT,
LANDLORD SHALL SAVE HARMLESS, INDEMNIFY, AND AT TENANTS OPTION, DEFEND TENANT,
AND ITS AGENTS AND EMPLOYEES, FROM AND AGAINST ANY AND ALL LIABILITY, LIENS,
CLAIMS, DEMANDS, DAMAGES, EXPENSES, FEES (INCLUDING REASONABLE ATTORNEYS FEES),
COSTS, FINES, PENALTIES, SUITS, PROCEEDINGS, ACTIONS AND CAUSES OF ACTION OF ANY
AND EVERY KIND AND NATURE ARISING OR
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GROWING OUT OF OR IN ANY WAY CONNECTED WITH LANDLORD'S USE, OCCUPANCY,
MANAGEMENT OR CONTROL OF THE COMMON AREA OR LANDLORD'S OPERATIONS, CONDUCT OR
ACTIVITIES IN THE COMMON AREA OR THE ACTIVITIES OF OTHER TENANTS IN THE PROJECT.
(c) In the event that the City becomes the Landlord hereunder by reason of
an exercise of any remedy under the Ground Lease following a default or breach
by Landlord under the Ground Lease, or by reason of a voluntary or involuntary
termination of the Ground Lease as a result of a default or breach by Landlord
under the Ground Lease, the provisions of Section 11.5 (b) shall not apply to
the City.
Section 11.6 Policies Requirements
All insurance policies procured by Tenant pursuant to Section 11.1 hereof
shall be issued by a company or companies authorized and licensed to do business
in the State of Texas. Tenant's policies of Liability Insurance and Construction
Period Insurance will name Landlord and the City and any Landlord's Mortgagee as
additional insureds and will provide that Landlord, Tenant and the City shall be
given a minimum of thirty (30) days notice by the insurance company prior to
cancellation, termination or change in such insurance. Tenant shall provide
Landlord and the City with certificates or, at Landlord's or the City's request,
copies of the policies, evidencing that such insurance is in full force and
effect and stating the terms thereof and Tenant shall, no later than five (5)
days prior to the expiration of the existing policies, provide Landlord and the
City with certificates or copies of the policies evidencing the renewals of such
policies. THE MINIMUM LIMITS OF THE COMMERCIAL GENERAL LIABILITY POLICY OF
INSURANCE SHALL IN NO WAY LIMIT OR DIMINISH TENANT'S LIABILITY UNDER SECTION
11.5 HEREOF. At Landlord's request, the amounts of insurance provided for in
Section 11.1 hereof shall be re-evaluated and reasonably adjusted at least once
every five (5) years so as to keep abreast of inflation and in order to conform
to current practice in the State of Texas for first class retail, restaurant and
entertainment projects.
Section 11.7 Landlord's Insurance/Insurance - Landlord's Operations
(a) Landlord shall comply with the insurance provisions of the Ground
Lease. Landlord's property insurance shall cover the roof and exterior walls of
the Premises.
(b) All insurance policies procured by Landlord pursuant to this Section
11.7 shall be issued by a company or companies authorized and licensed to do
business in the State of Texas,
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name Tenant, and at the request of Tenant, the constituent partners of Tenant,
as an additional insured, and shall provide that such insurance will not be
canceled or subject to reduction of coverage or other modification except after
thirty (30) days' notice to, among others, Tenant. Landlord shall provide Tenant
with certificates or, at Tenant's request, copies of the policies, evidencing
that such insurance is in full force and effect and stating the terms thereof
and Landlord shall, no later than five (5) days prior to the expiration of the
existing policies, provide Tenant with certificates or copies of the policies
evidencing the renewals of such policies.
(c) Landlord will not do or suffer to be done anything which will
contravene Tenant's insurance policies or prevent Tenant from procuring the
policies of insurance which Tenant is required to obtain under the terms of this
Lease.
(d) In the event that the City becomes the Landlord hereunder by reason of
an exercise of any remedy under the Ground Lease following a default or breach
by Landlord under the Ground Lease, or by reason of a voluntary or involuntary
termination of the Ground Lease as a result of a default or breach by Landlord
under the Ground Lease, this Section 11.7 shall be deemed null and void.
ARTICLE XII
ESTOPPEL CERTIFICATES, ATTORNMENT, SUBORDINATION
Section 12.1 Estoppel Certificates
Within ten (10) days after either party's written request, the other party
shall deliver, executed in recordable form, a declaration to any person
designated by the requesting party (a) stating whether this Lease is in full
force and effect; (b) stating the commencement and termination dates; and (c)
certifying (i) that this Lease has not been assigned, modified, supplemented or
amended (except as stated), (ii) that, to the best of such party's knowledge,
all conditions under this Lease to be performed by the requesting party have
been satisfied (stating exceptions, if any), (iii) that, to the best of such
party's knowledge, no defenses or offsets against the enforcement of this Lease
by the requesting party exist (or stating those claimed); (iv) as to advance
rent, if any, paid by Tenant, (v) the date to which -Rent has been paid, (vi) as
to the amount of security deposited with Landlord, if any, and such other
information as the requesting party reasonably requires. Persons receiving such
statements shall be entitled to rely upon them.
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Section 12.2 Attornment
Tenant shall, in the event of a sale or assignment of Landlord's interest
in the Premises or the Project or this Lease or the Property, or if the
Premises, the Project or the Property comes into the hands of a Landlord
Mortgagee, ground lessor or any other person whether because of a mortgage
foreclosure, exercise of a power of sale under a mortgage, termination of the
Ground Lease, or otherwise, attorn to the purchaser or such Landlord Mortgagee
or other person and recognize the same as Landlord hereunder. Tenant shall
execute, at Landlord's request, an attornment agreement in such form as Landlord
may reasonably request; provided that (i) such document does not require that
Tenant actually attorn at any one time to more than one person or entity and
(ii) the party to whom Tenant is being required to attorn also agrees to
recognize Tenant's rights hereunder.
Section 12.3 Subordination
(a) This Lease shall be automatically subordinate, secondary, junior and
inferior at all times to the lien of any Landlord's Mortgage now or hereafter
existing against all or a part of the Property, including, without limitation,
the leasehold interest of Landlord therein, and to all renewals, modifications,
replacements, consolidations and extensions thereof; provided that Tenant's
subordination to any future mortgagee is conditioned upon receipt of a
recognition agreement from such future mortgagee. Notwithstanding such
subordination, all such Landlord's Mortgagees shall honor this Lease and not
disturb Tenant's occupancy of the Premises pursuant to the terms of this Lease,
as long as Tenant is not in default of any of the terms and provisions of this
Lease beyond any applicable notice and cure period contained herein. Tenant
shall execute and deliver all documents reasonably requested by Landlord to
effect such subordination and non-disturbance; provided that (i) such document
does not adversely effect Tenant's rights under this Lease, (ii) such document
does not require Tenant to attorn at any time to more than one person or entity,
and (iii) such document includes a recognition agreement from the party to whom
Tenant is subordinanting. Landlord hereby represents and warrants to Tenant
that, on the date hereof, the Project is not encumbered by a mortgage.
(b) This Lease is further subject and subordinate to any other matters of
record, such as any reciprocal easement agreement, now affecting the Property.
Tenant shall execute such instruments as Landlord reasonably requests to
evidence subordination to any future reciprocal easement agreements affecting
the Property and shall deliver same to Landlord; provided that such document
does not adversely affect Tenant's
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rights under this Lease or require Tenant to attorn at any time to more than one
person or entity.
(c) This Lease is further subject and subordinate to the Ground Lease.
Landlord shall use its good faith best efforts to obtain within ninety (90) days
of the date of this Lease a Non-Disturbance Agreement from the City that
benefits Tenant and deliver same to Tenant. Upon receipt of same from Landlord,
Tenant shall execute such Non-Disturbance Agreement and deliver same to
Landlord. The form of such Non-Disturbance Agreement shall be substantially in
the form of the Consent to Sublease and Subordination, Non-disturbance and
Attornment Agreement attached hereto as Exhibit "D". In addition, Landlord shall
request the City to add the following sentences to the end of Section 3 (b) of
the Non-Disturbance Agreement:
In addition, The City hereby acknowledges and finds that the Sublease is
the lease of the tenant of a live theater fronting on Bagby Street, that
the premises leased to Tenant under the Sublease can be operated
separately, independently and physically separated from the balance of the
Premises, and that there is an entrance from such premises from a public
street; and, therefore, the Sublease is subject to the protections of the
penultimate paragraph of Section 8.1 (c) of the Ground Lease.
The parties acknowledge that the City may require certain modifications be made
to the Non-Disturbance Agreement as a condition to the execution and delivery
thereof by the City, and agree to work together to reasonably accommodate the
needs of the City while at the same time reasonably preserving the rights of
Landlord and Tenant under this Lease. Tenant acknowledges that the City may not
agree in such Non-Disturbance Agreement: (i) to perform the Landlord's Work;
(ii) to comply with and honor any use restrictions and/or exclusive use
provisions contained in this Lease; (iii) to waive the City's right to a trial
by jury; (iv) to pay Tenant's legal fees; (v) to arbitrate any dispute that may
arise hereunder between Tenant and the City; (vi) to indemnify Tenant or to
waive any claims that the City may have against Tenant; or (vii) to provide
insurance coverage (and Tenant agrees that it shall be reasonable for the City
to modify Exhibit D accordingly).
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ARTICLE XIII
ASSIGNMENT, SUBLETTING AND CONCESSIONS
Section 13.1 Consent Required
(a) Except as permitted in Section 13.1 (b) hereof, Tenant shall not sell,
assign, mortgage, pledge or in any manner transfer this Lease or any interest
therein, nor sublet all or any part of the Premises, nor lease departments
therein without Landlord's prior written consent in each instance, which consent
shall not be unreasonably withheld, conditioned or delayed. This prohibition
shall include a prohibition against any subletting or assignment by operation of
law.
(b) Notwithstanding anything to the contrary contained in Sections 13.1
(a) or 13.2 hereof, provided that Tenant is not in default of any of the
provisions of this Lease beyond any applicable notice and/or cure periods
contained herein, Tenant shall have the right:
(i) Without the need to request or obtain Landlord's consent thereto, to
assign this Lease or sublet the Premises to a wholly-owned subsidiary or
the parent of Tenant, (an Approved Transferee), a corporation in which
Tenant or an Approved Transferee owns a controlling interest of the voting
stock, a general or limited partnership in which Tenant or an Approved
Transferee is the managing general partner, or a trust in which Tenant or
an Approved Transferee is a primary beneficiary;
(ii) Without the need to request or obtain Landlord's consent, to assign
this Lease or sublet the entire Premises to an entity that has significant
and successful experience in owning and operating performance halls that
are similar to the Premises and has sufficient net worth to own and
operate the business in the Premises; and
(iii) Without the need to request or obtain Landlord's consent thereto, to
sublease or license the food and beverage and merchandise concession
operations within the Premises and to rent the Premises to third-party
promoters for the purposes of presenting events on a limited-engagement
basis.
(c) Consent by Landlord to any assignment or subletting shall not waive
the necessity for consent to any subsequent assignment or subletting (if such
consent is required by the provisions of this Section 13.1). If this Lease is
assigned or the Premises or any part sublet or occupied by anybody other than
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Tenant, Landlord may collect Rent from the assignee, subtenant or occupant and
apply the same to the Rent herein reserved, but no such assignment, subletting,
occupancy or collection of Rent shall be deemed a waiver of any restrictive
covenant contained in this Section 13.1 or the acceptance of the assignee,
subtenant or occupant as tenant, or a release of Tenant from the performance by
Tenant of any covenants on the part of Tenant herein contained. Any assignment
(a) as to which Landlord has consented or to which its consent is not required;
or (b) which is required by reason of a final non-appealable order of a court of
competent jurisdiction; or (c) which is made by reason of and in accordance with
the provisions of any law or statute, including, without limitation, the laws
governing bankruptcy, insolvency or receivership shall be subject to all terms
and conditions of this Lease.
Section 13.2 Change in Ownership
(a) If Tenant is a corporation, the stock of which is not traded on any
national securities exchange (as defined in the Securities Exchange Act of 1934,
as amended), then the following shall constitute an assignment of this Lease for
all purposes of this Article XIII: (i) the merger, consolidation or
reorganization of such corporation; and/or (ii) the sale, issuance, or transfer,
cumulatively or in one transaction, of any voting stock, by Tenant or the
stockholders of record of Tenant as of the date of this Lease, which results in
a change in the voting control of Tenant. If Tenant is a joint venture,
partnership or other association, then for all purposes of this Article XIII, a
change in the managing general partner of Tenant or the termination of any joint
venture, partnership or other association, shall constitute an assignment.
(b) Provided that Tenant is not in default of any of its obligations
under this Lease beyond any applicable notice and/or cure period,
notwithstanding anything to the contrary contained in Section 13.1 hereof and in
Subsection 13.2 (a) above, in the event that Tenant is a corporation, the
provisions of Section 13.1 hereof and of this Section 13.2 are not intended to
prevent a public offering of stock of Tenant and Tenant shall have the right to
make (or cause others to make) a public offering of stock of Tenant, provided
that upon the completion of such public offering the stock of Tenant is traded
on a national securities exchange (as defined in the Securities Exchange Act of
1934, as amended), such as the New York Stock Exchange, the American Stock
Exchange, the Pacific Stock Exchange, the Philadelphia Stock Exchange or the
NASDAQ/NMS. To the extent permitted by Applicable Law, Tenant (or its
underwriter) shall provide Landlord with a notice of such transaction prior to
the completion of such transaction which notice shall include a copy of the
preliminary offering prospective and, promptly after the
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completion of such transaction, shall provide Landlord with a copy of the final
offering prospective for such transaction.
ARTICLE XIV
ADVERTISING
Section 14.1 Media Events and City Meetings
Tenant or its representative shall attend and cooperate with any
recommencement of construction ceremony for the Project, shall participate in
similar media events, and shall attend and cooperate with the ceremonies for the
grand opening of the Project. In addition, from time to time during the Lease
Term, at the request of Landlord, Tenant or its representative shall attend
meetings with representatives of Landlord and the City in connection with the
operation of the Project.
Section 14.2 Annual Marketing
Through-out the Lease Term Tenant shall market the business in the
Premises in a commercially reasonable manner.
Section 14.3 Tenant's Trade Name
Landlord shall have the right to use Tenant's trade name, trade mark and
logo in order to identify Tenant as a tenant of the Project in connection with
Landlord's advertising and marketing of the Project. This use shall not be
deemed to be the grant of any license or the conveyance of any interest in such
marks.
ARTICLE XV
TENANT MORTGAGES
Section 15.1 Right to Mortgage
Tenant shall have the unrestricted right, at any time and from time to
time, to mortgage its leasehold interest under this Lease to a Tenant Mortgagee;
subject, however, to the limitations hereinafter set forth in this Article XV.
Any such mortgage shall be subject and subordinate to the rights of Landlord
hereunder and to the terms and provisions of the Ground Lease, however the
Tenant Mortgagee shall have the right to rely on any non-disturbance agreements
provided to Tenant. A mortgage of Tenant's leasehold interest under this Lease
is herein referred to as a "Tenant Mortgage".
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Section 15.2 Notice to Landlord
The Tenant Mortgagee shall not be entitled to enjoy the rights or benefits
contained in this Article XV, nor shall the provisions of this Lease pertaining
to Tenant Mortgages be binding upon Landlord, unless Landlord shall have been
given notice of the name and address of the Tenant Mortgagee. Landlord shall
have the right to rely on information provided to it by Tenant that identifies
the Tenant Mortgagee.
Section 15.3 Conditions
So long as the Tenant Mortgage of the Tenant Mortgagee shall remain in
effect, the following provisions shall apply:
(a) Landlord shall serve a copy of any notice, including a notice of
default, required to be served on Tenant under this Lease upon the Tenant
Mortgagee at the address provided in the notice referred to in Section 15.2
hereof, and no notice by Landlord to Tenant hereunder shall be deemed to have
been duly given unless and until a copy thereof has been served on the Tenant
Mortgagee.
(b) In the event of a default by Tenant hereunder, the Tenant Mortgagee
shall, following notice and within the period allowed Tenant to cure such
default and otherwise as herein provided, have the right to cure such default,
or cause the same to be cured, and Landlord shall accept such performance by or
on behalf of the Tenant Mortgagee as if the same had been made by Tenant. If
Tenant fails to cure any default asserted in said notice within the time
provided in Section 18.1 hereof, Landlord shall notify the Tenant Mortgagee in
writing of such failure to cure, and the Tenant Mortgagee shall have the right
but not the obligation, within thirty (30) days after receipt of such second
notice, to cure such default before Landlord, subject to the provisions of
Section 15.3 (c) hereof, may take any action by reason of such default.
(c) For the purposes of this subsection, no Event of Default shall be
deemed to exist under Section 18.1 hereof if steps shall have been commenced by
the Tenant Mortgagee in good faith within the time permitted therefor to cure
the same and shall be diligently prosecuted to completion.
(d) Notwithstanding the provisions of this Section 15.3, upon the
occurrence of an Event of Default, other than an Event of Default due to a
default in the payment of money, Landlord shall take no action to terminate this
Lease without first giving to the Tenant Mortgagee notice thereof and a
reasonable time thereafter (which time shall not exceed one hundred eighty (180)
days) within which either (i) to obtain possession of the Premises (including
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possession by a receiver), or (ii) to institute, prosecute and complete
foreclosure proceedings or otherwise acquire Tenant's interest under this Lease.
The Tenant Mortgagee, upon obtaining possession or acquiring Tenant's interest
under this Lease, shall be required promptly to cure all defaults reasonably
susceptible of being cured by such Tenant Mortgagee; provided, however, that:
(A) the Tenant Mortgagee shall not be obligated to continue such possession or
to continue such foreclosure proceedings after such defaults shall have been
cured; (B) nothing herein contained shall preclude Landlord, subject to the
provisions of this Section, from exercising any rights or remedies under this
Lease with respect to any other default by Tenant; and (C) the Tenant Mortgagee
shall agree with Landlord in writing to comply during the period of such
forbearance with such of the terms, conditions and covenants of this Lease as
are reasonably susceptible of being complied with by the Tenant Mortgagee,
including without limitation the payment of Rent. Any default by Tenant not
reasonably susceptible of being cured by the Tenant Mortgagee or the occurrence
of any of the events specified in Sections 18.1 (v) or (vi) shall be deemed to
have been waived by Landlord upon completion of such foreclosure proceedings or
upon such acquisition of Tenant's interest under this Lease, except that any of
such Events of Default which are reasonably susceptible of being cured after
such completion and acquisition shall then be cured with reasonable diligence.
The Tenant Mortgagee or other purchaser in foreclosure proceedings may become
the legal owner and holder of Tenant's interest under this Lease by foreclosure
or assignment in lieu of foreclosure.
Section 15.4 New Lease
In the event of termination of this Lease prior to the expiration of the
Lease Term, except by reason of Condemnation or Casualty as provided herein,
Landlord shall serve upon the Tenant Mortgagee notice that the Lease has been
terminated together with a statement of any and all sums which would at that
time be due under this Lease but for such termination, and of all other
defaults, if any, under this Lease then known to Landlord. The Tenant Mortgagee
shall thereupon have the option, for a period of thirty (30) days after the
receipt of such notice by the Landlord Mortgagee (time being of the essence), to
obtain a new lease in accordance with and upon the following terms and
conditions:
Upon the written request of the Tenant Mortgagee (which must be
received by Landlord within said thirty (30) day period (time being of the
essence)), Landlord shall promptly enter into a new lease of the Premises
with the Tenant Mortgagee, or its designee, as follows:
Such new lease shall be effective on the date of termination
of this Lease and shall be for the remainder of the Lease Term, at
the Rent and upon
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all the agreements, terms, covenants and conditions hereof,
including any applicable rights of renewal or extension. Such new
lease shall require the Tenant to perform all unfulfilled
obligations of Tenant under this Lease which are reasonably
susceptible of being performed by such tenant. Upon the execution of
such new lease, the tenant named therein shall pay all sums which
would at the time of the execution thereof be due under this Lease
but for such termination and shall pay the reasonable expenses
incurred by Landlord in connection with such defaults and
termination, the recovery of possession of the Premises and the
preparation, execution and delivery of such new lease.
Section 15.5 Assignment of Subleases
Effective upon the commencement of the term of any new lease executed
pursuant to Section 15.4, (a) all subleases shall be assigned and transferred
without recourse by Landlord to the tenant under such new lease, and (b) all
monies on deposit with Landlord which Tenant would have been entitled to use but
for the termination or expiration of this Lease may be used by the tenant under
such new lease for the purposes of and in accordance with the provisions of such
new lease.
Section 15.6 Miscellaneous
(a) This Lease may not be modified or canceled (other than pursuant to the
terms hereof) by the mutual agreement of Tenant and Landlord or surrendered
without the express written consent of the Tenant Mortgagee.
(b) If Landlord or Tenant shall acquire the interest of the other
hereunder, this Lease shall remain outstanding and no merger of the leasehold
into the fee interest shall be deemed to have occurred.
(c) If the Tenant Mortgagee shall acquire title to Tenant's interest under
this Lease by foreclosure, assignment in lieu of foreclosure or otherwise, or
under a new lease pursuant to Section 15.4 hereof, the Tenant Mortgagee may
assign such interest under this Lease or in such new lease and shall thereupon
be released from all liability for the performance or observance of the
covenants and conditions in this Lease or in such lease contained on Tenant's or
new tenant's part to be performed and observed from and after the date of such
assignment; provided, however, that the assignee from the Tenant Mortgagee shall
have expressly assumed this Lease or such new lease and written evidence thereof
shall have been submitted to Landlord.
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ARTICLE XVI
DAMAGE AND DESTRUCTION
Section 16.1 Casualty; Obligation to Restore/Exceptions
(a) Obligation to Restore. If any portion of the Premises or the Control
Area is damaged or destroyed by fire or other casualty ("Casualty"), this Lease
shall remain in full force and effect (except as provided in Sections 16.1 (b)
and/or 16.1 (c) hereof and except as otherwise provided herein), and Landlord
shall, at its sole expense, promptly repair, restore and rebuild the Landlord's
Work (a Restoration) to facilities of like quality, nature and condition, with
the same layout as that which existed immediately prior to the occurrence of
such Casualty. (Landlord shall not be obligated to restore items that were
initially Tenant's Work or replacements to Tenant's Work, the Excluded Personal
Property, and Tenant's stock in trade, fixtures, furniture, furnishings,
carpeting, floor covering, wall covering, drapes, ceiling and equipment). If any
portions of the Common Area (other than the Control Area) are damaged or
destroyed by a Casualty, this Lease shall likewise remain in full force and
effect (except as provided in Sections 16.1 (b) and/or 16.1 (c) and except as
otherwise provided herein) and Landlord shall as its sole expense repair,
restore and rebuild the same to facilities with a similar layout as that which
existed immediately prior to the occurrence of such casualty to the extent that
same will not materially adversely affect Tenant's business in the Premises.
Anytime that Landlord repairs or restores the Premises to the extent required
above after damage or destruction, then Tenant shall promptly repair or replace
the Tenant's Work, or any replacements thereto, the Excluded Personal Property,
and its stock in trade, fixtures, furnishings, furniture, carpeting, wall
covering, floor covering, drapes, ceiling and equipment to the same condition as
they were in immediately prior to the casualty, and if Tenant has closed its
business, Tenant shall promptly reopen for business upon the completion of such
repairs. Landlord shall utilize its best efforts (without having to pay
overtime) to substantially complete all Restorations as promptly as possible
under the circumstances, and, in any event, shall utilize its best efforts
(without having to pay overtime) to substantially complete all Restorations
within one (1) year of the Casualty.
(b) Exception; Last Twenty-Four Months. If the Premises are damaged to the
extent of more than twenty-five percent (25%) of the Replacement Cost thereof
within the last twenty-four (24) months of the initial Lease Term or the last
twenty-four months of the Extended Terms, Landlord or Tenant shall have the
option, exercisable by written notice within sixty (60) days after the
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date of the occurrence of such damage, to terminate this Lease, provided that
(i) in the case of any such termination by Tenant, Tenant shall release to
Landlord all of Tenant's claim or interest in and to that portion of any
insurance proceeds otherwise allowable in connection with such damage or
destruction for the repair and restoration of said improvements for which
Landlord would otherwise be responsible; and (ii) in the case of any such
termination by Landlord, Tenant may nullify Landlord's notice of termination by
electing to exercise Tenant's rights pursuant to Section 2.3 hereof to extend
the Lease Term; provided, however, that Landlord and Tenant shall immediately
undertake the repair, restoration and rebuilding of the Premises in accordance
with Section 16.1 (a) above.
(c) "Replacement Cost" Defined. As used in this Lease, the term
"Replacement Cost" means the reasonably estimated total cost of fully repairing,
replacing and restoring the building(s) and other improvements in question,
assuming a total destruction thereof, as nearly as practicable to the condition
existing immediately prior to the damage or destruction.
Section 16.2 Abatement of Rent
Tenant's obligation to pay Rent (including, without limitation, Minimum
Annual Rent, Percentage Rent, Additional Rent, Tenant's pro rata share of Common
Area Costs, and Tenant's pro rata share of Real Estate Taxes):
(a) Will not be abated if the Premises was not damaged by the Casualty;
and
(b) Will be abated during the period following a Casualty to the
Premises that prevents Tenant from operating its business in the
Premises (such abatement will cease when such areas have been
restored (or should have been restored had Tenant timely fulfilled
its obligations hereunder)).
ARTICLE XVII
EMINENT DOMAIN
Section 17.1 Condemnation of Project, Premises, or Common Areas
(a) In the event there shall be a taking, requisition or sale by or on
account of any actual or threatened eminent domain proceeding (herein called a
"Condemnation") of all of the Premises, this Lease shall terminate as of the
date Tenant shall be deprived thereof.
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(b) In the event that there shall be a Condemnation of (i) some portion
greater than ten percent (10%) but less than the whole of the Premises, as, in
the reasonable discretion of the Tenant, will interfere with the operation of
the Premises as a first class Performance Hall with a capacity of not less than
two thousand (2,000) spectators together with reasonable concession,
merchandising and support facilities or (ii) such portion of the Project as, in
the reasonable discretion of the Tenant, will interfere with the operation of
the Premises as a first class Performance Hall with a capacity of not less than
two thousand (2,000) spectators together with reasonable concession,
merchandising and support facilities, Tenant shall have the option to terminate
this Lease as of the date Tenant shall be dispossession from the part so
expropriated by giving notice to Landlord of such election so to terminate
within one hundred twenty (120) days after such disposition becomes effective;
provided, however, that if such Condemnation occurs within the last twenty four
(24) months of the Lease Term, and Tenant does not desire to exercise its option
to extend the Lease Term for the Extended Term, then Landlord may terminate this
Lease.
(c) In the event of a Condemnation of any portion of the Premises and if
this Lease shall not be terminated as hereinabove provided, it shall continue as
to that portion of the Premises which shall not have been expropriated or taken,
in which event Landlord shall, at Landlord's sole cost and expense, promptly and
with due diligence (and in any event, within twelve (12) months after such
disposition becomes effective) restore the Landlord's Work and Tenant shall
restore the Tenant's Work as nearly as practicable to what existed just prior to
such Condemnation.
(d) Without limiting the foregoing, in the event of a Condemnation of the
Control Area, and/or of Tenant's rights therein, Landlord shall promptly and in
any event within one hundred eighty (180) days substitute equivalent and similar
Common Areas contiguous to and properly integrated with the remainder of the
Common Areas and shall restore the remaining Common Areas as nearly as
practicable to the condition prior to the Condemnation to the extent that same
will not materially adversely affect Tenant's business in the Premises.
If (i) Landlord shall be unable within such time period to substitute such
Common Areas, or (ii) such substitution shall not be reasonably acceptable to
Tenant, or (iii) Tenant shall be deprived of the use of any Control Area,
whether or not such deprivation shall result from a Condemnation of such Common
Areas (and such Control Area are not replaced within such time period with a
substantially equivalent ingress and egress facilities reasonably acceptable to
Tenant), then, in such event, Tenant shall have the option to terminate this
Lease as of the date of such deprivation by giving notice to Landlord within one
hundred twenty
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(120) days after such deprivation becomes effective. Tenant's obligation to pay
Rent (including Minimum Annual Rent, Percentage Rent, Tenant's pro rata share of
Common Area Costs and Real Estate Taxes and Additional Rent), shall be abated
during the period of time required to complete any such restoration or
substitution. In the event of any Condemnation of any signage of Tenant, such
signage will be promptly replaced by Tenant at Tenant's expense (and Landlord
shall fully cooperate with Tenant's efforts to replace such signage) with
substantially equivalent signage.
(e) In the event this Lease shall be terminated pursuant to this Section,
any Rent paid in advance shall be refunded to Tenant. Nothing herein contained
shall be construed as preventing Tenant from being entitled to any separate
award made to Tenant for the taking of any Excluded Personal Property,
beneficial leasehold interest or good will, or from claiming its award directly
against the condemner.
Section 17.2 Condemnation Award-Lease Not Terminated
In the event of a Condemnation of any portion of the Premises, and the
Lease is not terminated, the award paid by the condemning authority (after
payment of expenses incurred in connection with collecting the same) shall be
allocated as follows:
(i) First, to Tenant a sum attributable to replacing
Tenant's improvements or alterations made to the Premises in
accordance with the terms of this Lease by Tenant at Tenant's
expense; and
(ii) Second, to Landlord, shall receive the balance of
the award.
In the event of a partial Condemnation of any portion of the
Premises and if this Lease shall not have been terminated, the Minimum Annual
Rent payable hereunder shall be abated in proportion to the number of square
feet of the Premises taken as related to the number of square feet of the
Premises prior to the Condemnation.
Section 17.3 Condemnation Award-Lease Terminated
In the event of a Condemnation and this Lease is terminated as herein
provided, the award paid by the condemning authority (after payment of expenses
incurred in connection with collecting the same) shall be allocated as follows:
(i) First, to Tenant a sum attributable to Tenant's
improvements or alterations made to the Premises per the terms of
this Lease by Tenant at Tenant's expense (except as to items Tenant
is
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entitled to and does remove from the Premises upon such Lease
termination) and a sum equal to Tenant's actual moving costs;
(ii) Second, to Tenant the value of the value of
Tenant's interest in the Lease; and
(iv) Third, to Landlord the balance of the award.
Section 17.4 Temporary Requisition
In the event of a Condemnation for temporary use (herein called a
"Temporary Requisition") of all or any part of the Premises or the Common Areas
or Tenant's rights therein for a period including any of the Lease Term, Tenant
shall be entitled to the portion of the net award attributable to the Temporary
Requisition of the Premises, Tenant's rights with respect to such Common Area
and Tenant's moving expenses and/or loss of business. If, however, such
Temporary Requisition shall include a period beyond the Lease Term, Landlord
shall be entitled to receive such portion of the award as shall be attributable
to the period after the Lease Term. During such time as Tenant shall be out of
possession by reason of a Temporary Requisition, this Lease shall not be subject
to forfeiture for failure to observe and perform its covenants hereunder. If the
condemning authority shall fail to keep the Premises in the state of repair or
to perform any other covenants required hereunder, Tenant shall have two hundred
and forty (240) days after restoration of possession to it within which to carry
out its obligations under such covenants.
Section 17.5 Notices; Compensable Interests
(a) In the event Landlord or Tenant receives any notice of any kind
specified below, Landlord or Tenant shall promptly give the other party a
photocopy of the notice received:
(i) Notice of intended taking;
(ii) Service of any legal process relating to condemnation of any
portion of the Premises or the Project or any improvement located
thereon, or of any easement appurtenant thereto;
(iii) Notice in connection with any proceedings or negotiations with
respect to such a condemnation; or
(iv) Notice of intent or willingness to make or negotiate a private
purchase, sale or transfer in lieu of condemnation.
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(b) Landlord, Tenant and all persons and entities holding under Tenant
shall have the right to represent his, her or its respective interest in each
proceeding or negotiation with respect to a taking or intended taking and to
make full proof of his or its claims. No agreement, settlement, sale or transfer
to or with the condemning authority shall be made without the written consent of
Landlord and Tenant. Landlord and Tenant each agree to execute and deliver to
the other any instruments that may be necessary or appropriate to effectuate or
facilitate the provisions of this Lease relating to condemnation.
ARTICLE XVIII
DEFAULT BY TENANT
Section 18.1 Events of Default
The following shall be considered for all purposes to be defaults under
and breaches of this Lease (and are each hereinafter sometimes referred to
herein as an Event of Default): (i) Tenant shall, except as otherwise permitted
under this Lease, fail to pay any Minimum Monthly Rent and such failure shall
continue for ten (10) business days after notice to Tenant of such failure; (ii)
Tenant shall, except as otherwise, permitted under this Lease, fail to pay any
Rent (other than Minimum Monthly Rent) and such failure shall continue for
fifteen (15) business days after notice to Tenant of such failure; (iii) Except
as otherwise provided herein, Tenant shall fail to observe or perform any other
provision hereof within thirty (30) days after receipt of notice from Landlord
to Tenant specifying such default and demanding that the same be cured provided
that, if such default cannot with due diligence be wholly cured within such
thirty (30) day period, Tenant shall have such longer period as may be
reasonably necessary to cure the default, so long as Tenant proceeds promptly to
commence the cure of same within such thirty (30) day period and diligently
prosecutes the cure to completion (provided, however, that in the case of any
such default that, in Landlord's reasonable judgment, results in or is likely to
result in a default by Landlord of any of its obligations under the Ground
Lease, the time within which such default may be cured shall expire one hundred
eighty days (180) days after the date that Landlord gives notice to Tenant of
its concern that such default results in or is likely to result in a default by
Landlord of any of its obligations under the Ground Lease); (iv) subject to the
provisions of Section 25.5 hereof, Tenant fails to substantially complete the
Tenant's Work and cause the Premises to be initially open for business to the
public in accordance with the provisions of this Lease on or before the Required
Completion Date and such failure shall continue for thirty (30) business days
after notice to Tenant of
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such failure; (v) Tenant shall file a petition in bankruptcy or for
reorganization or for an arrangement pursuant to any federal or state bankruptcy
law or any similar federal or state law, or shall be adjudicated a bankrupt or
become insolvent or shall make an assignment for the benefit of creditors or
shall admit in writing its inability to pay its debts generally as they become
due, or a petition or answer proposing the adjudication of Tenant as a bankrupt
or reorganization pursuant to any federal or state bankruptcy law or any similar
federal or state law shall be filed in any court and Tenant shall consent to or
acquiesce in the filing thereof or such petition or answer shall not be
discharged or denied within ninety (90) days after the filing thereof; (vi) a
receiver, trustee or liquidator of Tenant or of all or substantially all of the
assets of Tenant, or of the Premises or Tenant's estate therein shall be
appointed in any proceeding brought by Tenant, or any such receiver, trustee or
liquidator shall be appointed in any proceeding brought against Tenant and shall
not be discharged within ninety (90) days after such appointment, or Tenant
shall consent to or acquiesce in such appointment; (vii) if Tenant abandons the
Premises; or (vii) Tenant's failure to execute in accordance with its
obligations under this Lease instruments or certificates provided for in Article
XII hereof within fifteen (15) business days after the receipt by Tenant of a
written request therefor.
Section 18.2 Self Help
Landlord may perform, on behalf and at the expense of Tenant, any
obligation of the Tenant under this Lease which Tenant has failed to perform
within thirty (30) after the date that notice is given of such failure to
perform, provided that if the default cannot with due diligence be cured within
such thirty (30) day period, Tenant shall have such longer period as may be
reasonably necessary to cure the default, so long as Tenant proceeds promptly to
commence to cure the same within such thirty (30) day period and diligently
prosecutes the cure to completion, and the expense reasonably incurred by
Landlord in so performing such obligation, together with interest thereon at the
Default Interest Rate from the date of such expenditure, shall be deemed
Additional Rent and shall be payable by Tenant to Landlord upon demand.
Notwithstanding the provisions of this Section 18.2 and regardless of whether an
Event of Default shall have occurred, Landlord may exercise the remedy described
in this Section 18.2 without any notice to Tenant, if, in Landlord's good faith
judgment, it would be materially injured by failure to take rapid action, such
as a termination of the Ground Lease, or if the unperformed obligation
constitutes an emergency that endangers life and/or safety; provided that
Landlord shall exercise reasonable efforts to minimize any disruption to
Tenant's business in the Premises (to the extent same is permitted by the
provisions of this Lease).
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Section 18.3 Right to Re-Enter
Upon the occurrence of an Event of Default, and without any further grace
period, demand or notice, Landlord, in addition to all other rights or remedies
it may have hereunder or at law, shall have the right thereupon or at any time
thereafter to terminate this Lease by giving notice to Tenant stating the date
upon which such termination shall be effective, instituting an eviction action
or other action in a court of competent jurisdiction and obtaining a writ of
possession or other legal writ or process (except in the event where Tenant has
vacated or abandoned the Premises, in which case Landlord shall have the right
to regain possession of the Premises without initiating such an eviction action)
shall, have the right, after any such termination, to re-enter and take
possession of the Premises, without being deemed guilty of trespass or
constructive eviction or becoming liable for any loss or damage occasioned
thereby. Tenant hereby further waives the benefit of state law requiring that
Tenant be given three (3) days notice to vacate the Premises upon termination of
this Lease or Tenant's right to possession of the Premises, Tenant hereby
agreeing that Landlord may institute an eviction proceeding at any time after an
Event of Default and without any notice to vacate or other demand for the
Premises.
Section 18.4 Right to Re-let
If Landlord re-enters the Premises as provided in Section 18.3 hereof, or
if it takes possession pursuant to legal proceedings, arbitration or otherwise,
it may either terminate this Lease or it may, from time to time, without
terminating this Lease, make such alterations and repairs as it deems advisable
to re-let the Premises, and re-let the Premises or any part thereof for such
term or terms (which may extend beyond the Lease Term) and at such rentals and
upon such other terms and conditions as shall be commercially reasonable
(Landlord hereby agreeing to use commercially reasonable efforts to re-let the
Premises); upon each such re-letting all rentals received by Landlord therefrom
shall be applied, first, to any indebtedness other than Rent due hereunder from
Tenant to Landlord; second, to pay any reasonable costs and expenses of
re-letting, including without limitation, reasonable brokers and attorneys' fees
and reasonable costs of advertising, alterations and repairs; third, to Rent due
hereunder, and the residue, if any, shall be held by Landlord and applied in
payment of future Rent as it becomes due hereunder. If rentals received from
such re-letting during any month are less than that to be paid during that month
by Tenant hereunder, Tenant shall immediately pay any such deficiency to
Landlord. No re-entry or taking possession of the Premises by Landlord shall be
construed as an election to terminate this Lease, unless a notice of such
termination is given by Landlord.
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Section 18.5 Damages
Landlord may, at any time after an Event of Default, terminate this Lease.
If Landlord terminates this Lease, in addition to any other remedies it may
have, it may accelerate all Rent hereunder, and recover from Tenant, as damages,
the sum of all Rent and other indebtedness accrued to the date of such
termination, plus, an amount equal to the present value (computed as of the date
of any such termination using a discount factor equal to the Default Interest
Rate, less two (2%) percent) of the difference between the amount stated in (a)
below and the amount stated in (b) below: (a) the total Rent (Minimum Annual
Rent (computed in accordance with the last sentence of this Section 18.5) and
Percentage Rent (computed in accordance with the last sentence of this Section
18.5) plus Tenant's pro rata share of Real Estate Taxes and Common Area Costs
(using the sums due for each such item of Additional Rent during the year of
termination as the basis for determining the amount thereof which would have
been due each year thereafter for the remaining portion of the Lease Term had it
not been terminated)) that would have been due for the remaining portion of the
Lease Term (had such Lease Term not been terminated prior to the date of
expiration set forth in Section 2.3); and (b) the then fair market rental value
of the premises for such period. In determining the Rent payable by Tenant
hereunder subsequent to an Event of Default: (i) the Minimum Annual Rent for
each Lease Year of the unexpired portion of the Lease Term shall equal the
Minimum Annual Rent that Tenant was obligated hereunder to pay during such Lease
Year, and (ii) for each Lease Year, Percentage Rent shall equal the average
Percentage Rents which Tenant was obligated to pay from the commencement of the
Lease Term to the time of default, or during the preceding three (3) full
calendar years, which ever period is shorter.
Section 18.6 No Offset
The covenants to pay Rent and other amounts hereunder are independent
covenants and Tenant shall have no right to hold back, offset or fail to pay any
such amounts for default by Landlord or any other reason whatsoever, it being
understood and acknowledged by Tenant that Tenant's only recourse is to seek an
independent action against Landlord.
Section 18.7 Waiver of Rights of Redemption
To the extent permitted by law, Tenant waives any and all rights of
redemption granted by or under any present or future laws if Tenant is evicted
or dispossessed for any cause, or if Landlord obtains possession of the Premises
due to Tenant's default hereunder or otherwise.
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Section 18.8 Bankruptcy
(a) Assumption of Lease. In the event Tenant shall become a Debtor under
Chapter 7 of the Bankruptcy Code ("Code") or a petition for reorganization or
adjustment of debts is filed concerning Tenant under Chapters 11 or 13 of the
Code, or a proceeding is filed under Chapter 7 and is transferred to Chapters 11
or 13, the Trustee or Tenant, as Debtor and as Debtor-in-Possession, may not
elect to assume this Lease unless, at the time of such assumption, the Trustee
or Tenant has:
1. Cured or provided Landlord "Adequate Assurance" (as defined below)
that:
(i) Within thirty (30) days from the date of such assumption the
Trustee or Tenant will cure all monetary defaults under this
Lease and compensate Landlord for any actual pecuniary loss
resulting from any existing default, including without
limitation, Landlord's reasonable costs, expenses, accrued
interest as set forth in Section 4.2 of the Lease, and
attorneys' fees incurred as a result of the default;
(ii) Within sixty (60) days from the date of such assumption the
Trustee or Tenant will cure all non-monetary defaults under
this Lease; provided, however, if any such default cannot with
due diligence be wholly cured within such sixty (60) day
period, the Trustee or Tenant shall have such longer period as
may be reasonably necessary to cure the default, so long as
the Trustee or Tenant proceeds promptly to commence the cure
of same within such sixty (60) day period and diligently
prosecutes the cure to completion (provided, however, that in
the case of any such default that, in Landlord's reasonable
judgment, results in or is likely to result in a default by
Landlord of any of its obligations under the Ground Lease, the
time within which such default may be cured shall expire one
hundred eighty days (180) days after the date that Landlord
notifies Tenant and the Trustee (if any) of its concern that
such default results in or is likely to result in a default by
Landlord of any of its obligations under the Ground Lease);
and
(iii) The assumption will be subject to all of the provisions of
this Lease.
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2. For purposes of this Section 18.8, Landlord and Tenant acknowledge
that, in the context of a bankruptcy proceeding of Tenant, at a
minimum "Adequate Assurance" shall mean:
(i) The Trustee or Tenant has and will continue to have sufficient
unencumbered assets after the payment of all secured
obligations and administrative expenses to assure Landlord
that Trustee or Tenant will have sufficient funds to fulfill
the obligations of Tenant under this Lease, and to keep the
Premises stocked with merchandise and properly staffed with
sufficient employees to conduct a fully operational, actively
promoted business in the Premises; and
(ii) The Bankruptcy Court shall have entered an Order segregating
sufficient cash payable to Landlord and/or the Trustee or
Tenant shall have granted a valid and perfected first lien and
security interest and/or mortgage in property of Trustee or
Tenant acceptable as to value and kind to Landlord, to secure
to Landlord the obligation of the Trustee or Tenant to cure
the monetary and/or non-monetary defaults under this Lease
within the time period set forth above; and
(iii) The Trustee or Tenant at the very least shall deposit a sum,
in addition to the Security Deposit, equal to one (1) month's
Rent to be held by Landlord (without any allowance for
interest thereon) to secure Tenant's future performance under
the Lease.
(b) Assignment of Lease. If the Trustee or Tenant has assumed the Lease
pursuant to the provisions of this Section 18.8 for the purpose of assigning
Tenant's interest hereunder to any other person or entity, such interest may be
assigned only after the Trustee, Tenant or the proposed assignee has complied
with all of the terms, covenants and conditions of Section 13.1 herein,
including, without limitation, those with respect to Additional Rent and the use
of the Premises only as permitted in Article VIII herein; Landlord and Tenant
acknowledging that such terms, covenants and conditions are commercially
reasonable in the context of a bankruptcy proceeding of Tenant. Any person or
entity to which this Lease is assigned pursuant to the provisions of the Code
shall be deemed without further act or deed to have assumed all of the
obligations arising under this Lease on and after the date of such assignment.
Any such assignee shall upon request execute and deliver to Landlord an
instrument confirming such assignment.
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(c) Adequate Protection. Upon the filing of a petition by or against
Tenant under the Code, Tenant, as Debtor-in-possession, and any Trustee who may
be appointed agree to adequately protect Landlord as follows:
(1) To perform each and every obligation of Tenant under this Lease
until such time as this Lease is either rejected or assumed by Order
of the Bankruptcy Court; and
(2) To pay all monetary obligations required under this Lease, including
without limitation, the payment of Minimum Monthly Rent, and such
other Additional Rent charges payable hereunder which is considered
reasonable compensation for the use and occupancy of the Premises;
and
(3) Provide Landlord a minimum thirty (30) days prior notice, unless a
shorter period is agreed to in writing by the parties, of any
proceeding relating to any assumption of this Lease or any intent to
abandon the Premises, which abandonment shall be deemed a rejection
of this Lease; and
(4) To perform to the benefit of Landlord otherwise required under the
Code.
The failure of Tenant to comply with the above shall result in an
automatic rejection of this Lease.
(d) Stipulation. For purposes of this Section 18.8, Landlord and Tenant
hereby stipulate and agree that the Project is a shopping center as such term is
used in Section 365(b)(3) of the Code.
(c) Accumulative Rights. The rights, remedies and liabilities of Landlord
and Tenant set forth in this Section 18.8 shall be in addition to those which
may now or hereafter be accorded, or imposed upon, Landlord and Tenant by the
Code.
ARTICLE XIX
LANDLORD'S DEFAULT
Section 19.1 Landlord's Default, Defined Notice
(a) Any of the following occurrences, conditions or acts by Landlord shall
constitute a "Landlord Default": (i) Landlord's failure to make any payments of
money due Tenant under the express provisions of this Lease within ten (10) days
after the
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receipt of written notice from Tenant that same is overdue (in which event the
delinquent amount shall accrue interest at the Default Rate); or (ii) Landlord's
failure to perform any other obligation of Landlord under Section 9.1 hereof
within thirty (30) days after receipt of written notice from Tenant to Landlord
specifying such default and demanding that the same be cured; provided that, if
such default cannot with due diligence be wholly cured within such thirty (30)
day period, Landlord shall have such longer period as may be reasonably
necessary to cure the default, so long as Landlord proceeds promptly to commence
the cure of same within such thirty (30) day period and diligently prosecutes
the cure to completion.
(b) Notwithstanding the above, in the event that a default by Landlord
under the provisions of Sections 9.1 results in the occurrence of a bona fide
emergency, such as a roof leak that is of such a serious nature that if not
repaired immediately Tenant will have to close all or a significant part of the
Premises for business to the public, Tenant, without the need of serving the
above described default notice, may cure such default; provided Tenant promptly
provides Landlord with notice of such default and the actions taken by Tenant to
cure same.
Section 19.2 Notice to First Mortgagee
If any Landlord's Mortgagee shall have given written notice to Tenant of
the address to which notices to such parties are to be sent, Tenant shall give
such parties written notice simultaneously with any notice given to Landlord of
any default of Landlord, and if Landlord fails to cure any default asserted in
said notice within the time provided above, Tenant shall notify such parties in
writing of the failure to cure, and said parties shall have the right but not
the obligation, within thirty (30) days after receipt of such second notice, to
cure such default before Tenant may take any action by reason of such default. A
Landlord's Default shall not be deemed to have occurred until after Tenant has
complied with the provisions of this Section 19.2 and the additional notice
period contained herein has expired prior to the curing of the alleged default.
Notwithstanding the above, in the event of a bona fide emergency, such as a roof
leak that is of such a serious nature that if not repaired immediately Tenant
will have to close the Premises for business to the public, Tenant, without the
need of serving the above described default notices, may cure such default;
provided Tenant promptly provides Landlord and Landlord's all Landlord's
Mortgagees with notice of such default and the actions taken by Tenant to cure
same.
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ARTICLE XX
ARBITRATION
In the event that any dispute shall arise between the parties hereto with
respect to this Lease, including, without limitation, a dispute concerning: (a)
the amount of Gross Sales generated in any Fiscal Year, (b) Tenant's pro rata
share of Real Estate Taxes, (c) Tenant s pro rata share of Landlord s Common
Area Costs, (d) the occurrence of an Event of Default, or (e) the occurrence of
a Landlord's Default, and such dispute is not resolved to the satisfaction of
both parties hereto within twenty (20) days after either of the parties shall
notify the other in writing of its desire to arbitrate the dispute (the
"Arbitration Notice"), then the dispute shall be resolved in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then
pertaining. The decision of the arbitrators shall be binding, final and
conclusive on the parties, except that errors of law shall be subject to appeal.
Unless the parties otherwise agree, such arbitration proceedings shall be
conducted in Houston, Texas.
Within twenty-five (25) days after the service of the Arbitration Notice,
each party shall appoint an impartial person as an arbitrator who shall have had
at least ten (10) years' recent experience in the Greater Metropolitan Houston
area in a calling connected with the subject matter of the dispute. Such
appointment shall be signed in writing by each party to the other, and the
arbitrators so appointed, in the event of their failure to agree within thirty
(30) days after the appointment of the second arbitrator upon the matter so
submitted, shall appoint a third arbitrator. If either party shall fail to
appoint an arbitrator as aforesaid for a period of twenty-five (25) days after
service of the Arbitration Notice, then the arbitrator appointed by the party
having made such appointment shall appoint a second arbitrator and the two so
appointed shall, in the event of their failure to agree upon any decision within
thirty (30) days thereafter, appoint a third arbitrator. If such arbitrators
fail to agree upon a third arbitrator within forty-five (45) days after
appointment of the second arbitrator, then such third arbitrator shall be
appointed by the American Arbitration Association from its qualified panel of
arbitrators, and shall be a person having at least ten (10) years' recent
experience in the State of Texas in a calling connected with the subject matter
of the dispute. The fees of all arbitrators and the expenses incident to the
proceedings shall be borne by the losing party. The reasonable fees of
respective counsel engaged by the parties, and the fees of expert witnesses and
other witnesses called for the parties, shall also be paid by the losing party.
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The decision of the arbitrators shall be rendered within thirty (30) days
after appointment of the third arbitrator, and such decision shall be in writing
and in duplicate, one counterpart thereof to be delivered to each of the
parties. A judgment of a court of competent jurisdiction may be entered upon the
award of the arbitrators in accordance with the rules and statutes applicable
thereto then obtaining.
If a dispute shall be submitted to arbitration, notice of appointment of
the arbitrators shall be given to the Tenant Mortgagee who prior thereto shall
have given Landlord a notice specifying the name and address of the Tenant
Mortgagee who shall then have the right to participate in the arbitration
proceedings; provided, however, that in the case of the Tenant Mortgagee such
participation shall be in association with Tenant and shall neither be deemed to
entitle the Tenant Mortgagee to participate in the appointment of Tenant's
arbitrator nor to appoint an additional arbitrator nor to enlarge Tenant's
rights in such arbitration proceeding.
If a dispute shall be submitted to arbitration, notice of appointment of
the arbitrators shall be given to the Landlord s Mortgagee who prior thereto
shall have given Tenant a notice specifying the name and address of the Landlord
s Mortgagee who shall then have the right to participate in the arbitration
proceedings; provided, however, that in the case of the Landlord s Mortgagee
such participation shall be in association with Landlord and shall neither be
deemed to entitle the Landlord's Mortgagee to participate in the appointment of
Landlord's arbitrator nor to appoint an additional arbitrator nor to enlarge
Landlord's rights in such arbitration proceeding.
In the event that the City becomes the Landlord hereunder by reason of an
exercise of any remedy under the Ground Lease following a default or breach by
Landlord under the Ground Lease, or by reason of a voluntary or involuntary
termination of the Ground Lease as a result of a default or breach by Landlord
under the Ground Lease, the provisions of this Article XX shall not apply to any
dispute that may arise under this Lease between the City, as landlord hereunder,
and Tenant. In such event, all disputes to be resolved by arbitration will,
instead, unless Tenant and the City otherwise mutually agree, be resolved by
appropriate judicial proceedings, and any reference in this Lease to a decision
or determination by arbitration or pursuant to this Article XX, will be
thereafter deemed to be a reference to a final and non-appealable judgment by a
court of final jurisdiction with respect to the matter.
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ARTICLE XXI
TENANT'S PROPERTY
Section 21.1 Taxes on Leasehold
Tenant shall be responsible for and shall pay before delinquent all
municipal, county, federal or state taxes whether enacted now or in the future
coming due during or after the Lease Term against Tenant's interest in this
Lease or against personal property of any kind owned or placed in, upon or about
the Premises by Tenant.
Section 21.2 Excluded Personal Property
Landlord hereby waives any Landlord's lien, express or implied, statutory
or contractual, that it may have on the Excluded Personal Property.
ARTICLE XXII
ACCESS BY LANDLORD
Tenant shall permit the City, Landlord and the authorized representatives
of each to inspect the Premises during usual business hours after giving
reasonable prior notice as long as such inspection shall not interfere with any
business being conducted on the Premises. Except in the case of an emergency,
forty-eight (48) hours will be deemed to be reasonable notice. Subject to the
provisions of the two previous sentences, Landlord, its agents and employees
shall have the right to enter the Premises from time to time at reasonable times
to examine the same, show them to prospective purchasers and other persons, and
make such repairs to the Premises and/or the Project as Landlord is required to
make hereunder and the City, its agents and employees shall have the right,
after reasonable advance notice, to enter the Premises to the extent necessary
for maintenance, repair, or utility purposes related to the Garage (as that term
is defined in the Ground Lease) or surrounding City properties. When doing any
work in the Premises, Landlord (and the City) shall do so in a manner that does
not disrupt Tenant's business in the Premises. In connection with any entry by
Landlord, Landlord shall reimburse Tenant for all actual costs incurred by
Tenant in connection with repairing any damage to the Premises caused by such
entry. Nothing herein contained, however, shall be deemed to impose upon
Landlord any obligation, responsibility or liability whatsoever, for any care,
maintenance or repair except as otherwise expressly provided in this Lease.
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ARTICLE XXIII
HOLDING OVER, SUCCESSORS
Section 23.1 Holding Over
If Tenant holds over or occupies the Premises beyond the Lease Term (it
being agreed there shall be no such holding over or occupancy without Landlord's
written consent), Tenant shall pay Landlord for each day of such holding over a
sum equal to the greater of (a) one hundred and fifty percent (150%) of the
Minimum Monthly Rent divided by thirty (30), or (b) Minimum Annual Rent plus
Percentage Rent prorated divided by three hundred sixty five (365), plus,
whichever of (a) or (b) is applicable, a pro rata portion of all other amounts
which Tenant would have been required to pay hereunder had this Lease been in
effect. If Tenant holds over with or without Landlord's written consent, Tenant
shall occupy the Premises on a tenancy at sufferance but all other terms and
provisions of this Lease shall be applicable to such period.
Section 23.2 Successors
All rights and liabilities herein given to or imposed upon the respective
parties hereto shall bind and inure to the several respective heirs, successors,
administrators, executors and assigns of the parties and if Tenant is more than
one (1) person, they shall be bound jointly and severally by this Lease except
that no rights shall inure to the benefit of any assignee or subtenant of Tenant
except as provided in Section 13.1 hereof. Landlord, at any time and from time
to time, may make an assignment of all of its interest in this Lease, in the
event of such assignment, Landlord and its successors and assigns (other than
the assignee of Landlord's interest in this Lease) shall be released from any
and all liability thereafter accruing hereunder. Nothing set forth in this
Section 23.2 shall be deemed to alter the provisions contained elsewhere in this
Lease limiting the right of Tenant to assign or sublet.
ARTICLE XXIV
QUIET ENJOYMENT AND OTHER COVENANTS OF LANDLORD
Section 24.1 Quiet Enjoyment.
If Tenant pays the rents and other amounts herein provided, observes and
performs all the covenants, terms and conditions hereof, Tenant shall peaceably
and quietly hold and enjoy the Premises for the Lease Term without interruption
by any person, subject, nevertheless, to the terms and conditions of this Lease.
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Section 24.2 Title and Condition.
Landlord covenants and warrants that (i) Landlord is the holder of the
"tenant's" interest in the Ground Lease, with (ii) the right to execute this
Lease and to perform its obligations under this Lease and lease the Premises to
Tenant, subject only to (a) existing encumbrances of record and (b) such zoning
rules, restrictions, regulations, resolutions, ordinances, and building
restrictions and governmental regulations (zoning and building regulations) now
or hereafter in effect with respect to the Premises. No existing encumbrance of
record or currently applicable zoning or building regulations or, to the best of
Landlord's knowledge, any currently proposed zoning or building regulations,
when effective, restrict: (i) Landlord's right to execute and to perform its
obligations under this Lease; or (ii) Tenant's Intended Use of the Premises.
ARTICLE XXV
MISCELLANEOUS
Section 25.1 Waiver
No waiver by Landlord or Tenant of any breach of any term, covenant or
condition hereof shall be deemed a waiver of the same or any subsequent breach
of the same or any other term, covenant or condition. The acceptance of Rent by
Landlord shall not be deemed a waiver of any earlier breach by Tenant of any
term, covenant or condition hereof, regardless of Landlord's knowledge of such
breach when such Rent is accepted. No covenant, term or condition of this Lease
shall be deemed waiver by Landlord or Tenant unless waived in writing.
Section 25.2 Accord and Satisfaction
Landlord is entitled to accept, receive and cash or deposit any payment
made by Tenant for any reason or purpose or in any amount whatsoever, and apply
the same at Landlord's option to any obligation of Tenant and the same shall not
constitute payment of any amount owed except that to which Landlord has applied
the same. No endorsement or statement on any check or letter of Tenant shall be
deemed an accord and satisfaction or otherwise recognized for any purpose
whatsoever. The acceptance of any such check or payment shall be without
prejudice to Landlord's right to recover any and all amounts owed by Tenant
hereunder and Landlord's right to pursue any other available remedy.
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Section 25.3 Entire Agreement
This Lease (and its exhibits) supercedes all prior discussions,
negotiations, representations, covenants, warranties, promises, agreements,
conditions or undertakings, oral or written, between Landlord and Tenant. Except
as herein otherwise provided, no subsequent alteration, amendment, change or
addition to this Lease shall be binding upon Landlord or Tenant unless in
writing, signed by them.
Section 25.4 No Partnership
Landlord does not, in any way or for any purpose, become a partner,
employer, principal master, agent or joint venturer of or with Tenant.
Section 25.5 Force Majeure
(a) If either party hereto shall be delayed or hindered in or prevented
from the performance of any act required hereunder by reason of strikes,
lockouts, labor troubles, inability to procure material, failure of power,
restrictive governmental laws or regulations, riots, insurrection, war or other
reason of a like nature not the fault of the party delayed in performing work or
doing acts required under this Lease (collectively a Force Majeure), the period
for the performance of any such act shall be extended for a period equivalent to
the period of such delay (and if as a result of such delay (provided such delay
was not caused by the other party), the other party hereto is delayed or
hindered in or prevented from the performance of any act required hereunder, the
period for the performance of any such act shall be extended for a period
equivalent to the period of such additional delay). Notwithstanding the
foregoing, the provisions of this Section 25.5 shall at no time operate to
excuse Tenant from any obligations for payment of Minimum Annual Rent,
Percentage Rent, Additional Rent or any other payments required by the terms of
this Lease when the same are due, and all such amounts shall be paid when due,
provided, however, that an event of force majeure may have the effect of
delaying the Required Completion Date and thereby delaying the date on which the
obligation to pay Rent begins and/or extending a period during which Tenant is
entitled to an abatement of Rent.
(b) Notwithstanding the above, in order to claim that a Force Majeure has
caused a delay that would excuse performance hereunder, the party claiming such
Force Majeure shall give the other party notice of the occurrence of such Force
Majeure within twenty (20) days of the date the party claiming a delay as a
result of a Force Majeure first becomes aware of, or should have become aware
of, the occurrence of such Force Majeure.
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Section 25.6 Modification of Project
(a) Subject to the limitations contained in Section 5.1 hereof, Landlord
or its designee reserves the right to change or modify and add to or subtract
from the size and dimensions of the Project or any part thereof (but not the
Premises), the number, location and dimensions of buildings, the size and
configuration of the parking areas, entrances, exits and parking aisle
alignments, dimensions of hallways, malls and corridors, the number of floors in
any building, the location, size and number of tenants' spaces and kiosks which
may be erected in or fronting on any building or otherwise, the identity, type
and location of other businesses and tenants, and the size, shape, location and
arrangement of the Common Areas, and to design and decorate any portion of the
Property as it desires, provided that the location and size of the Premises
shall not be changed.
(b) Tenant recognizes that the structure located above Bagby Street that
is adjacent to the Premises may be removed during the Lease Term and that such
removal may be disruptive to Tenant's normal operations in the Premises. Tenant
consents to such removal and shall cooperate with the City and Landlord in
connection with such removal. Landlord shall use its best efforts to minimize
any unreasonable disruption to Tenant's normal operations in the Premises during
such removal and shall, indemnify and defend Tenant from any loss that Tenant
may actually suffer as a result of any material disruption to Tenant's normal
operations in the Premises. (Tenant recognizes and agrees that in the event that
the City were to become Landlord hereunder as a result of a termination of the
Ground Lease, the indemnity provision contained in this Subsection 25.6 (b)
shall not apply to the City.)
(c) When exercising its rights hereunder, Landlord shall do so in a manner
that does not materially adversely affect: (i) pedestrian access to the
Premises; or (ii) Tenant's signage rights hereunder.
Section 25.7 Notices
All notices from Tenant to Landlord required or permitted by any provision
of this agreement shall be directed to Landlord as follows:
500 Texas Avenue Limited Partnership
c/o The Cordish Company
300 Water Street
Baltimore, Maryland 21202
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All notices from Landlord to Tenant required or permitted hereunder shall
be directed as follows, namely:
Bayou Place Performance Hall General Partnership
c/o Pace Bayou Place, Inc.
515 Post Oak Boulevard, Suite 300
Houston, Texas 77027
Attention: Mr. Jeffry B. Lewis
With a copy to:
Michael F. Rogers, Esquire
Gardere Wynne Sewell & Riggs, L.L.P.
Three Allen Center
333 Clay Avenue, Suite 800
Houston, Texas 77002-4086
All notices to be given hereunder by either party shall be written and
sent by registered or certified mail, return receipt requested, postage pre-paid
or by an express mail delivery service, addressed to the party intended to be
notified at the address set forth above. Either party may, at any time, or from
time to time, notify the other in writing of a substitute address for that above
set forth, and thereafter notices shall be directed to such substitute address.
Notice given as aforesaid shall be sufficient service thereof and shall be
deemed given as of the date received, as evidenced by the return receipt of the
registered or certified mail or the express mail delivery receipt, as the case
may be. A duplicate copy of all notices from Tenant shall be sent to any
Landlord's Mortgagee as provided for in Section 19.3.
Section 25.8 Captions and Section Numbers
This Lease shall be construed without reference to titles of Articles and
Sections, which are inserted only for convenience of reference.
Section 25.9 Landlord's Liability
In no event shall Landlord, including any successor or assignee of all or
any portion of Landlord's interest in the Project, be personally liable or
accountable with respect to any provision of this Lease. If Landlord shall be in
breach or default with respect to any obligation hereunder or otherwise, Tenant
agrees to look for satisfaction solely to the equity of Landlord in the Project.
The liability of Landlord hereunder shall in no event exceed the amount of such
equity and no other assets of Landlord (or any partners, stockholders or
officers of Landlord) shall be subject to levy, execution or other procedures
for the satisfaction of Tenant's remedies. In the event Landlord
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transfers this Lease, other than as security for a mortgage, deed or trust or
loan, upon such transfer and acceptance by the transferee, Landlord (and, in
case of any subsequent transfers or conveyances, the then grantor) shall be
relieved from all liability and obligations hereunder arising after such
transfer (however the transferor shall not be relieved from all liability
hereunder to Tenant that arose before such transfer).
Section 25.10 Interpretation
This Lease shall be interpreted in such a manner that is consistent with
the Ground Lease.
Section 25.11 Third Party Beneficiary
With the exception of express rights granted to the City herein, nothing
contained in this Lease shall be construed to confer upon any other party the
rights of a third party beneficiary.
Section 25.12 Compliance with Laws
Notwithstanding anything to the contrary contained in this Lease, no
provision of this Lease shall be construed to require a party hereto to comply
with any Applicable Law during the period that such party may be pursing a bona
fide challenge of the applicability, lawfulness and/or enforceability of such
Applicable Law. If such party's challenge is successful, such party shall not be
required by the provisions of this Lease to comply with such Applicable Law.
Section 25.13 Trial by Jury
Landlord and Tenant do hereby waive trial by jury in any action, suit,
proceeding, and/or counterclaim brought by either of the parties hereto against
the other on any matters whatsoever arising out of or in any way connected with
this Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy
of the Premises, any claim of injury or damage, and/or statutory remedy.
Section 25.14 Attorney's Fees.
If either Landlord or Tenant brings suit or other legal proceedings to
enforce the provisions of this Lease against the other, then the party
prevailing in such suit shall be reimbursed by the other for all reasonable
attorneys' fees and litigation costs incurred by the prevailing party in
connection with such suit or proceeding.
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Section 25.15 No Broker
Tenant and Landlord each covenants, represents and represents to the other
that it has dealt with any broker or agent in connection with this Lease. Each
party hereby indemnifies and saves the other harmless against and from all
costs, expenses, damages and liabilities, including, without limitation,
reasonable attorneys' fees and expenses, arising from any claims for brokerage
commissions, finder's fees or other compensation arising by reason of any breach
of the foregoing covenant, warranty and representation.
Section 25.16 Tenant Election in Event of Termination by City.
In the event that the City has the right to terminate this Lease pursuant to
Section 8.1 (c) of the Ground Lease and this Lease is subsequently terminated by
the City pursuant to Section 8.1 (c) of the Ground Lease, Tenant hereby elects
to receive as damages the appraised value of the leasehold interest of Tenant in
the Premises.
IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this Lease
as of the day and year first above written.
WITNESS/ATTEST: 500 TEXAS AVENUE LIMITED PARTNERSHIP, a
Maryland Limited Partnership
By: THE CORDISH COMPANY, its General Partner
/s/ [Illegible] By: /s/ Charles F. Jacobs (SEAL)
- ------------------------- ----------------------------------------
Name: Charles F. Jacobs
Title: Vice President
BAYOU PLACE PERFORMANCE HALL GENERAL
PARTNERSHIP, a Texas general partnership,
By: Pace Bayou Place, Inc., a Texas
corporation, its managing general partner,
/s/ [Illegible] By: /s/ Rodney Eckerman (SEAL)
- ------------------------- ----------------------------------------
Secretary Name: Rodney Eckerman
Title: President
70
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EXHIBIT "A"
Site Plan
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EXHIBIT "A" PAGE 1 0F 3 - 1ST FLOOR
CONTROL AREA
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[GRAPHIC OMITTED]
EXHIBIT "A" PAGE 2 OF 3
2ND FLOOR
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[GRAPHIC OMITTED]
EXHIBIT "A" PAGE 3 OF 3
STORAGE AREA
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EXHIBIT "B"
LEGAL DESCRIPTION
<PAGE>
[ILLEGIBLE] Houston, Texas, and [ILLEGIBLE] all of City Block 64, [ILLEGIBLE]
described in deed and recorded in the Official Public Records of Real Property,
of Harris County under County Clerk's File No. B440365, Film Code No.
###-##-####, and a portion of City Block 63, as described in deeds and recorded
under County Clerk's File No. B653159, Film Code No. 085-09-0885, County clerk's
File No. B567589, Film Code No. 076-13-0214, County Clerk's File No. B455966,
Film Code No. 065-03-0267, County Clerk's File No. B589150, Film Code No.
###-##-####, and Volume 4105, Page 139, of the Harris County Deed Records, and a
portion of Brazos and Capitol Streets, based on a width of 80.00 feet; said
3.306 acre tract being more particularly described by metes and bounds as
follows:
Commencing at a 3/4-inch iron rod, being City of Houston Reference Monument
No. 242 in the intersection of Bagby Street, width varies, and Capitol Street,
based on a width of 80.00 feet, from which City of Houston Reference Monument
No. 15 bears S 17(degrees) 08' 11" E, a distance of 990.31 feet;
THENCE, S 68(degrees) 14' 18" E, a distance of 70.15 feet to a point in the
easterly right-of-way line of Bagby Street and being the POINT OF BEGINNING of
the herein described tract;
THENCE, N 32(degrees) 51' 32" E, along the easterly right-of-way line of Bagby
Street, at a distance of 26.49 feet passing the southwesterly line of City Block
63, and continuing a total distance of 278.20 feet to a point for the
intersection with the southerly right-of-way line of Texas Avenue, based on a
width of 100.00 feet;
THENCE, S 57(degrees) 08' 11" E, along the southerly right-of-way line of Texas
Avenue, a distance of 551.43 feet to a point for the intersection with the
westerly right-of-way line of Smith Street, based on a width of 80 feet, and
being the northeast corner of City Block 64;
THENCE, S 32(degrees) 52' 15" W, along the westerly right-of-way line of Smith
Street, a distance of 251.71 feet to a point for the intersection with the
northerly right-of-way line of Capitol Street, and being the southeast corner of
City Block 64;
<PAGE>
EXHIBIT "C"
RULES AND REGULATIONS
1. All deliveries are to be made to designated service or receiving areas.
Landlord shall have the right, from time to time, for a bona fide reason,
to prohibit deliveries during certain hours of each day and Tenant shall
endeavor to abide by such restrictions.
2. Tractor trailers or other vehicle, shall not have the right to park on the
Property. Tractor trailers are to be removed from the loading areas after
unloading. No parking or storing of such trailers will be permitted in the
Project.
3. Except for small parcel packages, no deliveries will be permitted through
the public common areas of the Project, unless Tenant does not have a rear
service door. In such event, prior arrangements must be made with the
Project's general manager for delivery. Merchandise being received shall
immediately be moved into Tenant's Premises and not be left in the service
or receiving areas.
4. Tenant is responsible for storage and removal of its trash, refuse and
garbage. When removing such trash, refuse and garbage, Tenant shall not
stain or soil any part of the Project. Tenant shall use reasonable efforts
to prevent the disposal of the following items in drains, sinks or
commodes: plastic products (plastic bags, straws, boxes); sanitary
napkins; tea bags; cooking fats; cooking oils; any meat scraps or cutting
residue; petroleum products (gasoline, naphtha, kerosene, lubricating
oils); paint products (thinner, brushes); or any other item which the same
are not designated to receive. All portions of the Premises, including
vestibules, entrances and returns, doors, fixtures, windows and plate
glass, shall be maintained in a safe, neat and clean condition. Landlord
may set the hours during which trash, refuse and garbage may be removed
from the Premises.
6. Tenant shall not permit or suffer merchandise of any kind at any time to
be placed, exhibited or displayed outside its Premises, nor, except as
expressly permitted hereunder, shall Tenant use the exterior sidewalks or
exterior walkways of its Premises to display, store or place any
merchandise. No sale of merchandise by tent sale, truck load sale or the
like, shall be permitted on the common areas.
7. Tenant shall not permit or suffer any portion of the Premises to be used
for lodging purposes.
<PAGE>
EXHIBIT "D"
FORM OF NON-DISTURBANCE AGREEMENT
<PAGE>
RECORDING REQUESTED BY AND
WHEN RECORDED PLEASE RETURN TO:
MICHAEL F. ROGERS, ESQUIRE
GARDERE WYNNE SEWELL & RIGGS, L.L.P.
333 CLAY AVENUE, SUITE 800
HOUSTON, TEXAS 77002-4086
CONSENT TO SUBLEASE AND SUBORDINATION
NON-DISTURBANCE, AND ATTORNMENT AGREEMENT
THIS CONSENT TO SUBLEASE AND SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
AGREEMENT (this "Agreement"), is entered into as of the __ day of June, 1997, by
and among the CITY OF HOUSTON, TEXAS, a Texas municipal corporation and Home
Rule City, as landlord ("City"), 500 TEXAS AVENUE LIMITED PARTNERSHIP, a
Maryland limited partnership, as sub-landlord ("Landlord") or ("TALP"), having
an office at c/o The Cordish Company, 300 Water Street, Baltimore, Maryland
21202, corporation, and BAYOU PLACE PERFORMANCE HALL GENERAL PARTNERSHIP, a
Texas general partnership, as subtenant ("Subtenant") or ("BPPHGP"), having an
office at 515 Post Oak Boulevard, Suite 300, Houston, Texas 77027.
WITNESSETH:
WHEREAS, pursuant to a Lease and Development Agreement, dated as of
November 8, 1991, between the City, as landlord, and Landlord, as tenant, as
amended by a First Amendment to Lease and Development Agreement, dated May 24,
1996 and a Second Amendment to Lease and Development Agreement and Angelika
Parking Rights Agreement, dated April 28, 1997 such Lease and Development
Agreement, as so amended, is hereinafter referred to as the Ground Lease), the
City demised to Landlord, and Landlord leased from the City, the real property
described on Exhibit A hereto (the "Land"), the improvements located thereon and
certain other interests, as specified therein, (the Land and such improvements
and interests being herein referred to collectively as the "Premises");
WHEREAS, Landlord and Tenant have entered into a Lease, dated June __,
1997 of a portion of the Premises, a copy of which the City acknowledged having
received (the "Sublease"); and
WHEREAS, pursuant to Section 12.3 (c) of the Sublease, Landlord is
obligated to use its good faith efforts to obtain this Agreement from the City,
and thereby provide to Tenant the protections and other benefits set forth
herein;
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and of other good and valuable considerations, the parties agree as follows:
1. REPRESENTATIONS
TALP and BPPHGP hereby warrant and represent unto the City that each of
the following statements is true, correct and complete:
(a) TALP and BPPHGP have delivered to the City a true, correct and
complete copy of the Sublease and all exhibits and schedules thereto, all as
executed by the parties thereto; and
(b) The Sublease is in full force and effect and has not been modified or
amended.
2. SUBORDINATION
Landlord and Tenant hereby confirm that the Sublease is subordinate to the
Ground Lease.
3. NON-DISTURBANCE AND ATTORNMENT
(a) The City agrees that the City, as the landlord under the Ground Lease,
shall not disturb the Tenant's possession of the Premises for any reason other
than one which would entitle the Landlord to terminate the Sublease under the
terms of the Sublease. If for any reason the City shall become the Landlord
under the Sublease by reason of the termination of the Ground Lease or
otherwise, Tenant, as tenant, shall be bound to the City under all of the terms,
covenants and conditions of the Sublease and Section 8.1 (c) of the Ground Lease
for the balance of the term thereof remaining with the same force and effect as
if City were the Landlord under the Sublease, and Tenant does hereby covenant to
pay rent and attorn to City as its Landlord, said agreement to pay rent and
attornment to be effective and self-operative without the execution of any
further instruments on the part of any of the parties hereto immediately upon
City becoming the Landlord under the Sublease by reason of the Ground Lease
being terminated or otherwise.
(b) Landlord hereby irrevocably designates the Sublease as a "TALP Tenant
Lease" pursuant to the terms of Section 8.1(c) of the Ground Lease and the City
hereby acknowledges such designation. Landlord and the City represent and
warrant that as a consequence of the designation of the Sublease as a "TALP
Tenant Lease", the Sublease is subject to the protections of Section 8.1 (c) of
the Ground Lease and that the Sublease is not subject to termination under
Section 8.1 (b) of the Ground Lease in the event the Ground Lease is terminated
and the City determines not to operate the Premises. Further, the City
acknowledges that Section 25.16 of the
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Sublease contains the election required of Tenant pursuant to Section 8.1 (c) of
the Ground Lease.
(c) In the event that the City becomes the "Landlord" under the Sublease
by reason of an exercise of any remedy under the Ground Lease following a
default or breach by Landlord under the Ground Lease, or by reason of a
voluntary or involuntary termination of the Ground Lease as a result of a
default or breach by Landlord under the Ground Lease, the City shall not be
bound by (i) any rent, prepaid charges, or other sums which Tenant might have
paid for more than the then current month to any prior Landlord under the
Sublease, (ii) any waiver of forbearance on the part of any prior Landlord under
the Sublease, or (iii) any modification of the Sublease; unless, in each
circumstance, any such matters have been previously approved in writing by the
City; nor shall the City be liable for any previous act or omission of any prior
Landlord under the Sublease, be subject to any offset, defenses or counterclaims
which have accrued to Tenant against said prior Landlord, or be bound by any
guaranty of work performed by or for the prior Landlord in construction of
Landlord's Work or any express or implied warranty of workmanship, materials, or
habitability.
(d) Subject to all the terms and conditions of this Agreement, the City
hereby grants its approval of the Sublease.
4. DERIVATIVE RIGHTS
The parties acknowledge and agree that this Agreement in no respect amends
or modifies the Ground Lease or waives the City's rights thereunder; that the
rights of Tenant under the Sublease are derivative of the rights of TALP under
the Ground Lease; and that in no event can the rights of Tenant be greater than
the rights of TALP under the Ground Lease as so derived through TALP. In this
regard, and without limitation, the property that is the subject of the Sublease
is intended to be a portion of the Premises as defined in the Ground Lease.
Tenant's quiet enjoyment is thereby subject to the terms of the Sublease, the
Ground Lease and this Agreement. To the extent of any discrepancy in the
description of characterization used in the Sublease with regard to the portion
of the Premises covered by the Sublease, the rights of Tenant in the Garage or
other matters covered by the Ground Lease, it is agreed that, subject to this
Agreement, the Ground Lease shall control. If the Ground lease is terminated,
the Sublease shall continue, subject to its terms and the terms of this
Agreement.
5. CITY AS LANDLORD
So long as the City has not become the Landlord under the Sublease, it
shall have no obligations under the Sublease nor any of the obligations of the
Landlord, as same is defined in the Sublease. If the City becomes the "Landlord"
under the Sublease by reason of an exercise of any remedy under the Ground Lease
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following a default or breach by Landlord under the Ground Lease, or by reason
of a voluntary or involuntary termination of the Ground Lease as a result of a
default or breach by Landlord under the Ground Lease, as to the Sublease, the
parties agree that so long as the City continues as the Landlord:
(a) The City shall have no obligation to perform, but at its sole election
may elect to perform, any of the Landlord's Work as described in Section 3.1 of
the Sublease.
(b) The City shall have no obligation to correct any defects in Landlord's
Work.
(c) The City shall have no obligation to honor the provisions of Section
5.1 of the Sublease, but at its sole election may elect to do so.
(d) The City shall have no obligation to expend any sums pursuant to
Section 6.1 of the Sublease, but at its sole election may elect to do so.
(e) Notwithstanding the provisions of Subsection 8.1 (c) of the Sublease,
the City shall have no obligation to assist Tenant with any effort of Tenant to
obtain a liquor license for Tenant's business in the Premises.
(f) The City shall have no obligation to comply with or honor the use
restrictions contained in Section 8.2 of the Sublease.
(g) The City shall have no obligation to repair, restore, or rebuild all
or any part of the Project (as that term is defined in the Lease) in the event
of a casualty or condemnation, but at its sole election, the City may elect to
do so.
(h) The City shall have no obligation to expend any sums pursuant to
Section 9.1 of the Sublease, but at its sole election may elect to do so.
(i) Notwithstanding the provisions of Section 11.2 of the Sublease, the
City shall not be deemed to release and discharge any other party from all
claims and liabilities and does not waive any right to subrogation against any
party.
(j) The City shall not be obligated to comply with the provisions of
Section 11.7 of the Sublease, but at its sole election may elect to do so.
(k) The City shall have no obligation to expend any sums pursuant to the
Sublease, unless expressly authorized by City Council to do so.
(l) The City shall not be obligated to honor any of the indemnity
obligations of Landlord contained in the Sublease.
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(m) The City shall not be obligated to honor the provisions of Sections
25.13 and 25.14 of the Sublease.
(n) The City shall not be obligated to arbitrate any disputes that may
arise under or in connection with the Sublease, but at its sole election may
elect to do so.
6. SUBLEASES
Subject to the provisions of Section 3 (c) hereof, pursuant to Article XII
of the Sublease, if the City becomes the landlord under any sublease, the City
shall not be bound by (i) any rent, which any tenant might have paid for more
than the then current month to any prior landlord under any sublease; (ii) any
security deposit, cleaning deposit or other prepaid charge which any tenant
might have paid in advance to any prior landlord under any sublease, (iii) any
waiver or forbearance on the part of any prior landlord under any sublease; nor
shall the City be liable for any previous act or omission of any prior landlord
under any sublease, be subject to any offset, defenses or counterclaims which
have accrued to any tenant against said prior landlord, or be bound by any
guaranty of work performed by or for the prior landlord in construction of
tenant improvements or any express or implied warranty of workmanship,
materials, or habitability. Tenant acknowledges and agrees to the terms of this
Section 6 and Tenant agrees to include the terms of this Section 6 in each of
its subleases.
7. ENTERTAINMENT SCHEDULE
Tenant hereby agrees to provide a copy of its entertainment schedule to
the City as such schedule becomes known to Tenant. Tenant agrees that the City
may circulate Tenant's entertainment schedule and publicize the schedule in such
manner as the City deems appropriate.
8. NOTICES
TALP hereby agrees to orally notify the City of any material defaults of
Tenant under the Sublease and agrees that the City may review, at TALP's
offices, any notices of such material defaults sent by TALP to Tenant.
9. MISCELLANEOUS
(a) Any notice, demand, consent, approval, direction, agreement or other
communication (any "Notice") required or permitted hereunder shall be given in
the manner required under the Ground Lease and shall be addressed to the parties
hereto at their respective addresses as set forth in the Ground Lease or the
Sublease.
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(b) This Agreement shall be binding upon and inure to the benefit of all
of the parties hereto and their respective successors and assigns.
(c) The captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope or intent of this
Agreement, nor in any way affect this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ATTEST/SEAL: Landlord:
500 TEXAS AVENUE LIMITED
PARTNERSHIP, a Maryland
limited partnership,
By: The Cordish Company, a
Maryland corporation, its
general partner,
___________________________ By: _________________________________
Name:
Title:
Tenant:
BAYOU PLACE PERFORMANCE HALL
GENERAL PARTNERSHIP, a Texas
general partnership,
By: Pace Bayou Place, Inc., a
Texas corporation, its managing
general partner,
___________________________ By: _____________________________________
Name:
Title:
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<PAGE>
City:
THE CITY OF HOUSTON, TEXAS,
___________________________ By: _____________________________________
City Secretary Director, Convention and
Entertainment Facilities
Department
APPROVED AS TO FORM:
_________________________________________
Sr. Assistant City Attorney
L.D. File No.
DATE OF COUNTERSIGNATURE:
_________________________________________
7
<PAGE>
MASTER LICENSED USER AGREEMENT
THIS MASTER LICENSED USER AGREEMENT is dated as of the 1st day of
February, 1996, by and between Ticketmaster Ticketing Co., Inc., a Delaware
corporation ("Ticketmaster") on behalf of itself and the "TM Affiliates" and
PACE Entertainment Corporation, a Texas corporation, ("Principal") on behalf of
itself and the "Pace Affiliates".
W I T N E S S E T H:
WHEREAS, Ticketmaster and/or various TM Affiliates and Principal and/or
various PACE Affiliate(s) have entered into certain ticketing services
agreements (collectively, the "Existing Agreements"), a list of which is
attached hereto and incorporated herein as Exhibit I; and
WHEREAS, the parties mutually desire to enter into one agreement (the
"Master Agreement") covering all of the Pace Affiliates and all of the TM
Affiliates applicable ticketing needs and services in the United States; and
WHEREAS, the parties mutually desire to terminate all the Existing
Agreements and to enter into the Master Agreement, effective as of February 1,
1996, all subject to the terms and conditions as are more fully set forth
herein.
NOW, THEREFORE, in consideration of the mutual premises, covenants and
understandings of the parties hereto, it is hereby agreed as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the respective meanings indicated below unless the context otherwise requires:
(a) Attraction: A concert, theatrical presentation or other entertainment
feature to be held at a Facility in the continental United States in respect of
which Principal or a Pace Affiliate owns or controls the right to sell Tickets
to the public or which is held at a "Pace Facility" or a "Non Pace Facility" (as
defined below); provided, however, an Attraction shall not include any event at
the Coca-Cola Lakewood Amphitheatre located in Atlanta, Georgia or the Starplex
Amphitheatre located in Dallas, Texas.
(b) Customer Convenience Charge: The amount charged to a Ticket purchaser
by Ticketmaster for the use of the TM System.
(c) Facility(ies): Any and all amphitheaters, theaters, arenas, stadiums
and other facilities of any nature whatsoever where an Attraction is to be held,
including, but not limited to, Pace Facilities and Non-Pace Facilities, whether
now existing or existing at any time during the term hereof.
<PAGE>
(d) Facility Box Office: The Ticket locations at the Facility which are
operated by Principal.
(e) Hardware: All of that certain computer hardware, communications
equipment, terminals and hook-ups listed with particularity on Exhibit II, which
is attached hereto and incorporated herein by this reference, or otherwise
supplied by Ticketmaster to Principal or a Pace Affiliate at any time during the
term of this Agreement.
(f) Inside Charges: The amount charged to Principal by Ticketmaster for
services rendered by Ticketmaster under this Agreement.
(g) Non-Pace Facility(ies): Any Facility other than a "Pace Facility" (as
defined below) and with which Ticketmaster does have a ticketing services
agreement in effect at the time of the performance of the Attraction. A listing
of certain current Non Pace Facilities is attached hereto and incorporated
herein in Exhibits VI-VIII.).
(h) Open Seats: Seats in the Facility which are available for public
purchase for an Attraction.
(i) Outlet: A physically existing retail Ticket selling agency where
Tickets for an Attraction are made available through the TM System and are
offered for sale to the public.
(j) Pace Affiliate(s): Subject to Section 5(b)(ii) hereof, any entity or
person, which is directly or indirectly controlled by, under common control with
or controls Principal, or any one of them, including, but not limited to, PACE
Theatrical Group, Inc., PACE Concerts, Inc., PACE Motors Sports (including SRO
and Supersports), Pavilion Partners, PACE Facilities Group and Theatre
Management Group Inc.. It is specifically understood and agreed that Pavilion
Partners and Theater Management Group, Inc. are deemed to be "Pace Affiliates"
only for purposes of this Agreement.
(k) Pace Facility(ies): Any and all theaters, arenas, stadiums and other
facilities of any nature whatsoever where an Attraction is to be held which (i)
are listed on Exhibits III, IV, V or VIII hereto (including Facilities
subsequently added to the Exhibits by the parties hereto) or (ii) (a) Principal
or any Pace Affiliate owns, operates, manages, controls or leases, or for which
any such entity otherwise has any other right to sell, or controls the right to
sell tickets, whether now or at any time in the future during the term hereof
and (b) any Facility(ies) which are not covered by Subsection (k) (i) above and
with which, at the time of the performance of the Attractions, Ticketmaster does
not have a ticketing services agreement. A listing of the current Pace
Facilities is attached hereto and incorporated herein in Exhibits III-V. The
parties acknowledge that in certain rare and exceptional instances Principal or
a Pace Affiliate may operate a Facility, but may not control the right to sell
Tickets at such Facility. In any such instance, any such Facility will not be
included as a "Pace Facility", provided, however, that Principal and the Pace
Affiliate will use their best efforts to recommend and secure the exclusive use
of the TM System for such a Facility.
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(l) Software: All the computer software, including all upgrades, new
releases, new versions and modifications thereto during the term of this
Agreement, which Principal shall have access to in connection with the sale of
Tickets through the TM System.
(m) Telephone Sales: All sales of Tickets through the TM System by
telephone (including through the Internet).
(n) TM Affiliate(s): Any entity which operates the TM System and which is
directly or indirectly controlled by or under common control with Ticketmaster,
exclusive of any entity which is solely a licensee of the TM System and the
Ticketmaster mark and which does not otherwise satisfy any of the conditions set
forth in the first part of this sentence. Notwithstanding the above,
Ticketmaster will use its reasonable efforts to work with Ticketmaster of
Delaware Valley, Inc. ("D.V.") and Bay Area Seating Services, Inc. ("Bass") so
that said entities shall be included as TM Affiliates for purposes of this
Agreement. In the event an Attraction or Facility is to be held in a
geographical area in which a licensee of Ticketmaster (other than Bass or D.V.)
operates, then Ticketmaster or the applicable TM Affiliate shall use its best
efforts to cause said licensee to enter into a ticketing agreement with
Principal or the applicable Pace Affiliate for ticketing services for said
Attraction and/or said Facility on the same general financial terms and
conditions set forth in the applicable Exhibit(s) hereto. If such negotiations
are unsuccessful (including negotiations with BASS), then Pace or the applicable
Pace Affiliate may enter into a ticketing agreement with any other entity with
respect to the upcoming Attraction or Facility.
(o) TM System: The Hardware, Software, related procedures and personnel,
repair and maintenance services established and maintained by Ticketmaster for
the purpose of selling, auditing and controlling the sale of Tickets for
Attractions.
(p) Ticket: A printed evidence of the right to occupy space at or to
attend an Attraction.
(q) Ticket Receipts: The face value of a Ticket less the applicable Inside
Charge.
(r) Controls the Right to Sell Tickets: When this phrase is used in the
definition of "Attraction", "Pace Facility(ies)" or elsewhere in this
Agreement, it means that Principal or a Pace Affiliate has the ability, whether
by contract, ownership, management or otherwise, to determine the manner in
which and/or means by which Tickets may be sold to the public. To the extent
that Principal or a Pace Affiliate does not have such ability, Principal shall
use its best efforts in its capacity as Facility manager, consultant, minority
partner or otherwise to recommend and secure the exclusive use of the TM System
by such Facility or for such Attraction; provided, however, that after Principal
and/or the applicable Pace Affiliate exercises their best effort in the manner
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<PAGE>
described above, on an attraction by attraction basis, their failure to secure
said rights shall not be deemed to be a breach of this Agreement.
2. Hardware; Software. During the term of this Agreement, Ticketmaster
shall provide to the Principal the Hardware for each applicable Pace Facility
and on-line access to the Software. The Hardware and Software shall at all times
be and remain the sole and exclusive property of Ticketmaster, and Principal
shall have no right, title or interest therein or thereto except as a licensed
user thereof.
3. Term of Agreement. The term of this Agreement shall commence on
February 1, 1996 and shall expire on December 31, 2001; provided, however, with
respect to any theatrical Attractions in the State of Florida presented by
PTG-Florida, Inc. only, the terms and conditions hereof shall commence as of
April 1, 1996. For a period of up to 90 days prior to October 31, 2001, the
parties will enter into good faith negotiations to extend the term of this
Agreement. If no such agreement is reached, then Ticketmaster will assist
Principal with the transition occurring at the expiration of this Agreement.
4. Compensation. In consideration for the license by Ticketmaster of the
Hardware and Software to Principal and Ticketmaster's continuing services to be
performed in connection herewith, Ticketmaster shall be entitled to receive the
following fees and compensation:
(a) Inside Charges: Ticketmaster shall assess and be entitled to
receive from gross Ticket proceeds an Inside Charge in the amount of $0.05 per
Ticket for each Ticket printed or sold through the TM System at the Facility Box
Office, except for complimentary Tickets which are subject to an Inside Charge
of $0.01 per Ticket.
The amount of Inside Charges owed by Principal to Ticketmaster shall
be deducted from Ticket revenues in the manner provided in Section 16 hereof.
(b) Customer Convenience Charge: A per Ticket Customer Convenience
Charge payable to Ticketmaster will be assessed against purchasers of Tickets to
any Attractions at a Pace Facility or Non-Pace Facility at all Outlets and
through Telephone Sales. The amount of the Customer Convenience Charge shall
initially be as set forth in Exhibits III-VIII, which are attached hereto and
incorporated herein by this reference, with respect to PACE Facilities and
Non-Pace Facilities, respectively. The amount of the Customer Convenience
Charge for both Outlet and Telephone Sales shall be automatically increased by
$0.25 on each of February 1, 1997, January 1, 1999 and January 1, 2001 and by
such amount, if any, as the parties shall mutually agree upon on January 1, 1998
and January 1, 2000. Ticketmaster shall be entitled to accept MasterCard, Visa
and American Express and any other credit card
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which Ticketmaster determines to accept (without adversely affecting the rate it
pays on credit card sales) with respect to Telephone Sales of Tickets. Further,
Ticketmaster shall be obligated to accept any other credit card that Principal
requires it to accept; provided, however, that Ticketmaster can enter into a
commercially reasonable arrangement to accept such card at financial terms which
are competitive with those arrangements Ticketmaster has in place for the
acceptance of other credit cards. Notwithstanding the foregoing, on Principal's
request, Ticketmaster shall reasonably comply with Principal's request to limit
the credit cards accepted for a particular Attraction that is part of a national
tour sponsored by a particular credit card company (e.g., Visa sponsorship of
Paul McCartney and "Chorus Line"). Ticketmaster shall absorb the credit card
company charges, and shall be responsible for any chargebacks, with respect to
such sales. However, at Principal's option, with respect to all Tickets with a
face value in excess of $20.00 ($10.00 in the case of motor sports only) which
are purchased by credit card, Principal may instruct Ticketmaster to either
increase the Customer Convenience Charge by the amount set forth below or
Principal shall pay Ticketmaster an Inside Charge equal to such amount. The
amount of such increase to the Customer Convenience Charge (or the Inside
Charge, as applicable) for Tickets sold by MasterCard, Visa and American Express
shall be equal to approximately two and thirty five hundredths percent (2.35%)
of that portion of the face value of such a Ticket which is in excess of $20.00
($10.00 in the case of motor sports only). Said percentage increase shall be
automatically increased consistent with any actual increases to the interbank
rate. Principal consents to the imposition of the Customer Convenience Charge on
all Ticket sales to purchasers at Outlets and on Telephone Sales.
(c) Handling Charge: Ticketmaster shall be entitled to assess and
receive a per order Handling Charge from each person purchasing Tickets through
Ticketmaster's Telephone Sales network to an Attraction at a Pace Facility. The
initial Handling Charges for each Pace Facility shall be those charges in effect
under the Existing Agreements as of the date of termination of the Existing
Agreements. Principal hereby consents to the imposition of said Handling Charge
which may be increased from time to time consistent with actual postal rate
increases. Further, Ticketmaster shall be entitled to increase the Handling
Charge by an amount no greater than $0.25 on each of the dates set forth in
Section 4(b) above for increases to Customer Convenience Charges. (in addition
to any increases due to postal rate increases).
(d) Ticket Sales Royalty: Principal shall be entitled to receive a
per Ticket royalty from Ticketmaster for each Ticket sold by Ticketmaster at an
Outlet to an Attraction and for which a Customer Convenience Charge is received
(and not refunded) by Ticketmaster. The amount of said royalty is set forth in
Exhibits III-VIII, which are attached hereto and incorporated herein by this
reference with respect to Attractions at Pace Facilities and Non-Pace
Facilities, respectively. Principal shall be entitled to an
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additional royalty in the amount of twenty-five percent (25%) of each increase
to any applicable per Ticket Outlet Customer Convenience Charge.
Principal shall be entitled to receive a per Ticket royalty from
Ticketmaster for each Ticket sold by Ticketmaster through its Telephone Sales
network to an Attraction and for which a Customer Convenience Charge is received
(and not refunded) by Ticketmaster. The amount of said royalty is set forth in
Exhibits III-VIII, which are attached hereto and incorporated herein by this
reference with respect to Attractions at PACE Facilities and Non-Pace
Facilities, respectively. Principal shall be entitled to an additional royalty
in the amount of fifty percent (50%) of each increase to any applicable per
Ticket Telephone Sales Customer Convenience Charge.
Principal shall be entitled to receive a per order royalty from
Ticketmaster for each order processed through Ticketmaster's Telephone Sales
network to an Attraction at a Pace Facility and for which a Handling Charge is
received (and not refunded) by Ticketmaster. The amount of the royalty shall be
equal to fifty percent (50%) of the applicable Handling Charge plus any increase
to the initial per order Handling Charge, (after deducting direct mailing costs
of fifty cents ($0.50) plus any actual increase to existing postal rates).
Notwithstanding anything to the contrary set forth above, Principal
shall not be entitled to participate in any increase to the Customer Convenience
Charge which was made pursuant to (i) Section 4(b) above re: credit cards with
respect to Tickets priced in excess of $20.00 ($10.00 for motor sports only)
purchased by telephone or (ii) Section 4(f) below with respect to taxes.
The parties agree that, from time to time, one or both parties may desire
to reduce the Customer Convenience Charges for a particular Attraction at a
particular location and that they will work together in good faith in such
instances to make such modifications to said Charges and to the applicable
Royalties as they mutually deem appropriate.
In the event that an Attraction covered by this Agreement is held at a
Facility which is not specifically referenced in the Exhibits to this Agreement,
then the parties shall mutually determine whether or not that Facility shall be
deemed to be a Pace Facility or a Non-Pace Facility. If it is deemed to be a
Non-Pace Facility then the Charges and/or Royalties applicable to such
Attraction shall be based upon the Charges and/or Royalties applicable to
similar Attractions at similar Facilities which are specifically referenced in
the Exhibits hereto. If it is deemed to be a Pace Facility, then the Charges
and/or Royalties applicable to such Attraction shall be based upon the
applicable amounts set forth in Exhibit IX, which is attached hereto and
incorporated herein by this reference.
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The royalties shall be payable weekly, as earned, concurrently with
the weekly settlements conducted under Section 16(a) below for Ticket sales to
an Attraction.
Notwithstanding anything to the contrary contained in Exhibits VI and VIII
with respect to Attractions at Non-Pace Facilities, Principal shall for all
Attractions (including, without limitation, motor sports, amphitheatre and
theatrical Attractions) receive no less than the difference between the sums
which would be due to Principal if the Facility were a PACE Facility and the
amounts due under Ticketmaster's contract with the Facility to the extent lower,
with a floor at all times of the amounts set forth below. For example, if the
Royalty with respect to an Outlet Ticket sale would have been $1.11 based upon
the applicable Customer Convenience Charge, and Ticketmaster, due to its
agreement with the applicable venue pays the venue $0.25, then Principal would
receive the balance of $0.86 (or such other amount as is applicable based upon
the actual Customer Convenience Charge):
(i) Twenty five cents ($0.25) per Ticket for each Ticket sold at an
Outlet.
(ii) Fifty cents ($0.50) per Ticket for each Ticket sold via Telephone
Sales, and
(iii) Twenty five cents ($0.25) per Ticket Order from each Handling Charge
collected.
(e) Motor Sports. It is hereby specifically agreed that the provisions of
this Section 4 shall apply to SRO/PACE motor sports Attractions in all "Non-PACE
Facility" cities and that such royalty shall apply to the Customer Convenience
Charges as they existed on February 1, 1996, as set forth on Exhibit VIII
annexed hereto.
With respect to motor sports Attractions, when tickets are priced at
"Family Attraction" rates, royalties shall be as set forth in the schedule
annexed hereto and incorporated herein as Exhibit VIII.
(f) Advertising Allowance. (i) Ticketmaster represents that it has entered
into an arrangement with MasterCard pursuant to which MasterCard is to be termed
the preferred card of Ticketmaster. Pursuant to the terms of the arrangement,
MasterCard is making available to Ticketmaster certain monies to be paid when
the MasterCard name is used in signage or advertising in connection with the
presentation of Attractions.
(ii) The parties agree that Principal may elect to accord or not accord
MasterCard credit in its advertisements and promotions of Attractions and can
further elect to accord MasterCard credit in connection with certain Facilities
and/or Attractions and not in connection with other Facilities and/or
Attractions. Principal may further elect to have certain PACE Affiliates accord
MasterCard credit and to have other PACE Affiliates not accord MasterCard
credit. By way of example only, Principal may accord MasterCard
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credit in connection with amphitheatre Attractions, but not in connection with
theatrical Attractions. Similarly, Principal may elect to accord MasterCard
credit in certain cities but not in other cities. It is specifically understood
and agreed that Principal shall have wide latitude in determining when, and
where, if at all, it shall elect to accord MasterCard credit in advertising or
on signage.
(iii) In those instances where Principal does elect to accord MasterCard
credit in advertising or on signage, Ticketmaster shall reimburse Principal the
full cost of such advertising and/or signage promptly following Principal's
furnishing to Ticketmaster a tear sheet with respect to the advertising or proof
that such signage has been placed, including the MasterCard name in accordance
with Subsection (vi) below. The reimbursable amount allocable to signage shall
be determined by reference to the signage charges at the Facility where such
sign is placed.
(iv) To the extent Principal elects to accord MasterCard credit, there
will not be two credit card sponsors in the same ad or promotion.
(v) Principal shall, with respect to the use of the MasterCard name,
attempt to accommodate Ticketmaster's needs in connection with its arrangement
with MasterCard, provided there is no conflict with another credit card sponsor
or with any of Principal's partners.
(vi) Ticketmaster will make available to Principal the sum of $500,000 per
year from the MasterCard/Ticketmaster arrangement during each calendar year of
the term hereof, commencing with February 1, 1996, for print advertisements for
designated Attractions, promotions and/or Facility signage agreed to by
Principal and Ticketmaster. Each of the advertisements, promotions, and/or
signage to be placed using this allowance shall include the Ticketmaster logo,
Outlets and charge by phone number as well as the MasterCard logo and the
following wording under Ticketmaster's charge by phone number: "MasterCard -
The Preferred Card of Ticketmaster," or any other sponsor's name, logo or other
representation as solely designated by Ticketmaster. In the event Ticketmaster
designates a sponsor other than MasterCard, each of the advertisements,
promotions and/or signage to be placed using the advertising allowance shall
also include the Ticketmaster logo, Outlets and charge by phone number as well
as such other sponsor's logo and the wording designated by Ticketmaster under
Ticketmaster's charge by phone number. Proofs of each advertisement, promotion,
and/or signage must be furnished by Principal to Ticketmaster for approval
prior to its publication. However, once a proof has been approved, subsequent
ads using the same manner of advertising will require oral approval only.
Principal shall furnish Ticketmaster with copies of the actual invoices covering
the costs expended by Principal in placing such advertisements.
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With respect to the final eleven (11) months of the term hereof,
commencing on January 1, 2001, the following shall apply:
(A) If Ticketmaster no longer has a credit card sponsor, Principal
shall receive no less than a $250,000 advertising allowance;
(B) If Ticketmaster does have a credit card sponsor, Principal shall
receive no less than a $300,000 advertising allowance.
(g) Season And Subscription Lists. With respect to Principal's and its
Affiliate's season, subscription customer lists and single ticket Telephone
Sales at Pace Facilities, Principal shall have access to the names of all
persons and entities on such lists and no other signature or other approval
shall be required for Ticketmaster to release such names to Principal.
(h) First Day of Sales. With respect to merchandising sold by
Ticketmaster, Ticketmaster agrees that, with respect to Attractions where,
during the first day of sales, a substantial number of calls are coming into
Ticketmaster's Telephone Sales center to purchase Tickets to an Attraction such
that it is difficult or time consuming to receive an answer from Ticketmaster,
upon Principal's reasonable request, Ticketmaster will suspend the sale of
merchandise so that the Telephone Sales center may be kept free for Ticket sales
during such day. It is understood that Principal shall not unreasonably refuse
Ticketmaster the right to attempt to sell merchandise during such telephone
calls.
(i) Season Account Storage. Ticketmaster shall provide Principal with its
TM System season and subscription account storage and sales package at the rate,
in total, of $2.50 per account per year. Such account storage fees shall be
payable in full by Principal on the date each invoice is received, which
invoices shall be prepared by Ticketmaster on the first Attraction date after
the date hereof, and quarterly thereafter for any new accounts added during the
preceding quarter.
(j) Taxes. With respect to states or jurisdictions (including, without
limitation, Texas), where Customer Convenience Charges are taxable, the amount
of any such tax shall be added to the Customer Convenience Charge.
(k) Single Promoter Concert Tours. In the event that a promoter of a
concert tour (such as the Eagles, Billy Joel/Elton John, The Rolling Stones
and/or Pink Floyd) directly negotiates a ticketing arrangement with Ticketmaster
covering several separate geographic areas, rather than acting through local
promoters, then, with respect to any such tour, Principal shall have the option
(a) to be excluded from any arrangement Ticketmaster may make with such promoter
(in which event this Agreement shall control such presentation) or (b) to
participate in the arrangement which Ticketmaster makes with such promoter on
terms no less favorable to
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Principal then those offered to any other promoter or Facility by Ticketmaster
in connection with such tour.
(l) Credit Card Authorization Network. Ticketmaster shall provide
Principal with use of its credit card authorization services for MasterCard and
Visa sales in the same manner, and subject to the same terms and conditions,
under which the parties currently operate.
5. Exclusive Rights.
(a) Principal hereby grants to Ticketmaster, and Ticketmaster
accepts from Principal, the exclusive right during the term of this Agreement to
sell as Principal's and the Pace Affiliates' agent at outlets and/or by
telephone sales all Tickets made available generally to the public for any
Attraction; provided, however, this Agreement shall not apply to Attractions
covered by Section 5(b) below and provided, further, that Principal itself shall
have the right to conduct season, subscription, box seats and group sales of
Tickets, but may not use the services of any third party computerized or
electronic ticketing service or entity to conduct such sales. Provided, further,
that Principal itself through its central offices (as well as through any or all
of its individual Facilities) shall have the right to conduct the sale of
Tickets pursuant to a concert club established by Principal (and/or its
Facilities) in such manner as it may elect, including, without limitation, in
person, by telephone or via the Internet, but Principal (and its Facilities and
the Pace Affiliates) may not make such Tickets generally available to the
general public and may not use the services of any third party ticketing system,
service or entity to conduct such sales. Provided, further, that in no event
shall Principal allocate or sell in excess of Twenty-five percent (25%) of the
gross seating capacity in a Facility for a performance of a concert or motor
sports (but excluding theatrical) Attraction pursuant to the immediately
preceding sentence. In the event that Principal and/or one of its Facilities
and/or a Pace Affiliate allocates more Tickets to a concert club for any
performance of an Attraction at a Facility then is permitted herein, then
Ticketmaster or the applicable TM Affiliate shall be entitled to receive from
Principal the Outlet Customer Convenience Charge on each such Ticket (less
Principal's Royalty in connection with such a sale). The amount of the Customer
Convenience Charge Ticketmaster is entitled to under this provision may be
deducted by Ticketmaster from the weekly settlements with respect to any such
Attraction.
(b) (i) In the event that any Attraction is held at a Facility with
which Ticketmaster or any TM Affiliate now has, or may, at the time of the
Attraction have a ticket service agreement, then, if said ticket service
agreement covers the sale of tickets to the Attraction, this Agreement (except
for this Section 5(b) and those portions of Section 4(d) above applicable to
Non-PACE Facilities) shall be superseded by said ticket service agreement
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and shall not apply or have any force or affect with respect to said Attraction.
(ii) In the event that during the term of this Agreement, Principal acquires any
facility, company or other entity which owns, has a contract with or is
otherwise lawfully bound to any ticketing service or system, then Principal
shall not be obligated to change such arrangement or to divest itself of, or to
decline to enter into any such transaction; provided, however, that at such time
as Principal is no longer lawfully obligated to use the services of any third
party ticketing provider (as distinct from Principal's continuing ownership of a
ticketing service or system), then any such applicable facility or entity shall
become a Pace Facility or Pace Affiliate, as applicable, and shall be bound by
the terms and conditions of this Agreement
(c) It is agreed and understood that neither Ticketmaster nor
Principal will guarantee that any minimum or fixed number of Tickets will be
sold through the TM System for any Attraction.
(d) Principal hereby covenants with Ticketmaster that at all times
during the term hereof, Principal and the Pace Affiliates will refrain from
intentionally taking any action which is inconsistent with Principal's or the
Pace Affiliates' past practices with respect to delegating responsibility for
the control of ticketing for any Attraction or Facility for the purpose of
attempting to cause such Attraction to be outside of the scope of this
Agreement. Principal further represents and warrants that in any instance where
it or a Pace Affiliate controls the right to sell Tickets, it will not, after
the date hereof and for the remainder of the term hereof, delegate or contract
that right to any third party other than to Ticketmaster or a TM Affiliate.
(e) Each Pace Affiliate and TM Affiliate shall have the duty and
responsibility to at all times conduct its operations in a manner consistent
with the duties and obligations of Principal and Ticketmaster hereunder,
notwithstanding the fact that any provision hereof may not specifically refer to
the Pace Affiliate or the TM Affiliate.
6. Central Computer Facility; Conduct of Telephone Sales.
Ticketmaster shall, at its sole expense, maintain a central computer
facility at such location or locations as it shall deem necessary for the
operation of the TM System. The central computer facility will be in operation
16 hours a day (8:00 a.m. to midnight, local time) during each and every day of
the year, and will be adequately staffed during all Ticketmaster hours of
operation to perform all ongoing licensed user assistance, maintenance and
repair services required to be performed by Ticketmaster under this Agreement
and consistent with industry standards. In addition to the foregoing,
Ticketmaster also agrees to provide telephone ticket sales services on behalf of
Principal with respect to Attractions and, in that regard, shall receive
telephone calls for Ticket sales between the hours of 9:00 a.m. and
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9:00 p.m. (local time) Monday through Friday and between the hours of 9:00 a.m.
and 7:00 p.m. (local time) on Saturday and Sunday. Such telephone service will
be adequately staffed to perform ongoing licensed user assistance with respect
to Ticket sales.
7. Maintenance and Repairs.
(a) Installation costs with respect to the Hardware, the cost of all
telephone line connections between the central computer facility and a Pace
Facility, and all monthly telephone line costs with respect to the operation of
the TM System between a Pace Facility and the central computer facility, shall
be borne solely by Ticketmaster. Ticketmaster agrees to provide ordinary and
routine maintenance and repair of the TM System at the Pace Facilities at no
additional cost to Principal, provided that such maintenance or repair is not
necessitated by the negligence of Principal, its employees, agents or
representatives. Ticketmaster represents and warrants that adequate service and
repair personnel on duty at its central computer facilities will be available
during all Ticketmaster hours of operation to meet the reasonably anticipated
service needs of Principal. In the event of any breakdown or malfunction in the
operation of the Hardware, or difficulties encountered in connection with access
to the Software, Principal agrees to promptly notify Ticketmaster of any such
malfunction to assist Ticketmaster in performing its obligations hereunder. In
the event of any emergency, Ticketmaster further agrees to respond to such
emergency as quickly as possible to provide Principal with repair services or to
replace the Hardware, if necessary, consistent with Ticketmaster's normal
procedures. In the event of a catastrophic disaster resulting in a complete
shut down of the TM System for a period in excess of three (3) consecutive
days, then, commencing on the fourth day of such interruption of service,
Principal shall be able to sell its own Tickets but only during the remainder of
such interruption of service.
(b) Nondurable operational supplies which are used at a Pace
Facility in connection with the operation of the TM System, consisting of line
printer paper and printer ribbons, shall be paid for by Principal, and Principal
shall be responsible for maintaining adequate supplies thereof to assure
continuous operations at each Pace Facility. Principal shall be under no
obligation to purchase these supplies from Ticketmaster.
8. Limitation of Liability. In the event of any breach of this Agreement
by Ticketmaster, the limit of any claim of loss by Principal shall be no greater
than the proven financial loss sustained by virtue of such breach. In no event
shall Ticketmaster be liable for incidental or consequential damages for any
breach of this Agreement. Occasional short-term interruptions of service which
are not unreasonable under comparable industry standards shall not be cause for
any liability or claim against Ticketmaster hereunder, nor shall any such
occasion render Ticketmaster in default under this Agreement. In the event of
any breach of this Agreement by Principal, the limit of any claim of loss by
Ticketmaster shall be no greater than the proven financial loss
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sustained by reason of such breach. In no event shall Principal be liable for
incidental or consequential damages for any breach of this Agreement.
9. Training of Box Office Employees. Principal shall staff a Ticket sales
office at each Pace Facility with its employees for the proper operation of the
TM System for Ticket sales made through such Facility. Ticketmaster shall, at
its cost, train a sufficient number of Principal's employees who shall be
reasonably necessary for the initial staffing of such Facility Box Offices and
for operation of the TM System at such Facilities and agrees, at Ticketmaster's
cost, to provide additional training to other employees and their replacements
of Principal to the extent such training is necessary as a consequence of
changes in, or a modification of, the Hardware or Software or in Ticketmaster's
method of operation, or by reason of the passage of time (i.e., Ticketmaster
shall provide routine additional training from time to time as needed and
requested by Principal). To the extent of any change in personnel by the
Principal in connection with Pace Facility Box Office sales requiring additional
training beyond that described in the preceding sentence, which training is
conducted at Principal's specific request, Principal agrees to absorb all of the
reasonable expenses thereof, which have been approved in advance by one of
Principal's representatives named in Section 12 below.
10. Box Office Ticket Pick-Up. At all times during the term of this
Agreement, Principal shall maintain a designated Facility Box Office window at
each Pace Facility for the pick-up of Tickets purchased to Attractions at such
Facility through the TM System pursuant to Telephone Sales. The pick-up window
shall be open during the normal hours of operation of each such Pace Facility
Box Office.
11. Installation. Following the execution of this Agreement, Ticketmaster
shall proceed in good faith and with due diligence to install the Hardware at
each applicable Pace Facility and to provide Principal with access to the
Software to facilitate Ticket sales on behalf of Principal in a manner
compatible with the objectives of this Agreement and with due consideration of
the needs of the Principal.
12. General Responsibilities of Principal and Ticketmaster. During the
term of this Agreement, Principal and Ticketmaster shall each designate in
writing to each other an individual who will serve as each of said parties
representative with respect to the resolution of disputes which may arise in
connection with the administration of this Agreement. Principal initially
designates Miles Wilkin and/or Rodney Eckerman as Principal's representative in
such capacity and Ticketmaster initially designates Fredric D. Rosen as
Ticketmaster's representative in such capacity.
13. Audit of Sales. Principal agrees to allow the sale to be made at all
Outlets and by telephone of all Open Seats for each Attraction at each Facility,
provided, that Principal shall at all
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times have sole control over the determination as to which Tickets are available
to the general public and the face value of such Tickets. At all times during
the term of this Agreement, Principal shall have the right at its own expense to
audit Ticket sales for Attractions from Outlets and with respect to all
Telephone Sales made by Ticketmaster to assure its compliance with the terms of
this Agreement. In the event that any such audit reveals a negative discrepancy
in total sales at any one Pace Facility in excess of 4%, Ticketmaster shall pay
the cost of such audit. Any amounts that are discovered to be actually owed and
unpaid shall be paid promptly by Ticketmaster to Principal together with
interest at a rate equal to Wells Fargo Bank National Association's prime rate
then in effect, from the date said monies should have been paid. Principal shall
not bear any cost with respect to the operation of Outlets or with respect to
the operation of Ticketmaster's Telephone Sales system. The TM System shall be
capable of providing Principal with a monthly report indicating total Ticket
Sales per Attraction and on a cumulative basis, broken down between Facility Box
Office, Outlet and Telephone Sales, for each month during the term hereof.
14. Attraction Set-Up. In advance of all Ticket sales, Principal shall
furnish Ticketmaster with all necessary information with respect to the proposed
arrangement of the applicable Facility for all Attractions, including, without
limitation, seating layout, Ticket structure, discounts permissible, Ticket
header information, color logos, entry information and such other information as
is necessary for the proper sale of Tickets at the applicable Facility Box
Office, at all Outlets and by telephone. Included in such information shall be
the Principal's prepared disclaimer respecting refund, the purchaser's
assumption of risk of injury, and such other relevant information as Principal
shall deem necessary or appropriate. Notwithstanding anything contained herein
to the contrary, Ticketmaster shall have no responsibility and Principal shall
indemnify and hold Ticketmaster harmless from and against any and all
liabilities, claims, expenses (including reasonable attorneys' fees) or causes
of action resulting from the inaccuracy of any information furnished by
Principal pursuant hereto.
15. Delivery of Tickets; Advertising.
(a) Principal agrees to supply, at its expense, all blank Ticket
stock sold at each Facility Box Office and shall have the right to sell
advertising on such Ticket stock; provided, however, that Ticketmaster shall
agree to provide blank Ticket stock to Principal, at Ticketmaster's expense, in
the event that Principal allows Ticketmaster to sell advertising with respect to
all of such blank Ticket stock. Principal shall be responsible for the security
of Ticket stock in its possession and risk of loss of Ticket stock shall shift
to Principal upon the delivery thereof to Principal or Principal's authorized
representative, agent or employee.
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(b) To the extent of Principal's right to do so, Principal hereby
grants to Ticketmaster the right, in Ticketmaster's reasonable discretion, to
advertise Attractions and the availability of Tickets at the applicable Facility
Box Office, if any, at all Outlets and by telephone, and, in connection
therewith, to use the name and logo of Principal, the Attraction, the Facility
and all other information respecting the Attraction. Except with respect to
listings in Ticketmaster's event guides, posters, hot-lines and similar
promotional vehicles where no prior consent shall be required, Ticketmaster will
not advertise Attractions without the prior consent of Principal, which consent
shall not be unreasonably withheld. Once consent is received with respect to a
particular form of advertisement or promotion, no further consent shall be
required prior to additional publications of similar advertisements or
promotions. Ticketmaster, in its reasonable discretion, may promote and
advertise on its own behalf, or on behalf of Principal or others, on the back
side of all Tickets sold through the TM System at all Outlets and over the
telephone. Principal may, during the term hereof, provide and place
advertisements in any form of media which Principal shall desire to promote the
availability of Tickets; provided, however, that in the event Principal shall
place any such advertisements it shall use its best efforts to cause the
corporate name, logo and central telephone number of Ticketmaster to be
displayed in the advertisement, as well as the address of the Facility and, if
possible and to the extent space permits, the identity of the Outlets where
Tickets may be purchased.
(c) Ticketmaster and Principal shall separately receive and retain
all income derived from advertising which each is entitled to sell under
subsections (a) and (b) above.
(d) The parties agree that during the term hereof they will
cooperate with each other with respect to cross promotions.
16. Accounting Procedures.
(a) Ticketmaster shall collect and deposit all Ticket Receipts
derived from Ticket sales for Attractions from all Outlets and Telephone Sales
in various accounts to be maintained by Ticketmaster at major banks. Ticket
Receipts to which Principal is entitled shall be paid by Ticketmaster and
delivered to Principal by wire transfer on Thursday or Friday of each week,
based on local practice, with each weekly payment to be on account of Ticket
sales for Attractions made by Ticketmaster and its Outlets during the period of
Monday through Sunday preceding such payment date. Each weekly payment shall be
accompanied by a written accounting detailing sales and Principal's
participation. In the event that Principal cancels any Attraction, the amount of
Ticket Receipts to said Attraction in Ticketmaster's possession shall be
available for distribution by Ticketmaster to customers for refunds. In the
event that the amount of Ticket Receipts in Ticketmaster's possession are
insufficient to make all refunds, Principal shall deliver the amount of such
deficiency (but in no event shall
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Principal be obligated to reimburse Ticketmaster in excess of funds received for
an Attraction from Ticketmaster by Principal) to Ticketmaster no later than 24
hours after notice by Ticketmaster to Principal of the amount of such
deficiency. Ticketmaster shall deliver to Principal all unrefunded Ticket
Receipts of a canceled Attraction within ninety (90) days of the canceled
Attraction playing date. Thereafter, Principal shall be solely responsible for
any subsequent reimbursements to purchasers of Tickets to such a canceled
Attraction, and Principal shall indemnify and hold Ticketmaster harmless from
and against any losses and expenses (including reasonable attorneys' fees)
Ticketmaster incurs or may become obligated with respect thereto.
(b) It is agreed and understood that Ticketmaster shall not be liable to
Principal for the printing and sale of counterfeit Tickets when such action is
beyond the control of Ticketmaster; provided, that Ticketmaster has previously
taken reasonable efforts to prevent the printing and sale of such counterfeit
Tickets by adopting adequate control procedures. Principal shall honor, or cause
to be honored, authorized Tickets validly issued by or through the TM System for
each Attraction.
(c) In the event that any Attraction is canceled, upon the direction of
Principal, Ticketmaster shall refund the Ticket price at each Outlet with
respect to Tickets sold at such Outlet. In the alternative, the purchaser of a
Ticket to such Attraction shall have the right to exchange such Ticket pursuant
to any exchange policy which may be mutually adopted by Principal and
Ticketmaster. With respect to canceled Attractions, Principal and Ticketmaster
agree that Ticketmaster shall be entitled to retain the Inside Charges and
Customer Convenience Charges assessable with respect to the initial sale
thereof, although no compensation shall be payable, or fee assessed, by
Ticketmaster with respect to the exchange of any Tickets initially purchased at
any Outlet or by Telephone Sales. Principal shall be entitled to receive its
Customer Convenience Charge participation pursuant to Section 4(d) above with
respect to Customer Convenience Charges not refunded by Ticketmaster and
Ticketmaster shall be entitled to deduct out of the next settlement any amounts
previously paid to Principal pursuant to Section 4(d) above with respect to
Customer Convenience Charges refunded by Ticketmaster.
(d) Principal acknowledge that all Ticket Receipts derived from Ticket
sales for Attractions from Outlets and through Telephone Sales will be
commingled by Ticketmaster with Ticket Receipts with respect to other users of
the TM System. Nevertheless, Ticketmaster hereby agrees that the Ticket
Receipts, when in such commingled account, shall at all times be the sole
property of Principal, subject to the refund provisions contained in Section 16
(a) above.
(e) Simultaneously herewith, and from time to time hereafter on
Principal's reasonable request, Ticketmaster will use its best efforts to cause
its principal lender(s) to confirm in writing that
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it (they) has (have) no security interest on, or right of offset against, the
Ticket Receipts contained in said accounts.
17. Ticketmaster's Representations and Warranties; Default.
(a) Ticketmaster represents and warrants to Principal that:
(i) Ticketmaster owns and has title to the Hardware and license rights
in and to the Software;
(ii) The Hardware and Software will perform, and operation of the TM
System, including all repair and service responsibilities, will be
undertaken in a manner reasonably adequate for the performance of
Ticketmaster's obligations under this Agreement; provided, however,
that such warranties do not extend or become applicable with respect
to any delays, stoppages or malfunctions which are caused by the
acts of any third parties, or which are not under, or are caused by
events or causes beyond, the control of Ticketmaster;
(iii) ALL IMPLIED WARRANTIES EXISTING BY OPERATION OF LAW, INCLUDING
SPECIFICALLY ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, ARE EXPRESSLY DISCLAIMED AND NEGATED BY
THE EXPRESS WARRANTIES PROVIDED HEREIN;
(iv) Ticketmaster is a corporation duly organized and in good standing
under the laws of the State in which it is incorporated and has
adequate power to enter into and perform this Agreement;
(v) this Agreement has been duly authorized, executed and delivered on
behalf of Ticketmaster and constitutes the valid, legal and binding
agreement of Ticketmaster, enforceable in accordance with its terms;
(vi) the entering into and performance of this Agreement will not violate
any judgment, order, law or regulation applicable to Ticketmaster or
any provision of Ticketmaster's charter or bylaws, or result in any
breach of, constitute a default under, or result in the creation of,
any lien, charge, security interest or other encumbrance upon any
assets of Ticketmaster or upon the Hardware or Software, pursuant to
any instrument to which Ticketmaster is a party or by which it or
its assets may be bound; and
(vii) Ticketmaster has the right, authority and power to enter into this
Agreement on behalf of and bind each of the TM Affiliates.
(b) The occurrence of any of the following events, continued for 30 days
(or ten (10) days in the case of Subsection (b)(i)
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below only) after receipt by Ticketmaster of written notice thereof and its
failure to cure the same shall, at Principal's option, constitute an Event of
Default hereunder and operate to terminate this Agreement and Ticketmaster's
right to effect sales of Tickets through the TM System:
(i) The nonpayment by Ticketmaster to Principal of any Ticket Receipts
required to be remitted hereunder;
(ii) the default by Ticketmaster under any material term, covenant or
condition of this Agreement, or the breach by Ticketmaster of any
material representation or warranty contained herein;
(iii) any affirmative act of insolvency by Ticketmaster, whether voluntary
or involuntary, or the filing by Ticketmaster, or any third person
against Ticketmaster, of any petition or action under any
bankruptcy, reorganization, insolvency or moratorium law or any
other law or laws for the relief of, or relating to, debtors, which
has not been dismissed or stayed on appeal within sixty (60) days
after the commencement of any such proceedings;
(iv) the exposure by Ticketmaster of the Hardware or Software or any
material portion thereof to any levy, seizure, assignment or sale
for, or by, a creditor or governmental agency.
Upon the happening of any of the foregoing Events of Default, (i)
Ticketmaster shall, without demand, forthwith pay to Principal all amounts due
and owing pursuant hereto, together with interest on any overdue amounts at a
rate equal to Wells Fargo Bank National Association's prime rate then in effect,
and (ii) Principal may without notice to or demand upon Ticketmaster:
(A) Sue for and recover any and all damages and losses resulting from
Ticketmaster's failure to perform the requirements of this Agreement (subject to
the limitations set forth in Section 8 above),
(B) terminate this Agreement and require Ticketmaster to remove all
Hardware from the Facility within ten (10) days of the termination, and
(C) obtain injunctive relief for any breach of Ticketmaster's covenants
contained in Section 29 hereof.
No remedy referred to in this Section 17 is intended to be exclusive, but
each shall be cumulative and in addition to any other remedy above or otherwise
available to Principal at law or in equity, each and all of which are subject to
the limitation contained in Section 8 above.
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18. Principal's Representations and Warranties; Default.
(a) Principal represents and warrants to Ticketmaster that:
(i) Principal is a corporation duly organized and in good standing in
its State of incorporation and has adequate power to enter into and
perform this Agreement;
(ii) this Agreement has been duly authorized, executed and delivered on
behalf of Principal and constitutes the valid, legal and binding
agreement of Principal, enforceable in accordance with its terms;
(iii) the entering into and performance of this Agreement will not violate
any judgment, order, law or regulation applicable to Principal or
any provision of Principal's charter or bylaws, or result in any
breach of, constitute a default under, or result in the creation of,
any lien, charge, security interest or other encumbrance upon any
assets of Principal or upon the Hardware or Software, pursuant to
any instrument to which Principal is a party or by which it or its
assets may be bound;
(iv) Principal has right to sell, or control the sale of, Tickets to each
Pace Facility which are subject to the terms of this Agreement at
which any of its Attractions are held, and is duly authorized to
execute, perform and deliver this Agreement; and
(v) Principal has the right, authority and power to enter into this
Agreement on behalf of and bind each of the Pace Affiliates.
(b) The occurrence of any of the following events, continued for 30 days
(except as otherwise stated in subsection (i) below, in which the time and
notice requirements shall be as are set forth in such subsections) after receipt
by Principal of written notice thereof and its failure to cure the same shall,
at Ticketmaster's option, constitute an Event of Default hereunder and operate
to terminate this Agreement and Principal's right to the use of TM System and
possession of the Hardware and Software:
(i) The nonpayment by Principal of any sum required hereunder to be paid
by Principal within 10 days after receipt by Principal of written
notice thereof and its failure to cure the same during said 10 day
period;
(ii) the default by Principal under any material term, covenant or
condition of this Agreement, or breach by Principal of any material
representation or warranty contained herein;
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(iii) any affirmative act of insolvency by Principal, whether voluntary or
involuntary, or the filing by Principal, or any third person against
Principal, of any petition or action under any bankruptcy,
reorganization, insolvency or moratorium law or any other law or
laws for the relief of, or relating to, debtors, which has not been
dismissed or stayed on appeal within sixty (60) days after the
commencement of any such proceeding; and
(iv) the exposure of a substantial part of Principal's property or any
part of the Hardware to any levy, seizure, assignment or sale for or
by a creditor or governmental agency.
Upon the happening of any of the above Events of Default, (i) Principal
shall, without demand, forthwith pay to Ticketmaster all amounts due and owing
pursuant hereto, together with interest on any overdue amounts at a rate equal
to Wells Fargo Bank National Association's prime rate then in effect, and (ii)
Ticketmaster may, without notice to or demand upon Principal:
(A) Disconnect all Hardware and terminate access to the Software and
related services from the central computer facility to the Facilities and/or all
Outlets,
(B) take immediate possession of the Hardware wherever the same may be
located without demand, notice or court order,
(C) sue for and recover any and all damages and losses resulting from
Principal's failure to perform the requirements of this Agreement (subject to
the limitations set forth in Section 8 above),
(D) obtain injunctive relief for any breach of Principal's covenants
contained in Section 29 hereof, and
(E) terminate this Agreement.
No remedy referred to in this Section 18 is intended to be exclusive, but
each shall be cumulative and in addition to any other remedy above or otherwise
available to Ticketmaster at law or in equity, each and all of which are subject
to the limitation contained in Section 8 above.
19. Loss and Damage.
Except as provided herein, Principal hereby assumes and shall bear the
entire risk of loss and damage to the Hardware, ordinary wear and tear excepted,
whether or not insured against, once installed, unless occasioned by the
negligence of Ticketmaster, from any and every cause whatsoever from the date of
installation at a Facility until thirty (30) days following termination of this
Agreement (ten (10) days if pursuant to Section 17(b)(i) hereof, it being
understood that Ticketmaster shall in all events
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expeditiously remove the Hardware at the end of the term hereof). No such loss
or damage to the Hardware (other than due to the negligence of Ticketmaster)
shall impair any obligation of Principal under this Agreement. In the event of
any such loss or damage of any kind to any Hardware, Principal at its sole
option, shall:
(a) Place the same in good repair, condition and working order to the
satisfaction of Ticketmaster within 90 days of such loss or damage;
(b) Replace the same with similar property in good repair, condition and
working order to the satisfaction of Ticketmaster within 30 days of the date of
such loss or damage; or
(c) Pay Ticketmaster therefor in cash the full replacement cost of the
Hardware, and Ticketmaster shall promptly install new hardware to replace the
lost or damaged Hardware.
20. Insurance.
(a) Principal shall, at its own expense, provide and maintain at all times
during the term hereof insurance to protect the Hardware against loss caused by
fire (with extended coverage), vandalism, malicious mischief, theft, or any
other cause in an amount equal to the full replacement value of the Hardware as
determined by Ticketmaster. Should Principal become unable to provide or
maintain such insurance coverage, Principal shall promptly notify Ticketmaster
in writing prior to the expiration of any such coverage and, thereafter,
Ticketmaster shall have the right, but shall not be obligated, to provide
insurance coverage for the occurrences specified above and charge Principal the
costs of such insurance coverage.
(b) Principal shall provide, at its sole expense, any and all other forms
of insurance, including, but not limited to, public liability and property
damage insurance, maintained by businesses similar to Principal pursuant to
prudent business practices, for its protection and the protection of
Ticketmaster and the TM Affiliates. Principal shall indemnify and hold
Ticketmaster and the TM Affiliates harmless from and against any and all risks,
claims, expenses (including reasonable attorneys' fees) or causes of action
arising from Principal's use, possession or operation of the Hardware, except to
the extent of damages caused by the negligence of Ticketmaster or a TM Affiliate
in the repair or maintenance of the Hardware.
(c) All insurance provided and maintained by Principal shall be in such
amounts, under such forms of policies, upon such terms, for such periods and
written by such companies as Ticketmaster and Principal shall agree upon, and in
all cases such insurance policies shall provide for the waiver of the insurer's
right of subrogation against Principal and Ticketmaster. All policies of
insurance shall include Ticketmaster and the TM Affiliates as
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additional insureds (and loss payees, as applicable) and shall provide for at
least 10 days prior written notice of cancellation to Ticketmaster. Principal
shall furnish Ticketmaster with certificates of such insurance or other evidence
satisfactory to Ticketmaster as to its compliance with the provisions of this
Section.
(d) Principal and Ticketmaster shall each maintain workers compensation
insurance in such amounts as are required by applicable law. All of said
policies shall contain a waiver of the insurer's right of subrogation against
the other party with respect to matters covered by such insurance.
21. Liens; Taxes.
Principal shall keep the Hardware free and clear of all levies,
liens and encumbrances. Ticketmaster shall pay all personal property taxes and
assessments and charges based on the value of the Hardware provided by
Ticketmaster to Principal hereunder. Further, it is understood and agreed that
under no circumstance shall Ticketmaster charge any fees of any kind or nature
whatsoever with respect to any Attractions covered by this Agreement, except
those fees and charges set forth in this Agreement and any other fees or charges
mutually agreed to by the parties hereto.
22. Hardware is Personal Property. Principal covenants and agrees that the
Hardware is, and shall at all times be and remain, personal property which
shall, at all times, remain the sole and exclusive property of Ticketmaster. If
requested by Ticketmaster, Principal will use its best efforts to obtain a
certificate in form satisfactory to Ticketmaster from all parties with a real
property interest in the premises wherein the Hardware may be located, waiving
any claim with respect to the Hardware. Except as may be necessary to prevent
damage to or destruction of the Hardware, Principal will not move the Hardware
nor permit such Hardware to be moved from a Facility without Ticketmaster's
consent, which consent shall not be unreasonably withheld, and shall give
Ticketmaster prompt written notice of any attachment or other judicial process
affecting any item of Hardware.
23. Designation of Ownership. If, at any time during the term hereof,
Ticketmaster supplies Principal with labels, plates or other markings stating
that the Hardware is owned by Ticketmaster, Principal shall affix and keep the
same in a prominent place on the Hardware in recognition of Ticketmaster's
ownership of the same.
24. Use. Principal shall use the Hardware in a careful and proper manner
and shall comply with and conform to all Federal, state, municipal and other
laws, ordinances and regulations in any way relating to the possession, use or
maintenance of the Hardware. Neither the Principal, nor its employees, agents,
servants or representatives, shall alter, modify, copy or add to the Hardware or
Software without the prior written consent of Ticketmaster.
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25. Surrender of Hardware. Upon the expiration or termination of this
Agreement, or any portion hereof, Principal shall permit Ticketmaster to remove
the Hardware, which Hardware shall be kept in good repair, condition and working
order, ordinary wear and tear resulting from proper use thereof alone excepted
during the term of this Agreement. Said removal shall take place within the time
periods set forth in Section 19 hereof.
26. Assignment and Sublease.
(a) Without the prior written consent of Ticketmaster, which consent shall
not be unreasonably withheld, Principal shall not (i) assign, transfer, pledge
or hypothecate its rights in this Agreement or any interest therein, or (ii)
permit the Hardware or any part thereof to be used, or access to the Software or
any part thereof to be had, by anyone other than Principal or Principal's
authorized employees. Any such assignment shall not relieve Principal of any of
its obligations hereunder. Notwithstanding the above, Principal may assign this
Agreement to any entity which acquires all or substantially all of the assets
or equity of Principal, whether through sale or merger. Principal shall provide
Ticketmaster with notice of said assignment at its earliest convenience. Any
assignment, transfer, pledge or hypothecation for which consent is required
hereby and which is made without such consent shall be void.
(b) Without the prior written consent of Principal, which consent shall
not be unreasonably withheld, Ticketmaster shall not assign its rights in this
Agreement. Notwithstanding the above, Ticketmaster and each TM Affiliate may
assign its or their rights in this Agreement to any entity which acquires all or
substantially all of the assets or equity of Ticketmaster or the applicable TM
Affiliate, as the case may be, whether through sale or merger or otherwise.
27. Indemnity.
(a) Principal shall protect, indemnify, save and hold Ticketmaster and the
TM Affiliates harmless from and against any and all claims, actions, damages,
expenses (including court costs and reasonable attorneys' fees), obligations,
losses, liabilities and liens, imposed or incurred by, or asserted against,
Ticketmaster, the TM Affiliates or their successors or assigns, by any person or
entity, caused by or arising out of any negligent act or omission in the use of
the TM System, the performance of this Agreement or the breach of any covenant,
representation or warranty contained in this Agreement by Principal, its agents,
employees or any other person (other than Ticketmaster or a TM Affiliate) acting
under the direction and on behalf of Principal.
(b) Ticketmaster shall protect, indemnify, save and hold Principal and the
Pace Affiliates harmless from and against any and all claims, actions, damages,
expenses (including court costs and reasonable attorneys' fees), obligations,
losses, liabilities and
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liens, imposed or incurred by, or asserted against, Principal, the Pace
Affiliates, or their successors or assigns, by any person or entity, caused by
or arising out of any negligent act or omission in the use of the TM System, the
performance of this Agreement or the breach of any covenant, representation or
warranty contained in this Agreement by Ticketmaster, its agents, employees or
any other person (other than Principal or a Pace Affiliate) acting under the
direction and on behalf of Ticketmaster.
28. No Joint Venture. The relationship of Ticketmaster and Principal
hereunder shall in no way be construed to create a joint venture or partnership,
or to constitute Ticketmaster as an agent or employee of Principal or Principal
as an agent or employee of Ticketmaster.
29. Restrictive Covenant.
(a) Principal and the Pace Affiliates recognize and acknowledges that the
TM System as it now exists, including the Hardware and Software associated with
the TM System and all improvements in the state of the art relative thereto,
represents a valuable, special and unique asset of Ticketmaster. Principal and
the Pace Affiliates consent and agree that they will not, during or after the
term of this Agreement, disclose any information, design specifications,
programs, listings, documentation or other supporting or related materials or
information of any nature or description whatsoever relating to the TM System,
the Hardware or the Software, or applications, adaptations and modifications
thereof, whether now existing or developed in the future, to any person, firm,
corporation, association or entity for any reason or purpose whatsoever;
provided, however, that this covenant shall not apply with respect to any
information which becomes a matter of general knowledge within the public domain
or if Principal or a Pace Affiliate is obligated to disclose same by reason of
any court order, rule or regulation applicable to the conduct of its business.
Principal and the Pace Affiliates do further agree and acknowledge that any
remedy at law for any breach or threatened breach of the provisions of this
Section and the covenants set forth herein will be inadequate and, accordingly,
Principal and the Pace Affiliates grant to Ticketmaster the right and
entitlement to seek injunctive relief for any such breach or threatened breach
of the provisions and covenants herein in addition to, and not in limitation of,
any and all other remedies at law or in equity otherwise available to
Ticketmaster. The expiration or termination of this Agreement by either party
shall not terminate the continuing confidentiality obligations imposed on
Principal and the Pace Affiliates by the terms of this Agreement.
(b) Ticketmaster and the TM Affiliates shall at all times maintain the
confidentiality of Principal's and the Pace Affiliates' season and subscription
Ticket customer lists with respect to the Pace Facilities. In addition,
Ticketmaster shall not make any lists of single Ticket customers available to
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Principal's competitors in the relevant local markets, it being agreed and
understood, however, that such single Ticket customers may be included in all
generic or market-wide lists prepared and disseminated by Ticketmaster.
Ticketmaster and the TM Affiliates do further agree and acknowledge that any
remedy at law for any breach of the provisions of this Section and the covenants
set forth herein will be inadequate and, accordingly, Ticketmaster and the TM
Affiliates grant to Principal the right and entitlement to seek injunctive
relief for any such breach or threatened breach of the provisions and covenants
herein in addition to, and not in limitation of, any and all other remedies at
law or in equity otherwise available to Principal. The expiration or termination
of this Agreement by either party shall not terminate the continuing
confidentiality obligations imposed on Ticketmaster and TM Affiliates by the
terms of this Agreement.
30. Principal's Agreements. Principal agrees that no agreement between
Principal and any third party shall contain any provision inconsistent with any
provision of this Agreement.
31. Miscellaneous.
(a) Notices. Any notice required or permitted to be given by the
provisions hereof shall be conclusively deemed to have been received by a party
hereto on the day it is delivered by hand or fax to such party at the address or
fax number indicated below (or at such other address or fax number as such party
shall specify to the other party in writing including by fax), or, if sent by
registered or certified mail, on the third business day after the day on which
mailed, addressed to such party at such address:
(i) If to Ticketmaster, at Ticketmaster Ticketing Co.,
Inc.
3701 Wilshire Blvd.
Seventh Floor
Los Angeles, CA 90010
ATTN: Terry Barnes
FAX NO. (213) 480-4884
with a copy to: Ticketmaster Corporation
3701 Wilshire Blvd.
Seventh Floor
Los Angeles, CA 90010
ATTN: Fredric D. Rosen and
Ned S. Goldstein
FAX NO. (213) 381-6043
(ii) If to Principal, at Pace Entertainment Corporation
515 Post Oak Boulevard
Suite 300
Houston, Texas 77027
ATTN: Allen Becker
FAX NO. (713) 621-9503
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with a copy to: Pace Entertainment Corporation
515 Post Oak Blvd.
Suite 300
Houston, Texas 77027
ATTN: Jeff Lewis, Esq.
FAX NO. (713) 621-9503
and courtesy copies to: Franklin, Weinrib, Rudell &
Vassallo, P.C.
488 Madison Avenue
New York, New York 10022
ATTN: Elliot Brown, Esq.
FAX NO. (212) 308-0642
Pace Entertainment Corporation
1515 Broadway
36th Floor
New York, New York 10036
ATTN: Miles Wilkin
FAX NO. (212) 768-7604
Pace Entertainment Corporation
One Bay Front Center
100 South Biscayne Blvd.
Suite 1200
Miami, Florida 33131
FAX NO. (305) 379-5901
(b) Effect of Waiver. No delay or omission to exercise any right or remedy
in favor of Ticketmaster or Principal upon any breach or default hereunder shall
impair any such right or remedy or be construed to be a waiver of any such
breach or default; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent, or approval on the part of Ticketmaster
or Principal of any breach or default under this Agreement, or of any provision
or condition hereof, must be made in writing and shall be effective only to the
extent specifically set forth in such writing.
(c) Attorneys' Fees. In the event of any action at law or suit in equity
in relation to this Agreement, the prevailing party shall be entitled to a
reasonable sum for its attorneys' fees.
(d) Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California. Any action that is or may
be commenced by any party pertaining to this Agreement and the subject matter
hereof shall be commenced in a Federal or state court located in Los Angeles
County, California. The parties hereto hereby consent to the jurisdiction of
such court.
(e) Additional Documents. Each of the parties hereto agrees to execute and
deliver such additional and further documents and instruments as may be
necessary or appropriate to carry out the intents and purposes of this
Agreement.
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(f) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be deemed to be one and the same document.
(g) Severability. In the event any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein. Further, in the event that any provision of this
Agreement shall be held to be unenforceable by virtue of its scope, but may be
made enforceable by a limitation thereof, such provision shall be deemed to be
amended to the minimum extent necessary to render it enforceable under the laws
of the jurisdiction in which enforcement is sought.
(h) Binding Effect. The terms, conditions, provisions and undertakings of
this Agreement shall be binding upon and inure to the benefit of each of the
parties hereto and their respective successors and permitted assigns.
(i) Amendments. This Agreement shall not be changed, modified, altered
or amended in any respect without the mutual consent of the parties hereto,
which consent shall be evidenced by a written amendment to this Agreement
executed by the parties hereto.
(j) Entire Agreement. This written Agreement and the Exhibit hereto
constitutes the sole and only agreement of the parties relating to the matters
covered hereby. Any prior or contemporaneous agreements, promises, negotiations
or representations not expressly set forth in this Agreement are of no force or
effect. With respect to matters arising following the commencement of the term
of this Agreement, this Agreement supersedes any and all existing contracts and
agreements by the parties with respect to the subject matter covered herein.
(k) TM Affiliates: It is the intent of the parties hereto that this
Agreement serve as the master agreement for ticket sales by the TM Affiliates.
Principal acknowledges that certain TM Affiliates have the right to operate the
TM System in certain territories and that the rights, duties and obligations of
Ticketmaster under this Agreement in a territory shall be solely the rights,
duties and obligations of the TM Affiliate which operates within said territory.
(l) Joint and Several Obligations: Notwithstanding anything to the
contrary contained in this Agreement, all agreements, covenants, duties and
obligations of Principal hereunder shall be the joint and several agreements,
covenants, duties and obligations of Principal and each of the Pace Affiliates.
(m) Effect on Affiliates: Each Pace Affiliate and TM Affiliate shall have
the duty and responsibility to at all times conduct its operations in a manner
consistent with the duties and
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obligations of Principal and Ticketmaster, respectively, hereunder,
notwithstanding the fact that any provision hereof may not specifically refer to
a Pace Affiliate or a TM Affiliate.
(n) Force Majeure. The act of any party required by this Agreement to be
done within a specified time shall be subject to excusable delays. The term
"excusable delays" shall be deemed to mean any delays caused by or due to fire,
the elements of nature, casualties, strikes, walkouts or other labor troubles,
shortages of equipment or material or any cause, whether similar or dissimilar
to the foregoing, beyond the control of the party so delayed, which effects the
performance of such party; provided, however, in no circumstance shall the
monetary inability of Ticketmaster or Principal to perform any covenant,
agreement or other obligation contained in this Agreement be construed to be an
event of force majeure. Provided, further, in the event of any such delay
affecting the entire TM system continuing for one hundred eighty (180)
consecutive days, either party shall have the right to terminate this Agreement
upon thirty (30) days written notice to the other party, and any amounts owing
to any party hereunder shall become due and paid in full, whether or not then
due and payable, with such notice.
(o) Existing Agreements. Upon execution of this Agreement, the Existing
Agreements shall automatically terminate as of February 1, 1996 with respect to
activities following such date, and shall be of no further force or effect with
respect to activities following such date, except as otherwise stated to the
contrary in Section 3 above with respect to certain Attractions in the State of
Florida.
(p) Confidentiality. It is the intent of the parties hereto that the
terms, conditions and provisions of this Agreement shall remain confidential and
shall not be disclosed to any other person without the prior consent of the
non-disclosing party. However, the parties acknowledge that (i) in operating
under this Agreement multiple employees of each of them will be privy to some or
all of the provisions hereof and (ii) certain regulatory processes (including,
but not limited to, those related to the Securities Exchange Commission) may
require disclosure of some or all of the provisions hereof, and that any
disclosure pursuant thereto, or any inadvertent disclosure by a recipient
thereof, shall not constitute a breach of this Agreement.
IN WITNESS WHEREOF, Ticketmaster and Principal have caused this Licensed
User Agreement to be duly executed as of the date first above written.
TICKETMASTER TICKETING CO., PACE ENTERTAINMENT CORPORATION
By: /s/ [Illegible] By: /s/ [Illegible]
------------------------- ------------------------
Title: President Title: President
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EXHIBIT I
EXISTING AGREEMENT
There will be excluded from this agreement the Coca-Cola Lakewood
Amphitheatre in Atlanta, Georgia and the Starplex Amphitheatre in Dallas, Texas.
a. The Agency Agreement dated as of December 12, 1989 between Ticketmaster
Corporation and PACE Theatrical Group, Inc. (and all related documents).
b. The Licensed User Agreement dated as of July 17, 1991 between
Ticketmaster Corporation and PACE Management Corporation (and all related
documents).
c. The Licensed User Agreement dated as of April 16, 1990 between
Ticketmaster Corporation and PACE Management Corporation.
d. The Licensed User Agreement dated as of April 16, 1990 between
Ticketmaster-Southern California, Inc. d/b/a regarding the Phoenix-Westside
Amphitheatre (Desert Sky Blockbuster Pavilion).
e. The Licensed User Agreement dated as of May 15, 1991 between
Ticketmaster-Southeast and Charlotte Amphitheatre Company regarding the
Charlotte Blockbuster Pavilion.
f. The Licensed User Agreement dated as of May 27, 1993 between
Ticketmaster-Southern California, Inc. and San Bernardino Amphitheatre
Corporation regarding the Glen Helen Blockbuster Pavilion.
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EXHIBIT II
HARDWARE SCHEDULE
- ----------------------------------
- ----------------------------------
- ----------------------------------
Hardware:
Quantity Description
-------- -----------
The Hardware currently provided under the Existing Agreements, such additional
Hardware as is reasonably requested by Principal with respect to operations not
covered by the Existing Agreements and maintenance and replacement thereof in
accordance with the terms and conditions of this Agreement.
This Schedule will include the use of a CRT and Modem (dial-up) in each of
Principal's headquarters servicing the Facilities covered by this Agreement.
30
<PAGE>
EXHIBIT III
FEE AND ROYALTY SCHEDULE
PACE FACILITIES- AMPHITHEATRES
PER TICKET CHARGES AND ROYALTIES
--------------------------------
OUTLET OUTLET PHONE PHONE
CITY FACILITY CHARGES ROYALTY CHARGES ROYALTY
- ---- -------- ------- ------- ------- -------
================================================================================
Charlotte Blockbuster $3.25 $1.05 $4.00 $1.60
Houston Woodlands $4.00 $1.19 $4.75 $1.97
Phoenix Desert Sky $3.00 $1.10 $4.00 $1.95
Pittsburgh Star Lake $3.75 $1.15 $4.75 $1.90
Raleigh Walnut Creek $3.25 $1.05 $4.00 $1.60
Camden Block-Sony $3.75 $1.25 $4.75 $1.95
Holmdel Garden State $4.50 $1.30 $5.50 $2.20
West Palm Bh. Coral Sky $3.50 $1.20 $4.75 $1.95
* Devore Glen Helen $5.00 $1.50 $6.50 $2.35
$4.75 $1.45 $6.25 $2.25
$4.50 $1.40 $6.00 $2.15
$4.25 $1.35 $5.75 $2.05
Nashville Starwood
Ticket Price
------------
$45.00 and over $3.50 $1.05 $4.75 $1.90
$25.00-$44.99 $3.25 $0.95 $4.50 $1.80
$0.00-$24.99 $3.00 $0.85 $4.25 $1.70
*Applicable Charges to be determined at the discretion of Principal.
31
<PAGE>
EXHIBIT IV
FEE AND ROYALTY SCHEDULE
PACE FACILITIES - CONCERTS
PER TICKET CHARGES AND ROYALTIES
--------------------------------
OUTLET OUTLET PHONE PHONE
CITY FACILITY CHARGE ROYALTY CHARGE ROYALTY
- ---- -------- ------ ------- ------ -------
===============================================================================
Austin S. Pk. Meadows $4.00 $1.11 $5.00 $1.82
College Stat. Wolf Pen Creek $4.00 $1.11 $5.00 $1.82
Dallas Bomb Factory $4.00 $1.11 $5.00 $1.82
Bronco Bowl $4.00 $1.11 $5.00 $1.82
Fair Park Co. $4.00 $1.11 $5.00 $1.82
Cotton Bowl $4.00 $1.11 $5.00 $1.82
Majestic Theatre $4.00 $1.11 $5.00 $1.82
Music Hall $4.00 $1.11 $5.00 $1.82
Reunion Arena $4.00 $1.11 $5.00 $1.82
Texas Stadium $4.00 $1.11 $5.00 $1.82
Trees $4.00 $1.11 $5.00 $1.82
Forth Worth Will Rogers Aud. $4.00 $1.11 $5.00 $1.82
Tarrant County CC $4.00 $1.11 $5.00 $1.82
Houston Deep Phat $4.00 $1.11 $5.00 $1.82
Intnl. Ballroom $4.00 $1.11 $5.00 $1.82
Jones Hall $4.00 $1.11 $5.00 $1.82
Music Hall $4.00 $1.11 $5.00 $1.82
Numbers $4.00 $1.11 $5.00 $1.82
Rice Stadium $4.00 $1.11 $5.00 $1.82
Millenium $4.00 $1.11 $5.00 $1.82
Urban Art Bar $4.00 $1.11 $5.00 $1.82
San Antonio Alamodome $4.00 $1.11 $5.00 $1.82
Majestic Theatre $4.00 $1.11 $5.00 $1.82
Sunken Gardens $4.00 $1.11 $5.00 $1.82
Freeman Coliseum $4.00 $1.11 $5.00 $1.82
Live Oak CC $4.00 $1.11 $5.00 $1.82
32
<PAGE>
EXHIBIT V
FEE AND ROYALTY SCHEDULE
PACE FACILITIES - THEATRICAL ATTRACTIONS
PER TICKET CHARGES AND ROYALTIES
--------------------------------
OUTLET OUTLET PHONE PHONE
CITY FACILITY CHARGES ROYALTY CHARGE ROYALTY
- ---- -------- ------- ------- ------ -------
================================================================================
S. Florida Jackie Gleason $3.50 $1.10 $4.75 $1.88
Broward Center $3.50 $1.10 $4.75 $1.88
Kravis Center $3.50 $1.10 $4.75 $1.88
Parker Playhouse $3.50 $1.10 $4.75 $1.88
Poinciana Playhouse $3.50 $1.10 $4.75 $1.88
Tampa TBPAC $3.50 $1.10 $4.50 $1.80
San Antonio Majestic $4.25 $1.19 $5.00 $1.87
Houston Jones $4.25 $1.19 $5.00 $1.87
Dallas Majestic $4.25 $1.19 $5.00 $1.87*
(Winter Music Hall $4.25 $1.19 $5.00 $1.87*
Season only)
*Inserted by Principal
33
<PAGE>
EXHIBIT VI
FEE AND ROYALTY SCHEDULE
NON-PACE FACILITIES - CONCERTS
PER TICKET CHARGES AND ROYALTIES
--------------------------------
OUTLET OUTLET PHONE PHONE
CITY FACILITY CHARGE ROYALTY CHARGE ROYALTY
- ---- -------- ------ ------- ------ -------
================================================================================
Atlanta Fox Theatre $3.75 $0.25 $4.50 $0.50
Baton Rouge LSU Assembly $2.00 $0.25 $3.00 $0.50
Centroplex $2.25 $0.25 $3.50 $0.50
El Paso County Coliseum $2.25 $0.25 $3.50 $0.50
Houston Astro Arena $3.60 $0.25 $4.35 $0.50
Astrodome $3.60 $0.25 $4.35 $0.50
Summit $3.85 $0.25 $4.85 $0.50
Memphis The Pyramid $3.00 $0.25 $4.00 $0.50
Mississippi Coast Coliseum $2.25 $0.25 $3.50 $0.50
Murfreesboro MTSU Murphy N/A $0.25 N/A $0.50
Nashville Municipal Aud N/A $0.25 N/A $0.50
TPAC N/A $0.25 N/A $0.50
New Arena N/A $0.25 N/A $0.50
New Orleans UNO Lakefront $2.00 $0.25 $3.50 $0.50
Pensacola Civic Center $2.75 $0.25 $3.75 $0.50
San Antonio Municipal Aud $3.50 $0.25 $4.50 $0.50
34
<PAGE>
EXHIBIT VII
FEE AND ROYALTY SCHEDULE
NON-PACE FACILITIES-THEATRICAL ATTRACTIONS
PER TICKET CHARGES AND ROYALTIES
--------------------------------
OUTLET OUTLET PHONE PHONE
CITY FACILITY CHARGE ROYALTY CHARGE ROYALTY
- ---- -------- ------ ------- ------ -------
================================================================================
Atlanta Fox $3.75 $0.25 $4.50 $0.50
Civic Center $3.50 $0.79 $4.25 $1.22
Austin UTPAC N/A N/A N/A N/A
Chicago Rosemont $4.00 $0.25 $4.75 $0.50
Cincinnati Aronoff Center $3.50 $0.25 $4.50 $0.50
Columbus Ohio $3.50 $0.25 $4.50 $0.50
Palace $3.50 $0.25 $4.50 $0.50
Costa Mesa OCPAC $3.00 $0.25 $3.75 $0.50
Dallas (Summer musicals only)
Des Moines Civic Center $2.25 $0.25 $2.75 $0.50
El Paso EPPAC $2.25 $0.25 $3.50 $0.50
Indianapolis Murat $3.50 $0.25 $4.50 $0.50
Clowes Hall $3.50 $0.25 $4.75 $1.00
Louisville Kentucky Center $3.50 $0.25 $4.50 $0.50
McCauley $3.50 $0.25 $4.50 $0.50
Milwaukee MPAC $3.50 $0.75 $4.00 $0.85
Ulhlein Hall $3.50 $0.75 $4.00 $0.85
Nashville TPAC $2.75 $0.25 $3.50 $0.50
New Orleans Saenger $3.00 $0.25 $4.25 $0.50
Norfolk Chrylser Hall $2.00 $0.25 $3.15 $0.50
Orlando Bob Carr $3.50 $0.40 $4.50 $0.80
Pittsburgh Benedum N/A N/A N/A N/A
Byham N/A N/A N/A N/A
Heinz Hall N/A N/A N/A N/A
San Diego Pasadena Civic $2.75 $0.25 $3.50 $0.50
Seattle Paramount $3.50 $0.25 $4.25 $0.50
St. Louis Fox N/A N/A N/A N/A
Tempe Gammage N/A N/A N/A N/A
Tulsa TPAC N/A N/A N/A N/A
35
<PAGE>
EXHIBIT VIII
FEE AND ROYALTY SCHEDULE
PACE FACILITIES - MOTORSPORTS ATTRACTIONS
PER TICKET CHARGES AND ROYALTIES
--------------------------------
OUTLET OUTLET PHONE PHONE
CITY FACILITIES CHARGE ROYALTY CHARGE ROYALTY
- ---- ---------- ------ ------- ------ -------
================================================================================
Anaheim Anaheim Stad. $2.50 $0.40 $3.75 $1.00
Charlotte Memorial Stad. $2.00- $0.25- $3.00- $0.50-
$2.25 $0.30 $3.25 $0.60
Cleveland Cleveland Stad. $2.25- $0.30- $3.00- $0.50-
$2.50 $0.40 $3.50 $0.80
Dallas Texas Stad. $2.40 $0.40 $3.00 $0.50
Dallas Texas Stad. $2.25- $0.30- $3.50- $0.80-
$3.00 $0.60 $4.25 $1.40
Dallas Reunion Arena
Miami Orange Bowl $2.50 $0.40 $3.75 $1.00
Pueblo Co. State $1.75- $0.25- $2.75- $0.50-
Fairgrounds $3.25 $0.70 $4.50 $1.60
San Antoino Alamodome $1.50- $0.25- $2.50- $0.25-
$2.25 $0.30 $3.50 $0.80
San Antonio Freeman $3.00 $0.60 $4.25 $1.40
Coliseum
Tampa Tampa Stadium $2.25 $0.30 $3.80 $1.00
Terre Haute Vigo Co. $2.00 $0.25 $2.50 $0.25
Fairgrounds
36
<PAGE>
EXHIBIT IX
BASE RATES - PER TICKET
A. Motorsports
OUTLET OUTLET PHONE PHONE
CHARGES ROYALTIES CHARGES ROYALTIES
- ------- --------- ------- ---------
$4.00 $1.20 $5.00 $2.00
$3.75 $1.00 $4.75 $1.80
$3.50 $0.80 $4.50 $1.60
$3.25 $0.70 $4.25 $1.40
$3.00 $0.60 $4.00 $1.25
$2.75 $0.50 $3.75 $1.00
$2.50 $0.40 $3.50 $0.80
$2.25 $0.30 $3.25 $0.60
$2.00 $0.25 $3.00 $0.50
$1.75 $0.25 $2.75 $0.50
$1.50 $0.25 $2.50 $0.25
Less than Less than
$1.50 $0.00 $1.50 $0.00
B. Concerts and Theatrical
OUTLET OUTLET OUTLET PHONE PHONE PHONE
CHARGES ROYALTIES ROYALTIES-TEX CHARGES ROYALTIES ROYALTIES-TEX
- ------- --------- ------------- ------- --------- --------------
$4.75 $1.35 $1.25 $5.50 $2.20 $2.04
$4.50 $1.30 $1.20 $5.25 $2.10 $1.94
$4.25 $1.25 $1.16 $5.00 $2.00 $1.85
$4.00 $1.20 $1.11 $4.75 $1.90 $1.76
$3.75 $1.15 $1.06 $4.50 $1.80 $1.67
$3.50 $1.10 $1.02 $4.25 $1.70 $1.57
$3.25 $1.05 $0.97 $4.00 $1.60 $1.48
$3.00 $1.00 $0.92 $3.75 $1.50 $1.39
37
<PAGE>
JOINT VENTURE AGREEMENT
JOINT VENTURE AGREEMENT made this day of July, 1995, by and
between AMERICAN BROADWAY, INC., a Texas corporation, with offices at 515 Post
Oak, #300, Houston, Texas 77027 ("ABI"), and GENTRY & ASSOCIATES, Inc., a
Maryland corporation, with offices at 32 Wa1ker Avenue, Gaithersburg, Maryland
20877 ("Gentry").
W I T N E S S E T H :
WHEREAS, ABI and Gentry have been formed to engage in the business
of presenting Non-Equity live stage Broadway-type productions of plays and
musicals (collectively, "Productions"); and
WHEREAS, the parties are desirous of forming a joint venture for
the purpose of financing, producing, managing and presenting Productions; and
WHEREAS, the parties are desirous of confirming their agreement in
writing,
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
1. Formation. The parties hereby form a joint venture (the "Joint
Venture") for the purpose of engaging in the
<PAGE>
business of financing, producing, managing and presenting Productions in any
venue. The office of the Joint Venture shall be located at the offices of Gentry
and the Joint Venture shall be known and conduct business as "Networks".
2. Term.
(a) The Joint Venture shall commence on the date of this
Agreement and shall continue to exist from such date until the date that is
three (3) years from the first day of the first month following the first
performance of the Joint Venture's first Production (the "Term"), unless sooner
terminated or dissolved as hereinafter provided. The Term shall be automatically
extended from year to year for an additional period of one year if the Net
Profit Threshold, hereinafter defined, shall have been attained.
(b) With respect to the initial three (3) years of the
Term, the "Net Profit Threshold" shall be attained if either (i) ABI shall have
earned ABI's share of Net Profits and ABI Fees, hereinafter defined, in the
amount of $350,000 during the third year of the Term or (ii) ABI shall have
earned $750,000 in ABI's share of Net Profits and ABI Fees cumulatively during
the initial three (3) years of the Term. Thereafter, the Net Profit Threshold
shall be attained if during the two (2) years immediately preceding the end of
the then current Term ABI shall
-2-
<PAGE>
have earned $750,000 in ABI's share of Net Profits and ABI Fees, cumulatively.
(c) For purposes of this Agreement, "Net Profits" shall
mean the gross income of the Joint Venture from any source, less all expenses of
the Joint Venture, including but not limited to recoupment of production
expenses for each Production, all running expenses for each Production,
including fees paid to each party pursuant to paragraph 5 hereof, and payment of
all outstanding overhead costs for the Joint Venture. By way of example, annexed
hereto as Exhibit A is a statement of the projected overhead costs for the Joint
Venture for the first year of operation, which has been mutually approved.
Actual overhead costs, and production and operating budgets for each Production
shall be determined by both parties.
3. Capital.
(a) Capital for the Joint Venture shall be contributed
by each of the parties in equal proportions only as, if and when required and
necessary for the business of the Joint Venture. The respective interests of the
each of the parties in the Joint Venture is as follows:
Name Percentage
---- ----------
ABI 50%
Gentry 50%
-3-
<PAGE>
(b) In addition to the overhead and other normal
operating expenses of the Joint Venture described herein, the parties each agree
to use their best efforts to contribute or raise one-half of the capital
requirements to open and present the Productions. Any advances paid by ABI on
account of any ABI-presented dates shall not be considered part of ABI's capital
contribution.
(c) In the event Gentry is unable to finance any portion
of its capital obligation, ABI shall lend to Gentry such portion of Gentry's
obligation as it is unable to fulfill. In consideration of such financing,
Gentry shall pay to ABI interest on any loans, made by ABI to Gentry at the per
annum rate of (i) the NationsBank posted prime rate of interest as stated from
time to time, plus (ii) four (4%) percent, calculated on an average daily
balance per month. Interest shall be paid on interest earned at the same rate at
any time the amount of the loan outstanding from Gentry to ABI exceeds $500,000.
Such loans shall be repaid by Gentry to ABI as funds become available to Gentry,
out of first profits of each Production or earlier, all payments being applied
first to accrued interest, and ABI shall have a claim against Gentry's interest
in the Joint Venture, until such time as the loans have been paid in full. The
parties agree to use their best efforts, including taking into account any
advances received from venues at which the Productions will be presented and
cash flow generated by the Productions, to cause
-4-
<PAGE>
the need for out-of-pocket disbursements by them to be minimized; provided,
however, that nothing herein contained shall cause the Joint Venture not to pay
its expenses in a timely manner or not to be operated in an efficient,
responsible manner.
4. Profits and Losses. There shall be established on the books
of the Joint Venture a capital account for each of the parties. The capital
account for each of the parties shall be credited with the capital contributions
of the parties as set forth in Paragraph 3 and with the amount of profits
allocable to each of the parties and shall be charged with the amount of all
distributions made to the parties and the amount of all losses allocable to the
parties. Upon dissolution and liquidation of the Joint Venture, both parties
shall be obligated to repay to the Joint Venture any deficit in their capital
accounts to the extent necessary to pay any liabilities of the Joint Venture.
5. Fees and Services. Gentry shall cause its President, Kenneth
Gentry, to furnish his services to the Joint Venture as may be necessary in
order to effectuate the purposes of this Agreement, and he shall notify ABI
whenever he is working on a project unrelated to the activities of the Joint
Venture. Upon the formation of the Joint Venture, ABI shall designate a
representative and shall cause such representative to provide such services to
the Joint Venture as ABI in its reasonable business judgment determines are
necessary in order to effectuate
-5-
<PAGE>
the purposes of the Joint Venture, and ABI shall have the right at any time to
designate a substitute of comparable experience and authority. In consideration
of these services, Gentry shall receive a weekly fee for each of the first two
(2) Productions the Joint Venture produces during any year of the Term in the
amount of $5,000 (the "Gentry Fee") and ABI shall receive a weekly fee of $2,000
(the "ABI Fee"). Such fees shall be paid only for the first fifty (50)
performance weeks, cumulatively, for the two subject Productions within that
year of the Term, beginning with the first week of performances for each
production (i.e., a yearly maximum payment to Gentry of $250,000 and to ABI of
$100,000); and for any Production presented by the Joint Venture in excess of
two (2) per year, any additional fees shall be subject to the mutual agreement
of the parties but shall always remain in the same relative proportion to each
other as the fees set forth above. In the event any Production shall suffer an
accounting loss in any week (including, for these purposes, scheduled weekly
repayment installments of Joint Venture startup expenses prior to July 1, 1996
[during the first year only], Joint Venture overhead [for each July 1 - June 30
period, commencing July 1, 1996], and production costs for such Production),
$2,000 of each party's fees set forth above shall be deferred on a pro-rata
basis until such time, if ever, as there shall be money available from first
weekly profits of such
-6-
<PAGE>
Production to cause the payment of the deferred fees. While this deferral of
fees and recovery of deferred fees may be cross-collateralized over the entire
length of each Production, the proceeds of one Production shall not be used to
pay the fees deferred in another Production.
6. Management. The parties agree that they will consult with one
another with respect to all business, financial, creative, personnel and
artistic matters of every nature and description involving the affairs of the
Joint Venture and its Productions, and all decisions shall require the mutual
agreement of the parties, each of them having one vote on such matters. However,
Gentry shall have the authority to make day-to-day business, creative and other
decisions of the type customarily delegated to the general manager without the
consultation of ABI. Kenneth Gentry is hereby designated by Gentry as its
representative for purposes of exercising managerial discretion and upon the
formation of the Joint Venture, ABI shall designate its representative. Any
documents or instruments necessary to effectuate the decisions of the Joint
Venture may be executed on behalf of the Joint Venture by either of the parties
hereto, provided such decisions have been mutually agreed.
7. Books and Records. Proper accounting records of all business
of the Joint Venture shall be maintained by ABI and kept open to the inspection
and copying of either of the parties
-7-
<PAGE>
or their designee or legal representatives at all reasonable business times.
Should ABI elect to engage an outside certified public accounting firm for the
Joint Venture, Gentry shall have the right to approve the choice of outside
firms, such approval not to be unreasonably withheld or delayed. Accounting for
the individual Productions shall be provided by Gentry on a weekly basis. ABI
shall have the right to designate an outside certified public accounting firm
for each Production, subject to the approval of Gentry, not to be unreasonably
withheld or delayed. The Joint Venture shall maintain its accounting records and
shall report for income tax purposes on the accrual basis of accounting with a
fiscal year ending June 30 or another mutually agreed upon date. ABI shall
provide Gentry with monthly financial status reports on the Joint Venture, and
at the end of each fiscal year, a complete account of the affairs of the Joint
Venture shall be furnished by ABI to each of the parties, together with such
appropriate information as may be required by each party for the purpose of
preparing its income tax return for that year.
8. Bank Accounts. The Joint Venture shell maintain its accounts
in the name of the Joint Venture at NationsBank, where all income and monies of
the Joint Venture shall be deposited. Any check or series of checks for any one
transaction in excess of $20,000 disbursed by the Joint Venture shall contain
-8-
<PAGE>
the signature of one designee of each member of the Joint Venture.
9. Other Activities.
(a) Subject to the provisions of paragraph 5, each party shall
devote such efforts and such time as may be necessary or advisable for the
furtherance of the activities of the Joint Venture. Each party shall have the
right to engage in other business activities during the Term, including, without
limitation the production of other plays or shows alone or in conjunction with
other persons and any other activities which may be deemed competitive with the
activities of the Joint Venture.
(b) Notwithstanding the foregoing, the parties shall offer to
the Joint Venture exclusively any Productions in any venue; provided, however,
that should the Joint Venture use its best efforts to present a particular
Production under this Agreement and be unsuccessful, then either party may make
a minimal passive investment in such project if produced by a third party,
without the active involvement of the other party hereto, provided that such
investment shall not exceed twenty-five (25%) percent of the capitalization of
such project and the investing party shall first have notified the other party
hereto of its intention to make such investment. Neither party shall assist in
acquiring the non-Equity rights in any project for any person or entity other
than the Joint Venture or have any other involvement
-9-
<PAGE>
in a non-Equity production not produced by the Joint Venture except for such
minimal passive investment. Gentry and Kenneth Gentry, individually, and ABI and
its affiliates further agree not to provide their services for any other person
or entity with regard to a non-Equity production.
(c) ABI and its affiliates shall have the right to present
non-Equity productions locally, whether produced by the Joint Venture or other
entities, as part of their ongoing business of presenting productions, and any
profits from such activities shall remain solely the property of ABI or its
affiliates, as the case may be. With regard to ABI's presentation of
Productions, ABI shall negotiate the presenting deal with the Joint Venture in
good faith. In the event a third party producer becomes involved in a
Production, the provisions of this Agreement shall continue to apply as between
ABI and Gentry independent of any arrangement they may make with such third
party producer.
20. Termination.
(a) The Term and the business of the Joint Venture shall
terminate upon the occurrence of any of the following:
(i) upon written notice (the "Termination Notice")
from one member of the Joint Venture to the other within
thirty (30) days after the end of
-10-
<PAGE>
the then current Term if the Net Profit Threshold has not been
attained or, if a determination of net profits for the current
year has not yet been made, within thirty (30) days after such
date as a determination has been made by the accountants for
the Joint Venture that the Net Profit Threshold has not been
attained, which notice shall set forth a date (the
"Termination Date") that is not less than thirty (30) nor more
than sixty (60) days after the date of the Termination Notice;
(ii) the bankruptcy, dissolution or liquidation of
either member of the Joint Venture or its withdrawal pursuant
to paragraph 2 hereof;
(iii) the death, illness, disability, incapacity or
otherwise of Kenneth Gentry such that he is unable to perform
his duties hereunder in the manner contemplated for sixty (60)
consecutive days or an aggregate of one hundred eighty (180)
days in any twelve-month period; or
(iv) any other event causing the termination of the
Joint Venture under the laws of the State of Texas.
(b) With respect to subparagraph 10(a)(i), termination of the
Joint Venture shall be effective as of the last day of the then current Term
(the "Effective Date"), with an
-11-
<PAGE>
appropriate adjustment between the parties giving effect to any profit or loss
of the Joint Venture between the Effective Date and the Termination Date, and
with respect to subparagraphs 1O(a)(ii), (iii) and (iv), termination of the
Joint Venture shall be effective on the day on which the event occurs giving
rise to such termination.
11. Liquidation.
(a) Upon the termination of the Joint Venture, the assets of
the Joint Venture shall be liquidated as promptly as possible, and the cash
proceeds shall be applied in the following order of priority:
(i) To the payment of debts, taxes, obligations and
liabilities of the Joint Venture and the necessary expenses of
liquidation. Where there is a contingent debt, obligation or
liability, a reserve shall be set up to meet it, and if and
when such contingency shall cease to exist, the monies, if
any, in such reserve shall be distributed as provided for in
this paragraph 11;
(ii) To the repayment of any remaining loans and
accrued interest due to ABI from Gentry pursuant to paragraph
3(b), which amounts, if any, shall reduce any amount
distributable to Gentry
-12-
<PAGE>
pursuant to subparaqraphs (iii) and/or (iv) following;
(iii) To the repayment of the capital accounts of the
parties, such parties sharing such repayment proportionately
to their respective capital accounts;
(iv) The surplus, if any, of such assets then
remaining shall be divided among the parties in proportion to
their percentage interests in the Joint Venture.
(b) Notwithstanding the termination and liquidation of the
Joint Venture, the parties shall continue to remain obligated to each other with
respect to any Productions in development or running on the date of termination.
A Production shall be considered to be in development when either the non-Equity
rights have been acquired by the Joint Venture or a written proposal mutually
agreed to by the parties to acquire such rights is in negotiation with the
holder of such rights. Any net profits derived from such Productions shall be
divided by the parties in accordance with the terms of this Agreement.
12. Arbitration. Any dispute related to any asserted breach of his
Agreement shall be determined and settled by arbitration before a single
arbitrator in the City of New York in accordance with the rules of the American
Arbitration Association
-13-
<PAGE>
then obtaining. There shall be no right to arbitrate management decisions that
are not asserted to be a breach of this Agreement. Any award rendered shall be
final and conclusive upon the parties, and judgment thereunder may be entered in
any court having jurisdiction thereof.
13. Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given or made: if by hand,
immediately upon delivery; if by telex, telecopier, or similar electronic
device, upon the close of business, provided it is sent on a business day
between 9:00 a.m. and 4:00 p.m., but if not, then immediately upon the beginning
of the first business day after being sent; if by Federal Express, Express Mail
or any other overnight delivery service, on the first business day after
dispatch; and if mailed by certified mail, return receipt requested, two (2)
business days after delivery or the return of the notice to the sender marked
"unclaimed". All notices, requests and demands are to be given or made to the
parties at the following addresses (or to such other addresses as any party may
designate by notice in accordance with the provisions of this paragraph):
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<PAGE>
If to ABI: American Broadway, Inc.
515 Post Oak #300
Houston, TX 77027
Attention: Mickey Gayler
Telephone: (713) 621-8600
Telecopier: (713) 963-0617
With a copy to: Robinson Brog Leinwand Reich
Genovese & Gluck P.C.
1345 Avenue of the Americas
New York, New York 10105
Attn: Richard M. Ticktin, Esq.
Telephone: (212) 586-4050
Telecopier: (212) 956-2164
If to Gentry: Gentry & Associates, Inc.
32 Walker Avenue
Gaithersburg, Maryland 20877
Attn: Kenneth Gentry
Telephone: (301) 258-1016
Telecopier: (301) 670-9814
With a copy to: Frankfurt Garbus Klein & Selz
488 Madison Avenue
New York, New York 10022
Attn: Seth D. Gelblum, Esq.
Telephone: (212) 980-0120
Telecopier: (212) 593-9175
14. Waivers and Amendments.
(a) This Agreement may be amended, modified or supplemented
only by a written instrument executed by the parties. The provisions of this
Agreement may be waived only by an instrument in writing executed by the party
granting the waiver. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach.
-15-
<PAGE>
(b) No failure on the part of any party to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power or
remedy by such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
15. Additional Documents. Each of the parties shall from time to
time, at the request of the other, execute, acknowledge and deliver to the other
party any and all further instruments that may be reasonably required to give
full force and effect to the provisions of this Agreement.
16. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective heirs,
executors, administrators, successors and assigns, but is not otherwise
assignable without the prior written consent of the non-assigning party. Any
attempted assignment in violation of this paragraph shall be void and of no
force or effect. Notwithstanding the foregoing, ABI and its permitted assignees
shall have the right to assign this Agreement to any corporation in which the
majority of the voting stock is owned by PACE Entertainment Corporation or one
of its affiliates, or by a partnership in which PACE Entertainment Corporation
or
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<PAGE>
one of its affiliates is a general partner, and Gentry shall have the right to
sign this Agreement to any corporation in which the majority of the voting stock
is owned by Gentry and Associates, Inc. or Kenneth Gentry or a partnership in
which either of the foregoing parties is a general partner.
17. Partial Validity. If any provision of this Agreement or the
application thereof to any person or circumstance is held to be invalid or
unenforceable, all of the remaining provisions shall not be affected thereby and
shall nevertheless continue in full force and effect.
18. Entire Agreement. This Agreement contains the full and
complete understanding of the parties hereto, and supersedes all prior oral and
written agreements.
19. Governing Law. This Agreement shall be interpreted, construed
and governed in all respects under the laws of the State of Texas applicable to
contracts entered into and wholly performed therein.
20. Section and Other Headings. The headings set forth at the
beginning of each paragraph are for the convenience of reference and do not
convey any independent meaning.
21. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an
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<PAGE>
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have set their hand as of the year
and date first above written.
AMERICAN BROADWAY, INC.
By: /s/ Gary Becker
-----------------------------
Gary Becker, President
GENTRY & ASSOCIATES
By: /s/ Kenneth Gentry
-----------------------------
Kenneth Gentry, President
AS TO PARAGRAPHS 5 and
9(b) ONLY:
/s/ Kenneth Gentry
- -----------------------------
KENNETH GENTRY
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<PAGE>
EXHIBIT A
JANUARY 1996 - JUNE 1997
NETWORKS OVERHEAD BUDGET
<TABLE>
TOTAL TOTAL TOTAL 1 11
Jan 1-Jun 30 Jul 1-Jun 30 Jul 1-Jun 30 Mo. Budget Mo. Budget
1995 1995/96 1996/97 Jul 96 Aug 96-Jun 97
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<S> <C> <C> <C> <C> <C>
STAFF PAYROLL:
General Mgr. Assistance 4,000 28,200 29,850 2,350 2,500
Production Assistant 0 21,600 21,600 1,800 1,800
Admin. Assistants 0 0 16,720 1,520
Health Insurance 0 6,600 6,600 550 550
Payroll Tax 0 6,225 6,600 519 728
Subtotal Payroll Cost 4,000 62,625 83,291 5,219 7,098
OFFICE EXPENSE:
Office Space Rental 0 15,000 15,550 1,250 1,300
Copier/Office Supplies 1,800 3,900 4,175 325 350
Postage Machine Rental 0 600 600 50 50
Phone System Rental 0 1,200 1,750 100 150
Postage & Delivery 1,200 2,700 2,975 225 250
Telephone Service & LD 2,100 4,800 5,350 400 450
Subtotal Office Expense 5,100 28,200 30,400 2,350 2,550
DEVELOPMENT:
Research Travel 1,800 3,600 3,600 300 300
P.R. & Entertainment 1,800 3,600 3,600 300 300
Subtotal Development 3,600 7,200 7,200 600 600
GENERAL & ADMINISTRATIVE:
Housing 3,000 6,000 6,000 500 500
Travel Allowance 1,500 3,600 3,000 250 250
Health Insurance 3,060 6,135 6,149 511 512
Misc. Expenses 840 1,680 1,680 140 140
Subtotal G & A Expense 8,400 16,815 16,829 1,401 1,402
OVERHEAD EXPENSE:
* Liability Insurance 0 6,000 6,000 500 500
** Accounting Services 1,750 12,000 20,250 1,000 1,750
Legal 1,500 3,000 3,000 250 250
Subtotal Overhead 3,250 21,000 29,250 1,750 2,500
------------ -----------
TOTAL OVERHEAD EXPENSE $24,350 $135,840 $166,970 $11,320 $14,150
OFFICE START-UP COST $25,000
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</TABLE>
TTL. OVERHEAD PAID OUT OF 1ST PROFITS $352,160
*Assume coverage by Pace Policy - Incremental cost estimated
**Assume serviced by Pace in-house - Incremental cost estimated
REVISED 7/6/95
<PAGE>
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
[Brian E. Becker]
THIS EMPLOYMENT AGREEMENT ("Agreement") is being executed as of December
12, 1997 between SFX Entertainment. Inc. ("Employee"), a Delaware
corporation, and Brian E. Becker ("Employee") (collectively the "Parties") to be
effective as of the Effective Date (as defined below).
WHEREAS, the Employee is currently President and Chief Executive Officer
of PACE Entertainment Corporation ("PACE") pursuant to an Employment Agreement
dated as of October 1, 1997 (the "Original Employment Agreement"); and
WHEREAS, the Employer has entered into a Stock Purchase Agreement of even
date herewith (the "Stock Purchase Agreement") with the shareholders of PACE
pursuant to which PACE will become a wholly-owned subsidiary of the Employer;
and
WHEREAS, the Stock Purchase Agreement provides for a closing date on which
the transactions described therein are to be consummated (the "Effective Date");
and
WHEREAS, the Employer desires to employ the Employee on the terms and
conditions described herein, and the Employee wishes to be so employed;
NOW, THEREFORE, the Parties do hereby agree as follows:
1. Employment. Employer hereby employs Employee, and Employee hereby
accepts such employment subject to the terms and conditions set forth below.
2. Duties.
2.1. Capacities
2.1.1 Employee is employed in the capacity of President and
Chief Executive Officer of PACE Entertainment Corporation ("PACE") and in
such capacity, shall have the rights and responsibilities attendant to
that of the Chief Executive Officer of a corporate division of a publicly
traded company. Employer intends to operate PACE in the same manner as
prior to execution of the Stock Purchase Agreement, and shall consult with
Employee, and Employee will participate in any decisions, with respect to
changing PACE's policies, personnel, culture, compensation structure,
reporting systems or configuration and alignment of operating divisions;
without limiting the generality of the foregoing, all material decisions,
other than those not in the ordinary course of business, and affecting
PACE shall be made by Employee. Employee's duties in such capacity shall
be to control, direct and supervise the day-to-day operations of PACE
subject only to the oversight and direction of the Employer's Board of
Directors.
<PAGE>
2.1.2 Employee shall be a member of the Office of the
President of Employer, which shall be the highest management body of
Employer, reporting to the Chairman of the Board and/or President of the
Company. The Office of the President shall include (in addition to
Employee) the Chief Executive Officer of Employer.
2.1.3 Employee shall also be employed as a senior executive in
the corporate office of Employer with a title to be mutually agreed upon,
responsible for planning, implementation and management of Employer's
business strategy, including the live entertainment activities of Employer
and Employer's subsidiaries, new programming, licensing and merchandising,
and development of new, ancillary and international businesses. Without
limiting the generality of the foregoing, Employee shall be responsible
for all operations of Employer in Theatrical (as defined below) and
Motorsports (as defined below) owned by or acquired or developed in the
future by Employer. The parties acknowledge that it is the intention of
the Employer to acquire additional businesses in Theatrical and
Motorsports. Such acquired Theatrical and Motorsports businesses will be
acquired and managed by PACE, unless the revenues from the Theatrical and
Motorsports lines of business in such acquired companies do not constitute
a majority of the revenues of the acquired company, in which case the
acquired company may be held by Employer outside of PACE but the
management of the Theatrical and Motorsports lines of businesses of such
acquired company will report to Employee. For purposes of this Agreement,
"Theatrical" shall mean (i) the presentation, production or booking of, or
the provision of any logistical or technical services in connection with,
any type of live stage shows (other than musical concerts), including
Broadway-type shows, magic shows, family entertainment and variety shows,
(ii) the ownership, operation or management of venues in which
theatrical-type presentations are typically presented, and (iii) related
businesses; "Motorsports" shall mean the presentation, promotion,
production or other exploitation of any live event featuring motorized
races or demonstrations, including motocross and other motorized races,
monster truck shows, air shows, thrill shows, demolition derbies, tractor
pulls, truckfests, other events developed by Motorsports, and related
businesses. Employee shall, to the best of his ability, experience and
talents, perform all such duties.
2.2 Additional Positions. During the Term of Employment, Employee
agrees, and the Employer (subject to required stockholder vote) requests
Employee, to serve as a Director of Employer and a Director of PACE, if and so
long as Employee is indemnified for serving in any and all such capacities on a
basis no less favorable than is currently provided by the Employer's bylaws or
by any written agreement between the Employee and the Employer regarding
indemnification, in a manner consistent with that provided to Senior Executives
(as defined in Section 8.2 hereof) of the Employer.
2.3 Place of Performance. In connection with his employment by the
Employer, Employee shall be based in Houston, Texas and shall not be required to
move or to relocate.
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<PAGE>
3. Compensation.
3.1. Salary, Bonus and Withholding.
3.1.1 Salary and Bonus. During the Term of Employment (as
defined in Section 5.1 hereof), as compensation for services rendered by
Employee, Employer shall pay Employee (i) a base salary ("Salary") in
semi-monthly installments equal to one twenty-fourth (1/24th) of the then
Annualized Amount (herein defined) and (ii) an annual bonus ("Annual
Bonus") pursuant to the provisions of Section 4 hereof.
3.1.2 Definition of Annualized Amount. As used herein, the
term "Annualized Amount" shall mean (i) $294,000 from the Effective Date
until the first anniversary of the Effective Date, (ii) $313,760 from the
first anniversary of the Effective Date until the third anniversary of the
Effective Date, and (iii) $334,310 from the third anniversary of the
Effective Date until the fifth anniversary of the Effective Date. If
applicable, the "Annualized Amount" shall be thereafter increased
effective as of each subsequent anniversary of the Effective Date
commencing with the fifth anniversary of the Effective Date by 4.0% over
the then effective Annualized Amount.
3.1.3 Withholding for Taxes. Compensation (herein defined)
shall be subject to any and all applicable payroll and withholding
deductions required by the law of any jurisdiction, state or federal, with
taxing authority with respect to such Compensation.
3.1.4 Definition of Compensation. The Salary, the Annual Bonus
and the other perquisites set forth in this Agreement including the
Benefits, are herein collectively referred to as the "Compensation."
3.2. Expenses. Employer shall reimburse Employee, in accordance with
Employer's standard expense reimbursement policy, for reasonable and necessary
expenses incurred by Employee while traveling pursuant to Employer's directions
(including, without limitation, air fare and hotel expenses in accordance with
the policies applicable to Senior Executives of the Employer), upon presentation
of documentation reasonably acceptable to Employer. In connection with such
reimbursement, Employer may, but shall not be obligated to, provide Employee
with a credit card or cards to be used for paying such expenses. Such card or
cards shall be the property of Employer and upon termination of the Term of
Employment shall be returned to Employer by Employee. Employee shall be
responsible for and shall reimburse Employer for any and all payments made by
Employer for Employee's personal, non-reimbursable expenses charged on any such
card or cards.
3.3. Grant of Restricted Stock and Stock Options. Employer shall
grant stock and stock options to Employee during the Term of Employment in a
manner and amount consistent with grants made to Senior Executives of the
Employer.
-3-
<PAGE>
3.4. Other Benefits. During the Term of Employment, Employer shall
provide the following additional benefits to Employee:
3.4.1 Health Insurance. Medical, dental and hospitalization
insurance for Employee and his family with the same scope and coverage as
is provided by Employer to the Chief Executive Officer and other Senior
Executives; provided, that such insurance shall have no gap in coverage
with Employee's current insurance; and provided, further, that such
insurance will have no exclusions for pre-existing conditions; and
provided, further, that Employee may purchase additional insurance so long
as such purchase does not adversely affect Employer's ability to obtain
insurance.
3.4.2 Term Life Insurance. Term life insurance upon the life
of Employee in an amount consistent with insurance made available to the
Chief Executive Officer and other Senior Executives of Employer,
including, if applicable, split-dollar insurance policies, provided, that
such insurance shall have no gap in coverage with Employee's current
insurance; and provided, further, that such insurance will have no
exclusions for pre-existing conditions; and provided, further, that
Employee may purchase additional insurance so long as such purchase does
not adversely affect Employer's ability to obtain insurance.
3.4.3 Disability Insurance. Disability insurance in an amount
consistent with insurance made available to the Chief Executive Officer
and other Senior Executives of Employer, provided, that such insurance
shall have no gap in coverage with Employee's current insurance; and
provided, further, that such insurance will have no exclusions for
pre-existing conditions; and provided, further, that Employee may purchase
additional insurance so long as such purchase does not adversely affect
Employer's ability to obtain insurance.
3.4.4 Professional Expenditures. Reimbursement to Employee of
up to $5,000 per year in documented expenditures of Employee in connection
with Employee's participation in the Young Presidents Organization.
3.4.5 Automobile. One thousand five hundred dollars ($1,500)
per month for the lease of an automobile or its equivalent.
3.4.6 Accommodations in New York. The living accommodations
and expenses currently provided to Employee in New York, New York by PACE
or their equivalent
3.4.7 Other Benefit Programs. Employee shall be entitled to
participate in all other employee benefit programs of Employer which the
Board of Directors of Employer may, in its sole discretion, regularly make
available to all of the Senior Executives (such as a stock bonus plan, a
retirement plan and other fringe benefits).
-4-
<PAGE>
3.4.8 Office in New York. Employer shall provide reasonable
office facilities in New York, New York at its principal executive
offices, with secretarial and support services, for the use of Employee.
Employee shall also be entitled to an office with secretarial and support
services at the principal offices of PACE Theatrical Group in New York,
New York.
The reimbursement of expenses provided for in Section 3.2, the stock awards
provided for in Section 3.3. the benefits provided for in this Section 3.4 and
any other benefits hereafter granted to Employee by the Board of Directors are
hereinafter referred to as the "Benefits."
4. Annual Incentive Bonus. Employee shall be paid an annual bonus in the
discretion of the Board of Directors of the Employer.
5. Term of Employment.
5.1. Definition of Term of Employment. The "Term of Employment", as
used in this Agreement, shall mean the period commencing on the Effective Date
and terminating with the first to occur of the following:
5.1.1 termination of the Term of Employment by Employer, for
any reason, in the sole discretion of Employer at any time;
5.1.2 termination of the Term of Employment by Employee by
notice to Employer at any time following a Constructive Termination Event
(as such term is defined in Section 8.1 hereof); and
5.1.3 termination of this Agreement as permitted by, and in
strict accordance with, the provisions of Section 6 hereof.
5.2. Effect of Termination of Term of Employment. Upon termination
of the Term of Employment, the following provisions shall apply:
5.2.1 Employee shall no longer be employed by Employer;
5.2.2 Employee shall no longer be obligated to provide any
employment, consulting or similar services to Employer;
5.2.3 If the Term of Employment is terminated pursuant to
Sections 5.1.1 or 5.1.2 hereof, then the provisions of Section 7.1 hereof
shall become effective and the Employer shall be irrevocably and
unconditionally obligated to fulfill and discharge all of the obligations
imposed upon it pursuant to the provisions thereof; and
5.2.4 Employer and Employee shall jointly issue a press
release, the text of which must be approved by both Parties, concerning
the termination of Employee's employment with Employer.
-5-
<PAGE>
6. Termination of Agreement.
6.1. Employer's Right to Terminate this Agreement For Cause. During
the Term of Employment, Employer may terminate this Agreement for cause (herein
defined) by providing notice thereof to Employee. Employer shall not have the
right, authority or power to terminate this Agreement for any other reason or
upon any other occurrence.
6.1.1 Effect of a For Cause Termination. If Employer
terminates this Agreement for cause, such termination shall take effect
immediately upon notice thereof being provided to Employee. In such event,
Employer shall pay Employee all Salary earned by Employee through the
effective date of the termination on the regularly established salary
payment schedule of Employer. In addition, Employer shall grant to
Employee all Benefits accrued as of the date of the termination. Upon such
payment of earned Salary and Benefits by Employer, all obligations of
Employer to Employee hereunder shall be totally and completely satisfied,
and Employer shall have no further obligations of any type to Employee
pursuant to this Agreement; provided, however, that Employee may retain
any vested options granted by Employer.
6.1.2 Definition of "For Cause". Cause for termination of this
Agreement shall exist only if, during the Term of Employment, Employee:
(a) engages in any violation of this Agreement which is not
cured, or with respect to which Employee is not diligently pursuing
a cure, within thirty (30) days of Employer giving notice to
Employee to do so (provided that no more than three (3) written
notice to cure need be given for violations of the same nature);
(b) is convicted of any felony or of any misdemeanor involving
dishonesty such as theft, forgery or fraud, or having been indicted
for, or had an information filed on him for, such a crime, enters a
plea of guilty or nolo contendere;
(c) engages in any intentional act of fraud against Employer,
any of its subsidiaries or any of their employees or properties,
which act shall be set forth and described in reasonable detail in a
written notice from the Employer to the Employee, such notice to
provide for an opportunity for the Employee to meet the Employer's
Board of Directors concerning the alleged acts;
(d) engages in the intemperate use of alcohol or drugs on a
repeated basis in a manner which, in the good faith opinion of the
Employee's Board of Directors, is impairing the Employee's ability
to perform his duties or obligations hereunder and such intemperate
use thereafter continues in such a manner following two written
notices thereof to Employee, with at least 30 days to correct
-6-
<PAGE>
following the first such notice and at least 10 more days to correct
following the second such notice;
(e) engages in conduct giving rise to a claim by another
employee of sexual harassment, which claim, after a complete and
diligent investigation, would lead a reasonable person to conclude
that Employee has violated Title VII of the 1964 Civil Rights Act,
or similar state law, in a manner which would reasonably and
customarily require the discharge of an executive employee; or
(f) engages in conduct giving rise to Legitimate Claims by any
persons that Employer or any of its subsidiaries is in violation of
any federal, state or local criminal statute or act. The term
"Legitimate Claims" shall mean any claims, allegations or assertions
which, in the reasonable opinion of Employer (after a diligent
investigation of the facts, have substantial merit.
6.2. Termination of this Agreement upon Employee's Death or
Permanent Disability. This Agreement shall be deemed terminated in the event of
death or permanent and total disability of Employee during the Term of
Employment.
6.2.1 Effect. In such event, Employer shall be obligated to
(i) pay to Employee, Employee's guardian, or Employee's estate, as
applicable, all Salary earned by Employee through the date of death or
the date that Employee is considered permanently and totally disabled,
(ii) grant to Employee all Benefits accrued as of the date of death or the
date that Employee is considered to be permanently and totally disabled
and (iii) pay to Employee, Employee's guardian or Employee's estate, as
applicable, a pro rata portion (based on the number of months worked in
the fiscal year that Employee dies or becomes permanently and totally
disabled) of the Annual Bonus provided for in this Agreement with respect
to the current fiscal year. Upon the payments of the aforesaid sums by the
Employer, all obligations of Employer to Employee hereunder shall be
totally and completely satisfied, and Employer shall have no further
obligations of any type to Employee pursuant to this Agreement; provided,
however, that in the event of death or permanent and total disability of
Employee, all options granted to Employee prior to such event shall
immediately vest and be exercisable by Employee, Employee's guardian or
Employee's estate, as applicable, for twelve (12) months following such
event.
6.2.2 Definition. Employee shall be considered "permanently and
totally disabled" for purposes of this Section 6.2 if he is unable to
perform with reasonable continuity his material duties hereunder by reason
of any medically determinable physical or mental impairment which has
lasted for a continuous period of not less than 9 months.
6.3. Employee's Right to Terminate. Employee may terminate this
Agreement at any time, for any reason, by providing notice thereof to Employer.
6.3.1 Effective Date. If Employee so terminates this Agreement
such termination shall take effect upon the date designated in the notice
provided to Employee
-7-
<PAGE>
which shall, in no event, be earlier than thirty (30) days following the
delivery of such notice.
6.3.2 Remaining Obligations. If Employee so terminates this
Agreement, Employer shall pay Employee all salary earned by Employee
through the effective date of the termination on the regularly established
salary payment schedule of Employer. No Annual Bonus shall be payable to
Employee for the fiscal year in which such termination is effective. Upon
such payment of earned Salary by Employer to Employee, all obligations of
Employer to Employee hereunder shall be totally and completely satisfied
and Employer shall have no further obligations of any type to Employee
pursuant to this Agreement.
6.4. Termination of Agreement upon Fulfillment of Post-Term of
Employment Obligations. If the Term of Employment should be terminated pursuant
to Sections 5.1.1 or 5.1.2 hereof, then this Agreement shall thereafter be
deemed to be terminated upon Employer's full, complete and timely fulfillment
and discharge of all obligations imposed upon Employer pursuant to the
provisions of Section 7.1 hereof.
6.5 Early Termination. Employee shall have the option beginning on
the second anniversary of the date of this Agreement, such option to be
exercisable for a period of fifteen (15) days, to elect one or more of the
following by written notice to Employer:
(a) Put any stock or portion thereof (including any vested and
unvested options to purchase stock) and/or the Compensation to be
paid during the remaining Term of Employment to Employer. The stock
and options to acquire stock would be valued at the then fair market
value of the common stock and any future payments of Compensation
shall be valued at the net present value thereof using a discount
rate of eight percent (8%). All such payments shall be made to
Employee within 30 days of Employee's written notice to Employer.
(b) Become a consultant to Employer and spend no more than an
average of 20 hours per week during the remaining Term of Employment
at the same Compensation set forth in this Agreement. In such event,
Employee would remain on the Board of Directors of Employer.
(c) Acquire the Motorsports business of PACE (or, in the event
the Motorsports business of PACE has been sold by Employer in
accordance with Section 6.6.1, Employee shall have the right to
acquire the Theatrical business of PACE) at its fair market value,
as described below. Employee shall deliver a nonrefundable (unless
Employer defaults or fails to close such transaction or as provided
below) deposit (the "Deposit") in the amount of One Million Dollars
($1,000,000) within fifteen (15) days from the date of exercise.
Employee and Employer shall attempt to reach agreement on the fair
market value of the Motorsports business of PACE (or Theatrical, as
the case may be). In the event the parties cannot reach agreement
within thirty (30) days of Employee's exercise
-8-
<PAGE>
of his purchase right, each of Employee and Employer shall select an
investment banking firm of national standing, which investment
banking firms shall attempt to reach agreement on the fair market
value of Motorsports (or Theatrical, as the case may be). In the
event such investment banking firms are unable to reach agreement
within thirty (30) days of being selected, the two investment
banking firms shall jointly select a third investment banking firm
of national standing which shall make a determination of fair market
value within thirty (30) days and whose determination as to the fair
market value of Motorsports (or Theatrical, as the case may be),
shall be binding upon Employer and Employee. The fees and expenses
of the third investment banking firm shall be paid by the party
whose position as to the fair market value is furthest from the fair
market value determined by such third investment banking firm. In
the event the fair market value determined by the investment banking
firm(s) is more than twelve and one-half percent (12 1/2%) higher
than Employee's final offer to Employer in the thirty (30) day
negotiation period described above, Employee may elect to waive his
purchase right hereunder and receive the Deposit with accrued
interest, less One Hundred Seventy-Five Thousand Dollars ($175,000)
which shall be retained by Employer; provided, that in such event,
Employer shall have the option to require Employee to purchase the
business(es) at a purchase price equal to Employee's final offer (as
described above) plus One Hundred Seventy-Five Thousand Dollars
($175,000). Employee shall provide evidence of financing within
thirty (30) days of determination of fair market value, provided,
that Employee may obtain an additional thirty (30) days (for a total
of sixty (60) days from exercise) by providing an additional deposit
in the amount of Five Hundred Thousand Dollars ($500,000). The
acquisition of the business(es) of PACE by Employee shall close
within five (5) months of determination of fair market value. The
purchase price, at Employee's option, may be paid in part with stock
of Employer owned by Employee. The Five (5) Year Put Option (as
defined in the Stock Purchase Agreement) shall accelerate and be
immediately exercisable as of the closing of such acquisition by
Employee, and Employee shall have the right to either exercise the
Five (5) Year Put Option at an exercise price equal to 105 percent
of the present value thereof (determined using net present value
using a discount rate of eight percent (8%)) or retain such shares.
6.6 Right of First Refusal.
6.6.1 Employer agrees that it will not sell either the
Motorsports business or the Theatrical business of PACE prior to the first
anniversary of Effective Date, and Employer further agrees that in the
event it sells either business after the first anniversary of the
Effective Date, then it will not sell the other business of PACE prior to
the second anniversary of the Effective Date plus 15 days. The parties
intend that the agreements set forth in this Section shall be enforced in
accordance with the provisions of Section 7.2(f) of the Stock Purchase
Agreement.
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<PAGE>
6.6.2 Employee shall have a right of first refusal in the
event the Employer has a bona fide offer from a third party to sell all or
a substantial portion of either the Motorsports business or the Theatrical
business of PACE during the period beginning on the first anniversary of
the Effective Date and ending on the second anniversary of the Effective
Date at a purchase price equal to 95 percent of the purchase price
proposed in the bona fide offer from a third party. Such right of first
refusal shall be exercisable by Employee within fifteen (15) days of
written notice from Employer, which notice shall set forth the identity of
the proposed purchaser, the proposed purchase price, the terms of the
proposed purchase and the proposed closing date for the purchase. In the
event the proposed purchase price includes non-cash consideration,
Employee may substitute cash or securities or instruments having a fair
market value equivalent to the non-cash consideration proposed in
Employer's notice. In the event Employee exercises his right hereunder,
Employee shall deliver a nonrefundable (unless Employer defaults or fails
to close such transaction) deposit in the amount of One Million Dollars
($1,000,000) within fifteen (15) days from the date of such exercise.
Employee shall provide evidence of financing within thirty (30) days of
such exercise, provided, that Employee may obtain an additional thirty
(30) days (for a total of sixty (60) days from exercise) by providing
an additional deposit in the amount of Five Hundred Thousand Dollars
($500,000). The acquisition of the business(es) of PACE by Employee shall
close within five (5) months of Employee's exercise. The purchase price,
at Employee's option, may be paid in part with stock of Employer owned by
Employee. The Five (5) Year Put Option (as defined in the Stock Purchase
Agreement) shall accelerate and be immediately exercisable as of the
closing of such acquisition by Employee, and Employee shall have the right
to either exercise the Five (5) Year Put Option at an exercise price equal
to 105 percent of the present value thereof (determined using net present
value using a discount rate of eight percent (8%)) or retain such shares.
As of the closing of such Acquisition by Employee, Employee shall put any
stock (including any vested and unvested options to purchase stock) and
the Compensation to be paid during the remaining Term of Employment to
Employer; the stock and options to acquire stock shall be valued at the
then fair market value of the common stock, and all such payments shall be
made to Employee as of the date of such acquisition by Employee.
6.6.3 In the event Employee does not exercise his right of
first refusal with respect to either the Motorsports or Theatrical
business of PACE as provided above, and one of such businesses is sold,
Employee shall have a right of first refusal in the event Employer has a
bona fide offer to sell all or a substantial portion of the other business
of PACE during the period beginning on the second anniversary of the
Effective Date and ending six (6) months later. The terms of such right of
first refusal shall be as set forth in Section 6.6.2 above.
6.6.4 In the event Employee does not exercise his right of
first refusal with respect to the Motorsports or Theatrical business of
PACE, and Employer does not consummate the proposed sale(s), Employee's
right of first refusal shall continue with respect to the Motorsports
and/or Theatrical business of PACE as applicable, and Employer shall pay
Employee an administrative fee of One Hundred Thousand Dollars
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($100,000) as compensation for time and expenses incurred in reviewing the
respective transaction, such fee to be payable upon Employer's
acknowledgment that such proposed transaction has been terminated.
7. Post-Term of Employment Obligations.
7.1. Employer's Obligations after Termination of Term of Employment.
If the Term of Employment should be terminated pursuant to Sections 5.1.1 or
5.1.2 hereof, then the following provisions shall apply:
7.1.1 Employer shall be obligated to pay to the Employee, for
a period of time commencing on the date of termination of the Term of
Employment and continuing until the fifth anniversary of the Effective
Date (herein called the "Surviving Obligation Period"), (i) the Employee's
base salary for the remaining years pursuant to this Agreement and (ii)
the Annual Bonuses which would have been payable to Employee with respect
to each fiscal year which ends during the Surviving Obligation Period
pursuant to the provisions hereof had the Term of Employment not been so
terminated.
7.1.2 The Employee shall continue to be entitled to
participate during the Surviving Obligation Period in any and all of the
profit-sharing and retirement income, stock purchase, savings, executive
compensation plans at the same level, in the same amount and to the same
degree the Employee was entitled to participate at the time of such
termination.
7.1.3 Employer shall maintain in full force and effect for
Employee for one year after termination of the Term of Employment all
life, accident; medical and health care plans and disability benefit
programs and programs or arrangements in which Employee was entitled to
participate immediately prior to the time of such termination provided
that Employee's continued participation is possible under the general
terms and provisions of such plans and programs. If Employee's
Participation in any such plan or program is barred, Employer shall
arrange to provide Employee with the benefits substantially similar to
those to which he was entitled to receive under such plans and programs of
Employer prior to the time of such termination. In such event, appropriate
adjustment shall be made so that the after tax value thereof to the
Employee is similar to the after tax value to him of the benefit plans in
which Employee is not eligible to participate. At the end of such one-year
period, the Employee shall have the option to have assigned to him at no
cost and with no apportionment of pre-paid premiums, any assignable
insurance policy owned by Employer and relating specifically to the
Employee.
7.1.4 Employer shall be obligated to provide to the Employee,
for a one-year period commencing on the date of termination of the Term of
Employment, use of the same office, related facilities and support
personnel provided to him at the time of such termination (but prior to
giving effect to any change therein within 90 days preceding the
termination of the Term of Employment).
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7.1.5 If such termination pursuant to Sections 5.1.1 or 5.1.2
shall occur prior to two (2) years and fifteen (15) days after the
Effective Date, the Employee shall have the right to elect the options
described in Sections 6.5 and 6.6 above.
7.1.6 Employer shall assign to Employee the living
accommodations in New York, New York described in Section 3.4.6 above.
7.2. No Mitigation. Under no circumstances shall the Employee be
required, whether by seeking other employment or otherwise, to mitigate the
amount of any payment or benefit specified in Section 7.1 hereof.
7.3. Liquidated Damages. In the event Employee terminates this
Agreement (other than due to a Constructive Termination Event or due to exercise
of Employee's rights pursuant to Sections 6.5 or 6.6 hereof) on or prior to the
third anniversary of the Effective Date, Employee shall pay Employer the sum of
$750,000 as liquidated damages; if on or prior to the fourth anniversary of the
Effective Date, Employee shall pay Employer the sum of $600,000 as liquidated
damages; and if on or prior to the fifth anniversary of the Effective Date,
Employee shall pay Employer the sum of $300,000 as liquidated damages.
8. Certain Definitions. As used herein, the following terms shall have the
meanings indicated below:
8.1. Constructive Termination Event. A "Constructive Termination
Event" shall be deemed to be the occurrence of any one or more of the following
events during the Term of Employment:
8.1.1 the assignment by Employer to the Employee of duties
that are inconsistent with the Employee's office with Employer at the time
of such assignment, or the removal by Employer from the Employee of those
duties described in Section 2.1 above, including without limitation
failure to nominate or re-nominate Employee for election to the Board of
Directors of Employer and failure of Robert Sillerman (and his affiliates)
to vote his (and their) shares in favor of such nomination; or
8.1.2 any removal of the Employee from, or any failure to
elect or re-elect the Employee to, the Designated Office (as defined in
Section 8.3 hereof, except in connection with the Employee's promotion,
with his prior written consent, to a higher office (if any) with Employer;
or
8.1.3 (i) a reduction by Employer in the amount of the
Employee's base salary as then in effect, or the failure of Employer to
pay such base salary to the Employee at the time and in the manner
specified in Section 3 of this Agreement or (ii) a change by Employer in
the formula for calculating Employee's Annual Bonus as set forth herein,
or the failure of Employer to pay any Annual Bonus to the Employee at the
time and in the manner specified in Section 4 of this Agreement; or
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8.1.4 the discontinuation or reduction by Employer of the
Employee's participation in any stock option, bonus or other employee
benefit plan or arrangement (including, without limitation, any
profit-sharing, life insurance, medical, dental, hospitalization,
incentive compensation or retirement plan or arrangement) in which the
Employee is a participant; or
8.1.5 the failure of Employer to obtain the assumption by any
successor to Employer of the obligations imposed upon Employer under this
Agreement, as required by Section 18 of this Agreement; or
8.1.6 the failure by Employer to promptly reimburse the
Employee for the reasonable business expenses incurred by the Employee in
the performance of his duties to Employer, including, without limitation,
reasonable expenditures for business entertainment and for travel in
connection with Employer's business; or
8.1.7 the failure of Employer to observe, fulfill or perform
any obligation, requirement or restriction imposed upon it pursuant to
this Agreement which is not referenced in the foregoing subsections of
this Section 8.1 and such failure continues uncorrected for 15 days after
notice thereof to Employer; or
8.1.8 prior to two (2) years and fifteen (15) days after the
Effective Date, the sale of either the Theatrical or Motorsports business
of Employer to any party or person other than Employee, unless Employee
has elected not to exercise his right of first refusal with respect to
such sale as set forth in Section 6.6 above, but in any event Employee's
remedies shall not be limited by exercising his rights pursuant to this
Section 8.1.8; or
8.1.9 the sale of all or substantially all the assets or stock
of PACE; or
8.1.10 change of control of Employer; or
8.1.11 the failure by Employer to put acquired companies, a
majority of which companies' business is derived from Theatrical and/or
Motorsports lines of business, in PACE, unless the revenues from the
Theatrical and Motorsports lines of business in such acquired companies do
not constitute a majority of the revenues of the acquired company, in
which case the acquired company may be held by Employer outside of PACE
but the management of such acquired company will report to Employee.
8.2 Senior Executives. The "Senior Executives" shall mean all
members of Employer's Office of the President (howsoever called), all executive
officers of Employer and the chief executive officers of each division or
subsidiary of Employer.
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8.3. Designated Office. The "Designated Office" shall mean President
and Chief Executive Officer of PACE and a position to be mutually agreed upon
with Employer and member of the Office of the President of Employer.
9. Noncompete Covenant.
9.1. During Period of Employment. Throughout the Term of Employment,
Employee shall not, directly or indirectly, for his own account or for the
account of others, as an officer, director, stockholder, owner, partner,
employee, promoter, consultant, manager, advisor, or otherwise, become involved
in any way, directly or indirectly, in any activity, business or pursuit which
is directly competitive with the activities, businesses and pursuits of any one
or more of the members of Employer's Affiliated Group (herein defined).
9.2 After Termination of Employment. For a period of eighteen months
(18) months after the date upon which the Term of Employment is terminated
Employee will not, directly or indirectly, for his own account or for the
account of others, become involved in any way, directly or indirectly, in any
activity, business or pursuit which is directly competitive with the activities,
businesses and pursuits of any one or more of the members of Employer's
Affiliated; provided, that the covenant set forth in this Section 9.2 shall not
apply in the event Employee exercises the option(s) set forth in Section 6.5(c)
and 6.6 above; and provided, further, that this Section 9.2 shall be of no force
and effect in the event Employer breaches its obligations set forth in Sections
6.5 and 6.6 above.
9.3. No Solicitation of Other Employees. Employee additionally
agrees that, throughout the Term of Employment and for a period of eighteen (18)
months after the termination of the Term of Employment, Employee shall not
directly or indirectly, solicit or induce, or attempt to solicit or induce, any
employee of Employer's Affiliated Group to leave Employer's Affiliated Group for
any reason whatsoever; provided, that the covenant set forth in this Section 9.3
shall not apply in the event Employee exercises the option(s) set forth in
Section 6.5(c) and 6.6 above; and provided, further, that this Section 9.3 shall
be of no force and effect in the event Employer breaches its obligations set
forth in Sections 6.5 and 6.6 above.
9.4. No Unfair Competition. Employee agrees that Employee will
never, directly or indirectly, at any time during the Term of Employment, or any
time subsequent to the termination of the Term of Employment, solicit customers
of Employer by using information covered by the provisions of Section 10 of this
Agreement or by committing unfair competition, including but not limited to the
misappropriation of information, intellectual property, or personal property or
misrepresentations regarding Employer, its employees, services or products;
provided, that it is the intention of the parties that the covenant set forth in
this Section 9.4 shall not restrict the operation by Employee of the
business(es) acquired pursuant to Sections 6.5(c) and 6.6 in the ordinary
course.
9.5. Definition of Affiliated Group. As used above, the term
"Employer's Affiliated Group" shall mean Employer and all corporations,
partnerships or other organizations which, directly or indirectly, are
controlled by Employer.
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9.6. Extraordinary Remedies. In the event of a breach of Employee's
covenants in this Section 9, it is understood and agreed that Employer shall be
entitled to injunctive relief as well as any and all other applicable remedies
at law or in equity available to Employer against Employee or others.
9.7. Survival. The provisions of this Section 9 shall survive the
termination of the Term of this Agreement and the termination of this Agreement
to the extent applicable; provided, however, that in the event of a termination
of the Term of Employment pursuant to Sections 5.1.1 or 5.1.2 hereof, the
provisions of this Section 9 shall be of no force or effect.
10. Disclosure of Confidential Information. Except to the extent
authorized by the express prior consent of the Board of Directors of Employer,
Employee will never, directly or indirectly, at any time during the Term of
Employment, or at any time subsequent to the termination of the Term of
Employment, use, disseminate, disclose, divulge or in any manner disclose or
permit to be divulged or disclosed to any person, firm, corporation, association
or other business entity, Confidential Information (herein defined) of Employer;
provided, that the covenant set forth in this Section 10 shall not apply as to
Confidential Information pertaining to Theatrical or Motorsports (as applicable)
in the event Employee exercises the option(s) set forth in Sections 6.5(c) and
6.6 above; and provided, further, that this Section 10 shall be of no force and
effect in the event Employer breaches its obligations set forth in Sections 6.5
and 6.6 above. As used herein, the term "Confidential Information" means any and
all information about or relating to the methods, processes, customers, services
or products of Employer or any of its subsidiaries or partnerships, including
information relating to research, development, inventions, purchasing,
accounting, consulting, marketing, merchandising of any services or products to
customers disclosed to Employee or known by Employee as a consequence of or
through his employment by Employer, if such information is not generally known
in any industry in which Employer or any of its subsidiaries is or may become
engaged during the Term of Employment. On the termination of his employment with
Employer, all files, documents, records, notebooks, and similar repositories,
then in Employee's possession or in the possession of any third party under the
control of Employee or pursuant to any agreement with Employee, whether prepared
by Employee or any other person, firm, corporation, association, or other
business entity, will be delivered to Employer by Employee. All rights to any
Confidential Information developed by Employer, Employee or other employees of
Employer during the Term of Employment shall belong to Employer, including all
rights to exploit any Confidential Information. In the event of a breach or
threatened breach by Employee of this Section 10, Employer shall be entitled to
seek an injunction restraining Employee from violating his covenants in this
Section 10. In addition, nothing contained herein shall in any manner be
construed to prohibit or limit Employer from pursuing against Employee or others
all other remedies available to Employers at law or in equity, from a breach of
this Section 10.
11. Return of Property on Termination. In order to prevent the intentional
or unintentional disclosure of Employer's trade secrets by Employee, the Parties
agree that on termination of the Term of Employment, all of Employer's property
shall be promptly returned to Employer by Employee. Without limiting the
generality of the term "Employer's property,"
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Employer and Employee stipulate that for the purposes of this Agreement, that
term includes, but is not limited to: all credit cards, sales manuals, leasing
manuals, brochures, charts, graphs, price lists, customer account lists,
prospective mailing lists, and any other written or printed materials,
recordings, photographs, films or slides relating to the Employer's business, or
any copies or reproductions of the foregoing, and all equipment, hardware, and
other property, given by the Employer to the Employee or owned by Employer and
in the possession or under the direct or indirect control of Employee.
12. Notice. Any notice, request, reply, instruction, or other
communication provided or permitted in this Agreement must be given in writing
and may be served by depositing same in the United States mail in certified or
registered form, postage prepaid, addressed to the Party or Parties to be
notified with return receipt requested, or by delivering the notice in person to
such Party or Parties. Unless actual receipt is required by any provision of
this Agreement, notice deposited in the United States mail in the manner herein
prescribed shall be effective on dispatch. For purposes of notice, the address
of Employee, his spouse, any purported donee or transferee or any administrator,
executor or legal representative of Employee or his estate, as the case may be,
shall be as follows:
The address of Employee shall be:
6146 Meadow Lake Lane
Houston, Texas 77057
with a copy to:
J. Kenneth Menges, Jr., P.C.
Akin, Gump, Strauss, Hauer & Feld. L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
The address of Employer shall be:
SFX Entertainment, Inc.
150 East 58th Street
l9th Floor
New York, New York 10155
Attention: Robert F.X. Sillerman
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with a copy to:
SFX Entertainment, Inc.
150 East 58th Street
l9th Floor
New York, New York 10155
Attention: Howard Tytel
Employer shall have the right from time to time and at any time to change its
address and shall have the right to specify as its address any other address by
giving at least ten (10) days written notice to Employee. Employee shall have
the right from time to time and at any time to change his address and shall have
the right to specify as his address any other address by giving at least ten
(10) days written notice to Employer.
13. Vacation. Employee shall be entitled to a minimum of four (4) weeks of
paid vacation during each calendar year.
14. Controlling Law. The execution, validity, interpretation and
performance of this Agreement shall be determined and governed by the laws of
the State of New York.
15. Entire Agreement. This Agreement contains the entire agreement of the
Parties with respect to the employment of Employee and amends and restates that
certain Employment Agreement between Employee and PACE dated as of October 1,
1997. The Agreement may not be changed orally or by action or inaction, but only
by an agreement in writing signed by the Party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.
16. Severability. If any provision of the Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, the Parties shall
promptly meet and negotiate substitute provisions for those rendered or declared
illegal or unenforceable, but all remaining provisions of this Agreement shall
remain in full force and effect.
17. Arbitration. Employer and Employee mutually consent to the resolution
by arbitration of all claims or controversies ("claims") arising out of this
Agreement or Employee's employment with Employer. The procedures for arbitrating
claims covered by the foregoing provisions are set forth in Exhibit "A" attached
hereto and made a part hereof as if fully set forth here.
18. Effect of Agreement, Assignment, Required Assumption. This Agreement
shall be binding upon Employee and his heirs, executors, administrators, legal
representatives, successors and assigns and the Employer and its successors and
assigns. Employee may not assign any rights hereunder without the prior written
consent of Employer. Employer shall require any person who is the successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or a substantial portion of the business or assets of Employer to
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[Illegible] paragraph
[Illegible] paragraph 19
[Illegible] paragraph 20
[Illegible] paragraph 21
[Illegible] signature lines
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EXHIBIT "A"
Dispute Resolution Procedures
a. Arbitration Procedures. Employer and Employee agree that any
arbitration shall be in accordance with the then-current Employment
Arbitration Rule of Judicial Arbitration & Mediation Services, Inc.
("JoAoMoS") before an arbitrator who is licensed to practice law in the
state in which the arbitration is convened (the "Arbitrator"). The
arbitration shall take place in Houston, Texas.
The Arbitrator shall be selected as follows: JoAoMoS shall give each
party a list of 11 arbitrators drawn from its panel of labor and
employment arbitrators. Each party may strike all names on the list it
deems unacceptable. If only one common name remains on the list of all
parties, that individual shall be designated as the Arbitrator. If more
than one common name remains on the list of all parties, the parties shall
strike names alternately until only one remains. The party who did not
initiate the claim shall strike first. If no common name remains on the
list of all parties, JoAoMoS shall furnish an additional list or lists
until an Arbitrator is selected. If, after four (4) lists, the parties
have not agreed on an Arbitrator, JoAoMoS shall appoint one from a fifth
list.
The Arbitrator shall apply the substantive law and the law of
remedies, if applicable, of the state of Texas, or federal law, or both,
as applicable to the claim(s) asserted. The Federal Rules of Evidence
shall apply. The Arbitrator, and not any federal, state, or local court or
agency, shall have exclusive authority to resolve any dispute relating to
the interpretation, applicability, enforceability or formation of this
Agreement, including, but not limited to any claim that all or any part of
this Agreement is void or voidable. The arbitration shall be final and
binding upon the parties, except for errors of law or as otherwise
provided in this Agreement.
Either party, at its expense, may arrange for and pay the cost of a
court reporter to provide a stenographic record of proceedings.
Either party may bring an action in any court of competent
jurisdiction to compel arbitration under this Agreement and to enforce an
arbitration award. Except as otherwise provided in this Agreement, both
Employer and Employee agree that neither shall initiate or prosecute any
lawsuit or administrative action in any way related to any claim covered
by this Agreement other than an administrative charge of discrimination
such as with the Equal Employment Opportunity Commission (EEOC) or other
federal or state commission or agency.
The Arbitrator shall render an award and opinion in the form
typically rendered in labor arbitrations.
b. Arbitration Fees and Costs. Employer and Employee shall equally
fund the fees and costs of the Arbitrator. Each party will deposit funds
or post other appropriate security for its share of the Arbitrator's fee,
in an amount and manner determined by the Arbitrator, 10 days
EXHIBIT "A"
Page 1 of 2
<PAGE>
before the first day of hearing. Each party shall pay for its own costs
and attorneys' fees, if any. However, the prevailing party in any
arbitration proceeding conducted hereunder shall be entitled to an award
against the other party in an amount equal to all fees and costs of the
Arbitrator paid by such prevailing party and all costs and attorneys' fees
paid or incurred by such prevailing party in connection with the pursuit
of such arbitration proceeding.
c. Interstate Commerce. Employee understands and agrees that
Employer is engaged in transactions involving interstate commerce and that
his employment involves such commerce.
d. Consideration. The promises by Employer and by Employee to
arbitrate differences, rather than litigate them before courts or other
bodies, provide consideration for each other.
EXHIBIT "A"
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SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT
FOR
AMPHITHEATER ENTERTAINMENT PARTNERSHIP
THIS SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT is made as of April
1, 1994, by and between The Westside Amphitheatre Corporation, an Arizona
corporation ("WAC"), San Bernardino Amphitheater Corporation, a Delaware
corporation ("SBAC"), Charlotte Amphitheater Corporation, a Delaware corporation
("CAC," and, together with SBAC and WAC, "Blockbuster"), and YM Corp., a
Delaware corporation ("Sony"). Certain capitalized terms used herein are defined
in Section 1 hereof. Unless otherwise specifically provided herein, all
obligations of Blockbuster hereunder shall be joint and several obligations of
SBAC, CAC and WAC.
RECITALS
WHEREAS, Blockbuster and Sony desire to pool certain expertise in the
ownership and operation of outdoor amphitheater entertainment facilities.
WHEREAS, Sony, WAC and CAC formed a general partnership for the
above-referenced purposes on September 29, 1993, pursuant to that certain
Partnership Agreement for Amphitheater Entertainment Partnership Agreement for
Amphitheater Entertainment Partnership, which Partnership Agreement was amended
and restated as of February 18, 1994 (the "Old Partnership Agreement").
WHEREAS, the Old Partnership Agreement contemplated that the San
Bernardino Asset, currently owned by SBAC (which is, like CAC, an indirect
wholly owned subsidiary of Blockbuster Entertainment Corporation), would be
contributed by WAC to the Partnership. SBAC now desires to become a partner of
the Partnership so that it may transfer the San Bernardino Asset to the
Partnership directly, rather than through WAC.
WHEREAS, in order to promote efficiency of operation, achieve high
standards of performance and obtain a reasonable return upon the investments of
Sony and Blockbuster, each of Sony, WAC and CAC desire to admit SBAC
<PAGE>
as a partner of the Partnership and to continue such Partnership subject to the
terms of this Agreement.
WHEREAS, following SBAC's Initial Capital Contribution, SBAC will merge
with and into Amphitheater Entertainment Corporation, a Delaware corporation and
the sole shareholder of SBAC ("AEC"), with AEC being the surviving corporation,
and then AEP will merge with and into CAC, a wholly owned subsidiary of AEC,
with CAC being the surviving corporation (such mergers being referred to herein
collectively as the "SBAC Mergers"). Upon the consummation of the SBAC Mergers,
among other things, (i) SBAC will cease to be a Partner of the Partnership and
(ii) CAC will succeed to all of the rights and obligations of SBAC as a Partner
of the Partnership.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
Section 1. Definitions. Capitalized terms used in this Agreement and not
otherwise defined shall have the meaning given to such terms in the SBPAP
Agreement. When used in this Agreement the following terms shall have the
meanings set forth below:
"Act" means the Delaware Uniform Partnership Act, as in effect from time
to time.
"Acquiring Partner" means the Partner acquiring the Partnership Interest
of the other Partner(s) pursuant to Section 9.3 of this Agreement.
"Additional Capital Contributions" means the Capital Contributions made by
the Partners pursuant to Sections 3.1(d), (e), (g), (i) and (j).
"Adjusted Capital Account Deficit" means, with respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:
(i) credit to such Capital Account any amounts which such Partner is
obligated to restore pursuant to any provision of this Agreement or is deemed to
be obligated to
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restore pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Regulations; and
(ii) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of
the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted and applied in a manner consistent therewith.
"Admission Agreement" means the Agreement to Admit New Partner And To
Amend And Restate Partnership Agreement, dated as of October 29, 1993, by and
among, Sony, WAC, CAC, Pace, Sony Music/Pace Partnership and the Partnership.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with, such
Person; for purposes of this definition, "control" of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise; provided, however, that for
purposes of this Agreement, neither H. Wayne Huizenga nor any Person directly or
indirectly controlled by Mr. Huizenga (other than Blockbuster Entertainment
Corporation ("BEC") and any Person directly or indirectly controlled by BEC)
shall be deemed to be an "Affiliate" of or "affiliated" with SBAC, WAC, CAC or
any Sony/Block Related Party.
"Agreement" means this Amended and Restated Partnership Agreement, as from
time to time amended.
"Allocation Percentage" means each Partner's allocation percentage, which
shall initially be equal to 70% less the Initial Sony Percentage for CAC, 25%
for SBAC, 5% for WAC and the Initial Sony Percentage for Sony. After the SBAC
Mergers, the Allocation Percentages shall be equal to 95% less the Initial Sony
Percentage for CAC, 5% for WAC and the Initial Sony Percentage for Sony. After
Sony's Additional Capital Contribution pursuant to Section 3.1(d), the
Allocation Percentages shall be equal to 47.5% for CAC, 2.5% for WAC and 50% for
Sony.
"Amphitheater Liabilities" means, with respect to any Amphitheater, the
liabilities and obligations of the owner
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of a Controlling Interest in such Amphitheater which, as of the Existing
Facility Closing Date, are (x) related to the ownership or operation of such
Amphitheater and (y) to be contributed to and assumed by SBPAP pursuant to the
Executory Contract, including, without limitation, the Amphitheater Loan to
which such Amphitheater is subject.
"Assignee" means a person to whom an interest in the Partnership has been
transferred in accordance with the provisions of this Agreement but who has not
been admitted as a substitute or additional Partner.
"Benefitting Partner" means (A) Sony if the Sony/Block Net Benefit Amount
is a negative number and (B) CAC if the Sony/Block Net Benefit Amount is a
positive number.
"Blockbuster" shall have the meaning given to such term in the opening
paragraph of this Agreement.
"Blockbuster Amphitheaters" means the Phoenix Amphitheater, the San
Bernardino Amphitheater and the Charlotte Amphitheater.
"Blockbuster Benefit Amount" means the aggregate amount payable by
Sony/Block to Pace pursuant to Sections 9.4(g)(2), 9.4(k)(4) and 9.4(k)(5) of
the SBPAP Agreement (disregarding, for purposes of this definition, the Netting
Provisions).
"Blockbuster Note" shall have the meaning given to such term in Section
3.1(b)(i) of this Agreement.
"Blockbuster Unwind Contribution Amount" means the positive difference, if
any, between:
(x) the sum of:
(A) the positive difference, if any, between:
(I) the product of (a) the aggregate Allocation Percentage of
WAC and CAC at the time of the Unwind Closing, multiplied by (b) the
sum of (i) the Pace Separate Benefit Amount, plus (ii) the portion
of the MCA Amount which would have been payable to the Partnership
in cash at the Unwind Closing but for the Netting Provisions, minus
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(II) the sum of (1) the Clause G&K Sum, if any, owed to the
Partnership from Pace pursuant to Section 9.4(k) of the SBPAP
Agreement, plus (2) the portion of the MCA Amount paid to the
Partnership in cash at the Unwind Closing, plus
(B) the portion of the Clause G&K Sum, if any, owed to Pace at the
Unwind Closing pursuant to Sections 9.4(k) which is not offset against the
principal amount of the Pace Note pursuant to Section 5.4(b), minus
(y) the Blockbuster Unwind Contribution Reduction Amount; provided that
under no circumstances shall the Blockbuster Unwind Contribution Amount
exceed the Blockbuster Benefit Amount.
"Blockbuster Unwind Contribution Offset Amount" means the portion of the
Make-up Amount which does not exceed the Blockbuster Unwind Contribution Amount.
"Blockbuster Unwind Contribution Reduction Amount" means the sum of (x)
the Sony/Pace Joint Benefit Amount, plus (y) if CAC is the Non-Benefitting
Partner, the Blockbuster Unwind Contribution Offset Amount.
"Buy Price" shall have the meaning given to such term in Section 9.2 of
this Agreement.
"Buy/Sell Notice" shall have the meaning given to such term in Section 9.2
of this Agreement.
"CAC" shall have the meaning given to such term in the opening paragraph
of this Agreement.
"Capital Account" of a Partner means the Capital Account established for
such Partner under Section 3.3.
"Capital Contribution" means, with respect to any Partner or Assignee, the
amount of cash and the initial Gross Asset Value of any property other than cash
contributed by the Partner or Assignee (or its predecessor in interest) to the
Partnership.
"Charlotte Distribution" shall have the meaning given to such term in
Section 5.3 of this Agreement.
"Closing" shall have the meaning given to such term in Section 9.5 of this
Agreement.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Communications" shall have the meaning given to such term in Section 13.9
of this Agreement.
"Compensable Damages" shall have the meaning given to such term in Section
12.1 of this Agreement.
"Covered Capacities" shall have the meaning given to such term in Section
6.5(a) of this Agreement.
"Deciding Partner" shall have the meaning given to such term in Section
9.2 of this Agreement.
"Default Notice" shall have the meaning given to such term in Section 11.1
of this Agreement.
"Defaulting Partner" shall have the meaning given to such term in Section
11.1 of this Agreement.
"Delivering Partner" shall have the meaning given to such term in Section
9.2 of this Agreement.
"Depreciation" means, for each fiscal year or other period, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization, or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization, or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the Management Committee.
"Dissolution" of a Partner which is not a natural person means that such
Partner has terminated its existence, whether partnership or corporate, wound up
its affairs and dissolved.
"Distribution" means, with respect to any Partner, the amount of cash and
the Gross Asset Value of any property
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other than cash distributed by the Partnership to the Partner.
"Division of Responsibility" means an allocation and division of the
Partnership's rights and responsibilities under the SBPAP Agreement pursuant to
Section 17.3 thereof.
"Event of Withdrawal" means the occurrence of any of the following events
in respect of a Partner: (i) the withdrawal by such Partner from the Partnership
in violation of Section 13.10, (ii) the granting of relief against such Partner
in an involuntary case under the Federal Bankruptcy Code which is not removed or
discharged within ninety (90) days, or in any such involuntary case, the
approval of the petition by such Partner as properly filed, or the admission of
such Partner of material allegations contained in the petition, (iii) the
execution by such Partner of a general assignment for the benefit of creditors,
(iv) the commencement of a voluntary case under the Federal Bankruptcy Code by
such Partner, or (v) the appointment of a receiver for a Partner or for all or a
substantial part of the assets of such Partner and such receivership proceedings
are not removed or discharged within ninety (90) days after the receiver's
appointment.
"Existing Facility Closing Date" means the date of the Existing Facility
Closing.
"Gross Asset Value" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of each of the Charlotte Asset,
the Phoenix Asset, the San Bernardino Asset and Sony's SBPAP Interest
shall be the Net Value of each such asset as determined pursuant to the
Admission Agreement and the Executory Contract. For purposes of the
immediately preceding sentence, the initial Gross Asset Value of Sony's
SBPAP Interest shall be the sum of 50% of the Net Value, as determined
pursuant to the Admission Agreement and the Executory Contract, of each of
the Camden Asset, the Tampa Asset, the Raleigh Asset and the Pittsburgh
Asset. The initial Gross Asset Value of any other asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as determined by the contributing Partner and the Management
Committee.
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(ii) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as determined
by the Management Committee, as of the following times: (a) the
acquisition of an additional interest in the Partnership by any new or
existing Partner in exchange for more than a de minimis Capital
Contribution; (b) the distribution by the Partnership to a Partner of more
than a de minimis amount of property as consideration for an interest in
the Partnership; and (c) the liquidation of the Partnership within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations; provided,
however, that adjustments pursuant to clauses (a) and (b) above shall be
made only if the Management Committee, by the agreement of all of its
members, reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Partners;
(iii) The Gross Asset Value of any Partnership asset distributed to
any Partner shall be the gross fair market value of such asset on the date
of distribution; and
(iv) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Section 734(b) or Section 743(b) of the Code, but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the
Regulations; provided, however, that Gross Asset Values shall not be
adjusted pursuant to this clause (iv) to the extent the Management
Committee, by the agreement of all of its members, determines that an
adjustment pursuant to clause (ii) is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this clause (iv).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
clauses (i), (ii) or (iv), above, such Gross Asset Value shall thereafter be
adjusted in the same manner as would the asset's basis for federal income tax
purposes except that in lieu of regular depreciation, the Partnership shall take
deductions for Depreciation.
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"Indemnified Parties" shall have the meaning given to such term in Section
12.1 of this Agreement.
"Indemnifying Party" shall have the meaning given to such term in Section
12.1 of this Agreement.
"Initial Capital Contributions" means the Capital Contributions made by
the Partners pursuant to Sections 3.1(a), (b) and (c).
"Initial Sony Percentage" means the percentage equivalent of a fraction,
the numerator of which is the sum of (x) the amount credited to Sony's Capital
Account pursuant to Section 3.3(a)(iii) hereof, plus (y) the principal amount of
the Sony Note, and the denominator of which is the sum of (I) the total amount
credited to the Partners' Capital Accounts pursuant to Section 3.3(a) hereof,
plus (II) the principal amount of the Sony Note and the Blockbuster Note.
"Interim Development Costs Amount" shall have the meaning given to such
term in Section 3.l(b)(i) of this Agreement.
"Make-Up Amount" means the absolute value (expressed as a positive number)
of the Sony/Block Net Benefit Amount.
"MCA Amount" means the amount, if any, payable to the Partnership from
Pace at the Unwind Closing pursuant to Section 7.2(d) of the SBPAP Agreement
(whether in cash or by means of the Pace Note and disregarding, for purposes of
this definition, the Netting Provisions).
"Netting Provisions" means the provisions of Article IX of the SBPAP
Agreement relating to the netting of payments due from the Partnership and Pace
against one another.
"1933 Act" shall have the meaning given to such term in Section 13.4 of
this Agreement.
"1934 Act" shall have the meaning given to such term in Section 13.4 of
this Agreement.
"Non-Defaulting Partner" shall have the meaning given to such term in
Section 1.1 of this Agreement.
"Non-Receiving Partner" shall have the meaning given to such term in
Section 3.6(a) of this Agreement.
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"Non-Benefitting Partner" means (A) Sony if the Benefitting Partner is
CAC, and (B) CAC if the Benefitting Partner is Sony.
"Non-Withdrawing Partner" shall have the meaning given to such term in
Section 10.1 of this Agreement.
"Pace" means SM/Pace, Inc., a Texas corporation.
"Pace Benefit Amount" means the sum of (x) the Sony/Pace Joint Benefit
Amount, plus (y) the Pace Separate Benefit Amount.
"Pace Note" shall have the meaning given to such term in Section 5.4(b) of
this Agreement.
"Pace Note Offset Amount" shall have the meaning given to such term in
Section 5.4(b) of this Agreement.
"Pace Note Payment" shall have the meaning given to such term in Section
5.4(b) of this Agreement.
"Pace Separate Benefit Amount" means the aggregate amount payable by Pace
to the Partnership pursuant to Sections 9.4(g)(l) and 9.4(k)(1) of the SBPAP
Agreement (disregarding, for purposes of this definition, the Netting Provisions
and excluding the MCA Amount).
"Partner Default" shall have the meaning given to such term in Section
11.1 of this Agreement.
"Partners" means, as of any particular time, those Persons who are at such
time the partners of the Partnership.
"Partnership" means the partnership formed hereby.
"Partnership Books" shall have the meaning given to such term in Section
8.2 of this Agreement.
"Partnership Interest" means the interest of a Partner in the capital,
Profit, Losses and distributions of the Partnership.
"Partnership Major Decision" shall have the meaning given to such term in
Section 6.3 of this Agreement.
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"Person" means an individual, corporation, partnership, association,
trust, joint venture, unincorporated organization, other entity or group.
"Profits" or "Losses" means, for each fiscal year or other period, an
amount equal to the Partnership's taxable income or loss for such year or
period, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), with the following adjustments:
(i) any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;
(ii) any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Section 705(a)(2)(B) expenditures pursuant to
Section 1.704-1(b)(2)(iv)(i) of the Regulations and not otherwise taken
into account in computing Profits or Losses pursuant to this definition
shall be subtracted from such taxable income or loss;
(iii) gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the
property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Gross Asset Value; and
(iv) in lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year
or other period, computed in accordance with the definition of
Depreciation.
"Promissory Notes" means the Blockbuster Note and the Sony Note.
"Receiving Partner" shall have the meaning given to such term in Section
3.6(a) of this Agreement.
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"SBAC" shall have the meaning given to such term in the opening paragraph
of this Agreement.
"SBPAP" means Pavilion Partners, a Delaware general partnership (formerly
known as Sony Music/Pace Partnership).
"SBPAP Agreement" means the Partnership Agreement to be made and entered
into on the Existing Facility Closing Date, by and between Pace and the
Partnership, in the form attached hereto as Exhibit A.
"Sell Price" shall have the meaning given to such term in Section 9.2 of
this Agreement.
"Selling Partner" shall have the meaning given to such term in Section 9.4
of this Agreement.
"Sony" shall have the meaning given to such term in the opening paragraph
of this Agreement.
"Sony Note" shall have the meaning given to such term in Section 3.1(c) of
this Agreement.
"Sony Unwind Credit Amount" shall have the meaning given to such term in
Section 5.4(e) of this Agreement.
"Sony/Block Net Benefit Amount" means (x) the Blockbuster Benefit Amount
minus (y) the Sony/Pace Joint Benefit Amount.
"Sony/Pace Joint Benefit Amount" means the aggregate amount payable by
Pace to the Partnership pursuant to Sections 9.4(g)(3), 9.4(h), 9.4(k)(2) and
9.4(k)(3) of the SBPAP Agreement (disregarding, for purposes of this definition,
the Netting Provisions and excluding the MCA Amount).
"Sony's SBPAP Interest" means Sony's interest in SBPAP immediately
following the Existing Facility Closing.
"Sony's SMP Interest" shall have the meaning given to such term in Section
9.6 of this Agreement.
"Special Distribution" shall have the meaning given to such term in
Section 5.3 of this Agreement.
"Tax Matters Partner" shall have the meaning given to such term in Section
8.5(a) of this Agreement.
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"Unwind Closing" means the closing of the Unwind Procedure.
"Withdrawing Partner" shall have the meaning given to such term in Section
10.1 of this Agreement.
"Woodlands Distribution" shall have the meaning given to such term in
Section 5.3 of this Agreement.
ARTICLE II
Section 2.1 Formation of Partnership. The Partnership was formed as a
partnership pursuant to the Act on September 29, 1993. The parties hereby admit
SBAC as a Partner in the Partnership and continue the Partnership as a
partnership pursuant to the Act, and the rights and liabilities of the Partners
shall be as provided in the Act, except as otherwise expressly provided herein.
The Partners shall promptly prepare and see to the execution, filing and
recording in the appropriate public offices of assumed or fictitious business
name statements and such other certificates, notices and statements as may be
required by law for the operation of the Partnership in all jurisdictions where
the Partnership may elect to do business. The parties agree that upon the SBAC
Mergers, CAC will succeed to all of the rights and privileges, and will assume
all of the obligations, of SBAC hereunder. The parties further agree that the
Partnership shall continue following the SBAC Mergers and that the SBAC Mergers
are not intended to, and shall not, cause a termination of the Partnership
created by the Old Partnership Agreement and continued pursuant to the terms and
provisions contained in this Agreement, it being the intent of the Partners to
continue the Partnership in existence without termination.
Section 2.2 Partnership Name. The business of the Partnership shall be
conducted under the name Amphitheater Entertainment Partnership or under such
other name as the Management Committee may from time to time determine.
Section 2.3 Purposes of Partnership. The Partnership is organized for the
purposes of (i) being a partner in SBPAP, (ii) engaging in any and all
activities related or incidental to the activities described in clause (i)
above, and (iii) doing all things necessary or appropriate in connection
therewith. In addition, the
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Partners and their respective Affiliates may from time to time after the date
hereof consider and enter into additional entertainment ventures in the
Restricted Portion of the Earth in partnership with one another pursuant to
separate partnership agreements appropriate for such ventures.
Section 2.4 Title to Partnership Property. Title to Partnership property
shall be held in the name of the Partnership or its nominee.
Section 2.5 Principal Place of Business. The principal place of business
of the Partnership shall be at One Blockbuster Plaza, 200 South Andrews Avenue,
Ft. Lauderdale, Florida. The Management Committee may change the location of the
Partnership's principal place of business or establish additional places of
business at such locations as the Management Committee may from time to time
determine.
Section 2.6 Term. Subject to the provisions of Article X, the Partnership
shall continue in effect until thirty-five (35) years after the Existing
Facility Closing Date, unless such term is extended for such further period or
periods as may be agreed in writing by all of the Partners.
ARTICLE III
Section 3.1 Capital Contributions and Loans of the Partners; Certain
Additional Obligations.
(a) Simultaneously herewith, CAC and Sony shall each contribute $5.00 in
cash to the capital of the Partnership.
(b) On the Existing Facility Closing Date, Blockbuster shall make the
following contributions to the capital of the Partnership:
(i) CAC shall contribute (A) an amount of cash (the "Interim
Development Costs Amount") sufficient to enable the Partnership to make
the capital contribution to SBPAP required under Section 4.15(b) of the
SBPAP Agreement, (B) the Charlotte Asset in accordance with the terms of
the Executory Contract for such Asset and (C) at CAC's option, either (I)
a promissory note (the "Blockbuster Note") in the principal amount of the
Blockbuster Subsidiary Cash
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Amount substantially in the form of Sony/Block Note #2 (in which case CAC
shall also cause the Blockbuster Guaranty to be provided to SBPAP), or
(II) the Blockbuster Subsidiary Cash Amount;
(ii) SBAC shall contribute the San Bernardino Asset in accordance
with the terms of the Executory Contract for such Asset; and
(iii) WAC shall contribute the Phoenix Asset in accordance with the
terms of the Executory Contract for such Asset.
(c) On the Existing Facility Closing Date, Sony shall contribute to the
capital of the Partnership at Sony's option, either (i) a promissory note (the
"Sony Note") in the principal amount of the Sony Subsidiary Cash Amount
substantially in the form of Sony/Block Note #1 (in which case Sony shall also
cause the Sony Guaranty to be provided to SBPAP), or (ii) the Sony Subsidiary
Cash Amount.
(d) Within seven days after the Existing Facility Closing Date, but in no
event before the next day after the Existing Facility Closing Date, Sony shall
contribute Sony's SBPAP Interest to the capital of the Partnership.
(e) Not later than one business day prior to the date on which the
Partnership is required, under the SBPAP Agreement, to make an additional
capital contribution to SBPAP pursuant to Section 4.11, 5.1(b) or 6.2(b) of the
SBPAP Agreement, each Partner shall contribute funds to the capital of the
Partnership in an amount equal to its Allocation Percentage of such additional
capital contribution so as to enable the Partnership to make such additional
capital contribution to SBPAP in the amount and at the time required under the
SBPAP Agreement.
(f) Not later than one business day prior to the date on which the
Partnership is required, under the SBPAP Agreement, to make a loan to SBPAP
pursuant to Section 4.12, 4.13, 5.1(a), 5.4(a), 5.5(a) or 6.2(a) of the SBPAP
Agreement, each Partner shall make a loan to the Partnership in an amount equal
to its Allocation Percentage of such loan required to be made to SBPAP so as to
enable the Partnership to make a loan to SBPAP in the amount and at the time
required under the SBPAP Agreement. Such loans shall be repaid to the respective
Partners on such terms, at such times and in such amounts as SBPAP shall repay
to the Partnership the corresponding loans by the Partnership to
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SBPAP pursuant to the SBPAP Agreement. All repayments of such loans shall be
made pro rata among the Partners in accordance with their respective Allocation
Percentages. Notwithstanding the foregoing, it is acknowledged that either
Partner shall have the right, in its sole discretion, to fulfill its obligations
to make any such loan required to be made by reason of the operation of Section
5.1(a), 5.4(a), 5.5(a) or 6.2(a) of the SBPAP Agreement by causing a third party
lender to make such loan in accordance with the terms of, and as contemplated
by, the applicable provision of the SBPAP Agreement.
(g) If at any time the Partnership shall be entitled, under the SBPAP
Agreement, to exercise rights to purchase Pace's partnership interest in SBPAP
pursuant to Section 16.2 or 17.2(e) of the SBPAP Agreement and the Management
Committee shall have determined to exercise such rights, not later than one
business day prior to the date on which the Partnership is required, under the
SBPAP Agreement, to consummate such purchase pursuant to the SBPAP Agreement,
each Partner shall contribute funds to the capital of the Partnership (or shall
make available funds to the Partnership's designee) in an amount equal to its
Allocation Percentage of the purchase price therefore so as to enable the
Partnership (or such designee) to consummate such purchase for the purchase
price and at the time required under the SBPAP Agreement.
(h) Sony agrees that it shall be solely responsible for, and it shall pay
or perform when and as required under the SBPAP Agreement, each of the Sony
Specific Obligations. WAC and CAC agree that they shall be solely responsible
for, and they shall pay or perform when and as required under the SBPAP
Agreement, each of the Blockbuster Specific Obligations. In furtherance of the
foregoing, not later than one business day prior to the date on which the
Partnership is required, under the SBPAP Agreement, to make payments of
principal and interest to SBPAP under (x) Sony/Block Note #1, Sony shall make
equivalent payments of principal and interest to the Partnership under the Sony
Note, and (y) Sony/Block Note #2, CAC shall make equivalent payments of
principal and interest to the Partnership under the Blockbuster Note. Each
Partner agrees that it shall not take or omit to take any action (or permit any
Sony/Block Related Party affiliated with it to take or omit to take any action),
which action or omission would constitute a breach of or default by the
Partnership under the SBPAP Agreement. Each Partner hereby indemnifies and holds
harmless the other from and against any and all loss, cost, damage or expense
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(including, without limitation, reasonable attorneys' fees) arising out of or
relating to any breach by the Partnership of or default by the Partnership under
the SBPAP Agreement occasioned by the breach by such Partner of its obligations
under this Section 3.1(h).
(i) Simultaneously with the Unwind Closing, (x) the Benefitting Partner
shall contribute cash funds to the capital of the Partnership in an amount equal
to the Make-Up Amount, and (y) CAC shall contribute cash funds to the capital of
the Partnership equal to the Blockbuster Unwind Contribution Amount.
(j) If at any time the Management Committee determines that funds in
excess of retained operating earnings and any Partnership borrowings are
required by the Partnership for the operation of its business or any of its
related obligations, expenses, costs, liabilities or expenditures, the Partners
shall contribute cash to the capital of the Partnership in the amounts and on
the dates as are established by unanimous vote of the Management Committee. Each
Partner shall contribute such amount in proportion to its Allocation Percentage.
(k) Except as provided in Sections 3.1(a)-(j), the Partners shall not be
required to make any capital contributions, loans, or other advances to the
Partnership; provided, however, that a Partner may voluntarily make a loan to
the Partnership. Such loan to the Partnership shall only be made on such terms
as shall be approved by the Management Committee. Subject to Section 3.4 hereof,
the Partners shall have no personal liability to each other for the repayment by
the Partnership of their respective loans and capital contributions made to the
Partnership.
(l) Sony hereby acknowledges and agrees that each of SBAC, WAC and CAC
shall be permitted to make the Capital Contributions, loans and other payments
required to be made by the other Blockbuster entities pursuant to this Section
3.1 and, in such event (provided that all applicable Capital Contributions,
loans and other payments to be made by SBAC, WAC and CAC are made in full by one
or more of the Blockbuster entities), the failure of SBAC, WAC or CAC to
comply with its obligations under this Section 3.1 shall not give rise to any
right, claim or cause of action against such Person by Sony under this Agreement
or otherwise.
(m) The provisions of this Section 3.1 are not intended to be for the
benefit of any creditor or other person (other than a Partner in such Partner's
capacity as a Partner) to whom any debts, liabilities or obligations are owed
by, or who otherwise has any claim against, the Partnership or any of the
Partners. No such creditor or
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other person shall have any right to make any claim in respect of any debt,
liability or obligation against the Partnership or any of the Partners under the
provisions of this Agreement.
Section 3.2 Prohibition Against Withdrawals. No Partner shall be entitled
to withdraw all or any portion of its Capital Contribution, or to receive any
payment of interest on its Capital Contribution.
Section 3.3 Capital Accounts. The Partnership shall create upon its books
and records a capital account ("Capital Account") for each Partner, which shall
be maintained in accordance with the provisions of this Section 3.3.
(a) Upon the making of the Initial Capital Contributions, the Partner's
Capital Accounts shall be credited as follows:
(i) there shall be credited to CAC's Capital Account the sum of (w)
$5.00 plus (x) the Interim Development Costs Amount, plus (y) the Net
Value of the Charlotte Asset and the San Bernardino Asset (after taking
into account the Amphitheater Liabilities related to such assets) plus (z)
if CAC elected to contribute the Blockbuster Subsidiary Cash Amount to the
capital of the Partnership, the Blockbuster Subsidiary Cash Amount;
provided, however, that if CAC elected to contribute the Blockbuster Note
to the capital of the Partnership, the Blockbuster Note shall be credited
to CAC's Capital Account in accordance with Section 3.5 hereof;
(ii) there shall be credited to SBAC's Capital Account the Net Value
of the San Bernardino Asset (after taking into account the Amphitheater
Liabilities related to the San Bernardino Amphitheater);
(iii) there shall be credited to WAC's Capital Account the Net Value
of the Phoenix Asset (after taking into account the Amphitheater
Liabilities related to the Phoenix Amphitheater); and
(iv) there shall be credited to Sony's Capital Account the sum of
(x) $5.00, plus (y) if Sony elected to contribute the Sony Subsidiary Cash
Amount to the capital of the Partnership, the Sony Subsidiary Cash Amount;
provided, however, that if Sony elected to contribute the Sony Note to the
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capital of the Partnership, the Sony Note shall be credited to Sony's
Capital Account in accordance with Section 3.5 hereof.
(b) Upon the making by Sony of the Additional Capital Contribution
contemplated by Section 3.1(d), there shall be credited to Sony's Capital
Account, the positive balance of Sony's capital account in SBPAP at such time,
as determined pursuant to Section 4.8(b) of the SBPAP Agreement. Upon the making
of any other Additional Capital Contribution by a Partner, a credit shall be
made to such Partner's Capital Account in the amount of cash and the fair market
value of such Additional Capital Contribution (net of any liabilities of such
Partner which are assumed by the Partnership or which are secured by the
property contributed by such Partner).
(c) Upon the allocation to a Partner of a distributive share of Profits or
any items in the nature of income or gain which are specially allocated pursuant
to Section 4.2, a credit shall be made to such Partner's Capital Account in the
amount of such allocation.
(d) To each Partner's Capital Account there shall be debited (i) the
amount of cash and the Gross Asset Value of any property distributed to such
Partner pursuant to any provision of this Agreement (net of any liabilities of
the Partnership which are assumed by such Partner or which are secured by the
property distributed to such Partner by the Partnership), and (ii) such
Partner's distributive share of Losses and any items in the nature of expenses
or losses which are specially allocated pursuant to Section 4.2.
(e) In the event all or a portion of an interest in the Partnership is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred interest.
(f) In determining the amount of any liability for purposes of clauses (a)
and (b), above, there shall be taken into account any applicable provisions of
the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Section
1.704-1(b) of the Regulations, and shall be interpreted and applied in a manner
consistent therewith.
Section 3.4. Capital Account Make-up Provision. If a Partner's Capital
Account has a deficit balance following
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liquidation (as defined in Treasury Regulation Section 1.704-1(b)(2)(ii)(g)) of
the Partner's Partnership Interest (after taking into account all Capital
Account adjustments for the taxable year of the Partnership in which liquidation
occurs), the Partner shall, by the end of such taxable year (or, if later,
within 90 days after the date of such liquidation), contribute to the
Partnership an amount necessary to increase the balance in its Capital Account
to zero. Any amount so contributed shall be used, first, to satisfy the
Partnership's obligations, if any, under Section 8.3 (h) of the SBPAP Agreement
and the balance, if any, shall be distributed in accordance with Section 10.5
hereof.
Section 3.5 Effect of Sony/Block Notes on Capital Accounts. Pursuant to
Section 1.704-1(b)(2)(iv)(d)(2) of the Regulations, the Capital Accounts of
Sony and CAC shall not be increased by the principal amount of the Promissory
Notes upon contribution of the Promissory Notes to the Partnership; provided,
however, that such Partner's Capital Account shall be increased upon (i) a
taxable disposition of its Promissory Note by the Partnership, or (ii) any
principal payments made on its Promissory Note. Interest payments made on the
Promissory Notes shall not be treated as contributions to the capital of the
Partnership and therefore shall not be credited to the Capital Accounts of Sony
or CAC.
Section 3.6 Effect of Distributions In Kind on Capital Accounts. If any
asset of the Partnership is distributed to a Partner in kind, then pursuant to
Section 1.704-1(b)(2)(iv)(e) of the Regulations and notwithstanding anything to
the contrary in this Agreement, such asset shall be treated as if it were sold
in a taxable disposition for an amount equal to its then fair market value
(determined by taking into account the effect of Section 7701(g) of the Code, if
applicable) immediately prior to its distribution and, for purposes of adjusting
the balances of the Capital Accounts of the Partners (and only for such
purpose), the resulting deemed gain or loss shall be allocated pursuant to the
following provisions:
(a) If such asset is being distributed pursuant to or in connection with
the Unwind Procedure, then (i) the deemed gain from such asset shall be
allocated first to the Partner that does not receive and is not deemed to
receive such asset (the "Non-Receiving Partner") to the extent of the
depreciation deductions previously allocated to the Non-Receiving Partner with
respect to such asset and then to the Partner that receives or is deemed to
receive such asset (the "Receiving Partner"); and (ii) the deemed loss from such
asset shall be allocated to the Receiving Partner; and
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(b) If such asset is being distributed for any other reason, then the
deemed gain or loss from such asset shall be allocated in the manner described
in Section 4.1 hereof.
ARTICLE IV
Section 4.1 Allocation of Profits and Losses. Except as otherwise provided
in this Article IV, Profits and Losses for any fiscal year shall be allocated to
the Partners in accordance with their Allocation Percentages.
Section 4.2 Special Allocations. Prior to making the allocations required
by Section 4.1 above, the following special allocations shall be made in the
following order:
(a) Except as otherwise provided in Section 1.704-2(f) of the Regulations,
notwithstanding any other provision of this Section 4.2, if there is a net
decrease in Partnership Minimum Gain during any Partnership fiscal year, each
Partner shall be specially allocated items of Partnership income and gain for
such fiscal year (and, if necessary subsequent fiscal years) in an amount equal
to such Partner's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Section 1.704-2(g) of the Regulations. Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant thereto. The items to
be so allocated shall be determined in accordance with Sections 1.704-2(f) (6)
and 1.704-2(j)(2) of the Regulations. This Section 4.2(a) is intended to comply
with the minimum gain chargeback requirement in Section 1.704-2(f) of the
Regulations and shall be interpreted consistently therewith.
(b) Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
fiscal year or other period shall be specially allocated among the Partners in
proportion to their Allocation Percentages.
(c) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision
of this Section 4.2, if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
fiscal year, each Partner who has a share of the Partner Nonrecourse Debt
Minimum Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Section 1.704-2(i) (5) of the Regulations, shall be specially
allocated items of Partnership income and gain for such fiscal year (and, if
necessary, subsequent fiscal years) in an amount equal to
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such Partner's share of the net decrease in Partner Nonrecourse Debt Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in accordance
with Section 1.704-2(i)(4) of the Regulations. Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts required
to be allocated to each Partner pursuant thereto. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i) (4) and 1.704-2(j)
(2) of the Regulations. This Section 4.2(b) is intended to comply with the
minimum gain chargeback requirement in Section 1.704-2(i)(4) of the Regulations
and shall be interpreted consistently therewith.
(d) Any Partner Nonrecourse Deductions for any Partnership fiscal year
shall be specially allocated to the Partner who bears the economic risk of loss
with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Sections 1.704-2(i) (1) and (2)
of the Regulations.
(e) All tax credits for amounts paid or incurred in any taxable year shall
be allocated to the Partners in the same proportions as the related items of
loss and deduction are allocated to the Partners in such fiscal year.
(f) Any income or gain which is specially allocated to the Partnership
with respect to the Charlotte Asset pursuant to Sections 8.1(c)(2)(i) or 8.1(h),
respectively, of the SBPAP Agreement shall be allocated entirely to CAC.
(g) Any SBPAP deductions or losses which are specially allocated to the
Partnership with respect to Previously Allocated Interim Development Deductions
pursuant to Section 4.15(b) of the SBPAP Agreement shall be allocated entirely
to CAC.
Section 4.3 Section 704(c) Allocations.
(a) In accordance with Section 704(c) of the Code and the Regulations
thereunder, income, gain, loss, and deduction with respect to any property
contributed to the capital of the Partnership shall be allocated among the
Partners so as to take account of any variation between the adjusted basis of
such property to the Partnership for federal income tax purposes and its initial
Gross Asset Value.
(b) In the event the Gross Asset Value of any asset is adjusted pursuant
to the provisions contained in the definition of "Gross Asset Value," subsequent
allocations of income, gain, loss, and deduction with respect to such asset
shall take account of any variation between the adjusted
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basis of such asset for federal income tax purposes and the value at which such
asset is reflected in the Capital Accounts of the Partners, to the extent such
variation was not previously taken into account pursuant to Section 4.3(a), in
the same manner as under Section 704(c) of the Code and the Regulations
thereunder.
(c) Allocations pursuant to Sections 4.3(a) and (b) are solely for
purposes of federal, state, and local income taxes. Notwithstanding any other
provision of this Agreement, such allocations (x) shall be consistent with any
income, gain, loss or deduction allocated to the Partnership by SBPAP pursuant
to Section 704(c) of the Code and the Regulations thereunder, and (y) shall not
affect, or in any way be taken into account in computing, any Partner's Capital
Account or share of Profits, Losses, other items, or Distributions pursuant to
any provision of this Agreement.
Section 4.4 Certain Other Allocation Rules.
(a) For purposes of determining the Profits, Losses, or any other items
allocable to any period, Profits, Losses, and any such other items shall be
determined on a daily, monthly or other basis, as determined by the Management
Committee using any permissible method under Section 706 of the Code and the
Regulations thereunder.
(b) Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction for any fiscal year or other period,
and any other allocations not otherwise provided for shall be divided among the
Partners in the same proportions as they share Profits or Losses, as the case
may be, for such year or other period.
ARTICLE V
Section 5.1 Distributions. Subject to the other provisions of this Article
V, Distributions shall be declared and made at such time or times and in such
amounts as shall be determined by the Management Committee and shall be made to
the Partners in proportion to their Allocation Percentages at the time of such
Distribution.
Section 5.2 SBPAP Distributions. Notwithstanding the provisions of Section
5.1, within ten (10) days after receipt by the Partnership of any distributions
of Free Cash from SBPAP pursuant to Section 8.4(b) (2) (ii) of the SBPAP
Agreement, the Management Committee shall cause Distributions to be made to each
Partner in an amount equal to the product of such Partner's Allocation
Percentage (as determined after Sony's Additional Capital Contribution
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pursuant to Section 3.1(d)) multiplied by the aggregate amount so received by
the Partnership from SBPAP.
Section 5.3 Special Distributions. Notwithstanding the provisions of
Section 5.1, the Partners shall, within three days after receipt by the
Partnership of a Special Distribution, cause the Partnership to distribute such
Special Distribution to the Partners as follows:
(a) the entire amount of each Charlotte Distribution shall be distributed
to CAC; and
(b) the entire amount of any Woodlands Distribution shall be distributed
to the Partners in accordance with their respective Allocation Percentages at
the time of such Distribution.
For purposes of this Section 5.3, (x) a "Charlotte Distribution" means any
distribution received by the Partnership from SBPAP pursuant to Section
5.6(b)(1) or 5.6(c)(1) of the SBPAP Agreement, (y) a "Special Distribution"
means a Charlotte Distribution or a Woodlands Distribution, and (z) a "Woodlands
Distribution" means any distribution received by the Partnership from SBPAP
pursuant to Section 4.17(b)(2) of the SBPAP Agreement.
Section 5.4 Unwind Distributions. It is the intention of the Partners
that, by means of the operation of this Section 5.4, in conjunction with the
operation of Section 9.4 of the SBPAP Agreement, each of Sony and Blockbuster,
as part of the Unwind Procedure, shall repay in cash and receive property and
cash at the Unwind Closing such cash amounts and items of property required in
order to equalize the aggregate financial benefit received by each such Person
as a result of their respective interests in the Amphitheaters distributed by
SBPAP at the Unwind Closing. Accordingly, the Partners hereby agree that
irrespective of the operation of this Section 5.4, they shall do all things
necessary to cause Sony, on the one hand, and WAC and CAC, on the other hand, to
achieve such result. Examples of the intended operation this Section 5.4 and
Section 3.1(i) are attached hereto as Annex A. Notwithstanding the provisions of
Section 5.1, all distributions of cash and property received by the Partnership
pursuant to Section 9.4 of the SBPAP Agreement shall be made to the Partners
within three (3) business days after receipt by the Partnership of such
distributions in accordance with this Section 5.4.
(a) Upon receipt of the Blockbuster Amphitheaters pursuant to Section
9.4(d) of the SBPAP Agreement, the Partnership shall distribute (x) all of
SBPAP's right, title and interest in and to the Phoenix Amphitheater to WAC or
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WAC's designee, and (y) all of SBPAP's right, title and interest in and to the
Charlotte Amphitheater and the San Bernardino Amphitheater to CAC or CAC's
designee; provided, however, that in the event of a distribution of the
Blockbuster Amphitheaters to the Partnership on and after the Closing
contemplated by Section 9.5 hereof, all of SBPAP's right, title and interest in
and to the Blockbuster Amphitheaters shall be distributed to the Acquiring
Partner and each Partner hereby authorizes the Acquiring Partner to so notify
SBPAP upon a Closing pursuant to such Section 9.5.
(b) All amounts received by the Partnership pursuant to Section 9.4(f) of
the SBPAP Agreement shall be distributed to Sony and CAC pro rata in accordance
with the respective principal balances of the Sony Note and Blockbuster Note
outstanding immediately prior to the Unwind Closing. All cash received by the
Partnership at the Unwind Closing pursuant to Section 9.4(h) of the SBPAP
Agreement (excluding any portion of the MCA Amount deemed distributed pursuant
to Section 9.4(h) of the SBPAP Agreement in accordance with Section 7.2(d) (2)
of the SBPAP Agreement) shall be distributed to CAC. All cash received by the
Partnership pursuant to Section 9.4(i) of the SBPAP Agreement at the Unwind
Closing shall be distributed to Sony and CAC pro rata in accordance with the
respective differences between (i) the Sony Subsidiary Cash Amount or the
Blockbuster Subsidiary Cash Amount, as applicable, and (ii) the principal
balances of the Sony Note and Blockbuster Note, as applicable, outstanding
immediately prior to the Unwind Closing. If Pace elects to deliver a promissory
note (the "Pace Note") to the Partnership at the Unwind Closing pursuant to
Section 9.4(j) of the SBPAP Agreement in lieu of delivering the cash amount then
due to the Partnership pursuant to Sections 9.4(h) and (i) of the SBPAP
Agreement (including any portion of the MCA Amount deemed distributed pursuant
to Section 9.4(h) of the SBPAP Agreement in accordance with Section 7.2(d)(2)
of the SBPAP Agreement), then the Partnership shall distribute each Pace Note
Payment to Sony and CAC within three business days after receipt by the
Partnership as follows:
(i) CAC shall receive a portion of each Pace Note Payment determined
by multiplying (x) the entire amount of such Pace Note Payment by (y) a
fraction, the numerator of which shall be the cash amount owed to the
Partnership by Pace at the Unwind Closing pursuant to Section 9.4(h) of
the SBPAP Agreement (excluding any portion of the MCA Amount deemed
distributed pursuant to Section 9.4(h) of the SBPAP Agreement in
accordance with Section 7.2(d) (2) of the SBPAP Agreement) and the
denominator of which shall be the original principal amount of the Pace
Note; and
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(ii) the remaining portion of each Pace Note Payment shall be
distributed to Sony and CAC pro rata in accordance with the respective
differences between (i) the Sony Subsidiary Cash Amount or the Blockbuster
Subsidiary Cash Amount, as applicable, and (ii) the principal balances of
the Sony Note and Blockbuster Note, as applicable, outstanding immediately
prior to the Unwind Closing.
For purposes of this Section 5.4(b), a "Pace Note Payment" means all of the
following: (x) each payment received by the Partnership from Pace under the Pace
Note, (y) each receipt by the Partnership of proceeds from the sale or other
disposition of the collateral held by the Partnership in respect of Pace Note,
and (z) the offset by the Partnership of the Pace Note Offset Amount, in which
event the Pace Note Payment shall be the portion of the Blockbuster Unwind
Contribution Amount equal to the Pace Note Offset Amount. The Partners hereby
agree that if Pace delivers the Pace Note to the Partnership, then the Clause
G&K Sum, if any, owed to Pace at the Unwind Closing pursuant to Section 9.4(k)
of the SBPAP Agreement shall be offset against the principal of the Pace Note to
the fullest extent possible (the amount so offset being hereinafter referred to
as the "Pace Note Offset Amount").
(c) The Partnership shall distribute cash in the amount of the Make-Up
Amount to the Non-Benefitting Partner; provided that if CAC is the
Non-Benefitting Partner, then such distribution shall be reduced by the
Blockbuster Unwind Contribution Offset Amount, if any.
(d) The Partnership shall distribute all amounts received from SBPAP
pursuant to Section 9.4(1) (4) (ii) (A) to CAC and all amounts received from
SBPAP pursuant to Section 9.4(1)(4)(ii)(B) to Sony.
(e) All cash, if any, which was received by the Partnership in connection
with the Unwind Closing (including, without limitation, the Blockbuster Unwind
Contribution Amount) and remains after the distributions, if any, required by
Sections 5.4(b), (c) and (d) and the payment, if any, to Pace required pursuant
to Section 9.4 of the SBPAP Agreement, shall be distributed as follows: (i) to
Sony in an amount equal to the Sony Unwind Credit Amount, and (ii) the balance
to CAC. For purposes of this Section 5.4(e), "Sony Unwind Credit Amount" means
the product of (x) Sony's Allocation Percentage at the time of the Unwind
Closing, multiplied by (y) the sum of (A) the Pace Separate Benefit Amount, plus
(B) the portion of the MCA Amount which was paid to the Partnership in cash at
the Unwind Closing or
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which would have been paid to the Partnership in cash at the Unwind Closing but
for the Netting Provisions.
ARTICLE VI
Section 6.1 Management Committee. The overall management and control of
the business and affairs of the Partnership shall be vested in the Management
Committee. The Management Committee will consist of one (1) person designated by
CAC and one (1) person designated by Sony. Each Management Committee member will
serve at the pleasure of the Partner who designated such member and such member
may be replaced, with or without cause, at any time by such designating Partner
upon notice to the other Partners. No action shall be taken by the Management
Committee unless (i) approved by all of the members of the Management Committee,
or (ii) approved by unanimous written consent of all the members of the
Management Committee for action taken without a meeting.
Section 6.2 Meetings. The Management Committee shall meet regularly at
such times and places as it shall determine, provided that any Partner may call
a special meeting of the Management Committee on ten (10) days' advance written
notice to all members of the Committee. Notice may be waived in writing, and
attendance at a meeting shall be deemed to be waiver of notice. The Management
Committee may take action without a meeting by consent in writing signed by all
members of the Management Committee and setting forth the action so taken.
Meetings of the Management Committee may be held by means of conference
telephone or similar communications equipment which permits all members
participating in a meeting to hear and speak to each other. Written minutes of
each Management Committee meeting shall be kept by the Management Committee and
shall be provided to each Partner within fifteen (15) business days following
any such meeting.
Section 6.3 Partnership Major Decisions. No act shall be taken or funds
expended or obligation incurred by (i) the Partnership, (ii) any Partner acting
on behalf of the Partnership, or (iii) any members of the Management Committee,
with respect to a matter within the scope of any "Partnership Major Decision,"
as defined in the following sentence, unless the Partnership Major Decision is
approved (x) unanimously by the members of the Management Committee in advance,
in writing, or (y) unanimously by recorded vote at a meeting of the entire
Management Committee. A "Partnership Major Decision" shall mean any of the
following:
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(a) the adoption of any business plan or budget for any fiscal period;
(b) the making of capital expenditures, except to the extent provided for
in any business plan previously adopted by the Management Committee or in the
SBPAP Agreement;
(c) the sale, lease or exchange of any assets of the Partnership other
than in the ordinary course of business or in accordance with the terms of the
SBPAP Agreement or the making of any Distributions by the Partnership other than
those required by the provisions of this Agreement or the SBPAP Agreement;
(d) the merger or consolidation of the Partnership with or into any other
entity;
(e) entering into any license agreement;
(f) the admission of additional Partners or issuance of additional
interests in the Partnership;
(g) any transactions or payments between the Partnership and any Partner,
Affiliate or partner of a Partner or the Partnership except for transactions and
payments contemplated by (i) this Agreement or the SBPAP Agreement or (ii) any
budget or business plan approved pursuant to Section 6.3(a);
(h) entering into, amending or terminating any employee benefit plan or
contract of employment to which the Partnership is a party;
(i) making any investments other than in the ordinary course of business
or in accordance with the terms of the SBPAP Agreement;
(j) with regard to any federal, state or local tax matter, except as
otherwise provided in Section 8.5:
(i) extending of the statute of limitations on behalf of the
Partnership;
(ii) determining whether or not to appeal or otherwise contest by
administrative or judicial proceedings by administrative or judicial
determination, except as otherwise provided in Section 8.5; or
(iii) entering into any settlement agreement with a taxing
authority;
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(k) entering into any business other than ownership of the partnership
interest in SBPAP;
(l) the leasing of property by the Partnership;
(m) except as provided by the provisions of the SBPAP Agreement or as
contemplated thereby:
(i) the borrowing or lending of money by the Partnership (other than
trade obligations incurred in the ordinary course of business);
(ii) the mortgaging, pledging or hypothecation of any assets of the
Partnership; or
(iii) the assumption of any loan or obligation or the guaranteeing
of any loan or obligation of any party other than the Partnership except
as contemplated by the SBPAP Agreement;
(n) the institution of legal proceedings by the Partnership, other than
routine proceedings for the collection of trade debt;
(o) the settlement of any legal proceedings against the Partnership, other
than routine collection matters brought by or against the Partnership;
(p) the selection and replacement of attorneys and accountants for the
Partnership;
(q) making any political or charitable contributions;
(r) casting any vote by the members of SBPAP's Executive Committee
appointed by the Partnership (provided, however, that if the Management
Committee shall not approve any such vote relating to the annual operating
budget of SBPAP prior to the date that such vote is required to be taken
pursuant to the SBPAP Agreement, the respective members of SBPAP's Executive
Committee representing the Partnership shall each be entitled to vote on such
budget as he or she sees fit);
(s) subject to Section 6.3(r) and Section 6.4 hereof, taking any action or
making any decision required or permitted to be taken by the Partnership in its
capacity as a partner of SBPAP, whether pursuant to the SBPAP Agreement or
otherwise;
(t) amending, modifying, waiving or terminating any provision of the SBPAP
Agreement;
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(u) except as provided by Article X hereof, dissolving or liquidating the
Partnership, or filing any petition under any bankruptcy or insolvency law with
respect to the Partnership;
(v) causing or attempting to cause SBPAP to refinance the Charlotte Loan
with a Replacement Loan having a maturity date later than April 1, 2004; and
(w) making any other decision or taking any other action which either (i)
effects a change in the business strategy of the Partnership or (ii) by any
provision of this Agreement is required to be approved by the Management
Committee or the Partnership, or which could reasonably be expected to have a
material effect on any other Partnership Major Decision.
Section 6.4 Appointment of Members of SBPAP Executive Committee. Each of
Sony and CAC shall be entitled, individually, to appoint (and replace from time
to time in accordance with the provisions of the SBPAP Agreement) one of the
Partnership's two (2) representatives to SBPAP's Executive Committee.
Section 6.5 Indemnification.
(a) To the full extent permitted under the Act, the Partnership shall
indemnify any Person who was or is a party, or is threatened to be made a party,
to any threatened, pending or completed action, suit, or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Partnership) by reason of the fact that he is or was a general
partner, Management Committee member or officer of the Partnership, or is or was
serving at the request of the Management Committee of the Partnership as a
director, management committee member or officer (or in any capacity equivalent
to any of the foregoing) of another corporation, partnership, joint venture,
trust or other enterprise (all of the foregoing being herein collectively
referred to as "Covered Capacities"), against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding 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 Partnership, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or plea of nolo contendre or its equivalent, shall not of itself
create a presumption that the person did not act in good faith and in
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a manner which he reasonably believed to be in and not opposed to the best
interests of the Partnership, and with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) To the full extent permitted under the Act, the Partnership shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending, or completed action or suit by or in the right of
the Partnership to procure a judgment in its favor by reason of the fact that he
is or was serving in any of the Covered Capacities, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit 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 Partnership and except that
no indemnification shall be made in respect to any claim, issue or matter as to
which such action or suit alleges misconduct in the performance of his duty to
the Partnership unless and then only to the extent that the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability, and in view of all the circumstances of the case,
such person is fairly and reasonably entitled to be indemnified for such
expenses which the court shall deem proper.
(c) Anything in Sections 6.5(a) or (b) to the contrary notwithstanding, to
the extent that any Person referred to therein has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to therein or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
(d) Any indemnification under Sections 6.5(a) or (b) (unless ordered by a
court) shall be made by the Partnership only as authorized in the specific case
upon a determination that indemnification is proper in the circumstances because
the indemnitee has met the applicable standard of conduct set forth in Sections
6.5(a) or (b).
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Partnership in advance of the final disposition of
such action, suit or proceeding, as authorized by the Management Committee in
the specific case upon receipt of any undertaking by or on behalf of the
indemnitee to repay such amount unless it shall ultimately be determined that he
is entitled to be indemnified by the Partnership.
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(f) The indemnification provided by this Section 6.5 shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any statute, agreement, or otherwise, and shall continue as to a
person who has ceased to serve in a Covered Capacity and shall inure to the
benefit of his successors in interest, including but not limited to his heirs,
executors, and administrators.
(g) The Partnership shall have power to purchase and maintain insurance on
behalf of any person who is or was serving in any of the Covered Capacities and
incurred by him in any such capacity or arising out of his status as such,
whether or not the Partnership would have the power to indemnify him against
such liability under the provisions of this Section 6.5.
(h) Each Person who is or was an employee or agent of the Partnership or
an employee or agent of a general partner, or who is or was serving at the
request of the Management Committee of the Partnership as an employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
may be indemnified (or covered by insurance), in the manner and to the extent
provided in this Section 6.5 for persons acting in Covered Capacities, at the
discretion of the Management Committee.
(i) The Partnership shall have the right to assume the defense of any
action, suit or proceeding in connection with which any Person is entitled to
indemnification under this Section 6.5 and to select counsel for such purpose.
No Person entitled to indemnification hereunder shall consent to entry of any
judgment or enter into any settlement in connection with any such action, suit
or proceeding without the consent of the Partnership, and the Partnership shall
not, without the consent of each such Person that is entitled to
indemnification, consent to entry of any judgment or enter into any settlement
in connection with such action, suit or proceeding which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Person of a release from all liability in respect to such claim or litigation.
(j) Indemnification under this Section 6.5 shall not be available to any
Person in the case of any action, suit or proceeding brought (i) against the
Partnership by such Person or (ii) against such Person by or on behalf of the
Partnership.
(k) The indemnification obligations set forth in this Section 6.5 shall be
recourse to the assets of the
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Partnership only and no Partner shall be personally liable in respect thereof.
Section 6.6 Partnership Professional Services. Subject to Section 13.3
hereof, if the Partnership requires any legal, accounting or other professional
services during the term of the Partnership, the expenses of such professional
services will be borne by the Partnership.
ARTICLE VII
Section 7.1 Noncompetition.
(a) For so long as the Partnership is bound by Sections 12.1 and 12.3 of
the SBPAP Agreement, each Partner agrees that it will, and will cause each of
the Sony/Block Related Parties affiliated with it to, comply with the provisions
thereof. At such time, if any, as the Partners or their Affiliates determine to
enter into any new business as contemplated by the last sentence of Section 2.3
hereof, the Partners agree that such Persons shall be obligated to discuss in
good faith whether specific noncompetition or exclusivity restrictions relating
to such new businesses and binding the Partners are appropriate and, if the
Partners agree that such restrictions are appropriate, they shall use their good
faith best efforts to promptly negotiate and agree upon the terms thereof and
such restrictions, as so negotiated and agreed upon, shall be reflected in an
amendment to this Agreement.
(b) Upon breach of any provision of this Section 7.1, the Partnership will
be entitled to injunctive relief, since the remedy at law would be inadequate
and insufficient. In addition, the Partnership and non-Defaulting Partner will
be entitled to the rights and remedies set forth in Article XVI. If any
provision of this Section 7.1, as applied to any party or to any circumstances,
is adjudged by a court to be invalid or unenforceable, the same will in no way
affect any other provision of this Section or any other part of this Agreement,
the application of such provision in any other circumstances or the validity or
enforceability of this Agreement. If any such provision, or any part thereof, is
held to be unenforceable because of the duration of such provision or the area
covered thereby, the parties agree that the court making such determination will
have the power to reduce the duration and/or area of such provision, and/or to
delete specific words or phrases, and in its reduced form such provision will
then be enforceable and will be enforced.
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ARTICLE VIII
Section 8.1 Fiscal Year: The fiscal year of the Partnership for financial
and book accounting purposes and for federal, state and local income and other
tax purposes shall begin on November 1 and end on October 31 of each year during
the term of the Partnership, except that the Partnership's initial fiscal year
for all purposes shall begin on the Existing Facility Closing Date.
Section 8.2 Books and Records. The Management Committee shall establish,
maintain and keep accurate, full and complete books of account and records (the
"Partnership Books") showing the assets and liabilities, revenues and
expenditures, and all other aspects of the operations, transactions and
financial condition of the Partnership including changes in the respective
Capital Accounts of the Partners. The Partnership Books shall be maintained at
the principal office of the Partnership or at such other place reasonably
designated by the Management Committee and each Partner shall have access to the
Partnership Books during ordinary business hours upon reasonable prior notice.
Section 8.3 Financial Reports. The Management Committee shall cause to be
submitted to each Partner, within thirty (30) working days after the end of each
month and within one hundred twenty (120) days after the end of each fiscal
year, internal unaudited financial statements for that month or fiscal year,
respectively, showing the revenues and expenditures, and the assets and
liabilities, for that period of each of the entities in which the Partnership
holds an equity interest. At the request of a Partner and at such Partner's
expense, the Management Committee shall have any of such financial statements
for a full fiscal year audited by a qualified independent public accounting firm
which may be the accounting firm retained by either of the Partners for its
individual auditing needs, or the accounting firm retained by either of the
Partners' Affiliates.
Section 8.4. Bank Accounts. All receipts, funds and income of the
Partnership shall be deposited in an account or accounts in the name of the
Partnership.
Section 8.5 Tax Matters Partner.
(a) CAC is hereby appointed the initial "Tax Matters Partner" of the
Partnership for all purposes pursuant to Sections 6221 through 6231 of the Code
(the "Tax Matters Partner"). With respect to the Partnership' s fifth fiscal
year, Sony shall serve as the Tax Matters Partner. Thereafter, CAC and Sony
shall rotate as the Tax Matters
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Partner every five years. The Tax Matters Partner will (i) furnish to each
Partner or Assignee affected by an audit of the Partnership income tax returns a
copy of each notice or other communication received from the Internal Revenue
Service or applicable state authority, (ii) keep each such Partner and Assignee
informed of any administrative or judicial proceeding, as required by Section
6623(g) of the Code, and (iii) allow each such Partner and Assignee an
opportunity to participate in all such administrative and judicial proceedings.
(b) The Tax Matters Partner has the authority to do all or any of the
following:
(i) file a petition as contemplated in Sections 6226(a) or 6228 of
the Code;
(ii) intervene in any action as contemplated in Sections 6226(b) of
the Code;
(iii) file any request contemplated in Sections 6227(b) of the Code;
and
(iv) enter into an agreement extending the period of limitations as
contemplated in Section 6229(b)(1)(B) of the Code.
(c) The Partnership is not obligated to pay any fees or other compensation
to the Tax Matters Partner in its capacity as such. However, the Partnership
will reimburse the Tax Matters Partner for any and all out-of-pocket costs and
expenses (including reasonable attorneys' and other professional fees, including
any applicable tax preparation fees) incurred by it in its capacity as Tax
Matters Partner. Each Partner who elects to participate in Partnership
administrative tax proceedings will be responsible for its own expenses incurred
in connection with such participation. In addition, the cost of any adjustments
to a Partner and the cost of any resulting audits or adjustments of a Partner's
tax return will be borne solely by the affected Partner.
(d) The Partnership will indemnify, defend and hold the Tax Matters
Partner harmless from and against any loss, liability, damage, cost or expense
(including reasonable attorneys' and other professional fees) sustained or
incurred as a result of any act or decision concerning Partnership tax matters
and within the scope of such Partner's responsibilities as Tax Matters Partner,
so long as such act or decision was not made fraudulently or in bad faith and
did not constitute willful or wanton misconduct or gross negligence. The
Partnership shall have the right to
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assume the defense of any action, suit or proceeding in connection with which
the Tax Matters Partner is entitled to indemnification pursuant to this Section
8.5(d) and to select counsel for such purpose. The Tax Matters Partner shall not
consent to entry of any judgment or enter into any settlement in connection with
any such action, suit or proceeding without the consent of the Partnership, and
the Partnership shall not, without the consent of the Tax Matters Partner,
consent to entry of any judgment or enter into any settlement in connection with
such action, suit or proceeding which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Person of a release from
all liability in respect to such claim or litigation.
ARTICLE IX
Section 9.1 Assignments by Partners and Assignees. Except as permitted by
and in compliance with Article XV of the SBPAP Agreement, during the term of
this Agreement no Partner may, directly or indirectly sell, transfer, assign,
give, pledge, encumber, alienate or otherwise dispose of (voluntarily or
involuntarily, by operation of law or otherwise) all or any part of its interest
in the Partnership or any of its rights or obligations under this Agreement,
without the prior unanimous consent of the Management Committee, except that any
Partner may transfer all or any portion of its interest in the Partnership to a
corporation, partnership or other entity which is directly or indirectly wholly
owned by, or which directly or indirectly wholly owns, such Partner, or which
directly or indirectly acquires all of the stock or substantially all of the
assets and assumes substantially all of the liabilities of such Partner's parent
corporation (including the Partner's obligations under this Agreement). Such
transfer of a Partner's interest shall be permitted only upon the condition that
the transferor unconditionally and irrevocably guarantees the payment and
performance of the transferee's obligations under this Agreement and complies
with the applicable provisions of the SBPAP Agreement. In the event of any such
transfer, it is the Partner's intention that this Partnership shall continue in
existence without termination following such transfer. Moreover, notwithstanding
the foregoing, no transfer otherwise permitted by this Section 9.1 shall be made
if it would cause a termination of the Partnership or SBPAP for Federal income
tax purposes pursuant to Section 708(b) of the Code and such termination would
result in materially adverse tax consequences to the other Partners or the
Partnership (or adverse tax consequences to Pace, to the extent indemnification
for the consequences of such a termination
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is required to be provided to Pace pursuant to the SBPAP Agreement), for which
such other Partners are not indemnified to their reasonable satisfaction (or
Pace is not indemnified to the extent required by the SBPAP Agreement) by or on
behalf of the transferring Partner. Nothing herein contained shall be deemed to
prohibit a public offering of securities of any direct or indirect parent
corporation of any Partner.
Section 9.2 Buy/Sell Notice. Subject to the provisions of this Agreement,
(i) Sony shall have the right to deliver a Buy/Sell Notice to WAC and CAC, and
(ii) WAC and CAC shall have the right to deliver a Buy/Sell Notice to Sony. A
Buy/Sell Notice may be given only after the second anniversary of the Existing
Facility Closing Date. For purposes of this Section 9.2, the following terms
shall have the meanings set forth below:
"Buy/Sell Notice" shall mean a written notice delivered pursuant to this
Section 9.2 in which the Delivering Partner unconditionally offers to (i)
purchase all of the Deciding Partner's Partnership Interest at a cash purchase
price ("Buy Price") designated in such notice or (ii) sell all of the Delivering
Partner's Partnership Interest to the Deciding Partner at a cash purchase price
("Sell Price") designated in such notice.
"Deciding Partner" means (x) Sony, if the Delivering Partner is WAC or
CAC, and (y) CAC, if the Delivering Partner is Sony.
"Delivering Partner" means the Person delivering the Buy/Sell Notice
pursuant to this Section 9.2.
Any Buy/Sell Notice delivered by Sony pursuant to this Section 9.2 shall offer
to purchase the Partnership Interests of WAC and CAC and allocate the Buy Price
between WAC and CAC based upon their respective Allocation Percentages. Any
Buy/Sell Notice delivered by CAC pursuant to this Section 9.2 shall offer to
sell the Partnership Interests of WAC and CAC and allocate the Sell Price
between WAC and CAC based upon their respective Allocation Percentages. In order
for a Buy/Sell Notice to be validly given pursuant to this Article IX, the Buy
Price designated therein must be at least five percent (5%) greater than the
Sell Price designated therein. Notwithstanding the foregoing provisions of this
Section 9.2, a Partner shall not have the right to give a Buy/Sell Notice (a) if
such Partner is then a Defaulting Partner, or (b) on more than one (1) occasion
during any Fiscal Year. In the event of a transfer pursuant to a Buy/Sell
Notice, it is the intention of the Partners that, so long as there is more than
one
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Partner in the Partnership upon the Closing described in Section 9.5 hereof, the
Partnership shall continue in existence without termination following such
transfer.
Section 9.3 Deciding Partner Elects to Sell or Buy; Appraisal by Deciding
Partner. Within one hundred twenty (120) days after the date of receipt of a
Buy/Sell Notice, the Deciding Partner shall deliver written notice to the
Delivering Partner stating whether the Deciding Partner agrees to accept (i) the
Delivering Partner's offer to sell all of its Partnership Interest to the
Deciding Partner for the Sell Price or (ii) the Delivering Partner's offer to
purchase all of the Deciding Partner's Partnership Interest for the Buy Price.
If the Deciding Partner fails to deliver such notice within one hundred twenty
(120) days after receipt of the Buy/Sell Notice, then the Deciding Partner shall
be deemed to have accepted the Delivering Partner's offer to purchase all of
the Deciding Partner's Partnership Interest for the Buy Price. Notwithstanding
the foregoing, in the event that the Deciding Partner delivers to the Delivering
Partner within one hundred ten (110) days following the Deciding Partner's
receipt of the Buy/Sell Notice a written appraisal of an appraiser selected by
the Deciding Partner who is experienced in the appraisal of entertainment
related businesses (provided, however, that so long as the Partnership continues
to hold its interest in SBPAP, such appraiser shall also be experienced in the
appraisal of real estate), which appraisal states that the fair market value of
the Deciding Partner's Partnership Interest is an amount equal to or greater
than 110% of the Buy Price, then the Buy Price shall be equal to the fair market
value of the Deciding Partner's Partnership Interest set forth in the appraisal;
provided, however, that (i) in order to exercise the right to obtain an
appraisal the Deciding Partner shall notify the Delivering Partner within
forty-five (45) days after the giving of the Buy/Sell Notice that the Deciding
Partner desires to obtain an appraisal of the fair market value of its
Partnership Interest, and (ii) upon receipt of such appraisal which provides for
an increased Buy Price (i.e., over 110%), the Delivering Partner shall have the
option, exercisable by giving notice to the Deciding Partner within ten (10)
days following its receipt of the appraisal to rescind the Buy/Sell Notice. Upon
the election by the Delivering Partner to rescind the Buy/Sell Notice as
provided in the preceding sentence, the obligations of the Partners with respect
to such Buy/Sell Notice shall terminate.
Section 9.4 Release or Indemnification from SBPAP Obligations. In the
event that a Partner sells its Partnership Interest pursuant to the provisions
of Section 9.3, then the Acquiring Partner shall cause the selling
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Partner (the "Selling Partner") and the Selling Partner's Affiliates to be
released from or be indemnified for any and all liability or obligation
(including, without limitation, in respect of existing guaranties of SBPAP debt
to third party lenders and the unpaid balance, if any, of the Sony/Block Notes,
and obligations to make new capital contributions, loans or advances to SBPAP or
guarantees for the benefit of SBPAP) pursuant to the SBPAP Agreement. Any such
indemnity shall be guaranteed in accordance with the provisions of Section 13.17
hereof and shall be secured by a first priority security interest in and to all
of the Acquiring Partner's right, title and interest in the Partnership, SEPAP
and their respective assets. Such guaranty and security agreement shall be in
form and substance reasonably satisfactory to the Selling Partner.
Section 9.5 Closing of the Sale. The sale of all of a Partner's
Partnership Interest required to be sold pursuant to an offer and an acceptance
made pursuant to this Article IX shall close on the date which is one hundred
eighty (180) days after the date on which the Buy/Sell Notice is received by the
Deciding Partner (the "Closing"). The Closing shall occur at such place in Ft.
Lauderdale, Florida or New York, New York as may be designated by the Deciding
Partner. At the Closing, the following obligations shall apply:
(a) The Acquiring Partner shall deliver the Buy Price or the Sell Price,
as appropriate in immediately available funds to the Selling Partner;
(b) The Selling Partner shall be obligated to execute such instruments of
assignment as may be reasonably required by the Acquiring Partner containing
warranties that such Partnership Interest is being conveyed to the Acquiring
Partner or its designee free and clear of all liens, claims, charges and
encumbrances; and
(c) The Acquiring Partner shall execute (and shall cause its parent
corporation named in Section 13.17 hereof to execute) such instruments as may be
reasonably required by the Selling Partner in which the Acquiring Partner
indemnifies and holds harmless the Selling Partner from all loss, cost or claim
associated with or arising out of any of the Partnership's then existing
liabilities and obligations, other than any liabilities and obligations incurred
by the Selling Partner on behalf of the Partnership in violation of this
Agreement.
Section 9.6 Interests in SMP Partnership. For purposes of this Article IX,
all references to Sony's Partnership Interest shall be deemed to include all of
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Sony's and its Affiliates' right, title and interest in and to the SMP
Partnership, a general partnership formed under the laws of the State of New
York between Sony (or an Affiliate thereof) and SM/Pace, Inc. on the Existing
Facility Closing Date ("Sony's SMP Interest"). Sony shall not (I) sell, assign
or otherwise transfer Sony's SMP Interest (other than to an Affiliate), or (II)
mortgage, pledge or otherwise encumber Sony's SMP Interest, in either case
without the prior written consent of CAC. If Sony is the Selling Partner and
Sony is not the holder of Sony's SMP Interest, Sony shall cause its Affiliate
that is the holder thereof to take all such action and execute all such
instruments as may be reasonably required to transfer Sony's SMP Interest to
Blockbuster or its designees at the Closing in accordance with this Article IX.
ARTICLE X
Section 10.1 Dissolution of the Partnership. The Partnership shall be
dissolved upon the happening of any of the following events or otherwise as
provided by the Act:
(a) expiration of the term of the Partnership set forth in Section 2.6;
(b) the unanimous action of the Management Committee to terminate the
Partnership;
(c) the occurrence of an Event of Withdrawal with respect to a Partner and
the failure by a designee of the Non-Withdrawing Partner to purchase the
Partnership Interest of the withdrawing Partner as provided in Section 10.2
below; or
(d) as provided in item (i) of Section 11.2(e) below.
For purposes of this Article X, whenever an Event of Withdrawal shall occur with
respect to either WAC or CAC, WAC and CAC, jointly, shall be deemed to be the
"Withdrawing Partner" and Sony shall be deemed to be the "Non-Withdrawing
Partner."
Section 10.2 Option to Purchase Partnership Interest of Withdrawing
Partner. Upon the occurrence of an Event of Withdrawal with respect to Sony or
Blockbuster, the Non-Withdrawing Partner shall have the option of nominating a
designee of its choice to purchase the entire Partnership Interest of the
Withdrawing Partner, which option shall be exercisable by the giving of written
notice to the Withdrawing Partner or its legal representatives within one
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hundred twenty (120) days after the Non-Withdrawing Partner first has actual
knowledge of the Event of Withdrawal. The purchase price for the Partnership
Interest of the Withdrawing Partner and the manner of payment thereof, and the
procedures for a closing of such purchase, shall be the same as if the
Withdrawing Partner were a Defaulting Partner and its Partnership Interest was
being purchased pursuant to the provisions of Section 11.2(d) hereof (except
that the closing shall occur on that date designated by the designee of the
Non-Withdrawing Partner which is within forty-five (45) days from the exercise
of such option). The option set forth in this Section 10.2 is being provided in
view of the fact that the prospects for the Partnership and the Partnership
Interest of the Non-Withdrawing Partner will be placed in jeopardy upon the
occurrence of an Event of Withdrawal, all with potential damages to the
Non-Withdrawing Partner and the Partnership which cannot be foreseen. So long
as, following the exercise of such option, there are at least two Partners, it
is the intention of the Partners that the Partnership shall continue in
existence without termination following such exercise.
Section 10.3 Dissolution in the Event Option is Not Exercised. Upon the
occurrence of an Event of Withdrawal and the failure by the designee of the
Non-Withdrawing Partner to exercise the option to purchase the Partnership
Interest of the withdrawing partner as provided in Section 10.2 above, the
provisions of paragraphs (a) through (d) below shall control such dissolution
notwithstanding anything to the contrary contained herein, including without
limitation, in Section 10.5 below.
(a) The Withdrawing Partner shall thereafter be deemed to be an assignee
of a Partner's Interest (and accorded only the limited rights provided pursuant
to the Partnership Act to such an assignee) and shall have no voting, consent or
approval rights under Section 6.3 or any other provision of this Agreement, and
the Non-Withdrawing Partner may send such notice or other advice of the
dissolution to each such Person as the Non-Withdrawing Partner may deem
appropriate and necessary under the circumstances.
(b) The Non-Withdrawing Partner shall settle the business of the
Partnership as expeditiously as the nature of such business will permit.
(c) The Non-Withdrawing Partner shall be entitled to, but shall not be
obligated to seek or obtain administration of the assets of the Partnership by a
receiver, referee, trustee or court of bankruptcy.
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(d) In the event of a liquidation and distribution pursuant to this
Article X as a result of the occurrence of an Event of Withdrawal, the
Withdrawing Partner shall have no power or authority to bind the Partnership or
the Partners but shall cooperate with and, to the extent requested, assist the
Non-Withdrawing Partner in the dissolution and winding up of the Partnership and
the distribution of the assets thereof.
Upon the occurrence of an Event of Withdrawal, whether or not the option
referred to in Section 10.2 hereof is exercised, if the Event of Withdrawal
shall result in indemnification of Pace being required pursuant to Section 13.9
of the SBPAP Agreement, the Withdrawing Partner shall provide such indemnity to
Pace (and indemnify the Non-Withdrawing Partner on the same terms as it so
indemnifies Pace pursuant to said Section 13.9).
Section 10.4 Final Accounting. Upon dissolution of the Partnership, an
accounting shall be made of the accounts of each Partner and of the
Partnership's assets, liabilities and operations, from the date of the last
previous accounting to the date of dissolution.
Section 10.5 Liquidation; Distribution. In the event of the dissolution of
the Partnership, the affairs of the Partnership shall be wound up in an orderly
manner and the assets of the Partnership shall be distributed in accordance with
a liquidation plan, which shall provide for the distribution of such assets in
the following order of priority:
(a) first, to the repayment of the debts and liabilities of the
Partnership (other than loans or advances from Partners);
(b) second, to the establishment of any reserves for any contingent or
unforeseen liabilities or obligations of the Partnership, as provided in the
liquidation plan;
(c) third, to the repayment of the outstanding principal and interest on
any loans or advances that may have been made by any of the Partners to the
Partnership, but if the amount available for repayment of such loans or advances
shall be insufficient, then to the Partners on account thereof in proportion to
their respective advances; and
(d) fourth, to the Partners in accordance with and to the extent of their
positive Capital Account balances, after taking into account all Capital Account
adjustments for the taxable year during which the liquidation occurs.
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Section 10.6 Approval of Liquidation Plan. In instances in which
liquidation of the Partnership is the result of a dissolution pursuant to
Section 10.1(a) or (b), the liquidation plan shall require the approval of the
Partners. In instances in which the liquidation of the Partnership is the result
of a dissolution pursuant to Section 10.1(c), then the liquidation plan shall be
approved by the Non-Withdrawing Partner; provided that such plan conforms to the
requirements of Sections 10.5(a)-(d) above; and provided further that the
appraised value, as determined by a nationally recognized investment banking or
appraisal firm, of the assets other than cash distributed to each Partner shall
bear substantially the same proportion to the appraised value of all assets so
distributed to the Partners, as such Partner's positive Capital Account balance
bears to the aggregate of the positive Capital Account balances of all Partners.
ARTICLE XI
Section 11.1 Default. If any Partner (the "Defaulting Partner") fails to
perform any of its material obligations contained in this Agreement, or
materially violates the terms of this Agreement, then the Non-Defaulting Partner
shall have the right to give the Defaulting Partner a notice (the "Default
Notice") specifically setting forth the nature of such failure or violation and
stating that such Defaulting Partner shall have a period of ten (10) days to pay
any sums of money specified therein as due and owing to the Partnership or to
any Partner or, if the failure or violation is a non-monetary default and is
capable of being cured, thirty (30) days to cure such default specified therein.
If the monies specified in the Default Notice are not paid within such ten (10)
day period, or if such non-monetary failures or violations are not capable of
being cured or, if capable of being cured, such Defaulting Partner has not cured
such non-monetary failures or violations within such thirty (30) day period,
then a "Partner Default" shall be deemed to have occurred with respect to such
Partner. If a Defaulting Partner cures in all material respects all of its
failures or violations which are capable of being cured within the aforesaid
notice and cure periods, then such defaults shall be deemed no longer to exist
and provided that no failure or violation exists which is not capable of being
cured, such Partner shall be deemed no longer to constitute a Defaulting
Partner. For purposes of this Article XI, WAC shall be deemed to be a Defaulting
Partner at such time as CAC is a Defaulting Partner and CAC shall be deemed to
be a Defaulting Partner at such time as WAC is a Defaulting Partner. For
purposes of this Agreement, "Non-Defaulting
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Partner" means (x) Sony if the Defaulting Partner is either WAC or CAC, and (y)
CAC if the Defaulting Partner is Sony.
Section 11.2 Rights and Remedies. Upon the occurrence of a Partner
Default, the Non-Defaulting Partner and the Partnership shall each have the
following rights, options and remedies which shall be cumulative and may be
exercised concurrently or singly in the sole and absolute discretion of the
Non-Defaulting Partner:
(a) The right to bring an action at law by or on behalf of Partnership or
the Non-Defaulting Partner in order to recover the amounts owed, if any, and any
incidental or consequential damages arising from such default (including,
without limitation, reasonable attorneys fees and disbursements incurred by the
Partnership or the Non-Defaulting Partner, as the case may be, in prosecuting
any such action).
(b) The right to bring any proceeding in the nature of injunction,
specific performance or other equitable remedy, it being acknowledged by each of
the Partners that damages at law may be an inadequate remedy for such default.
(c) If a sum of money is owed to the Partnership (whether a capital
contribution or a loan), the Non-Defaulting Partner may advance the sum of money
owed to the Partnership by the Defaulting Partner with the following results:
(i) the sum thus advanced shall be deemed to be a loan from the
Non-Defaulting Partner to the Defaulting Partner;
(ii) the principal balance of such deemed loan shall be due and
payable in whole upon written demand from the Non-Defaulting Partner to
the Defaulting Partner;
(iii) the principal balance of such deemed loan shall bear interest
at an interest rate equal to the lesser of (1) six percent (6%) per annum
over the prime rate of interest per annum announced, from time to time, by
major money center banks in the United States and as published in The Wall
Street Journal, compounded monthly or (2) the maximum nonusurious interest
rate permitted by applicable law from time to time in effect; and
(iv) all distributions from the Partnership that would otherwise be
made to the Defaulting Partner (whether before or after dissolution of the
Partnership) shall, instead, be paid to the Non-Defaulting Partner until
such
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loan and all interest accrued thereon has been repaid in full.
(d) If, as a result of the nature of the default, failure, breach or
omission which gave rise to such Partner Default, the damages suffered or
incurred as a result thereof by the Non-Defaulting Partner are difficult or
impossible to ascertain, then the Non-Defaulting Partner shall have, as
liquidated damages and not as a penalty, the right and option to purchase all,
but not a portion of, the Partnership Interest of the Defaulting Partner at a
purchase price equal to seventy five (75%) percent of the then balance in the
Defaulting Partner's Capital Account, which shall be payable in ten (10) equal
annual installments of principal, together with interest at a variable rate
equal to the Short Term Rate, with the first installment due on the first
anniversary following the closing hereinafter referred to; provided that where
either WAC or CAC is the Defaulting Partner, Sony may only elect to purchase the
Partnership Interests of both such Persons. The option to purchase the interest
of the Defaulting Partner shall be exercisable on or before the ninetieth (90)
day following the expiration of the period of time in which the Defaulting
Partner could have cured such default (or if such default is not capable of
being cured, on or before the ninetieth (90) day following the giving of the
Default Notice) by the giving of written notice to the Defaulting Partner. The
closing of any such purchase shall take place on a date and at a place
designated by the Non-Defaulting Partner (but the date designated for such
closing shall in any event be a date which is not later than (30) days from the
exercise of such option). At the closing, the Non-Defaulting Partner shall
deliver to the Defaulting Partner the required consideration in exchange for an
instrument or instruments (and such other documents as counsel to the
Non-Defaulting Partner may reasonably request) validly assigning the interest of
the Defaulting Partner to the Non-Defaulting Partner free and clear of all
liens, claims and encumbrances. The obligation to pay the purchase price to the
Defaulting Partner shall be an obligation of the Non-Defaulting Partner alone
and, in any event, shall not be an obligation included within the provisions of
Section 13.17 hereof. Any Defaulting Partner whose Partnership Interest is
purchased under the provisions of this clause (d) shall remain liable for its
Percentage Interest of the Partnership's liabilities in existence at the time of
closing of such purchase. The Non-Defaulting Partner may, at its sole option,
designate any third party of its choosing to exercise the option granted to it
in this clause (d).
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(e) If, in connection with a Division of Responsibility, indemnification
of Pace shall be required pursuant to Section 13.9 of the SBPAP Agreement, then
at the option of the Non-Defaulting Partner, the Defaulting Partner shall either
(i) provide such indemnity to Pace (and indemnify the Non-Defaulting Partner on
the same terms as it so indemnifies Pace pursuant to said Section 13.9), in
which case the Partnership shall dissolve pursuant to Article X hereof, or (ii)
fully cooperate with Pace and the Non-Defaulting Partner in order to restructure
the Division of Responsibility so as to achieve as nearly as possible the
results contemplated by Section 17.3 of the SBPAP Agreement without causing a
termination of SBPAP under Section 708(b) of the Code in which case the
Partnership shall not dissolve pursuant to Article X hereof. Each Partner hereby
irrevocably constitutes and appoints the other Partners, and each officer of the
other Partners, and their respective successors, acting singly, as its true and
lawful attorney-in-fact, with full right of substitution, in its name, place and
stead, to take all action, and to make, execute, acknowledge, swear to and file
any document, instrument, agreement or amendment, in each case that may be
required to effectuate the restructuring referred to in the preceding sentence.
ARTICLE XII
Section 12.1 Indemnification.
(a) Each Partner (the "Indemnifying Party") agrees to indemnify and hold
harmless the other Partners and the Partnership (the "Indemnified Parties") from
and against any and all claims, demands, actions, losses, damages, assessments,
charges, costs, expenses (including, without limitation, interest, penalties and
reasonable attorneys' fees), or judgments against the Indemnified Parties
(hereafter, "Compensable Damage"), resulting from or arising out of:
(i) any breach of the Indemnifying Party's obligations under this
Agreement;
(ii) any action or conduct by the Indemnifying Party relating to the
Partnership or this Agreement outside the scope of the authority of such
Indemnifying Party; and
(iii) any grossly negligent or intentional wrongful action or
omission of the Indemnifying Party or any employee, agent or
representative of the Indemnifying Party relating to the Partnership or
this Agreement.
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(b) If any claim relating to the matters indemnified pursuant to this
Section 12.1 is asserted against an Indemnified Party which may result in any
Compensable Damage, then the Indemnified Party shall give notice to the
Indemnifying Party as provided by this Agreement within thirty (30) days of the
Indemnified Party's knowledge of such claim. Upon receipt of such notice, the
Indemnifying Party shall have the right to undertake, by counsel or
representatives of its own choosing, the good faith defense, compromise or
settlement of the claim, such defense, compromise or settlement to be undertaken
on behalf of and for the account and risk of the Indemnified Party. The
Indemnified Party shall cooperate with the Indemnifying Party in such defense at
the Indemnifying Party's expense and provide the Indemnifying Party with all
information and assistance reasonably necessary to permit the Indemnifying Party
to settle and/or defend any such claim. No settlement of any claim shall be
effected without the consent of both the Indemnifying Party and the Indemnified
Party, which consent shall not be unreasonably withheld, conditioned or delayed.
(c) Except as otherwise explicitly herein provided (including, without
limitation, pursuant to Sections 3.1, 3.4 and 12.1 hereof), as among the
Partners, no Partner shall be liable or bear responsibility for more than its
proportionate share (based on its Allocation Percentage) of each and all of the
liabilities and obligations of the Partnership. Except as otherwise explicitly
herein provided (including, without limitation, pursuant to Sections 3.1, 3.4
and 12.1 hereof), in the event that (whether before or following any dissolution
of the Partnership) any Partner shall be required to pay, discharge or otherwise
bear responsibility for any amount of any liability or obligation of the
Partnership in excess of such Partner's proportionate share thereof (determined
as provided above), each other Partner hereby agrees to indemnify, hold harmless
and reimburse (directly or through the Partnership) such Partner upon demand
against and for such other Partner's proportionate share of such excess. It is
the intention of this contribution clause that, except for any Partner's
liability arising explicitly hereunder (including, without limitation, pursuant
to Sections 3.1, 3.4 and 12.1 hereof), following the operation of this clause
and without relieving any former Partner of any responsibility or obligation it
may have, each Partner will have borne exactly its proportionate share of the
liability or obligation of the Partnership at issue determined with reference to
such Partner's Allocation Percentage.
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<PAGE>
ARTICLE XIII
Section 13.1 Survival. In the event of any termination of this Agreement,
all provisions of Section 13.4 below and of Section 12.1 above shall survive
such termination and remain in full force and effect.
Section 13.2 Further Assurances. Each Partner agrees that it will do any
and all things and take any and all actions reasonably requested by any other
Partner to fulfill the purposes of this Agreement.
Section 13.3 Expenses. Each Partner will pay all of its expenses incurred
in connection with the negotiation of this Agreement and the SBPAP Agreement,
the performance of its obligations hereunder and thereunder and the consummation
of the transactions contemplated hereby and thereby.
Section 13.4 Confidentiality. The Partners acknowledge that they and their
respective Affiliates are now and may in the future be engaged in a number of
businesses related to and/or competitive with each others' businesses and,
accordingly, no Partner wishes to receive from any other Partner any
proprietary, confidential or non-public information relating to such other
Partner's or its Affiliates' businesses. Each Partner will, and will cause its
Affiliates to, use reasonable safeguards to prevent the disclosure to the
Partnership or the other Partners and their Affiliates of any of its
proprietary, confidential or non-public information. Each Partner agrees not to
disclose, or permit or suffer any of its Affiliates to disclose, any
proprietary, confidential or non-public information of the Partnership or the
other Partners except for disclosures to such Partner's or its Affiliate's
directors, officers, employees, agents and representatives who need to know such
information and who shall be under similar obligations not to use or disclose
the information. Its is not anticipated that any of the information covered by
this Section 13.4 will constitute technical proprietary or confidential
information. Notwithstanding the foregoing, information shall not be deemed
proprietary, confidential or non-public if such information (a) was or is
publicly disclosed or otherwise made widely available other than through the
fault of the receiving Partner or its Affiliate, (b) was or is obtained by such
Partner from sources other than the Partnership or independently developed by
such Partner without the use of any information, property or personnel of the
Partnership or (c) was required by law to be disclosed; provided, that prior to
disclosing information pursuant to (c) above, a Partner shall, if permitted by
law, provide to the Partnership and
48
<PAGE>
each other Partner reasonable notice and an opportunity to challenge the
disclosure before appropriate authorities; and further provided that to the
extent that disclosure pursuant to (c) above is required under the Securities
Act of 1933, as amended, or any rule or regulation thereunder ("1933 Act"), or
the Securities Exchange Act of 1934, as amended, or any rule or regulation
thereunder ("1934 Act"), the Partner or Affiliate responsible for such
disclosure, if requested by the other Partner, shall use its best efforts to
obtain confidential treatment thereof pursuant to Rule 406 of the 1933 Act, or
any successor rule, or Rule 24b-2 of the 1934 Act, or any successor rule, as
appropriate.
Section 13.5 Binding Effect. This Agreement constitutes a valid and
binding obligation of each Partner, enforceable in accordance with its terms.
Section 13.6 Other Activities. Each of the Partners acknowledges that it
and each of its Affiliates is engaged and may in the future be engaged in a
number of businesses related to the business of the Partnership and (i) except
as specifically provided in Section 7.1 hereof, nothing in this Agreement is
intended to prohibit any Partner or any of its Affiliates from owning, managing,
operating, investing and participating in their current businesses and
investment interests or from owning, managing, operating, investing and
participating in additional businesses and investment interests, whether or not
any such business or activity is competitive with the business of the
Partnership and (ii) neither the Partnership nor any other Partner shall have
any rights in or to any such businesses or investments of such Partner or its
Affiliates or any income or profits derived therefrom.
Section 13.7 Transactions with Partners. No contract, agreement, license
or other instrument or transaction between the Partnership and a Partner, any
officer, director, shareholder or partner of a Partner, or any two or more such
persons or entities, or between the Partnership and any other corporation,
partnership, association or other organization in which any one or more of the
aforementioned persons is a director or officer, or has a financial interest,
which is approved by the vote of the entire Management Committee, shall be void
or voidable solely because of said relationship.
Section 13.8 Inspection. Each Partner or its authorized representative may
examine the Partnership Books or other financial records of the Partnership as
provided in Section 8.2 of this Agreement, and may examine or inspect any of the
property or assets owned or used by the
49
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Partnership during ordinary business hours upon prior reasonable notice.
Section 13.9 Notices. All notices, offers, approvals, elections, consents,
acceptances, waivers, reports, requests and other communications required or
permitted to be given hereunder (all of the foregoing hereinafter collectively
referred to as "Communications") shall be in writing and shall be deemed to have
been duly given if delivered personally with receipt acknowledged or sent by
registered or certified mail or equivalent, if available, return receipt
requested, or by facsimile, telex or cablegram (which shall be confirmed by a
writing sent by registered or certified mail or equivalent on the same day that
such facsimile, telex or cablegram is sent), or by recognized overnight courier
for next day delivery, addressed or sent to the parties at the following
addresses and facsimile numbers or to such other or additional address or
facsimile number as any Partner shall hereafter specify by Communication to the
other Partner:
If to SBAC, WAC or CAC:
Blockbuster Entertainment Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301-1860
Fax: (305) 833-3929
Attention: Thomas W. Hawkins, Esq.
If to Sony:
YM Corp.
% Sony Corporation of America
9 West 57th Street
New York, NY 10019
Fax: (212) 418-9434
Attention: Marinus N. Henny
Senior Vice President
with a copy to:
Sony Music Entertainment, Inc.
550 Madison Avenue
New York, New York 10022-3211
Fax: (212) 833-8083
Attention: David H. Johnson, Esq.
Senior Vice President, General Counsel
Notice of change of address shall be deemed given when actually received or upon
refusal to accept delivery thereof; all other Communications shall be deemed to
have been given, received and dated on the earlier of: (i) when
50
<PAGE>
actually received or upon refusal to accept delivery thereof; or (ii) on the
date when delivered personally, one (1) day after being sent by facsimile,
cable, telex or overnight courier and four (4) business days after mailing, as
aforesaid.
Section 13.10 No Partition. The parties hereto expressly waive any rights
they may have to retire, withdraw or resign from the Partnership, dissolve the
Partnership, terminate the Partnership or seek partition of Partnership's assets
between the Partners by any court; provided, however, that such waiver shall not
affect the operation of Section 17.3 of the SBPAP Agreement or Article IX or XI
of this Agreement.
Section 13.11 Severability. If any part of any provision of this Agreement
or any other agreement, document or writing given pursuant to or in connection
with this Agreement shall be invalid or unenforceable under applicable law, said
part shall be ineffective to the extent of such invalidity or unenforceability
only, without in any way affecting the remaining provisions of said agreement,
but only if and to the extent that removal of such provision and enforcement of
the remainder of the Agreement or any other agreement would not materially and
adversely frustrate the parties' essential objectives.
Section 13.12 Waiver of Default. No delay or failure on the part of any
party to this Agreement in exercising any right, power or privilege under this
Agreement shall impair any such right, power or privilege or be construed as a
waiver of any default or acquiescence therein.
Section 13.13 Benefits and Obligations. The covenants and agreements
contained in this Agreement shall inure to the benefit of, and be binding upon,
the Partners and their respective legal successors. Any persons succeeding to
the interest of a Partner shall succeed to all of such Partner's rights,
interests and obligations under this Agreement, subject to and with the benefit
of all terms and conditions of this Agreement.
Section 13.14 Amendment. This Agreement shall not be amended, altered, or
modified except by an instrument in writing and signed by the Partners.
Section 13.15 Entire Agreement. This Agreement constitutes the entire
agreement between the Partners with respect to the transactions described in
this Agreement and supersedes all prior oral or written agreements, commitments
51
<PAGE>
or understandings with respect to the matters in this Agreement.
Section 13.16 Governing Law. This Agreement, the rights and obligations
hereunder, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed therein.
Section 13.17 Joinder. On or before the Existing Facility Closing Date,
Sony shall cause Sony Music Entertainment Inc. to execute a letter addressed to
SBAC, WAC and CAC, in form reasonably acceptable to SBAC, WAC and CAC,
guarantying Sony's obligations hereunder. On or before the Existing Facility
Closing Date, SBAC, WAC and CAC shall cause Blockbuster Entertainment
Corporation to execute a letter addressed to Sony, in form reasonably acceptable
to Sony, guarantying SBAC's, WAC's and CAC's obligations hereunder.
Notwithstanding the foregoing, no such guaranty shall guaranty any obligation
hereunder (i) pursuant to Section 3.4 or (ii) arising out of an obligation of
the Partnership under the SBPAP Agreement which is excluded from the guarantees
provided for in Section 18.11 of the SBPAP Agreement.
Section 13.18 Press Releases; Names. All press releases which are issued
by the Partnership or any Partner or any Affiliate of any Partner concerning the
subject matter of this Agreement shall first be approved by both Partners before
the release thereof. Prior to the use by the Partnership of the name "Sony,"
"Blockbuster" or any combination, abbreviation or other derivative of such names
for any reason, there shall have been obtained the written approval of Sony or
Blockbuster, as applicable, to the proposed use of such name, which approval may
be withheld for any reason or no reason. In the event Sony or Blockbuster ceases
for any reason to be a Partner in the Partnership, the Partnership shall
immediately cease to use such Partner's and its Affiliates' name and any
derivative thereof.
Section 13.19 No Third Party Beneficiaries. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give to any person
or entity, other than the parties hereto and their respective successors and
permitted assigns, any rights or remedies under or by reason of this Agreement.
Section 13.20 Certain Representations. Each Partner represents and
warrants to the other that (i) it has taken or caused to be taken all necessary
action to authorized the execution, delivery and performance of this Agreement
and
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<PAGE>
the transactions contemplated hereby, (ii) this Agreement constitutes its legal,
valid and binding obligation of such Partner, enforceable against it in
accordance with its terms and (iii) neither the execution and delivery of this
Agreement by it nor compliance by it with any of the provisions hereof will
violate any law, or regulation, or any order, writ or decree of any court or
governmental instrumentality or its certificate of incorporation or bylaws.
Section 13.21 Amendment of Amended and Restated Partnership Agreement.
This Agreement amends, restates and supersedes in its entirety the Amended and
Restated Partnership Agreement for Amphitheater Entertainment Partnership dated
as of February 18, 1994 among the Partners.
* * * * *
53
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
THE WESTSIDE AMPHITHEATRE CORPORATION
By: /s/ [Illegible]
-------------------------------
Its: President
CHARLOTTE AMPHITHEATER CORPORATION
By: /s/ [Illegible]
-------------------------------
Its: Vice President
SAN BERNARDINO AMPHITHEATER CORPORATION
By: /s/ [Illegible]
-------------------------------
Its: Vice President
YM CORP.
By: /s/ [Illegible]
-------------------------------
Its: Vice President
54
<PAGE>
Annex A
(Unwind Examples)
I. Example #1
----------
A. Assumptions
-----------
Defined Term Amount
- ------------ ------
Sony/Pace Properties Benefit $60
Pace Properties Benefit 60
Blockbuster Properties Benefit 0
Sony/Pace Joint Benefit Amount $10
Pace Separate Benefit Amount 40
Blockbuster Benefit Amount $0
Pace Benefit Amount 50
(Sony is the Benefitting Partner)
(Pace owes Clause G&K Sum)
Sony/Block Net Benefit Amount ($10)
Blockbuster Unwind Contribution Amount 0
Blockbuster Unwind Credit Amount 30
Sony Unwind Credit Amount 20
Make-Up Amount 10
Clause G&K Sum 50
B. Capital Contributions to Sony/Block by Sony and Blockbuster
-----------------------------------------------------------
Sony contributes $10 to the Partnership pursuant to item (x) of Section 3.1(i)
of the Agreement.
C. Capital Contributions to Sony/Block/Pace by Sony/Block
------------------------------------------------------
None.
D. Payments to Sony/Block by Pace
------------------------------
Pace pays $50 to Sony/Block pursuant to Section 9.4(k) of the SBPAP Agreement.
<PAGE>
E. Distributions from Sony/Block
-----------------------------
Sony/Block distributes $10 to CAC pursuant to Section 5.5(c) of the Agreement.
Upon receipt of Clause G&K Sum from Pace, Sony/Block distributes $20 to Sony and
$30 to CAC pursuant to Section 5.5(d) of the Agreement.
F. Net Results (Benefit-Contributions/Pmts + Distributions
-------------------------------------------------------
Blockbuster - 0-0+40=40
Pace - 90-50+0=40
Sony - 30-10+20=40
<PAGE>
II. Example #2
----------
A. Assumptions
-----------
Defined Term Amount
- ------------ ------
Sony/Pace Properties Benefit $60
Pace Properties Benefit 0
Blockbuster Properties Benefit 90
Sony/Pace Joint Benefit Amount $10
Pace Separate Benefit Amount 0
Blockbuster Benefit Amount $30
Pace Benefit Amount 10
(Blockbuster is the Benefitting Partner)
(Sony/Block owes Clause G&K Sum)
Sony/Block Net Benefit Amount $20
Blockbuster Unwind Contribution Amount 20
Blockbuster Unwind Credit Amount 0
Sony Unwind Credit Amount 0
Make-Up Amount 20
Clause G&K Sum 20
B. Capital Contributions to Sony/Block by Sony and Blockbuster
-----------------------------------------------------------
CAC contributes $20 to the Partnership pursuant to item (x) of Section 3.1(i) of
the Agreement.
CAC contributes $20 to the Partnership pursuant to item (y) of Section 3.1(i) of
the Agreement.
C. Capital Contributions to Sony/Block/Pace by Sony/Block
------------------------------------------------------
Sony/Block contributes $20 to Sony/Block/Pace pursuant to Section 9.4(k) of the
SBPAP Agreement.
D. Payments to Sony/Block by Pace
------------------------------
None.
E. Distributions from Sony/Block
-----------------------------
Sony/Block distributes $20 to Sony pursuant to Section 5.5(c) of the Agreement.
<PAGE>
F. Net Results (Benefit-Contributions /Pmts + Distributions
--------------------------------------------------------
Blockbuster - 90-40+0=50
Pace - 30-0+20=50
Sony - 30-0+20=50
<PAGE>
III. Example #3
----------
A. Assumptions
-----------
Defined Term Amount
- ------------ ------
Sony/Pace Properties Benefit $60
Pace Properties Benefit 60
Blockbuster Properties Benefit 15
Sony/Pace Joint Benefit Amount $10
Pace Separate Benefit Amount 40
Blockbuster Benefit Amount $5
Pace Benefit Amount 50
(Sony is the Benefitting Partner)
(Pace owes Clause G&K Sum)
Sony/Block Net Benefit Amount ($5)
Blockbuster Unwind Contribution Amount 0
Blockbuster Unwind Credit Amount 25
Sony Unwind Credit Amount 20
Make-Up Amount 5
Clause G&K Sum 5
B. Capital Contributions to Sony/Block by Sony and Blockbuster
-----------------------------------------------------------
Sony contributes $5 to the Partnership pursuant to item (x) of Section 3.1(j) of
the Agreement.
C. Capital Contributions to Sony/Block/Pace by Sony/Block
------------------------------------------------------
None.
D. Payments to Sony/Block by Pace
------------------------------
Pace pays $45 to Sony/Block pursuant to Section 9.4(k) of the SBPAP Agreement.
E. Distributions from Sony/Block
-----------------------------
Sony/Block distributes $5 to CAC pursuant to Section 5.5(c) of the Agreement.
Upon receipt of Clause G&K Sum from Pace, Sony/Block distributes $20 to Sony and
$25 to CAC pursuant to Section 5.5(d) of the Agreement.
<PAGE>
V. Example #4
----------
A. Assumptions
-----------
Defined Term Amount
- ------------ ------
Sony/Pace Properties Benefit $0
Pace Properties Benefit 37.50
Blockbuster Properties Benefit 90
Sony/Pace Joint Benefit Amount $0
Pace Separate Benefit Amount 25
Blockbuster Benefit Amount $30
Pace Benefit Amount 25
(Blockbuster is the Benefiting Partner)
(Sony/Block owes Clause G&K Sum)
Sony/Block Net Benefit Amount $30
Blockbuster Unwind Contribution Amount 17.50
Blockbuster Unwind Credit Amount 0
Sony Unwind Credit Amount 12.50
Make-Up Amount 30
Clause G&K Sum 5
B. Capital Contributions to Sony/Block by Sony and Blockbuster
-----------------------------------------------------------
CAC contributes $30 to the Partnership pursuant to item (x) of Section 3.1(i) of
the Agreement.
CAC contributes $17.50 to the Partnership pursuant to item (y) of Section 3.1(i)
of the Agreement.
C. Capital Contributions to Sony/Block/Pace by Sony/Block
------------------------------------------------------
Sony/Block contributes $5 to Sony/Block/Pace pursuant to Section 9.4(k) of the
SBPAP Agreement.
D. Payments to Sony/Block by Pace
------------------------------
None.
E. Distributions from Sony/Block
-----------------------------
Sony/Block distributes $30 to Sony pursuant to Section 5.5(c) of the Agreement.
<PAGE>
Sony/Block distributes $12.50 to Sony pursuant to Section 5.5(d) of the
Agreement.
F. Net Results (Benefit Contributions/Pmts + Distributions)
--------------------------------------------------------
Blockbuster - 90-47.50+0+=42.50
Pace - 37.50-0+5=42.50
Sony - 0-0+42.50=42.50
<PAGE>
F. Net Results (Benefit Contributions/Pmts + Distributions)
--------------------------------------------------------
Blockbuster - 15-0+30=45
Pace - 90-45+0=45
Sony - 30-5+20=45
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of January 2, 1997 (this "Agreement"), between
DELSENER/SLATER ENTERPRISES, INC., a Delaware corporation (the "Employer"),
and SFX BROADCASTING, INC., a Delaware corporation (the "Parent") and the
owner of all the outstanding capital stock of the Employer, and RON DELSENER
(the "Executive").
WHEREAS, pursuant to a Stock Purchase Agreement dated as of October 8th,
1996 (the "Purchase Agreement"), the Parent has caused the Employer to
acquire, on the date hereof, from the Executive the stock of each of the
corporations that conduct the business known as Delsener/Slater Enterprises,
Ltd. ("D/S Enterprises");
WHEREAS, as a result of such acquisition, the Employer will conduct the
business of D/S Enterprises on and after the date hereof;
WHEREAS, prior to such acquisition, the Executive was the owner and
Chairman of D/S Enterprises;
WHEREAS, the Employer and the Parent consider the continued services of
the Executive to be in their best interests;
WHEREAS, the Executive is desirous of serving the Employer on the terms
and conditions herein provided;
WHEREAS, on the date hereof, the Employer and the Parent are entering into
an employment agreement with Mitch Slater (the "Other Senior Executive" and,
together with the Executive, the "Senior Executives"), who jointly operated
D/S Enterprises with the Executive prior to the date hereof; and
1
<PAGE>
WHEREAS, terms used but not defined herein shall have the meanings
assigned thereto in the attached Annex I.
NOW, THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged, the Employer, the Parent and the
Executive agree as follows:
1. Employment. Upon the terms and subject to the conditions of this
Agreement, the Employer hereby employs the Executive and the Executive hereby
accepts employment by the Employer on the terms hereinafter set forth.
2. Term. The term of the Executive's employment hereunder shall commence
on the date hereof (the "Effective Date") and continue until December 31,
2001 (the "Term") and shall terminate at the close of business on such date
(the "Termination Date") unless terminated earlier in accordance with the
provisions of this Agreement.
3. Executive's Position, Duties and Authority.
3.1 Position. The Employer shall employ the Executive, and the Executive
shall serve, as Co-President and Co-Chief Executive Officer of the Employer
and, subject to the terms of Section 13 of this Agreement, of any successor
to the Employer by merger, acquisition of all or substantially all of the
assets of the Employer or otherwise. The Other Senior Executive shall also
serve as the Co-President and Co-Chief Executive Officer of the Employer.
3.2 Description. The Executive shall, jointly with the Other Senior
Executive, have full executive authority and responsibility for the
day-to-day management and operational control of the Employer, with
commensurate duties and functions. Without limiting the foregoing, the Senior
Executives shall jointly control the incurrence by the Employer of all
overhead and
2
<PAGE>
operational expenses and the entering into by the Employer of new lines of
businesses, and all executives and other employees of the Employer shall
report jointly to the Senior Executives. The Executive shall report to Robert
F. X. Sillerman so long as he is the current Executive Chairman of the Board
of Directors of the Parent (the "Parent's Board"), or, if he no longer holds
such position or a similar position with the Parent, the Parent's chief
executive officer. Notwithstanding the foregoing, the following actions by
the Employer or its subsidiaries shall be subject to the ultimate authority
of the Board of Directors of the Employer and the Parent's Board: (i) entry
into new lines of business; (ii) making any material capital commitment to
invest in venues; (iii) engagement of outside accountants and attorneys; (iv)
preparation of annual budgets (except that the Senior Executives shall
exercise exclusive control over the incurrence by the Employer of all
overhead and operational expenses) and (v) making material upfront payments
and deposits to artists not consistent with past practice.
3.3 Board; Subsidiaries. During the Term, the Executive shall have the
right to serve without remuneration (i) on the Board of Directors of the
Employer (the "Board") and as a member of any committee of the Board and (ii)
as a director and executive officer (in the same capacities as provided in
this Section 3) of any subsidiaries of the Employer; provided, however, that
if the Executive exercises such right, his commitments as a director shall be
substantially consistent with past practice.
3.4 Funding. Subject to the approval of the Board of Directors of the
Parent, the Parent agrees to provide such funding to the Employer to support
and expand its business operations as the Senior Executives, at the direction
of the Board of Directors of the Employer, may reasonably request from time
to time; provided, that at such time the Parent has sufficient financial
capacity to
3
<PAGE>
comply with such request. Notwithstanding the foregoing, the Parent shall be
obligated to provide the Employer with funding sufficient (in the reasonable
judgment of the Senior Executives) to operate its business as presently
conducted. The Parent may charge the Employer interest (based on the Parent's
blended borrowing rate at the time of such borrowing) on any funds provided
by the Parent to the Employer.
4. Full-Time Services.
4.1 General. The Executive shall devote substantially all of his business
time, labor, skill and energy to conducting the business and affairs of the
Employer and to satisfying the duties and responsibilities referred to in
Section 3.2 of this Agreement ; provided, that the Executive shall not be
required in fulfilling such obligations to devote a greater number of hours
or to keep significantly different hours than he has in the past and that he
may use his reasonable discretion in determining the optimal method of
fulfilling his obligations. Notwithstanding the foregoing, the Executive
shall have the right, subject to Section 16, to devote a portion of his
business time to personal investments and commitments not related to the
business of the Employer; provided, that the time devoted thereto shall not
interfere in any material respect with the performance of the Executive's
services hereunder. In addition, except as provided in Section 16, the
Executive may serve on boards of directors of not-for-profit organizations
and companies and, with the consent of the Parent (which consent shall not be
unreasonably withheld), on boards of directors of any other organizations or
companies; provided, that the service on any such boards of directors shall
not interfere in any material respect with the performance of the Executive's
services hereunder.
4.2 Opportunities; Investments. The Executive covenants and agrees that,
during the Term, he shall inform the Employer of each business opportunity
related to the business of the
4
<PAGE>
Employer and any of the Employer's subsidiaries, the Parent or any of the
Parent's subsidiaries in each case of which he becomes aware, and that he
will not, directly or indirectly, exploit any such opportunity for his own
account, nor will he render any services to any other person or business, or
acquire any interest of any type in any other business, that competes with
any material business of the Employer or any of the Employer's subsidiaries,
the Parent or any of the Parent's subsidiaries; provided, however, that the
foregoing shall not be deemed to prohibit the Executive from acquiring,
solely as a passive investor, up to 10% of any securities or other interests
in any partnership, trust, corporation or other entity; provided that, the
Executive may not acquire any interest in any entity that derives revenues
from the business of promoting or producing musical concerts or similar
musical or artistic events unless such revenues are not material in relation
to the other revenues of such entity.
5. Location of Employment. Unless the Executive consents otherwise in
writing, the headquarters for performance of his services hereunder, as well
as the principal offices of the Employer, shall be at 27 East 67th Street,
New York, New York.
6. Base Salary. During the Term, the Employer shall pay or cause to be
paid to the Executive a base salary at the annual rate of not less than $1.00
(the "Base Salary").
7. Profits. Equity and Repurchases.
7.1 Profits after 1996. No later than March 31 of each year, beginning
March 31, 1998, the Executive shall receive a bonus determined by reference
to the Employer's Profits (as defined below) for the immediately preceding
year ending December 31, as follows: (i) the first $4,000,000 of Profits
shall be payable to the Parent; (ii) the next $300,000 of Profits shall be
payable 25% to the Executive and 75% to the Other Senior Executive; and (iii)
all additional Profits (that is,
5
<PAGE>
Profits in excess of $4,300,000) shall be payable 20% to the Senior
Executives and 80% to the Parent, with such Senior Executives' 20% share
payable 25% to the Executive and 75% to the Other Senior Executive. The
foregoing bonus payable based on the Profits for the year 2001 will remain so
payable notwithstanding expiration of the Term on December 31, 2001.
"Profits" shall mean the Employer's revenues minus the sum of (A) the Base
Salaries of the Senior Executives, (B) an amount equal to $600,000 and (C)
the actual overhead and operational expenses of the Employer, which overhead
and operational expenses shall exclude (i) all noncash charges (such as
depreciation and amortization expenses and charges relating to goodwill),
(ii) income taxes, (iii) any management fees charged to the Employer by the
Parent and its affiliates and (iv) the Base Salaries of the Senior
Executives. In determining "Profits", the Parent may charge the Employer
interest (based on the Parent's blended borrowing rate at the time of
borrowing) on funds provided by the Parent to the Employer. "Profits" will be
calculated on a consolidated basis for the Employer and its subsidiaries and
shall be determined by the Employer's independent accountants.
7.2 [RESERVED]
7.3 Options. During the Term, the Executive shall be granted options to
purchase such number of shares of the Parent's Class A Common Stock (the
"Class A Stock") as is determined by the Parent's Board to be fair and
appropriate for an employee in the position of the Executive, after and
pursuant to the affirmative recommendation of the Stock Option Committee of
the Parent's Board and with due regard for the recommendations of the
Executive Chairman of the Parent's Board. Each such option shall have an
exercise price equal to the average closing ask and bid price of the Class A
Stock on the date of the grant and shall be exercisable for ten years and
shall vest on
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a schedule to be determined by the Parent's Board but in no event shall the
vesting schedule exceed the Term hereof; nor shall the terms and conditions
of such options (including those terms and conditions described above) be any
less favorable than the terms and conditions (other than vesting) applicable
to options granted to the other senior executives of the Parent.
Notwithstanding the foregoing, in the event that the Executive ceases to be
employed by the Employer for any reason whatsoever (including upon death or
Total Disability of the Executive) other than as a result of a voluntary
termination (that is not a Constructive Termination Without Cause) or
termination for Cause, (x) all options granted pursuant to this Section 7.3
shall vest immediately, and (y) the balance of all remaining stock options to
be granted during the Term pursuant to this Section 7.3 shall immediately be
granted and shall vest immediately at an exercise price per share equal to
the lower of (A) the average ask and bid price of the Class A Stock on the
date of the relevant event or occurrence and (B) the exercise price of the
last option granted prior to such event or occurrence, and the Executive
shall retain the right to exercise each such option described in clauses (x)
and (y) during the remaining original term of each such option. In the event
of a termination following a Change in Control (as defined in Section
13.1.2), the exercise price shall be modified as set forth in Section 13.3(b)
below. To the extent required, this Section shall automatically be deemed to
be modified in accordance with Section 18.5 to insure that the Executive's
rights with respect to acceleration of option grants and acceleration of
option vesting are at least as favorable as the rights that from time to time
are generally applicable to other senior executives of the Parent at the
level of regional manager.
7.4 Share of Upside After Return. The provisions of Annex I hereto are
incorporated by reference herein, as if set forth in full in this Section
7.4.
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7.5 Right of First Offer. If, at any time during the first three years
following the Effective Date, the Parent desires to effect (or to permit the
Employer to effect) a transaction that would qualify as a Return Event under
clause (i), (ii), or (iii) of the definition thereof set forth in Annex I,
then the Parent shall, prior to negotiating or publicly proposing or
disclosing such transaction, first offer in writing to negotiate with the
Senior Executives for the purchase of the Employer Stock or Employer assets
that would otherwise be sold pursuant to such Return Event. If either or both
of the Senior Executives notify the Parent in writing, within 30 days of his
or their receipt of the Parent's written offer, of their interest in pursuing
such negotiations, then the Parent shall negotiate exclusively and in good
faith with either or both of the Senior Executives, as the case may be, for a
period of 60 days following delivery of such notice by the Senior Executives.
If the parties fail to reach agreement during such 60-day period (including
by reason of the Senior Executives failing to obtain financing), then the
Parent shall have the right to initiate (or to permit the Employer to
initiate) such transaction at any time within six months thereafter on terms
no less favorable to the Parent and the Employer than the final terms
proposed by the Senior Executives. The parties acknowledge that in the event
the Senior Executives do not jointly exercise the right provided in this
Section 7.5, the Executive may exercise the right individually, provided that
either (i) the Other Senior Executive's Employment Agreement is no longer in
effect or (ii) the Executive or the Other Senior Executive provides the
Parent with (a) written confirmation signed by the Other Senior Executive
that such Other Senior Executive will not exercise such right, or (b) a
written notice signed by the Executive providing that the Other Senior
Executive has been deemed to have made an irrevocable election not to
exercise such right pursuant to the Letter Agreement (as defined in the
Purchase Agreement) together with evidence, including copies of any notices,
satisfactory to
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the Parent, that the Executive has complied with the terms of the Letter
Agreement.
7.6 Repurchase Right. If; at any time during the first three years
following the Effective Date, a Change in Control occurs or is approved by
the Parent's Board, the Parent shall promptly provide written notice thereof
to the Senior Executives, such notice to contain (i) the Parent's
determination of the Fair Market Value of the Employer Stock then
"beneficially owned" (such term used for all purposes of this Agreement as
defined in Annex I hereto) by the Parent (the "Eligible Employer Stock") and
(ii) a reasonably detailed description of the Change in Control transaction
and the basis for the determination of such Fair Market Value. For purposes
of this Section 7.6, the term "Fair Market Value" shall have the meaning
assigned thereto in Annex I, except that the determination thereof shall be
made in good faith by the Parent's Board and an independent investment
banking firm chosen by the Parent (whose fees and expenses shall be born
solely by the Parent). After receipt of such notice from the Parent, either
or both of the Senior Executives may, within five business days thereof;
provide written notice to the Parent of either or both of the Senior
Executives' intent to pursue the purchase of the Eligible Employer Stock. If
either or both of the Senior Executives, as the case may be, provide notice
of such intended purchase, they shall have (A) an additional 10 business days
to deliver to the Parent written indications of financing support for the
intended purchase and (B) an additional 41 days to deliver commitment letters
from their financing sources. Upon complying with the foregoing, the Senior
Executives shall have the right, but not the obligation, to purchase the
Eligible Employer Stock at the Fair Market Value specified in the Change in
Control notice provided by the Parent (provided that, if such Change in
Control does not occur, such right of the Senior Executives with respect
thereto shall be void and of no further force and effect (it being understood
that the Senior Executives retain the repurchase right
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described in this Section 7.6 for any subsequent Change in Control within
three years following the Effective Date)). The parties acknowledge that in
the event the Senior Executives do not jointly exercise the right provided in
this Section 7.6, the Executive may exercise the right individually, provided
that either (i) the Other Senior Executive's Employment Agreement is no
longer in effect or (ii) the Executive or the Other Senior Executive provides
the Parent with (a) written confirmation signed by the Other Senior Executive
that such Other Senior Executive will not exercise such right, or (b) a
written notice signed by the Executive providing that the Other Senior
Executive has been deemed to have made an irrevocable election not to
exercise such right pursuant to the Letter Agreement (as defined in the
Purchase Agreement) together with evidence, including copies of any notices,
satisfactory to the Parent, that the Executive has complied with the terms of
the Letter Agreement.
7.7 Deductions. The Employer shall, in accordance with applicable law,
deduct from the Base Salary and all other cash amounts payable by the
Employer under the provisions of this Agreement to the Executive, or, if
applicable, to his estate, legal representatives or other beneficiary
designated in writing by the Executive, all social security taxes, all
Federal, state and municipal taxes and all other charges and deductions which
now or hereafter are required by law to be charges on the compensation of the
Executive or charges on cash benefits payable by the Employer hereunder to
his estate, legal representatives or other beneficiary.
8. Expenses; Automobile; Vacation. The Employer shall reimburse the
Executive, upon production of reasonably detailed accounts and vouchers or
other reasonable evidence of payment by the Executive, all in accordance with
the Employer's regular procedures in effect from time to time and in form
suitable to establish the validity of such expenses for tax purposes, all
ordinary,
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reasonable and necessary travel, entertainment and other expenses as shall be
incurred by him in the performance of his duties hereunder. The Executive
shall be entitled to paid vacation time at the rate of not less than six
weeks per calendar year during the Term. The Employer shall make an
automobile available for the Executive's exclusive use while employed under
this Agreement, such automobile to be commensurate in value to the
automobiles made available to the other senior executives of the Parent.
9. Benefits. During the Term, the Executive shall be eligible to
participate in any pension or profit-sharing plan or program of the Parent
now existing or established hereafter, on terms no less favorable than those
made available to the other senior executives of the Parent. The Executive
shall also be eligible to participate in any group life insurance,
hospitalization, medical, health and accident, disability or similar plan or
program of the Parent now existing or established hereafter, on terms no less
favorable than those made available to the other senior executives of the
Parent. In addition, the Executive shall be entitled to all prerequisites
made available to the other senior executives of the Parent to the extent not
otherwise specifically provided herein. The Parent shall cause the Employer
to be a participating employer in all benefit plans which the Parent sponsors
or maintains at any time during the Term.
10. Insurance. The Executive agrees to submit himself, upon request of the
Parent and within a reasonable period of time from such request for physical
examination by any physician designated by the Parent's Board as required or
advisable in connection with the obtaining of any key man insurance policy or
similar coverage which the Parent may wish to obtain. The costs and expenses
for such medical examinations and any such insurance shall be borne by the
Parent, and such costs and expenses shall not be deemed overhead or
operational expenses of the Employer for
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purposes of calculating "Profits" in Section 7.1.
11. Indemnification. The Employer shall indemnify the Executive and his
legal representatives to the fullest extent permitted by the laws of the
State of Delaware, and the Executive shall be entitled to the protection of
such insurance policies which the Employer hereby agrees to maintain for the
benefit of its directors and officers, against all costs, charges or expenses
whatsoever incurred or sustained by him or his legal representatives in
connection with any action, suit or proceeding to which he or his legal
representatives may be made a party by reason of his being or having been a
director or officer of the Employer or the Parent, or because of actions
taken purportedly on behalf of the Employer or the Parent after the Effective
Date. The Employer shall, upon request by the Executive, promptly advance or
pay any amount for costs, charges or expenses (including, without limitation,
legal fees and expenses incurred by counsel retained by the Executive) in
respect of his right to indemnification hereunder, subject to a later
determination as to the Executive's ultimate right to receive such payment.
The Employer shall maintain such insurance policies for the benefit of its
directors and officers to the same extent and in the same amount and type as
is maintained by the Parent.
12. Confidential Information. All records, papers, models, programs and
other documents and those kept or made by the Executive relating to the
business or affairs of the Employer and/or its clients or customers shall be
and remain the property of the Employer, and to the extent available shall be
delivered by the Executive to the Employer as required by the Board and, in
any event, upon the expiration or earlier termination of the Executive's
employment by the Employer.
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13. Termination.
13.1 For purposes of this Agreement the following definitions shall apply:
13.1.1 "Cause" shall mean:
(i) the Executive is convicted of a felony involving moral turpitude which
would render the Executive unable to perform his duties set forth in this
Agreement;
(ii) the Executive engages in conduct that constitutes willful gross
neglect or willful gross misconduct in carrying out his duties under this
Agreement, resulting, in either case, in material economic harm to the
Employer; or
(iii) a final, non-appealable determination by a court of competent
jurisdiction that the Executive has knowingly and willingly made a fraudulent
material misrepresentation in the Purchase Agreement that has a material
adverse effect on the value of the Companies to the Buyer.
13.1.2 A "Change in Control" shall mean the occurrence of any one of the
following events:
(i) any "person," as such term is used in Sections 3(a)(9) and 13(d) of
the Securities Exchange Act of 1934 (other than the Executive or entities
controlled by the Executive), becomes a beneficial owner of 50% or more of
the voting power of the Parent or of the common stock of the Parent owned
beneficially by Robert F.X. Sillerman;
(ii) all or substantially all of the assets or business of the Parent are
disposed of pursuant to a merger, consolidation, sale or other transaction
(unless the shareholders of the Parent, immediately prior to such merger,
consolidation or other transaction beneficially own, directly or indirectly,
in substantially the same proportion as they owned the voting power of the
Parent, all of the voting power or other ownership interests of the entity or
entities, if any, that
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succeed to the business of the Parent);
(iii) the Parent combines with another company and is the surviving
corporation but, immediately after such combination, the shareholders of the
Parent immediately prior to the combination hold, directly or indirectly, 50%
or less of the voting power of the combined company;
(iv) the majority of the Parent's Board consists of individuals other than
incumbent directors (which term shall mean members of the Parent's Board as
of the Effective Date), except that any person who becomes a director
subsequent to such date whose election or nomination was supported by
two-thirds of the directors who then comprise the incumbent directors shall
be considered an incumbent director; or
(v) except for a repurchase by a Senior Executive pursuant to Section 7.6,
(A) a sale or transfer of Employer Stock (including by way of merger,
consolidation or similar transaction) following which one or more persons
other than the Parent beneficially owns 50% or more of the Employer Stock or
(B) a sale or transfer of all or substantially all the assets of the Employer
and its subsidiaries as a whole.
13.1.3 "Constructive Termination Without Cause" shall mean a termination
of the Executive's employment at his initiative as provided in this Section
13 following the occurrence, without the Executive's prior written consent,
of one or more of the following events:
(i) a failure by the Employer or the Parent to fulfill in all material
respects its obligations under this Agreement;
(ii) the failure to elect or reelect the Executive to any of the positions
described in Section 3 or removal of him from any such position;
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(iii) a material diminution in the Executive's duties or the assignment to
the Executive of duties which are materially inconsistent with his duties or
which materially impair the Executive's ability to function as the
Co-President and Co-Chief Executive Officer of the Employer or the Executive
being required to report to anyone other than the person identified in
Section 3.2; or
(iv) the failure of the Employer or the Parent to obtain the assumption in
writing of its obligation to perform this Agreement by any successor to all
or substantially all of the assets or business of the Employer or the Parent
within 15 days after a merger, consolidation, sale or other transaction.
13.2 Termination by the Employer for Cause. A termination for Cause shall
not take effect unless all of the provisions of this Section 13.2 are
complied with. The Executive shall be given written notice by the Parent's
Board of the intention to terminate him for Cause, such notice (i) to state
in detail the particular act or acts or failure or failures to act that
constitute the grounds on which the proposed termination for Cause is based
and (ii) to be given within three months of the Board learning of such act or
acts or failure or failures to act. The Executive shall have 10 business days
after the date that such written notice has been given to the Executive in
which to cure such conduct, to the extent such cure is possible. If he fails
to cure such conduct, the Executive shall then be entitled to a hearing
before the Board. Such hearing shall be held within 20 business days of such
notice to the Executive, provided he requests such hearing within 15 business
days of the written notice from the Board of the intention to terminate him
for Cause. If, within five business days following such hearing, the
Executive is furnished written notice by the Board confirming that, in its
judgment, grounds for Cause on the basis of the original notice exist, he may
thereupon be
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terminated by the Board for Cause. Nothing in this Section 13.2 shall
prejudice the Executive's right to challenge the validity of his termination
by the Employer.
13.2.1 Payment. In the event the Employer terminates the Executive's
employment for Cause, he shall be entitled to:
(i) the Base Salary (if any) through the date of the termination of his
employment for Cause; and
(ii) the Executive's share of Profits for the portion of the calendar year
preceding his termination; provided, that, for purposes of calculating such
Executive's share, the Parent's and the Other Senior Executive's shares of
Profits shall also be based on the portion of the calendar year preceding the
termination. In calculating Profits pursuant to this Section the Executives'
Base Salaries and the $600,000 amount set forth as (A) and (B) under the
definition of Profits in Section 7.1 shall be pro rated for that portion of
the year actually elapsed prior to termination.
13.2.2 No Further Liability. In the event the Employer terminates the
Executive's employment for Cause, the Executive shall have no further
obligations or liability to the Employer or the Parent pursuant to this
Agreement (except his obligations under Sections 12 and 16, which shall
survive).
13.3 Termination Without Cause or Constructive Termination Without Cause.
(a) In the event the Executive's employment is terminated without Cause,
other than due to a Total Disability or death, or in the event there is a
Constructive Termination Without Cause, the Executive shall be entitled to:
(i) the Base Salary through the date of termination of the Executive's
employment;
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(ii) the Base Salary, at the annualized rate in effect on the date of
termination of the Executive's employment (or in the event a reduction in
Base Salary is the basis for a Constructive Termination Without Cause, then
the Base Salary in effect immediately prior to such reduction), for a period
of 36 months following such termination or until the end of the Term,
whichever is longer; provided, that, at the Executive's option, the Employer
shall pay him the present value of such salary continuation payments in a
lump sum (using as the discount rate 75% of the prime rate (as published by
The Wall Street Journal) for the month in which such termination occurs);
(iii) all stock options shall be immediately granted and shall immediately
vest and become exercisable in accordance with Section 7.3 hereof;
(iv) the Executive's share of Profits for the balance of the Term based on
the greater of (A) the Profits for the calendar year in which the termination
occurs, with such Profits being pro rated for the remainder of such year, and
(B) the Profits for the calendar year immediately preceding the termination;
provided, that, at the Executive's option, the Employer shall pay him the
present value of such share of Profits in a lump sum (using as the discount
rate 75% of the prime rate (as published by The Wall Street Journal) for the
month in which such termination occurs); and
(v) all benefits and prerequisites provided in Section 9 hereof until the
end of the Term. In calculating Profits pursuant to clause (iv) (A) above,
the Executives' Base Salaries and the $600,000 amount set forth as (A) and
(B) under the definition of Profits in Section 7.1 shall be pro rated for
that portion of the year actually elapsed prior to termination.
(b) If a termination described in Section 13.3(a) occurs following a
Change in Control, the
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Executive shall be entitled to the payments and benefits set forth in such
Section, except that the payments under clauses (ii) and (iv) of such Section
13.3(a) shall be paid in a lump sum without any discount and the exercise
price of the stock options accelerated under clause (iii) of such Section
13.3(a) shall be the lower of (A) the average ask and bid price of the Class
A Stock on the date of the termination and (B) the lowest exercise price of
any other then outstanding options granted to the Executive prior to the
Change in Control. In the event of a termination pursuant to this Section
13.3 (b), if the aggregate of all payments or benefits made or provided to
the Executive under this Agreement and under all other plans and programs of
the Employer and the Parent (the "Aggregate Payment") is determined to
constitute a Parachute Payment, as such term is defined in Section 280G(b)(2)
of the Internal Revenue Code of 1986, as amended (the "Code"), the Employer
shall pay to the Executive, prior to the time any excise tax imposed by
Section 4999 of the Code ("Excise Tax") is payable with respect to such
Aggregate Payment, an additional amount which, after the imposition of all
income, employment and excise taxes thereon, is equal to one-half of the
Excise Tax on the Aggregate Payment, or such greater portion thereof as the
other senior executives of the Parent shall be paid. The determination of
whether the Aggregate Payment constitutes a Parachute Payment and, if so, the
amount to be paid to the Executive and the time of payment pursuant to this
subsection shall be made by an independent auditor (the "Auditor") jointly
selected by the Employer and the Executive and paid by the Employer. The
Auditor shall be a nationally recognized United States public accounting firm
which has not, during the two years preceding the date of its selection,
acted in any way on behalf of the Employer, the Parent or any affiliate
thereof. If the Executive and the Employer cannot agree on the firm to serve
as the Auditor, then the Executive and the Employer shall each select one
accounting firm and those two firms shall jointly select the accounting firm
to
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serve as the Auditor.
13.4 [RESERVED].
13.5 Voluntary Termination. In the event of a termination of employment by
the Executive on his own initiative other than a termination due to death or
disability or following a Change in Control or a Constructive Termination
Without Cause, the Executive shall have the same entitlements as provided in
Section 13.2 above for a termination for Cause. A voluntary termination under
this Section 13.5 shall be effective upon 30 days' prior written notice to
the Employer and shall not be deemed a breach of this Agreement.
13.6 [RESERVED]
13.7 No Mitigation; No Offset. In the event of any termination of
employment under this Agreement, the Executive shall be under no obligation
to seek other employment and there shall be no offset against amounts due the
Executive under this Agreement or the Purchase Agreement on account of any
remuneration attributable to any subsequent employment that he may obtain or
for any amount allegedly due the Employer or the Parent by the Executive.
14. Total Disability. The Employer shall provide disability insurance
coverage to the Executive as of the Effective Date, on terms no less
favorable than those made available to the other senior executives of the
Parent. If the Executive becomes disabled during his employment hereunder so
that he is unable for a period of six consecutive months to perform his
duties under this Agreement (a "Total Disability"), the Employer shall pay to
the Executive his full Base Salary and maintain in effect his group health
insurance coverage during such six-month period (the last day of such
six-month period, the "Disability Date"); thereafter, the Employer shall pay
the Executive his full Base Salary and maintain in effect his group health
insurance coverage for an additional six-
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month period, after which no further obligation shall be due to the Executive
from the Employer hereunder; provided, however, that at the end of such
additional six-month period, the Executive and his eligible dependents shall
be entitled to their group health insurance coverage continuation, as
provided under the Consolidated Omnibus Budget Reconciliation Act, without
any offset for the prior 12 months of group health insurance coverage
maintained in effect pursuant to this Section 14. The Employer shall have the
right to offset against the foregoing payments the amount of any proceeds
received by the Executive under any disability insurance policies maintained
by the Employer in respect of such 12-month period.
15. Death of Executive.
15.1 General. Upon the Executive's death this Agreement and all of the
Employer's obligations to pay salary and Profits hereunder shall terminate
(unless a notice of termination shall have previously been delivered by the
Employer or the Executive), except as provided in Sections 15.2 and 15.3.
15.2. Salary; Profits. The Executive's estate or designated beneficiary
shall be entitled to receive (i) any unpaid portions of the Executive's Base
Salary in respect of the period ending on the Executive's date of death and
(ii) any unpaid shares of Profits in respect of years or portions of years
prior to the date of death; provided, that for purposes of calculating such
Executive's share with respect to the portion of the calendar year preceding
his death, the Parent's and the Other Senior Executive's shares of Profits
shall also be based on the portion of the calendar year preceding death. In
calculating Profits pursuant to this Section the Executive's Base Salaries
and the $600,000 amount set forth as (A) and (B) under the definition of
Profits in Section 7.1 shall be pro rated for that portion of the year
actually elapsed prior to termination. The Employer shall
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pay to such estate or beneficiary an amount equal to the present value of all
the remaining Base Salary for the balance of the Term, calculated using as
the discount rate the average yield on three-month Treasury Bills for the
30-day period prior to the date of death.
15.3 Reduction. The Base Salary and shares of Profits payable pursuant to
this Section 15 shall be reduced by the value of any benefits payable to the
Executive's estate or designated beneficiary under any life insurance plan or
policy the premiums for which are paid primarily by the Employer, other than
such insurance identified in Section 10.
16. Noncompetition.
16.1 By Executive During Term. During the Term, the Executive will not,
without the prior written approval of the Board, become employed by, or
become an officer, director or general partner of, any partnership,
corporation or other entity that competes with any business of the Employer,
any subsidiary of the Employer, the Parent or any subsidiary of the Parent,
whether now or hereafter conducted.
16.2 By Executive After Term. For a period of one year following the
termination of the Executive's employment hereunder by the Employer for Cause
or by the Executive on his own initiative (other than due to Constructive
Termination Without Cause), the Executive will not become employed by, or
become an officer, director or general partner of, any partnership,
corporation or other entity that competes with any business of the Employer
on the date of such termination nor will he render any services to any other
person or business, or acquire any interest of any type in any other
business, that competes with any material business of the Employer or any of
the Employer's subsidiaries on the date of such termination. Notwithstanding
the foregoing, the restrictions in this Section 16.2 shall in no event extend
beyond December 31, 2001.
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16.3 By Parent. During the Term, the Parent shall not, nor shall the
Parent permit any of its subsidiaries to, engage in, directly or indirectly,
any business activities related to the promotion or production of musical
concerts or similar musical or artistic events except to the extent such
activities are incidental to the ownership or operation of radio stations
consistent with past practice.
17. Notices. Any notice, direction or instruction required or permitted to
be given hereunder shall be given in writing and may be given by telex,
telegram, facsimile transmission or similar method if confirmed by mail as
herein provided; by mail if sent postage prepaid by registered mail, return
receipt requested; or by hand delivery to any party at the address of the
party set forth below. If notice, direction or instruction is given by telex,
telegram or facsimile transmission or similar method or by hand delivery, it
shall be deemed to have been given or made on the day on which it was given,
and if mailed, shall be deemed to have been given or made on the third
business day following the day after which it was mailed. Any party may, from
time to time, by like notice give notice of any change of address and in such
event, the address of such party shall be deemed to be changed accordingly.
(a) If to the Employer or the Parent:
SFX Broadcasting, Inc.
150 East 58th Street, 19th Floor
New York, New York 10155
Attention: Mr. Robert F. X. Sillerman
(b) If to the Executive:
Ron Delsener
1 Gracie Square
Penthouse
New York, New York 10028
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(c) Copies of all communications given hereunder shall also be delivered
or sent, in like fashion, to:
Proskauer, Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036
Attention: Bettina B. Plevan, Esq.
18. General.
18.1 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws.
18.2 Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation
of this Agreement.
18.3 Entire Agreement. This Agreement, including Annex I hereto, sets
forth the entire agreement and understanding of the parties relating to the
subject matter hereof; and supersedes all prior agreements, arrangements and
understandings, written or oral, between or among the parties (other than the
Purchase Agreement and the Letter Agreement), except as specifically provided
herein. There are no oral promises, conditions, representations,
understandings, interpretations or terms of any kind as conditions or
inducements to the execution hereof or in effect among the parties. No custom
or trade usage, nor course of conduct among the parties, shall be relied upon
to vary the terms hereof.
18.4 Successors and Assigns. This Agreement, and the Executive's rights
and obligations hereunder, may not be assigned by the Executive, except that
the Executive may designate pursuant to Section 18.6 one or more
beneficiaries to receive any amounts that would otherwise be payable
hereunder to the Executive's estate. This Agreement shall be binding on any
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successor to the Employer or the Parent, as the case may be, whether by
merger, consolidation, acquisition of all or substantially all of the
Employer's or the Parent's assets or business or otherwise, as fully as if
such successor were a signatory hereto, and the Employer or the Parent, as
the case may be, shall cause such successor to, and such successor shall,
expressly assume the Employer's or the Parent's, as the case may be,
obligations hereunder. The terms "Employer" and "Parent" as used in this
Agreement shall include all such successors.
18.5 Amendments; Waivers. This Agreement cannot be changed, modified or
amended, and no provision or requirement hereof may be waived, without an
affirmative vote of the Board and the Parent's Board, and the consent in
writing of the Executive, the Employer and the Parent. The failure of a party
at any time or times to require performance of any provision hereof shall in
no manner affect the right of such party at a later time to enforce the same.
No waiver by a party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such breach, or a waiver of the breach of any other term or covenant
contained in this Agreement.
18.6 Beneficiaries. Whenever this Agreement provides for any payment to
the Executive's estate, such payment may be made instead to such beneficiary
or beneficiaries as the Executive may have designated in a writing filed with
the Employer. The Executive shall have the right to revoke any such
designation and to redesignate a beneficiary or beneficiaries by written
notice to the Employer (and any applicable insurance company) to such effect.
18.7 Further Assurances. The parties hereto agree that, after the
execution of this Agreement, they will make, do, execute or cause or permit
to be made, done or executed all such
24
<PAGE>
further and other lawful acts, deeds, things, devices, conveyances and
assurances in law whatsoever as may be required to carry out the true
intention and to give full force and effect to this Agreement.
18.8 Ability to Fulfill Obligations. None of the Employer, the Parent or
the Executive is a party to or bound by any agreement which would be violated
by the terms of this Agreement.
18.9 Severability. Should any provision of this Agreement be unenforceable
or prohibited by any applicable law, this Agreement shall be considered
divisible as to such provision which shall be inoperative, and the remainder
of this Agreement shall be valid and binding as though such provision were
not included herein.
18.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original. It shall not
be necessary when making proof of this Agreement to account for more than one
counterpart.
18.11 Survival of Certain Provisions. The provisions of Section 7, 9, 11,
12, 13, 14, 15, 16 and 17 and this Section 18 shall, to the extent
applicable, continue in full force and effect notwithstanding the expiration
or earlier termination of this Agreement or of the Executive's employment in
accordance with the terms of this Agreement.
18.12 Arbitration of Disputes. Any dispute or controversy between the
parties relating to or arising out of this Agreement or any amendment or
modification hereof shall be determined by arbitration in the City and State
of New York by and pursuant to the rules then prevailing of the American
Arbitration Association. The arbitration award shall be final and binding
upon the parties and judgement may be entered thereon by any court of
competent jurisdiction. The service of any notice, process, motion or other
document in connection with any arbitration under
25
<PAGE>
this Agreement or the enforcement of any arbitration award hereunder may be
effectuated either by personal service upon a party or by certified mail duly
addressed to him or to his executors, administrators, personal
representatives, next of kin, successors or assigns, at the last known
address or addresses of such party or parties. If the Executive is the
prevailing party on any issue in any such arbitration proceeding, he shall be
entitled to recover from the Employer any actual expenses for attorney's fees
and disbursements incurred by him.
18.13 Guarantee by Parent. The Parent hereby absolutely and
unconditionally guarantees, as a primary obligor and not merely as a surety,
to the fullest extent permitted by law, all the obligations (financial or
otherwise) of the Employer under this Agreement. The Parent also waives
presentment to, demand of compliance from and protest to the Employer of any
of the Employer's obligations under this Agreement.
[END OF PAGE]
26
<PAGE>
18.14 Payola/Plugola. During the Term of this Agreement, the Executive
shall not pay or agree to pay any money, service or any valuable
consideration, as defined in and other than as permitted by Sections 317 and
507 of the Communications Act of 1934, as amended, for the radio broadcast of
any matter whatsoever.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
DELSENER/SLATER ENTERPRISES, INC.
By:
---------------------------------
Name:
Title:
SFX BROADCASTING, INC.
By:
---------------------------------
Name:
Title:
-------------------------------------
Ron Delsener
27
<PAGE>
18.14 Payola/Plugola. During the Term of this Agreement, the Executive
shall not pay or agree to pay any money, service or any valuable
consideration, as defined in and other than as permitted by Sections 317 and
507 of the Communications Act of 1934, as amended, for the radio broadcast of
any matter whatsoever.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
DELSENER/SLATER ENTERPRISES, INC.
By:
---------------------------------
Name:
Title:
SFX BROADCASTING, INC.
By:
---------------------------------
Name:
Title:
/s/ Ron Delsener
-------------------------------------
Ron Delsener
28
<PAGE>
ANNEX I TO
MR. DELSENER'S EMPLOYMENT AGREEMENT
Share of Upside After Return
Reference is made to Section 4 of this Annex I for certain definitions.
1. General. (a) Subject to adjustment as set forth in Section 1(b) below,
upon the occurrence of a Return Event, if the sum of the Prior Proceeds and
the Deemed Proceeds exceeds the Threshold Amount (such excess, the "Upside"),
then the Senior Executives will be paid in cash an amount equal to 15% of the
Upside (plus interest thereon, at 1% over the Parent's blended borrowing
rate, from the date of the Return Event to the date of payment), with such
Senior Executives' 15% (plus any interest) being paid 25% to the Executive
and 75% to the Other Senior Executive. Such amount shall be paid, (A) in the
case of a Return Event described in clause (i) , (ii) , (iii) , (iv) or (vi)
of Section 2 below, within 10 business days after the occurrence of such
Return Event (or, if the determination of the amount of the Upside is not
finalized until a later time, then within 10 business days after such
determination) or (B) in the case of a Return Event described in clause (v)
of Section 2 below, in five equal annual installments commencing 10 business
days after the date of such Return Event (or, if the determination of the
amount of the Upside
<PAGE>
2
is not finalized until a later time, then within 10 business days after such
determination).
(b) Notwithstanding anything in Section 1(a) above, if the Senior
Executives elect to treat a Change in Control of SFX as a Return Event under
clause (iv) of Section 2 below, they will only be entitled to an amount equal
to 7.5% or less (such lesser amount to be determined in the sole discretion
of the Senior Executives) of the Upside (plus any interest). In the event
that a Return Event under clause (iv) of Section 2 below has occurred and the
Senior Executives have elected to treat such event as a Return Event, the
percentage amount to which the Senior Executives are entitled pursuant to
Section 1(a) above with respect to any subsequent Return Event shall be
reduced by the percentage that the Senior Executives elected to receive in
connection with such earlier Return Event.
2. Return Event; Employer Stock. (a) "Return Event" shall mean the first
of the following to occur during the Term or, in the event a Return Event
described under clause (iv) has already occurred, the next to occur of the
following during the term:
(i) an initial public offering (an "IPO") of the Employer's common stock
(the "Employer Stock");
<PAGE>
3
(ii) a sale or transfer of Employer Stock (including by way of merger,
consolidation or similar transaction) following which one or more persons
other than the Parent beneficially owns 50% or more of the Employer Stock
(for all purposes of this Annex I and the Employment Agreement, "beneficial
ownership" will be determined pursuant to Rule 13d-3 promulgated under the
Securities Exchange Act of 1934);
(iii) a sale or transfer of all or substantially all the assets of the
Employer and its subsidiaries taken as a whole (an "Asset Transfer"); or
(iv) a Change in Control of the Parent, provided that either Senior
Executive may elect, within five business days after the Deemed Proceeds with
respect to such Change in Control are determined, to not treat such Change in
Control as a Return Event (it being understood that if such election is made,
any subsequent Change in Control of the Parent would, absent such election,
be treated as a Return Event);
(v) The death or Total Disability of a Senior Executive; provided, that a
Return Event shall be considered to have occurred only for the Senior
Executive who died or was disabled, with such Senior Executive (or his
estate) being paid in connection therewith his share of the Senior
<PAGE>
4
Executives' 15% of any Upside as provided in Section 1 above and the other
Senior Executive only being paid his share when the next Return Event occurs;
or
(vi) a Renewal Failure or a Termination Without Cause, provided that a
Return Event shall be considered to have occurred only for the Senior
Executive for which there was a Renewal Failure or a Termination Without
Cause, with such Senior Executive being paid in connection therewith his
share of the Senior Executives' 15% of any Upside as provided in Section 1
above and the other Senior Executive only being paid his share when the next
Return Event occurs.
(b) Other than as set forth in the succeeding sentence, the Employer and
its subsidiaries will each have only one class of capital stock, which will
be common stock, and will not issue or grant equity securities of any other
kind. The parties agree that the Employer may issue preferred stock provided
that appropriate modifications are made to the Employment Agreement and this
Annex I to maintain the economic and other rights of the Senior Executives as
set forth herein. During the Term (or any extension thereof) all the common
stock of the Employer beneficially owned by the Parent will be held directly
by the Parent and not through any subsidiary.
<PAGE>
5
3. Deemed Proceeds. "Deemed Proceeds" shall mean:
(v) with respect to an IPO, the sum of (aa) the proceeds received by the
Parent or its affiliates from the sale of Employer Stock in such IPO and (bb)
the value of the remaining Employer Stock beneficially owned by the Parent,
which such value shall be deemed to equal the product of the number of shares
of Employer Stock the Parent continues to own and the average closing prices
for the Employer Stock for the 20 consecutive trading days commencing on the
60th trading day after the IPO is closed;
(w) with respect to a sale or transfer of Employer Stock, the sum of (aa)
the proceeds of such sale or transfer and (bb) the Fair Market Value of the
remaining Employer Stock beneficially owned by the Parent;
(x) with respect to an Asset Transfer, the sum of (aa) the proceeds of
such Asset Transfer and (bb) the Fair Market Value of the remaining assets of
the Employer and its subsidiaries; and
(y) with respect to a Change in Control of the Parent, the Fair Market
Value of the Employer Stock beneficially owned by the Parent at the time of
such
<PAGE>
6
Change in Control (for the first three years following the Effective Date,
such Fair Market Value shall be determined in accordance with the terms of
Section 7. 6) ; and
(z) with respect to a Renewal Failure, a Termination Without Cause or the
death or Total Disability of a Senior Executive, the Fair Market Value of the
Employer Stock beneficially owned by the Parent at the time of the occurrence
thereof (assuming in such valuation that the terminated Senior Executive, or
the Executive who has died or become disabled, does not continue to be
employed).
4. Definitions.
"Base Purchase Price" shall mean the Fixed Payment as defined in the
Purchase Agreement.
"Fair Market Value" shall mean private market value (which, in the case of
a valuation of less than all the Employer Stock, shall be deemed to be the
applicable proportionate interest in the private market value of all the
Employer Stock) as agreed by the Parent and the Senior Executives or, if they
cannot agree, as determined by an independent investment banking firm jointly
selected by the parties (whose fees and expenses will be shared 50% by the
<PAGE>
7
Parent and 50% by the Senior Executives, except that the Senior Executives
share shall be paid solely out of the payment due them under Section 1 of
this Annex I).
"Minority Interest Sale" shall mean any sale or transfer of (i) assets of
the Employer or its subsidiaries (other than in the ordinary course of
business) or (ii) beneficial ownership of Employer Stock (including by way of
merger, consolidation or similar transaction) to any person other than the
Parent, which such sale or transfer does not constitute a Return Event.
"Prior Proceeds" shall mean the sum of (i) the aggregate amount of all
Profits allocated or allocable to the Parent pursuant to Section 7.1 of the
Employment Agreement prior to the date of the applicable Return Event and
(ii) an amount with respect to each Minority Interest Sale prior to such date
equal to the proceeds thereof, less any amounts paid thereon to either of the
Senior Executives plus 20% interest on such difference, compounded annually,
from the date of the closing of such Minority Interest Sale to the date of
the applicable Return Event (it being understood that in connection with a
Minority Interest Sale that involves the issuance of Employer Stock or a sale
or transfer of assets, such proceeds shall only include amounts that are
either (x) dividended or otherwise distributed to
<PAGE>
8
the Parent or its affiliates or (y) are used to replace funds so dividended
or distribution) . For purposes of the foregoing clause (i), Profits for the
year in which the Return Event occurs will be determined as of the date of
the Return Event, as if such date was the last day in such year (with no
proration for the remainder of such year).
"Renewal Failure" shall mean, if the Agreement has not yet been
terminated, the failure of the Employer to offer, within the 90-day period
immediately preceding the last 180 days of the Term, to renew each of the
Senior Executive's employment agreement for another five-year period on terms
that (i) are at least as favorable to each Senior Executive as the terms set
forth in their respective employment agreements dated as of the Effective
Date (other than with respect to Base Salaries) and (ii) provide for a Base
Salary of $300,000 for the Executive and $600,000 for the Other Senior
Executive.
"Termination Without Cause" shall mean (i) a termination of either Senior
Executive's employment due to his disability or death or without Cause or
(ii) a Constructive Termination Without Cause of either Senior Executive.
"Threshold Amount" shall mean an amount equal to the Base Purchase Price,
plus 20% interest thereon,
<PAGE>
9
compounded annually, from January 1, 1997, to the date of the applicable
Return Event.
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT made as of January 2, 1997 (this "Agreement"), between
DELSENER/SLATER ENTERPRISES, INC., a Delaware corporation (the "Employer"), and
SFX BROADCASTING, INC., a Delaware corporation (the "Parent") and the owner of
all the outstanding capital stock of the Employer, and MITCH SLATER (the
"Executive").
WHEREAS, pursuant to a Stock Purchase Agreement dated as of October 8,
1996 (the "Purchase Agreement"), the Parent has caused the Employer to acquire,
on the date hereof, from Ron Delsener (the "Other Senior Executive" and,
together with the Executive, the "Senior Executives") the stock of each of the
corporations that conduct the business known as Delsener/Slater Enterprises,
Ltd. ("D/S Enterprises");
WHEREAS, as a result of such acquisition, the Employer will conduct
the business of D/S Enterprises on and after the date hereof;
WHEREAS, prior to such acquisition, the Executive was the President of
D/S Enterprises;
WHEREAS, the Employer and the Parent consider the continued services
of the Executive to be in their best interests;
WHEREAS, the Executive is desirous of serving the Employer on the
terms and conditions herein provided;
WHEREAS, on the date hereof, the Employer and the Parent are entering
into an employment agreement with the Other Senior Executive, who jointly
operated D/S Enterprises with the Executive prior to the date hereof; and
<PAGE>
WHEREAS, terms used but not defined herein shall have the meanings
assigned thereto in the attached Annex I.
NOW, THEREFORE, for good and valuable consideration, the sufficiency
and receipt of which is hereby acknowledged, the Employer, the Parent and the
Executive agree as follows:
1. Employment. Upon the terms and subject to the conditions of this
Agreement, the Employer hereby employs the Executive and the Executive hereby
accepts employment by the Employer on the terms hereinafter set forth.
2. Term. The term of the Executive's employment hereunder shall commence on
the date hereof (the "Effective Date") and continue until December 31, 2001
(the "Term") and shall terminate at the close of business on such date (the
"Termination Date") unless terminated earlier in accordance with the provisions
of this Agreement.
3. Executive's Position, Duties and Authority.
3.1 Position. The Employer shall employ the Executive, and the
Executive shall serve, as Co-President and Co-Chief Executive Officer of the
Employer and, subject to the terms of Section 13 of this Agreement, of any
successor to the Employer by merger, acquisition of all or substantially all of
the assets of the Employer or otherwise. The Other Senior Executive shall also
serve as the Co-President and Co-Chief Executive Officer of the Employer.
3.2 Description. The Executive shall, jointly with the Other Senior
Executive, have full executive authority and responsibility for the day-to-day
management and operational control of the Employer, with commensurate duties
and functions. Without limiting the foregoing, the Senior Executives shall
jointly control the incurrence by the Employer of all overhead and
2
<PAGE>
operational expenses and the entering into by the Employer of new lines of
businesses, and all executives and other employees of the Employer shall report
jointly to the Senior Executives. The Executive shall report to Robert F.X.
Sillerman so long as he is the current Executive Chairman of the Board of
Directors of the Parent (the "Parent's Board"), or, if he no longer holds such
position or a similar position with the Parent, the Parent's chief executive
officer. Notwithstanding the foregoing, the following actions by the Employer
or its subsidiaries shall be subject to the ultimate authority of the Board of
Directors of the Employer and the Parent's Board: (i) entry into new lines of
business; (ii) making any material capital commitment to invest in venues;
(iii) engagement of outside accountants and attorneys; (iv) preparation of
annual budgets (except that the Senior Executives shall exercise exclusive
control over the incurrence by the Employer of all overhead and operational
expenses) and (v) making material upfront payments and deposits to artists not
consistent with past practice.
3.3 Board; Subsidiaries. During the Term, the Executive shall have the
right to serve without remuneration (i) on the Board of Directors of the
Employer (the "Board") and as a member of any committee of the Board and (ii)
as a director and executive officer (in the same capacities as provided in this
Section 3) of any subsidiaries of the Employer; provided, however, that if the
Executive exercises such right, his commitments as a director shall be
substantially consistent with past practice.
3.4 Funding. Subject to the approval of the Board of Directors of the
Parent, the Parent agrees to provide such funding to the Employer to support
and expand its business operations as the Senior Executives, at the direction
of the Board of Directors of the Employer, may reasonably request from time to
time; provided, that at such time the Parent has sufficient financial capacity
to
3
<PAGE>
comply with such request. Notwithstanding the foregoing, the Parent shall be
obligated to provide the Employer with funding sufficient (in the reasonable
judgment of the Senior Executives) to operate its business as presently
conducted. The Parent may charge the Employer interest (based on the Parent's
blended borrowing rate at the time of such borrowing) on any funds provided by
the Parent to the Employer.
4. Full-Time Services.
4.1 General. The Executive shall devote substantially all of his
business time, labor, skill and energy to conducting the business and affairs
of the Employer and to satisfying the duties and responsibilities referred to
in Section 3.2 of this Agreement; provided, that the Executive shall not be
required in fulfilling such obligations to devote a greater number of hours or
to keep significantly different hours than he has in the past and that he may
use his reasonable discretion in determining the optimal method of fulfilling
his obligations. Notwithstanding the foregoing, the Executive shall have the
right, subject to Section 16, to devote a portion of his business time to
personal investments and commitments not related to the business of the
Employer; provided, that the time devoted thereto shall not interfere in any
material respect with the performance of the Executive's services hereunder. In
addition, except as provided in Section 16, the Executive may serve on boards
of directors of not-for-profit organizations and companies and, with the
consent of the Parent (which consent shall not be unreasonably withheld), on
boards of directors of any other organizations or companies; provided, that the
service on any such boards of directors shall not interfere in any material
respect with the performance of the Executive's services hereunder.
4.2 Opportunities: Investments. The Executive covenants and agrees
that, during the Term, he shall inform the Employer of each business
opportunity related to the business of the
4
<PAGE>
Employer and any of the Employer's subsidiaries, the Parent or any of the
Parent's subsidiaries in each case of which he becomes aware, and that he will
not, directly or indirectly, exploit any such opportunity for his own account,
nor will he render any services to any other person or business, or acquire any
interest of any type in any other business, that competes with any material
business of the Employer or any of the Employer's subsidiaries, the Parent or
any of the Parent's subsidiaries; provided, however, that the foregoing shall
not be deemed to prohibit the Executive from acquiring, solely as a passive
investor, up to 10% of any securities or other interests in any partnership,
trust, corporation or other entity; provided that, the Executive may not
acquire any interest in any entity that derives revenues from the business of
promoting or producing musical concerts or similar musical or artistic events
unless such revenues are not material in relation to the other revenues of such
entity.
5. Location of Employment. Unless the Executive consents otherwise in
writing, the headquarters for performance of his services hereunder, as well as
the principal offices of the Employer, shall be at 27 East 67th Street, New
York, New York.
6. Base Salary. During the Term, the Employer shall pay or cause to be paid
to the Executive a base salary at the annual rate of not less than $300,000
(the "Base Salary"), payable in equal installments every two weeks commencing
on January 15, 1997.
7. Profits, Equity and Repurchases.
7.1 Profits after 1996. No later than March 31 of each year, beginning
March 31, 1998, the Executive shall receive a bonus determined by reference to
the Employer's Profits (as defined below) for the immediately preceding year
ending December 31, as follows: (i) the first $4,000,0Q0 of Profits shall be
payable to the Parent; (ii) the next $300,000 of Profits shall be payable
5
<PAGE>
75% to the Executive and 25% to the Other Senior Executive; and (iii) all
additional Profits (that is, Profits in excess of $4,300,000) shall be payable
20% to the Senior Executives and 80% to the Parent, with such Senior
Executives' 20% share payable 75% to the Executive and 25% to the Other Senior
Executive. The foregoing bonus payable based on the Profits for the year 2001
will remain so payable notwithstanding expiration of the Term on December 31,
2001.
"Profits" shall mean the Employer's revenues minus the sum of (A) the
Base Salaries of the Senior Executives, (B) an amount equal to $600,000 and (C)
the actual overhead and operational expenses of the Employer, which overhead
and operational expenses shall exclude (i) all noncash charges (such as
depreciation and amortization expenses and charges relating to goodwill), (ii)
income taxes, (iii) any management fees charged to the Employer by the Parent
and its affiliates and (iv) the Base Salaries of the Senior Executives. In
determining "Profits", the Parent may charge the Employer interest (based on
the Parent's blended borrowing rate at the time of borrowing) on funds
provided by the Parent to the Employer. "Profits" will be calculated on a
consolidated basis for the Employer and its subsidiaries and shall be
determined by the Employer's independent accountants.
7.2 [RESERVED]
7.3 Options. During the Term, the Executive shall be granted options
to purchase a minimum of 100,000 shares of the Parent's Class A Common Stock
(the "Class A Stock"), such options to be granted in accordance with the
following schedule: (i) no less than 15,000 of such options shall be granted on
the Effective Date, (ii) no less than an additional 15,000 of such options
shall be granted in each of the five calendar years comprising the Term and
(iii) the remaining amount of such options shall be granted at such time during
the Term as is determined by the Parent's
6
<PAGE>
Board, after and pursuant to the affirmative recommendation of the Stock Option
Committee of the Parent's Board. Each such option shall have an exercise price
equal to the average closing ask and bid price of the Class A Stock on the date
of the grant and shall be excercisable for ten years and shall vest on a
schedule to be determined by the Parent's Board but in no event shall the
vesting schedule exceed the Term hereof, nor shall the terms and conditions of
such options (including those terms and conditions described above) be any less
favorable than the terms and conditions (other than vesting) applicable to
options granted to the other senior executives of the Parent. Notwithstanding
the foregoing, in the event that the Executive ceases to be employed by the
Employer for any reason whatsoever (including upon death or Total Disability of
the Executive) other than as a result of a voluntary termination (that is not a
Constructive Termination Without Cause) or termination for Cause, (x) all
options granted pursuant to this Section 7.3 shall vest immediately, and (y)
the balance of all remaining stock options to be granted during the Term
pursuant to this Section 7.3 shall immediately be granted and shall vest
immediately at an exercise price per share equal to the lower of (A) the
average ask and bid price of the Class A Stock on the date of the relevant
event or occurrence and (B) the exercise price of the last option granted
prior to such event or occurrence, and the Executive shall retain the right to
exercise each such option described in clauses (x) and (y) during the remaining
original term of each such option. In the event of a termination following a
Change in Control (as defined in Section 13.1.2), the exercise price shall be
modified as set forth in Section 13.3(b) below. To the extent required, this
Section shall automatically be deemed to be modified in accordance with Section
18.5 to insure that the Executive's rights with respect to acceleration of
option grants and acceleration of option vesting are at least as favorable as
the rights that from time to time are generally applicable to other senior
7
<PAGE>
executives of the Parent at the level of regional manager.
7.4 Share of Upside After Return. The provisions of Annex I hereto are
incorporated by reference herein, as if set forth in full in this Section 7.4.
7.5 Right of First Offer. If, at any time during the first three years
following the Effective Date, the Parent desires to effect (or to permit the
Employer to effect) a transaction that would qualify as a Return Event under
clause (i), (ii), or (iii) of the definition thereof set forth in Annex I, then
the Parent shall, prior to negotiating or publicly proposing or disclosing such
transaction, first offer in writing to negotiate with the Senior Executives for
the purchase of the Employer Stock or Employer assets that would otherwise be
sold pursuant to such Return Event. If either or both of the Senior Executives
notify the Parent in writing, within 30 days of his or their receipt of the
Parent's written offer, of their interest in pursuing such negotiations, then
the Parent shall negotiate exclusively and in good faith with either or both of
the Senior Executives, as the case may be, for a period of 60 days following
delivery of such notice by the Senior Executives. If the parties fail to reach
agreement during such 60-day period (including by reason of the Senior
Executives failing to obtain financing), then the Parent shall have the right
to initiate (or to permit the Employer to initiate) such transaction at any
time within six months thereafter on terms no less favorable to the Parent and
the Employer than the final terms proposed by the Senior Executives. The
parties acknowledge that in the event the Senior Executives do not jointly
exercise the right provided in this Section 7.5, the Executive may exercise the
right individually, provided that either (i) the Other Senior Executive's
Employment Agreement is no longer in effect or (ii) the Executive or the Other
Senior Executive provides the Parent with (a) written confirmation signed by
the Other Senior Executive that such Other Senior Executive will not exercise
such right, or (b) a written
8
<PAGE>
notice signed by the Executive providing that the Other Senior Executive has
been deemed to have made an irrevocable election not to exercise such right
pursuant to the Letter Agreement (as defined in the Purchase Agreement)
together with evidence, including copies of any notices, satisfactory to the
Parent, that the Executive has complied with the terms of the Letter Agreement.
7.6 Repurchase Right. If, at any time during the first three years
following the Effective Date, a Change in Control occurs or is approved by the
Parent's Board, the Parent shall promptly provide written notice thereof to the
Senior Executives, such notice to contain (i) the Parent's determination of the
Fair Market Value of the Employer Stock then "beneficially owned" (such term
used for all purposes of this Agreement as defined in Annex I hereto) by the
Parent (the "Eligible Employer Stock") and (ii) a reasonably detailed
description of the Change in Control transaction and the basis for the
determination of such Fair Market Value. For purposes of this Section 7.6, the
term "Fair Market Value" shall have the meaning assigned thereto in Annex I,
except that the determination thereof shall be made in good faith by the
Parent's Board and an independent investment banking firm chosen by the Parent
(whose fees and expenses shall be born solely by the Parent). After receipt of
such notice from the Parent either or both of the Senior Executives may, within
5 days thereof provide written notice to the Parent of either or both of the
Senior Executives' intent to Pursue the Purchase of the Eligible Employer
Stock. If either or both of the Senior Executives, as the case may be, provide
notice of such intended purchase, they shall have (A) an additional 10 business
days to deliver to the Parent written indications of financing support for the
intended purchase and (B) an additional 41 days to deliver commitment letters
from their financing sources. Upon complying with the foregoing, the Senior
Executives shall have the right, but not the obligation to purchase the
Eligible Employer Stock at the Fair Market Value specified
9
<PAGE>
in the Change in Control notice provided by the Parent (provided that, if such
Change in Control does not occur, such right of the Senior Executives with
respect thereto shall be void and of no further force and effect (it being
understood that the Senior Executives retain the repurchase right described in
this Section 7.6 for any subsequent Change in Control within three years
following the Effective Date)). The parties acknowledge that in the event the
Senior Executives do not jointly exercise the right provided in this Section
7.6, the Executive may exercise the right individually, provided that either
(i) the Other Senior Executive's Employment Agreement is no longer in effect or
(ii) the Executive or the Other Senior Executive provides the Parent with (a)
written confirmation signed by the Other Senior Executive that such Other
Senior Executive will not exercise such right, or (b) a written notice signed
by the Executive providing that the Other Senior Executive has been deemed to
have made an irrevocable election not to exercise such right pursuant to the
Letter Agreement (as defined in the Purchase Agreement) together with evidence,
including copies of any notices, satisfactory to the Parent, that the Executive
has complied with the terms of the Letter Agreement.
7.7 Deductions. The Employer shall, in accordance with applicable law,
deduct from the Base Salary and all other cash amounts payable by the Employer
under the provisions of this Agreement to the Executive, or, if applicable, to
his estate, legal representatives or other beneficiary designated in writing by
the Executive, all social security taxes, all Federal, state and municipal
taxes and all other charges and deductions which now or hereafter are required
by law to be charges on the compensation of the Executive or charges on cash
benefits payable by the Employer hereunder to his estate, legal representative
or other beneficiary.
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8. Expenses; Automobile; Vacation. The Employer shall reimburse the
Executive, upon production of reasonably detailed accounts and vouchers or
other reasonable evidence of payment by the Executive, all in accordance with
the Employer's regular procedures in effect from time to time and in form
suitable to establish the validity of such expenses for tax purposes, all
ordinary, reasonable and necessary travel, entertainment and other expenses as
shall be incurred by him in the performance of his duties hereunder. The
Executive shall be entitled to paid vacation time at the rate of not less than
six weeks per calendar year during the Term. The Employer shall make an
automobile available for the Executive's exclusive use while employed under
this Agreement, such automobile to be commensurate in value to the automobiles
made available to the other senior executives of the Parent.
9. Benefits. During the Term, the Executive shall be eligible to
participate in any pension or profit-sharing plan or program of the Parent now
existing or established hereafter, on terms no less favorable than those made
available to the other senior executives of the Parent. The Executive shall
also be eligible to participate in any group life insurance, hospitalization,
medical, health and accident, disability or similar plan or program of the
Parent now existing or established hereafter, on terms no less favorable than
those made available to the other senior executives of the Parent. In addition,
the Executive shall be entitled to all perquisites made available to the other
senior executives of the Parent to the extent not otherwise specifically
provided herein. The Parent shall cause the Employer to be a participating
employer in all benefit plans which the Parent sponsors or maintains at any
time during the Term.
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10. Insurance. The Executive agrees to submit himself, upon request of the
Parent and within a reasonable period of time from such request for physical
examination by any physician designated by the Parent's Board as required or
advisable in connection with the obtaining of any key man insurance policy or
similar coverage which the Parent may wish to obtain. The costs and expenses
for such medical examinations and any such insurance shall be borne by the
Parent, and such costs and expenses shall not be deemed overhead or operational
expenses of the Employer for purposes of calculating "Profits" in Section 7.1.
11. Indemnification. The Employer shall indemnify the Executive and his
legal representatives to the fullest extent permitted by the laws of the State
of Delaware, and the Executive shall be entitled to the protection of such
insurance policies which the Employer hereby agrees to maintain for the benefit
of its directors and officers, against all costs, charges or expenses
whatsoever incurred or sustained by him or his legal representatives in
connection with any action, suit or proceeding to which he or his legal
representatives may be made a party by reason of his being or having been a
director or officer of the Employer or the Parent, or because of actions taken
purportedly on behalf of the Employer or the Parent after the Effective Date.
The Employer shall, upon request by the Executive, promptly advance or pay any
amount for costs, charges or expenses (including, without limitation, legal
fees and expenses incurred by counsel retained by the Executive) in respect of
his right to indemnification hereunder, subject to a later determination as to
the Executive's ultimate right to receive such payment. The Employer shall
maintain such insurance policies for the benefit of its directors and officers
to the same extent and in the same amount and type as is maintained by the
Parent.
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12. Confidential Information. All records, papers, models, programs and
other documents and those kept or made by the Executive relating to the
business or affairs of the Employer and/or its clients or customers shall be
and remain the property of the Employer, and to the extent available shall be
delivered by the Executive to the Employer as required by the Board and, in any
event, upon the expiration or earlier termination of the Executive's employment
by the Employer.
13. Termination.
13.1 For purposes of this Agreement the following definitions shall
apply:
13.1.1 "Cause" shall mean:
(i) the Executive is convicted of a felony involving moral
turpitude which would render the Executive unable to perform his duties set
forth in this Agreement;
(ii) the Executive engages in conduct that constitutes
willful gross neglect or willful gross misconduct in carrying out his duties
under this Agreement, resulting, in either case, in material economic harm to
the Employer; or
(iii) a final, non-appealable determination by a court
of competent jurisdiction that the Executive has knowingly and willingly made a
fraudulent material misrepresentation in the Purchase Agreement that has a
material adverse effect on the value of the Companies to the Buyer.
13.1.2 A "Change in Control" shall mean the occurrence of any one
of the following events:
(i) any "person," as such term is used in Sections 3(a)(9)
and 13(d) of the Securities Exchange Act of 1934 (other than the Executive or
entities controlled by the Executive), becomes a beneficial owner of 50% or
more of the voting power of the Parent or of the common
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stock of the Parent owned beneficially by Robert F.X. Sillerman;
(ii) all or substantially all of the assets or business of
the Parent are disposed of pursuant to a merger, consolidation, sale or other
transaction (unless the shareholders of the Parent, immediately prior to such
merger, consolidation or other transaction beneficially own, directly or
indirectly, in substantially the same proportion as they owned the voting power
of the Parent, all of the voting power or other ownership interests of the
entity or entities, if any, that succeed to the business of the Parent);
(iii) the Parent combines with another company and is the
surviving corporation but, immediately after such combination, the shareholders
of the Parent immediately prior to the combination hold, directly or
indirectly, 50% or less of the voting power of the combined company;
(iv) the majority of the Parent's Board consists of
individuals other than incumbent directors (which term shall mean members of
the Parent's Board as of the Effective Date), except that any person who
becomes a director subsequent to such date whose election or nomination was
supported by two-thirds of the directors who then comprise the incumbent
directors shall be considered an incumbent director; or
(v) except for a repurchase by a Senior Executive pursuant to
Section 7.6, (A) a sale or transfer of Employer Stock (including by way of
merger, consolidation or similar transaction) following which one or more
persons other than the Parent beneficially owns 50% or more of the Employer
Stock or (B) a sale or transfer of all or substantially all the assets of the
Employer and its subsidiaries as a whole.
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13.1.3 "Constructive Termination Without Cause" shall mean a
termination of the Executive's employment at his initiative as provided in this
Section 13 following the occurrence, without the Executive's prior written
consent, of one or more of the following events:
(i) a failure by the Employer or the Parent to fulfill in
all material respects its obligations under this Agreement;
(ii) the failure to elect or reelect the Executive to any of
the positions described in Section 3 or removal of him from any such position;
(iii) a material diminution in the Executive's duties or the
assignment to the Executive of duties which are materially inconsistent with
his duties or which materially impair the Executive's ability to function as
the Co-President and Co-Chief Executive Officer of the Employer or the
Executive being required to report to anyone other than the person identified
in Section 3.2; or
(iv) the failure of the Employer or the Parent to obtain the
assumption in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the assets or business of the Employer
or the Parent within 15 days after a merger, consolidation, sale or other
transaction.
13.2 Termination by the Employer for Cause. A termination for Cause
shall not take effect unless all of the provisions of this Section 13.2 are
complied with. The Executive shall be given written notice by the Parent's
Board of the intention to terminate him for Cause, such notice (i) to state in
detail the particular act or acts or failure or failures to act that constitute
the grounds on which the proposed termination for Cause is based and (ii) to be
given within three months of the Board learning of such act or acts or failure
or failures to act. The Executive shall have 10 business
15
<PAGE>
days after the date that such written notice has been given to the Executive in
which to cure such conduct, to the extent such cure is possible. If he fails to
cure such conduct, the Executive shall then be entitled to a hearing before the
Board. Such hearing shall be held within 20 business days of such notice to the
Executive, provided he requests such hearing within 15 business days of the
written notice from the Board of the intention to terminate him for Cause. If,
within five business days following such hearing, the Executive is furnished
written notice by the Board confirming that, in its judgment, grounds for Cause
on the basis of the original notice exist, he may thereupon be terminated by
the Board for Cause. Nothing in this Section 13.2 shall prejudice the
Executive's right to challenge the validity of his termination by the Employer.
13.2.1 Payment. In the event the Employer terminates the
Executive's employment for Cause, he shall be entitled to:
(i) the Base Salary (if any) through the date of the
termination of his employment for Cause; and
(ii) the Executive's share of Profits for the portion of the
calendar year preceding his termination; provided, that, for purposes of
calculating such Executive's share, the Parent's and the Other Senior
Executive's shares of Profits shall also be based on the portion of the
calendar year preceding the termination. In calculating Profits pursuant to
this Section the Executives' Base Salaries and the $600,000 amount set forth as
(A) and (B) under the definition of Profits in Section 7.1 shall be pro rated
for that portion of the year actually elapsed prior to termination.
13.2.2 No Further Liability. In the event the Employer terminates
the Executive's employment for Cause, the Executive shall have no further
obligations or liability to the Employer
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or the Parent pursuant to this Agreement (except his obligations under Sections
12 and 16, which shall survive).
13.3 Termination Without Cause or Constructive Termination Without
Cause. (a) In the event the Executive's employment is terminated without Cause,
other than due to a Total Disability or death, or in the event there is a
Constructive Termination Without Cause, the Executive shall be entitled to:
(i) the Base Salary through the date of termination of the Executive's
employment;
(ii) the Base Salary, at the annualized rate in effect on the date of
termination of the Executive's employment (or in the event a reduction in
Base Salary is the basis for a Constructive Termination Without Cause, then
the Base Salary in effect immediately prior to such reduction), for a
period of 36 months following such termination or until the end of the
Term, whichever is longer; provided, that, at the Executive's option, the
Employer shall pay him the present value of such salary continuation
payments in a lump sum (using as the discount rate 75% of the prime rate
(as published by The Wall Street Journal) for the month in which such
termination occurs);
(iii) all stock options shall be immediately granted and shall
immediately vest and become exercisable in accordance with Section 7.3
hereof;
(iv) the Executive's share of Profits for the balance of the Term
based on the greater of (A) the Profits for the calendar year in which the
termination occurs, with such Profits being pro rated for the remainder of
such year, and (B) the Profits for the calendar year immediately preceding
the termination; provided, that, at the Executive's option, the Employer
shall pay him the present value of such share of Profits in a lump sum
(using as
17
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the discount rate 75% of the prime rate (as published by The Wall Street
Journal) for the month in which such termination occurs); and
(v) all benefits and perquisites provided in Section 9 hereof until the
end of the Term. In calculating Profits pursuant to clause (iv) (A) above, the
Executives' Base Salaries and the $600,000 amount set forth as (A) and (B)
under the definition of Profits in Section 7.1 shall be pro rated for that
portion of the year actually elapsed prior to termination.
(b) If a termination described in Section 13.3(a) occurs following a Change
in Control, the Executive shall be entitled to the payments and benefits set
forth in such Section, except that the payments under clauses (ii) and (iv) of
such Section 13.3(a) shall be paid in a lump sum without any discount and the
exercise price of the stock options accelerated under clause (iii) of such
Section 13.3(a) shall be the lower of (A) the average ask and bid price of the
Class A Stock on the date of the termination and (B) the lowest exercise price
of any other then outstanding options granted to the Executive prior to the
Change in Control. In the event of a termination pursuant to this Section 13.3
(b), if the aggregate of all payments or benefits made or provided to the
Executive under this Agreement and under all other plans and programs of the
Employer and the Parent (the "Aggregate Payment") is determined to constitute a
Parachute Payment, as such term is defined in Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the "Code"), the Employer shall pay
to the Executive, prior to the time any excise tax imposed by Section 4999 of
the Code ("Excise Tax") is payable with respect to such Aggregate Payment, an
additional amount which, after the imposition of all income, employment and
excise taxes thereon, is equal to one-half of the Excise Tax on the Aggregate
Payment, or such greater portion thereof as the other senior executives of the
Parent shall be paid. The determination of whether the Aggregate Payment
constitutes a Parachute
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Payment and, if so, the amount to be paid to the Executive and the time of
payment pursuant to this subsection shall be made by an independent auditor
(the "Auditor") jointly selected by the Employer and the Executive and paid by
the Employer. The Auditor shall be a nationally recognized United States public
accounting firm which has not, during the two years preceding the date of its
selection, acted in any way on behalf of the Employer, the Parent or any
affiliate thereof. If the Executive and the Employer cannot agree on the firm to
serve as the Auditor, then the Executive and the Employer shall each select one
accounting firm and those two firms shall jointly select the accounting firm to
serve as the Auditor.
13.4 [RESERVED]
13.5 Voluntary Termination. In the event of a termination of
employment by the Executive on his own initiative other than a termination due
to death or disability or following a Change in Control or a Constructive
Termination Without Cause, the Executive shall have the same entitlements as
provided in Section 13.2 above for a termination for Cause. A voluntary
termination under this Section 13.5 shall be effective upon 30 days' prior
written notice to the Employer and shall not be deemed a breach of this
Agreement.
13.6 [RESERVED]
13.7 No Mitigation; No Offset. In the event of any termination of
employment under this Agreement, the Executive shall be under no obligation to
seek other employment and there shall be no offset against amounts due the
Executive under this Agreement or the Purchase Agreement on account of any
remuneration attributable to any subsequent employment that he may obtain or
for any amount allegedly due the Employer or the Parent by the Executive.
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14. Total Disability. The Employer shall provide disability insurance
coverage to the Executive as of the Effective Date, on terms no less favorable
than those made available to the other senior executives of the Parent. If the
Executive becomes disabled during his employment hereunder so that he is unable
for a period of six consecutive months to perform his duties under this
Agreement (a "Total Disability"), the Employer shall pay to the Executive his
full Base Salary and maintain in effect his group health insurance coverage
during such six-month period (the last day of such six-month period, the
"Disability Date"); thereafter, the Employer shall pay the Executive his full
Base Salary and maintain in effect his group health insurance coverage for an
additional six-month period, after which no further obligation shall be due
to the Executive from the Employer hereunder; provided, however, that at the
end of such additional six-month period, the Executive and his eligible
dependents shall be entitled to their group health insurance coverage
continuation, as provided under the Consolidated Omnibus Budget Reconciliation
Act, without any offset for the prior 12 months of group health insurance
coverage maintained in effect pursuant to this Section 14. The Employer shall
have the right to offset against the foregoing payments the amount of any
proceeds received by the Executive under any disability insurance policies
maintained by the Employer in respect of such 12-month period.
15. Death of Executive.
15.1 General. Upon the Executive's death this Agreement and all of the
Employer's obligations to pay salary and Profits hereunder shall terminate
(unless a notice of termination shall have previously been delivered by the
Employer or the Executive), except as provided in Sections 15.2 and 15.3.
20
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15.2. Salary; Profits. The Executive's estate or designated beneficiary
shall be entitled to receive (i) any unpaid portions of the Executive's Base
Salary in respect of the period ending on the Executive's date of death and
(ii) any unpaid shares of Profits in respect of years or portions of years
prior to the date of death; provided, that for purposes of calculating such
Executive's share with respect to the portion of the calendar year preceding
his death, the Parent's and the Other Senior Executive's shares of Profits
shall also be based on the portion of the calendar year preceding death. In
calculating Profits pursuant to this Section the Executive's Base Salaries and
the $600,000 amount set forth as (A) and (B) under the definition of Profits in
Section 7.1 shall be pro rated for that portion of the year actually elapsed
prior to termination. The Employer shall pay to such estate or beneficiary an
amount equal to the present value of all the remaining Base Salary for the
balance of the Term, calculated using as the discount rate the average yield on
three-month Treasury Bills for the 30-day period prior to the date of death.
15.3 Reduction. The Base Salary and shares of Profits payable pursuant
to this Section 15 shall be reduced by the value of any benefits payable to the
Executive's estate or designated beneficiary under any life insurance plan or
policy the premiums for which are paid primarily by the Employer, other than
such insurance identified in Section 10.
16. Noncompetition.
16.1 By Executive During Term. During the Term, the Executive will
not, without the prior written approval of the Board, become employed by, or
become an officer, director or general partner of, any partnership, corporation
or other entity that competes with any business of the Employer, any subsidiary
of the Employer, the Parent or any subsidiary of the Parent, whether now or
hereafter conducted.
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16.2 By Executive After Term. For a period of one year following the
termination of the Executive's employment hereunder by the Employer for Cause
or by the Executive on his own initiative (other than due to Constructive
Termination Without Cause), the Executive will not become employed by, or
become an officer, director or general partner of, any partnership, corporation
or other entity that competes with any business of the Employer on the date of
such termination nor will he render any services to any other person or
business, or acquire any interest of any type in any other business, that
competes with any material business of the Employer or any of the Employer's
subsidiaries on the date of such termination. Notwithstanding the foregoing,
the restrictions in this Section 16.2 shall in no event extend beyond December
31, 2001.
16.3 By Parent. During the Term, the Parent shall not, nor shall the
Parent permit any of its subsidiaries to, engage in, directly or indirectly,
any business activities related to the promotion or production of musical
concerts or similar musical or artistic events except to the extent such
activities are incidental to the ownership or operation of radio stations
consistent with past practice.
17. Notices. Any notice, direction or instruction required or permitted to
be given hereunder shall be given in writing and may be given by telex,
telegram, facsimile transmission or similar method if confirmed by mail as
herein provided; by mail if sent postage prepaid by registered mail, return
receipt requested; or by hand delivery to any party at the address of the party
set forth below. If notice, direction or instruction is given by telex,
telegram or facsimile transmission or similar method or by hand delivery, it
shall be deemed to have been given or made on the day on which it was given,
and if mailed, shall be deemed to have been given or made on the third business
day following the day after which it was mailed. Any party may, from time to
time, by like notice
22
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give notice of any change of address and in such event, the address of such
party shall be deemed to be changed accordingly.
(a) If to the Employer or the Parent:
SFX Broadcasting, Inc.
150 East 58th Street, 19th Floor
New York, New York 10155
Attention: Mr. Robert F.X. Sillerman
(b) If to the Executive:
Mitch Slater
18 Circle Road
Scarsdale, New York 10583
(c) Copies of all communications given hereunder shall also be
delivered or sent,
in like fashion, to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eight Avenue
New York, New York 10019
Attention: Robert A. Kindler, Esq.
18. General.
18.1 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws.
18.2 Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
18.3 Entire Agreement. This Agreement, including Annex I hereto, sets
forth the entire agreement and understanding of the parties relating to the
subject matter hereof, and
23
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supersedes all prior agreements, arrangements and understandings, written or
oral, between or among the parties (other than the Purchase Agreement and the
Letter Agreement), except as specifically provided herein. There are no oral
promises, conditions, representations, understandings, interpretations or terms
of any kind as conditions or inducements to the execution hereof or in effect
among the parties. No custom or trade usage, nor course of conduct among the
parties, shall be relied upon to vary the terms hereof.
18.4 Successors and Assigns. This Agreement, and the Executive's
rights and obligations hereunder, may not be assigned by the Executive, except
that the Executive may designate pursuant to Section 18.6 one or more
beneficiaries to receive any amounts that would otherwise be payable hereunder
to the Executive's estate. This Agreement shall be binding on any successor to
the Employer or the Parent, as the case may be, whether by merger,
consolidation, acquisition of all or substantially all of the Employer's or the
Parent's assets or business or otherwise, as fully as if such successor were a
signatory hereto, and the Employer or the Parent, as the case may be, shall
cause such successor to, and such successor shall, expressly assume the
Employer's or the Parent's, as the case may be, obligations hereunder. The
terms "Employer" and "Parent" as used in this Agreement shall include all such
successors.
18.5 Amendments; Waivers. This Agreement cannot be changed, modified
or amended, and no provision or requirement hereof may be waived, without an
affirmative vote of the Board and the Parent's Board, and the consent in
writing of the Executive, the Employer and the Parent. The failure of a party
at any time or times to require performance of any provision hereof shall in no
manner affect the right of such party at a later time to enforce the same. No
waiver by a party of the breach of any term or covenant contained in this
Agreement, whether by conduct or
24
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otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
18.6 Beneficiaries. Whenever this Agreement provides for any payment
to the Executive's estate, such payment may be made instead to such beneficiary
or beneficiaries as the Executive may have designated in a writing filed with
the Employer. The Executive shall have the right to revoke any such designation
and to redesignate a beneficiary or beneficiaries by written notice to the
Employer (and any applicable insurance company) to such effect.
18.7 . The parties hereto agree that, after the execution of this
Agreement, they will make, do, execute or cause or permit to be made, done or
executed all such further and other lawful acts, deeds, things, devices,
conveyances and assurances in law whatsoever as may be required to carry out
the true intention and to give full force and effect to this Agreement.
18.8 Ability to Fulfill Obligations. None of the Employer, the Parent
or the Executive is a party to or bound by any agreement which would be
violated by the terms of this Agreement.
18.9 Severability. Should any provision of this Agreement be
unenforceable or prohibited by any applicable law, this Agreement shall be
considered divisible as to such provision which shall be inoperative, and the
remainder of this Agreement shall be valid and binding as though such provision
were not included herein.
18.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original. It shall not be
necessary when making proof of this Agreement to account for more than one
counterpart.
25
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18.11 Survival of Certain Provisions. The provisions of Section 7, 9,
11, 12, 13, 14, 15, 16 and 17 and this Section 18 shall, to the extent
applicable, continue in full force and effect notwithstanding the expiration
or earlier termination of this Agreement or of the Executive's employment in
accordance with the terms of this Agreement.
18.12 Arbitration of Disputes. Any dispute or controversy between the
parties relating to or arising out of this Agreement or any amendment or
modification hereof shall be determined by arbitration in the City and State of
New York by and pursuant to the rules then prevailing of the American
Arbitration Association. The arbitration award shall be final and binding upon
the parties and judgement may be entered thereon by any court
of competent jurisdiction. The service of any notice, process, motion or other
document in connection with any arbitration under this Agreement or the
enforcement of any arbitration award hereunder may be effectuated either by
personal service upon a party or by certified mail duly addressed to him or to
his executors, administrators, personal representatives, next of kin,
successors or assigns, at the last known address or addresses of such party or
parties. If the Executive is the prevailing party on any issue in any such
arbitration proceeding, he shall be entitled to recover from the Employer any
actual expenses for attorney's fees and disbursements incurred by him.
18.13 Guarantee by Parent. The Parent hereby absolutely and
unconditionally guarantees, as a primary obligor and not merely as a surety, to
the fullest extent permitted by law, all the obligations (financial or
otherwise) of the Employer under this Agreement. The Parent also waives
presentment to, demand of compliance from and protest to the Employer of any of
the Employer's obligations under this Agreement.
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18.14 Payola/Plugola. During the Term of this Agreement, the Executive
shall not pay or agree to pay any money, service or any valuable consideration,
as defined in and other than as permitted by Sections 317 and 507 of the
Communications Act of 1934, as amended, for the radio broadcast of any matter
whatsoever.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
DELSENER/SLATER ENTERPRISES, INC.
By: /s/
-------------------------------
Name:
Title:
SFX BROADCASTING, INC.
By: /s/
-------------------------------
Name:
Title:
-----------------------------------
Mitch Slater
27
<PAGE>
18.14 Payola/Plugola. During the Term of this Agreement, the Executive
shall not pay or agree to pay any money, service or any valuable consideration,
as defined in and other than as permitted by Sections 317 and 507 of the
Communications Act of 1934, as amended, for the radio broadcast of any matter
whatsoever.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
DELSENER/SLATER ENTERPRISES, INC.
By:
-------------------------------
Name:
Title:
SFX BROADCASTING, INC.
By:
-------------------------------
Name:
Title:
/s/
-----------------------------------
Mitch Slater
27
<PAGE>
ANNEX I TO
MR. SLATER'S EMPLOYMENT AGREEMENT
Share of Upside After Return
Reference is made to Section 4 of this Annex I for certain definitions.
1. General. (a) Subject to adjustment as set forth in Section 1(b)
below, upon the occurrence of a Return Event, if the sum of the Prior Proceeds
and the Deemed Proceeds exceeds the Threshold Amount (such excess, the
"Upside"), then the Senior Executives will be paid in cash an amount equal to
15% of the Upside (plus interest thereon, at 1% over the Parent's blended
borrowing rate, from the date of the Return Event to the date of payment),
with such Senior Executives' 15% (plus any interest) being paid 75% to the
Executive and 25% to the Other Senior Executive. Such amount shall be paid, (A)
in the case of a Return Event described in clause (i) , (ii) , (iii) , (iv) or
(vi) of Section 2 below, within 10 business days after the occurrence of such
Return Event (or, if the determination of the amount of the Upside is not
finalized until a later time, then within 10 business days after such
determination) or (B) in the case of a Return Event described in clause (v) of
Section 2 below, in five equal annual installments commencing 10 business days
after the date of such Return Event (or, if the determination of the amount of
the Upside
<PAGE>
2
is not finalized until a later time, then within 10 business days after such
determination)
(b) Notwithstanding anything in Section 1(a) above, if the Senior
Executives elect to treat a Change in Control of SFX as a Return Event under
clause (iv) of Section 2 below, they will only be entitled to an amount equal
to 7.5% or less (such lesser amount to be determined in the sole discretion of
the Senior Executives) of the Upside (plus any interest). In the event that a
Return Event under clause (iv) of Section 2 below has occurred and the Senior
Executives have elected to treat such event as a Return Event, the percentage
amount to which the Senior Executives are entitled pursuant to Section 1(a)
above with respect to any subsequent Return Event shall be reduced by the
percentage that the Senior Executives elected to receive in connection with
such earlier Return Event.
2. Return Event; Employer Stock. (a) "Return Event" shall mean the
first of the following to occur during the Term or, in the event a Return Event
described under clause (iv) has already occurred, the next to occur of the
following during the term:
(i) an initial public offering (an "IPO") of the Employer's common
stock (the "Employer Stock");
<PAGE>
3
(ii)a sale or transfer of Employer Stock (including by way of merger,
consolidation or similar transaction) following which one or more persons other
than the Parent beneficially owns 50% or more of the Employer Stock (for all
purposes of this Annex I and the Employment Agreement, "beneficial ownership"
will be determined pursuant to Rule l3d-3 promulgated under the Securities
Exchange Act of 1934);
(iii) a sale or transfer of all or substantially all the assets of the
Employer and its subsidiaries taken as a whole (an "Asset Transfer"); or
(iv) a Change in Control of the Parent, provided that either Senior
Executive may elect, within five business days after the Deemed Proceeds with
respect to such Change in Control are determined, to not treat such Change in
Control as a Return Event (it being understood that if such election is made,
any subsequent Change in Control of the Parent would, absent such election, be
treated as a Return Event);
(v) The death or Total Disability of a Senior Executive; provided,
that a Return Event shall be considered to have occurred only for the Senior
Executive who died or was disabled, with such Senior Executive (or his estate)
being paid in connection therewith his share of the Senior
<PAGE>
4
Executives' 15% of any Upside as provided in Section 1 above and the other
Senior Executive only being paid his share when the next Return Event occurs;
or
(vi) a Renewal Failure or a Termination Without Cause, provided that a
Return Event shall be considered to have occurred only for the Senior Executive
for which there was a Renewal Failure or a Termination Without Cause, with such
Senior Executive being paid in connection therewith his share of the Senior
Executives' 15% of any Upside as provided in Section 1 above and the other
Senior Executive only being paid his share when the next Return Event occurs.
(b) Other than as set forth in the succeeding sentence, the Employer
and its subsidiaries will each have only one class of capital stock, which will
be common stock, and will not issue or grant equity securities of any other
kind. The parties agree that the Employer may issue preferred stock provided
that appropriate modifications are made to the Employment Agreement and this
Annex I to maintain the economic and other rights of the Senior Executives as
set forth herein. During the Term (or any extension thereof) all the common
stock of the Employer beneficially owned by the Parent will be held directly by
the Parent and not through any subsidiary.
<PAGE>
5
3. Deemed Proceeds. "Deemed Proceeds" shall mean:
(v) with respect to an IPO, the sum of (aa) the proceeds received by
the Parent or its affiliates from the sale of Employer Stock in such IPO and
(bb) the value of the remaining Employer Stock beneficially owned by the
Parent, which such value shall be deemed to equal the product of the number of
shares of Employer Stock the Parent continues to own and the average closing
prices for the Employer Stock for the 20 consecutive trading days commencing on
the 60th trading day after the IPO is closed;
(w) with respect to a sale or transfer of Employer Stock, the sum of
(aa) the proceeds of such sale or transfer and (bb) the Fair Market Value of
the remaining Employer Stock beneficially owned by the Parent;
(x) with respect to an Asset Transfer, the sum of (aa) the proceeds of
such Asset Transfer and (bb) the Fair Market Value of the remaining assets of
the Employer and its subsidiaries; and
(y) with respect to a Change in Control of the Parent, the Fair Market
Value of the Employer Stock beneficially owned by the Parent at the time of
such
<PAGE>
6
Change in Control (for the first three years following the Effective Date, such
Fair Market Value shall be determined in accordance with the terms of Section
7.6); and
(z) with respect to a Renewal Failure, a Termination Without Cause or
the death or Total Disability of a Senior Executive, the Fair Market Value of
the Employer Stock beneficially owned by the Parent at the time of the
occurrence thereof (assuming in such valuation that the terminated Senior
Executive, or the Executive who has died or become disabled, does not continue
to be employed).
4. Definitions.
"Base Purchase Price" shall mean the Fixed Payment as defined in the
Purchase Agreement.
"Fair Market Value" shall mean private market value (which, in the
case of a valuation of less than all the Employer Stock, shall be deemed to be
the applicable proportionate interest in the private market value of all the
Employer Stock) as agreed by the Parent and the Senior Executives or, if they
cannot agree, as determined by an independent investment banking firm jointly
selected by the parties (whose fees and expenses will be shared 50% by the
<PAGE>
7
Parent and 50% by the Senior Executives, except that the Senior Executives'
share shall be paid solely out of the payment due them under Section 1 of this
Annex I).
"Minority Interest Sale" shall mean any sale or transfer of (i) assets
of the Employer or its subsidiaries (other than in the ordinary course of
business) or (ii) beneficial ownership of Employer Stock (including by way of
merger, consolidation or similar transaction) to any person other than the
Parent, which such sale or transfer does not constitute a Return Event.
"Prior Proceeds" shall mean the sum of (i) the aggregate amount of all
Profits allocated or allocable to the Parent pursuant to Section 7.1 of the
Employment Agreement prior to the date of the applicable Return Event and (ii)
an amount with respect to each Minority Interest Sale prior to such date equal
to the proceeds thereof, less any amounts paid thereon to either of the Senior
Executives plus 20% interest on such difference, compounded annually, from the
date of the closing of such Minority Interest Sale to the date of the
applicable Return Event (it being understood that in connection with a Minority
Interest Sale that involves the issuance of Employer Stock or a sale or
transfer of assets, such proceeds shall only include amounts that are either
(x) dividended or otherwise distributed to
<PAGE>
8
the Parent or its affiliates or (y) are used to replace funds so dividended or
distribution). For purposes of the foregoing clause (i), Profits for the year
in which the Return Event occurs will be determined as of the date of the
Return Event, as if such date was the last day in such year (with no proration
for the remainder of such year).
"Renewal Failure" shall mean, if the Agreement has not yet been
terminated, the failure of the Employer to offer, within the 90-day period
immediately preceding the last 180 days of the Term, to renew each of the
Senior Executive's employment agreement for another five-year period on terms
that (i) are at least as favorable to each Senior Executive as the terms set
forth in their respective employment agreements dated as of the Effective Date
(other than with respect to Base Salaries) and (ii) provide for a Base Salary
of $600,000 for the Executive and $300,000 for the Other Senior Executive.
"Termination Without Cause" shall mean (i) a termination of either
Senior Executive's employment due to his disability or death or without Cause
or (ii) a Constructive Termination Without Cause of either Senior Executive.
"Threshold Amount" shall mean an amount equal to the Base Purchase
Price, plus 20% interest thereon,
<PAGE>
9
compounded annually, from January 1, 1997, to the date of the applicable Return
Event.
<PAGE>
January 15, 1998
SFX Entertainment, Inc.
650 Madison Avenue
New York, New York 10022
Attention: Robert F.X. Sillerman,
Executive Chairman
Gentlemen/Ladies:
Based upon recent discussions between The Bank of New York ("BNY"),
its affiliate, BNY Capital Markets, Inc. ("BNYCMI"), Lehman Commercial Paper
Inc. ("Lehman"), Goldman Sachs Credit Partners L.P. ("Goldman", and together
with BNY, BNYCMI and Lehman, the "Banks"), and you, and relying upon the
information which you have previously provided to the Banks
(i) BNY is pleased to confirm its willingness to act as
administrative agent and letter of credit issuer for, and (to the
extent indicated below) participate in, certain proposed senior
secured revolving credit and term loan facilities (the "Facilities")
for SFX Entertainment, Inc. (the "Company"),
(ii) BNYCMI is pleased to confirm its willingness to be the lead
arranger of the Facilities, and
(iii) each of Lehman and Goldman is pleased to confirm its
willingness to be a co-arranger and co-documentation agent of, and (to
the extent indicated below) participate in the Facilities,
in each case referred to above subject to the conditions set forth in this
Commitment Letter. The Facilities would be provided pursuant to a credit
agreement which would contain terms, conditions of lending, funding and yield
protections, representations and warranties, covenants, events of default and
other provisions customary for facilities of this size, type and purpose,
including, without limitation, the terms and conditions set forth on the
Summary of Principal Terms and Conditions attached hereto (the "Term Sheet").
This Commitment Letter, the fee letter, dated the date hereof, from BNY to the
Company (the "BNY Fee Letter"), the fee letter, dated the date hereof, from
BNYCMI, Lehman and Goldman (the "Arrangers") to the Company (the "Arranger Fee
Letter"), and the Term Sheet are sometimes hereinafter referred to collectively
as the "Commitment Documents". Capitalized terms used herein which are not
herein defined shall have the meanings set forth in the Term Sheet.
BNY agrees that it is willing to participate in the Facilities, on a
pro rata basis, to the extent of $210,000,000. Lehman agrees that it is willing
to participate in the Facilities, on a pro rata basis, to the extent of
$70,000,000. Goldman agrees that it is willing to participate in the
Facilities, on a pro rata basis, to the extent of $70,000,000.
<PAGE>
The increase in the Revolver which may, upon the terms and conditions
set forth in the Term Sheet, occur prior to the Closing Date is expressly
conditioned upon an oversubscription of the Facilities that shall cause each
Arranger's final allocated commitment to be at or below the target retention
level therefor set by such Arranger. The increase in the Term Loan which may,
upon the terms and conditions set forth in the Term Sheet, occur prior to the
Closing Date shall be at the option of the Administrative Agent in the event
that the Administrative Agent shall determine that the Revolver shall have been
undersubscribed in the pre-closing syndication of the Facilities.
The Company has requested that the Arrangers syndicate the Facilities,
and the Arrangers are pleased to confirm their willingness to do so.
BNY's willingness to act as administrative agent and letter of credit
issuer for, and (to the extent indicated above) participate in, and the
willingness of the Arrangers to arrange and (to the extent indicated above)
participate in, the Facilities are subject to (i) the negotiation and execution
of a credit agreement (as described above) and related documents that are
satisfactory in form and substance to the Banks, the Company and their
respective counsel, (ii) the absence of any material adverse change in the
condition (financial or otherwise), business, assets, properties, prospects,
operations, performance or current capital structure of the Company or any of
its subsidiaries from that described to the Banks in the information previously
delivered to the Banks, (iii) verification by the Banks of the information you
have previously provided to the Banks, (iv) the Banks' satisfaction with their
due diligence concerning the Company, its subsidiaries and such aspects of the
business of the Company and its subsidiaries that the Banks choose to
investigate, and (v) the absence of any material adverse change in the
financial markets and in the market for senior debt financing.
By executing this Commitment Letter, you agree to indemnify and hold
harmless each of the Banks (in their individual capacity and in their
respective capacities as administrative agent, letter of credit issuer and
Arrangers, each of the participating lenders (including the Banks) and each of
their respective officers, directors, partners, employees, affiliates, agents
and controlling persons (each, an "Indemnified Party") from and against any and
all losses, claims, damages and liabilities to which any such Indemnified Party
may become subject arising out of or in connection with any claim, litigation,
investigation or proceeding relating to the Commitment Documents, the
Facilities (including the use of the proceeds thereof), or any related
transaction, whether or not any Indemnified Party is a party thereto, and to
reimburse each Indemnified Party upon demand for all legal and other expenses
incurred in connection with investigating or defending any of the foregoing;
provided that the foregoing indemnity will not, as to any Indemnified Party,
apply to losses, claims, damages, liabilities or related expenses to the extent
arising from the willful misconduct or gross negligence of such Indemnified
Party.
By executing this Commitment Letter, you (i) agree that you will not
make any claim against any Indemnified Party for any special indirect or
consequential damages in respect of any breach or wrongful conduct (whether the
claim therefor is based on contract, tort or duty imposed by law) in connection
with, arising out of or in any way related to the transactions contemplated and
the relationship established by the Commitment Documents, or any act, omission
or event occurring in connection therewith, and (ii) waive, release and agree
not to sue upon any such claim for any such damages, whether or not accrued and
whether or not known or suspected, to exist in your favor.
- 2 -
<PAGE>
You acknowledge that the Banks may have shared, and that the Banks may
in the future share, non-public information concerning the Company and its
affiliates with each other and with their other affiliates. By your execution
of this Commitment Letter, you consent and agree to such sharing.
You agree that the Commitment Documents are for your confidential use
only and will not, without the prior consent of the Banks, be disclosed by you
or any of your representatives to any person other than your accountants,
attorneys and other advisors, and then only in connection with the transactions
contemplated hereby and only on a confidential basis, except that, following
your acceptance of the Commitment Documents, you may make such disclosures of
the terms and conditions hereof as you are required by law to make.
The Commitment Documents shall not be assignable by you and may not be
amended or any provision thereof waived or modified except by a document in
writing signed by you, and the Banks.
You hereby knowingly, voluntarily and intentionally waive any right
you may have to a trial by jury in respect of any litigation arising out of,
under or in connection with the Commitment Documents or the transactions
contemplated thereby.
The Commitment Documents set forth the entire understanding of the
parties hereto as to the scope of the obligations of the parties thereto and
supersedes all prior agreements, representations and understandings, if any,
relating to the subject matter thereof.
The Commitment Documents shall be governed by, and construed in
accordance with, the laws of the State of New York.
The Commitment Documents shall automatically expire if not accepted by
you on or before 5:00 P.M. (New York City time) on January 20, 1998. Please
indicate your acceptance of the Commitment Documents and your agreement to the
terms thereof by signing the enclosed copy of this Commitment Letter, the BNY
Fee Letter and the Arranger Fee Letter and returning them to BNY. By so doing,
you will be deemed to have agreed as follows:
A. You shall be bound by the terms hereof;
B. You (i) will provide sufficient information, in form and
substance acceptable to the Banks, for the preparation of an information
package describing the Company, its subsidiaries and the Facilities, (ii)
consent to the establishment by the Arrangers of a syndicate of, and the
distribution by the Arrangers (on a confidential basis) of the aforesaid
information package and other information to, interested lenders, and (iii)
will (and will cause your management to) take an active role in the syndication
process (including, without limitation, attending bank meetings and holding
yourselves available to answer questions during the syndication process);
C. You will pay all fees and expenses incurred by the Banks in
connection with the syndication of, and the negotiation and preparation of the
Commitment Documents and the loan documentation relating to, the Facilities
(including, without limitation, costs and expenses in connection with the
Banks' due diligence investigations and fees and expenses of the Banks'
respective counsel) whether or not the
- 3 -
<PAGE>
loan documentation is finalized or the syndication is completed and whether or
not any of the Facilities is extended or other financial accommodations are
made, and regardless of the reasons for which such documentation is not
finalized or the syndication is not completed or any of the Facilities is not
extended or other financial accommodations are not made; and
D. You will fully cooperate with the Banks in connection with the
transactions contemplated hereby.
Even if accepted in accordance with the provisions of the previous
paragraph, the obligations of the Banks under this Commitment Letter shall
expire and terminate automatically, without further act or condition and
regardless of cause or circumstance, if loan documentation satisfactory in form
and substance to the Banks, the Company and their respective counsel is not
executed on or before February 27, 1998.
Very truly yours,
THE BANK OF NEW YORK
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
BNY CAPITAL MARKETS, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
LEHMAN COMMERCIAL PAPER INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
GOLDMAN SACHS CREDIT
PARTNERS L.P.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
- 4 -
<PAGE>
Accepted and agreed:
SFX ENTERTAINMENT, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Date: , 1998
--------------- --
<PAGE>
SFX ENTERTAINMENT, INC.
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS
JANUARY 15, 1998
BORROWER: SFX Entertainment, Inc. ("SFX Entertainment").
GUARANTORS: All direct and indirect domestic subsidiaries of the
Borrower at closing and in the future.
FACILITIES: $350.0 million senior secured credit facilities (the
"Facilities") comprised of the following:
1. $250.0 million reducing revolving credit facility
(the "Revolver"). A $20.0 million sublimit shall
be available under the Revolver for the issuance
of standby letters of credit ("Letters of Credit")
by the Letter of Credit Issuer and, further
thereto, upon the issuance of each Letter of
Credit, each Lender shall be deemed to have
purchased a risk participation in such Letter of
Credit in an amount equal to such Lender's pro
rata share of the Revolver; and
2. $100.0 million term loan (the "Term Loan").
Prior to the date of the execution and delivery of the
Facility Documents (the "Closing Date"), the Borrower
may, with the consent of the Administrative Agent,
increase the Revolver to an amount not to exceed $300.0
million.
Prior to the Closing Date, the Term Loan may be
increased to an amount not to exceed $150.0 million,
provided that the Revolver, at the option of the
Administrative Agent, will be reduced by an amount
equal to the increase in the Term Loan.
Subsequent to the Closing Date and prior to December
31, 1999, the Borrower may request an increase in the
Revolver by an amount not to exceed $50.0 million by
requesting existing Lenders to increase their
commitments and, thereafter, by requesting other
institutions (reasonably acceptable to the
Administrative Agent) to become Lenders, provided that
no existing Lender shall have any obligation to
increase its commitment.
USE OF PROCEEDS: To finance permitted acquisitions and for working
capital and general corporate purposes.
ADMINISTRATIVE
AGENT: The Bank of New York ("BNY").
LEAD ARRANGER: BNY Capital Markets, Inc. ("BNYCMI").
<PAGE>
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS PAGE 2
CO-ARRANGERS AND
CO-DOCUMENTATION
AGENTS: Lehman Commercial Paper Inc. and Goldman Sachs Credit
Partners L.P. (the Lead Arranger and the Co-Arrangers
shall be collectively referred to as the "Arrangers").
LETTER OF CREDIT
ISSUER: BNY.
LENDERS: BNY, the Co-Arrangers and a syndicate of financial
institutions to be arranged by the Lead Arranger.
FINAL MATURITY: 1. Revolver - March 31, 2005.
2. Term Loan - March 31, 2006.
COMMITMENT
REDUCTIONS AND
AMORTIZATION: 1. The Revolver commitment shall be reduced in equal
quarterly installments commencing March 31, 2000
according to the following table:
YEAR PERCENTAGE REDUCTION
2000 10.0%
2001 15.0%
2002 20.0%
2003 25.0%
2004 25.0%
2005 5.0%
2. The Term Loan shall be repaid by $1.0 million per
year with the balance thereof being repaid on Final
Maturity.
INTEREST RATES: Borrowings under the Facilities shall bear interest, at
the option of the Borrower, at a rate per annum equal
to the Applicable Margin (as defined below) plus
either:
1. The greater of the following (the "Alternate Base
Rate" or "ABR"):
(a) BNY's prime commercial lending rate as
publicly announced to be in effect from time
to time (the "Prime Rate"); or
(b) 0.50% plus the federal funds rate (as
published by the Federal Reserve Bank of New
York) (the "Federal Funds Rate"); or
2. LIBOR (adjusted for reserves) for interest periods
of 1, 2, 3 or 6 months.
<PAGE>
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS PAGE 3
APPLICABLE MARGIN: The Applicable Margin shall be based upon the
applicable Total Leverage Ratio (as herein defined)
according to the following tables:
APPLICABLE MARGIN FOR THE REVOLVER
TOTAL LEVERAGE RATIO APPLICABLE APPLICABLE
ABR MARGIN LIBOR MARGIN
x > 6.50 1.250% 2.375%
-
6.00 < x < 6.50 1.125% 2.250%
-
5.50 < x < 6.00 0.875% 2.000%
-
5.00 < x < 5.50 0.625% 1.750%
-
4.50 < x < 5.00 0.375% 1.500%
-
4.00 < x < 4.50 0.125% 1.250%
-
3.50 < x < 4.00 0.000% 1.000%
-
x < 3.50 0.000% 0.750%
APPLICABLE MARGIN FOR THE TERM LOAN
TOTAL LEVERAGE RATIO APPLICABLE APPLICABLE
ABR MARGIN LIBOR MARGIN
x > 6.00 1.250% 2.375%
-
5.50 < x < 6.00 1.000% 2.125%
-
4.50 < x < 5.50 0.875% 2.000%
-
x < 4.50 0.750% 1.875%
Notwithstanding the pricing grids above, the Applicable
LIBOR Margin and the Applicable ABR Margin for the
Revolver and the Term Loan will be 2.375% and 1.250%,
respectively prior to the delivery of a compliance
statement for the quarter ended September 30, 1998.
DEFAULT RATE
OF INTEREST: The applicable interest rate plus 2% per annum on all
outstandings during the continuance of an Event of
Default. All such interest shall be payable on demand.
COMPUTATION
OF INTEREST: Interest at the ABR will be computed on the basis of a
365 or 366 day year for the actual number of days
elapsed for so long as the Prime Rate is applicable and
on the basis of a 360 day year for the actual number of
days elapsed for so long as the Federal Funds Rate is
applicable. Interest at a rate based upon LIBOR will be
computed on the basis of a 360 day year for the actual
number of days elapsed.
<PAGE>
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS PAGE 4
PAYMENT OF
INTEREST: Except as otherwise provided under "Default Rate of
Interest", above, (i) interest at the Alternate Base
Rate will be payable quarterly in arrears, and (ii)
interest at a rate based upon LIBOR will be payable in
arrears on the last day of the applicable interest
period and, if such interest period is longer than
three months, every three months during such interest
period.
LETTER
OF CREDIT FEE: A per annum fee for the account of the Lenders equal to
the Applicable LIBOR Margin for the Revolver then in
effect. The Letter of Credit Fee will be calculated on
a per annum basis (on the basis of a 360-day year for
the actual number of days elapsed) on the average daily
drawable amount of the Letters of Credit, payable
quarterly in arrears together with the customary
administrative fees of the Letter of Credit Issuer.
COMMITMENT FEE: A per annum fee on the unused portion of the Revolver
based upon the applicable Total Leverage Ratio
according to the following table:
TOTAL LEVERAGE RATIO COMMITMENT FEE
x > 4.00 0.500%
x < 4.00 0.375%
The Commitment Fee shall be payable quarterly in
arrears, and upon termination or reduction of the
Revolver (on the terminated or reduced portion of the
Revolver), and shall be calculated on the basis of a
360-day year for the actual number of days elapsed.
MANDATORY
REDUCTIONS: Commitments under the Revolver and outstandings under
the Term Loan shall be permanently reduced, on a pro
rate basis, by the following (in each case to be
applied to the remaining commitment reductions and loan
amortization payments on a pro rata basis):
1. 100% of the net cash proceeds received from
permitted asset sales, subject to standard
reinvestment provisions.
2. 50% of Excess Cash Flow calculated for each fiscal
year beginning with the year ended December 31,
2000.
3. 50% of net proceeds of any equity issuance to the
extent that the Total Leverage Ratio is greater
than or equal to 5.00x.
SECURITY: 1. Pledge of (a) all of the capital stock of each
Guarantor, and (b) not less than 66-2/3% of the
capital stock of the Borrower's present and future
direct and indirect foreign subsidiaries.
<PAGE>
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS PAGE 5
2. Pledge of all of the assets (subject to certain
non-material exceptions), now owned or hereafter
acquired, of the Borrower and each Guarantor.
FUNDING AND
YIELD PROTECTIONS: Standard provisions for illegality, inability to
determine rate, and indemnification for break funding
and increased costs or reduced return, including,
without limitation, those arising from reserve
requirements (if any), taxes, withholding and capital
adequacy.
FACILITIES
DOCUMENTATION: The Facilities shall be subject to the negotiation,
execution and delivery of a definitive credit agreement
(including schedules, exhibits and ancillary
documentation, and including conditions precedent to
the consummation of each Identified Acquisition (as
defined below)) and other supporting documentation
satisfactory to the Lenders and their respective
counsel. CONDITIONS PRECEDENT: Usual and customary for
credit facilities of this size, type and purpose,
including, without limitation:
1. SFX Broadcasting, Inc. ("Broadcasting") shall have
contributed (such contribution to be in form and
substance satisfactory to the Administrative
Agent) to the Borrower or the Guarantors all of
its existing concert promotion and live
entertainment businesses.
2. The Borrower shall have issued $275.0 million of
unsecured, non-amortizing senior subordinated
notes having a maturity of not less than 10 years
upon terms and conditions satisfactory to the
Administrative Agent in all respects.
3. The acquisition by the Borrower or any Guarantor
of not less than 85% of the capital stock of PACE
Entertainment Corporation ("Pace") shall have been
consummated on terms and conditions satisfactory
to the Administrative Agent, and all outstanding
debt of Pace shall have been refinanced.
4. The Borrower shall have entered into definitive
purchase agreements on terms acceptable to the
Administrative Agent for the purchase of Bill
Graham Presents, Inc., Concert/Southern
Promotions, Network Magazine, SJS, the
Contemporary Group, 100% of the ownership
interests in Pavilion Partners (the general
partnership between Pace and Amphitheater
Entertainment Partners) and 100% of the ownership
of Riverport Amphitheater in St. Louis, Mo.
(collectively, and together with Pace, the
"Identified Acquisitions").
5. Completion of all due diligence by, and to the
satisfaction of, the Administrative Agent.
<PAGE>
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS PAGE 6
6. Receipt of satisfactory UCC, tax and judgment lien
searches with respect to the Borrower and each
Guarantor.
7. Receipt of customary certificates, legal opinions
and other documents and records reasonably
satisfactory to the Administrative Agent.
8. Consent by all requisite parties to the
consummation of the proposed transactions.
REPRESENTATIONS
AND WARRANTIES: Usual and customary for credit facilities of this size,
type and purpose.
COVENANTS: Usual and customary for credit facilities of this size,
type and purpose, including, without limitation:
1. Line of business - limited to the promotion and
production of concerts, motor sports events and
touring theatrical shows, and other businesses
incidental or related thereto.
2. Limitations on additional indebtedness.
3. Limitations on liens (except customary permitted
liens incurred in the ordinary course of
business), and limitations on investments.
4. Limitations on acquisitions. Any acquisition which
is in excess of $50.0 million shall require the
prior written consent of the Required Lenders (the
Identified Acquisitions shall not be subject to
this limitation).
5. Prohibition on asset sales other than (i) asset
sales in the ordinary course of business, and (ii)
other asset sales, provided that (1) no default or
Event of Default shall or would exist before or
after giving effect thereto, (2) the OCF
attributable to all assets sold during the
one-year period ending on the date of the proposed
sale shall not exceed 10% of the OCF of the
Borrower on a consolidated basis; (3) the OCF
attributable to all assets sold during the life of
the Facilities, after giving effect to the
proposed sale shall not exceed 20% of the OCF of
the Borrower on a consolidated basis; (4) fair
value is received; and (5) at least 75% of the
consideration to be received in the form of cash
or cash equivalents.
6. Prohibition on dividends, repurchases of capital
stock, or any other form of cash distributions
(each a "Restricted Payment") provided, however,
that so long as no default or Event of Default
shall or would exist before or after giving effect
thereto, a Restricted Payment will be permitted
with respect to cash distributions in an amount up
to 50% of
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SUMMARY OF PRINCIPAL TERMS AND CONDITIONS PAGE 7
Excess Cash Flow for each fiscal year, beginning
December 31, 2000, provided that prior to and
after giving effect thereto, the Total Leverage
Ratio shall be less than 3.50x.
7. Limitations on partnerships and joint ventures,
other than certain permitted partnerships and
joint ventures to be determined.
8. Prohibition on transactions with affiliates, other
than (a) certain permitted transactions, and (b)
transactions on an "arms-length" basis.
FINANCIAL
COVENANTS: 1. Total Leverage Ratio:
The Total Leverage Ratio shall not at any time
exceed the ratio set forth below with respect to
the applicable period set forth below:
PERIOD TOTAL LEVERAGE RATIO
Closing - 09/29/98 6.75x
09/30/98 - 12/30/98 6.50x
12/31/98 - 06/29/99 6.25x
06/30/99 - 12/30/99 5.75x
12/31/99 - 12/30/00 5.25x
12/31/00 - 12/30/01 4.50x
12/31/01 - thereafter 3.75x
2. Senior Leverage Ratio: The Senior Leverage Ratio
shall not at any time exceed the ratio set forth
below with respect to the applicable period set
forth below:
PERIOD SENIOR LEVERAGE RATIO
Closing - 09/29/98 3.75x
09/30/98 - 12/30/98 3.50x
12/31/98 - 12/30/99 3.25x
12/31/99 - 12/30/00 3.00x
12/31/00 - thereafter 2.50x
3. Interest Expense Ratio: The Interest Expense Ratio
shall not at any fiscal quarter end be less than
the ratio set forth below with respect to the
applicable period set forth below:
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SUMMARY OF PRINCIPAL TERMS AND CONDITIONS PAGE 8
PERIOD RATIO
Closing - 12/31/98 1.50x
01/01/99 - thereafter 2.00x
4. Debt Service Ratio:
The Debt Service Ratio shall not at any fiscal
quarter end be less than the ratio set forth below
with respect to the applicable period set forth
below:
PERIOD RATIO
Closing - 12/31/98 1.25x
01/01/99 - thereafter 1.50x
5. Fixed Charges Ratio:
The Fixed Charges Ratio shall not at any fiscal
quarter end be less than 1.05x.
EVENTS OF DEFAULT: Usual and customary for credit facilities of this size,
type and purpose, including, without limitation, any
Change of Control.
ASSIGNMENTS AND
PARTICIPATIONS: Each Lender may (a) with the consent of the Borrower,
the Letter of Credit Issuer and the Administrative
Agent (such consents not to be unreasonably withheld
and, with respect to the Borrower, not to be required
during the continuance of an Event of Default) and the
payment of a $3,500 assignment fee to the
Administrative Agent, assign all or a portion (in
minimum amounts to be determined) of its interest in
the Facilities and (b) without the consent of the
Borrower, the Letter of Credit Issuer or the
Administrative Agent, (i) grant participations in all
or a portion of its interest in the Facilities, (ii)
assign all or a portion (in minimum amount to be
determined) of its Interest in the Facilities to one of
its affiliates or another Letter, and (iii) to pledge
and assign as collateral to a Federal Reserve Bank all
or a portion of its interest in the Facilities.
EXPENSES AND
INDEMNIFICATION: All fees and expenses of (A) the Administrative Agent
and the Arrangers related to this transaction, and the
syndication thereof (including, without limitation, all
fees and disbursements of counsel to the Arrangers in
connection with the preparation, negotiation and
closing of, or any amendment or modification to, the
Facility Documents and the administration of the
Facilities) whether or not the transaction is
consummated, and (B) the Lenders in connection with the
enforcement of, and the protection of their rights
under, the Facility Documents, would be paid by the
Borrower. Documentation shall contain expense and
indemnification provisions for the benefit of the
Administrative Agent and the Lenders customary for
transactions of this type.
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SUMMARY OF PRINCIPAL TERMS AND CONDITIONS PAGE 9
VOTING RIGHTS: Increases in commitments (except as otherwise expressly
provided), reduction in amount or extension of time of
any payment, reduction in any rate of interest or any
fee, extensions of commitments, changes in funding and
yield protections and indemnities, changing the
definition of Required Lenders, assignment by the
Borrower of rights or obligations under the Facility
Documents (except for certain permitted mergers and
consolidations) and the release of any Guarantor or
collateral will require the approval of all Lenders. In
all other cases, Required Lenders will have the
authority to approve amendments and waivers to the
Facility Documents.
REQUIRED LENDERS: Lenders with 51% of the Facilities.
SPECIAL COUNSEL TO
THE ADMINISTRATIVE
AGENT: Emmet, Marvin & Martin, LLP.
MISCELLANEOUS
PROVISIONS: 1. The Facility Documents will be governed by New
York law.
2. Consent and submission to the jurisdiction of New
York and federal courts in New York City.
3. Waiver of trial by jury.
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SUMMARY OF PRINCIPAL TERMS AND CONDITIONS PAGE 10
DEFINITIONS
CHANGE OF
CONTROL: Shall mean any of: (i) at any time prior to the spin-
off of the Borrower from SFX Broadcasting, Inc., the
failure of SFX Broadcasting, Inc. to own or control
100% of the capital stock of the Borrower; (ii) a
"change of control", as such term is defined in the
indenture to the Borrower's senior subordinated notes;
(iii) the failure of Robert F.X. Sillerman
("Sillerman"), any affiliate of Sillerman or, together
with any executor, heir or successor appointed to take
control of Sillerman's affairs in the event of his
death, disability or incapacity, to own directly or
indirectly, in the aggregate, of record and
beneficially, more than 30% of the voting power of all
issued and outstanding capital stock of the Borrower;
(iv) if within 90 days after the date Sillerman ceases
to be employed by the Borrower in his present capacity,
a replacement for Sillerman reasonably satisfactory to
the Required Lenders has not been appointed; or (v) any
other Person shall own, beneficially, in excess of 10%
of the voting power of all issued and outstanding
capital stock of the Borrower.
DEBT SERVICE: For the most recently completed four fiscal quarters of
the Borrower, the sum of: (i) Interest Expense, (ii)
the scheduled maturities of Total Debt, and (iii)
commitment reductions in respect of revolving credit
facilities.
PRO FORMA
DEBT SERVICE
RATIO: The ratio of OCF to Pro Forma Debt Service.
EXCESS CASH FLOW: Operating Cash Flow (before any adjustments to reflect
acquisitions, sales and exchanges during such period)
for each fiscal year of the Borrower less the sum of
the following during such fiscal year: (i) Fixed
Charges, and (ii) voluntary repayments of the
Facilities provided that the Facilities are permanently
reduced by a like amount.
FIXED CHARGES: For the most recently completed four fiscal quarters of
the Borrower and its subsidiaries on a consolidated
basis, the sum of the following paid during such fiscal
period: (i) Debt Service; (ii) cash income taxes; (iii)
capital expenditures (excluding certain special capital
expenditures associated with the Jones Beach Marine
Amphitheater, the Seattle Amphitheater, the Atlanta
Amphitheater and the PNC Bank Arts Center and
acceptable to the Administrative Agent); and (iv)
investments in unconsolidated subsidiaries,
partnerships and joint ventures ("Unconsolidated
Investments").
FIXED CHARGES
RATIO: The ratio of OCF (before any adjustments to reflect
acquisitions, sales and exchanges) to Fixed Charges.
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SUMMARY OF PRINCIPAL TERMS AND CONDITIONS PAGE 11
INTEREST EXPENSE: The sum of all interest expense and commitment fees
incurred with respect to Total Debt.
PRO FORMA
INTEREST EXPENSE
RATIO: The ratio of OCF to Pro Forma Interest Expense.
OPERATING
CASH FLOW ("OCF"): For the most recently completed four fiscal quarters,
(i) revenues minus (ii) expenses (excluding
depreciation, amortization (amortization expense shall
not include capitalized pre-production costs), interest
expense and income tax expense), plus (iii) certain
non-recurring expense items or non-cash expense items
mutually agreed upon, plus (iv) the lesser of (a) the
equity income from Unconsolidated Investments, and (b)
cash dividends and other cash distributions from
Unconsolidated Investments, provided, however, that the
total amount determined under this clause (iv) and
added to OCF shall not exceed 10% of OCF before
overhead.
OCF will be adjusted to reflect acquisitions,
dispositions and exchanges during such period as if
they had occurred at the beginning of such period.
PRO FORMA
DEBT SERVICE: The sum of: (i) Pro Forma Interest Expense and (ii) the
scheduled current maturities of Total Debt (and current
commitment reductions in respect of revolving credit
facilities) each measured for the four fiscal quarters
immediately succeeding the date of determination.
PRO FORMA
INTEREST EXPENSE: Interest Expense anticipated for the four fiscal
quarters following the calculation quarter, giving
effect to the Total Debt outstanding and the rates in
effect as of the date of determination and the
commitment reductions and debt amortization scheduled
during such period.
SENIOR
DEBT: Total Debt less the amount outstanding under the senior
subordinated notes.
SENIOR
LEVERAGE RATIO: The ratio of: (i) Senior Debt less cash and cash
equivalents in excess of $5 million to (ii) OCF.
TOTAL DEBT: Shall include all outstandings under the Facilities and
any other borrowed money and similar type indebtedness
(including capital lease obligations) of the Borrower
and its subsidiaries, on a consolidated basis.
TOTAL
LEVERAGE RATIO: The ratio of: (i) Total Debt less cash and cash
equivalents in excess of $5 million to (ii) OCF.
